Economic uncertainty should not stop investors getting into the market and riding out the cycle of high interest rates expected over the rest of the year, according to a major buyer's agent.
While tensions in the Middle East, rising interest rates and skyrocketing inflation are putting extreme pressure on household budgets, chief executive Rich Harvey said it is "a really good time" for property investment.
"You need to get really proactive and look past the noise," he told realestate.com.au. "When there's peak uncertainty, there's peak opportunity."
Many who had considered investing in property this year might now be erring on the side of caution, a response to financial pressure Mr Harvey billed as natural.
Aussies are braced for continued high inflation this year as a result of global instability in oil prices. While a pressure on household budgets, Mr Harvey says the current enviornment "hasn't changed the property market" at a core level.
A fundamental undersupply in property remains the issue in the same way it was before other major economic events, he says.
"The property market shortage was going to continue for the next five to 10 years," he said.
“This global instability is causing people to do nothing but we've been there before, we've lived through that, and while property markets might pause briefly, it's kind of what I call the window of opportunity to really make it a good time to buy,” he adds.
Often during periods of uncertainty, would-be buyers’ withdraw from the market, Mr Harvey says, making it a prime time for others to make their move when there was less competition.
Rental properties in short supply
LJ Hooker head of research and business intelligence Mathew Tiller says a big positive for investors to make the leap was Australia’s undersupplied, tight rental market.
Propertybuyer chief executive and founder, Rich Harvey. Picture: Supplied
“We have vacancy rates just above, or around the 1% mark, and a lot of regional markets haven't seen any new supply come through at all,” he says.
“We've got population growth, employment is still strong so I think from an investment point of view, there's still a lot of positives for investment in property in a lot of various markets across Australia.”
Investor activity has been stronger
Likewise, already strong investor activity is setting the tone.
REA Group executive manager of economics Angus Moore said investors have been a big part of the Australian housing market during the last couple years, with a huge ramp up in investor activity since interest rates stabilised in 2023.
REA Group executive manager of economics Angus Moore. Picture: Supplied
“And importantly, that ramp up in investor activity has been faster than the ramp that we've seen from owner-occupiers,” he adds.
The share of housing to investors has been high relative to historical levels, with the ever pricier states of Queensland and Western Australia (WA) comprising a 30% or 40% share.
Although not record breaking, Mr Moore confirmed this were edging close to the highest levels seen.
The median price of a property in Queensland is 14.1% more expensive than this time 12 months ago, while WA has seen an even more impressive annual growth of 15.9%, the latest PropTrack Home Price Index shows.
Brisbane and Perth are now the second and third-most expensive capital cities in the nation to buy a home, with median prices in both having recently cracked the $1 million mark.
The impact of interest rates
With two rate hikes already in 2026 and potentially up to three more before year’s end, Mr Moore expects any rises will be a headwind for higher price growth.
Borrowing capacity is generally reduced and to some extent, housing demand, with every rate rise.
Mr Tiller says forecasts of further tightening from the Reserve Bank needed to be carefully considered by prospective investors when working on feasibilities and planning cash flow.
The Reserve Bank of Australia is expected to raise rates at least twice more this year. Picture: Lisa Maree Williams/Getty Images)
“Higher fuel prices and energy costs flowing through to the goods and services," he cautions.
"We're going to see higher inflation over the course of this year so the likelihood that interest rates going up is a certainty."
While inflation tended to scare potential property investors, Mr Harvey notes property can be an effective hedge against it.
If a buyer chooses to snap up a property after further hikes, their borrowing capacity is likely to be less, he added.
“The minute the market stabilises is the minute it starts to turn up again,” he says. “Even if the market were to sort of drop 2%, 3% or 5%, what does it matter if you're not selling within a year?"
Regardless of where interest rates head in 2026, Mr Harvey said prospective investors should "get in and rise out the cycle".
"To people that are price sensitive, you have just got to build in a buffer, and that's what the interest rates do," he says.
“But also, extend yourself as far as you can, because getting the best quality property is going to work better for you.”
This article first appeared on Mortgage Choice and has been republished with permission.
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