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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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Negative Gearing – Should it Be Abolished?

Negative Gearing – Should it Be Abolished?

SHOULD NEGATIVE GEARING BE ABOLISHED?

 

by Andrew Unterweger | 5th May 2016

With the release of the Australian Budget earlier this week, we have seen much of the negative gearing discussion put to bed…for now. Should negative gearing be abolished? Should it be changed and only allowed on new properties? What would be the impact of such a change.

This debate may be something we would need to consider if the Australian Labor Party were in government, however, that is not the case and I think sufficient common sense prevails in the Turnbull Government so that we can safely put this back into the closet until this time next year.

One of the largest independent research houses in the sector, BIS Shrapnel, have prepared a detailed report in relation to the Labor Party’s proposed negative gearing changes. The Labor Party has outlined that its policy:

• is to halve the 50% capital gains tax discount for investors to 25%
• to limit all new negative gearing to new homes from July 1, 2017
• will raise $32 billion over 10 years and generate an extra 25,000 construction jobs annually because of the demand of new housing.

The BIS Shrapnel Report claims Labor’s negative gearing plans :

• will increase rents by an average of 10 per cent, or $2600 a year,
• depress new home construction by 4% ,
• shrink gross domestic product by $19 billion a year,
• lead to 175,000 fewer jobs over 10 years,
• shrink government tax revenues by $1.65 billion a year, and
• put 70,000 households into rental stress.

Obviously, this is not a positive outcome for the Australian public and must be taken into consideration by the Labor Party. As property investors, it’s important to remain vigilant and plan appropriately to allow you to build your property portfolio over time without taking on unnecessary risk.

 

To Your Property Investing Success!

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Disclaimer: This information on this site is for general information purposes only. It is not intended as financial, tax or investment advice.

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

 

 

 

 

 

More Articles

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The Negative Gearing Debate and the pre-Budget News

The Negative Gearing Debate and the pre-Budget News

We have come to the annual pre-budget season once again where the usual rhetoric in relation to the removal of Negative Gearing and other unpopular outcomes make their way out of the closet to give the media some new doom and gloom scenarios to throw at us.

This debate may be something we would need to consider if the Australian Labor Party were in government, however, that is not the case and I think sufficient common sense prevails in the Turnbull Government so that we can safely put this back into the closet until this time next year.
BIS Shrapnel have prepared a detailed report in relation to Labor’s proposed negative gearing changes:

  • Labor says its policy – is to halve the 50% capital gains tax discount for investors to 25%
  • to limit all new negative gearing to new homes from July 1, 2017
  • will raise $32 billion over 10 years and generate an extra 25,000 construction jobs annually because of the demand of new housing.

The BIS Shrapnel Report claims Labor’s negative gearing plans

  • will increase rents by an average of 10 per cent, or $2600 a year,
  • depress new home construction by 4% ,
  • shrink gross domestic product by $19 billion a year,
  • lead to 175,000 fewer jobs over 10 years,
  • shrink government tax revenues by $1.65 billion a year, and
  • put 70,000 households into rental stress.

When I look back over the first quarter of 2016, the most positive outcome has been the sharp rally in oil and commodity prices in general, a decline in the USD and strength in the AUD.

I think this is largely a momentum driven rally including a large amount of short covering and as such lacks any real substance to continue for the rest of the year.

The positive in this is that it has allowed us to adjust the asset allocation and underlying investments in our clients non-property exposures to take on an even more defensive tactical position and overweight Cash (particularly USD) to be better positioned for the continued volatility that I expect in both Equity and Bond markets over the next year or so.

The economic backdrop continues to be broadly supportive for the Australian residential property market as the RBA has remained on the sidelines in relation to current monetary policy and has left the door open for some further easing in the official cash rate which the markets have already priced in.

The ANZ Research report below shows that there is still a fairly large undersupply of housing in the Australian market which is supportive of the current market cycle. That being said, it is still very important to be very aware of the value gap between the Nation’s Capital Cities and keep an eye on areas of oversupply which are typically found in any of the CBD areas. A number of Banks have blacklisted suburb postcodes which they are not willing to give new loans for due to supply and demand issues which do not support property prices in those areas.

We will continue to monitor all these factors over the year and share some insights along the way.
I wish you every success for 2016…

Best Regards,

Dr Andrew Unterweger MB BS, CFP®, Dip FP, Dip FNS, MFAA, AFA, SMSF, REA


Negative gearing reform could lead to lost decade: BIS Shrapnel

The consequences of limiting the tax deductibility of negatively geared residential properties would impact any expected tax savings, according to a new report from BIS Shrapnel.

BIS Shrapnel’s report, Economic Impact of Limiting the Tax Deductibility of Negatively Geared Residential Investment Properties, said changes to the current negative gearing setup would go well beyond any saving of the income tax concession, to a multitude of unintended consequences.  read more


Is there still a housing shortage in Australia? ANZ Research says about 250,000 dwellings

 

unnamed-4.png

The national shortage of housing in Australia is nearly 250,000 dwellings, lower than previously estimated, but still a long way from being in structural surplus, according to ANZ Research’s latest Economic Insight.
The study forecasts that housing construction and underlying housing demand will see a modest unwinding of the current housing shortage in coming years. This easing will, however, challenge the short-term support to dwelling sales and price growth from the underlying … Read More


Australia’s Property Tax Perks Are in the Crosshairs

 

  • Labor targets landlord tax breaks in election-year pitch
  • Concessions helped fuel 50% home-price surge since 2008

Australian investors enjoy some of the most generous tax concessions in the world when they buy real estate. That could be about to change.

unnamed-3.png

Negative Gearing

About 1.2 million Australians use so-called negative gearing, where they reduce their tax bill by deducting the costs of owning
a rental property, including mortgage interest payments, from their taxable income.
Some countries including Britain and the U.S. allow property investors to deduct costs from investment income; Australia is
unusual because it allows the deduction against wages… Read more.. 


Hedge Funds Turn Bullish on the Aussie

 

  • Australian currency has rebounded from a nearly seven-year low
  • Traders were last positioned for Aussie gain in May: CFTC data

Hedge funds and other large speculators turned bullish on the Australian dollar last week for the first time since May 2015, while Macquarie Bank Ltd. said selling South Korea’s won is now the favoured way to bet against China.

Although Asia’s largest economy is the primary destination for both Australian and South Korean exports, the Aussie’s 0.8% drop this year pales in comparison to a 4.6 percent slump in the won that’s come as China’s benchmark equity index has plunged.
Expectations of relative price swings for the Australian dollar are the lowest since the first half of 2015 when compared with a
JPMorgan Chase & Co. index for the overall currency market.

unnamed-2.png

The Aussie dollar has climbed about 6 percent from a near seven-year low reached in January amid signs Australia’s labor market is recovering enough to allow the Reserve Bank to extend a nine-month stretch in which interest rates have remained unchanged. Read more…

 

 

 


Brisbane’s Apartment Pipeline – 2016 to 2018

Brisbane is under construction. Anyone driving through the Valley, Newstead or South Brisbane can see that. The streets are
lined with hoarding plastered with impossibly beautiful vistas of the CBD from across a computer-rendered infinity pool.
Buyers want to know what Brisbane is going to look like in three years’ time. How will the landscape of this city change as a
result of the recent surge in apartment construction? We will discuss the future apartment market in Brisbane. How many and
what types of apartments will be built and where they will be built.

unnamed-1.pngThere are currently 18 projects under construction across the inner city that have recorded complete sell-outs, totalling approximately 2,600 apartments. There are a further 9,170 apartments under construction across 50 buildings that are actively being sold and advertised to the market-place. Many of these have had significant levels of enquiries and sales in recent years.

On top of this, 33 brand new developments are being marketed and are in the pre-construction sales phase.
There is a further pipeline of more than 21,000 apartments that have not yet hit the market. These projects are in planning and the likelihood of them making it into the marketplace depends on a variety of factors, the biggest of which surrounds finance and risk. Read more …


Oversupply being extended by new construction

 

unnamed.png

“The property made its way onto the market back in July 2013 with the vendor originally asking for offers above $650,000. Since then the vendor has reduced the price down to $465,000, a total reduction of $185,000,” he said. Read more…

 


Meet Dr Andrew Unterweger

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

More Articles

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There are many myths and false beliefs that you may be feeding yourself, that may be hindering your progress as a property investor. We are here to debunk some of these myths and help you make progress in seeing the property investment industry for the...

Everything You Need To Know About Australia’s Property Market Cycles

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Why You Should Invest In Brisbane’s Property Market

To many it might feel like the Sydney property market is difficult to penetrate in terms of property investments. Seeing as most suburbs within 50km of the city’s central business district have a median house price higher than $500 000, this sentiment is...

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2016 Investment Outlook and Australia’s property market implications

2016 Investment Outlook and Australia’s property market implications

2016 Investment Outlook and Australia’s property market implications

by Dr Andrew Unterweger | 15th January 2016

I would like to wish everyone a wonderful 2016 and every success in navigating what should be another challenging year ahead in terms of making some prudent investment decisions given the somewhat uncertain global macro-economic backdrop that we are faced with.

If I look at the newsletter I sent out at this time last year and the predictions for the year just passed, I think the only outcomes that were unforeseen, were the extent of the continued increases in property values in both Sydney and Melbourne. From a global perspective, similar themes that existed in 2015 will continue this year with the main change being the long anticipated lift off in the Fed Funds Rate and the likelihood of a further three or more such increases during the course of 2016.
The other main concern, especially for Australia and with a direct impact on the Australian property market is China, which, as everyone is aware is Australia’s major trading partner, however, the IMF forecasts suggest that China’s GDP growth could slow in percentage terms over the coming years (from double-digit rates to still rapid high single-digit rates.) and that US growth could pick up, but it still expects China to be the single largest contributor to global GDP growth in USD terms over the coming five years. Also, China’s economy is now much larger than it was when it sustained double-digit growth rates, which makes it harder to grow as quickly as it did and means that even high single digit growth rates deliver significant additions to global demand.

China’s growth is expected to have slowed to around 7% in 2015 from 10.6% in 2010, but because China is a lot larger than it was in 2010 (89% larger in USD terms and 69% larger in local currency terms) the IMF estimates that this year’s GDP growth is estimated to be equivalent to USD1,028 bn, which is slightly more than the addition to GDP in 2010 of USD 980 bn . More importantly, China’s recent Fifth Plenum, which included a significant focus on the 13th Five-Year Plan (2016-2020), saw policymakers set economic growth as a top priority. Policymakers reiterated the goal of “doubling GDP and people’s income by 2020”, which implies a minimum growth rate of around 6.5% a year over the next five years which bodes well for the Australian economy at least in the medium term although I expect this position to continue into the foreseeable future. The major risk that I can see facing the Chinese economy is the expansion that has occurring in their banking system over recent years and hence the potential for a large increase in bad debts if economic growth slows too much, which would then have a global impact.

What we as property investors need to always be mindful of is the likely interest rate environment and, as we saw in the last few months, the impact that regulatory pressures from the likes of APRA can have on both the cost and availability of bank funding to enable us to continue with our investment strategies. I think the RBA will have an even more difficult time in 2016 in terms of setting monetary policy to cope with the continuing decline in the mining sector of the economy, the resilience of the AUD and trying to manage the price growth of some of the nation’s property markets. We have seen the banks come to the aid of the RBA in terms of increasing borrowing rates out of cycle and I anticipate this could well be repeated during the year as they face more margin pressure and slowing lending growth. I am sceptical that the Banks will pass on any interest rate cuts if the RBA does cut the benchmark rate and I think the present scenario continues to favour longer term fixed rates from an investor’s viewpoint.

To summarise, I think the continuing decline in commodity prices, a strengthening USD and weakening AUD combined with a supportive monetary policy from the RBA should assist the Services and Tourism sectors of the Australian economy to continue to expand, which will be broadly supportive for the residential property market. This will continue to drive quite different outcomes for the property markets of the various states of Australia and we should see some easing in the growth rates for Sydney and Melbourne. We continue to favour Brisbane and in particular the inner middle ring ( 3 to 10 km from the CBD ) as being better placed to find value and scope for sustainable longer term growth.

We will continue to monitor all these factors over the year and share some insights along the way.

I wish you every success for 2016.

 

Best Regards,

Dr Andrew Unterweger

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

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

 

 

 

 

 

More Articles

15 common myths that are killing the wealth potential of the average Australian property investor

There are many myths and false beliefs that you may be feeding yourself, that may be hindering your progress as a property investor. We are here to debunk some of these myths and help you make progress in seeing the property investment industry for the...

Everything You Need To Know About Australia’s Property Market Cycles

Most markets in the world consistently go through periods of growth contraction, and the property market is no different. While some might feel that this constant shift means that getting the most out of their property investments will be difficult, it is the...

Why You Should Invest In Brisbane’s Property Market

To many it might feel like the Sydney property market is difficult to penetrate in terms of property investments. Seeing as most suburbs within 50km of the city’s central business district have a median house price higher than $500 000, this sentiment is...

You Can Cancel Your Home Loan Contract Before Settlement – Here’s How

Buying a house is seen by many as one of the most important purchases you can make in your life. This means that the decision to go through the time consuming and costly process of getting the property you want can be intimidating, leaving first-time buyers feeling...

What You Need To Know About NSW Swimming Pool Regulations

  Summer is definitely in full swing, and what better way to enjoy the New South Wales sun than a trip to the beach, or a dip in your pool? However, if you own and or rent out your property investment in NSW, you have to make sure that your swimming pool complies...

FACTORS TO CONSIDER WHEN ASSISTING YOUR CHILDREN WITH HOME OWNERSHIP

In the past, buying a home was viewed as a marker of adulthood, often preceding marriage and having children. Times have changed, and currently housing affordability is at an all-time low in Australia. As a parent, it’s normal to want to give your children a hand with...
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.

Read more


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.

Read more


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.

read more ..

 

sydney-breakout-600x364.jpg

 

Should you wait to buy?

John McGrath

Turn your mindset around. If you buy now, you’re likely to enjoy some decent capital growth before the year is out.

Read more 


RBA’s Financial Stability Review & housing market analysis

The Reserve Bank (RBA) released its bi-annual Financial Stability Review (FSR). As you’d expect, the residential housing market features heavily in their assessment of financial stability.
Read analysis..

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.

read more..

 

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

 

 

 

 

 

More Articles

15 common myths that are killing the wealth potential of the average Australian property investor

There are many myths and false beliefs that you may be feeding yourself, that may be hindering your progress as a property investor. We are here to debunk some of these myths and help you make progress in seeing the property investment industry for the...

Everything You Need To Know About Australia’s Property Market Cycles

Most markets in the world consistently go through periods of growth contraction, and the property market is no different. While some might feel that this constant shift means that getting the most out of their property investments will be difficult, it is the...

Why You Should Invest In Brisbane’s Property Market

To many it might feel like the Sydney property market is difficult to penetrate in terms of property investments. Seeing as most suburbs within 50km of the city’s central business district have a median house price higher than $500 000, this sentiment is...

You Can Cancel Your Home Loan Contract Before Settlement – Here’s How

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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.

read more..

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.

Read more

 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.

Read more…

More Articles

15 common myths that are killing the wealth potential of the average Australian property investor

There are many myths and false beliefs that you may be feeding yourself, that may be hindering your progress as a property investor. We are here to debunk some of these myths and help you make progress in seeing the property investment industry for the...

Everything You Need To Know About Australia’s Property Market Cycles

Most markets in the world consistently go through periods of growth contraction, and the property market is no different. While some might feel that this constant shift means that getting the most out of their property investments will be difficult, it is the...

Why You Should Invest In Brisbane’s Property Market

To many it might feel like the Sydney property market is difficult to penetrate in terms of property investments. Seeing as most suburbs within 50km of the city’s central business district have a median house price higher than $500 000, this sentiment is...

You Can Cancel Your Home Loan Contract Before Settlement – Here’s How

Buying a house is seen by many as one of the most important purchases you can make in your life. This means that the decision to go through the time consuming and costly process of getting the property you want can be intimidating, leaving first-time buyers feeling...

What You Need To Know About NSW Swimming Pool Regulations

  Summer is definitely in full swing, and what better way to enjoy the New South Wales sun than a trip to the beach, or a dip in your pool? However, if you own and or rent out your property investment in NSW, you have to make sure that your swimming pool complies...

FACTORS TO CONSIDER WHEN ASSISTING YOUR CHILDREN WITH HOME OWNERSHIP

In the past, buying a home was viewed as a marker of adulthood, often preceding marriage and having children. Times have changed, and currently housing affordability is at an all-time low in Australia. As a parent, it’s normal to want to give your children a hand with...
2014 Federal Budget – Short Term Positive but negative in the Medium Term

2014 Federal Budget – Short Term Positive but negative in the Medium Term

2014 Federal Budget – Short Term positive but negative in the Medium Term

 

by Dr Andrew Unterweger | 21st May 2014

 

This has been a topic for speculation for some weeks which finally ended on Tuesday night, thankfully !!

I would like to point out that these are proposed changes which need to be passed in parliament to become effective, and we have already seen further media speculation about a raft of possible outcomes, including a double dissolution election in the future if Tony Abbott feels these measures are being thwarted.

From a macro view the 2014-15 Budget incorporates a $11.6 billion Infrastructure Growth Package that will contribute to an estimated $125 billion of additional infrastructure, including incentives to encourage asset recycling as a catalyst for unlocking significant new infrastructure investment. The government estimates that upon completion, these infrastructure projects will add around 1 percentage point to annual GDP. I think this is very positive in the longer term and shows good use of fiscal policy to address the current state change for the drivers of future economic growth.

The 2014-15 Budget is set against an economic outlook that is characterised by the Australian economy’s transformation as it moves from growth led by investment in resources projects to broader-based rivers of activity in the non-resources sectors. This is occurring at a time when the economy has been growing below its trend rate and the unemployment rate has been rising

2014 Federal Budget summary

The key initiatives in this year’s Federal Budget include:

  • A Temporary Budget Repair Levy of 2% will be payable on taxable incomes over $180,000 pa for the next three financial years.
  • The levy will increase the Fringe Benefits Tax rate to 49% for three years, starting on 1 April 2015.
  • Changes to HELP debts will increase the amount payable and payments will be made at lower income levels.
  • The income thresholds determining the Private Health Insurance Rebate and Medicare Levy Surcharge will not be indexed for three years, starting on 1 July 2015.
  • The Dependent Spouse and Mature Age Worker Tax Offsets will be abolished from 1 July 2014.
  • People who make non-concessional super contributions from 1 July 2013 that exceed the cap will have the option to withdraw the excess amount plus earnings on the excess.
  • The timeframe for increasing the Superannuation Guarantee contribution rate to 12% will be amended.
  • The Age Pension age will gradually increase to 70.
  • The deeming thresholds will reduce from 20 September 2017.
  • A range of changes to Family Tax Benefit – Part A and B will reduce the number of people who are eligible and, for some, lower the entitlements.
  • The Commonwealth Seniors Health Care Card thresholds will be indexed from 20 September 2014.

The definition of income for the Commonwealth Seniors Health Care Card will be expanded. From 1 January 2015, an amount will be included in the income test, based on an account-based pension being subject to deeming

I thought I would add the two articles above just to emphasize how quickly financial predictions change in response to news that has often been widely anticipated and I don’t think that a rate cut is likely!

Best Regards,

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

 

Aussie Property Guru is your expert adviser for investment in Australian property. We provide a full tailored concierge service for each of our clients from finding the right property based on your own situation, projecting and managing your cash flows, structuring and arranging your financing and working with a team of professional settlement agents and property managers to ensure your property is tenanted, saving you time and money. Book your complimentary consultation with our team here.

Disclaimer: This information on this site is for general information purposes only. It is not intended as financial, tax or investment advice.
.


RBA rate cut expected by year end

   |  by James Mitchell

 

The federal Budget has created compelling evidence for the Reserve Bank to cut interest rates – rather than raise them – by year end, according to a former RBA employee.

The government’s plans to undertake a notional fiscal tightening of 1.3 per cent of GDP in the 2015 financial year represent a weighty argument for a rate cut, Credit Suisse research analyst and former RBA employee Damien Boey told MortgageBusiness.

While residential investment may carry the economy in the next couple of quarters, building approvals have peaked by cyclical standards, he added. 

Read more…

 


Rates won’t rise until end of 2015: NAB

NAB has revealed it does not expect an interest rate rise until the last quarter of 2015, defying industry predictions the RBA could move as soon as September.

Speaking at a NAB Federal Budget Breakfast in Sydney yesterday, the bank’s global head of research, Peter Jolly, said the bank’s forecasts were that the RBA was unlikely to move on rates for at least the next 12 to 18 months.

Mr Jolly said it would not be Australia’s hot housing market that would be the catalyst for a rise; rather, it would mirror rises by the US Federal Reserve which are not expected until the second half of 2015.

“NAB sees the economy remaining benign for the next few years,” Mr Jolly said, “and that means low inflation, low interest rates and an unemployment rate bobbing around the six per cent mark.”

The good news for the economy was that domestic housing construction was starting to show signs of growth, reversing an almost decade-long decline, Mr Jolly said. He also said the Australian dollar will drop back to 80 US cents as the US Federal Reserve begins to increase rates.

read more…

 

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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Aussie homes: as affordable as a decade ago

Aussie homes: as affordable as a decade ago

I thought it would be appropriate to include these news items as I am often asked the question “ Isn’t Australian property overpriced ?”. This brings out a number of interesting insights and whilst statistics can sometimes be somewhat misleading, it is reasonable to use the rule of thumb that people spend about a third of their income on housing, be that rent or mortgage payments. If we keep that in mind, this would mean that Australia is quite well placed on the “dwelling affordability index” relative to other developed nations.

The other articles focus on interest rate expectations, firstly from the Reserve Bank of Australia and then from Macquarie Bank and Westpac .. this is interesting in that Bill Evans, and Matthew Hassan, the chief economist at Westpac made these two predictions which are in opposing directions, within days of each other.

I think this highlights that we need to be mindful of the macro factors at work, but also use some common sense and recognise that it is sometimes better to work with the “likelihood factor” of certain outcomes occurring. When applied to you property investment and associated loan portfolio, it might be sensible to take a measured approach and fix the interest rate for a proportion of that portfolio and leave the rest on a variable interest rate.

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


Aussie homes: as affordable as a decade ago

james- Switzer brokerby Craig James

 

Housing affordability
Homes are still affordable: The Rismark housing affordability measure indicates that home prices stood at 4 times household disposable income in the December quarter – a figure broadly unchanged on a decade ago. Over the past decade disposable income per household has risen around 70 per cent while the average home price has lifted around 67 per cent.

What do the figures show and what does it all mean?

Gen Y has no reason to blame parents or grandparents – home affordability hasn’t really budged in the past decade. Home prices may be up, but so are disposable incomes. read more …



RBA offers good news on interest rates

 

interest relative to housing
The Reserve Bank of Australia has signalled that interest rates
are likely to remain at record lows..


“At recent meetings, the board had judged that it was prudent to leave the cash rate unchanged, while noting that the cash rate could remain at its current level for some time.. Read more
The RBA has released the minutes of its most recent meeting on March 4, which support hopes that the official cash rate 
might remain at 2.5 per cent for the rest of 2014.

MacBank Changes Rate Cut Projection

Macquarie has become the latest bank to revise its forecast for further rate cuts from the Reserve Bank of Australia, moving from an expectation of two reductions to interest rates this year to just a single cut.

Macquarie follows Westpac which on Monday scrapped its prediction for two rate cuts in favour of calling rates on hold for the next 18 months before anticipating a hike from the RBA.

National Australia Bank, JPMorgan and Bank of America-Merrill Lynch still think the RBA has more easing to do in this cycle. read more …

Consumer sentiment falls; two more rate cuts for 2014: Westpac

Declining confidence in the economic outlook and escalating job-loss fears have contributed to a decline in the latest Westpac Melbourne Institute Index of Consumer Sentiment.

The March figure posted a decrease of 0.7% to 99.5 from 100.2 in February. The Index is down 10.9% from its November peak of 110.3 and is at its lowest level since May last year, Westpac reveals.

Consumers have been rattled by the bad news surrounding the car industry, other manufacturers and Qantas, according to Westpac chief economist Matthew Hassan.

“The March survey showed a continued collapse in near term expectations for the economy – the sub-index tracking consumer views on outlook for ‘economic conditions over the next 12 months’ dropped 4%, following a 7.1% fall in February,” says Hassan. “The sub-index is at its lowest level since December 2011, at the height of the European sovereign debt crisis.”. read more...

westpac

 

Westpac’s about-face on rates

Westpac no longer expect rate cuts

Banking Corp chief economist Bill Evans has dropped his expectation for two further rate cuts from the Reserve Bank of Australia, instead predicting a rate hike in 2015.

Mr Evans’ views have been closely followed by traders because he was the only economist to successfully predict the last turn in the economic cycle when the RBA began easing.
He went out on a limb in June 2011 when he forecast the RBA would cut interest rates; though the central bank didn’t cut until November that year when more economists shared that view, Mr Evans still got the credit.
Better news on employment; consumption and business confidence will help counter the effect of weaker employment, says Westpac chief economist Bill Evans.
Mr Evans together with NAB chief economist Alan Oster was until today one of the most bearish interest rate forecasters, citing weak domestic demand for expectations of further easing.
But Westpac now has rates on hold for the rest of this year, and the first rate rise in the third-quarter of next year. read more

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RBA untroubled by home price rise

RBA untroubled by home price rise

Hi Everyone,

I continue to have people ask me about current property prices in the Australian market, and yes, newspapers still continue to talk of a property boom. I think this comment from Craig James at Commonwealth Bank sums up the real situation; “One issue exercising minds at present is the solid growth of home prices. Some contend that a bubble has developed and only bad things can follow – using the assumption that bubbles only burst and don’t gently deflate.”

Others, such as the Reserve Bank, are largely untroubled by the lift in home prices. The RBA contends that “it would be surprising if home prices weren’t rising in response to rising population growth, government grants for new construction, tight rental markets, low yields on cash-based investments and near-record low housing rates.”

The other article I found interesting is the interview with Benjamin Weinstock, as it is about the American property market, but serves to emphasize that the same set of fundamentals can apply just as aptly in different regions of the world.

“Even aside from expected price gains, buying a home is almost always a good investment in the long run, says Weinstock. Tax benefits are not to be overlooked.”

It’s worth noting some differences as well though ;

  • Australia’s inner-city suburbs will remain a strong prospect for investors as both young families and downsizers gravitate towards apartment living, according to a 2014 property market forecast.

At the Property Council of Australia Residential Outlook 2014 yesterday, Brian White, chairman of Ray White, said the biggest recent property market trend in Australia was the move towards inner-city areas.

“We have such buoyant inner cities in Australia. I think that’s one of the biggest features that’s happened in my career, seeing the health, the vibrancy, the youth that’s come in, the families that are coming in. They’re making do with the smaller accommodation,” he said.

“There’s this huge appeal now of inner cities in Australia that is in massive contrast to some of the greatest cities in the United States.”

Mr White said Australia’s inner cities were vastly different to those in the United States due to their health and education facilities and appeal to owners, investors and tenants alike.

Kind Regards

Doc

RBA

 

RBA untroubled by home price rise

james_3.jpgby Craig James

One issue exercising minds at present is the solid growth of home prices. Some contend that a bubble has developed and only bad things can follow – using the assumption that bubbles only burst and don’t gently deflate.

Others, such as the Reserve Bank, are largely untroubled by the lift in home prices. The Reserve Bank contends that it would be surprising if home prices weren’t rising in response to rising population growth, government grants for new construction, tight rental markets, low yields on cash-based investments and near-record low housing rates. Read more...

 

Why 2014 is a good year to buy a home

If you didn’t buy a home in 2013, you may be kicking yourself now. Home prices climbed nationally an average of 13.6 percent in the past 12 months, according to Tuesday’s release of the Standard & Poor’s/Case-Shiller 20-city home price index.

Don’t make the same mistake in 2014, suggests Benjamin Weinstock, real estate attorney and partner at the firm Ruskin Moscou Faltischek in Uniondale, N.Y.

Market forecasters predict that 2014 will be another year of gains for the real estate market..read more..

House prices

 

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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15 common myths that are killing the wealth potential of the average Australian property investor

There are many myths and false beliefs that you may be feeding yourself, that may be hindering your progress as a property investor. We are here to debunk some of these myths and help you make progress in seeing the property investment industry for the...

Everything You Need To Know About Australia’s Property Market Cycles

Most markets in the world consistently go through periods of growth contraction, and the property market is no different. While some might feel that this constant shift means that getting the most out of their property investments will be difficult, it is the...

Why You Should Invest In Brisbane’s Property Market

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