The Reserve Bank of Australia reiterated Monday that interest rates would remain on hold, releasing minutes from the August 5 meeting. The growth forecast is uncertain but probably slowed to a more moderate pace in the June quarter, the bank said. Weakening commodity prices, rising unemployment and a rising Australian dollar continue to make it harder to stimulate local demand. And average lending rates for mortgages have been falling, due to refinancing. That leaves the bank in a tough spot, since further rate cuts might inflate a housing bubble while raising rates would stoke unemployment. Read the full story here.
How did REA land the Terminator for an ad blitz?
Apparently, Arnold Schwarzenegger’s latest role as a pitchman for realestate.com.au began with the action movie superstar and former California governor eyeing property just north of Newcastle, NSW. The advertising team wasn't targeting Schwarzenegger nor any celebrity, but had settled on a humorous conflation of Austria and Australia when inspiration struck. Ad firm BWM approached Schwarzenegger through a Hollywood director who wrangled time together. The director “spoke to Arnold about how he understood the idea, that it would never be endorsement, it would be performance and he was just tickled by it. He’d never done something like that before.” Read the full story here.
Buyers spooked by federal budget
About 60 per cent of potential property buyers expect to hold off until they see the impact of the federal budget, according to the annual QBE Australia report. The survey, conducted at the end of June, delved into mortgage and property market sentiment. According to the report first-home buyers were even more reticent. While the appetite for residential property remains strong relative to the same time last year, more than half of those surveyed think property is overpriced. Most people who do not own a home believe they'll never be able to afford one, and first homebuyer activity remains near record lows. Read the full story here.
First-time investors, however, appear “relaxed”
Australians are undeterred by possible interest rate increases when considering a first investment, given a market with record home prices, according to a Westpac Banking Corp. (WBC) survey. Most surveyed remain confident in buying a property to rent out, and it would take a two-point rise in interest rates to cause a rethink. “Even if the rate direction changes suddenly, there could still be at least a year of strong demand left in the Australian property market,” an analyst said. Loose monetary policy has boosted home prices by 10 per cent in the three months ended June from a year earlier. But Australian household debt has doubled since 1997, with banks’ exposure to mortgages rising in tandem. Read the full story here.
Five tips on buying an investment property
Being a landlord can be a headache for the inexperienced. (It's often a headache for experienced people, too.) But finding the right property will help. Here's five tips from experts. Choose apartments – they're just easier to manage and they're easier to rent because they're less expensive for tenants. Two-bedroom units are ideal, given the market in the main capital cities. Older apartments are less likely to have strange amenity issues and are easier to price correctly. Simpler is better, because every additional amenity adds complexity and overhead costs for maintenance. But don't skip the essentials like off-street parking, storage and laundry, lighting and the like, since your tenants are also human beings. Read the full story here.
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