I have had a couple of questions from radio listeners.
The first is from a regular listener about the Reserve Bank Interest Rates. He says that at this time last year when the Reserve Bank lowered the Cash Rate to 2%, I was asked if I expected rates to get any lower. He remembers me saying there was a possibility of a further 0.25% but that I did not expect it for approximately 12 months. He said that once again I was spot on.
This is flattering, but if you had asked last Tuesday morning, I would have said “a rate cut today is a possibility, but more likely to be after the Elections.”
What effect will a rate cut have on my clients?
To back track for a moment: What was the Cash Rate last Monday and what is it today?
The RBA (Reserve Bank of Australia) had set a Cash Rate of 2% but have now slashed it by 0.25% making the new rate 1.75%.
What rates will I be able to offer my clients now?
I will leave that until next week. Whilst the NAB have said they will pass on the full 0.25%, this will vary with different products and I will not know for sure until next Monday.
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A Case for Property Investment in Brisbane
Now to the other question, what is your opinion on recent media reports from foreign experts saying the Australian residential property market is overvalued?
I think their opinions have little merit. As I have said recently if you apply the property clock to Sydney and Melbourne, they are a few minutes after 12 and a correction in the short term is expected.
However, Brisbane is about 6:35, is on the upswing and is now moving to about 6:40.
According to the Real Estate Institute of Queensland (REIQ), in their latest published figures, the average house price in Brisbane was $610,000 for the June Quarter last year and $615,000 for the September Quarter. I expect it would be about $625,000 today.
With the average price of a house in Brisbane at $625,000, our beautiful 5 bedroom homes with gourmet kitchens, fully ducted air con etc. are great value at under $500,000.
I am often asked how I can bring in such a quality product at this price. One of the main reasons is that my builder is debt free and we are pretty old fashion that way. I don’t know any other builder in Australia who is debt free. This passes on tremendous savings to our clients. Where normally the builder will do the slab and then send an invoice and wait to be paid before he takes the next step we have a seamless flow of activity and we save our clients a fortune in land and construction interest.
This is great value.
Now a comment on the budget. I call it the ‘Clayton’s budget’ as it will not be a budget unless the Coalition wins the election. In my opinion, it is going to be close. If Bill Shorten is our next Prime Minister, we are going to see a lot of changes and he will be doing his own budget. If anyone is concerned about that and is interested in getting into negative gearing, for goodness sake get in NOW before the election.
If you have any questions about the reserve bank interest rates or to-restrict-advantages-of-negative-gearing/”>negative gearing and are interested in enquiring about buying property to start your Residential Property Portfolio, please contact our office to schedule a free, no-obligation consultation.
If you prefer to listen here is my radio interview on Emerald 4HI:
Steve Taylor
DISCLAIMER
Steve Taylor & Partners blog is opinion and not advice. Readers should seek their own professional advice on the subject being discussed.