SSS – June 2015

RBA Cash rate:
Left on hold at 2% for the month of June. I still believe we will remain on hold until at least October/November before another potential cut. This will be heavily dependent on both inflation and unemployment data between now and then. The RBA also believes the Aussie dollar still needs to fall further from the current $0.77US mark to the low $0.70’s or high $0.60’s which may be assisted by another interest rate cut.

Tighter Bank Lending:
Banks all over have really begun tightening their lending activities to both investors and now owner-occupiers. Macquarie Bank have just recently announced 80% LVR caps on interest-only owner-occupier loans. This does surprise me but then again the lack of lending will reduce the amount of housing being built. This will in turn drive up rents which will in turn drive up capital growth which will then be the time the banks change their policies and begin mass-lending once again! We’ve been here before and this is a good thing if you can recognise it. This will take years to play out, but everything is occurring in accordance with the 18.6 year real-estate cycle.

Low Land Supply:
The RBA’s assistant governor Christopher Kent has recently highlighted in a speech that fresh land for development appears to be “unusually low.” It is most pronounced in Sydney (hence the high growth) with Adelaide the least affected. The high cost and red-tape involved in bringing land to market is prohibitive and this will never change. Therefore if you are in a position to invest in the current conditions, don’t waste it!

RBA’s Kent says drop in land supply could increase house price spike –

Speaking of land – the UK property market is now in an uptick after being decimated during the GFC. The current Duke of Westminster is worth around $27 billion mainly due to land holdings in London that have been in the family since 1677.

Gerald Grosvenor, 6th Duke of Westminster – Wikipedia, the free encyclopedia –

SE QLD Market:
Congratulations to those that have recently secured H&L packages with us up in Coomera and Pimpama! A broad overview of the Gold Coast housing market shows home values have moved 4.8% higher for houses and 3.9% higher for units over the year to March 2015. Annually, home values have been increasing since August 2013, showing an overall strengthening across the market. The south-east Queensland market as well as Cairns still remain my priority markets.

Compound interest is the 8th wonder of the world. He who understands it earns it; he who doesn’t pays it – Albert Einstein

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