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Growth Conditions across Brisbane 20-10-2022
No question that rising interest rates have played a major part in taking the heat out of the real estate market during the course of 2022. People have been shocked at how frequent and how much the interest rate rises have been. One of the quickest upswings in interest rates in history. Of course, this has been driven by the outbreak of inflation, but from my experience, it’s also because the Reserve Bank left it too late to put some more modest increases in interest rates late last year.
So, for many, the sudden and sharp rise in interest rates spooked them. A big question was, where to from here? It caused many buyers to simply park their buying interest and to sit on the sidelines, however many buyers are starting to read the tea leaves with some signs that the three primary drivers of the sharp increase in inflation are starting to be brought under control, and by the very fact that the Reserve Bank had a lower increase in their latest upward move in interest rates. After several months of over half percent rises, it was only a quarter percent.
Anyone who looks closely at the money markets is also seeing that the market is reading that interest rates will peak somewhere within the next 6 months, based on all the information that we have at hand. No question that there is going to be some pain for current borrowers who borrowed to their maximum 12 months ago and did not factor in interest rate rises. Anyone borrowing today, they can borrow less, but with some comfort in knowing that we must be getting close to the top of the current interest rate cycle and that perhaps a year or eighteen months from now interest rates will start coming down.
Many buyers have been simply assessing the lay of the land, and with increasing confidence that they can read what is happening with interest rates they are now back out believing that this is a good time to buy before lower interest rates bring more buyers back into the market. Most people know there is an underlying supply problem, and that will continue to have an underlining strengthening of the market over time, and certainly until there is some meaningful increase in the supply of properties to buy.
The key thing to watch in terms of the future directions of the real estate market is the inflation figure and how quickly it responds to higher interest rates.
https://wordpress.com/post/ljgillandrealestate.wordpress.com/146750
Growth Conditions across Brisbane 20-10-2022 https://ljgillandrealestate.wordpress.com/2022/10/20/growth-conditions-across-brisbane-20-10-2022/ via @GillandDebello
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