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Will an interest rate rise see the end of the current growth cycle?

As we all know Aussie property prices have been going gangbusters. According to the Australian Bureau of Statistics (ABS) property prices are up almost 20% for the year ending June 2021.

More than 12 months ago, the Reserve Bank of Australia (RBA) dropped the cash rate to a record low of 0.1 per cent, and the banks responded by pushing mortgage interest rates below 2 per cent.

The impact was felt almost immediately, many property owners who had been previously priced out of the market had suddenly been given the opportunity to enter. And that they did. Mortgage loan growth broke all records towards the end of 2020.

This week on our podcast I was asked “Will an interest rate rise see the end of the current growth cycle?”

My answer to that is “no”. The market has been going at a frantic pace and that will need to slow down at some point. That being said, taking a long-term view significantly reduces your property buying risk. With strong population growth (demand) and limited supply of property in desirable Australian cities, my view is that over the long term we will continue to see solid growth in property prices.

Stick to property research fundamentals and buy to hold long term. This formula is proven. Get in when you can, base your acquisitions on research and stay in that market as long as you can afford to.

Listen to this topic in more detail on our podcast “Equity Street”.

Listen here : https://sptfy.com/70bs

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