Key investment topics we’ve been tracking over the last couple of months are as follows:
The RBA cash rate was dropped in May to 1.75%. This was due to low inflation of less than 2%. Don’t forget that the world’s central banks will do whatever it takes to keep inflation going – including going to negative interest rates as is currently the case in the EU, Switzerland and Japan. Although it’s doubtful Australia will get to that stage, we are expecting another interest rate cut later this year to 1.5%. For this reason my lending will be kept at variable rates for the time being.
Hard assets such as property (land), gold and fine art are excellent stores of wealth in an inflationary environment. Land value though is also tied to its overlying economy which is why we remain focussed on residential property in strong growth areas. Be very weary of apartments as land content is significantly less and you will end up with more depreciating asset than appreciating.
Adelaide – The $50 billion submarine and frigate project announced in Adelaide will be a big boon for Adelaide land values in the future. Vacancy rates remain tight overall and we’re seeing good growth in the western suburbs. Well done to our FHB’s in Seaton and Semaphore that have recently built. We can also assist in sourcing investment-grade stock for those interested in the Adelaide market.
South-East Queensland – Still remains strong and is our prime investment location. Key areas are the northern Sunshine Coast corridor and Ipswich LGA mainly due to infrastructure and population growth (Ipswich now at 188,000). New home packages in Coomera and Pimpama are now breaching the $500,000 mark so congratulations to those who got on board early!
Although there’s been a drop nationwide in rents with some areas like Perth more impacted, there should be no real change in your net return as interest rates have also dropped. Regarding vacancy rates, latest SQM data has all capitals at now less than 3% with Perth the only exception at 4.9%.
The new superannuation scheme begins on the 1st July allowing members more direct control over their superannuation investments. Whilst seeking professional advice on whether to switch is highly recommended, current members will generally be better off by staying on the current defined benefits scheme (MSBS). This can be substantially bolstered with a separate 10-15 year property investment plan. More details on ADF Super here.
Being rich is having money; being wealthy is having time. – Margaret Bonnano
If you or someone you know is ready to start building genuine wealth through property then please get in touch! We can assist in all aspects of finance, asset selection and strategy!