As I discussed previously the biggest area of lending growth is investors. (refer graph below)

 But which locations are likely to be in investors sights in 2014? We believe the below chart provides a bit of a clue.

Brisbane certainly presents an affordable option to investors when contrasted against the other major capitals and still appears in early stages of receovery.

The question is how can you take advantage? Where area the areas an opportunities that are likely to present good long term growth and deliver solid cashflow that will enable you to hold the property over the long term. Particularly if rates rise.

There's is no doubt many people will jump in head first but many will get it wrong.

Contact us to discuss how you can take advantage.

A question many have been asking is where are the first home buyers? With the Brisbane market in the early stages of recovery and interest low (normally favourable conditions) first home buyers still seem to be absent. Particularly when we look at the break up of housing finance below.   .

But the figures may be a little bit misrepresented. First home buyers are entering the market not as owner-occupiers but as investors. More recent figures on lending growth show that the growth area in lending is in the investor market.  

And it makes complete sense.

• The first home owners grant is no longer available for established property
• First time buyers can still get a foot in the market but have someone else help pay the mortgage while they continue to live at home and save or rent in locations that are close to their work or offer lifestyle benefits. Locations that would be out of their price range and budget from a buyer perspective.
• If the right type of property is purchased and structured correctly there are also significant tax benefits which are not achievable through own-occupied property.

We have had many clients utilise this approach as an effective way to building a property portfolio.

Contact us to discuss how you could get into the property market through investment

Last year Australias population grew by almost 400,000 people mainly due to overseas migration. Contrast that to other developed nations - we are growing at around 1.8% per annum USA (0.8%); UK 0.6%; Canada 1%; China 0.6%

Our population is likely to grow by 10% over the next 5 years which means around 2.3 million more people will need somewhere to live.

That’s an awful lot of houses and apartments.

The latest Australian Bureau of Statistics (ABS) national population growth projections suggest our population is likely to double in the next 62 years.

Currently 57.3% of Australians live in our four big capital cities – Sydney, Melbourne, Brisbane or Perth but if the ABS population projections pan out, by 2061 65.8% of the total national population will live in our four big capital cities – Sydney, Melbourne, Brisbane and Perth.

There are a range of offers in the market at present like the one below offering significant price discounts plus a range of other concessions. If you haven't reviewd your lending in a while now might be a good time. Contact us to arrange a finance review

by Emily Guterras CBA

While many first home buyers may be struggling to get their foot on the property ladder, Gen Ys have no grounds to blame parents or grandparents, according to new research, which found that housing affordability has barely changed in a decade.

The median price of homes across Australia in the December quarter was $450,000, according to the RP Data/Rismark Home Value index, while the Australian Bureau of Statistics (ABS) national accounts estimate disposable income per household of $111,919.

The figures suggest that the median home price was around 4 times disposable income in the December quarter, up from 3.9 times in the September quarter.

However, over the past decade, the average household income has risen 70.6%, while house prices have gone up 66.7%.

"Gen Y has no reason to blame parents or grandparents - home affordability hasn't really budged in the past decade," said CommSec economist Craig James, who authored the research.

“Simply, Australians have got richer over time. But broadly over the decade little has changed in terms of home affordability – it has gone sideways.”

While low interest rates have contributed to a steep rise in house prices last year and early in 2014, the Reserve Bank of Australia does not believe that the present conditions pose a near term risk.

“Certainly homes are less affordable than 20 years ago, but that is not because income growth has been sluggish, but because wealthier Australians, utilising lower interest rates, and benefitting from more affordable basic necessities like food, clothing and transport, have channelled extra dollars into the family home," said James.

"Homes are bigger and of higher quality than 20 years ago.”

It is interesting to note that several lenders in the last week have reduced their 3 year fixed rates St George down to 5.14% and NAB 5.07%. Both ahead of the RBA board meeting today.

Perhaps they knew something as the interesting comment in the statement is the RBA's view on inflation "Inflation is expected to be consistent with the 2–3 per cent target over the next two years".

The Governor's statement below.

Glenn Stevens' statement from the March Reserve Bank meeting:

"At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy was a bit below trend in 2013, but there are reasonable prospects of a pick-up this year. The United States economy, while affected by adverse weather, continues its expansion and the euro area has begun a recovery from recession, albeit a fragile one. Japan has recorded a significant pick-up in growth, while China's growth remains in line with policymakers' objectives. Commodity prices have declined from their peaks but in historical terms remain high.

Financial conditions overall remain very accommodative. Long-term interest rates and most risk spreads remain low. Equity and credit markets are well placed to provide adequate funding, though for some emerging market countries conditions are considerably more challenging than they were a year ago.

In Australia, recent information suggests slightly firmer consumer demand and foreshadows a solid expansion in housing construction. Some indicators of business conditions and confidence have shown improvement and exports are rising. At the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative. Public spending is scheduled to be subdued.

The demand for labour has remained weak and, as a result, the rate of unemployment has continued to edge higher. Growth in wages has declined noticeably. If domestic costs remain contained, some moderation in the growth of prices for non-traded goods could be expected over time, which should keep inflation consistent with the target, even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and savers continue to look for higher returns in response to low rates on safe instruments. Credit growth remains low overall but is picking up gradually for households. Dwelling prices have increased significantly over the past year. The decline in the exchange rate seen to date will assist in achieving balanced growth in the economy, though the exchange rate remains high by historical standards.

Looking ahead, the Bank expects unemployment to rise further before it peaks. Over time, growth is expected to strengthen, helped by continued low interest rates and the lower exchange rate. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates."