Inflation Eases: Property Market Opportunity For Investors?

Inflation Eases: Property Market Opportunity For Investors?

Two interest rate cuts by year end could change the market and create opportunities for property investors.

New data from the Australian Bureau of Statistics shows that inflation is at its lowest point since 2021. The decrease in inflation indicates that the Reserve Bank of Australia may reduce interest rates which could potentially benefit individuals interested in investing in property.

ABS Chart of All Groups CPI (Annual percentage change)

Here’s the breakdown:

  • Inflation is decreasing. The inflation rate in December was 4.1%, which is lower than the previous year’s rate of 5.4%. This is the lowest rate since late 2021. The latest quarter saw only a modest 0.6% increase in the CPI.
  • Inflation peaked at 7.8% in December 2022, leading the RBA to raise interest rates.
  • Some things got more expensive, like insurance which went up by 16.2% and tobacco prices which increased by 10%.

Despite certain goods and services experiencing price hikes, the property market remains largely unaffected, showcasing its resilience.

Dwelling values show impressive resilience.

Recent data by CoreLogic revealed national dwelling values increased for the 12th consecutive month, up by 0.4% in January. Perth and Adelaide led the way, increasing by 1.6% and 1.1% in the month to January.

In Sydney, values increased by 0.2% in the month, contributing to an 11.4% rise over the year. Similarly, Melbourne saw a 0.1% increase in January, resulting in a 3.9% higher value over the year.

Despite facing challenges such as spiking interest rates, living costs and affordability issues, Australian dwelling values achieved strong growth of 8.7%.

Increased demand is likely to continue thanks to high migration and a tight rental market.

Rents went up by 0.9% in the quarter, leading to a yearly increase of 7.3%. Sydney and Brisbane saw the biggest rises, with 8.5% and 8.4% respectively.

So what does this all mean for potential property investors? 

  • A possibility of interest rate relief exists. Inflation is cooling faster than expected. This has led to discussions among economists and markets. They are considering a potential 0.5% interest rate cut by the end of the year.
  • A 0.5% rate cut could save someone with a $600,000 mortgage around $200 each month. This could help borrowers and boost the property market.
  • Improved rental yields: With lighter mortgage burdens, landlords can anticipate greater rental income, boosting overall investment returns.
  • Changing market conditions offer a special opportunity to position yourself strategically and take advantage of new trends.

What to consider

Investors who adapt to changes in the housing market can find great opportunities in the next phase of the property cycle.

Seize this moment to sharpen your investment acumen and claim your share of the evolving property landscape.

At Wealth Street, we understand the complexities and emotional rollercoaster that comes with planning for a financially secure future. You need a clear roadmap to grow your wealth and plan for retirement.

You may not know where to start or how to manage finances and investment options, which can leave you feeling overwhelmed and uninformed.

Our experienced team is here to simplify your journey and help you reach your financial goals.

Start a conversation with us today.


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