The decision by the Reserve Bank of Australia (RBA) to cut interest rates again at its December 2011 meeting is good news for the Australia property market, says Paul Bennion, Managing Director of tax depreciation specialists, DEPPRO.After a slump in activity Bennion predicts current falling interest rates combined with rising rental yields and very competitive property prices will generate renewed activity by property investors during 2012.”When the RBA started to increase interest rates in 2009/10, it became more difficult for investors to secure the necessary finance to purchase property,” he said.”In addition, many banks increased their interest rates even above those set by the RBA. The impact of these high interest rates has been a decline in activity by investors in most real estate markets throughout Australia.”According to Bennion, the slump in activity saw investors account for only 8% of all property buyers in Perth during September 2011, compared with previous figures of around 20%.”Current falling interest rates, particularly lower long-term fixed rates, will stimulate a recovery in the investment market,” said Bennion, adding that property investors are heavily influenced by long-term interest rates as most fix their rates to ensure certainty in repayments.Bennion added that the current trend of falling rental vacancy rates leading to higher rental yields for investors would also help to boost the investment property market in coming months.
A blog by Paul Bennion.
