Interest rates left on hold

Interest rates have remained constant at 3% for a second month in a row. The Reserve Bank of Australia (RBA) indicated that a cut wasn’t necessary due to signs of economic recovery.

RBA Governor, Glenn Stevens, said recent economic news has been more positive especially from Australia’s biggest customers for commodity exports, China and India.

‘Evidence has continued to emerge that the global economy is stabilising, after a sharp contraction during the December and March quarters,’ Mr Stevens said.

RBC Capital Market Economist, Su-Lin Ong, said that the RBA has not ruled out further cuts.

‘It won’t hesitate to cut rates again if needed…the central bank is now in wait-and-watch mode,’ Ms Ong said.

April economic indicators were positive, with the official jobless rate falling while building approvals showed a 5.1% increase.

Real Estate Institute of Australia Media Release, 2 June 2009.
Sydney Morning Herald, 2 June 2009.

Australian families have $11,000 more in the pocket

The average Australian family is now $11,000 a year better off due to a combination of low interest rates, a drop in petrol prices, government stimulus packages and growth figures. All positive indicators that Australia has avoided a recession.

‘Aussie households are in a lot better position than households in other major industrial economies,’ Economy.com’s Matt Robinson said.

Mortgage Choice said housing finance was ‘on the up’ with figures released from the RBA showing that housing affordability had improved significantly and house values were holding steady.

The Age, 11 June 2009.
Mortgage Choice, 1 June 2009.
Canberra Times, 1 June 2009.

Super changes will see property as preferred investment choice

Recent changes to Australian superannuation laws are expected to see more investors move to property investment.

Federal Treasurer, Wayne Swan, has announced that deductible superannuation contributions will be cut by half from 1 July 2009. Concessional contributions will be reduced to $50,000 for those aged over 50 and to $25,000 for those aged under 50.

‘What that will do, almost assuredly, is push those people on a higher taxable income to more deductible investments,’ said Roger Hancock, Principle Adviser for Centric Wealth Advisers.

Investors will be looking for the next most tax effective investment. Mr Hancock believes this is likely to be property because investors can claim the interest on investment loans and the ongoing costs of investment properties for cash deductions and savings.

Sydney Morning Herald, 3 June 2009.
Australian Financial Review, 28 May 2009.

Property market ripe for investors

Investors believe the property market is currently at the bottom of the cycle, according to a new survey. The Colliers International National Investor Sentiment Survey also found that most investors are confident that the property market has outperformed other markets.

‘The time is ripe and buyers are eager to capitalise, particularly the cashed-up private investor market,’ Collier's International Managing Director, John Marasco, said.

Australian Finance Group (AFG) said that first home buyer activity had slowed while loans to property investors had increased.

‘Low rates, good rental yields and the relatively strong performance of property over equities may be contributing to growing investor confidence,’ the AFG said.

Herald Sun, 16 June 2009.
Australian Financial Review, 11 June 2009.

Property values set to rise

Property investors can expect to see significant growth in property values over the next three years, according to leading economic forecaster, BIS Shrapnel.

The Residential Property Prospects, 2009 to 2012 report predicted the top performing capital cities will be Sydney, Melbourne and Adelaide which are each expected to rise by 19%.

BIS Shrapnel’s Senior Project Manager, Angie Zigomanis, said that conditions were ripe for sustained recovery: with low interest rates, solid growth in rents and housing shortages evident in most markets.

‘Although first home buyer demand is expected to ease after the expiry of the Government’s boost scheme…investors are expected to take the baton,’ Mr Zigomanis said.
 
‘From here, the recovery in housing demand is expected to broaden and deepen,’ he said.

Australian Financial Review, 15 June 2009.
Herald Sun, 15 June 2009.

Is your mortgage broker licensed?

Starting next year, Australian mortgage brokers will be required to be licensed by the Australian Securities and Investments Commission (ASIC). 

Australia’s credit licensing regime is currently being revamped by ASIC who will implement the new licensing requirements.

Fines and the removal of licenses will be enforced for brokers found guilty of misconduct.

Australian Property Investor, June 2009.

Property offers highest returns

In the current market, cash and residential property have proven to be the best investment performers, according to Portfolio Management Services Director, Jock Bing.

According to an analysis of investment returns, residential property has offered the highest total returns over the past three years. The analysis found that most property investors have experienced strong capital gains and rising rents while other investments, such as shares and superannuation, have fallen by up to 40%.

Continued demand by investors and owner occupiers has meant that residential property has stood out as an investment. Mr Bing said Australia is the only country in the world to have a net shortage of accommodation for both buyers and tenants.

‘Residential property has proved to be the mainstay of a large number of investment portfolios, and there is very good reason for that; over the years, property has made a lot of money for many investors,’ Mr Bing said.

Herald Sun, 13 June 2009.

Aussies forego the beloved ‘sickie’

The Herald Sun reports that workers are taking fewer sick days, due to fears of losing their jobs in light of the global financial crisis. There has been a 15% decrease from last year in the amount of sick days taken, according to Direct Health Solutions.

Chief Executive, Paul Dundon, said that absenteeism usually increases in a recession as employees become stressed however, ‘this year we are seeing less sick days’ resulting in a rise in mental health issues in the workplace.

The Week, 29 May 2009.

Diamonds may not be a girl’s best friend

A good investment in your relationship may not always be a successful financial one. Artworks, collectibles, antiques and jewellery rank highly on the romantic gifts scale but are difficult to make money from.

Romantic assets generate no financial income and their market value may be hard to determine. While gold prices rose by 25% in 2008, the value of the bullion is quite distinct from the value of gold jewellery. Its resale value is subject to fads and individual taste.

Money, June 2009.