Australia’s Low interest rates increase interest!

The adjustment of 3.75% in the last five months is significant but not as high. However, in percentage change terms it is close to 50% of the peak rate of 7.25% in March 2008.

The auction clearance rates for the week ended 14th were significantly improved with some markets reporting a clearance rate of something in the order of 70%.

Australia’s growth rate in the year from Jan 07 to Jan 08 was 11.86% and this has reduced to -1.8% in the year ended Jan 09. This decrease looks significant and is, but looking at the monthly trend it would seem that we may have reached the low point as the rate of adjustment is slowing. The correction in December 2008 was -1.1% and is similar in January being -1.15%.

There was more activity and interest in the lower half of the market where 54% of all sales occurred.

In the last 12 months, Australia has experienced rental increases of 9% and 13.3% for houses and units respectively. This increasing rental yield will continue to occur and compensate investors for the lower capital growth which is occuring. In cash flow terms, investment is and will continue to become easier.

Source: Residex Newsletter - February 2009