(Source: Phillip Baker AFR)

A a week ago, there was no chance the Reserve Bank of Australia would cut rates to 2.25 per cent in February, but now it’s a 40 per cent chance. If the RBA does not cut at the first meeting for 2015, traders are betting it’s an 85 per cent chance that it will happen in March.

This follows a larger than expected fall in New Zealand inflation rate which has sparked talk that similar fall in Australia’s inflation next week will open door for rate cut.

Still, 22 out of 25 economists say the RBA will keep the cash rate steady at 2.5 per cent next month.

MTA is a Brisbane based property investment service helping clients build wealth without impacting their lifestyle. Click here for FREE investment tips

The significant shortfall makes Australia’s retirement status the worst in the Asian region and the fourth largest gap globally, HSBC’s Future of Retirement report has found.

And almost half of the nation’s population (44 per cent) are not afraid to concede they have inadequately prepared for retirement or have not prepared at all.

The report, which surveyed 16,000 people worldwide, also found among Australian respondents 16 per cent believe they will never be in a position to full retire compared to the global average of 10 per cent.

Australians expect their retirement to last 23 years but the shortfall of 13 years is among the worst of the 15 markets surveyed.

An ASFA spokeswoman said people are living longer in retirement than ever before — the average life expectancy in Australia is 83 — and they need to prepare for this.

“It’s important they plan to save enough so they can live comfortably for all of their post-work years,’’ she said.

“The earlier you start saving the more you will benefit from the magic of compound interest.

“For example, if you’re 30 years old, having just one less cup of coffee per day and putting the extra money into your super can add over $125,000 to your final superannuation balance when you retire.’’

ASFA data released last year showed in 2011-12 the average super balances of Australians was $197,000 for men and only $105,000 for women and most retirees would need to rely on the age pension in retirement.

The HSBC report found that paying off a mortgage or other debts was a significant barrier a majority of Australians (51 per cent) to financially prepare for retirement.

HSBC’s head of retail banking and wealth management Graham Heunis said “Australians are in denial about retirement planning.”

“Being concerned is not enough — the next generation need to take action and start saving now.”

MTA is a Brisbane based property investment service helping clients build wealth without impacting their lifestyle. Click here for FREE investment tips

The latest National Australia Bank Residential Property Index tipped Queensland and Victoria as most optimistic markets, with house prices to rise 2.1 per cent here and 2.2 per cent in Victoria compared to a pared-back national average of about 1.5 per cent.

NAB chief economist Alan Oster said Brisbane was the best city for capital growth this year (5.7 per cent), followed by Sydney (4.1 per cent) and Melbourne (2.7 per cent).

The Queensland capital was also expected to hold onto that mantle into 2016 (3.8%), with Sydney and Melbourne to both sit on 2.3 per cent.

The NAB survey had some bad news for renters though, with rental growth expected to be strongest in Queensland and Victoria this year.

All markets except Victoria were also expected to see foreign buyers make up a smaller portion of the market. In Victoria foreign sales were around one in three according to the NAB survey, with the rest of the country sitting at around half that.

Mr Oster predicted there would be two rate cuts this year, in March and August, bringing the cash rate target to a new record low of 2 per cent.

“Our assessment of the market remains that house price growth will continue to moderate because of rising unemployment, sluggish household income growth, affordability concerns, cost of living pressures and high levels of household debt.”

But he said the two interest rate cuts “should support house prices a little more than previously expected”.

(SOURCE: CBA)

Brisbane has had the highest average annual house price growth across the country’s capital cities since 1970 at 11% per year, according to Hotspotting.com.au.

This means the city’s house prices have doubled about every six years over the past 35 years, as per analysis from Hotspotting.com.au’s director Terry Ryder.

It's worth noting, however, that Brisbane houses sold for a median price of just $8,500 in 1970, according to statistics from the Real Estate Institute and BIS Shrapnel. So the rapid rate of growth since that time has come off a particularly low base.

According to the CoreLogic RP Data home value index, the average house price in Brisbane was $466,500 at the end of 2014.

* Home prices up 7.9% in 2014

Using figures from the Real Estate Institute of Australia and BIS Shrapnel, Ryder calculated average house price growth over several decades in each of the capitals and found that Brisbane has been a consistent performer over the last four decades and even in more recent times.

For example, Brisbane’s prices have improved by an annual average of 13.6% since 2000, while Sydney’s annual average has been 10% during that time, Ryder said.

“The growth has not been even, with the seventies being particularly strong for Brisbane real estate,” said Ryder. “The eighties were also healthy, but in the nineties value growth was sluggish in all cities.”

However, even with the latest price boom, no capital city has averaged better than 8% annual growth since 1990, he said.

Melbourne's solid growth

Melbourne has also performed relatively well over the long term, averaging better than 10% annual price growth since 1970, with its house prices doubling every seven years on average, according to Hotspotting.com.au.

Given that the nineties were poor for property price growth across the board, a number of the capital cities experienced the best growth either side of that decade.

For example, the bulk of Melbourne’s high growth came before 1990 and the city has been a mediocre performer since, said Ryder.

“When you consider that Brisbane, Melbourne, Perth and Sydney have all averaged 9%-11% a year since 1970, it shows how much the nineties have dragged down overall property performance.

“It took the market quite some time to recover from the high interest rates of the late eighties and the economic recession of the early nineties.”

Sydney average over long term

Hotspotting.com.au's analysis also noted that the country’s strongest property market today, Sydney, has performed poorly compared to other cities over the long term.

While its 12% annual price growth led the national market in 2014, based on CoreLogic RP Data’s figures, Hotspotting.com.au found that since 1980, Sydney house price growth had been outpaced by Brisbane, Perth, Melbourne and Canberra, and matched by Adelaide.

A lender has recently put a new offer to the market of 4.39% Comparison rate 4.44% for loans of $150,000 and above. Snap shot of details as follows:

• Loans within 80% LVR 4.39% Comparison Rate 4.44%
• Over 80% LVR 4.69% Comparison rate 4.80%
• No application fees
• To approved applicants
• For a limited time

*Each comparison rate is based on $150,000 over 25 years.
WARNING: For qulaified applicants. These comparison rates apply only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Suncorp-owned Guardian Advice will have to appoint an independent consultant approved by the Australian Securities and Investments Commission for the next two years to ensure it is complying with its obligations under the law.

Guardian Advice currently employs 257 authorised representatives and has 130,000 clients across the country.

ASIC said it was concerned the company was not complying with its general obligations as an Australian financial services (AFS) licensee, including failing to properly supervise its advisers.

Specifically, ASIC was concerned that Guardian Advice did not “properly assess and monitor its representatives’ competence to provide financial services”.

According to the watchdog, Guardian Advice also failed to meet its record-keeping obligations, did not adequately respond to identified breaches by its representatives, nor have in place adequate human and technological resources.

“The weaknesses in Guardian Advice’s systems and controls show that there was an ongoing risk that unsuitable advice could be provided by Guardian Advice and its authorised representatives,” ASIC Deputy Chairman Peter Kell said.

The ASIC-appointed expert will report regularly to the watchdog over the next two years, and ASIC says it may publish the results of the reports.

The move is the result of an investigation launched in 2013 after a number of former employees of AAA Financial Intelligence Limited and AAA Shares Pty Ltd — both of which had their AFS licenses cancelled by ASIC — joined the company.

Consumers are in a particularly vulnerable position when purchasing life insurance. Source: Getty Images

In a statement, Guardian Advice said it takes ASIC’s findings very seriously and would work “to ensure the necessary improvements are implemented by the business”.

“The life insurance and advice industries are undergoing widespread reform and GFP accepts that it is appropriate that there is greater scrutiny of these industries,” it said.

“GFP is confident it can seize this opportunity to improve our business, including improvements in adviser recruitment, training and adviser audit processes.”

The determination follows a review of the industry last year, which found what ASIC described as an “unacceptable level of failure” with more than one third (37 per cent) of advice received by consumers failing to comply with the laws relating to appropriate advice and prioritising the needs of the client.

David Leermakers, a senior policy officer at the Consumer Action Law Centre in Melbourne, said consumers were in a particularly vulnerable position when purchasing life insurance, and so had a right to expect advisers act in their best interests.

“When someone buys life insurance it’s an important decision, but it’s also very confusing. A lot of people don’t have the expertise or the time to do a good job themselves, so they put a lot of trust in advisers,” he said.

He added the entire remuneration model of the industry needed to be looked at with a view to banning upfront commission outright.

“We’ve said for some time we don’t think upfront commissions are appropriate,” he said. “Clearly we want advisers to be out there and to be able to make money, but they need to be paid in a way that encourages them to help consumers.”

Saw this article this morning. Certainly aligns with some of our observations.

5 BIG reasons to think South East Queensland in 2015

Your Investment Property Magazine Predicts Queensland to outperform all other States for Capital Growth in 2015 and there are a number reasons why.

Capital Growth

Much of the hype surrounding the Sydney market over the last 24 months has focused on the strong capital growth of Australia's largest city.  Whilst 2015 is still expected to be a good year for NSW, Queensland is tipped to out perform not just NSW but all other states for Capital Growth in 2015. 

Angie Zigomanis, BIS Shrapnel: Queensland prices haven't moved much for a long time, so it has become increasingly affordable.  We think Southeast Queensland, as well as Brisbane, could finally be on its way to becoming a property market powerhouse.

(Your Investment Property Magazine, January 2015)

Affordability

The median house price in QLD is now sitting at $480,000.  Compare this to NSW at $810,000 and VIC at $660,000.  Buyers in Qld have significantly more buying power and options available to them particularly at the $500,000 price point.  Not only can the typical investor actually get into the property market but they also have many more buying options available to them, particularly in the South East Queensland hotspots of Brisbane, Gold Coast, Logan, Ipswich, Toowoomba & the Sunshine Coast.

(source: Deloitte Access Economics & BIS Shrapnel)

Rental Yield

Largely, discussion of Sydney's outstanding 2014 centred on double digit capital growth in the chronically undersupplied western corridor and city fringe.   Less so was there a focus on the relative weak rental yields (3.0% on average) that investors can expect when buying in these locations.  Rental yields in Victoria (2.9%) also weakened as rental prices failed to keep pace with property prices in 2014.  The bright spot for some years now is Queensland where average rental prices have remained higher at 4.1% and looking at South East Queensland in isolation this figure is likely in excess of 4.8% or some 40% more than key Sydney or Melbourne locations.

Australia's prudential regulator APRA has already indicated that it "may institute further supervisory action" in relation to record low interest rates that could fuel a property boom.  This will mean even greater scrutiny on the serviceability of borrowers and an even greater emphasis on potential rental yields for investors.

(source: QBE Australian Housing Outlook 2014- 2017 & The Australian, Jan 5 2015)

Why constrain yourself to a $1 million apartment in Sydney returning $600 per week with similar capital growth potential as a 4 bedroom house in South East Queensland for $480,000 returning $500 per week?

Chinese Investment

Brisbane will be the next cab off the rank for Chinese Investment according to Greenland Australia Development director Kang Xue.   Headquartered in Shanghai Greenland has joined forces with James Packer's Crown Resorts in a multi billion dollar hotel, apartment and casino development in Brisbane's CBD. He says that Chinese investment into Australian will increase further this year, "Melbourne and Sydney have been paid attention for a long time and I think Brisbane will catch up."

Aussie Home Loans founder John Symond says Brisbane will also attract more investors from NSW and Victoria next year, "Investors are looking for better value than in Sydney and Melbourne and they will go into regional areas and cities like Brisbane to get a better yield."

(source: The Australian, January 3 2015)

Employment

The Queensland economy has continued to improve despite a slow down in the resources sector.  The pace of state Government cutbacks has slowed and there are also a considerable number of big, well spaced infrastructure projects in the pipeline.

Overall unemployment (5.3%) is less than both NSW (5.8%) and Victoria (6.0%).  The weak Australian dollar has already had a positive impact on exposed industries such as tourism and also retail which now represents $60 billion to the Queensland economy. 

Another interesting statistic is average weekly income.  Despite a considerable difference in the cost of living between QLD and the other Big States NSW and Victoria.  QLD's average weekly income is currently $1,116 slightly higher than Victoria ($1,096) and slightly less than NSW ($1,152).

(source: Deloitte Access Economics Business Outlook)