First up - The Reserve Bank has decided to keep interest rates on hold at 3%. No surprises for anyone. We have many clients asking about fixing rates and whether it is a good time to fix which it possibly is. If you are one of the people who thinks we have seen the bottom of the trough, but some think the rate could go as low as 2%. Remember that a good time to fix is well before we see a rise in rates as by then the banks have factored in the increase. At present to fix an average $300K loan the rates are:

1 yr             5.39% ( as opposed to our present variable rate of 5.04%)

2 yr             5.79%

3 - 5 yrs      6.09%

6 - 10 yrs    7.29%

As you can see the banks expect the rate to be back in normal territory in 3 years or more. To fix or not to fix is your decision and I am happy to discuss it with you at any time. History has shown that to keep it variable usually pays off but having the peace of mind of fixed is a big advantage.

Many people are happy to see what is called "Planned Retreat" at Belongil Beach. (For readers not in the shire - allowing beach front property to erode instead of rock walling). Some are happy to see nature have it's way and others are keen to see the rich get swept into the Ocean as God's revenge for their greed and avarice. 

The Belongil peninsula is actually a dyke that is protecting a lot of the Byron town centre from high seas and tides. If it was to go then a lot more than just Belongil would be under threat and we could be wading through salt water in Jonson Street as some of our CBD is under sea level. It now seems the council are going to the next stage to enforce "Planned Retreat" instead of allowing land owners to spend their own money to protect their homes. 

The recent storms created havoc all over the place but Belongil Beach will take a long time to recover. Just turning our back on a group of residents and a well loved part of town may seem like natural justice in theory but when destruction is lapping at doors of people we know it becomes personal and ungracious.

Who Knows?

The never ending belly gazing about whether property prices are on the rise or about to plunge has finally reached a logical conclusion - nobody knows and nobody can predict. The joke is that now punters and reporters are equally confused and non-plussed by all of the conflicting reports. The data is misleading because we have many different markets - capital cities or regional, top end or entry level, investor or first home owner. All of these different sectors and locations are having different results so even the media had to recently admit that there is no clear direction or easy headline. 

OK - but what is our location doing - Northern Rivers? Well agents are saying that properties accurately priced are moving very nicely thank you very much! I don't mind admitting that the bulk of my work - over $1M, small acreage 20 minute from Byron is slow as the sea change/owner occupier market are sitting on their hands waiting out for all the financial dust to settle. 

My personal opinion is that now is the best time to enter the market as we will not see any more major price drops and this is the worst it will get. As they say: "buy sun hats in winter" or "go against the herd mentality" and "buy when everyone is selling" has  been the perennial advice for centuries and I don't see that changing now. 

First Home Owner Boost

The busy end of the market has been under $500K due to the First Home Owner Grant boost.The Government has extended the First Home Owner Grant to October 1, 2009. After that scheme will be halved which means those buying existing homes will receive $10,500 and those buying new homes $14,000. After December 1st the boost to the FHOG will cease and revert back to the original $7000. 

The bottom end of the market has been so robust that there is speculation that it is a mini bubble and that we will see a slump in entry level housing after the scheme ends. I don't believe that - unless many of the FHOG buyers decide to sell for some reason. I have come across some very interesting entruy level properties in Ocean Shores, Burringbar and other areas if you are interested in taking a look.

Stormy Weather .....

I hope you all weathered the storms well. I must admit I got to enjoy it after a while and no power for five days made me stop and ponder how life was in the middle ages - simple and uncomplicated in many ways. Filling buckets of water from storm water to flush toilets even had its charm once or twice but happy now to be back in the modern world!

Talk soon,  Michael