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Before my days of property investing and involvement in this industry a property valuation meant just that; or so I thought. It didn’t take long before I began to understand that the same terminology, “Property Valuation”, can mean very different things.

Here are a few examples:

1. A probable sale price in a seller’s market
2. A probable sale price in a buyer’s market
3. The value of the land acquisition, construction of the dwelling and associated costs of bringing the product to market
4. A representation of a banks risk assessment of a property

While 1, 2 & 3 are self explanatory, let me expand on # 4.

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I believe that last months drop of 0.75% in the official cash rate was supposed to be passed on to borrowers in its entirety; that is what I think the Reserve Bank had in mind. Thus far, it has not happened and given the banks current position of posture they seem to have been let off the hook with the Federal Government hardly making mention of it.

With that in mind… along with the inevitable delay of a few months that it takes before an interest rate cut has any real positive impact on the economy I expect that when the RBA meets next Tuesday they will drop official interest rates by at least another full 1.0%. I say “at least” because if there is any indication that the banks may hold onto  anything this time around, I suspect they will go further.

The month of December is vitally important for our retail sector and this is their final opportunity for the year to give consumers the confidence to spend and support businesses and jobs alike. The Government’s $10.4b stimulus package will be released into the economy on Monday week. While this is also expected to have a positive impact on consumer spending it is likely to fall short of what the Government had hoped as many recipients of this money are expected to save it for future possible “rainy days” in 2009.

While I would not go so far as to predict a rate drop of 1.25% or even 1.5% (i.e. 125 or 150 basis points); neither would come as a shock. After Tuesday, the RBA is not scheduled to meet again until February 2009 so there may just be a bigger kick along now to carry the economy through. While the RBA can call a meeting in January 2009, or anytime they like, I suggest their first preference will be to use the December 2008 meeting and avoid the need to interrupt their Christmas break.

Even if next weeks rate cut is just a fraction of what I expect this is all good news for home owners and investors alike.

Happy Investing,

Nick Lockhart
mrd customer care program… because investing is personal

The current worldwide credit crisis has started to have an effect on the lending policies of some financial institutions in Australia. There have been a number of changes put in place that will in some cases make it more challenging to obtain finance in the near future. A few of these recent changes include…

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To make sense of the property market we must separate opinion from fact. Opinions will always be heard… just in greater numbers now perhaps. If you are prepared to “drill deeper” and dissect the evidence available; the facts will speak for themselves. There’s no reason for allowing the conflicting voices of opinion to keep you confused!

In the current round of Web Seminars we are offering, I highlight four key factors that are a MUST… if you expect to draw any credible conclusions.

1.    Record Population Growth
2.    Investors Have Fled The Market
3.    Home Ownership Unattractive
4.    New Construction Has Stalled Badly

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Our “What In The World Is Going On With Property” Web Seminar has proven to be so popular that we are going to run it again a few more times between now and the Christmas break.

You can register for next Wednesday evening; December 3rd… or nominate a preferred time when you would like us to host one… and if enough people want a lunch time or weekend one e.g. we’ll arrange it!

CLICK HERE TO REGISTER FOR THIS FREE EVENT NOW!

You will learn…

• Four important factors that must be considered if you want to accurately analyse the state of our property market
• Rental market equilibrium; how is it reached and what does it mean
• What are balanced and stressed rental markets and what must follow
• Changing property cycle and fresh wealth creation opportunities
• How the US property market works and why they got themselves into so much trouble
• Why the value of your home will NOT follow that of Europe and the USA
• Plus much more (including answers to YOUR questions, at the end)

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It was at the end of the school year, and a kindergarten teacher was receiving gifts from her pupils. The florist’s son handed her a gift.

She shook it, held it overhead, and said, “I bet I know what it is. Some flowers.” “That’s right” the boy said, “but how did you know?” “Oh, just a wild guess,” she said. The next pupil was the candy shop owner’s daughter. The teacher held her gift overhead, shook it, and said, “I bet I can guess what it is. A box of sweets.” “That’s right, but how did you know?” asked the girl. “Oh, just a wild guess,” said the teacher.

The next gift was from the son of the liquor store owner. The teacher held the package overhead, but it was leaking. She touched a drop of the leakage with her finger and touched it to her tongue. “Is it wine?” she asked. “No,” the boy replied, with some excitement. The teacher repeated the process, taking a larger drop of the leakage to her tongue. “Is it champagne?” she asked…

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People renting houses can expect to pay increasing rents during the coming financial year due to a significant drop in lending for property investment according to Paul Bennion, Managing Director of tax depreciation specialists DEPPRO. Mr Bennion said that the latest ABS figures showed that lending for investment housing in Australia fell by nearly $5.0 billion or 23% to $16.2 billion during the September 2008 quarter compared to the September quarter 2007. “This major fall in property investment means that there will be fewer rental properties moving forward at a time when there is already a shortage of rental properties in many parts of Australia,” Mr Bennion said.

Over the past year, average weekly rents in many capital cities have increased by more than 10% and this trend is likely to continue due to this decline in property investment. “Investment in property has declined due to the growing economic uncertainty being caused by the global financial crisis. However, the good news for existing property investors is that they should receive rising rents while at the same time mortgage repayments will decline due to falling interest rates.”

City Park Construction is nearing completion anticipated for 30 November 2008 with settlements being between the end of January 09 and end of February 09.  This is subject to weather conditions allowing external landscaping completion and the progress of titles issue.

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It is not long now until the completion of this exciting project.  (See below for completion estimations)  This has been a long awaited project that we have all looked forward to.  We will continue to keep you informed of when construction is complete and the next step in the process for you.

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Over the past two weeks of this series, I have focused on offering a fuller understanding of a very misunderstood four-letter word. This four-letter word… DEBT, can engender quite negative emotions in us all.

‘English is a crazy language’… say many with a native language other than English. Let’s look at another four-letter English word… LOVE. In English we have just the one word, love, but the Greek language, which has had a huge influence on English has four words… all translated love!

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