The RBA has recently raised interest rates again, taking the cash rate to 4.60%, with talks about another rise coming soon.

For mortgage holders, that means one thing: higher repayments.

But when it comes to Australia’s property market, the impact isn’t quite as simple as “rates go up, property goes down.”

In fact, interest rates are only one piece of a much bigger puzzle.

Are interest rates targeting the wrong people?

The Reserve Bank raises interest rates to slow spending and bring inflation under control.

The problem is that rate rises don’t affect everyone equally.

Roughly a third of Australian households own their home with a mortgage, while another third own their property outright and close to another third rent.

So when the RBA increases rates, it’s borrowers who feel the most immediate impact.

As OpenCorp Executive Director Michael Beresford recently argued, this raises an important question: are we putting too much pressure on mortgage holders to solve an inflation problem they didn’t necessarily create? 

Inflation is influenced by far more than household spending. Government spending, business investment, wages, energy costs, global events and supply constraints can all contribute. 

Yet mortgage holders continue to be one of the groups most directly affected by attempts to bring it under control. 

What does another rate rise mean for property investors?

Higher rates mean higher borrowing and holding costs. That’s the reality.

But they don’t necessarily mean property prices will fall.

Australia isn’t one property market, and interest rates aren’t the only factor determining whether prices rise or fall.

Supply and demand still matter.

Population growth, housing supply, rental vacancies, affordability, employment and buyer demand can all influence individual markets. 

That’s why simply waiting for interest rates to come down isn’t necessarily an investment strategy. 

We’ve already seen property markets perform strongly through periods of rising and elevated interest rates. 

For investors, the more important question is whether the fundamentals of the market you’re investing in stack up. 

Could higher rates actually create opportunities?

This is where things get interesting. 

When rates rise, borrowing capacity can fall and buyer sentiment often weakens. 

Some potential investors decide to sit on the sidelines and wait for conditions to “improve.” 

That can change competition within the market. 

It doesn’t mean investors should rush out and buy simply because rates have increased. But it does mean higher rates aren’t automatically a reason to stop investing. 

For financially prepared investors, changing market conditions can create opportunities. 

The key is being able to separate market sentiment from market fundamentals. 

Stop trying to predict the RBA

One of the biggest mistakes investors can make is building their entire strategy around what they think interest rates will do next. 

Will rates rise again? Will they fall next year? How quickly? 

Nobody knows with certainty. 

At OpenCorp, we’d rather focus on the factors we can research. 

Our team spends more than 19,000 hours each year researching property markets, looking at factors including supply, demand, affordability, population growth, infrastructure and economic conditions. 

Because the question isn’t simply: 

“Are interest rates going up or down?” 

It’s: 

“Where are the strongest long-term property fundamentals?” 

“Where are the strongest long-term property fundamentals?”

Another interest rate rise will hurt many Australian households. There’s no denying that. 

But investors need to look beyond the headline. 

People still need somewhere to live. Housing supply remains critical. Population and household formation continue to drive demand. And different property markets will continue to perform differently. 

Interest rates matter. 

But they aren’t the property market.

Successful property investing is about understanding your financial position, choosing the right market and making decisions based on research rather than fear. 

For more of Michael Beresford’s perspective on the RBA, inflation and what the latest figures mean for Australians, read the full article on Yahoo Finance. 

Wondering what the latest rate rise means for your investment strategy?

OpenCorp helps everyday Australians build personalised property investment strategies based on their financial position and long-term goals. 

Book a complimentary Discovery Call with our team and find out what opportunities could be available to you.