The current Coalition government has shown on more than one occasion whilst they’ve been in power that they’re very keen to prop up the property market. But there is only so much stimulus you can throw at the market to bring forward demand. That’s all they’re doing by dangling carrots in front of people. When those carrots are dangled whilst interest rates are slashed at the same time, as has happened in 2020-21, it stands to reason that prices will go up. You need to study the cause and effect.
The number one rule of investing is buy low, sell high. Right now pretty much every property market in Australia is at its record high. Coincidence that they’ve all gone up hard in the last two years, when we’ve had no positive net migration? I don’t think so. The effect of ultra low interest rates is being grossly underestimated by most mug punters out there. Central bankers however, know them to be the elephant in the room.
Anyone borrowing to buy property now, whether on fixed rates or variable, has to be prepared for the very high likelihood they’ll be paying substantially higher loan repayments within two or three years. The best thing they can do to avoid a forced sale in a falling market, therefore losing much of their deposit, is make sure they don’t borrow anywhere near what the bank says is their borrowing limit.
