As Australians we love the property market. It seems that our wealthiest residents already have a thirst for good property. The Asia-Pacific Wealth Report released recently reveals that Australian millionaires invest more in property compared to those from anywhere else in the world. Maybe that is why they are wealthy.
Australia’s wealthy invest in property
The Royal Bank of Canada and Capgemini study found out that rich Australians place around a third of their cash into properties while the global average is slightly less than a fifth. The level of investment in properties has fallen though; last year it was 41 percent compared to 33 percent today. The number of Australian millionaires has also increased in the last year, largely driven by investments in property.
The Reserve Bank of Australia has revealed the minutes of its October meeting and they had a good news for those with home loans or about to get home loans. the interest rates will stay low up and into 2015. Today’s current cash rate of 2.5 percent has been in place for more than a year and it has seen to increase competition inline with mortgage rates as the lenders fight to pick up the business against the backdrop of their increased prices.
The RBA board is keen enough that the low rates shouldn’t mean lenders have reduced their standards in which would increase the exposure to a riskier loan. The RBA also noted that high prices in Sydney and Melbourne were being driven by investors with home loans from owner-occupiers being overshadowed in the coming months.
The Australian construction industry has continued to increase revealed by a quarterly report from Hays Construction showing that the new jobs in the sector are also rising by the fastest pace in nine years. Although Sydney and New South Wales areas are both leading the growth of the country, Western Australia is also seeing a significant demand for their project managers in the building industry.
More and more people believe that the cost of living is higher, which makes retiring on a good income even harder.
Australia’s wealthy invest in property, why don’t you?
A survey revealed an increase in the rate of people who actually believe that the cost of living in Australia is continuously rising. There’s no specific data about home loan repayments although interest rates have reduced payments for many homeowners while the value of their homes has been increasing. With Interest Rates at historic low levels, and expected to remain low for a fair while into the future. Now becomes a great time to purchase an Investment Property.
Many people are paying extra on their home mortgage as interest rates have moved down. That is fantastic as their home loan will be paid off faster. But maybe there is a better way to use these extra payments. They could be directed towards an Investment Property. That means that you will enjoy the benefits of 2 properties going up in value. It is highly likely that the extra growth from a well selected Investment Property will be worth a lot more than the interest savings on the original mortgage.
So what are you doing about it? Are you growing your savings for retirement or are you taking the “she be right mate” approach?