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At its meeting today, the Board decided to leave the cash rate unchanged at 4.75%.
The Australian economy is relatively flat at the moment. New building approvals are at low levels. Mortgage lending is also lower than for the same period last year. This is also being reflected across the whole economy. Ford Australia recently cut back on production just ahead of the launch of their new models.
This cautious approach by consumers especially in the Real Estate market has created some good purchasing opportunities for the investors. Some developers overextended themselves and the cut back in consumer spending has resulted in those properties being offered at greatly reduced prices.
Development land is also offering some outstanding opportunities. Here the investor needs to be cashed up and have a reliable cash flow as this becomes a long term investment with little chance of immediate income; however some of these properties offer some spectacular medium to long term capital gain opportunities.
Historically, property has always recorded average growth of 8% to 9% annually. These increases rarely ever happen in a steady manner but rather in spurts after years of little or no growth.
This is why real estate is always recommended as a ‘long term’ investment. If it is treated as such it is a good profitable investment. Normally the only time you will lose in such a transaction is if you are forced to sell at a bad time.
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