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As you all may suspect by now, apart from my involvement with New Hope in Cambodia, I am an avid supporter of the local Lennox Head community which expands to many facets and different areas within our beautiful region.
One of my latest ventures is to become a “Silver Sponsor” for Mark Waller – an exceptional (and debonair) local artist with a vision for the future which includes promoting our unique and diverse region through art and video.
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With Australia’s residential property sector finally coming off the boil, investors should be set to head back into the market to take advantage of easing demand and weakening buyer competition.

But while owner occupiers and first home buyers are fast disappearing from the market, the latest figures from the Australian Bureau of Statistics show that investors aren’t exactly jumping in to take their place.

It’s a sign of just how strong Australia’s property market became over the last 18 months that investors are now finding it a bit of a struggle to see a profitable way in.

One of the biggest problems is the across-the-board decline in gross rental yields seen in every capital city for both houses and units in the last year, according to analysts RP Data.

(Gross rental yield is calculated as a percentage of the annual rent versus the purchase price; it does not include expenses in maintaining the rental property.)

RP Data estimates that it takes a rental yield of 5.5 per cent or better to be attractive enough to draw investors into the market in any great numbers.

Many capital cities – particularly for houses – don’t even come close to that threshold:

HOUSES               Jul-10                    1 Year Change

Melbourne             3.5                              -0.6                        

Perth                     3.8                              -0.4

Adelaide                3.9                              -0.3

National                3.9                              -0.4

Sydney                  4.1                                0.3

Brisbane                4.2                              -0.3

Canberra               4.6                               -0.3

Hobart*                 4.9                               -0.1

Darwin                  5.2                               -1.2

UNITS                 Jul-10                    1 Year Change

Melbourne            4.1                               -0.5

Perth                    4.3                               -0.2

Adelaide               4.5                               -0.3 

National              4.8                               -0.3

Brisbane               4.9                               -0.3

Sydney                 5.1                               -0.3

Canberra              5.3                               -0.2

Hobart*                5.4                               -0.5

Darwin                 5.6                               -0.5

Sure, gross rental yields are a blunt instrument for measuring the profitability of an investment  — because they don’t account of other expenses and outgoings – and what ultimately matters is the rental yield calculated for an individual property.

But the data does point out pretty clearly how spiraling property prices in many of the capital cities have put real pressure on would-be investors.

Vacancy may be tight in many cities but rental growth has proved weak-to-moderate, which means investors are having to wait longer to see a decent rental return after paying those high purchase prices.

Then there’s the other risk that comes with buying into a near-peak market — pay too much above market value and you can end up sacrificing months or even years of potential capital growth.

Avoiding both these scenarios are sure to be on the forefront of investors’ minds heading into the spring property season.

*Due to the low volume of sales in Hobart, rental yield figures cited by RP Data cover the period from June 2009 to June 2010. 

Story by Chris Vedelago Fairfax Digital

Would you pay more for an energy-efficient house? Or one that was water-wise? When we polled our readers 62 per cent said they wanted the house they were buying to be eco-friendly, my first reaction was to ask; Are people just saying that? Or are they following through and voting with their wallets.

Here is what you told us. The question posed was: Is the eco-rating of a home a major factor in your buying decision? And the answers were …

Yes, absolutely: I would only buy a house that is designed to have minimal impact on the environment (27%);

Yes, it would be ideal if the house had some energy efficient measures installed such as solar panels or solar hot water: You can really make some good savings on your bill power bill and it also helps the environment (35%).

No, it’s considered after other factors: A good eco-rating is nice to have however I will always first consider price and location (25%);

No, not at all: It’s hard enough to find the right property without considering a property’s eco-rating (12%).

Like I said it got me wondering. My feeling was that with the cost of housing having just leapt ahead in many parts of Australia, and the strong conservatism that has swept through consumer spending, many people would simply be happy to find something they can afford.

Then again, you only need to look at the votes the Greens party received in the last election to know there is concern about the environment out there, so maybe that is translating to housing choice?

The whole question of eco ratings is pretty pertinent, given there’s a move on to make energy rating mandatory across Australia for homes that being sold or leased. It’s already in play for commercial spaces.

See page 26 of this Council of Australian Governments’ document where the council says it wants to "Phase in mandatory disclosure of residential building energy, greenhouse and water performance at the time of sale or lease, commencing with energy efficiency by May 2011." The group reasons that would make credible and meaningful information "publicly and readily available to market participants to assist them in making lease/purchase decisions." The mandatory disclosure process could be modelled on that already enforced in the ACT.

If you take a look at houses for sale in the ACT you’ll see that every one has an energy rating from 0-10. It’s been that way since 1999. A 0-star rating is very poor and means the building shell does practically nothing to reduce the discomfort of hot or cold weather. A 5-star rating indicates good, but not outstanding, thermal performance. People living in a 10-star home are unlikely to need any artificial cooling or heating.

All good but will people pay for more efficient houses? There’s an interesting government study, Energy Efficiency Rating and House Price in the ACT, which found that if you’ve got two houses on the market that are pretty much the same except for their energy ratings, the house with the higher energy efficiency rating will command a higher price.

The study was based on 2005 and 2006 data, and ran various models. One found that "if the energy performance of a house improves by 1 star level, on average, its market value will increase by about 3 per cent (2.5 per cent in 2005 and 3.8 per cent in 2006). Therefore, if a property owner installs R4 ceiling insulation at an approximate cost of $1200 they will, on average, improve the energy performance of a poorly insulated home by at least 1 star. This means that a detached house sold in 2005 for $365,000 could fetch an additional $8979 with only a 1 star improvement in energy rating".

That was before the surge in eco awareness of the last five years, and pre Al Gore’s climate documentary, which seemed to have a big impact on the Australian psyche.

In older areas many buyers accept the houses will have a poor rating, but in newer spots where neighbouring homes tend to perform well, a poor rating will raise eyebrows. You can see why it would be important in Canberra – it gets pretty hot and cold there, and would be an expensive place to keep a draughty house comfortable.

Coventry goes so far as to suggest to vendors, that if they need to do anything to smarten up the home, they considering adding some energy efficient measures as they go. It could be something as simple as rubber-backed curtain and pelmets.

Angus Kell, NSW/ACT manager of building advisory service Archicentre, says its commonsense now that now people are more aware of environmental issues, and the rising cost of energy and water, that it would affect their property choices. He’s says a well-designed house can slice a family’s energy bill by one-third. Energy-saving bells and whistles can shrink the bills even further.

Original story from Carolyn Boyd www.domain.com.au

Potential first homebuyers who want to jump off the rental roundabout should consider the effects of a strengthening economy, particularly as lenders begin improving borrowing conditions.

Expected interest rate rises and higher living costs will compel many landlords to recoup lost funds by hiking rental prices, affecting many prospective buyers who juggle rent with saving for a deposit.

Mortgage Choice spokesperson Kristy Sheppard said, “Consumer confidence in the housing market is quite strong as we face a bumper spring, but there are hesitations from first time buyers who are unsettled by affordability concerns as they struggle to raise a significant deposit.”

“The latest ABS housing finance figures show a small increase in the number of first homebuyers as a percentage of total owner-occupied dwelling commitments, up point one of a percent to 16.1% in July. Our data supports this. However, that ABS figure was 25% for the same period last year.

“Many would-be buyers biding their time as tenants will be feeling a tighter pinch thanks to already-rising house and unit rents. Combined, these increased 2.9% over the year to June, according to RP Data’s June 2010 Quarterly Rental Review. While this probably hinders their savings ability it could be the persuasive stimulus they need to move into home ownership.

“The good news is, several lenders have begun loosening loan approval criteria. In some cases this means increasing the amount they will lend to 95% of the purchase price from 90% earlier this year and 80% during the GFC. Borrowers who choose such lenders will require only a 5% deposit plus other possible purchase costs such as lenders mortgage insurance and legal fees.

“With lenders tipped to soon raise variable interest rates independently of the cash rate cycle, fixed rate loans are looking more attractive. Mortgage Choice’s August customer loan approval data shows fixed rate demand rose for the first time in three months. These loans are often popular with first timers, who are more likely to need peace of mind over their repayment level.

“That’s all well and good, but potential buyers must knuckle down to combat higher housing prices, which inevitably mean higher loan sizes. Thankfully for them, growth is plateauing in many areas.

“The ABS reports the current first homebuyer average loan size is $282,500. In contrast, the Mortgage Choice 2010 First Homebuyers Survey found the majority of respondents purchasing their first home before February 2012 will apply for a loan of between $300,001 and $400,000.

“At present, we’re looking at higher than average property listings with lower than average competition between buyers. But it’s a cycle. As positive sentiment grows so too will demand, which may mean now is a good time to act. What prospective first homebuyers really need to do is explore their choices carefully – both property and mortgage wise – before leaping in too quickly.”

Source: www.australianhousehunters.com.au

Real estate sales in Australia jumped by 11 per cent during August, official figures reveal.

The property market in the country received a boost as homebuyer confidence strengthened and first-time buyers returned to the market.

With the Reserve Bank keeping official interest rates on hold, property sales across the nation were 10.9 per cent higher than in July, the figures from the Australian Finance Group (AFG) show.

According to the figures, greater competition between lenders on price and policy combined with increasing loan-to-value ratios are also proving beneficial to property investors.

"With property prices in many areas having stabilised, and some lenders prepared to lend up to 95 per cent of the property’s value, property is becoming more accessible to first home buyers and more attractive to investors," he explained.

Indeed, investor activity varied across the states, with New South Wales and Victoria topping the market.

In New South Wales almost 37 per cent of all mortgages sold were to investors, while in Victoria they accounted for 36.4 per cent of the total sales volume.

However, investor confidence in Queensland and Western Australia remained low, largely due to the uncertainty over a possible mining super tax.

Source: www.ipinglobal.com