Australia’s central bank will hold off on further rate cuts until at least February, according to its December meeting minutes, allowing time for recent rate cuts to work their way through the economy and spur growth.
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Paul Castran
This week’s interest rate cut is expected to lead to an investor resurgence.
With the arrival of spring, they started emerging from their winter bunkers, scouring every neighbourhood, on the prowl for the easy kill. As December broke and interest rates fell again this week, they became bolder and began pacing, waiting and watching for their weakened prey.
And now, finally, they’ve begun to pounce. “Yes, at last we’re seeing evidence of investors returning to the apartments market,” says John Edwards, managing director of residential property researchers Residex. “There’s real activity now from the investment community and we’re predicting we’ll soon see that translated into a lot more sales.”
The latest rate drop in the cash rate this week, a further 1 percentage point to 4.25 per cent, is expected to further lure the investment hunters. “It will have an effect over time, especially if the rates stay permanently down,” says Australian Property Monitors’ senior economist Liam O’Hara.
It’s amazing to see them stalk in terrain that otherwise looks so parched and barren but the experts are adamant: with falling interest rates, rising rents and the continuing sharemarket volatility, the conditions are perfect for the lean and mean to make an absolute killing.
Read the full article from Susan Wellings of the Sydney Morning Herald here:
Paul Castran
Industry advisers say the combination of falling interest rates and rising rents have presented a once-in-a-generation opportunity to invest in the property market. Mortgage rates have fallen from an average of about 9.25 per cent to 6.9 per cent, and some financial experts predict official interest rates will fall to 3.25 per cent by the middle of 2009.
At the same time, the recent fall in property prices in major cities has seen rental yields as high as 4-5 per cent on well-located properties.
While many property investors are tempted to sit back and wait till the market bottoms out next year, some property experts say the time to buy is now.
The Real Estate Institute of Victoria also advises it is a good time to invest.
REIV president Adrian Jones said that for the past two years rental vacancies had been hard to find in Melbourne, a sure sign that investors could achieve a decent return.
It is also a buyer’s market, making it easier to find and afford an investment home.
“The cost of borrowing has fallen substantially but returns on investment, the rental paid by tenants, has not,” Mr Jones said.
Finally, Melbourne has a growing population, which will translate into growing demand for housing.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,24764359-5013926,00.html
Paul Castran