How long have interest rates been this stable for and more!

Property Club Property Market Insights

Here we are in the depths of winter, hope you are keeping warm!

To those of you with American connections, friends or family . . . Happy Independence Day!

Okay, let’s have a look at what made news this week in our property markets and more; importantly, how it affects us!

  1. How long have interest rates been this stable for??
  2. RP Data House Price Summary for June 2014 – last 12 months
  3. The house price rebound – Stephen Koukoulas
  4. Aussie millionaires hold twice as much property as their global counterparts

How long have interest rates been this stable for??

This weeks decision by the RBA to leave interest rates unchanged at 2.5 per cent means that we are seeing our longest period of interest rate stability in nearly a decade, said the Housing Industry Association, the voice of Australia’s residential building industry.

“The RBA have been saying for some months now that the economy requires stable interest rates. Consequently, today’s decision is in line with our expectations,” commented HIA Senior Economist Shane Garrett.

“The record low interest rates we have had for the past twelve months has done much to fuel growth in the most interest rate sensitive sectors of the economy,” explained Shane Garrett. “We estimate that new dwelling starts grew by 10 per cent during 2013/14, hitting one of the highest annual totals on record,” Shane Garrett noted. “Low interest rates have also been instrumental in helping the ailing renovations market finally take a turn for the better,” added Shane Garrett.

RBA is saying:

In the Board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.

We certainly look to be in for a good period of stable and low interest rates!

RP Data House Price Summary to June 2014

As we head into this new financial year, it is an appropriate time, to have a look at what our property markets did over the past 12 months!

No surprises as per the graphics below; that of the 5 capital cities, Sydney was a standout, with over 15% growth; however good growth from the other capital cities as well, has contributed to a 10% increase over the past 12 months!

What have you missed out on, by not being part of this?

And conversely, what have you enjoyed in capital growth over the past 12 months?!

The house price rebound – Stephen Koukoulas

Stephen Koukoulas is one of Australia’s leading economic visionaries, past Chief Economist of Citibank, heading global research in London for TD and Senior Economic Advisor to the Prime Minister.

Stephen published an interesting article just recently, about house prices in Australia; makes a lot of common sense, I’ll let you go through it below!

The RP Data house price series now shows that prices are up 1.3 per cent so far in June (just one day to go) to largely reverse the 1.9 per cent price drop in May. In recent weeks, the price rises have been solid which suggests further seasonal increases are likely in the near term, especially with interest rates remaining near record lows.

With the economy seemingly softening in recent months with commodity prices down and the Australian dollar strong, the balance of issues to force the RBA to move rates in either direction remains finely balanced with house prices now back in the “hike” column.

Aussie millionaires hold twice as much property as their global counterparts

Nothing out of the ordinary that we didn’t know about here, read below!

Australians millionaires hold over 40% of their wealth in property, more than double the global average, the 18th annual World Wealth Report has found.

The report by Cap Gemini revealed there were 218,700 people in Australia who had US$1 million or more to invest (excluding their family home). That was up by 5.8% from 206,600 people a year earlier.

Cap Gemini wealth management specialist Dorus van den Bizenbos told Property Observer that Australian millionaires had always held around 35 to 40% of their wealth in real estate over the time since the first survey was conducted.

So; what would you do, as you know:

  1. Based on fixed interest rates available now, we are in for a long period of low and stable interest rates
  2. House prices have re-bounded strongly over the last 12 months and because of the above-mentioned low interest rates, are set to continue
  3. With so many Australians having a large proportion of their wealth in property, it is a tried and proven way of creating wealth safely!

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