Everyone is talking about an interest rate cut in May and that might very well happen, and if it does you watch the bottom of the Sydney property market fly.
I have been writing in all my newsletters for the past 5 months or so that I believe rents will back off in 2012 and landlords will no longer be king, as more buyers will move out of the rental market and start purchasing. Well this was confirmed by RP Data and Australian property monitors reporting that March was a month of stabilising rents in Sydney.
Understand everyone that the government are now determined to fire up the property market and the economy in general, and how they do this is not complicated. First of all interest rates get to a level where the gap between renting and buying becomes minimal, and once the market starts to move upwards people start to trade in the housing market again. Capital growth usually runs for about 2 to 3 years before interest rates get too high and the cycle starts all over again.
Understand if people see their property grow in value, they feel more secure in life and therefore happier and spend more money out there in the economy. It’s all about consumer confidence.