Perpetual Private Market Update: Interest rates, cooling property and trade wars

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Perpetual Private Insights

Luke McMillan is the National Manager, Investment Advice, at Perpetual Private. In the accompanying video, Luke covers everything from global market trends to the outlook for interest rates and residential property in Australia.

Here are some of the key take-outs:

Global market trends

  • Global economic growth continues, driven in part by the strength of the US economy following tax cuts and fiscal stimulus.
  • Looking ahead, further increases in US interest rates and escalation of trade wars are trends to watch closely.

Australian interest rates

  • The interest rate picture in Australia is very different to the US – they’re well into the hiking cycle, we haven’t started.
  • In Australia there’s less pressure to increase rates because of low wages growth and subdued retail prices.

Residential property market

  • National property prices have slowed over the last year – predominantly in Sydney and Melbourne.
  • The cooling property market is a result of high housing supply and slow loans growth due to tighter lending criteria and higher wholesale funding costs.
  • National property prices could fall by another 5% over the next 12 months.

Long-term investing

  • In our last issue of Catalyst we asked what timeframes came to mind when people thought of long-term investing. Most people chose 3-5 years. In our view long-term investing is the next 5-10 years-plus.
  • The benefit of a long-term strategy for share investing is being able to take more risk for potential reward. You have the time to ride out short periods of market volatility and benefit over the longer term.

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Perpetual Private advice and services are provided by Perpetual Trustee Company Limited (PTCo) ABN 42 000 001 007, AFSL 236643. This information was prepared by PTCo. It contains general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. You should consider, with a financial adviser, whether the information is suitable for your circumstances. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information.