Hi Everyone,
Here are some articles of interest to anyone looking at investments in Australia.
As an aside I’ve included a snippet from Tim Farrelly who emphasizes that “ Buy high, sell low still seems to be the preferred strategy for many financial advisors “ and I think this is also true for many investors. That’s why we always continue to stress that it is important to invest in quality assets, preferably when they are under-priced to comparable investments. When looking at this in the context of property investments in Australia, the best avenue to use this basic principle is to compare what is happening in different locations.
Australia’s central bank signalled the end of a two-year easing cycle and foreshadowed stronger economic growth, sending the nation’s currency higher.
Governor Glenn Stevens kept the overnight cash-rate target at 2.5 percent, saying in a statement in Sydney “the most prudent course is likely to be a period of stability in interest rates.” He said the Australian dollar’s decline “will assist in achieving balanced growth,” dropping references in past statements that it was “uncomfortably high.”
The RBA is trying to stimulate housing construction to pick up some of the slack in the labour market from waning mining investment, and has previously said that higher property prices are needed to spur the building industry.
“Credit growth remains low overall but is picking up gradually for households,” the RBA said today. “Dwelling prices have increased further over the past several months.”
A private RP Data-Rismark home value index released this week showed house and apartment prices rose 9.8 percent in major cities in the year to Jan. 31. In and around Sydney, prices in some suburbs have surged as much as 27 percent in the past year.
Read the full story at http://www.bloomberg.com/news/2014-02-03/rba-holds-key-rate-at-record-low-2-5-as-currency-pressure-eases.html
RBA upgrades domestic economic growth
The Reserve Bank of Australia has upgraded domestic economic growth alongside its latest inflation forecasts, while Perpetual Investments has predicted positives for investors. More>>
Perspectives – latest
Blowing in the wind
In December, a report on asset allocation trends and intentions of financial planners crossed my desk. The voice in my head sang the Dylan classic “How many times…”
Tim Farrelly, farrelly’s | Opinion
Brisbane’s next growth suburbs identified
The inner-northern suburbs of Brisbane will offer the best prospects for capital growth and rental returns in the city, according to Position Property. Read More…
Sydney, Melbourne push values 1.2 pc higher in January
Property prices in the capital cities have continued 2013’s impressive gains, with a 1.2 per cent increase for the first month of 2014. More>>
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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.” 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. |
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Sydney property bubble to pop when rates rise, says HSBCWednesday, 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.
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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
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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.
http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926
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RBA upgrades Domestic Economic Growth
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