With more rate cuts a possibility, the market will stay positive: Frank Valentic

guest observation

Interest rate cuts will undeniably have a positive impact on consumer sentiment, especially for lower segments of the market such as first home buyers and investors who typically purchase properties under $500,000.

Suggestions of more cuts on the horizon will keep the market positive for 2015.

Competition for properties is always strong at the start of the year given limited supply over the summer, but competition should pick up even more with most banks passing on the rates.

The impact should trickle into the marketplace within the next couple of weeks, and it will be interesting to see the results at the end of February - when there are over 1,000 auctions scheduled in the Melbourne market.

Investors should keep in mind though that if first home buyers make the jump, the rental market may be impacted.

This makes it imperative for investors to do their research and investigate areas and property types in locations where rental yields are high and vacancy rates are low.

FRANK VALENTIC is managing director of award-winning buyers' agency Advantage Property Consulting.