Interest Rates - Investors Decisions on Hold for the Moment.

The news of an interest rate rise may have a slowing affect on investor sentiment this week but most will be waiting for the outcome of the Federal Election before making any decisions. The latest interest rate rise, concerns of an international credit squeeze and the upcoming Federal Election will cause investors to think hard before entering into new property transactions over the next month or so.

Investors are likely to be more focused on fixing their rates rather than seeking new investments given the prospect of additional increases in the New Year. A change in Government may provide even more uncertainty keeping some investors on the sidelines. The upside is that, in some areas there will still be some bargains to be had as those already under stress will be looking to sell quickly.

ABS figures on House Prices released this week, show there has been an average 10.6% increase in house prices across Australia since September last year. Perth was the lowest at 2.8% with Sydney next at 5.2% and Brisbane the highest at 18.1%. The last quarter figures show that house prices are moving quickest in Melbourne and Adelaide, which makes sense, as both cities are the most affordable at the moment.

The latest rise in interest rates is likely to create further demands on housing in both Melbourne and Adelaide. Melbourne has seen net positive interstate migration this year showing that people are strongly attracted to more affordable areas.

A strong economy driven by the resources boom, jobs and wages growth and the continuing influx of skilled labour into Australia creating demand for housing are all factors that have leading to the current situation. Given that these conditions will remain with us for some time it is not likely that investor sentiment is going to be affected for long.

Media Release: 8-Nov-2007 John Moore President - The Property Investors Association of Australia Inc. Phone: 02 9499 9499