Introduction
Should property investors be worried about rising interest rates? Let’s see if historical data can provide any clues.
RBA Cash Rate
Here’s the history of the RBA cash rate since 1990.
It’s been mostly on a downward trajectory, so unfortunately, we don’t have many historical cases of rising rates to examine. Here they are highlighted.
There are only 5 cases in 31.5 years.
Observations
Correlation to Capital Growth
Some parts of this chart make sense and other parts don’t. Take for example the rising rate of growth that started in late 1995. I’ve highlighted it in green below.
There is definitely “some” relationship between interest rates and capital growth rates. But clearly there are other factors at play.
Other Factors
And remember, people still need a place to sleep at night. Even in high interest rate environments, people still buy houses.
Here are a few other counter-catastrophe arguments…
Record Low Vacancies
Low Stock Levels
Strong Demand & Supply
Where to Buy?
The markets that have suffered the most during tough times, like rising interest rates, are the prestigious markets. These are in affluent areas of high socio-economic demographics. Core Logic’s historical Decile reports confirm this.
Where to Buy?
