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By Michael Yardney
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Low interest rates could cause property prices to rise 30% – RBA

Analysis by the Reserve Bank of Australia suggests house values could jump 30 per cent over three years if borrowers believe the cut in interest rates is permanentproperty investment.

An internal RBA document released on Friday in response to a Freedom of Information request says that while the RBA is on alert for current ultra-low borrowing costs inflating a credit-fuelled asset bubble, so far, the central bank believes lending standards are prudent.

While our financial regulators are ready to act if necessary, apparently they don’t see rising house prices as a major risk.

Part of the reason the RBA is comfortable is that currently much of the housing demand is coming from owner occupiers including first homebuyers, rather than investors.

Housing Credit Growth

Fhb Finance Commitments

The RBA recognises that low interest rates will lift asset prices, but they believe in turn will increase wealth and household spending.

If anything the RBA see the biggest risk to the economy being high unemployment, but they suggest our stronger household balance sheets from low interest rates could help counteract the danger.

But there’s more than low interest rates that are going to fuel our property markets this year…

The number of properties for sale in Australia is beginning to dry up.

 Currently property buyers are heading back into our housing markets in droves, keen to get a foothold before property values surge.

But they are finding limited stock, with 7 of our 8 capital cities having significantly less properties for sale than 12 months ago.

Strong demand at a time of limited supply must lead to property price growth.

Capital City Sale

Homes For Sale

But don't get lulled into a false sense of security by our rising property markets.

As always correct property selection will be critical for the long-term performance of your investments.

Location will continue to do around 80% of the heavy lifting, so don't compromise.

You can't expect to get top investment performance from a secondary property.

This means that NOW is the time to take action and set yourself up for the opportunities that will present themselves in property this year.

Metropole Team Meeting

If you're wondering how to take advantage of the new property cycle you can trust the team at Metropole to provide you with direction, guidance and results.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

In “interesting” times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that's what you exactly what you get from the multi award winning team at Metropole.

If you're looking at buying your next home or investment property here's 4 ways we can help you:

  1. Strategic property advice. - Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now!  This will give you direction, results and more certainty. Click here to learn more
  2. Buyer's agency - As Australia's most trusted buyers’ agents we've been involved in over $3.5 Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective - that's something money just can't buy. We'll help you find your next home or an investment grade property.  Click here to learn how we can help you.
  3. Wealth Advisory - We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
  4. Property Management - Our stress free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years and our properties lease 10 days faster than the market average.

About Michael Yardney Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media.
4 comments

Yep ! No doubt the trusty ol metropole will deliver outstanding results in every market . Just ask them ! They will deliver you an smsf with bells and whistles they imagined for you. Dont worry you select few they will steer you clear of the perils ...Read full version

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Disappointed with that sensationalist headline, especially from this site. From the link, the statement is: "A permanent (temporary) 100 basis point reduction in the cash rate [may cause] real housing prices [to rise] 30 per cent (10 per cent) after ...Read full version

1 reply

I don't think so.

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