Can investors take advantage of reduced interest rates? Today the Reserve Bank has cut the cash rate by one percentage point to 3.25%. If banks pass the full cut to their mortgage customers, interest rate would be close to 5% p.a.

Residential rents in Australia grew to 8.4% in 2008 and is expected to rise strongly over the next two years according to research by BIS Schrapnel.

Reduced interest rates ( 5% p.a) with higher rentals (8.4% p.a)  reduce risk by generating increased cash flow. Investors are looking to positive cash flow into their investment properties. Further cash flow is also generated for the investor if he / she is paying less tax as a result of applying the depreciation and deductible property  expenses to set-off earned Australian income.

 

It is time to look for bargains in an area with capital growth potential and good rent returns. Look for quality positions : not necessarily water views - just the needs in life for the tenant : convenience to transport, shopping, entertainment, schools.

 

$350 million deals in Brisbane. Around $350 million worth of property is set to change hands in Brisbane. The Brisbane State Law building is being acquired by Peter Harburg, in a deal worth about $100 million. Kevin Seymour is buying 10 Felix Street, Brisbane CBD, for around $23 million, and Cromwell is believed doing due diligence to acquire FKP's Energex building. Another major deal in the past month is the ATO building in Mt Gravatt, which sold for $47.1 million.

 

 * Source : Matusik Insights, McGees Research