The Interest Rate Debate Increases

The Interest Rate Debate Increases
An Editorial By Phil Anderson - Tuesday February 14th

Australia boasts a quarter century of positive economic growth as of 2016, but as the sands of international politics shift beneath our tanned feet it would be prudent to continually evaluate the effects of broader economic conditions and not just the likes of Brexit and President Trump have on our own economy. The future direction of interest rates play a large roll in today’s decisions for property holders and potential buyers, so lets try and take a closer a look at what the RBA might be thinking in regards to our interest rates.

First off, let me be clear in saying that the only certainty when it comes to the future of Australian interest rates is that they’re uncertain. You may have heard me say before that ... “No one has a crystal ball”, and to know with absolutely precision the direction of Australian interest rates you would need one, as the direction of interest rates is increasingly unclear and movement in 2017 is dependent on a number of factors.

Inflation and unemployment are two of these factors. Low inflation numbers released recently still refuse to give the RBA the excuse they need to increase rates from their current all time lows, and a relatively stable unemployment rate of 5.6% is also lacking fuel for any potential fire in any direction.

And then there are Property prices. Unfortunately for the RBA markets around the country are operating at dramatically different speeds in different cities, with Sydney and Melbourne experiencing strong growth, Perth generally enduring substantial decline, and Brisbane unfortunately experiencing somewhat of a split personality between property types.

With so much uncertainty it is more important that ever, whether you are a home owner, investor, or entering the world of either in the near future to know your options and have clarity on your decisions and their impacts. Many of my personal forecasts are based on higher interest rates than are currently on offer. It’s these kinds of strategies, as well as picking the strongest property markets and most reliable property types on offer that I will be explaining in detail at my next free investor meeting.

One thing that we can say for certain is that given property prices in certain popular pockets of Sydney and Melbourne have held their stamina, there is no doubt the strength of the housing market will weigh upon any rates decision.

With a whole generation of “rent-vestors” in these markets still unable to get their feet wet in their local markets it is water-1615343understandable that the RBA is hesitant to pull the trigger and increase rates in the near future.

What is understandable is everybody wanting to take part in one of the strongest property markets on planet earth. How that first step is taken is changing, and as economically conscious and responsible caretakers of our family’s futures we also must change with it.

To hear first hand about the performance of our local markets, as well as the property types and locations I’ll be targeting personally in 2017, please feel free to come along to our complimentary investor meetings over the next few weeks. To register please click here.