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Property Owners Sigh a Relief |
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Friday, 01 February 2008 |
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Yesterday the Reserve Bank decided to leave rates unchanged. I could almost hear the country sigh a sigh of relief, but while this is good news for home owners, it may not be the best news for vulture-like property investors like myself. Myself and other property investors that have held cash reserves during the recent property boom have been enjoying the pressure on property sellers which interest rates have brought about.
During this time we've seen property prices edging down, but not with the type of momentum we would have liked. Still, we have managed to get our grubby little hands on some bargains with good below market values, but it would have nice if there were more out there. At present rates, many sellers, even when in trouble, are not burning enough to want to let go at break even or loss. Myself and others were kinda hoping that another increase in rates would open the flood gates and break down the last doors of resistance. I guess it's not meant to be just yet. We could see a surprise rate hike later this year, but I think that if it does not happen in 2Q or 3Q this year then we wont see it at all. Flat line and sideways will be the case until the politicians start preparing and ramping up for national elections. So, while I would like to have seen an increase and hope one may still be hiding somewhere, I still think that rental prices will play catchup in the next 3 quarters. That will see some improvement in buy-to-let investor cashflows. If interest rates do come down around 4Q then cashflow will be even better and many will have survived to live another market cycle. A reduction in rates during 2009 should present a great exit opportunity for investors and home owners wanting to sell and may bring some improvement in equity growth in the mid and upper market bring relief to those who have refinanced to the hilt. Well, time will tell, but now I need to prepare for our Investor Letting Workshop tomorrow. It's gonna be another long and great day. The course is well booked and I look forward to meeting many new investors.
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