Market Update

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Foreign Investors Seeking Australia All Out For Property Investments

homes for foreign investorsLow interest rates have ushered in a new era of property investment. Come to think of it, low interest rates and sustainable inflation is turning out into a global trend. For Australia, it might open the door to some well-leveraged property transactions, high nominal prices and further foreign investment, writes Pete Wargent for the blog Property Update.

This is the time to take your foot off the pedal in the bond market or the fixed-interest investment market.

This is the time of saying Hi! To the glorious opportunities that real estate presents….

….and this, more than ever before, is the time to diversify your property portfolio and root for the capital city investments (they will reach new highs).

Cash rates may come down further

Wargent reports that 2.75% may not be the last limit to which cash rate has come down. Three more, yes I come again, three more cash rate cuts to the tune of 0.25% each are expected. Finally, the cash rate may close in around 2.00%.

With population growing as expected in capital cities, a higher median price brought about by housing demand is expected. Add to this the spike in nominal prices (prices not adjusted for inflation).

Australia gets the “safe haven” tag from foreign investors

Global investors have never used the expression “safe haven” so fiercely for Australia. Today, they are willing to be buyers of off-plan constructions, redevelopment properties and new dwellings with just the same vigour. They would not have spared the established dwellings either but for the property regulations in Australia.

Wargent feels that the regulations may ease up during the bust phase of the property cycle allowing our real estate to be cushioned by foreign investments made in established dwellings.

You can read the original article here.

More action expected in capital cities

I ditto Wargent’s opinion in regards to the boom in the capital cities. I think the meat of the action will take place there. Even the foreign investors are looking for inner urban spots with cafe lifestyles. The trend of buying around regional hotspots is fast becoming a thing of the past.

Nobody is putting a bet on waterfront properties (fear of land erosion and submersion) either- not even the traditional lobbyists of oceanic beauty.

Low interest rate environment hasn’t changed buyer response as expected

“Low interest rates will change the buying order”. Yes we keep hearing this but truth be told, there isn’t an appreciable shift in buyer preference due to the prevailing low cash rates. The loan offices are far from being in a mode of frenzied activity.

We, the Australian citizenry, have perhaps become too circumspect after the GFC. We are not willing to reduce our monthly mortgage either despite deals being available (because of low interest rates).

Do you think that Asian investment is responsible for the prestige market recovery in Australia?