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Hi Everyone,

It’s interesting reflecting on a lot of the market predictions that we saw at this time last year …………………………. and it makes you aware that consensus opinions are not often correct !

Something we can all be confident about is that we have seen the peak of the investment boom in mining infrastructure and that 2014 will be a difficult time for the Australian economy as the non-mining sectors of the economy need to be able to compensate for that, and that this may prove to be quite difficult until 2015 and beyond.

Goldman Sachs expects growth to dip below trend in 2014, they said it will pick up to between 3.5 and 4 percent in 2016 and 2017.

The boost will come from looser monetary policy from the country’s central bank in the form of interest rate cuts, they said, combined with the benefits of a rise in housing investment and a weaker currency. Goldman said they expected the Reserve Bank of Australia to act soon, cutting rates in March next year, and again in 2015.

I’m not so confident about the prediction of a rate cut in 2015 as I think the economy should be showing signs of improvement by then.

The Bloomberg News article post the Fed announcement in relation to tapering is worth looking at as this should keep some downward pressure on the Aussie dollar, but the question is, will that be enough ?

The yield difference between Treasury five- and 30-year securities narrowed this week by the most in 19 months as traders unwound bets the Federal Reserve would wait until 2014 to announce cuts to its bond buying.

Yields on five- and seven-year notes rose to the highest since September after the Fed said Dec. 18 it will start slowing purchases next month. The U.S. economy grew more in the third quarter than first reported, data showed, underscoring wagers the Fed may conclude its buying next y […]

Read the full story at http://www.bloomberg.com/news/2013-12-21/treasury-yield-gap-shrinks-most-in-19-months-after-fed-decision.html

Given this overall outlook for 2014, I think that property should continue to fare quite well as any economic difficulties are likely to be met with an easing in monetary policy by the RBA which will continue to drive improved housing affordability.

Markets set for strong 2014

Investors have missed the opportunity to take advantage of capital growth in Sydney, Melbourne and Perth, according to RP Data analysis. More>>

Australia to be ‘odd one out’ in 2014: Goldman Sachs

Published: Monday, 25 Nov 2013 | 10:39 PM ET

By: Katie Holliday | Writer for CNBC.com

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http://www.cnbc.com/id/101227413

RBA must remain ‘accommodative’: Pimco

With 2014 shaping up as a critical year for the Australian economy, the Reserve Bank will need to keep monetary policy accommodative, according to Pimco. More>>

 

Fixed rates set to rise further

1.76.jpgThe low interest rate environment will continue into 2014, but fixed rates will edge higher as economic confidence improves in Australia and overseas, according to Aussie’s executive chairman, John Symond.

Read more…

 

Lower dollar needed to boost economic growth: RBA

Broker News
The Reserve Bank Board of Australia has left open the possibility of reducing interest rates further if required to boost economic growth, within the target inflation band.Click here to read more.


Lower dollar needed to boost economic growth: RBA

I would like to take this opportunity to wish you all a very Merry Christmas and a relaxing holiday season.

All the very best !

Doc

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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

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·        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

 

 

 

 

 

Markets set for a strong 2014 – RP Data

Australian market, Property investing, rental return

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