Market/Finance News Blog: Investors heed market changes

By the resi financial blog team, 07 October 2014

Market/Finance News Blog: Investors heed market changes

There isn't an investor in the country that hasn't been watching the news with bated breath, waiting to see what the Reserve Bank of Australia (RBA) will decide to do next.

If you've been sitting on the fence about whether to get that lo doc home loan to invest in one of the property hot spots, now might be the time to make a move. There are two major factors to consider in the property market at the moment.

The actions of the RBA and the Australian Prudential Regulation Authority to redistribute the market balance between investors and home-owners is one huge factor, and the other is the value of the Australian dollar.

The RBA has stated that it will not be making any immediate moves, but that the public can expect a definite answer in regard to their policy choice by the end of the year.

Because the Australian dollar is usually measured in terms of the American dollar, it is easy to forget that other countries are watching our dollar too. If the dollar drops too much against Asian currencies, especially the Chinese Yuan Renmin, it could give overseas investors an even greater advantage in the market place, effectively reducing their cost of investment. This could mean more competition for the local market. What this boils down to is that while the Aussie dollar is relatively high, it may be a good time to get ahead of the curve and invest in property.

In July this year, Glenn Stevens, governor of the RBA stated that "when judged against current and likely future trends in the terms of trade, and Australia's still high costs of production relative to those elsewhere in the world, most measurements would say [the Australian dollar] is overvalued, and not by just a few cents." Mr Stevens has actively advocated "jawboning" of the currency, to reduce its value and boost Australian industry and exporters.

Taken together, these signs indicate that the best time to invest in property may be sooner than you think. Talk to a resi loan specialist to assess your options.

Categories: Financial Services, Home Loans, Property Investment