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THE NEW RBA 1.5% RATE: WHAT THIS MEANS FOR AUSTRALIAN PROPERTY INVESTORS

THE NEW RBA 1.5% RATE: WHAT THIS MEANS FOR AUSTRALIAN PROPERTY INVESTORS

 

As I speculated last Monday, the June quarter CPI report gave the Governor enough ammunition to act.

 

The Reserve Bank said a rate cut will create “room for even stronger growth” as the inflation rate is set to remain below its target range and risks in the housing market abate.  read more..

The Reserve Bank of Australia (RBA) reduced its official cash rate to a new record low of just 1.5 per cent at its August board meeting.

 

We expect this move to stimulate the country’s property market further, given that the RBA’s decision to trim the rate was mainly aimed at stimulating the economy and boosting employment. Notably, inflation data for the June quarter showed that consumer prices increased by only 1 per cent year-over-year. This pace was well below the Reserve Bank’s target of 2 to 3 per cent.

 

What’s remarkable in the RBA’s recent rate cut is that the monetary agency has apparently adopted a relaxed stance about the east coast’s housing market. Reserve Bank Governor Glen Stevens was quoted as saying in the rate cut announcement that home price increases are “rising only modestly” so far this year, thus allaying some fears that the Australian real estate market is overheating.

 

Stevens also noted the apartment construction boom in the east coast cities which would boost housing supply in the next two years. In this context, upward pressure on prices can be expected to diminish and hence the need for the rate cut to pump-prime borrowing as well as consumer spending.

 

The RBA governor likewise stressed that lending growth in housing has slowed somewhat this year. This slower pace suggests that the probability of lower interest rates increasing the risks in the housing market has lessened.

Prospective property investors and home loan borrowers who wish to take advantage of the recent interest rate cuts, however, need to be selective and shop around for the best products and rates. The same is true for homeowners with mortgages, as not all banks are passing the recent RBA rate reduction on in full.

 

The big banks, in particular, are passing on less than half the cut. The reduction in interest rates ranges from 10 basis points (NAB) to 14 basis points (Westpac). Notably, NAB and the other big banks passed on the full cut when the official rate was cut in May this year.

At least one smaller bank, on the other hand, passed on the rate cut in full, while customer-owned Bank Australia trimmed its standard variable mortgage rate to 4.74 per cent. It is therefore vital that people with mortgages re-examine their current home loans to check how much of the interest rate cut is being passed on to them.

 

In one estimate, some $16,000 could be slashed over the entire life of a $300,000 mortgage having an average variable rate of 4.93 per cent which received the full 0.25 percentage-point interest rate reduction

Offset mortgages likewise present windows of opportunity for prospective investors and property buyers. Blending a traditional mortgage with a deposit account now looks quite attractive as together with the rate cuts, major banks are passing on a rate increase of as much as 50 basis points on new term deposits.

 

Moreover, here’s the thing. There are expectations that while interest rates may remain steady at 1.5 per cent this year, the RBA could cut the rates twice more during the first half of 2017. We are certainly abreast of these recent market developments and definitely have more to share on the opportunities that the current RBA interest rate regime presents to investors.

 

Best Regards

Dr Andrew Unterweger

MBBS, CFP®, Dip FP,FPA, AFA, SMSF
Chairman

Rate Cut or Not ?

Rate Cut or Not ?

Commentators are divided as to the likelihood of the Reserve Bank of Australia announcing another interest rate cut in August, especially in light of the June Quarter CPI report that has just been released.

The uncertainty surrounding Tuesday’s decision is reflected in the market, where pricing for a rate cut is about 50-50. The vast majority of economists still expect an easing.
In general, the market tends to get the RBA right rather than economists but we also need to look at what the market thinks via the strength of the Aussie Dollar which is trading near its recent highs above 0.76 USD.

I believe the RBA has sufficient data to warrant a cut to 1.50 % but can also see a delay till November as the Housing Market has been showing some resilience in the last quarter, even with APRA and the banks tightening credit policy to limit the amount of investment lending being made available to property investors.

Its interesting to note that we live in a world that is awash with QE but there has not been any market commentary on the possibility of the RBA actually using anything else than monetary policy to stimulate the economy.
It is reassuring to note that the RBA have considered what lessons can be drawn for Australia by looking at the experience of other Central Banks in the US, Japan and Europe that have adopted various methods of deploying monetary stimulus beyond rate cuts.

In contrast to where central banks see the state of their economies in terms of trying to stimulate growth, global markets are surging again after a short correction post the Brexit vote and asset price growth continues unabated as investors continue to chase yield.

This state of affairs does make the decision to invest in quality Australian residential property assets a far more reassuring one, especially when borrowing in AUD to fund these purchases.
We need to remain focussed on what the research can show us and not chase assets that have seen too much short term price appreciation in this cycle.

Always remember not to lose sight of the fundamentals as that will reduce the chances of making the sort of mistakes that many investors tend to make.

Let’s see what Tuesday brings us !

 

Best Regards,
Dr Andrew Unterweger MBBS, CFP®, Dip FP,FPA, AFA, SMSF
Chairman

 

 


bloomberg

Aussie Inflation Delivers RBA Smoldering, Not Smoking Rate Gun  The gasps following the previous inflation release were absent this time. Consumer-price growth in Australia remained subdued in the second quarter, but not as weak as some economists feared. And it didn’t suggest the country was being dragged even further into the disinflation vortex. So while most economists are sticking to their prediction the Reserve Bank of Australia will cut interest rates in six days’ time, the couple who changed their calls presented compelling cases for doing so… Read more

 

 

 

 

RBA’s sober assessment of the labour market and housing: Westpac’s Bill Evans 

The minutes of the July monetary policy meeting of the Reserve Bank Board confirmed the importance of next week’s June Quarter inflation report. The key sentences in the concluding paragraph of the “Considerations for Monetary Policy” section state: “The Board noted that further information on inflationary pressures, the labour market and housing market activity would be available over the following month and that the staff would provide an update of their forecasts .. Read more

 


 

 

Australia’s Central Bank Would Mix Stimulus Tools in Extreme
Scenario

Australia’s central bank has studied the examples of unorthodox policy conducted by its peers, and would favor a multi-pronged stimulus if economic conditions unexpectedly deteriorated to the point where it had to head into uncharted territory.The Reserve Bank of Australia currently still has room for traditional interest-rate cuts, with its benchmark at 1.75 percent. However, economists anticipate another reduction as soon as next month, and Deputy Governor Philip Lowe — who will take the RBA’s helm in September — has indicated that lowering the rate on its own would lose effectiveness as it approaches 1 percent..

Read more

 


 
 

Focus Shifts to AUD/USD Amid Bets for RBA Rate-Cut
Talking Points:
– AUD/USD Preserves Near-Term Bullish Formation Ahead of RBA Rate-Decision.
– USDOLLAR Extends Losses as 2Q GDP Report Disappoints.
  • Even though AUD/USD largely preserves the upward trend carried over from the end of May, the near-term outlook remains clouded amid the divergence in the Relative Strength Index (RSI); need a break of the bearish formation in the oscillator to favor a larger advance in the exchange rate.    Read more

 


 
Headline inflation at weakest annual pace in 17 years

Headline inflation has unexpectedly slowed to the weakest pace in 17 years, ramping up speculation the Reserve Bank of Australia will cut the official cash rate to 1.5 per cent next week.

The consumer price index rose 0.4 per cent in the June quarter from the previous three months, and 1 per cent from the same period a year earlier, the Australian Bureau of Statistics said on Wednesday. Economists surveyed by Bloomberg News had forecast inflation of 0.4 per cent and 1.1 per cent.More importantly, measures of so-called core inflation that are closely watched by the Reserve Bank showed price weakness continues to be soft, exacerbated by the lowest wages growth on record, the ongoing deflationary impulse of a sluggish global economy, and a lack of pricing power by retailers in..

Read more

 


 

 
 

Meet Dr Andrew Unterweger

Dr Unterweger is a highly qualified financial and property adviser, experienced venture capitalist and successful investor

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The New Normal – is this another illusion?

The New Normal – is this another illusion?

I thought it would be relevant to share my thoughts about this concept that I keep hearing over and over from Fund Managers ( especially in the Fixed Income markets ) that we have entered a “New Age” of lower rates for longer. My experience in the past is that every cycle brings about this paradigm shift of a new normal being created and this then takes on a life of its own as more and more people hear about it, see it being endorsed by experts and then having the media “confirm its very existance” !

The issue I have is that I have never experienced a sustainable “New Normal” ever actually play out in these cases, and I’m pretty sure that is why all languages have the word “Normal” in them in the first place.Human nature being what it is makes me believe that most economic cycles will always revert to “normal”, and that it won’t be any different in this cycle.

I agree that the key factors behind the lower-for-longer scenario in Australia is down to the shift away from mining investment, ongoing weak growth and the need for lower policy rates and a lower Australian dollar to accommodate the rebalancing of the economy.As a result, it would seem “very unlikely” that the Reserve Bank of Australia (RBA) will hike rates any time soon.

I think the Financial Markets are trying to “talk their own book” to continue to make easy money in a QE environment and use the media to try to force the Fed to hold off the rate raising cycle in the US ( which affects markets globally ). As I have told our clients this year, I cannot see why the Fed won’t start raising rates at the September meeting as the domestic US economic indicators point to this being a prudent course of action, notwithstanding the recent turmoil in global equity markes caused by the Chinese devaluation of the RMB and a general increase in volatility. Anyway, we will find out soon enough, and if this doesn’t occur, it is simply delaying the inevitable and we will continue to speculate about the October meeting outcome.

The key take away from this is that once the Fed started raising rates, it will put pressure on bond yields globally, including Australia which will increase the cost of borrowing, perhaps initially in the larger corporate sector, but this will then filter down the food chain and so I think it is an opportune time to look at fixing some personal debt that is being used for investment purposes, and I would look at a 5 year duration as I think rates will normalise and that the “new normal in interest rates” will just be something we remember in the future as being a fundamentally unsustainable figment of the popular imagination.

I hope you find this interesting reading and that it helps you make better informed decisions.

 

Best Regards,

Dr Andrew Unterweger

MB BS, CFP®, Dip FP, Dip FNS, MFAA, AFA, SPAA, REA

 

 


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RATES TO REMAIN LOW FOR ‘SEVERAL YEARS

 

Standard Life Investments believes that while the “self-sustaining” economic recovery in the US will soon drive interest rates higher there, the Reserve Bank of Australia is unlikely to raise rates any time soon.

Standard Life Investments believes that while the “self-sustaining” economic recovery in the US will soon drive interest rates higher there, the Reserve Bank of Australia is unlikely to raise rates any time soon.

Sebastian Mackay, Standard Life Investments investment director and joint portfolio manager of the Absolute Return Global Bond Strategy, shared his thoughts last week with MortgageBusiness’s sister publication InvestorDaily.

According to Mr Mackay, Standard Life Investments’ central scenario is one of a weak global recovery rather than deflation, although he concedes a deflationary scenario is “not that unlikely”.

Read more

 


Hot property: most expensive suburbs revealed

 

CoreLogic RP Data has revealed the suburbs with the highest median value around the country, with Sydney suburbs dominating the list.

The top five most expensive suburbs are in Sydney, which has 17 of the 20 listings.

Point Piper came in at number one ($5,596,397), followed by Centennial Park ($5,199,324), Vaucluse ($4,125,216), Bellevue Hill ($3,810,420) and Tamarama ($3,534,024) rounding out the top five.

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EASING CYCLE OVER FOR NOW

The Reserve Bank’s two-pronged monetary easing measures look to have come to an end but our central bankers will remain watchful of the currency, according to Goldman Sachs Asset Management executive director and global fixed income portfolio manager Sean Reynolds.

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post sept 2015-10-01 at 8.36.53 pm

AUSTRALIA NAMED ‘WORLD’S GREENEST PROPERTY INDUSTRY’

Australia has again placed first in an international ranking of sustainability in real estate.

For the fifth year running, the region of Australia and New Zealand topped the annual survey, which is conducted by GRESB, a Dutch-based industry group.

Property companies in Australia and New Zealand achieved an average score of 69, which was well ahead of the other regions.

Read more

 


CONFIDENCE GROWS, CAR SALES UP

By CommSec

Reserve Bank Board minutes: weekly consumer confidence; car sales

  • Consumer sentiment: the weekly ANZ/Roy Morgan consumer confidence rating rose by 0.6% last week to stand 0.6% higher than a year ago.
  • New vehicle sales: sales fell by 1.3% in July but were still up 3.7% on a year ago. The annual total of new vehicle sales hit a 19-month high and is 0.6% below record highs.
  • Reserve Bank Board minutes: Board members noted that the shift in the resources sector from investment to production “was being assisted by the depreciation of the exchange rate over recent months”.

What does it all mean?

Consumer confidence is stuck in a groove at present. That is far from negative as the current confidence reading is above both short and longer-term averages. Factors like the Aussie dollar, petrol prices, home prices and sharemarket fluctuations will be important in driving confidence in the future together with political influences. The greatest threat to consumer confidence is the negativity of major political parties.

Read more

 

Australian Home Prices and Interest Rates – April 2015

Australian Home Prices and Interest Rates – April 2015

Hi Everyone,

The case for the RBA resuming interest rate cuts this year has been fairly clear: commodity prices have fallen more than expected; the $AUD has remained relatively high; while residential construction and consumer spending are okay the outlook for business investment has deteriorated pointing to overall growth remaining sub-par; and inflation is low. This has seen the cash rate fall to 2.25%. While the RBA left rates on hold at its April meeting, it retains an easing bias pointing to further cuts ahead.

Whilst some of the data such as the latest ABS jobs numbers are contradictory, I still believe that we will get further Rate reductions and that this will continue to be supportive for for Growth Assets such as Property. Since this will increase the affordability on a national basis, I believe we will continue to see price growth in the Sydney market even though there are constant stories of this being in bubble territory.

The jobs data has caused the Aussie Dollar to appreciate above 78 cents to the USD due to the market now thinking that the RBA is now more likely to leave rates on hold at the May meeting, however, this in itself causes another problem for the RBA as it is trying to talk the currency down to add some stimulus to the Economy.

BetaShares chief economist David Bassanese has forecast the official cash rate to end the year at 1.5 per cent and the Australian dollar to sink to US68 cents. According to Mr Bassanese, the monthly level of home building approvals is already near previous cyclical peaks, suggesting there is little room to further increase supply.

“Should home building approvals peak within coming months, it would also mean home building activity will start to decline by late this year [or] early 2016 – undercutting what has recently been an important source of economic growth,” he said.

The other piece of trivia which comes up at this time of year …… every year, is the speculation that the Government is going to abolish negative gearing. I’ve learnt that it is unwise to make categorical sweeping statements, but I was speaking to some clients two weeks ago about this and told them that “Negative Gearing will not be affected in the Budget”. Fortunately, Tony Abbott made the statement to the Press last week so that we can now put this to bed, at least for this year !

As always, I hope you find this interesting reading and that it helps you make better informed decisions.

 

Best Regards,

Dr Andrew Unterweger

MB BS, CFP®, Dip FP, Dip FNS, MFAA, AFA, SPAA, REA

 

 

The negative gearing myth of 1985: ACOSS

A quarantining approach was adopted by the Hawke government in 1985 when it effectively abolished negative gearing for rental property investments.

For two years after the announcement of the policy, expenses related to rental property investments could not be claimed against income from other sources such as wages. In return for this restriction on deductions, a depreciation allowance was introduced to encourage investment in new rental housing. Existing investments were not affected.

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sydney-breakout-600x364.jpg

 

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Housing recovery continues

Australian economic data from the past week shows the housing recovery is continuing, according to AMP Capital chief economist Shane Oliver.

Despite a small fall in February, building approvals remain close to record highs and new home sales remain solid, pointing to continued strength in dwelling construction, Mr Oliver said.

“While home prices continued to rise in March this was concentrated in Sydney, with other cities decidedly soft, indicating that despite the hoopla, home price momentum overall is waning,” he said.

“It is also noteworthy that there has been some modest loss of momentum in investor housing credit.”

As a result, Mr Oliver believes the housing market may be becoming less of a constraint on the RBA’s flexibility to cut interest rates again. Meanwhile, homebuilding continues to gather momentum across the nation.

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Meet Dr Andrew Unterweger

Dr Unterweger is a highly qualified financial and property adviser, experienced venture capitalist and successful investor

RATES FORECAST TO FALL TO 2PC

By Smart Property Investor Staff Reporter

Friday, 06 February 2015

Two prominent economists have praised the Reserve Bank of Australia’s decision to reduce the cash rate and have predicted at least one more cut to come.

Domain Group senior economist Andrew Wilson said the Reserve Bank had made the right decision to reduce the cash rate from 2.5 per cent to 2.25 per cent.

Dr Wilson also said that another cut is likely, given that the economy received minimal stimulus from the succession of rate cuts between October 2011 and August 2013.

 

“We haven’t had much action from cutting from 4.75 per cent to 2.5 per cent, so I’m not sure what a 0.25 per cent improvement is going to do,” he told Smart Property Investment's sister publication Real Estate Business.

“Certainly the Reserve Bank had to act – it’s really the only tool in the box that we’ve got left.”

read more...

Pricing gaps across product types and capital cities are widening

by Cameron Kusher

30 January 2015

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

According to median selling prices over the three months to December 2014 published in the CoreLogic RP Data Home Value Index report, the gap between capital city house and unit prices has never been greater. As at December 2014, the capital city median house price was almost 20% higher than the capital city median house price. In dollar value terms, median house prices are $100,000 greater than unit prices. read more...

 

John McGrath ignites Sydney's "hot forever" inner ring debate

by Jonathan Chancellor

1 FEBRUARY 2015

John McGrath has always been passionate about the property prospects of Sydney’s inner ring suburbs. But last week he went a little further, saying suburbs close to the city are becoming so desirable that they will be “hot forever”

But last week he went a little further saying suburbs close to the city are becoming so desirable that they will be "hot forever".

The high profile agent stopped short of declaring inner city property prices were immune from price falls.

But the chief executive of McGrath Estate Agents told Fairfax Media these areas would always be attractive to buyers.

"There is just no end of demand from overseas and local buyers who want to live in those precincts," McGrath said.

read more..

 

 

 

 

Sydney property bubble to pop when rates rise, says HSBC

Wednesday, 11 Feb 2015   |

James Mitchell

0

·

·        A fresh round of cheap credit is further inflating Sydney’s investor-driven property prices.

In a research note released yesterday, HSBC economists Paul Bloxham and Daniel Smith predict strong national housing price growth to continue at seven to eight per cent, driven by record-low mortgage rates.

“We see Sydney prices rising by 9 to 10 per cent in 2015 and expect that, when rates do eventually rise, there is now a high risk that Sydney will see price falls,” the economists said.

“Although we do not see a national housing bubble, we believe that growth in Sydney housing prices is currently running at an unsustainable pace and that any further growth is likely to be met by housing price declines in future years, when interest rates do begin to rise,” they said.

A signal of the growing risk of overinflation in the Sydney market is the high level of investor demand, according to HSBC.

Read more…

https://www.mortgagebusiness.com.au/breaking-news/8152-sydney-property-bubble-to-pop-when-rates-rise-says-hsbc

 

 

 

 

 

JESSIE RICHARDSON | 10 FEBRUARY 2015

Melbourne growth to stand out in 2016: HSBC's Paul Bloxham

Melbourne will see the highest price growth of any capital city next year, HSBC has forecast.

In the latest HSBC Australia Downunder Digest report, HSBC Australia chief economist Paul Bloxham forecasts 4% to 8% price growth in Melbourne for 2016, after 7% to 8% growth in 2015.

Bloxham expects that in 2015, Melbourne and Sydney will "continue to outpace the rest of the nation", noting that from its mid-2012 trough, Melbourne's housing prices have increased by 20%. Read more

http://www.propertyobserver.com.au/finding/residential-investment/40049-melbourne-growth-to-stand-out-in-2016-paul-bloxham.html

 

Commonwealth Bank posts 8pc half-year profit rise to $4.5b

By business reporter Michael Janda

Updated 11 Feb 2015, 5:49am

 

PHOTO: The Commonwealth Bank has posted its half-year results. (ABC News: Nic MacBean, file photo)

The Commonwealth Bank has reported an 8 per cent rise in half-year profit to $4.54 billion.

The bank's preferred cash measure of net profit, which adjusts for some accounting items, also rose 8 per cent to $4.62 billion.

CBA said its improved profit came on the back of a 5 per cent increase in revenue, despite subdued conditions in the lending market.

It also said it had lowered its cost to income ratio by 70 basis points to 42.2 per cent, as productivity initiatives continued to contain business expenses.

Read more…

 

http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926

 

 

 

 

 

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January Property Snapshot – Median Values and Growth rates

January Property Snapshot – Median Values and Growth rates

January Property Snapshot – Median Values and Growth rates

by Dr Andrew Unterweger | 11 Febuary 2015

 

We are constantly being bombarded by a huge number of often quite contradictory news items and predictions and forecasts from a plethora of experts in economic, property and investment professions. I want to share a few just to highlight how difficult it is to try to put all this information into a context that can help someone to make a more informed investment decision, rather than seeing them paralysed by the lack of any clarity that could otherwise lead them to do nothing for all the wrong reasons. I prefer the clarity of someone like Warren Buffett !

 He is known as the Wizard of Omaha and considered to be one of the world’s most successful investors and for thousands of investors around the world, Warren Buffett has become their investment guru.

In January, Warren Buffett again released his highly anticipated annual shareholder newsletter and this time, front and centre of his letter was real estate investment.

Specifically, he reflected on two small properties that he purchased long ago and offered some insights on real estate investment. In his letter, Buffett says he cites the tales to “illustrate certain fundamentals of investing”. He then goes on to highlight his five tips for real estate investing.

They are:

        • You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don’t swing for the fences. When promised quick profits, respond with a quick “no.”
        • Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.
        • If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am sceptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
        • With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field – not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
        • Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle’s scathing comment: “You don’t know how easy this game is until you get into that broadcasting booth.

 

As always, I hope you find this interesting reading and that it helps you make better informed decisions.

 

Best Regards,

Dr Andrew Unterweger 

MB BS, CFP®, Dip FP, Dip FNS, MFAA, AFA, SPAA, REA

Solis by Mosaic

RATES FORECAST TO FALL TO 2PC

By Smart Property Investor Staff Reporter | 6th February 2015

Two prominent economists have praised the Reserve Bank of Australia’s decision to reduce the cash rate and have predicted at least one more cut to come.

Domain Group senior economist Andrew Wilson said the Reserve Bank had made the right decision to reduce the cash rate from 2.5 per cent to 2.25 per cent.

Dr Wilson also said that another cut is likely, given that the economy received minimal stimulus from the succession of rate cuts between October 2011 and August 2013.

“We haven’t had much action from cutting from 4.75 per cent to 2.5 per cent, so I’m not sure what a 0.25 per cent improvement is going to do,” he told Smart Property Investment’s sister publication Real Estate Business.

“Certainly the Reserve Bank had to act – it’s really the only tool in the box that we’ve got left.”

read more…


Pricing gaps across product types and capital cities are widening

by Cameron Kusher

30 January 2015

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction.

According to median selling prices over the three months to December 2014 published in the CoreLogic RP Data Home Value Index report, the gap between capital city house and unit prices has never been greater. As at December 2014, the capital city median house price was almost 20% higher than the capital city median house price. In dollar value terms, median house prices are $100,000 greater than unit prices. read more…

Melbourne growth to stand out in 2016: HSBC’s Paul Bloxham

JESSIE RICHARDSON | 10 FEBRUARY 2015

Melbourne will see the highest price growth of any capital city next year, HSBC has forecast.

In the latest HSBC Australia Downunder Digest report, HSBC Australia chief economist Paul Bloxham forecasts 4% to 8% price growth in Melbourne for 2016, after 7% to 8% growth in 2015.

Bloxham expects that in 2015, Melbourne and Sydney will “continue to outpace the rest of the nation”, noting that from its mid-2012 trough, Melbourne’s housing prices have increased by 20%.

Read more 

John McGrath ignites Sydney’s “hot forever” inner ring debate

by Jonathan Chancellor | 1st Febuary 2015

 

 

 

 

 

 

John McGrath has always been passionate about the property prospects of Sydney’s inner ring suburbs. But last week he went a little further, saying suburbs close to the city are becoming so desirable that they will be “hot forever”

But last week he went a little further saying suburbs close to the city are becoming so desirable that they will be “hot forever”.

The high profile agent stopped short of declaring inner city property prices were immune from price falls.

But the chief executive of McGrath Estate Agents told Fairfax Media these areas would always be attractive to buyers.

“There is just no end of demand from overseas and local buyers who want to live in those precincts,” McGrath said.

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Sydney property bubble to pop when rates rise, says HSBC

By James Mitchell | 11th Febuary 2015

A fresh round of cheap credit is further inflating Sydney’s investor-driven property prices.In a research note released yesterday, HSBC economists Paul Bloxham and Daniel Smith predict strong national housing price growth to continue at seven to eight per cent, driven by record-low mortgage rates.

“We see Sydney prices rising by 9 to 10 per cent in 2015 and expect that, when rates do eventually rise, there is now a high risk that Sydney will see price falls,” the economists said.

“Although we do not see a national housing bubble, we believe that growth in Sydney housing prices is currently running at an unsustainable pace and that any further growth is likely to be met by housing price declines in future years, when interest rates do begin to rise,” they said.

A signal of the growing risk of overinflation in the Sydney market is the high level of investor demand, according to HSBC.

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 COMMONWEALTH BANK POSTS 8PC HALF-YEAR PROFIT RISE TO $4.5B

By business reporter Michael Janda | 11 Feb 2015

PHOTO: The Commonwealth Bank has posted its half-year results. (ABC News: Nic MacBean, file photo)

 

 

The Commonwealth Bank has reported an 8 per cent rise in half-year profit to $4.54 billion.

The bank’s preferred cash measure of net profit, which adjusts for some accounting items, also rose 8 per cent to $4.62 billion.

CBA said its improved profit came on the back of a 5 per cent increase in revenue, despite subdued conditions in the lending market.

It also said it had lowered its cost to income ratio by 70 basis points to 42.2 per cent, as productivity initiatives continued to contain business expenses.

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