Newsletter Issue 43

A lot of water has gone under the bridge since you received our last newsletter. Some of the fear that was evident in the market place has abated due to positive news on the economy.

The Reserve Bank Board - which has been preparing the market for future interest rate rises - has announced its second rate rise of .25 basis points in as many months. It will be interesting to see how the next 12 months pans out - even the most competent economist would not dare to confidently predict the outcome. It is certain however that if economic news continues to be positive the RBA will continue to use the interest rate lever. It remains to be seen whether they have jumped the gun too early as they did last time interest rates rose sharply.

The property market has performed much better than most economists predicted. The huge suggested price falls of 40% or more, as happened in the USA and elsewhere, have not eventuated. Property overall, has in fact increased modestly in value. At the time of writing we are seeing some evidence of investors returning to the market. This could turn out to be good timing. As first home buyer numbers peak and begin to slow, investors who predominately buy similar properties may take over and maintain the demand at the lower end of the market.

Our randomly selected winner for a weekend away at Hobart's Grand Chancellor is Ms Kathryn Darlow. Kathryn listed her home with our consultant Ken Jones earlier this year and was happy when he achieved a sale for her. She was even happier when Ken phoned to surprise her with the Grand Chancellor prize. Congratulations Kathryn and we hope your weekend away is enjoyable.

HONESTY: My son Zachary, 4, came screaming out of the bathroom to tell me he'd dropped his toothbrush in the toilet. So I fished it out and threw it in the garbage. Zachary stood there thinking for a moment, then ran to my bathroom and came out with my toothbrush. He held it up and said with a charming little smile, "We better throw this one out too then, 'cause it fell in the toilet a few days ago."

OPINIONS: On the first day of school, a first-grader handed his teacher a note from his mother. The note read, 'The opinions expressed by this child are not necessarily those of his parents.'

TOMATO SAUCE: A woman was trying hard to get the tomato sauce to come out of the bottle. During her struggle the phone rang so she asked her 4-year-old daughter to answer the phone. 'It's the minister, Mummy,' the child said to her mother. Then she added, 'Mummy can't come to the phone to talk to you right now. She's hitting the bottle.'

NUDITY: A little boy got lost at the YMCA and found himself in the women's locker room. When he was spotted, the room burst into shrieks, with ladies grabbing towels and running for cover. The little boy watched in amazement and then asked, 'What's the matter haven't you ever seen a little boy before?'

ELDERLY: While working for an organization that delivers lunches to elderly people, a woman used to take her 4-year-old daughter on my afternoon rounds. The various appliances of old age, particularly the canes, walkers and wheelchairs, unfailingly intrigued her. One day the woman found her staring at a pair of false teeth soaking in a glass. As she braced herself for the inevitable barrage of questions, her daughter merely turned and whispered, 'The tooth fairy will never believe this!'

DRESS-UP: A little girl was watching her parents dress for a party. When she saw her dad donning his tuxedo, she warned, 'Daddy, you shouldn't wear that suit.' 'And why not, darling?' 'You know that it always gives you a headache the next morning.'

SCHOOL: A little girl had just finished her first week of school. 'I'm just wasting my time,' she said to her mother. 'I can't read, I can't write and they won't let me talk!'

BIBLE: A little boy opened the big family bible. He was fascinated as he fingered through the old pages. Suddenly, something fell out of the Bible. He picked up the object and looked at it. What he saw was an old leaf that had been pressed in between the pages. 'Mummy, look what I found', the boy called out.' What have you got there, dear?' With astonishment the young boy answered, 'I think it's Adam's underwear.'

Property ownership, whether for home or investment, is an aspiration for many Australians, yet the prospect of saving what can be an entire annual wage for a deposit puts the dream further into the future.

Goal setting, clever planning and a commitment to following through are often the keys to solving this savings problem.

According to mortgage broking firm Mortgage Choice, creating a savings plan need not result in the stripping away all the good bits life has to offer; more likely, it will prioritise them.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard suggests it is best to know what you're in for from the very start.

Begin your deposit savings process by speaking to an accountant plus a professional and accessible mortgage broker who has access to a wide range of lenders.

"This will give you a good idea of how much you can and need to save for your deposit in order to buy within a particular price range", Ms Sheppard says.

"Then, create a comprehensive budget, constantly reassess it, and follow it to the best of your ability. It can be as elaborate or as simple as you like however, even a basic Excel spreadsheet with your cost detailed in consecutive columns will often suffice. The easier it is to maintain, the more likely you are to keep it up."

"Don't stop there; seriously consider setting up automatic payments into high interest savings accounts from your salary account for ongoing costs such as your car, rent, utilities, groceries, entertainment and, of course, home deposit."

"While this may limit your disposable income, don't deny yourself treats every now and then - but remember, every treat you give yourself takes you a little further away from the end result of property ownership. Nothing comes free and earning your badge as a property owner takes effort."

"Most importantly, be realistic about what you can achieve. Remember most people can't afford to buy their ideal property the first, second or sometimes even third time around. Regardless, saving for your own property is a journey you will look back on with pride."

When planning your budget, consider these tried and tested savings tips:

Give yourself a holiday every now and then, but reduce all costs where possible. Fly with a discount airline and/or wait for airfare sales.

Also, consider giving a cheap cabin, van or tent a go and enjoy the adventure.

Take your lunch to work rather than buying it. Same goes for coffee and tea - bite the bullet and make it at work. Every cent counts.

Don't turf the old faithful. If you have an old car that isn't in the best aesthetic condition but runs well, then resist the temptation to buy a new one. Which would you prefer: a vehicle upgrade or being months/years closer to owning your own home?

Don't be a clothes fanatic or hoarder. Shop at funky seconds and samples shops, warehouse sales, factory outlets or even online. You could also look into selling your old clothes (or other household items) online or at markets, to save extra money.

Keep up your social life. Keep the smile on your face but tone down your social agenda where possible, such as encouraging friends around to dinner or out for a picnic or barbecue instead of heading out on the town.

Over the past six months or so, availability of homes for sale has been extremely tight. This may be due to general fear in the market place because of the world financial crisis. Fear seems to affect people so that they would rather do nothing or may delay any important decisions, instead adopting a wait and see approach. If recent good economic news continues we may see more home sellers confident enough to place their properties on the market.

Another factor leading to less property for sale, has been the seemingly endless weeks of rain which we have been experiencing. While good news for some, the home owner has not been able to tidy up, prune the garden, touch up the paint-work and generally prepare their property for sale.

The good news in all of this is that some of those who have placed their homes on the market have experienced a quick sale at a good price, due to the low supply of available homes. Also the last month of brighter weather has seen many more homes being listed for sale.

As usual if you have any comments or questions, do not hesitate to contact me.

Regards,

Noel R. Towns
Managing Director