Hi everyone
Lots of good information being shared considering it is such a new site.
My question is around the news on interest rates and how
people think it will affect prices of houses. I know this
could be crystal gazing at this stage though.We went to Coolum (Sunshine Coast) to check out agents and there was still a lot of buyer activity. Anything under $200,000 was being snapped up. It sounded like buyers were sitting or
selling close to their prices. Certainly couldn’t see anything
that was cash flow friendly as far as rentals. We did see some
opportunities in a couple of houses for turners tho.Do members think that the Reserve bank warning will
put pressure on those who are highly leveraged. I think it was
Steve who commented on the last in may be the first out
when rates go up.Is this a good time to ‘wait and see’ if buyers become more
motivated or that a deal is always around?On the news tonight an extra 2% was mentioned as an increase. It was also stated that property investors would be the hardest hit. Their could be some bargains soon from investors who are heavily – geared.
Tara,
Three comments:
1. Know the difference between fact and opinion. Fact: interest rates are at 30 years lows. Opinion – how long they will stay there.
2. Good deals exist in all markets. Rising interest rates will kill some deals, but you can still buy today and lock in rates for five to ten years.
3. Accept the market will never be perfect. Having said this I expect that in 5 years time people will kick themsleves that they didn’t invest in property when i/rates were so low. Alas… they missed the boat through inaction or buying poorly and capping the # of deals they could lock up.
Taking action leads to a reaction and a spot in the game… but taking no action leads to a seat on the substitution bench.
Don’t rush your investment decision, but avoid being spooked by natural market forces where the investment risk can be mitigated by sensible property management.
Bye
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
Steve,
Appreciated your comments and taken on board.If interest rates go up, will this in fact be shown in property values? Like will property prices drop if the interest rate rises?
Thanks.
RRitchie,
I think so. I saw on ‘The 7:30 Report’ tonight some discussion about the purpose of rising interest rates.
Of course, the purpose behind increase i/rates is to dampen consumer demand and pour water on an over-heated property market.
See my article in the ‘articles’ section ‘Making Cents of Statistics’ for more discussion about this.
Bye,
Steve McKnight
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.comSuccess comes from doing things differently
I had some thoughts on interest rates rising, all based on total generalisations!
Obviously interest rates rising affects business, and that’s one factor.
But a lot of the purpose of rising rates is to dampen consumer spending, in particular borrowing for houses. The thing that I find interesting, is to wonder how effective this strategy will be nowadays. After all, the biggest consumer group out there is the baby boomers, aged around 38-56. I would like to think that most of these people have either paid off their home or have a mortgage that is small in comparison to the home they own (okay, I know many have probably upgrade theirh ome and home loan accordingly) and therefore have a higher level of discretionary income. As a huge force in consumer spending, with plenty of discretionary income, are they really going to be slowed down by changes in interest rates? Maybe they’ve borrowed $30k on a LOC to buy a new car, but are they going to be hurting enough to really feel a few % interest rate rise? Unlike a first home buyer with a mortgage of $180k
Sure, I’m being terribly generalised here, but I do wonder whether interest rates are going to be as effective in manipulating spending as they have been in the past.Keep smiling
Felicity
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