Focusing on just interest rates might mean you miss out on investment opportunities

31 July 2024, 4:23 am

Focusing on just interest rates might mean you miss out on investment opportunities

Smart investors are thinking beyond the headline interest rate to set themselves up for strong investment returns.

While interest rates are one factor to consider, focusing solely on them can be misleading.

Investors should also consider other aspects such as long-term capital growth and high rental yields in the mix to ensure strong returns.

Australia has a stable and resilient property market, and it can be a sound investment choice regardless of short-term interest rate levels.

If you’d sat around and waited in the 1970s for interest rates to come down, you would have been waiting a long time. In 1971 the interest rate was 7% and didn’t go down for another 20 years. In the meantime, the average home price in the Australian property market quadrupled!

Investors should consider the broader economic and demographic trends that drive the market’s strength over time.

Here are five benefits of considering property investment right now:

1.  Economic Resilience and Growth

Australia’s economy is strong, resilient and growing, making it an attractive destination for property investment.

The country’s robust economic framework, characterised by stable GDP growth and low unemployment rates, creates a favourable environment for real estate investment.

The post-pandemic recovery has been swift, supported by government stimulus packages and significant infrastructure projects.

2. Favourable Borrowing Conditions

Although interest rates have risen from their historic lows, they remain relatively low compared to past decades. The Reserve Bank of Australia (RBA) has kept the cash rate at 4.35% to manage inflation.

3. High Rental Yields and Strong Demand

Australia’s rental market is experiencing robust demand due to population growth, urbanisation, and a growing preference for renting among younger demographics.

Major cities like Sydney, Melbourne, and Brisbane are witnessing high occupancy rates and attractive rental yields, providing investors with a steady income stream.

Strong immigration numbers are also fueling rental property demand. Governments are scrambling to introduce schemes to increase the volume of home and apartment buildings in an environment where the construction industry has been under pressure from multiple company failures.

4. Government Incentives and Support

The Australian Government still offers incentives and support measures to encourage property investment.

Grants for first-home buyers and tax benefits on expenses such as loan interest, property management fees, and depreciation can significantly enhance the profitability of property investments. These incentives help stimulate demand and support property values

5. Long-Term Capital Growth

Australian property has a proven track record of strong long-term capital growth. Property values in major cities have consistently gone up, driven by factors such as limited supply and high demand. Investing in strategically located properties near infrastructure developments and employment hubs can maximize capital growth potential.

It is recommended that you review your own situation to see how property investment could fit into your financial plans and goals.

Contact Finwell Group to organise a complimentary, no-obligation initial review of your circumstances so we can help you identify what would be best for your specific circumstances.

Contact us today on (03) 9017 3235 or email better@finwellgroup.com.au for an initial review valued at $249.

Let’s see how it can fit into your plans.

That is why focusing on just interest rates might mean you miss out on investment opportunities

The information in this article is general in nature and does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.