Well, the RBA has gone soft again. Another 25-point cut, which takes the cash rate down to 3.60%. The headlines say it’s “relief for mortgage holders.” The herd hears: thank goodness, we can breathe again.

But that’s not the real story. For action-takers like us, lower rates aren’t about shaving a few dollars off the monthly repayment. They’re about serviceability. Cheaper money means banks will now let borrowers take on a bigger loan. Bigger loans mean more buyers at the auction for your finished product. In other words, demand at the back end of your flip just got stronger.

And while the RBA tries to look serious about “productivity slumps” and “cautionary pauses,” we know the effect on the ground: easier credit, more spending power, and another leg up for those who can manufacture capital growth.

Meanwhile, investors have been on a bender. They borrowed almost $130 billion over the past year—nearly double what first-home buyers managed. Investors now make up close to half the growth in new housing credit. They’re piling into cheaper stock (sub-$640K), squeezing first-timers out and pushing prices higher.

The herd is rushing into volume, buying whatever they can finance. But you don’t win in property by playing follow-the-leader. You win by doing what they can’t or won’t—splitting blocks, carving up townhouses, renovating ugly ducklings. While they’re all chasing the same cookie-cutter rentals, you’re creating uplift where none existed yesterday.

The loan numbers tell the same story. The average new mortgage nationally is now around $660K, but in NSW it’s pushing $795K. Everywhere you look, buyers are stretching further. Rising borrowing capacity means rising ceiling prices, especially in Sydney and Melbourne.

For us, that’s useful. It’s a green light to plan projects that sell into those higher brackets. The herd complains about “unaffordability.” We see it as headroom. A bigger mortgage pool means more room for us to deliver product that captures the premium.

Of course, the RBA also muttered about productivity falling to just 0.7% growth. Translation: the economy isn’t actually getting much better at producing value. That’s the part the herd won’t think about until later—when they realise passive capital growth is no longer a free ride.

But we’re not passive passengers on the macro bus. We don’t sit around waiting for the economy to get more “productive.” We take matters into our own hands. Through flipping, building, subdividing, we create growth where none existed. It’s the difference between hoping for capital gains and manufacturing them.

This Week’s Takeaway

The herd hears: RBA cuts rates, everyone’s safe again.
We hear: cheaper money means stronger demand for the product we create.

The herd sees: investors squeezing first-timers out.
We see: opportunity to arbitrage value-add deals they can’t touch.

The herd frets: mortgages are too big.
We say: bigger loans mean buyers can afford to pay us more on exit.

The herd worries: productivity is too low.
We know: that’s why we flip—because waiting for the economy is a mug’s game.

The Property Lovers Team

Helping you run property like a business, not a gamble.

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