There are many factors that go to making up what affects the rate of change of real estate prices. Any real estate investment decision you make must consider these factors in terms of your timing, where and how much you can (or should) reasonably pay for your future property.
- Interest rates – lower rates for a better chance of upwardly moving prices, higher rates tend to flatten or drop markets.
- Finance availability – the more money available, the more people can spend – prices move up. If money is tighter, people have less money to pay with – property doesn’t get sold and prices stagnate or move down.
- Number of listings – the more listings on market, the more choice and less competition, prices move sideways or down. If there are fewer listings for the same number of buyers, bunfights can happen and prices can move up.
- Vacancy rates – below 3% is considered tight for the market and rents can move up, meaning values may move up. Above 3%, rents can ease leading to lowering in values.
Ever since I was a child I have been interesting in flying, particularly to outer space – hence my decision as a nine year old to become an astronaut. Because of that and shows like Star Trek, I have always been fascinated with our planet, its place in our solar system and our Milky Way’s place in our universe. We really are just a speck of dust in the universal scheme of things. Some think that we are an experiment in some alien’s petri dish. A few believe that a higher power – call it what you will – has a lot to do with us being here on the 3rd planet from the Sun.
So when I read an article recently that clearly explained that our world was going to end, and that it would be because of our own Sun, curiosity took over and naturally I read it. Just in case you are interested in the full article, here is the link.
When I was seven, I decided I wanted to be an Astronaut, right after the moon landings. Then a few years later, I realized I could never be an Astronaut because I wasn’t an American (though in the last decade or so that has changed). So I thought I would be a fighter pilot instead. I reached Year 11 in High School and enrolled in all the classes I needed, including the double maths classes. I quickly realized that I could not cope with the x’s and y’z over z’s. I was only any good with numbers that had dollar signs in front of them. So I dropped out of the high level maths, to the mid-level maths class and so ended my fighter pilot ambitions. I toyed with the idea of being an air traffic controller but that didn’t work because I didn’t have the multi-tasking skills required. Two years after I finished high school, the Air Force changed the maths requirements – the mid level maths would have been enough for me to qualify as a pilot.
But for the sake of an administrative policy I may have had a career flying F-111 or F-18’s and maybe retired to fly Jumbo jets as a commercial pilot. And I would not have had a career that included real estate sales – new homes and established, finance broking, financial planning, property investing, renovating and finally real estate development. And I would not have written five books on real estate investing, nor spent years educating thousands of people on how to achieve wealth via property.
I continue to be fascinated with people who have achieved success in their lives, reasoning that there are always lessons to learn and inspiration to glean from studying their lives. One such person I have followed with great interest is Mr Frank Lowy.
Ever since the very first publication of the Australian Rich 200 list in 1983, Frank Lowy has appeared among its members. In recent years his net wealth is estimated as in excess of $8 Billion AUD, which is enough to place him 3rd on the list of wealthiest Australians of 2016, behind Harry Triguboff and the Pratt Family.
Most investors are aware that housing markets across most parts of the country (Perth & Darwin excepted) have been in a prolonged state of price increases. The more aware will have drilled down to what has been driving the boom and will know that in answer to the demand, developers have been building apartments in record numbers, for record prices.
What is currently causing jitters is that no one seems to know if the number of apartments that have been constructed, are under construction or approved to be constructed, will ultimately prove to be too many for the demand. If so, many fear that could lead to a downward price spiral and a protracted period of flat growth in prices.
Let’s have a look at the situation from a macro viewpoint and see if we can make sense of it.
Last week in my Radio Wealth Episode 14 podcast, I shared with you some really exciting information about a home loan product that had an interest rate potentially as low as 2%.
Yes, TWO percent.
Needless to say it has caused quite a stir and there are lots of investors out there who have been emailing in asking questions.
One in all in I say, so I am going to reproduce a few of the best questions, and the answers here so that you can get a better feel for what the product is.
Just over 20 years ago, in 1995, an “average” Australian home could be bought for about 3.8 times the average weekly earnings.
Today, that same ratio is 6.5 times average weekly earnings. So on the face of it, Australian homes today are almost twice the relative prices as they were 20 years ago – see the chart below.
Welcome to the Radio Wealth Real Estate Financing Special broadcast.
If you have ever wanted to know what it takes to pay off your own home and then your investment property loans fast, then this show is an absolute must for you.
We have a special guest joining me in the studio, my friend Scott Parry, who is a finance and wealth creation specialist. Scott told me a few weeks ago about a new financing facility called Rate Reducer. I think that it is the most powerful system for paying off a home loan that I have ever seen for investors who have their own home and at least one investment property.
The Rate Reducer loan facility may be able to help you get a home loan that has an interest rate as low as 2%. Yes, that’s two percent.
So this twenty minute episode could be just the thing for you if you are looking to accelerate your wealth creation plan.
We are looking to create more special Radio Wealth shows with special guests – if you know someone we should be talking to, who has something valuable to share, do please let us know.
Or if you have your own questions, do send them in. Remember you can ask anything you like – this is your show. The questions can be about anything to do with life, freedom, property investing, finance, planning, goal-setting, inspiration – whatever you want to know that will help you along on your journey.
Feel free to email firstname.lastname@example.org with any questions you want answered on the show.
Have you ever wondered what motivates an athlete to devote countless hours of practice, training, pain and sacrifice, often physical as well as financial, to have the opportunity to compete in their chosen sport at the highest level? And what drives them to win?
In 1990, at the Commonwealth Games, Australian Andrew Lloyd found himself running against the current Olympic champion in the 5000m. With a lap to go he was in third place about 50m behind the race leader. At the final straight he somehow found a sprint to go past the 2nd placed American and then was about 15m behind the tiring John Ngugi from Kenya. Lloyd was just about done but victory was close. Something clicked inside Lloyd and instinct took over. He was famously quoted to have been thinking – “bugger the silver, go for gold.” Which he managed to do, defeating the Kenyan by a whisker.
If you are anything like me, you might have approached the current Rio Olympics with a bit of a “take it or leave it” attitude. But as the games have progressed I found myself increasingly drawn in to the excitement of the various competitions and the incredible stories of the athletes and teams.
I’m sure you have been following the economic news and now know that last week the Reserve Bank of Australia lowered official interest rates to a record low of 1.5%. Of course that’s not the rate at which you can borrow, which will be 2-4% higher (the banks margin) or the rate at which the bank will pay you for your savings – currently anywhere from 0% to about 3%, depending on the length of time you loan your money to the bank and how much you loan. Yes, your deposit to the bank is a loan from you to them – your deposit is actually a liability on the bank’s balance sheets and that is because it is your money and at some point you might want it back.
Let’s assume that you are either already an investor or you want to be one, having the lowest interest rates on record is a major benefit. That is simply because the cost of borrowing money is lower than it has ever been. The Government and the Reserve Bank have decided it would be a good thing if you were encouraged to borrow a bit more and then spend that money on whatever it is you want, since that has an economic multiplier as you consume goods. Yes, it is good for our economy if you are spending.