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Rate cut effect unclear

04 June 2013 Reporter

Investors will be watching any rate movements closely later today, but it’s unclear what effect they may have on the market.

Speaking to Residential Property Manager's sister publication Smart Property Investment, Key Asset Management’s Grant Simpson explained that he’d noticed some significant trends affecting investors at the moment.

Firstly, he explained, investors are looking very closely at where they can increase their rent, “trying to capitalise on the push of rents going up in Sydney, which has been a constant now for two to three years”.

Secondly, however, “they’re focused on and are concerned with interest rates dropping and rents going up”.

While from a distance these may sound like ideal investment conditions, he said that many of the landlords he has spoken to are trying to find a very careful balance with their rental increases.

“[Many investors] are concerned about their current tenant leaving and the pool of tenants becoming smaller, and therefore they’re really thinking about how much they can push those rents before the tenant can move out and buy themselves,” he said.

These comments come as many industry spokespeople believe the rates will boost confidence in the market and first home buyer numbers.

SQM Research's Louis Christopher agrees with this sentiment, noting that "No doubt if the RBA does cut again we’ll see even more first home buyers in the market and even more investors in the market".

Rate cut effect unclear
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