26Nov

Property owners confident despite stalled market

Despite declines in property prices in October and what has been a relatively stagnant last couple of years in the housing market, property owners are buoyant and confident in their investments according to a new research report released by BDRC.

77% are rated as being positive about their investment with a further 1 in 5 planning to buy another investment property in the next 12 to 18 months.  The report states that owners are confident their property will deliver good returns to them in the longer term with many owners rating the property market as a better place to have their money than the recently volatile financial markets.

Link: Lords of Property Confidence – News.com.au

At Ark Total Wealth we believe this high level of confidence in the property market is reflective of the recent moves by the RBA to lower interest rates.  Variable rates have tumbled to below 6% and fixed rate mortgage options at below 5.5% pa are now common in the market place.  Clearly owners are happy with dramatically reduced holding costs for their properties in the interim.  Meanwhile, rental market tightness has built over the last couple of years with modest increases in rent in the Sydney metro area.  This combination of higher rents and lower interest rates has is having a very positive effect on owners cashflows and they seem content to wait out any market stagnation.

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