Are you considering investing in property in Brisbane’s Inner City but wondering why apartment prices are surging despite the recent history-making interest rate rises?
Over the last year, the home borrower has been rocked by a series of rate interest hikes as a result of the highest inflation rate increases in decades. Experts from the big four banks remain split over whether the dust will settle with the current official cash rate of 3.85% or if rates could go higher.
As of May 2023, the average variable interest rate for investments stands at 6%, marking the highest rate observed in several years. Despite the increase in rates, rental incomes have continued to surpass these hikes, presenting a promising opportunity for astute investors to acquire cash-positive investments.
Despite the rate rises, the population growth in Brisbane City is a significant factor in increasing apartment demand, with more people moving to the city pushing prices in an upward spiral. The ongoing infrastructure development in the city has also generated substantial employment opportunities, further attracting people to the inner city. As a result, experts predict that apartment prices will continue to increase in the coming months.
The recent decision to lift interest rates has been influenced by higher-than-forecast increases in rent, according to the Reserve Bank of Australia (RBA). The RBA has been closely monitoring the property market and recent interest rate hikes are part of the RBA’s efforts to keep the property market in check.
The recent rate hikes have had a mixed effect on the property market. On the one hand, they have made it more difficult for buyers to secure loans, however, the rental increases have made property investments more attractive to investors, who are looking for long-term, higher returns on their investments.
Ray White Inner Brisbane Apartments is experiencing the lowest inventory levels in recent memory, accompanied by the shortest days on market. Buyers are acting quickly to secure these high-quality cash-positive investments. This fast-paced sales environment can be attributed to the strong demand for Brisbane City Apartments and the limited supply available in prime locations.
According to the predictions of the big four banks, there is uncertainty about the future direction of interest rates. CBA believes that 3.85% is the cash rate peak, while Westpac and NAB have pencilled in another potential rate hike in either July or August 2023, bringing it to a peak of 4.10%. ANZ has yet to make a firm current prediction.
Consumer confidence has taken a hit amid the generational inflation battle. However, with employment going strong, consumer spending relatively high, and many of the global disruptions calming down, the alarm bells ring quietly for now.
In conclusion, the continued growth of the population and the ongoing progress in infrastructure development will remain the primary factors driving increased rental income and apartment prices in the coming years.
If you are looking to invest in an inner Brisbane City apartment, now may be the right time to do so. Keep an eye on the market trends and consult with one of our trusted real estate agents to make an informed decision.
References: https://mozo.com.au/home-loans/articles/how-high-will-interest-rates-go-new-forecasts-from-westpac-and-nabhttps://www.theguardian.com/australia-news/2023/may/02/rba-interest-rates-reserve-bank-increases-official-cash-rate-to-385-in-shock-decision https://www.canstar.com.au/home-loans/average-interest-rates-home-loans/ https://www.abc.net.au/news/2023-05-16/consumer-confidence-down-amid-generational-inflation-battle/102350772 https://www.news.com.au/finance/economy/interest-rates/bad-indicator-finance-guru-mark-bouris-makes-bleak-rate-rise-prediction/news-story/7d4ceac748b35cd482c65c1459beb72b https://www.theguardian.com/australia-news/2023/may/16/decision-to-lift-interest-rates-influenced-by-higher-than-forecast-increases-in-rent-rba-says https://www.abc.net.au/news/2023-05-02/rba-interest-rate-rise-may-2023/102292616 https://www.theguardian.com/australia-news/2023/may/02/rba-interest-rates-reserve-bank-increases-official-cash-rate-to-385-in-shock-decision
By Nick Bendel from LoanMarket Nick Bendel is a professional journalist with more than a decade’s experience writing about mortgage broking, property, finance, economics and business. His work has been published in The Adviser, Mortgage Business, Real Estate Business, Elite Agent, Smart Property Investment and RateCity. The amount of money … Read more
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