26 November 2009

Dear Investor,

Property prices in Australia

We are frequently asked by investors about the property market. In our last Investment News, we reported that dire predictions of the market's imminent collapse had been shown to be wrong. As a result, one prophet of gloom, Steven Keen, now has to walk from Canberra to Mt Kosciusko wearing a t-shirt proclaiming his error.

So what has been happening in property in 2009?

The overseas picture

With the onset of the Global Financial Crisis, some property markets have experienced a significant downturn. The problems in the US are well documented and are likely to be ongoing, as the entire nation enters a sustained period of enforced saving.

The UK has also had a difficult time, with house prices recently posting their first quarterly increase since the third quarter of 2007. Closer to home, New Zealand is still down on its peak in 2007, although there are signs of consolidation and recovery.

Property in Australia through 2009

The experience in Australia has been markedly different. In 2008, the market reduced by 3% 'peak to trough' between February and December. However, by March 2009 it was becoming clear that this softening was limited both in scope and duration. At this time, Anthony Richards, the Head of the Economic Analysis Department of the Reserve Bank of Australia, noted that:
  1. the weakness in housing prices was mainly at the higher end of the market; and
  2. preliminary data was already showing a significant pick-up in the market.
Although we have obviously not yet completed the final quarter of 2009, it seems clear that Richards' early assessment was accurate. According to RP Data-Rismark, by the end of the third quarter Australian house prices had risen by approximately 8%.

Of course, not all regions in Australia were equal. Darwin experienced 6.3% growth in the third quarter alone and Melbourne and Sydney easily exceeded the national average. However, other regions, such as Brisbane, Perth and Adelaide, have been less buoyant, despite having provided the best overall results in recent years.

Property performance and investment

There is no doubt that many who have ridden the recent roller coaster on equities markets would be looking enviously at the stability of the Australian property markets. But investors should always recall that the property market does not rise and fall uniformly. All investment, including property investment, involves risk.

The way to manage the risk (it can never be eliminated entirely, even by avoiding investment) is to diversify your investment. Or, as the old adage puts it: "Don't put all your eggs in one basket".

La Trobe's Pooled Mortgages Option offers diversification on a range of levels so that it can provide a stable, reliable income for investors. Each investment is available to be invested in over 300 mortgages and in cash, rather than being reliant on the performance of a single borrower. In addition, the mortgages are diversified geographically and according to security type (e.g.: residential, vacant land etc).

La Trobe's dedicated management team constantly assesses and reviews allocations and investments of the Pooled Mortgages Option. Allocation changes are constantly adjusted to take account of changes in the general economy or in particular market segments.
The La Trobe Group is one of Australia's leading mortgage managers and has been managing mortgages for over 55 years.

Best regards,

Best regards,
Chris Andrews


> Home
> About Us
> PDS - Want to invest?
> FAQs
> Subscribe Free
> Independent Ratings
> Mortgage Shopping List

Chris Andrews
Head of Funds Management

t  +61 3 8610 2811
e  candrews@latrobefinancial.com.au

Chris Andrews is the Head of Funds Management for the La Trobe Group and has responsibility for the La Trobe Australian Mortgage Fund.
Read full profile here.

La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

Copyright 2010 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

* La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
(1) The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Past performance is no guarantee of future performance. Investors risk losing some or all of their principal investment.
(2) Withdrawal rights are subject to liquidity and may be delayed or suspended.
(3) As at 30/11/10 the La Trobe Australian Mortgage Fund had received a Morningstar RatingTM of 5 stars. The Morningstar Rating is an assessment of a fund's past performance - based on both return and risk - which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision. © 2010 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the above data or content to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant product disclosure statement, before making any decision. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.pdf
(4) 3.75 star rating out of a possible 5 star rating indicates that Adviser Edge believes that La Trobe has performed in line with its peers and exceeded its peers on some fronts.
(5) The Standard and Poors rating of 4 out of 5 stars indicates that S + P has high conviction that La Trobe Financial will consistently generate risk-adjusted fund returns in excess of its relevant investment objectives and relative to its peers.
(6) The award was given to the La Trobe Australian Mortgage Fund, Pooled Mortgages Option.
Research Ratings are subject to change. To view the latest research information please visit www.adviseredge.com.au or www.standardandpoors.com.au. Ratings issued by Adviser Edge Investment Research AFS Licence No. 236783 and Standard & Poors Information Services (Australia) Pty Ltd AFS Licence No. 258896 are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. The ratings are only one factor to be taken into account in deciding to invest. Research Houses receive a fee from La Trobe for rating the product. The Adviser Edge rating is generally a measure of the rated entity's capacity to meet its repayment obligations in all market circumstances.
IMPORTANT: This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website.