So last week media commentators were talking about a busy holiday season in Australian property – now it appears that all is doom and gloom again. Frankly I wish newspapers would stop treating the whole of Australia as a single property market and making meaningless broad statements which may indeed to be right for some small part of the sector but is probably incorrect for the other 90% of the Australian property sector!
More on Australia Property – Looking at a Quiet Three Months
At the time of writing the Australian dollar is worth around US$0.92 – up from US$0.67 in less than eight months. That is one huge appreciation and anyone who is exposed to the currency risk will certainly have noticed it. The rise of the Australian dollar is most spectacular against the US$ but its also up against almost every other currency from pounds to Euro to the New Zealand dollar. So what does the Australian dollars rise have to do with the Australian property investor? Plenty – even if you don’t think you are exposed to currency risk – you should understand what drives currencies and their close cousins: interest rates.
More on Australian Property Investment and the Australian Dollar
The speculation is that tomorrow will see the RBA drop Australia’s official rates of 1.25% – and that’s what the the financial markets have priced in. Economists are more reserved though, a drop of that size would be the largest in history since the RBA started regulating official interest rates in 1990. With suggestions that the economy is already heading towards or in recession such a dramatic drop may not be necessary.
More on Australia Property News: Interest Rate Cuts and Auction Rates
