How will the rate cut affect investors?

rbaIt didn’t take long for the predictions to start rolling in – less than a day, in fact.

When the Reserve Bank cuts interest rates this low, you can bet that every economist and market expert worth his salt is going to make a prediction about what impact a rate cut will have on property prices.

According to the Fin Review, Tuesday’s news could prompt “the biggest building boom in Australian history is going to accelerate, predicts BIS Shrapnel”.

The article reports:

The number of dwellings built this year could come close to 200,000 for the first time, the property forecaster said, beating the previous record of 187,000 in 1994, when the economy was recovering from a recession.

“We were saying something in the low-mid 190,000s,” BIS Shrapnel associate director Kim Hawtrey said. “Now we’d be saying something in the upper 190,000-level.”

So what does this mean for investors?

A boom in housing construction means that some areas are going to be oversupplied. That’s not to say that all of Australia will be oversupplied – or even that any parts will be. But certainly, the gap between supply and demand will be bridged in specific areas and this may have an impact on property prices in those suburbs.

This many impact you directly; it may not. As an experienced investor who is accustomed to doing thorough due diligence before you shop for property, you won’t know until you start researching your next deal!

There is one thing that we know for sure. Anyone who has a variable mortgage is going to save some money as a result of this rate cut, as the banks seem to be passing on the full saving. That’s reason in itself to celebrate!

Til next time, happy investing!

Helen Collier-Kogtevs

Share this post

Become a successful Property Investor

Start Here With Your Free Investment Gift Pack Valued at $297
how to project manage your renovation

Get one step closer, Fill in the form below

  • This field is for validation purposes and should be left unchanged.

More from Real Wealth Australia

Property market about to go ballistic in australia

The Property Market Is About To Go Ballistic!

I’ve got good news for you and more good news! Firstly, you may have heard that the Reserve Bank of Australia (RBA) have indicated that ...
How to Maximise Your Most Important Investments this Christmas_7

How to Maximise Your Most Important Investments this Christmas

Your biggest investment: what it is and how much is it worth? If it’s your home, it could be worth a fair chunk of change. ...

It’s official! Australia is now in a recession… now what?

As Australia has experienced three months of negative growth we are now officially in recession. I wanted to share my thoughts on this as there ...