SSS – Jul/Dec 2020

G’day All,

Well who would have thought!? With the official cash rate now at 0.1% (the rate that banks charge to lend to each other) and average home loan fixed rates between 2%-3%, there’s been a huge increase in real-estate lending across the country!

It’s also set to become much easier to get a loan as responsible lending laws are due to be watered down in early 2021! This together with all the government housing grants on offer plus stamp-duty concessions means property (land) prices will go higher. Vacancy rates are also extremely tight (1% or less) in all capitals and major regionals except Melbourne and Sydney.

As mentioned back in June 2020, we are now transitioning into the second half of the real-estate cycle marked by huge government stimulus and infrastructure spending on things like roads, rail, energy and renewables.

The economic drivers to follow for the next 5-7 years will be commodities, infrastructure and defence and I expect high growth pockets in WA, SA, QLD and the NT. Iron ore (Australia’s largest export) has just surpassed its previous price peak set back in 2014!

NSW and VIC (mainly Sydney and Melbourne) will likely stagnate given their impressive growth between 2013-19, and unless international arrivals and migration resume to record levels, we don’t expect that outlook to change. In fact, the outlook we had back in May 2018 is ringing true!  

As observed in June 2020, government and the RBA are doing everything they can to ensure the economy and house prices do not implode. This is a massive tail-wind that favours property owners.  

If you’re considering investing for the first time or looking to add to your portfolio, I’d suggest now and the next 12-24 months (until late 2022) is the perfect window of opportunity. Please drop us a line if you’d like to explore your lending and/or property investment options.

From the entire Defencewealth team, we wish you and your families a safe and enjoyable festive season and looking forward to 2021!

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 (min 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.

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