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2022 Interest Rates & Inflation Crisis: How Should Investors React?

| Colin Lee |

If the last few years have taught us anything, it’s that life happens.

It’s no secret that interest rates have been on the rise since the beginning of this year, with the Reserve Bank of Australia announcing many cash rate increases. 

Not only have interest rates been rising, but these cash rate increases have also consequently resulted in inflation. 

And, if you’re sitting at home wondering whether now is a good time to invest in property, whether the interest rates will affect the property you’re able to purchase, and whether the policies of a new government will work in your favour – you’re not alone!

Our answer is simple: understand the fundamentals of the property market!

Understand what drives the property market, what pushes prices up, and emerging market trends. 

Ultimately, supply and demand are what drive the property market up.

In today’s climate, it’s important to know and understand the facts and figures so you’re able to make informed decisions. Don’t let emotions and fear get the better of you. 

If we look at the last 30-40 years there are many events that have happened that would deter people from investing in the property market. But, if you look at the facts, property prices have increased by 6.8% on average for the last 40 years. 

Why do properties continue to grow?

In the midst of covid, the global financial crisis, the Russian-Ukraine war, and now, rising interest rates – property prices have continued to rise. 

Australian properties have been proven rock solid regardless of these world events. 

In fact, in 1960 interest rates sat somewhere between 5%-6%, and in 1990 they peaked at 17%.

That’s an interest rate increase of 12%!

This proves that in the midst of world events and external factors, property prices continue to rise.

They continue to rise because the property market is not driven by interest rates. 

While this rate increase may have affected people’s confidence, it didn’t affect the fundamentals of property. Relying on facts and figures will always prove beneficial when it comes to investing. 

But what about inflation?

Many people may be wondering whether inflation will affect the price of properties. 

The short answer: inflation is a non-factor when it comes to property. 

This is why it’s so important to understand the facts and rely on the fundamentals of property. 

Property trends to look out for in 2022 and beyond

If you’re looking to purchase an investment property in 2022, it’s a good idea to understand property trends and what people are looking for. The most searched terms relating to properties this year have been: 

  • Large livable space
  • Additional study or home office

Moving forward this is what people will be looking for when it comes to rental properties and buying their own homes. 

To discuss how you can confidently invest in the property market during 2022, book a discovery call today

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