SSS – Apr/May 2018

G’day All,

Finance

-Official cash-rate left on hold at 1.5% for May. This is the longest period in history that the RBA has left the rate on hold. Underlying inflation is still <2%. There is an expectation that wages and inflation will begin to pick up at the end of the year resulting in a possible rate rise.

-APRA have lifted the 10% cap on property investment lending. In summary, banks may be more open to lending to investors and reducing interest rates, but……

-The Banking Royal Commission has ripped heavily into the way lenders assess borrower serviceability and expenses. In summary, getting investment finance now is probably going to get harder before it gets easier around early 2020. Try and have at least 15%-25% saved as a deposit before looking to invest.

Economy

-With global oil prices rising, Australian gas exports are soaring! This will bode well for QLD, NT and WA as demand builds over the next few years. Of note, the NT recently lifted the ban on onshore gas fracking so Darwin will be a market to watch as investment, projects and employment get off the ground.

Market

-Congratulations to our newest clients who are either underway or have recently completed construction of their investment properties! The LAND 400 announcement is a massive boon for the Ipswich economy and this is one of many projects that will support capital and rental growth in the south-east Queensland region.

https://www.qt.com.au/news/land-400-what-5b-defence-contract-means-ipswich/3360618/

Around the country:

-Sydney: Beginning to slow

-Melbourne: Possibly 12-18mths of growth left

-Hobart: Possibly 2-3 years growth left

-Adelaide: Recovery phase. Begin positioning now for $85billion in submarine and frigate projects

-Perth: Bottom of cycle. Expect solid pick-up to commence in 2020-21 as commodities also pick up

-Darwin: Bottom of cycle. Expect solid pick-up to commence in 2020-21 as commodities also pick up

-Gold Coast (Coomera/Pimpama): Approaching peak cycle. Consider accessing equity and investing in other markets.

-Toowoomba: Moving into recovery phase.

-Brisbane (western and northern corridors): Upswing markets due to population, infrastructure and affordability metrics.

Strategy

The Defencewealth strategy of TWO-50-TEN™ is based on acquiring a $2 million portfolio at 80-90% LVR over a 6-8 year timeframe. Once acquired we work to reduce the LVR to 50% over the next 4-7 years using a combination of capital growth, offset accounts and principal repayments. Once at 50% LVR, you will have some serious financial options but it will take time (10-15 years) to achieve. The new property packages we recommend are considered investment-grade based on experience and results and are selected for their balance in anticipated cash flow, capital growth and risk.

Please get in touch if you’d like the team to review your lending or discuss any aspects of property investment!

Quote – Someone is sitting in the shade today because someone planted a tree a long time ago – Warren Buffet

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