2012 looks to be a positive year for property, however the question is by how much?

There are a lot of different reports and articles flowing through telling us that property prices are finally on the way up, and further rate cuts are imminent. However the doom & gloom reporters are still telling us that another GFC is just around the corner. How do you know if the time is right to invest your funds, and be able to grow your money for your family and your retirement? “Investing in shares, cash and property isn’t the same as it was 5 years ago. Back then you could invest your money in any direction and [within reason] be guaranteed to have growth in your portfolio,” commented Harry Charalambous of Plan Assist.

The RP Data – Rismark Home Value Index has released that in seasonally-adjusted terms, Australia’s capital city home values rose by 0.1% in November 2011. Whist this amount may seem very small, this increase was the first since December 2010. Rismark’s director Christopher Joyce commented that they project housing activity will rebound solidly. He said the best proxy for housing demand is the number of new home loans approved for purchasing established properties, and this has risen robustly every month since March 2010.

And whilst we all like to complain about the banks extremely large profits, and their resistance to pass on rate cuts to their customers, it is undeniable that our banks have provided a safety net for the Australian economy, which is coming out of the GFC somewhat bruised but indeed intact. With banks’ profits remaining to increase year on year, this stability should hopefully prop up the economy during these unsteady times.

After 30 consecutive months without a rate cut, the Reserve Bank’s decision to recently reduce the cash rate has also boosted confidence. When the RBA meets on February 7 a further rate cut is expected in many reports seen over the last week.

All of this leads to good news for Australian property prices. However Plan Assist’s director Harry Charalambous warns you should always have a strategy in these challenging times. “I encourage my clients to make decisions using strict criteria to reduce risks that the current climate may present. During my training I urge clients to look for property that suits their needs right now, and also in the future. In my recent training to ProfitsToShare clients I taught 3 ways to profit in today’s market, which helps give diversification in their portfolio, as well as provide additional cashflow to their current income.

Once all the planning and training is complete, to have your goals to come to fruition the most crucial step is taking massive action towards these goals. I have come across a lot of people who want to get into the market place, yet they seem to take months, sometimes years in preparation, and at the end of the day the best way to get ready to enter the market is to enter the market. The feedback from some of our most successful clients, is that having someone there guiding them through the process has given them the confidence and certainty to take that first step, knowing that they had the support where required.

Harry Charalambous provides professional property training. To enquire about his services phone Plan Assist on 1300 039 801 or email info@planassist.com.au

For anyone stressed out at the impact of the Reserve Bank’s interest rate policy on their material life or their business, there are mounting stories that suggest talk of three interest rate rises this year should be erased from the mental hard disc.

Before 2011 kicked off and the rain came down creating the devastating floods across the country, the consensus of economists tipped two to three interest rate rises over the year.

Last year, I argued on my Sky News Business Channel program and especially in my Weekend Australian newspaper column that the fear of those pending rate rises were spooking consumers. And true to form retail had a shocker last year.

Retail woes

The latest reading showed that retail spending rose by just 0.3 per cent in November after the 0.8 per cent slump in October.

“Over the past year retail spending has risen by just 1.3 per cent – marking the second weakest reading in five years — surpassed only by the one per cent annualised growth rate in the year to May 2010,” said CommSec’s Craig James.

This comes as both the manufacturing and services sectors, according to special ‘performance measures’, are actually contracting, and they have been for some time!

Economists’ call

This year saw some economists back off their three rate rises in 2011 call as the country was drenched by the Queensland floods in particular. The consensus went to one to two rate rises.

Only last week, Westpac’s boss Gail Kelly told the parliamentary inquiry into banking that her chief economist had downgraded his rate rise call to one only for the year, which looks the most likely outcome. But wait, there’s a better call.

Surprising result

Adnan Kucukalic, a Credit Suisse research analyst, told the AFR last weekend that things are tighter than many think and that economic growth this year in Australia will be “underwhelming.”

This contrasts with the Reserve Bank’s view that has two years of growth over three per cent.

Kucukalic says if you add the high borrowing costs to tougher bank lending standards and then to the demand sapping impact of the high Aussie dollar, then monetary conditions are tighter than most think — especially the RBA!

Putting these together he arrives at a single number for a monetary conditions index and he comes up with a conclusion that could make a lot of long-suffering home loan customers’ ears prick up.

Kucukalic says his index says interest rates should be cut this year!

Even if he’s not totally right, I think there’s evidence that says forget three rate rises in 2011. By the way, the money market that bets on this sort of thing through futures products is also tipping no rate rise this year.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

(Source:Peter Switzer     Switzer Broker Newsletter  28/1/2011)

The RBA is widely expected to lift the official cash rate 25 basis points when it meets next Tuesday.According to HSBC economist Paul Bloxham, the Australian economy is now back to growing at around trend, with business surveys suggesting it is operating at near capacity.

“In addition, the unemployment rate has fallen to around 5.1 per cent, which is close to most estimates of the natural rate,” Mr Bloxham said.With this in mind, Mr Bloxham said it is likely we will see inflation increase, which would force the Board to lift rates on November 2.

“Our central forecast is for an underlying inflation rate (average of trimmed mean and weighted median) of 0.8 per cent in Q3, which we think will be a key part of the motivation for a 25 basis point rate hike – taking the cash rate to 4.75 per cent,” he said.

(By: Staff Reporter, Inflation pressure to force RBA’s hand, Tuesday, 26 October 2010)

The Reserve Bank of Australia has decided to keep the official cash rate on hold at 4.5 per cent for the fourth consecutive month.

Uncertainty surrounding the global economic outlook, consumer spending and Australia’s political situation forced the Board to leave rates unchanged.Rates have been on hold since May. Prior to that, concerns about rising inflation forced the RBA to lift rates by 25 basis points in March, April and May.

While local economic data shows the Australian economy has grown at the fastest pace in three years, ongoing economic uncertainty abroad ultimately forced the RBA to err on the side of caution when making the latest rate decision.

“The current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade. With growth in the near term likely to be close to trend, inflation close to target and with the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate for the time being,” RBA governor Glenn Stevens said in his statement on monetary policy.

The news did not come as a surprise, with many economists predicting the RBA would leave rates unchanged when it met in Adelaide today.

AMP chief economist Shane Oliver said the stronger than expected data culminating in above trend growth in the June quarter was balanced against uncertainty regarding the global outlook and expectations that inflation is likely to remain within the target range over the year ahead

(By: Jessica Darnbrough, Tuesday, 07 September 2010)

When it comes to refinancing, almost half of borrowers turn to a mortgage broker for advice, the latest research shows.

According to Mortgage Choice’s 2010 Refinancers Survey almost half (45 per cent) of the 1,028 respondents surveyed said they had used a mortgage broker to help them refinance.

South Australians were most likely to enlist the help of a mortgage broker with one in two South Australians opting for a broker.

The survey also found that borrowers are motivated primarily by interest rates and bank fees when it comes to making a refinancing decision.

Almost one quarter of respondents said their main motivation for refinancing was to switch to a cheaper loan.

With the recent spate of rate rises and the possibility of more before 2011, as well as a renewed focus on mortgage exit fees Plan Assist’s Loan Advisor Anton Hamer said this was “no surprise”.

According to the survey the majority of borrowers – almost nine in 10 – who did refinance were saving at least $50 per month with 23% of borrowers reporting savings of more than $300 per month.

(By: Staff Reporter, Wednesday, 11 August 2010)