Buying Property

Over the next decade, the Australian government will have sunk $8 billion into expanding Perth’s HMAS Stirling – already the largest naval base in the country. Estimates predict that the plan will create around 3000 new jobs and provide a significant economic boost to both local industry and the rest of the state. Except for some outlying cases, it is generally true that government investment is a positive thing. When a government starts pouring money into their economy, many of the important numbers (things like GDP, unemployment, exchange rates, etc) begin to move in a positive direction.

Statistics reveal that many investors never venture beyond their initial property acquisition, despite their lofty ambitions. While some deliberately choose to maintain a single property as a means of supplementing their income with minimal financial risk, the majority of investors find that achieving their goals necessitates a more expansive approach.   In this article, we delve into the reasons why we believe it's worth thinking big and expanding your portfolio. We also provide valuable insights on growing your property investments and avoiding the pitfalls of relying solely on a single property.

In an earlier article, we explored some of the ways in which government spending can have a positive effect upon local economies, and real estate markets. Using HMAS Stirling in Perth as a sort of case study, we also threw out a few ideas for how defence spending may be unique compared to other forms of government stimulus. Overall, local government spending is typically a positive sign for a property market – simple. But before you begin to anticipate growth in every region where a government is throwing money around, it’s vital to understand a few exceptions to the rule and be aware of how it can sometimes go wrong.

This is the ASX’s “30 Day Interbank Cash Rate Futures Implied Yield Curve”, and, as well as having an egregious word salad of a name, it can be a pretty useful tool for understanding what the RBA is likely to do with interest rates. How? Well, the key concept at play here is in the title – “futures”. Futures are a clever type of financial contract that can help to hedge against risk. To explain, let’s take a quick example: Imagine you're a farmer who grows apples. For a variety of reasons (say, new competitors, weather, anything really) you’re worried that when it's time to sell your apples in a few months, it looks like prices are going to be lower than normal, and you’re heading straight for a loss.