While the Reserve Bank Monetary Policy Committee (MPC)’s decision to increase the repo rate by 0.25% may send some ripples through the property market, the impact on investors in the upper end of the residential market as well as the commercial and industrial spaces can be more complex. The High Street Auction Company’s Greg Dart shares his insights.
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Funding mechanisms for those utilising the High Street auction platform do not necessarily hinge on loans from mainstream financial institutions and this slight fluctuation in the interest rate could spark many to actively investigate alternative solutions.
Many would have already factored in elements that are beyond both their and the Reserve bank’s control – including oil price fluctuations due to the Iran war, the impact this has on local inflation and the performance of both emerging markets and their currencies.
The Reserve Bank’s largely defensive stance during 2026 sends a positive message to both local and international investors and helps buoy the beginning of a recovery in business confidence which is sorely needed.
Savvy investors often recognise that higher interest rates present an opportunity to secure properties at lower prices, especially if they benefit from a distressed sale or from entities with larger portfolios either offloading non-core assets or diversifying their investments in response to short term fluctuations in economic performance.
Investors who can afford higher borrowing costs can also negotiate better deals or find properties in desirable locations that were previously unattainable.
In addition, an interest rate increase plays into the hands of investors who are purchasing commercial spaces for conversion either into residential or student accommodation. High bank borrowing costs might well keep would-be first-time home buyers in the rental market for longer, ensuring a steady income stream.
It is unlikely that a small step back in interest rate cuts will halt the slow but welcome recovery in the commercial property space whilst pressure on global supply chains is likely to encourage local manufacturing which could become more competitive, increasing demand for industrial properties.
