SSS – Sept/Oct 2015

RBA Cash Rate
Left on hold at 2% for both September and October. The official interest rate setting is really only a factor for owner-occupiers now and less so for investors as most lenders have increased their investor interest rates by between 0.25%-0.45%. If you’re on a fixed rate then it’s obviously not an issue at the moment.

The reason we watch what the RBA does with the official cash rate is because it’s a gauge on the broader economy. When the economy improves and inflation begins to pick up the RBA will increase the cost (interest rate) of money. At the same time the value of hard assets (land in particular) will rise to capture the increase in inflation and economic gain.

There is no doubt that right now is the time to be acquiring favourable assets in solid markets whilst rates are historically low. Also remember that residential housing is the business but the wealth is in the land.

Market News
Northern Gold Coast

  • Confidence and momentum in the Coomera and Pimpama markets are solidly increasing.
  • SQM Research have upgraded their outlook for the region. As a result we’re now seeing an increase in land prices from developers (if it’s in the news, it’s in the price);
  • Although vacancy rates are trending lower, we’re finding that it is taking some time (approx. 3-5 weeks) to initially lease some properties. This is typical though for the winter months.
  • By securing property now at today’s price points, any drops in future rental return as housing supply increases will be manageable. This is also why I think we only have an 8-12 month window to secure land in this market.

Northern Brisbane/Sunshine Coast

  • A lot of infrastructure going up or planned. The North-East Business Park in Morayfield is underway.
  • Construction of the $1.5 billion Kawana Health Precinct on the Sunshine Coast is also underway making it the largest health precinct in Australia.
  • Similar to northern Gold Coast, we are witnessing land price increases by developers as more infrastructure projects and buyer interest gets underway.

Cairns

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Quote
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