Property investment: Property investor demand to ease if rates rise

Already a subscriber?A further interest rate increase in the coming months could dampen demand from new property investors who might be spooked by the potential slowdown in capital gains.

Arjun Paliwal, head of research at buyers’ agency InvestorKit, said investor numbers had been increasing in the past year despite higher interest rates. “It’s quite possible investors will lose interest. Some may conclude that there’s no hurry to buy now.”“I suspect that the delay in interest rate cuts will dampen demand, at the same time, the longer we delay rate cuts, the greater chance we will see an increase in distressed sales,” he said.

“I think for investors, servicing their debt and making sure they have sufficient cash flow to service it, at least until they get some tax refund, that’s probably going to be the hardest part of holding an asset.” “I think that’s probably where a lot of investors are facing some hardship in their monthly servicing costs.”

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