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Bubble Busters

When changes to interest deductibility bite, interest rates rise (and the higher 40% deposit required by investors) click in unison, investors will feel the pressure. This confluence of external factors comes at the end of a period of unprecedented price growth, a dark cloud on the horizon. But what are the real implications for investors? And will these changes lead to a levelling off of the market?

The Government and Reserve Bank have been trying, through tax change policies and loan-to-value ratios (LVRs), to cool the housing market for the best part of a year. So far it has had little effect – apart from putting a dampener on investors holding one or two residential properties, who have taken a back seat, while the more substantial property portfolio holders have continued buying.