Even with no more rate rises (but there is likely to be a couple this year)- from an investment point of view ..
For a Melbourne property investor .. A 4% gross return = a 2% net return in reality(after ongoing maintenance and replacement expenses + rates etc..)... the investors are being priced out as they can't generate the required net yields to service the investment loan at 8%.
The yields are too low by about 2% at the moment - so the house prices need to fall by at least 10% (ideally by 20% or more)to start bringing back the investor.
As an investor I can make 6%(and likely to rise) with my money sitting in a short term bank deposit - vs I can borrow at 8% to earn 2% net = a 6% loss.
A 6% gain vs a 6% loss = I'm 12% better off as an investor keeping my money in the bank at the moment and deferring my next property purchase - in a flat and falling market, with a property glut.
