Cessnock is Very Cheap and Good Rent Returns
This March, the U.S. Federal Reserve raised the country’s cash rate a quarter of a percent, to 1.75 percent. It’s the first time in 18 years, the U.S. has raised the cash rate higher than Australia’s, which remains unchanged at a record low 1.5 percent.
If you’re still looking to invest in real estate Cessnock might be a good low risk, high return strategy
It’s expected that interest rates in the U.S. will reach 2.75 percent by mid- to -late 2019. And this means a few things for Australians.
For a start, higher U.S. interest rates will make the U.S. dollar more expensive, while the Aussie dollar will become less valuable.
For Australian businesses — retailers, especially — that’s a little bit of good news, as it makes overseas imports less attractive to Australian consumers.
Lending will become more expensive
But there are some downsides. Australia’s biggest overseas import is crude oil and petroleum. As petrol companies pass on the costs of converting the U.S. dollar to the Aussie dollar, we’ll see our petrol prices rise.
It’ll also be more expensive for Australians to borrow money. The U.S. is the world’s largest economy by GDP, and banks around the world — including Australia — trade on the strength and weakness of the U.S. dollar.
Even though the RBA has kept Australia’s cash rate at 1.5 percent, our commercial banks will raise interest rates to deal with the cost of borrowing U.S. money.
Investors priced out of Sydney
Most investors have already been priced out of Sydney, thanks to tightening of lending rules, so they’ve been looking for other regions of NSW to invest in. (Lending is only going to tighten further, following the revelations of the Banking Royal Commission.)
North of Sydney, Newcastle and the Greater Hunter Regions, including Cessnock, Raymond Terrace and Beresfield, are attracting lots of investors. It’s not just cheaper property prices that make regional NSW towns attractive.
Like Wollongong in the south, Newcastle is full of amenities (hospitals, schools, a respected university), but unlike Wollongong, it thrives off two diverse economies — mining and resources and tourism.
More brick for your buck
Unlike Sydney, when you buy property in Newcastle and the Hunter, lot sizes are bigger, so you’re often buying more land than building. (Also unlike Sydney: in Newcastle you can still buy land!)
Further, zoning restrictions are often looser than in Sydney, and there’s greater opportunity to change the dwellings to maximise the return on investment, including the building of granny flats for rent.
If you choose to, buying land in Newcastle and the Hunter, gives you capital appreciation and development opportunities. Land is also reasonably inexpensive. If you choose well, you can build more than one dwelling, again increasing your return on investment.
To learn more about investing in the Newcastle and Lake Macquarie property markets, our Property Investment Training Course will teach you all about investing in the regional NSW property market.