Low interest rates recognised as catalyst for strengthening real estate market

By the resi financial blog team, 25 June 2014

Low interest rates boosting Australia real estate

The Australian property market has undergone some incredible growth over the last year, with momentum during 2013/14 expected to continue well into the future. This could present a number of opportunities for anyone considering taking out a home loan and moving into the property market. Regardless of whether you're a potential owner occupier or looking to expand your investment portfolio, there's something for everyone. 

The latest report from BIS Shrapnel has pointed out the growing strength of the real estate market, with low interest rates and a tightening market - especially in capital cities - helping stimulate buyers across the nation. In fact, this support of home prices is expected to remain intact until at least 2016, providing varying degrees of confidence across the real estate sector for both buyers and sellers. 

BIS Shrapnel Senior Manager Angie Zigomanis said the current prices seen in Australia are "sufficiently attractive" to maintain price growth into the future along with retained interest rates. For example, the current standard variable rate across Australia is 5.95 per cent which, outside of GFC emergency rates, is the lowest seen across the nation in over 40 years.

"The low interest rates have had minimal impact on first home buyer demand, which has weakened considerably as state governments have removed incentives for established dwellings in favour of targeted incentives for new dwellings. However, this weakness has been more than compensated for by the strength of next time buyers and investors," said Mr Zigomanis in a June 23 statement. 

Furthermore, the projected population growth expected in the coming years will push up demand for accommodation and rental properties. This could present a brilliant opportunity for potential investors to secure a slice of the real estate market in their local market ahead of the impending expansion. 

Categories: Home Loans, Property Investment