Citylife Investor News:
31 MARCH, 2009
CITYLIFE INVESTOR NEWS
The Australian Investor and Property Buyers
Newsletter
**************************************************** 31 March 2009
In this issue:
1. Banks cut cash deposit rates ahead of RBA decision.
2. Buffet warns of onslaught of inflation.
3.Banks declare Australia has "weathered the worst of the global crisis".
4.Off Plan commercial office suites from AUD$173,700 releasing next week!
1. Banks cut cash deposit rates ahead of interest rate drop
THE major Australian banks are aggressively lowering their cash rates ahead of next week's expected interest rate cut by the Reserve Bank.
With the political pressure mounting on all banks to pass on the full benefit to consumers, two of Australia's major banks have taken drastic steps to protect their funding margins by slashing deposit rates.
On March 30th, NAB slashed the rate it pays on three month fixed term deposits from 4.2 per cent to 2.1 per cent.
The NAB move comes after more aggressive repricing by Commonwealth Bank in recent weeks in which it slashed its three month fixed term deposit rate from 4.2 per cent to 1.5 per cent.
And Australians have to pay tax on those rates. And if you live overseas, deposit rates for nearly all currencies are now zero.
Inflation will be higher than term deposit rates - so essentially you will be losing money by locking it up with a bank for 3 or 6 months.
With rents on properties climbing, the 'full house' signs for tenants everywhere, a massive shortage of new construction (and therefore supply) who would bet against a rush back into real estate?
2. Buffet warns of onslaught of inflation
The multibillion-dollar bailouts handed out by the US Government will bring on an "onslaught of inflation", Warren Buffett, the legendary investor, said in his keenly awaited annual letter to shareholders. Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel," Mr Buffett said. "These once unthinkable dosages will almost certainly bring on unwelcome after-effects. Their precise nature is anyone's guess, though one likely consequence is an onslaught of inflation."
"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value".
(For more on inflation, visit www.inflation101.com)
3. Banks declare Australia has "weathered the worst of the global crisis."
As reported on March 26, 2009 Sydney Morning Herald:
"THE big bank bosses have declared Australia has weathered the worst of the global financial crisis, with some predicting official interest rates as low as 2 per cent later this year as the Reserve Bank attempts to keep the economy pumping.....
....In a separate presentation in Hong Kong, ANZ's chief executive, Mike Smith, said the Rudd Government and the RBA still had plenty of firepower to direct against the economic downturn.
He believed further interest rate cuts were in the pipeline and that the official cash rate was likely to drop to just 2 per cent in the second half of the year. The Reserve board will consider further cuts to official cash rates when it meets next week. Most economists are tipping the central bank to cut rates by 0.5%.
Mr Smith said lower interest rates were feeding through to home loan repayments more rapidly than they were in the US and Britain.
Lower rates were helping household budgets, along with more stable petrol prices. The individual savings ratio was likely to recover "dramatically" during 2009 and beyond.
And disposable income was rising after a tough 18 months.
But even with last year's budgeted surplus of $22 billion forecast to turn into a deficit of the same amount, the Government's net debt of 5.2 per cent of GDP by fiscal 2012 would still be extremely low by international standards and well below the likes of Japan, the US, Britain and Europe as a whole.
4. Off Plan commercial office suites from AUD$173,700 releasing next week!
Next week, we shall launch these in a prime location near Melbourne's famous Southbank. A boutique low rise building, of the highest quality, offices will be available from just A$173,700. BUT YOU'LL HAVE TO BE QUICK!
Market rental returns are over 7%, and we have secured a guarantee from the developer for the first 12 months to give you plenty of time to rent out. Demand for small office space is very strong in Melbourne, and boutique offices seldom come on to the market.
Just 10% deposit secures until completion in approx 18 months. (INVESTORS NOTE: Financing for Commercial offices currently available up to 70%).
To register for an early selection go here:
http://www.citylifeproperty.com/pp_09.asp
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