Making the most of the low cash rate environment
Over the past year, there has been lots of talk about the official cash rate and wider Australian economy. Thanks to the Reserve Bank of Australia's (RBA) decision to leave the rate at a low of 2.5 per cent for 14 straight months, many Aussies looking to create wealth may be pondering their options.
Property a top pick for investors
The cash rate has a rather large influence on home loan interest rates. And as such, many investors have been able to take advantage to obtain cheaper financing.
Thanks to lower interest rates, investing in real estate has become a much more attractive option.
In a recent speech, RBA Deputy Governor Philip Lowe explained: "Many investors, including those in self-managed superannuation funds, have decided that investment in residential property is an attractive option, partly given the low level of interest rates."
Naturally, as the housing market always goes, if demand rises then prices follow suit. As more investors have jumped at the chance to buy rental properties, national housing prices have also picked up.
Mr Lowe noted a 10 per cent rise in prices nationwide over the last year, which he says is a result of more investor activity.
With some industry analysts expecting the cash rate to stay low for some time, now might be the time to start thinking about where and what to invest in.
More investors buying rental properties
Following Mr Lowe's speech, data from the Australian Bureau of Statistics showed a big hike in investor activity across the country. In fact, lending for investment purposes hit a high in September at $11.9 billion dollars.
Just over half of all finance commitments, excluding refinancing, went to investors in September.
RP Data Research Analyst Cameron Kusher noted that many investors will either achieve capital growth or rental return from properties, especially as both home values and total returns has grown over the past year.
Brisbane rental property owners have been able to enjoy a large 10.6 per cent in total returns over the last 12 months, RP Data found.
Whether you're looking to supplement your lifestyle during retirement or want to save for a different goal, buying real estate could open up many doors for savvy investors.
Remember, like any type of investment, purchasing real estate involves a lot of knowledge and research before signing a dotted line. Before jumping into the market, make sure you get quality property coaching so you can find a strategy to help you reach your goals.