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What rising interest rates means for Perth property investors

By Urban Springs Marketing

Most people with a mortgage would have received multiple emails over the past few months with consistent increases in interest rates. And this does not show any signs of slowing down; in fact, rates are rising at an unprecedented pace. Do we want to bring up inflation and the gap between wage growth and how this relates to paying a mortgage? Probably not.

We could use the word unprecedented again, but what do these increases mean for Perth investment property owners? It means holding costs will be raised for the investors with a variable rate loan.

Perth is one of the most affordable capital cities in Australia

The year 2021 proved to be one of the strongest years in the property market despite the onset of a global pandemic. As our WA borders were shut, the prices of Perth properties continued to climb with a median price of $520,000 (the median value of a Sydney property is $1,098,412 for some more context). Despite this rise, Perth remained one of the most affordable capital cities to purchase a home.

With WA borders open for domestic and international travel, we have seen an influx of people choosing to move to our state for new job opportunities. This means rental properties are in high demand to keep up with the new residents.

This does not mean every suburb will perform equally. Factors like walking distance to the shops, schools, amenities and more will be looked at favourably. More companies are offering remote positions, which means the commute to work has been eliminated, and people are suddenly taking lunchtime walks and paying more attention to their local area.

The properties in the City of Belmont, including Kelmscott, Carlisle, Ascot and Rivervale, to name a few, provide valuable properties for Perth investors because of the facilities that available locally and the proximity between Perth city and the Airport making it an ideal location for FIFO or city workers.

As an investor, should you be concerned?

One of the most critical skills of investors is to be able to spot cyclical trends in the market. Lenders have already assessed investor loans at a buffer above the actual rates since October 2021. Your lender has ensured your finances can comfortably cope with the increases.

The rising rates mean rent will continue to increase, and investors will experience more deductions and tax benefits which is an ideal result. We do not see the rate increases as a major concern for investors.

Living in Perth means rental rates can be increased every six months, allowing investors to keep up with climbing interest rates.

Advice for upcoming investors

Contacting your accountant and speaking about your financial situation should be the first thing on your to-do list before starting on your investment property ownership journey. They will help you budget and give professional advice on how to proceed in the best way for your unique situation.

Keeping this in mind, maybe now is the time to consider purchasing an investment property of your own

Ray White Urban Springs can help you find an investment property to suit your needs and budget. Our property management team can also help you find the right tenant and make good rental returns on your property. Get in touch with us today to discuss the options that may be available to you. Call Deborah Horder on 0422 098 029 or for a friendly chat anytime.

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