A timely perspective for property investors

The good news is that Australian residential property is considered generally considered to carry a moderate risk profile, particularly when compared to highly volatile asset classes like the stock market where investors get to see their assets rise and fall in value from one day to the next.

Having said that, the news this week that the Reserve Bank was surprising no-one by raising official interest rates would probably have got a few property investors revisiting their financial plans with one eye on their lending costs.

The mistake some property investors make is assuming that historical growth rates guarantee future growth rates. They don’t. Property markets tend to be cyclical, as anyone who has watched the Melbourne market over the past couple of decades will tell you. Periods of rapid growth are often followed by periods of slower consolidation, as we saw during the 2018 lending squeeze when momentum slowed, and when interest rates saw the market flatten out in 2022-23.

Now, it’s fair to say that interest rates have tended to be the key element of discussions about property over the past few years. When the RBA raised rates sharply between 2022 and 2024, mortgage repayments increased right across the country.

For leveraged property investors, this translated directly into higher holding costs. But interest rates impact far more than simply monthly repayments. They affect buyer demand and borrowing capacity, refinancing flexibility and overall market confidence.

With the Reserve Bank’s monetary policy setting the cash rate at 4.1 per cent this week, we need to keep in mind that there are still another half dozen Board meetings to come in 2026. That means six more opportunities to rates to go up again, to go down, or to remain steady.

What seasoned property investors will do is to run a few simulations to clarify what their cash-flow looks like in each scenario, so they have clarity before it happens. It’s far better to have a clear plan in advance, than to have a knee-jerk reaction later.

Of course, if you need any objective advice on the current rental market ort local property values, our team at Barry Plant Thomastown is always happy to assist. You can give us a call this week if you like, on 9466 3233.

Cheers,

Con Constantinou

Barry Plant Thomastown