Good news this month – another interest rate drop of 0.75%.

The Australian Federal Government has announced that it will guarantee deposits up to $1 million, at no charge, for a period of three years commencing from Sunday 12 October 2008. This includes all retail and wholesale deposits and applies to deposits in any currency. The guarantee applies to deposits held by banks for all types of customers, including individuals (and joint accounts), partnerships, businesses, trusts and government entities. 

What this means is that if any financial institution was to fail, then its customers would be able to access any monies held in deposit by that financial institution. Everyone should take comfort in the fact that financial institutions in Australia are highly regulated, and the deposits of consumers are now 100% guaranteed by the Government. In addition, the regulator, (APRA) regularly reviews and stress tests the financial position of banks. 

Due to the global financial situation, banks are being much tighter and stricter with credit policy when it comes to lending.

However, with two recent interest rate cuts and continuing uncertainty in the share market, now is a good time to look for opportunities in the property market.

Which ever way you look at the Australian residential property market, the long-term fundamentals are still there.  With strong immigration levels and a rising birth rate as major contributors, Australia’s population continues to rise and  there are not enough homes to go around.

Rental vacancy rates are at, or around the lowest on record, so for investors looking for good returns with long term capital growth potential, property continues to offer great opportunities. Add to this the governments increase to the First Home Owners grant and we see potential for more activity in the housing market over the coming months.