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Historic low interest rates are driving investors back into the Gold Coast property market, which experts predict will drive up prices.
Property analyst Michael Matusik said investors were not getting a decent return on their money in the bank, the share market was still volatile and with money cheap to borrow, bricks and mortar was more appealing than ever.
“It is an exciting time if you are a property investor because accessing money is going to be cheaper and there is some assurity from the Reserve Bank of Australia that is not going to change in the near future,” Mr Matusik said.
“When the cash rate drops and it becomes cheaper to borrow money, it actually pushes house prices upwards.
“I wouldn’t be surprised if they rise by about 5 per cent in the next 12 months, which is quite contrary to what some people are saying.”
The central bank cut the cash rate by 0.15 basis points down to 0.1 per cent on Melbourne Cup Day, when RBA governor Philip Lowe said: “Given the outlook, the Board is not expecting to increase the cash rate for at least three years.”
That statement triggered an instant increase in inquiry from investors, according to Surfers Paradise First National Real Estate principal Rob Rollington.
“Investors aren’t liking the returns they’re getting from the banks so they’re coming back to real estate for better returns and potential for growth,” he said.
Surfers Paradise is now the most inquired suburb by investors in South East Queensland, according to a recent report by realestate.com.au.
“Investors are slowly returning, but they are sticking to smaller markets that are far more COVID-proof than others,” said REA Chief Economist Nerida Conisbee.
“At a suburb level, strong performance on the Gold Coast and Sunshine Coast has become more apparent.”
Units in Southport and Broadbeach have also seen increases in demand, making them more popular with investors since COVID-19.
John Fitzgerald, CEO of property investment company Custodian, believes the drop in interest rates will kick start the property investment cycle again.
“Many investors have sat on their hands during the COVID-19 pandemic,” he said.
“I think this will be the incentive to bring them back in. People who put their money in the bank are getting nothing for it.
“There is going to be a flight to fixed assets and that will drive up prices. I’m predicting as a result the Australian median house price will hit $1m in the next three to five years.”
Source: Real Estate AU