Interest rates are coming down. According to the financial markets, the 0.25 per cent drops in November and December are the first of another three to four rate cuts expected by June.
Rents are rising rapidly. Information from the Australian Bureau of Statistics (ABS) shows the dollar value of rents rose by 4.6 per cent across Australia in the year to September and by 1.2 per cent in the September quarter alone.
Sentiment is improving. New home financing figures from the ABS show the number of property commitments for owner-occupied housing rose by a seasonally adjusted 2.2 per cent in September, while the number of first homebuyer commitments as a percentage of total commitments climbed to 16 per cent - the highest level in just under a year and a half.
But has the market bottomed yet? Research from RP Data confirms the housing market correction is slowing, with capital city values achieving their best result in several months. Meanwhile data from SQM Research shows the number of 'stock on market' (properties for sale) remained flat in October. A look at SQM's graphs (go to bit.ly/uu3oEW) shows that stock levels appear to have peaked for at least Brisbane, Perth and Darwin.
Looking at the overall picture, RP Data reports that continued strong growth in rents has meant that gross total returns for homeowners are actually charting in positive territory. This is good news for landlords, and it got us thinking about how we could help our readers take advantage of this.
We're very much aware that many investors are taking a cautious approach in the current economic climate, so we've travelled the country in search of high-return rental powerhouses.
Our mission was simple - to find areas that offer both positive cash flow and good capital growth prospects and in so doing, reduce the risk for the investor.
With rental returns of up to 14 per cent, the opportunities available in today's market are definitely worth checking out.
Thredbo has a very strong Peak Season with strong rental yields and very high depreciable tax benefits to certain properties.
