SSS – Jan/Feb 2016

RBA Cash Rate
-Remains on hold at 2%. Inflation increased slightly over the Christmas quarter but still remains under the RBA’s preferred 2-3%. Expect official rate to remain on hold with potential for another cut.
-Interest rate increases by the banks from hereon are now purely for profit as investor lending growth is now contained below the regulator’s (APRA) annual 10% guideline. If in doubt about any loans you have then please get in touch with Simon to arrange a no-obligation review.

Global Economy
– US raised their official interest rate by 0.25% on the back of a strengthening economy and increasing real-estate values.

-The Japanese official interest rate is now negative and I promise this isn’t a joke. This only affects the Japanese banks in a bid to get them to lend more money into the economy rather than keep reserves on deposit with their central bank. http://www.bloombergview.com/quicktake/negative-interest-rates

-Global oil prices have dipped below US$30 a barrel. Cheap energy is a pre-cursor to a strong economy and a strong economy is what supports rising property (land) prices.

-Whilst China is in a spot of bother economically, most of their issues will remain contained internally. Whenever you hear bad news always remember that there’s approximately 2.5 billion people in the Asia-Pacific region that are either in or moving into a recognised middle-class. These people will be demanding higher quality food, leisure, health and education and Australia is well placed to service these demands. Take baby formula for instance. The Asian Century is the main driver behind the Federal Government’s push to further develop northern Australia.

Australian Market
-No change to our focus on the south-east Queensland market. Congratulations to those that have recently secured early-stage land through Catherine in Brisbane’s south-west corridor!

DHOAS
-As a guide for those with a NAB DHOAS loan, you shouldn’t be paying more than a 4.75% interest rate. The bigger your loan amount then the bigger the discount. If you are paying more than 4.75% then get in touch with NAB and request a lower rate.

Overall 2016 looks set to be a solid year to get your property portfolio underway. The ideal time was 2 years ago but the next best time is now. For those in their mid-20’s that have recently joined Defencewealth and started the TWO-50-TEN™ journey – welcome! By the time you are in your mid to late 30’s you’ll be in a very healthy financial position provided you stay the course.

If you or anyone else you know are seriously considering property investing then please get in touch. As investors ourselves, our core business is to assist you with strategy, finance and asset selection with referral partners for tax, accounting and financial planning.

Here’s to a great year!

Quote
Diversification is protection against ignorance. It makes little sense if you know what you are doing – Warren Buffet

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