I am ready to buy an investment, but I am thinking I should hold off until interest rates rise by 1% or more. My thinking is that the prices will go down as people hold back on the factor that repayments will up and hinder their cashflow. The flip side is that of course at the moment interest rates are very low, which means if I buy something now it will be easier to service. A question for someone who have gone through an interest rate cycle or more, when is the better time to buy something, during high interest rates when prices are depressed or now during low interest rates (which have seen prices rise)...or does this not matter at all?
Buy now or wait for interest rates to peak?
- Thread starter DanielG
- Start date
Daniel
I think it depends on where you buy and what you buy.
If interest rates increase your borrowing capacity will decrease.
Also, higher interest rates don't automatically mean lower property prices.
Property prices could stagnate and creep up slowly instead.
Prices have moved a bit since the beginning of the year but not by much and not in all all areas. There are still good buys out there.
We bought our latest one 3 weeks ago and when this settles we'll try for 1 more.
Also, the first home buyers are slowly dissapearing because even if they manage to find some money for the deposit it's either not enough or they have no savings history and can't get finance.
I think it depends on where you buy and what you buy.
If interest rates increase your borrowing capacity will decrease.
Also, higher interest rates don't automatically mean lower property prices.
Property prices could stagnate and creep up slowly instead.
Prices have moved a bit since the beginning of the year but not by much and not in all all areas. There are still good buys out there.
We bought our latest one 3 weeks ago and when this settles we'll try for 1 more.
Also, the first home buyers are slowly dissapearing because even if they manage to find some money for the deposit it's either not enough or they have no savings history and can't get finance.
Buy whilst you can afford it. I'm looking to buy another IP on Monday, hopefully the prop didn't sell on the weekend.
Daniel, if you are buying in SYD or MEL then the only advice I can offer you is that the longer you wait at the moment, the more you'll pay.
There has been anout a 4-5% rise that has happened in the last 2-3 months (that is not reflected in RP Data) yet - because there is a 2-3 month delay on data collection too.
This trend shows no sign of abating from what I've been experiencing.
When rates were 17 & 18% way back, we had just had one of the biggest RE booms at that time. IR rises don't correlate to price falls in my experience.
Just buy Daniel...
Forget trying to time the market, it's the time IN the market that is more important... especially for a beginner.
Forget trying to time the market, it's the time IN the market that is more important... especially for a beginner.
Andy
I am confused....I thought you are holding off buying for the moment....
I am confused....I thought you are holding off buying for the moment....
Just buy Daniel...
Forget trying to time the market, it's the time IN the market that is more important... especially for a beginner.
buy now
don't try to 2nd guess the market ... i thought the sydney market would sink after the 2000 olympics ... & then it went on a 4 year run!
if you see a property that has good fundamentals ... location, transport, beach whatever & looks like good value & you can afford it (& will also be able to if rates rise) - then go for it
if you're uncomfortable with the potential for future rates rises then take out a fixed - or half/half
if you sit waiting to time the market you'll just kick yourself for eternity at all the opportunities you've missed!
don't try to 2nd guess the market ... i thought the sydney market would sink after the 2000 olympics ... & then it went on a 4 year run!
if you see a property that has good fundamentals ... location, transport, beach whatever & looks like good value & you can afford it (& will also be able to if rates rise) - then go for it
if you're uncomfortable with the potential for future rates rises then take out a fixed - or half/half
if you sit waiting to time the market you'll just kick yourself for eternity at all the opportunities you've missed!
'we had just had' is the salient sentence. Interest rates were high when the boom started (c1987) just after the government had removed the 13.5% interest ceiling. But they got higher and higher and along with recession growth pretty much stopped.
And it remained sluggish for at least 5-6 years after then (in many areas).
While interest rates were coming down, which was helpful for those holding on, there was still a high temptation to sell, especially for those whose jobs/businesses failed given prices were going nowhere.
Hey Sash..quite the opposite mate, I am holding off by force, I am over my 80% LVR...my hands are tied!!!
If you’re a long term investor, it shouldn’t matter. You’re best to get in the market now and let time do its work. It’s too easy to get stranded on the sidelines, watching and waiting for the best time to invest and never actually doing it. Just make sure you can manage the repayments if interest rates go up so even if prices move down, you’re not forced to sell during that time. Without a crystal ball, it’s hard to tell if prices will move down. They could well move up and you’ll be kicking yourself if you miss out investing at these prices.
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