Do lower interest rates and rising house prices mean it’s time to jump back into the real estate market?

It’s the great Australian dream. A home to call your own.

For decades real estate not only delivered security and comfort to bring up Australian families but also a cast-iron vehicle for wealth building, seemingly immune from the ups and downs experienced by other types of investment.

But then came the recent downturn, with falling house prices shaking our longstanding faith in bricks and mortar.

Signs of recovery…

In recent months green shoots have started to appear, at least on the eastern seaboard. In August 2019 Australian capital city house prices rose 1%1 after a 10.2% decline over the previous 22 months. This was the second rise in a row and the strongest since April 2017.

Sydney and Melbourne house prices rose 1.6% and 1.4% respectively—the third gain in a row for both cities2 - while auction clearance across capital cities increased above the 70% mark3. Prices also rose in Brisbane (+0.2%), Hobart (+0.5%) and Canberra (+0.8%).

…but a mixed bag

The picture wasn’t so rosy in other parts of Australia, with house prices falling in Adelaide (-0.2%), Perth (-0.5%) and Darwin (-1.2%). This left Perth prices down 20.6% and Darwin prices down 30.7% from their 2014 high4. And overall house prices across Australia were still down 5.9% from 12 months earlier5.

Stepping into spring

Come the spring selling season and the recovery appears to be gathering momentum, with house prices up 0.9% in September 2019—the biggest monthly gain since March 20176.

And there appear to be plenty of positive signs for home buyers and investors, including:

  • relaxed borrowing rules making it easier to access credit7
  • official interest rates cut to a new low of 0.75%8, and
  • the prospect of more cuts, with AMP Chief Economist Shane Oliver flagging the possibility of rates as low as 0.25% by early 20209.

So is this a good time to jump back in to the property market?

Like any type of investment, it’s difficult to second guess house price and interest rate fluctuations. You could be better off focusing on factors within your control, like your savings plan, mortgage repayments and overall investment strategy.

Tips for first home buyers…

…existing homeowners…

…and property investors

  • Think about how bricks-and-mortar real estate fits into your overall investment portfolio.
  • Compare the yield you’re getting on your investment property with other asset classes and consider whether there are any other ways of investing in real estate.

So whatever your personal situation—and whatever happens with house prices and interest rates—you’ll be in the best position to reach your goals.



1,2,4,5 Australian capital city home prices rebound in August, AMP Capital, 2 Sep 2019
6 Housing recovery gathers momentum through first month of spring, with national dwelling values up 0.9%, CoreLogic, 1 Oct 2019
3,7 Macquarie Property Insights Report, September 2019
8 Reserve Bank of Australia, Monetary Policy Decision, 1 October 2019
9 AMP Capital Market Update 11 October 2019 by Shane Oliver, Head of Investment Strategy and Economics and Chief Economist
10 High times for low interest rates, AMP, 28 Aug 2019

Subscribe to our newsletter

Important information

This information is provided by AMP Life Limited ABN 84 079 300 379 (AMP Life). It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances and the relevant Product Disclosure Statement or Terms and Conditions, available by calling 13 30 30, before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

All banking products are issued by AMP Bank Limited ABN 15 081 596 009, AFSL and Australian Credit Licence 234517.

All information on this website is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek professional advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability for any resulting loss or damage of the reader or any other person.