Do your homework, whatever the interest rate

Glenn Stevens' statement on interest rates was bland but holds important reminders for property investors.

It's probably a sign of how stable our economy is that we wait for the slightest change in wording when the Reserve Bank (RBA) decides on the cash rate.

Last Tuesday the RBA board met and decided to keep the official interest rate at 2.5% – not only a historically low rate compared with the 5.2% average since 1990, but also a rate that's been kept the same since August 2013.

But it was the way RBA governor Glenn Stevens expressed himself on property prices and the Australian dollar that is worth looking at during the remainder of the year and into 2015.

For more than a month we've heard strong commentary from economists about unhealthy price inflation in the property market, driven by low interest rates. Some of that comment has predicted an end to negative gearing. I haven't joined this discussion because lenders' figures don't suggest a problem in the property market, and the Bureau of Statistics' House Price Index series shows we are just slightly above the index average since 2002.

However, the RBA governor in his statement did mention investment property: "Credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets."

I think Stevens was right to address the property market with a bland statement like this. If nothing else, it's a reminder to property investors that they must do their homework and invest wisely regardless of what official interest rates are doing.

With an investment property, you are interested in a good location and access to infrastructure such as schools, shops, railway stations and playing parks. And you are also interested in average rentals and some historical data on rental yields.

But the first step in a good investment is buying well. This means not just paying a good price for the year, but a good price for the 10 to 20 years you want to generate income from this property. If you pay too much you'll lose on capital appreciation and it will take longer to generate clear funds from the rent.

It's one thing to get carried away at an auction and pay too much for the house you love, but an investment property is a business that must earn income and capital growth for many years.

So keep a cool head.

The other element mentioned by the RBA – that they expect the Aussie dollar to fall further against the US – is something that might give a boost to our economy. When our dollar was at parity with the US, Aussie exports were expensive and local manufacturers found it hard to compete in foreign markets.

Now that our dollar is at 85 US cents – and expected to fall further – our non-mining economy has a chance to pick up, expand operations and create jobs.

So don't be alarmed at the lack of big headlines from the Reserve Bank this month. A steady economy is a great thing when you consider the alternative.