Interest rates June 2023

Interest Rates update - June/July 2023

Perth Buyer's Agent Simon Deering

Author

Buyer's agent and co-founder

Interest Rate Increase in Australia, June/July 2023

Understanding the recent interest rate hikes

Hello, everyone! I’m Heath Bassett, buyer’s agent and co-founder of from You&Me Personalised Property Services, and I hope you’re enjoying this crisp Saturday morning in Perth as much as I am. Today, I’d like to tackle a topic that’s on everyone’s minds – the current state of interest rates.

Significant changes in interest rates

Over the past 13 months, we’ve witnessed significant changes. The Reserve Bank of Australia (RBA) took the interest rates from a historic low of 0.1% to 4.1%, shaping the financial landscape for the entire year. Let’s delve into what this means for all of us.

Implications of interest rate hikes on homeowners

Financial impact of interest rate hikes

In the past three months alone, we’ve experienced an astounding 12 interest rate hikes. As discerning homeowners, I’m certain you’re aware of these developments. However, let’s delve into the real implications of these changes. Consider, for instance, a $500,000 mortgage taken within the last 13 months. During this period, your monthly repayments have surged by a substantial $1000 to $1100 on top of what you are already paying. This significant financial impact is an essential aspect to be mindful of in today’s property landscape.

These interest rate hikes are substantial and particularly impactful for most families in Australia. To grasp the full extent of the financial burden, let’s examine it on a weekly basis. We’re looking at approximately $250 to $275 per week, a considerable sum that needs to be sourced from your pocket, and it’s important to remember that this is after taxes.

Necessity for prudent financial planning and informed decisions

Effectively, this translates to an additional $340 in weekly earnings that your family must now generate just to cover the repayments that were well within reach 30 months ago. It underscores the urgency for prudent financial planning and highlights the necessity for informed decisions in navigating today’s property landscape.

The future of interest rates and inflation

Impact of inflation on interest rates

Personally, I value financial stability, and I believe many of you share the same sentiment. An additional $300 per week is a substantial amount to sacrifice. The continuous surge in inflation, which has reached record highs, further compounds the situation, and there’s no indication of it slowing down anytime soon. The pressing question on everyone’s mind is the future of interest rates, and rightfully so.

Monitoring inflationary trends

As I contemplate this, it becomes evident that the path of interest rates is intricately tied to the trajectory of inflation. Monitoring inflationary trends will be crucial in discerning the potential course of action for interest rates. Being proactive and well-informed in these dynamic financial times is key to safeguarding your hard-earned money.

The correlation between spending, inflation, and interest rates

Investing in property during interest rate hikes

With the current economic landscape, it’s crucial to understand the correlation between spending, inflation, and interest rates.

Increased spending contributes to inflationary pressures, and as a consequence, the Reserve Bank of Australia (RBA) may resort to raising interest rates as a measure to curb excessive spending. Therefore, investing in your house becomes an attractive proposition. This explains why house prices have been on a continuous upward trajectory and show no signs of abating. Remarkably, the interest rates in our area are now on par with those in Sydney, Melbourne, and Canberra, underlining the significance of this trend in the broader national context. It’s prudent to acknowledge these factors and make well-informed decisions to secure our financial future amidst these evolving dynamics.

Sydney's real estate market
Sydney’s real estate market is hard to get in

Capitalizing on the unique circumstances in perth

An intriguing aspect of the current market dynamics is the relative shelter we’ve experienced in Perth. While other major cities like Sydney, Melbourne, and Canberra have faced interest rate hikes, we’ve been comparatively shielded, paying an average of around $620,000 to $640,000 for properties. This means that over the last 13 months, we’ve been spared from the burden of the additional 4% interest rate surge that those in higher-priced markets have endured.

Influx of external investments

As a result, we’ve witnessed a fascinating trend where individuals from the other states are redirecting their investment focus. They are pulling their money out of their local markets, seeking opportunities in Perth, as it offers a more favourable and stable real estate environment. This influx of external investments bodes well for our local property market, and it’s essential for us to stay vigilant and capitalise on these unique circumstances. By being proactive and leveraging our advantageous position, we can make strategic decisions that align with our financial goals and aspirations.

Opportunities in the Perth property market

Perception of house prices varies depending on location

The recent interest rate hikes have brought investors from cities like Sydney, Melbourne, and Canberra to divert their capital to Perth (or Western Australia). While locals in Perth may feel that house prices are surging exponentially, those from other metropolitan areas see a golden opportunity. They find themselves elated at the prospects, exclaiming, “Imagine that! I can own a spacious four-bedroom, two-bathroom property right on the beach for just $550,000!”

This influx of external investments is transforming the real estate landscape in Perth, providing buyers from other cities with excellent value propositions that were previously beyond their reach. As we observe these developments, it becomes clear that the perception of house prices can vary significantly depending on one’s geographical perspective. The current scenario calls for savvy investors to seize the moment and explore the diverse range of options available in the thriving Perth property market, where promising opportunities await those who are ready to act.

Best time to buy property in the current property market

Sydney’s property market, with its staggering $2 million price tag, has prompted investors to redirect their funds from the East Coast to our region. This influx of capital has brought both investments and potential new residents to Perth. Consequently, the property market here shows no signs of slowing down; in fact, house prices continue to surge. Houses are now selling within days and weeks, indicating the high demand and competitive nature of the market.

For those contemplating their next move in this dynamic environment, the question naturally arises: “When is the best time to buy property?” This is a question we often hear, and the answer remains steadfast – the best time is when you are ready to make a sound investment decision aligned with your financial goals. Given the current landscape, it becomes even more crucial to stay informed, assess the market trends, and act decisively when the right opportunity presents itself. With a proactive approach and a clear understanding of your objectives, you can capitalize on the prevailing market conditions and make a wise investment in Perth’s thriving real estate sector.

More and more buyer's from Melbourne are buying Perth's properties
More and more buyer’s from Melbourne are buying Perth’s properties

Looking to buy a property in Perth WA?

The adage holds true: “The best time to invest in property is always yesterday.” Throughout history, property values have consistently appreciated, and this upward trend is likely to persist. If you have any inquiries or seek further information on the Perth property market, feel free to ask.

Get in touch with us: here.

Perth Buyer's Agent Simon Deering

Buyer's Agent, Co-Founder at You&Me Personalised Property Services

Helping property buyers get into Perth and Brisbane property faster and for less.

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