In the current economic climate, understanding market trends and their implications becomes a necessity, particularly for those who invest in real estate. Let’s delve into the current scenario and discuss how these shifts in the market can influence and impact your decisions and strategies going forward.

Again, we have witnessed interest rates increasing by an additional 0.5%, positioning the new base rate at a substantial 5.0%, with further increases on the horizon. This rate hike is significantly influencing the landscape of property investment, leading to consequential behavioral changes amongst landlords
and buyers.

Landlords are increasingly finding themselves in a position where they’re inclined to sell. This is due to the increased difficulty of refinancing their properties and the fading profits when transitioning from fixed rates to managed rates, which can reach a staggering 8-9% per annum. As a result, many landlords are exploring the idea of selling their underperforming properties, in hopes of salvaging their negative cash flow/equity situation.

Simultaneously, potential buyers flush with cash are biding their time, waiting for highly profitable opportunities to surface. These investors understand the power they hold, especially when the market is getting dry on financing options.

However, investors who are reliant on raising finance are encountering challenges. The hike in interest rates is causing these investors to put down more substantial deposits, complicating their purchasing process, creating blockages in their pipelines or forcing them to rescind offers.