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Prepare for risks despite rate cut

By webmaster
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While yesterday’s rate cut will be good for investors they should still prepare for risks ahead, a leading property research and investment firm has warned.

The reduction in the official cash rate points to broader macroeconomic issues and buyers should look carefully before using it as a reason to buy, according to Aviate Group managing director Neil Smoli.

“From a buyer sentiment perspective, the second consecutive rate drop will positively impact affordability and preserve what already was an attractive landscape for investors,” Mr Smoli said.

Those in secure employment can benefit from the current economic environment regardless, with price, income levels and rental yields all currently favouring investors.

“The banks, having lowered fixed interest rates in recent times, were already effectively resigned to a downward movement in rates. Astute investors recognised this and this latest rate cut should encourage other prospective investors to become active as well,” he said.

The second consecutive rate cut could be viewed as recognition of potential turmoil ahead.

“More than ever property investors need to ensure they take every precaution to mitigate risk and approach investment opportunities with security front of mind,” said Mr Smoli.

“It would be a mistake to view the downward shift in interest rates as the sole catalyst to pursue a property investment. Extensive research into the many factors that can influence the success of an investment, coupled with detailed macroeconomic analysis as it relates to specific markets and properties is more critical than ever.”

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