How low can interest rates go?

Despite the RBA’s decision to keep the cash rate on hold at its April meeting, economists and analysts have factored in at least one if not two rate cuts before year end.

The historically low interest rates have motivated property owners throughout the country for the past three years.

Sydney and Melbourne have led the activity, with other markets such as Brisbane and regional areas slower to react, improving in value gradually over the past 12-18 months.

Luxe Commercial managing director Chris Sales started to see a resurgence from investors for Sunshine Coast property in late 2014.

Confidence has continued to gather momentum in the first quarter of 2015, which is expected to carry through the rest of the year. 

“I don’t think we’ve seen the best yet. I think further rate cuts will lead to a lack of returns for anyone holding cash and a hot share market will be making some investors nervous,” he said.

“We’re starting to see the most conservative of buyers and investors venturing into the market. They’ve done the sums and assuming they have equity or some savings have decided now is an opportune time to make a purchase.”

Property with long-term reliable tenants, in locations close to major transport hubs such as warehouses or light industrial offerings are achieving solid yields and significant returns. 

Demand for office space is also starting to increase as businesses grab the opportunity to secure high quality spaces at good rates.

As long as employment in regional areas such as the Sunshine Coast continue, Mr Sales said further interest rate cuts in 2015 would aid confidence further and underpin the improving market significantly.

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