Low interest rates - A positive sign for the property market

The property market is starting to warm up, along with the weather and with interest rates at an all time low, the coming months are looking extremely positive indeed.

After what has been an extraordinary year of unprecedented events, the economy is a little worse for wear and unemployment is soaring. As a result, Reserve Bank of Australia has significantly lowered interest rates to boost the economy and get things back on track. Which is great news for the property market.

Traditionally when interest rates fall, people can spend more money. Those who have been considering buying a property are more likely to go ahead with the decision. Rather than sitting on the fence, they move forward and take the plunge. This might be first homebuyers finally entering the property market, or those wanting to upgrade and move into a bigger property. Low interest rates mean that these prospective buyers can afford to spend more money and are likely to do so.

Secondly, buyers have more borrowing power, which means they can afford to get finance in order to buy their new property. And they can borrow more money than they had anticipated, and so have more money to spend on a property.

As a result, there are many more serious buyers looking to purchase. But this does not necessarily mean that more properties are available. It all comes down to supply and demand. Low interest rates increase the demand for properties, creating a shortage of supply. This increases competition between buyers and a rapid rise in prices.

Right now, interest rates are rock

bottom, which makes the outlook an exciting one for the property market. More people are ready to buy, the demand for properties will increase – and so will the prices. The property market is already showing signs of an upward movement, and this is will only improve in the coming months.

The other major factor at this time of low interest rates is the government support now available to first homebuyers. In NSW, those looking to buy their first home may benefit from the First Home Buyer Assistance scheme and the First Home Owner’s Grant (new homes) scheme. Some may be able to benefit from both. Match this up with low interest rates and you will see an increase of first homebuyers out there looking to purchase.

So if you want to sell, then now is the time to do it. As market activity increases, agents have the ability to achieve enormous prices for residential properties. And with more people waiting to purchase with their finance ready to go, properties will not only sell for more desirable prices, but also sell quickly, with less time on the market.

Most real estate agents have access to a database of prospective buyers and when the right property presents, they immediately contact those who might be interested. Now, with demand starting to far outweigh the supply, prices will start to rise, as people will be in the position to buy what they want – and ready to pay accordingly.