Month-In-Review-March-2015

Month in Review
March 2015
Interest-ing! How interest rate cuts drive our real estate
Debate around of the Federal Reserve using interest rates to quell or
spur inflation and the economy is always spirited.
There are some who believe it’s a classic hammer
and walnut move – too broad and brutal to deal with
the nuances. Others say there’s limited ability to
impact Australia’s economy given the overwhelming
influence of larger, overseas markets. It’s a bit
like tickling an elephant with a feather – there’s a
localised sensation, but the whole thing is actually
being driven by the elephant. Finally, there are
those who watch interest rate shifts with hawk-like
intensity, most of those observers are in property.
Property is just one sector of the
economy, so while the Fed might
want to speed up or slow down
other sectors like manufacturing
or mining, property will be directly
hit by any shift.
The first half of this year saw an interest rate cut
issued from on high – an unthinkable move about 12
months ago. Even more surprisingly, we’re seeing
plenty of speculation that the buzz saw will be taken
to the figure again within the next few months. Wow!
Mortgage repayments are usually a big chunk of any
investor or home owners’ obligations each month,
so they factor heavily in property running costs.
Interest rate falls also mean a little more currency in
the wallet so property owners can either pay down
more of that pesky mortgage, or blow the lot on a
few really great nights out.
So how can we here at Herron Todd White help?
Well, has anyone noticed the way markets across
Australia refuse to perform as one? Real estate in all
corners of the nation perform at different speeds and
at different times. Anyone looking for a little dirt in
Sydney at the moment would love to see the brakes
put on prices and step away from our big capital, and
almost all other centres are looking for ways to boost
their property values.
This is where we come in readers. While it’s fine to
give a ‘vibe’ on property markets performance in
Australia, the truth is we are more complex than a
simple statement of ‘up, down or sideward’ for all.
The recent, and possibly pending, interest rate cut
will result in different effects and to different degrees
across Australia. Herron Todd White is uniquely
placed to cut through the confusion. We’ve hit up
our experts throughout the country to answer the
question, ‘How will interest rate cuts impact your
area?’ They’ve dug down to come up with an answer,
and they’re willing to share the results with you.
As you’ll see, some markets are breathing a sigh
of relief, while others find the whole thing a touch
tiresome. The team at Herron Todd White is set to tell
you which camp your property investment falls into.
Commercially, the office sector specialists have
dropped upon us their ‘year ahead’ report. They’ve
set about telling us all where office markets will head
in 2015. Whether your prime, secondary, a big player
or small investor, this is definitely the issue for you.
So there we are one and all. Time to understand what
cuts in the cost of borrowing means to your property
values. Remember the nuance, however. Don’t forget
to key in our number, raise the handset to the side of
your head and speak to one of our local experts, to
get a microscopic view of a macro-scopic topic!
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