Australian Economic Indicators

In an ever-evolving financial market place, it is important to keep informed and up to date.

Australian economic indicators remain sound with growth picking up more recently.

Momentum in the labour market has improved. Strong employment growth has been recorded over recent months, although wage growth remains low by historical standards.

Economic conditions continue to vary across the states, with the New South Wales economy performing strongly, and there are signs that economic conditions are starting to improve.

Conditions in the established housing market remain strongest in Sydney, which is consistent with better economic growth expected in coming months.

Are your financial circumstances positioned to take advantage of current sound economic conditions?

– Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Coffee with Kiril – Episode 11: The Secret Revealed: How to buy a property with your superannuation fund

The Secret Revealed: How to buy a property with your superannuation fund.

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube Channel

Wages Growth

Australian workers are still stuck with the lowest level of wages growth in at least two decades, as pay packets increased an average of just 1.9 per cent last financial year.

That is the same annual increase that was recorded for the three months to March, and only just matches the current level of cost of living increases, as measured by the consumer price index.

Private sector wages rose a paltry 1.8 per cent over the past year, while public servants saw an average 2.4 per cent pay rise.

When was the last time you reviewed your budget and in particular the effect interest rate increases may be having, or could potentially have, in the future?

Now is a good time to be prudent and review your financial circumstances, in particular how your budget would be affected by increased interest rates.

Attractive fixed interest rates options are available should your individual financial circumstances dictate.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

 

Coffee with Kiril – Episode 10: Are property warning bells starting to ring?

In this episode, Kiril answers the question: “Are property warning bells starting to ring?”

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube channel

Interest Only: PI Rate Movements

The average interest only investment loans with a variable rate have shot up by 73 basis points due to rate movements beginning last November.

These figures, from the latest Reserve Bank of Australia (RBA) Statement on Monetary Policy released on 3 August 2017, reveal this increase was caused by a double whammy of rate rises in November and again in June.

“Since May, most lenders have increased their standard variable reference rates for interest-only loans by around 30 basis points and reduced standard variable rates for principal-and-interest loans to owner-occupiers by around five basis points,” the RBA wrote.

The average fixed and variable rates, as well as the associated changes since November, are listed below:

Interest rate Change since Nov 2016
Variable P&I rate
Owner occupier 4.41% -4 basis points
Investor 4.98% +29 basis points
Variable IO rate
Owner occupier 4.98% +52 basis points
Investor 5.46% +73 basis points
Fixed P&I rate
Owner occupier 4.14% +3 basis points
Investor 4.45% +20 basis points
Average outstanding rate 4.63% +13 basis points

 

– Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Coffee with Kiril – Episode 9: Choose carefully! Buying in the wrong city will cost you big time

In this episode, Kiril answers the question: “How buying in the wrong city will cost you big time?”

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube channel

Spruikers Paradise- A Tale of Two Cities

For a number of years now, Sydney property buyers have been coerced into buying in Brisbane. Lured by the promise of massive capital gains and thinking they are getting greater value because the prices were so much cheaper than Sydney.

 

What due diligence did these investors actually undertake? Often it was a schmick presentation by a professional marketing company that claimed to have carefully scoured the entire property market around Australia, and hand-picked a particular unit in a particular development.

 

Well, these investors are about to revisit what they learned in Economics 101, however unfortunately clearly forgot….the law of Supply & Demand.

CoreLogic recently released their expectations for the number of units due to settle over the next 24 months in each capital city. Whilst Sydney can expect an uplift of 12.2%, Brisbane blows that number out of the water with a massive uplift of new units of 21.4%.

With such a massive jump in the supply side, you would need to see a huge lift in the demand side for these units to avoid a complete blood bath in Brisbane. And unfortunately the demand is just not there. In the last 5 years, jobs growth in NSW has increased by 38%, compared to Queensland’s 12%…and it is jobs growth that drives population growth to those States.

In the last 5 years the NSW share of national population growth was 29%, whilst Queensland experienced 20%……. ‘Brisbane, we have a problem.’

The picture is becoming very clear right now and is showing up in what is known as ‘Settlement risk’. That is, the % of off the plan units that were sold in the last few years that are settling today with a valuation lower than the contract price. Sydney has the lowest number in the country sitting just above 10%. In Brissy that number has just hit a whopping 50% according to CoreLogic. That means that 1 in every 2 settlements, is coming in at less than what it was bought for. And whilst some investors will have the cash or equity to complete that purchase, many wont.

The lesson here is simple. Property doesn’t always go up. Property can carry substantial risk.  And most importantly you must always always do your own due diligence.

– Kiril Ruvinsky, Director Corporate Partnerships

Housing Affordability

Housing affordability continues to be a hotly discussed topic with both younger first home buyers, and older generations, looking to support their children into property.

It is important to start planning on how you can best enter the property market as either an owner occupier or investor now.

To better understand your borrowing capacity, and budget to save for a deposit, there are critical actions you can take today to place yourself in the best position to buy property.

It is important to seek professional advice to understand the current market and what options are available, based upon your individual circumstances.

At Strategic Investor Group, we are well placed to provide you with sound advice regarding property strategy, debt structuring and property acquisition.

 

–  Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

 

Coffee with Kiril – Episode 8: Understand your cashflow = own more property

In this episode, Kiril answers the question: “Should you buy a unit or a house?”

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube channel

Cash Rate Unchanged

As expected the Reserve Bank has maintained official cash rates at the lowest levels ever recorded…

The official cash rate has now remained at 1.50% for twelve months and every indication is that prevailing market conditions will ensure the rate remains at these levels for some time to come.

Whilst the Reserve Bank continues to monitor other key economic indicators such as the Australian Dollar and underlying Inflation, it is hard to see the Reserve using interest rates as a leverage against these factors in the short term.

Many people continue to sit around waiting for things to change, in particular regarding a property purchase. However, the longer you wait, the more likely you are of missing out on today’s opportunities.

It is important to remain informed. At Strategic Investor Group, we are well placed to provide you with sound advice regarding property strategy, debt structuring and property acquisition.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group