AUSTRALIA is set to experience the slowest economic growth in seven years which would make the case for a 50 basis point interest rate cut in September, a survey shows.

The Reserve Bank left interest rates on hold at 7.25 per cent in August for the fifth consecutive month.

There is a widespread speculation that the RBA will make the move to cut rates by 50 basis point instead of two consecutive cuts of 25 basis points each.

The irony is that property investors are shunning away from the property market and rents are set to climb. Given the inflation levels and high costs of living coupled with the highest interest rate in last 12 years, housing affordability is not going to get any better. Property investors should see a healthy rise in rents with their investment properties over the next 12-18 months as more would-be investors are sitting on the fence, adopting a wait and see attitude.

See beyond what the masses see and sometimes you will see great opportunities come your way.

For the fully story, go to http://www.news.com.au/business/money/story/0,25479,24211703-5016110,00.html

I went for a tour of the actual site where the development will be built some three weeks ago. Although near the West Gate Freeway, I am pretty sure the apartments will be fitted with double-glazed windows for sound insulation.

Well, for all my blog readers out there, if you need any info or feedback from me, do drop me a note. The Bank apartments is located near 109 Clarenden Street, another high rise development built by the same developer.

Sydney road is one of the most prominent roads in Brunswick, a suburb next to Princess Hill, Fitzroy North and Parkville. It is populated by yuppies who embraced the Australian coffee culture. Sydney road has been designated by its LGA as one of the roads to be converted to a promenade - a pedestrain walking strip with trendy cafes, restaurants and also shopping outlets. It is set to be the ‘chapel street’ of the North.

There’s a limited opportunity to get into a boutique development along union street, beside the RMIT(Brunswick campus). With a 2-minute walk to Jewell train station, and being close to Barkley SC coupled with its proximity to Sydney road, this is as good as you can get being close to ‘action’.

There will be no lack of tenants wanting to rent close to the city. The lure of Italian restaurants along Lygon street is hard to resist; and if you wish, take a tram along Sydney road to the city. It only takes 10 minutes and you will be swarmed by more restaurants at the Crown Casino. Walk along the Yarra river and look back to the city; it is a stunning sight in a class of its own.

Opportunities are limited! It may or may not suit your portfolio requirements. Call me today for a no-obligation consultation…

It was winter in Melbourne when I arrived on the 7th June after a stopover at Darwin. It was not until I step into my business partner’s apartment at 80 Lorimer Street that I realized how beautiful the views over Victoria Harbour can be. It’s stunning, particularly with the sun glazing down over the chilly wind in winter Melbourne, voted as one of the most liveable cities in the world.

Nested in Lorimer St are five towers built by one of Australia’s biggest developer. You could see the standard of the finishing once you walked into the apartment. Nicely laid quality carpets, stone benchtops, exclusive vanities used in all the toilets/bathrooms and not forgetting the huge 42′ LCD TV in the living room for pure entertainment. It’s city living at its best!

It just cannot get any better, being so close to the CBD; in fact just 2 minutes away and close to water.

There is a freeway running parallel to Lorimer St but mate, I could hardly hear anything when the windows are closed. Windows are double-glazed and strict building standards says it all.

To put it simply, I wouldn’t mind going back there in September again…oh..how I missed the excellent weather.

The scene at the Docklands is certainly one of beauty. Compared to my last visit in 2005, the Docklands have come up very well indeed. The stadium village where the telstra drome is the centre of attraction, a place where major sporting events are held, like Aussie Rules, etc has its own unique appeal.

Being close to Victoria Harbour, the Docklands offer residents who wants a combination of both city living and close to water. To me, it is a dream come true. As a city boy, it is not easy to be close to water and yet in the city. People pay a lot to be close to water but if it is right in the heart of the city, you can’t get any better.

While at the restaurants and cafes in the Docklands, I marvelled at how the city skyline has changed in the past few years. More quality developments emerged. Iconic building start to dominate and fancy yachts are founds parking right on the waterfront, beside the restaurants. To say it is a beautiful scene is really an understatement.

With city living becoming popular amongst the generation Y, Z and the seachangers, developments around and in the Docklands are in great demand. Pan Urban is developing the Lacrosse after a successful spell with Watergate. Lend Lease is building Mosaic etc…

With Suncorp, the insurance giant relocating from the Melbourne CBD to the Docklands, the Docklands have its own commercial appeal. It can only be good for property investors. With only a limited amount of space for development, every inch in the Docklands will be utilized to realize its fullest potential.

Like my property guru said, ‘you cannot go wrong if you hold it for the long term’. I am sure many seasoned investors will agree with me the same can be said for the Docklands.

I had the opportunity of viewing Chevron Green when I was down in Melbourne last week. I couldn’t understand the reason why it has taken longer than usual for the project to sell out, considering the fact the project is located along St. Kilda Road and with close proximity to the city and to the famous and highly popular fitzroy street where restaurants and cafes are located.

The project was marketed over the weekend in Singapore by another marketing company. I have gotten the price list directly from the developer and the developer is paying full stamp duties for purchasers.

If anyone wants to have developer’s price, contact me at 98344408 immediately.

Once again after much media and analyst speculation, the Reserve Bank of Australia (RBA) today just announced that the official interest rate will increase by 0.25% making the base cash rate 7.00%pa. This is now the eleventh consecutive increase.

The primary reason behind this increase is the RBA’s commitment to keep inflation under control.

This means that the average standard variable rate will change shortly to 9.02%pa. For each $100,000 of your mortgage this will increase repayments by approximately $4.80 per week.

Indicatively the best fixed rates as of today will be about 8.20% fixed for two (2) or three (3) years.

For an article in The Age about the increase please click_here

‘Local real estate agents can make or break the ’social status’ of a suburb’, One of my vendors who used to be a real estate agent said. If real estate agents agree that it is a fantastic suburb, and with the media on their side, the chances of property values appreciating big-time will be great but the opposite happens when all the estate agents agree that the suburb is a slump.

Investors are very much influenced by the advice of real estate agents. They rely on the inputs from real estate agents to provide them with the general sentiments of a certain suburb and the social stigma associated with the suburbs. Hence never underestimate the power of estate agents!

For overseas investors, your best bet is to ask a local real estate agent about the suburb that you are buying into; that way you can never go wrong with your investment property!

The use of multi-currency to finance an Australian real estate is possible with non-resident investors. Essentially, it means the security (real estate) is in Australia and the loan (mortgage) taken in a currency other than Australian Dollars (AUD). In principal, if you are a Singaporean and is able to show proof that you have been earning a SGD income, you may be eligible for a loan up to 75% (for residential properties) of the property value or valuation, whichever is lower.

The advantages of taking a multi-currency loan are aplenty:
1. If you take up a SGD or JPY loan, with proof of income that you are earning in SGD or JPY, you are eligible for up to 75% loan to value ratio.
2. It saves investors in interest repayments and ensures the cashflow of the property is positive. E.g. most residential properties are between 4.5%-5% in rental yield. A SGD loan say 2.4%(cost of funds) plus 1% margin for the bank is 3.5% p.a. and a JPY loan say 0.5%(cost of funds) plus 1% margin for the bank is 1.5%p.a. in interest for the mortgage rate. The property will be cashflow positive if an interest-only loan is maintained.
3. The currency can be switched to lower the principal. Over time, just by switching between currencies the LVR will be lowered.

It is not exactly a walk in the park for investors taking the leap. The risks, though present can be mitigated with professional advice. The rule of thumb is to borrow in the currency that is likely to weaken.

Illustration of an investor who takes AUD300,000 in mortgage loan:

Assuming the AUD/SGD exchange rate is 1.3 at the time when the loan is disbursed, the liability in SGD is SGD390,000
If the AUD appreciates against SGD, e.g. 1.4 then the liability in AUD will be reduced. The amount would be SGD390,000/1.4 = AUD278,571 if the investor switched from SGD loan to an AUD loan. It helped reduces the principal sum of loan. Of course the investor can choose to sit on the SGD loan and do nothing to continue paying lower interest rates.

If the AUD depreciates against SGD, e.g. 1.2 then the liability in AUD will be increased. The amount would be SGD390,000/1.2 = AUD325,000. The investor will have to make sure if the amount in AUD is kept well below the bank’s requirement of 80% loan-to-value ratio, otherwise the investor may need to ‘top up’ the loan to ensure it stays within the bank’s comfort level. The investor can however instruct the bank to switch the currency to a AUD one if the AUD liability is near to 80% of the value of the property.

Some banks offer unlimited switching options for investors. By timing the entry of the currencies, the investors can wipe the principal loan off using this strategy. There is now a better opportunity for increased equity particularly if the currency pair is volatile in nature. A better pair would be AUD/JPY where the volatility is greater and hence presents better opportunities for investors. Of course the risk is also proportionally higher.

More information can be obtained from Australian banks offering multi-currency loans for offshore investors. This product, however cannot be offered to tax residents of Australia because of the complication of withholding tax by the ATO.

According to Herron Todd White, a leading valuer in Australia based in the eastern state, it has been reported that the capital city of WA, Perth has reached the peak of its property cycle. Residex has reported Perth as having the highest median property price in the whole of Australia, even more than Sydney.

Industry professionals said the main reason for the property boom in WA is mainly attributed to the resource boom. People flocked to WA for employment in droves and the supply of properties is not enough to keep up to the ever-growing demand.

The question is how long will this resource boom last? Judging by recent reports where Australia has just made a pact with China, it is going to last for a while. Housing affordability index cannot be rising forever. It will grow to a point where people deem it is not viable to buy properties at a certain price as the wages just cannot support the mortgage repayments.

When the resource boom is over, people might leave town in droves. This may create a temporary situation of oversupply in WA and it may be undesirable for many property investors.

For investors who have already invested in WA and had equity in their investment property, they may look towards the eastern states and capital cities for re-investment. Don’t get me wrong. I am not advising the investors to sell. All you need to do is to consult a mortgage broker or an investment specialist, they will advise investors how to uplift equity in their existing portfolio to increase their total asset holdings without much risk.

For investors who are thinking about buying into WA, it may be worthwhile to look at properties that are settling soon or house/land packages. If you are buying off the plans, good luck to you. Pray that the numbers still stack up at settlement, or better still, pray that the developers have enough margins to continue with the sale. I have heard of developers putting viability clause in WA projects in such a way that if they deem the project is not viable anymore, they can cancel the contracts or go back to investors to ask for more money.

So look to the east mates. The chances of going wrong may be lessened!