Well, after a little break from blogging I thought I’d recommence with some thoughts and ponderings on the year ahead.
I hear many people wondering about what the year ahead will bring, more interest rate cuts perhaps?
It needs to be remembered that the Reserve Bank reduces Interest Rates to help stimulate the economy.
Currently house prices are relatively low and the demand for rental accommodation is high.
At some point there will be a transition where those renting are paying the equivalent of home loan/mortgage payments in rent. These people then start looking more at buying than renting.
At the same point in time, property Investors are returning to the market to buy while property is relatively cheap as any good investor knows, you buy near the bottom of the market and sell near the top. By the time most people get on the bandwagon the market is too hot so they don’t make the returns they dream of.
Historically you can see in Australia that on average, property tends to double in value every 7-10 years. If you don’t believe me there’s plenty of data available for you to research for yourselves. Whether a residential home buyer or an investor, you’d like to think you’ll make some money on your purchase. Maybe now is that time?
On a different note, there are some very good fixed interest rates out there at the moment. They could be viewed as an indicator that variable rates may drop further. Or they could just be viewed as some great peace of mind for those out there who are financially stressed. A guaranteed interest rate for a set period of time can bring great peace of mind and potentially relieve some of that financial stress.
What do you think? Am I right or wrong? Only time will tell, but we’ve always had property cycles and I believe we always will. Maybe they won’t all be quite as I’ve described but I think they will.