Queensland Australian; Low Interest Rates, Low House Prices, and Negatively Geared Tax Deductio
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in Updates
@ May 11th 2013 1:16am
- By Garry Larden
Queensland Australian; Low Interest Rates, Low House Prices, and Negatively Geared Tax Deductions helps money move to Housing
The Reserve Bank (RBA) slashing of interest rates to a record low, driving down a currency that has damaged manufacturing and boosted unemployment. RBA Governor Glenn Stevens reduced the overnight cash-rate target by a quarter percentage point to 2.75% saying in a statement that the Australian Dollars record strength “ is unusual given the decline in export prices and interest rates.”
Governor Glenn Stevens said that the RBA board “has previously noted that the inflation outlook would afford scope to ease further, should that be necessary to support demand.”
This has caused investors to move on the Queensland property market fuelled by these historic low interest rates, but also because of cheaper prices, generous negative gearing tax deductions and relaxed superannuation rules.
The economic gyrations of the post-GFC world have narrowed investors' options with many hoarding cash in long-term bank deposits but as they reach maturity and new, lower interest rates begin to bite, investors are confronted with a choice - rollover or run.
These falling returns on cash deposits are accelerating a push into property by self-managed superannuation funds (SMSFs), and the breakneck pace of Australia's population growth is also playing a role.
Property investors over the past 10 years have done extraordinarily well if they held real estate in mining towns. However, there is always a risk that when a downturn arrives that these markets could have a very rapid and severe correction.
Banks have passed on the official interest rate cut to their home loan customers in full, as lenders try to tempt debt-shy consumers into borrowing more. Commonwealth Bank, Westpac, National Australia Bank and Bank of Queensland all reduced their mortgage rates by 0.25% and ANZ dropped under with 0.27% which makes a nice change.
