Interest Rate Update

Yesterday brought some good news for investors…

Even though this is only the second interest rate cut since 2009, it’s arrived in light to moderate growth. A sign that the Reserve Bank of Australia considering the Australian market to be relatively stable and that inflation is under control. Now is the time capitalise on some of the drops in pricing we’ve seen in certain areas of the market…

http://dymvideo.s3.amazonaws.com/ilove/20111208 – Interest Rate Update.mp3
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Transcription

Please remember that these are direct transcriptions. In the interest of getting this to you in a timely manner, grammer, punctuation and spelling have not been corrected.

Hey guys, great to see the interest rates cut yesterday. Down by another quarter of a percent; this is good news for investors. Even though this is only the second interest cut we’ve seen since 2009, it’s come in the face of basically light to moderate growth, which is a good thing and what it means is that the RBA’s considering the Australian market to be relatively stable and that inflations are under control. Now that’s all good news for us. What we are actually seeing in this market right now is an amazing opportunity to capitalize on some of the drops that we’ve seen in pricing.

Now the major capital cities, particularly places like Melbourne and Brisbane and to a lesser extent, perhaps Perth, we’ve seen quite a drop-off in pricing and now all of that is due to a number of different reasons. Of course Brisbane’s had its environmental issues with floods and the like and really the lack luster economy up there with poor jobs and things like that have really made the economy actually quite soft.

Whereas Percy, he’s got great fundamentals. I think it’s stalled a little bit but it’s certainly going to come back pretty soon and Melbourne, well Melbourne is a different story. You know, Melbourne has had a good run for a good five years and it’s just leveling off. Some of the areas have been over built in Melbourne but others, those are still good. You know, obviously the hot spots to look for in Melbourne are those where the surrounding areas are of a higher pricing and you’ve got an unevenness amongst the economy from a subdivision to subdivision prospective. And interest rates are going to help with all of that.

Why haven’t I mention Sydney? Well Sydney is just trucking on in there. You know, Sydney is still relatively strong; it’s still massively under supplied. The weak economy is really given a little bit of a slow start to the growth that would normally have taken place so interest rates again are going to be a good thing.

Adelaide is chugging along doing its thing; not much happening there really and Canberra is really following in the footsteps of Sydney to a large extent.

So what are we seeing with these interest rates? Well, the lower interest rates are going to mean that you’ll be able to capitalize on some of the cheap buys. Now, I haven’t mentioned any of the regional areas but of course there’s huge opportunities in all the regional areas with the opportunity also to pick up in a positive cash flow and after all, that’s the way to go. If, you know, you can pick up the positive cash flow on a property that’s a little bit under where it’s going to be in a year or so time simple because of the lull in the market, we’ve got great news ahead. The interest rate drop will have a little bit of an upward pressure on pricing and to be able to use that to get out there and make some serious ground from both growth and cash flow prospective is really, really, you know, a great opportunity for all.

The mining towns are doing absolutely fabulously. There’s a couple that are over heated in my opinion. But, there’s a large opportunity there in some of those that have just started their construction phase, heading into their largest growth cycle and they’re the ones I’d really like to kind of focus on throughout next year; spend more time going through all of those—each one of the towns and going through the why’s and the how’s and what’s going on because it’s a great opportunity to pick up on positive cash flow, as well as the growth. Now the interest rates are helping us on that one and all it means is that our cash flows are going to be even greater because of the lower interest rate.

So it’s all good news, all good news ahead. In fact, 2012 is going to be very, very exciting. I’m hugely excited about the opportunity to replace income next year with the surge in the regional areas and the potential for growth. Some of those towns are going to double in value over the next couple of years and it’s really a matter of sitting down and understanding the dynamics behind them. Now whilst they do come with their own variety of risks, it’s something that education can certainly mitigate that stuff and put you in a very strong position for income replacement for next year. And really you know, for most of you that’s what it’s about. It’s about income replacement rather more than wealth building. You can’t eat a baleen sheep, whereas cash flow provides you that long-term lifestyle change which makes such a huge difference to everybody.

Wealth in itself is great but it doesn’t change your life. What changes your life is that cash flow and with this interest rate drop, obviously interest rate directly affects cash flow and when we’re coming in at an economic cycle that is…it’s not weak, but it’s probably a little bit soft just due to public opinion and those types of things, so you’re going to start to see some really strong ground being made over the next 12 months.

So, it’s time to take all of that on board. It’s time to set some goals over the Christmas break and really decide on what your pig in the sand is for next year. Get on board and let’s get out there and make that happen. So guys, thanks so much. Have a fabulous Christmas if I don’t talk to you before then and we’ll be back again to talk to you real soon. Bye for now.

Comments

  1. Kathy says

    Thanks for the link Jared. Nice to hear some of the “mainstream” finally starting to tell it like it really is. I’ve been hearing exactly what Phil Williams was talking about for the past two or three years on non mainstream newsletters and contrarian sites and commentators. So far I’ve found them to be far more accurate with their predictions and forecasts than just about all other mainstream economists.