SSS – Jan/Feb 2018

G’day All,

1-minute read:

Interest Rates

Official cash-rate was left on hold at 1.5% in February. There may be a rate rise towards end of year as employment, wage growth and inflation start to slowly pick up. There hasn’t been much movement in investor rates but I recommend fixed rates for the next 2-3 year period be explored depending on your personal circumstances.

Serviceability and lending policies are still very tight. This will further constrain new housing supply (a good thing) but policies will eventually change and with it some solid capital growth if you can acquire now.

Property Cycle

The transition into the second half of the real-estate cycle is now slowly underway. Sydney values are very slowly losing steam and we can expect a shift of focus away from finance and services based economies (NSW & VIC) to the manufacturing and resources based areas such as QLD, SA and WA. This will take around 2-3 years to play out but opportunity is brewing. Broad 2018 expectations:

Sydney: prices lower by end of year

Melbourne: prices slightly higher by end of year (tends to lag Sydney by 6-12mths)

Hobart: probable double-digit growth (catch-up period after almost 10 years of zero growth)

Adelaide: prices higher by end of year (bulk of 10-year $200billion defence spend is in SA)

Perth/Darwin/Canberra: prices to remain stagnant (Perth & Darwin primarily resources-based economies)

Brisbane: prices higher by end of year (increased interstate migration, infrastructure and median price gap between Brisbane and Sydney is now at its widest in history).

Strategy

Always remember that property is a long-term play (min 10-years). Our TWO-50-TEN™ strategy and asset selection process is designed on this principle and based on experience. The aim of building wealth is to provide choice and manoeuvrability in the future.

From the whole Defencewealth Team, here’s to a great 2018! If you or anyone you know would like to discuss finance (including DHOAS) or tax/accounting options, then please get in touch.

Quote

If you do not plan your future, someone else WILL plan it for you – Unknown

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