Article Display Page

4

February

2014

Invest or Sell?

It is interesting of late with all the commentary around that one can be quite confused over the current status of the market and of course the economy as a whole.

Throughout the past decades, there has always been a housing market cycle where over a  7-10 year period the cycle repeats itself. One can only surmise that this trend will hold true for the future. So where are we at the moment? For those Investors who have read our newsletters over the past 7 years, you will be familiar with the following diagram.

 

Lets look at the facts of recent days. Well known Westpac chief economist,  Bill Evans has recently said that although the inflation figure recently announced was at the top range of where the Reserve Bank would like it to be, he still predicts the possibility of 2 interest rate falls in the latter part of this year. The underlying inflation rate is expected to stay within the Reserve Bank range of 2-3% throughout this year and into 2015. Wages are expected to be kept in check as  the labour market is still quite weak. Along with the falling Australian dollar and higher government charges,  employers are still being very cautious over the future. Growth forecasts are predicted to remain stable for the short term at least and as expected, the Reserve bank kept the cash rate unchanged today at 2.5%.

As reported recently on the news, there has been indications of cashed up foreign investers buying into our local markets. These Investors have been competing with local buyers and investors and as a result, are purportedly increasing prices through their demand for property. So what's new?  Prices in a cycle will always eventually increase. 

With many suburbs back to or close to prices pre GFC, one can only assume that the worst is now behind us. I would therefore surmise that with stable government, a little optimism and stable low interest rates, we are now in the recovery phase as indicated on the attached diagram. 

So is it better to sell or invest at this time?  There are no hard and fast rules and as always will depend on many of your own personal circumstances. However, it would be self evident that one would always like to buy in a slump or early stages of recovery and sell at the top of the boom.  Be aware though, there are always bargains on offer at any stage of the cycle and with a little research and due diligence, there is always a capital gain to be made. 

As always, when you are ready to purchase or sell, please consult one of our property managers. We can either refer you onto a reputable sales agent or assist you in your property management needs throughout the greater Brisbane area.

 

Social Sharing: