Activity by property investors has declined in most capital cities over recent months due to falling rent returns. This cut in interest rates will make it financially more attractive for investors to buy property as it will help to off-set weaker rents.

At the same time, baby boomers that have cash savings in the bank will be getting even lower interest rate returns on their money and this will encourage them to invest in property.

More people will also take advantage of lower interest rates to upgrade their homes.

This latest cut in interest rates will only accelerate this upgrading trend as it will give confidence to property buyers that interest rates will remain very low for an extended period of time.

In addition to investors and upgraders, this cut in interest rates should also give a boost to first-home buyer activity in the established housing market.

Established house prices in the lower end of the market are becoming more affordable and first home buyers are now realising that it can now be less expensive to buy an established house rather than building a new home.

A large number of these first-home buyers have been ‘sitting on the fence’ due to the uncertainty in the state economy, and this cut in interest rates should encourage them to take the plunge and buy an established home.

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