Mirror, Mirror on the Wall, What Will 2018 Hold for Us All?

Prediction 2018

As absurd as it is to speak to a mirror, it also is to try and predict the future, but I will attempt to predict 2018 for us all:

Interest rates:

The inflation rate (current 1.6%) is still hovering within the reserve bank band of between 1-3%, which is predicted to remain under 3% in 2018 with a slight increase through latter part of the year. Therefore, I predict rates to remain at similar levels and, at most, increase by 0.25% for 2018.

Property Market (Auckland in specific):

Already January has been a real hive of activity in our office and speaking to various real estate agents, principles and groups, the market seems very active. Therefore I predict an increase in property prices but at a moderate pace.

Economy:

The economy is predicted to grow, albeit slowly. Terms of trade is at an all-time high, global economy is more stable than it has been for many years, tourism is flourishing, and diary is in a relatively good position.

Funding:

The Reserve Banks have released more capital into the market in late 2017 by reducing the loan value ratio rules. There is more funding available for investors and first home buyers alike. Investors now only need 35% deposit/equity to invest and there is more funding for first home buyers who do not have 20% deposit. Give me a call if you have any questions.

Caution:

I always recommend approaching your investment strategy with caution. With low interest rates for an extended time, the stock market and the property market have been given a boost. Also, as different countries try to exit the low interest rate environment, it would be prudent to keep in mind that it would affect the stock market and the property market.

Recommendation:

Would I invest in property…? Yes, but I would ensure I have appropriate savings in place for a rainy day and an insurance plan for my investment strategy.

Currently I would not fix for longer than 3 years. I believe the 4 year and 5 year rate is not worth the increased payments.

Reduce or cut debt, which is more than 5% interest rate and live off your income.