Property analyst Michael Matusik says that buying residential property in Australia is “big business’ amd says investors account for a substantial proportion of that business.

With one quarter of Australia’s housing held by private investors, Matusik has conducted research to paint a picture of what those investors look like. 

He says most are aged 34-35; most buy apartments as investments rather than houses and, on average, the typical Australian investor holds 1.5 residential investment properties.

“They buy close to home, with half buying in the same city or same suburb.” he said.  “Nine out of ten investors stick to buying in their own state or territory and two-thirds buy within a capital city, with inner-city locations the most favoured.

“Three our of five investors borrow money to buy investment properties and most of those negatively gear their properties.

“More than eighty percent buy for long-term capital gain and most investors expect property values to double every ten years.”

Portrait of an Investor – source Gold Coast Bulletin 28.08.10

Tweet This Post

After an intense and extensive campaign our Spring Auction evening on 1 September 2010 provided an excellent platform to showcase some stunning properties for sale in the Lennox Head, Bangalow, Knockrow, Clunes, Ocean Shores, South Golden Beach and East Wardell areas.

It was standing room only at the auction held at the  Ramada in Ballina and extra seating was brought in to accommodate interested parties.  The overwhelming attendance was a thrilling result in a market that analysts consider to be “slow” and taking into account the political situation that we Australian’s find ourselves in at the moment.

Out of 14 properties listed for Auction on the night, 2 were held over and sales over $3.5 million have already been exchanged.

The staff are continuing to work with several interested parties and we envisage more contracts will exchange in the very near future.

A great night and a great result.

Tweet This Post

On Friday 24 September 2010 Southern Cross School K-12  in East Ballina will be holding it’s annual Year 12 Presentation Ceremony.

Lois Buckett Real Estate as a proud sponsor of local schools and associations has contributed to the event in the form of financing a book prize for one of the first place students.

Tweet This Post

Like some carnival mystic, before the last election I wrote some predictions in an envelope and sealed it, with instructions only to open it after the election was over. Lo and behold, when I opened the envelope afterwards my prediction proved right: ”That neither party will do anything about making housing more affordable.”

They say that neither of the major parties can agree about anything, but they have certainly continued their conspiracy of silence about the ruinous price of housing in this country. Large parts of New South Wales and the rest of the country are desperately crying out for action on both reducing the price of housing and freeing up more land for residential development, but the reply during the election has been a deafening silence.
We’ve been distracted by a wide variety of carnival tricks, with politicians from both sides busy dancing around marginal electorates in NSW, Victoria, Queensland and elsewhere, but yet no action on one of the most pressing issues of our times.

Neither party is willing to touch the negative gearing issue, perhaps in fear of offending their backers in the business community (although New Zealand seems to have the courage to). The NSW state government still remains addicted to stamp duty. Wage increases in the past 10 years have come nowhere near close to matching the stratospheric rise in house prices. Houses in NSW are at least 10 times the average wage (which is in itself a ridiculous way of measuring affordability — that assumes that the average person on $60,000 has no expenses as they pay off their house, perhaps existing on thin air and hope. A more accurate figure would be 20 times the average wage, taking into account minimum expenses of $30,000.)

Relaxed Foreign Investment Review Board rules of home availability means that Australians are competing with the rest of the world for their local resource. The Liberal Party says it will ”reduce the debt”, but it neglects to say that our public debt is tiny compared to other countries — instead, the nation is hocked to the gills on private debt, partly credit card debt but mostly housing debt.

We’ve reached the point where people are actively praying for that long-awaited major collapse in the housing bubble so they can possibly afford a home, something akin to planning one’s retirement strategy on a win at lotto or a punt on the dogs. Sydney and Melbourne’s western suburbs, traditionally the working-class heartland of Labor, might have gone aspirational but they still want affordable homes, something state Labor seems unable to provide.

Meanwhile, the housing affordability time bomb ticks away — a growing population and a shortage of land promises a price explosion in the future, locking out yet another generation from home ownership. Soon we will reach a point where only the richest of Australians — and cashed-up investors from overseas — will be able to own a house. And with our banks finding it harder and harder to compete for capital overseas, money for home lending may become harder to obtain.

There are many models we could follow around the world — the German model for long-term renters signing a contract with their landlords, reducing housing speculation; or the Denmark model where tax benefits are given mainly to purchasers of residential property who intend to live in their home – but we refuse to do so, because they aren’t enough votes in it, and because it’s the sweetest racket for the rich apart from mining.

Perhaps millions of us will just have to settle on being renters in our own country. That is, until a leader or a political party comes along with the guts to do something about it.

Charles Purcell is a Fairfax writer. Story from the Sydney Morning herald

Tweet This Post

The Australian real estate market is experiencing a period of sluggish growth and activity, but property values are performing strongly when compared to our overseas counterparts.

The Global Property Guide’s latest survey of house prices, which uses price changes after inflation to gain a more realistic picture, reveals an uneven recovery in global housing markets during the 12 months to June 2010.

Over that period, 18 countries had house price increases and 18 countries had price declines.

Europe presented mixed results, with Finland (up 9%) defying the downward trend of decline experienced throughout Ireland, Bulgaria, Lithuania, Iceland, Russia, Croatia, Spain and Slovakia.

In the US, house prices fell 3.31% over the year, while Canadian house prices were up 1.47%.

Singapore performed best overall, with a 34% house price increase recorded between June 2009 and June 2010. House prices in Hong Kong, Taiwan and China also surged 21.4%, 11.51% and 5.78% respectively.

Strong economic growth, low interest rates and increases in foreign demand fuelled house prices in these four countries, raising fears of a property bubble. In June the International Monetary Fund warned that the booming Asian real estate markets “may pose risks to financial stability.”

In response, Singapore, Hong Kong, Taiwan and China all swiftly tightened credit supply by lowering the loan-to-value ratio. Singapore and Hong Kong have also increased land supplies, and China has increased the down payment requirement for second-home mortgages to 50%.

Closer to home, the July RP Data-Rismark Hedonic Home Value Index confirms that Australian property values are holding their own.

“In the period between end 2008 and March 2010, Australian home values rose by 16.3%,” says RP Data’s research director, Tim Lawless.

In the month of July Australian home values remained virtually unchanged, recording an increase in value of 0.1% for the month. Annually, house prices jumped 9.7% in the 12 months to June – and Lawless believes the outlook for the rest of the year remains positive.

“There is the possibility of modest gains,” he says, “if mortgage rates remain in check and economic conditions continue to improve.”

Source:www.yourmortgage.com.au

Tweet This Post

Here’s a challenge. How fast could you pay your mortgage off? The sad realisation hit me earlier in the year that I’m not likely to get rich anytime soon. I know – why did I even think that would happen?

The only path to financial freedom is going to be to make sacrifices – some pretty big ones – and slash the mortgage as soon as possible. Then compound interest and investing will be able to actually earn us money. The sooner the mortgage is gone, or at least significantly reduced (given the size of mortgages these days!), the more money we will have to enjoy life.

Yes, it can be a little boring trying to pay a slab off the mortgage. But once you owe a lot less you’ll be able to use that spare money to do things that you want, instead of feeding it to the bank all the time. If you’re in deposit saving mode, the tips below will also be helpful.

#1 Stop Spending. Sounds simple, but do you find yourself wondering where all your money went? Does it leak out of your wallet like a bucket with a hole in the bottom? We’ve tried budgeting before but it just seemed too complicated. After a couple of weeks we’d get bored and the whole thing would go out the window. So now we’ve just decided to stop spending on pretty much everything – except the essentials, and a couple of luxuries we just can’t live without.

#2 No new clothes. In fact no new anything. Terrifying for some, I know. But we’ve decided to put a ban on buying any new clothes for two years, and most other goods too. I already have enough threads to dress the people of a smallish nation so it really shouldn’t be too much of a challenge. It’s just the boredom factor, really. Second-hand op-shop bargains are allowed and it has become surprising to see what you can actually find, if you have the time to look. And given we’re not heading out to pubs and cafes anymore, we have to do something with our time.

We’ve got little kids so obviously they can’t wear the same clothes for two years, unless we put bricks on their heads. But we’ve made it known that we welcome all hand-me-downs, and have also made a habit of perusing the op shops and second kids’ clothing markets. It’s amazing how many near-new clothes you find for just a few dollars, or items that even have the tags still attached.

#3: Lose the pay TV. It’s a luxury that is costing you a pretty penny. With the growing number of channels on free to air, there’s a lot more choice for nix on the box these days. And if you do the sums, you’ll probably find that even hiring a few DVDs a month is a lot cheaper than pay-TV. If there is something you must watch – sport for example – try to arrange to see it at a friend’s house who has got pay TV. As a last resort head out to the pub to see it – but be careful your beer bill doesn’t cost you more than your monthly pay-TV would have!

#4: Join the library. Now that you’re not watching as much pay TV you might have more time to read books – and you can do it for free from your local library. Check out their DVDs and CDs too. If your library doesn’t have what you want you can ask them to bring it in from another public library. In many areas this is free. In others they’ll charge about $2 or $3 to do it. Recently my three-year-old wanted me to get him a Gruffalo audio book. Instead of buying it, we asked at the library, and they got it from another library for us. We had to wait about two weeks, but it provided some great anticipation for my son, and cost us nothing.

#5 Quit the gym. Go for a walk/run/ cycle/swim instead. Now we are coming into spring, there should be ample chance to get out and about and exercise without having to pay for it. If you need motivation, try to arrange with a friend to exercise with. Make a date for something active, such as tennis, swimming or walking.

#6: Ditch the car. Get a bike, or opt for two feet and a heartbeat. I don’t mean sell the car, I just mean avoid using it when possible. Of course if you have two cars and think you can survive with just one, it might be worth offloading your second. Otherwise keep your fuel costs down by jumping on a bike when you can or for very short trips, walk. We have a Christiana trike, which is great for carting the kids around and also for heading to the markets on a weekend. If you live in an area where there are organised car pooling groups, it might be worth checking them out as an alternative to owning your own car.

#7: Entertain at home. Going out can be pricey, especially if you are buying alcohol too. Entertaining at home can be just as much fun, and stress-free (and cheap) if you ask everyone to bring a little something to contribute. If you do head out for a meal, look for cheaper restaurants where you can BYO alcohol for a low corkage fee.

#8: Home brew is a go-go. Since my hubby started home brewing a year ago, I reckon we’ve saved a small fortune in beer. If you’ve got a green bent, it’s potentially better for the environment too, because you’re reusing the bottles and not paying for all that heavy ready-made beer to be shipped about. If you are a wine drinker, try to save money by buying wine in bulk.

#9: Holiday close to home. Look for cheap options, such as camping, staying in caravan parks, or house-sitting for friends and family. Try to get something with kitchen facilities where you can make most of your meals – eating out can be a significant cost of holidays.

#10: Grow a few vegies. It can be pretty simple to grow some herbs in the garden (or pots) and a few basics such as spinach, lettuce and tomatoes. Pottering about watering and weeding them can also be relaxing after a stressful day at work.

#11: Babysitting circle. If you’ve got young kids, considering swapping babysitting services with friends. We have a magnet system where we use magnets as payment. Each family starts with four magnets. We often babysit the kids in their own home, in the evening. So one parent stays at home with their own children, while the other minds the second family’s children. It works a treat. You can arrange for the circle to work with several families or you could have your own arrangements with a couple of different families, as we do.

#12: Limit your mobile phone calls. If you’re bursting out of your mobile phone plan each month it might be time to examine your habits. Can you limit your conversations or cut down your texting to save money? Or could you email or skype someone instead?

#13:  Pre-made is pre-paid. Go for fresh with food where you can. Don’t get caught out buying pre-made things such as soup. It’s pretty easy to chuck a few vegies in a saucepan along with some stock powder and boil it up. Pre-made sauces (the add meat and vegies variety) can also be an expensive choice that could be replaced with a few basics such as stock powder, cornflour and garlic. It’s always good to make sure you’ve got a few basics in the fridge or cupboard so you’re not tempted to get take-away – even if it’s as simple as tinned fish, a cheap packet of pasta and sauce, or baked beans on toast as a stopgap.

#14: Buy a water bottle – and use it. Buying bottled water is crazy when you can refill from a tap. And resisting soft drinks, juice and flavoured milk will also save you plenty of money over time. Drink some water and eat an orange instead. It’s a lot cheaper, and better for your waistline too.

#15: Pack your own. Whether it’s work or an outing, there’s no doubt that food brought from home is going to be cheaper than lunch on-the run. It can get a bit tedious at times, so allow yourself to go really wild on occasion and buy takeaway. Otherwise bring your own and watch your mortgage start to be whittled away.

Original story by Carolyn Boyd, a property journalist and keen follower of Australia’s housing market.

Tweet This Post

WARMER weather will combine with other favourable conditions to fuel the appetites of potential property investors, according to Australia’s largest independently owned mortgage broker.

The latest Australian Bureau of Statistics housing finance report saw the value of investment housing loans drop for the first time in four months in June 2010 by a seasonally-adjusted 3.6 per cent to $7.3 billion, the lowest value reached since February this year.

However, this compared favourably to $6.5 billion in June last year.

Many market commentators say this buyer group had been holding back until the election was over and the traditionally strong spring selling season begins. They won’t have to wait much longer.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard says that according to RP Data, Australia typically sees higher than average property activity from September through to November.

"This year should be no exception, despite a possible lag effect from the hung parliament," she said.

"There are already more properties on the market than usual at this time of year.

"That is good news for prospective investors, as is property prices plateauing in many areas and dropping in some; rental prices increasing; strong population growth continuing; consumer sentiment rising and the sharemarket continuing to be unpredictable.

"Housing undersupply is a serious issue in Australia and ABS building approval figures show a fall for a third consecutive month in June to reach the lowest level since August last year.

"Hence, many investors believe the long-term potential of property as a stable asset class is excellent.

"With fewer new properties there is bound to be a pick-up in rental price growth — we are seeing that happen already.

"Australian Property Monitors Rental Market Report for the June 2010 quarter shows that from April to June, rental prices for houses rose nationally by 0.7 per cent, bringing annual growth to a relatively small, but very encouraging, 3.1 per cent.

"The unit market was stronger, with rents increasing nationally during the last quarter by 3.5 per cent, bringing the annual growth rate to 4.2 per cent.

"This bodes well for people who research the property market thoroughly, have a long-term strategy in mind and investigate all their finance options so they make a sound investment decision.

"Prospective buyers must be aware that lenders have tightened loan assessment criteria for investors as well as owner occupiers.

"Many have limited their loan to value ratios to 90 per cent of the purchase price for both buyer groups, with some going even lower.

"Also, genuine savings are essential, whether in the form of a cash deposit or existing property equity.

"Both buyer groups will need to plan ahead to satisfy their chosen lender’s requirements.

"Preparing for rate movements is also vital to the planning process.

"The cash rate will probably remain stable for the next couple of months but many lenders are signalling that funding costs may force them to raise borrowing costs independently of the RBA’s rate cycle.

"It will be interesting to see how many Australian investors spring into the property market over the next quarter and what effect, if any, lender rate rises will have."

Source: www.goldcoast.com.au

Tweet This Post

Gerard Minack, a senior economist at Morgan Stanley, predicted two years ago that house prices were set to experience a dramatic 30 per cent fall by this year given rising unemployment.

”Australian houses are much more overvalued than US houses; indeed, on some measures, our houses are arguably the most expensive in the world,” Minack said.

”My very simple take on it – the bigger the bubble, the bigger the pop.”

But with no snap crackle or pop, and debate still raging whether there has been a bubble, Minack last week revised his script to envisaging the bubble deflating, not popping.

”Dodging the worst of the global financial crisis didn’t demonstrate that there’s no bubble. In my view it just showed we dodged the prick,” he said.

”I’m not persuaded by arguments that houses are sustainably priced. Most measures suggest house prices are around 40 per cent above fair value. However, the risk of big price declines in the near term seems low.”

Minack points out that much of the discussion about the residential market future overly concentrates on owner occupiers despite a jump in taxpayers reporting rental income jumping from 608,000 in the late 1980s to about 1,765,000 now.

He notes the percentage of landlords claiming a rental loss (that is, rent not covering interest and other costs) has risen from 50 per cent to 70 per cent over the past decade.

With broad-based job losses appearing unlikely, Minack now sees the more imminent risks to property price growth as the

banks tightening credit and negative-gearing landlords departing the market due to low capital appreciation.

Ignoring the fact that investment property for many is their nest egg in the absence of superannuation, Minack envisages property investors becoming disillusioned with the ensuing widespread disposal of their investments. ”This is an investment that depends on capital gain for its payback. With net income not even covering interest charges, this is a classic Hyman Minsky Ponzi scheme,” he says.

”The real return on residential property over the next decade is likely to be negative.”

Minack also took aim at the Reserve Bank deputy governor, Ric Battellino, who recently said that 75 per cent of household debt was held by the upper 40 per cent of income earners.

”It is simply wrong to assert that rental properties are largely owned by high-income households: losing on residential property investment is largely a middle-class affair,” Minack writes.

”Taxpayers who earn $80,000 or less own 80 per cent of all loss-making properties.”

His 10-year negative return timeline forecast is offered without explanation. But the prospect of a price plateau rather than a pop is a much more plausible position for Minack to now embrace. This is especially so for Sydney which recorded a slump and then negligible price growth for many years after the last investor-inspired boom that peaked in 2004.

Some further excessive froth in Sydney pricing that was evident by late 2007 and early 2008 was removed by the global financial crisis fall-back.

It wasn’t until late 2009 that Sydney’s median house value finally surpassed the $568,000 peak of early 2004, according to Australian Property Monitors. At its worst, during the global financial crisis, the median was 6.5 per cent off its earlier peak. It’s now at $625,000.

But Minack, who lives in Mosman, has only to sound out another economist, Stephen Koukoulas, to know that many neighbourhoods across Sydney are going nowhere fast.

Koukoulas, now based in London as the chief global markets strategist for TD Securities, sold out of Mosman earlier this year for $1,175,000. The Mosman house had traded at $1,285,000 in 2007.

Mosman’s pricing is problematic, but Minack’s abandonment of his bubble pop forecast is especially intriguing as Melbourne’s price juggernaut has put it in a more precarious position than Sydney.

Melbourne’s dwelling price growth over the past decade sits at 174 per cent compared with Sydney’s 83 per cent, according to Australian Property Monitors.

Over the past five years it has been 66 per cent in Melbourne and 17 per cent in Sydney.

The latest Housing Industry Association affordability survey for the June quarter suggested Melbourne could shortly rank alongside Sydney as the least affordable Australian cities.

The HIA chief economist Harley Dale noted affordability dropped year on year by 39.8 per cent in Melbourne and in Sydney by 33.5 per cent.

”If that trend were to persist then you would rapidly be approaching a situation where Melbourne is on a par with Sydney in terms of [least] affordability,” Mr Dale said.

Story by Jonathan Chancellor www.domain.com.au

Tweet This Post

As a cloud of uncertainty hangs over Canberra, real estate agents will be wringing their hands together hoping that we have a stable government formed as soon as possible.

There’s nothing like a federal election to slow the wheels of the housing market, many agents say. So when Julia Gillard decided to take Australians to the polls before spring arrived, property insiders were quietly saying their thanks that the whole show would be done and dusted before the biggest sales season of the year arrived.

Within a few weeks, they said, everyone would get back to their day-to-day activities, including the all-important decision of where to live. It’s interesting to note, though, that even though many sellers weren’t keen on going under the hammer on election day, there were some buyers about. Perhaps driven by the low stock levels, auction clearance rates hit 75 per cent in Melbourne and 66 per cent in Sydney on Saturday, although were much lower in Brisbane and Adelaide, at 26 per cent and 30 per cent.

When it comes to the effect of the election, it’s not so much that either major party offered up any overly exciting housing policies, it’s more that buyers and sellers prefer certainty at all levels when they are making such an important decision.

“People see uncertainly as a reason to sit on their hands and do nothing,” says Craig James, the chief economist with CommSec.

“What it means is you may see vendors holding back listing their property for another fortnight or so, which certainly wouldn’t be a positive outcome for the property market, real estate agents in particular.”

However, James questions whether this is necessary. “I suppose what a lot of people have got to ask themselves is, ‘is anything going to change dramatically, if you have a Liberal minority government or a Labor minority government?’”

James says for both sides in the election, property wasn’t a major consideration. “There’s nothing in terms of the major policies that are likely to change things ,” he says. “So I would’ve have thought that vendors and budding buyers should be getting on with business but that may not be the case.”

As we head into spring you would normally expect to see plenty of hot properties come flooding onto the market, which may be delayed now. But David Airey, Real Estate Institute of Australia president, says the industry was already forecasting a quieter than normal spring as the six recent interest rates continue to bite, the market stabilises after some pretty substantial increases earlier in the year, and a cloud from the global economic uncertainty hangs over Australia. “People aren’t confident enough to go delving into the market with any great expectations at this stage,” he says.

Airey doesn’t think the uncertainty will have much impact on people buying and selling places to live in themselves, but he does expect investors will hold off making a decision until the situation is clearer.

One thing that Airey has on his radar is the possibility the major lenders could use a once-in-a-lifetime opportunity to improve their margins while the government is in caretaker mode. He’s not expecting to see the Reserve Bank move on the rates for the rest of the year, but he thinks an opening exists for the banks to make some quiet adjustments.

“There’ll be the least resistance from government to those rises and even if there was resistance or reaction it would be meaningless in a limbo situation,” Airey says. “Effectively we have no national government or a weakened national government, which will allow the banks to have a look at interest rate rises on the break basically. They’ll be taking the opportunity to say ‘gee, now would be a time to tweak up our rates with very little resistance or reaction from the market’, and that worries me a lot.”

When the situation will be resolved is difficult to tell, although that changes minute by minute. There is talk from independent MP Rob Oakeshott about the possibility of heading back to the polls if a solution can’t be found that installs a minority government. Real estate agents around the country have their toes crossed hoping that doesn’t eventuate. From Airey’s point of view a second election would be disastrous and would leave the entire country into a state of limbo.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.

Tweet This Post

Australia’s political deadlock is set to hurt financial markets with the uncertainty expected to send share prices and the local currency lower, analysts said Sunday.

In elections Saturday, neither the ruling Labor Party nor opposition Liberal/National alliance won enough seats to govern alone.

“Markets traditionally don’t like uncertainty and clearly markets would have been anticipating a (clear) result,” UBS economist Scott Haslem told AFP.

“So the market will have to deal with some uncertainty when it opens up on Monday.”

In advance of the election, Sydney’s main share index lost 1.07 percent, or 48.1 points, to 4,430.9 on Friday in line with regional falls.

Haslem said the Australian dollar would likely fall amid the stalemate, which has seen Labor Prime Minister Julia Gillard and her conservative opponent Tony Abbott battling to win the support of five minority MPs.

“What is more likely is that you end up with more volatility than you end up with a fundamental move in the currency, because fundamentally nothing has changed (to the economy),” he said.

The hung parliament leaves the future of the government’s plans for a tax on the nation’s profitable mining sector and a national high-speed broadband network hanging in the balance.

Commsec chief economist Craig James said any political uncertainty was “a major negative for financial markets”.

“In the short term the Aussie (dollar) has the potential to lose ground,” he told AFP, saying the currency could lose as much as one US cent after closing Friday at 89.05 cents.

Tweet This Post