Reserve Bank & Property Invstments?

[Hubush]

I turned on the telly the other night only to catch the end of an interview with a Qld Developer.

The interviewer asked a question about whether as investors we've missed the boat & the wave was to high now to cash in on the lucrative real estate market specifically in either NSW or Qld

The Qld developer replied:

It never ceases to amaze me how late in the game some of these so called investors want to enter into the market where you have so many market indicators out there such as the Reserve Bank telling you what the true timing is!

How does the Reserve Bank's movements or decisions on interest rates etc indicate to us when we should start considering opportunities OR are we to seek our own opportunities as they arise despite market trends!

all comments are welcome!

 

[MarkB]

I must say that I am a little bit perplexed by his reference to the RBA.

Fact is that they haven't made any changes to the interest rate since June 2002. I'd go so far as to say that the RBA must have a lot of splinters in its butt from sitting on the fence this long.

However, whereas people were once speculating that rates would fall further, the most recent indications are that this may not occur.

However, this does not neccesarily mean that rates will start to hike up ala the late 80's.

Have a look at:

http://www.somersoft.com/forums/showthread.php?s=&threadid=10967

and:

http://www.somersoft.com/forums/showthread.php?s=&threadid=11017

At the end of the day the RBA does control the price of money (that is what the interest rate is, the price of money) - so naturally a rise in interest rates reduces the returns on investments exposed to that rise.

Perhaps the biggest message coming from the financial sector, comes not from the central bank but from the trading banks who are reputedly starting to tighten their lending criteria (though I personally have no evidence to point to).

Supposing for a moment that this is true, then what it could mean is that they are bracing themselves for the next phase of the cycle.

Presumably this is what that developer in Qld is refering to.

Mark

 

[Aceyducey]

Yeah, if you wanted to get an indication out of the RBA at this time you'd have to listen to their hyperbole about housing being overheated.

The RBA would like to slow down property price growth, but cannot raise interest rates without hurting business & potentially cutting Australia's current growth - which is protecting us again job losses & the global recession.

But would you really trust the RBA to give you guidance on what time it is on the property cycle clock in the areas you buy in?

They're no better than predicting the future than anyone else and any comments they might have are on a national level.

If I was buying into a nationally based property fund I might listen to them closer, but on a regional and local level the story is always different.

Cheers,

Aceyducey