INVESTORS will be allowed to improve properties in their self-managed superannuation funds, following a tax office move to abolish a ruling that banned the practice when money had been borrowed to buy the property.

Investors have always been allowed to maintain their properties, but they were banned from changing them because it would negate the concept of the "single acquirable asset" that the Australian Taxation Office had come up with to more clearly identify assets in SMSFs.

Ken Reiss, a director at accounting firm Chan & Naylor, said the new ruling was a "huge win" and would turn around a situation where investors had lost the desire to use their SMSF to use debt to buy property.

He said the previous rules meant, for instance, that "if an SMSF had used debt to buy a property in Queensland that was destroyed in the recent floods, the insurance proceeds could only be used to pay down debt rather than rebuild".

"In that case, the investor would be left with a block of land that they had no option but to sell" because any reconstruction, even an identical one, would be classed as a new asset.

The new ruling still insists that the improvements be paid for by cash resources in the SMSF rather than by borrowing.

The draft ruling will not, however, allow SMSF investors to buy and bulldoze houses and put up units using borrowings, for example. Allowable changes include pools, extensions and bigger kitchens, but they must not "fundamentally change" the property.

It also gives owners more room to move when buying a rundown property that needs more than maintenance, although, again, the new work cannot be financed by borrowing.

The decision caps a succession of policies that used to allow borrowing to buy property in super funds until June 1999, which was then banned except for existing arrangements until September 2007. The ATO brought in the no-improvements rule last year.

Story by Andrew Main, source: www.theaustralian.com.au

One in 10 Australian households is in housing stress and at risk of financial hardship and poverty, a new report says.

Renters and first home buyers are most under pressure, with 26 per cent of renters and 15 per cent of first home buyers in housing stress, the Australians for Affordable Housing (AAH) said on Monday.

"There is an entrenched and significant group of people in Australia who face day to day hardship because of their housing costs," AAH spokeswoman Sarah Toohey said in a statement.

Overall, 850,000 households across the country are at risk of financial hardship after paying for housing costs, of which nearly 300,000 are in NSW.

The report, commissioned from the National Centre for Social and Economic Modelling (NATSEM), found 21 per cent of first home buyers in Melbourne are more likely to experience housing stress, compared to 15 per cent in Sydney.

Hobart and Sydney put the tightest squeeze on renters. Hobart has the highest rate of renters in housing stress at 33 per cent, while Sydney has the highest number with more than 100,000 households facing poverty because of the high cost of renting.

"A secure home is a fundamental building block for everything else we do in life," Ms Toohey said.

"We need to create a housing system that works for everyone."

Story source: www.ninemsn.com.au

The decision by the State Government to remove the stamp duty home concession will flatten the struggling Queensland residential property market and cost homebuyers thousands of dollars, according to the Real Estate Institute of Queensland (REIQ).

The government announced today that from 1 August the concession which non-first home buyers receive when buying a new or established home as their principal place of residence will be removed. For a median-priced house in Brisbane, homebuyers will now be hit with more than $15,000 in stamp duty – an increase of more than $7,000.

First home buyer stamp duty concessions will remain for homes up to $500,000.

The government also announced a $10,000 grant for new-home builds. The Queensland Building Boost grant will be available for all people building, or buying, a new-build home or unit priced up to $600,000 between 1 August 2011 and 31 January 2012.

REIQ chairman Pamela Bennett said while any incentive to increase housing supply and create jobs in the construction sector is a positive for the economy, the removal of the stamp duty concession for non-first home buyers will wreak havoc on the Queensland property market.

About 60 per cent of all dwellings financed in Queensland in April were to non-first home buyers.
“The market is already the lowest it has been in many years and today’s announcement will just make it worse,” she said.

“The government is obviously trying to fill the financial void that has been left by the weak property market, and the subsequent lower stamp duty receipts given the marked reduction in property sales over the past 18 months.

“A better way to stimulate the economy would have been to provide financial incentives for all buyers of all types of properties which in turn would have increased activity and therefore helped the government’s bottom-line.”

According to the REIQ, the $10,000 grant for new-builds might provide a much-needed shot in the arm for the building sector but its value will be greatly diminished by the increased rates of stamp duty that non-first home buyers will have to pay. It is also unlikely to assist more first home buyers into the market.

“There has been a huge reduction in first home buyer activity over the past year and this grant is unlikely to change that state of affairs to any significant degree,” she said.

“While the grant means first-timers will be able to access $17,000, as well as stamp duty concessions, purchasing a new-build home or unit continues to be out of the financial reach of most prospective homeowners.”

When the First Home Owners Boost was available in late 2008 and throughout 2009, 74 per cent of first home buyers purchased an established home despite $21,000 being available for constructing a new home or the purchase of a new-build.

The head of the Bank of Queensland has warned that Queensland’s economy is at its weakest level in the past five years due to falling tourism and deflated real estate values, and that any additional interest rate hike would only serve to cause more damage, according to a report by The Australian.

David Liddy added that the strength of the mining and manufacturing sectors is overshadowing significant weak points elsewhere in the economy, and joined business leaders in expressing concern over the possibility of an interest rate hike by the Reserve Bank of Australia in its determination to cap inflation.

The concern expressed by Mr Liddy and business leaders at Monday’s Australian Agenda event came on the heels of the release of minutes from the RBA’s May board meeting, where board members suggested that higher interest rates may be necessary to fight inflation.

Speculation suggested a rate hike could come as early as the RBA’s next board meeting, which occurs in two weeks, according to The Australian.

THE government should relax foreign direct investment regulations, the Organisation for Economic Co-operation and Development says.

THE government should consider relaxing foreign direct investment regulations, which have discouraged overseas investors from investing in Australia, the Organisation for Economic Co-operation and Development says.

The existence of these restrictive barriers have led some overseas investors to refrain from applying to the Foreign Investment Review Board for approval, while others have withdrawn their applications because of the uncertainties and costs involved.

Australia ranks relatively high in the OECD Foreign Direct Investment restrictiveness index — ahead of the US, which has more generous criteria, an OECD report says.

Australia occupied the seventh worst position in the index with Korea, Canada, Japan and Mexico having even more restrictive barriers on foreign ownership of assets. The report says in Australia, “restrictions apply in certain sectors — international aviation including airports, domestic shipping, telecommunications, media and real estate — and investments above a certain amount are subject to screening, increasing the regulatory costs for investors.

“The criteria for approvals, especially with respect to the national interest, are not always clear, although the government released national interest principles in 2008 with further clarity provided in June 2010.”

However, since FIRB had only rejected about 1 per cent of investment applications, this indicated that the restrictions were not that onerous after all.

The OECD estimates that if investment restrictions were removed, foreign direct investment into Australia would “increase noticeably over time”.

The report also calls for more transparency and accountability on the application criteria to help investors better assess the outcome of their applications.

If foreign direct investment regulations were relaxed, this would help promote a rebalancing of the structure of foreign liabilities and improve longer-term financing of the economy, the report says.

Australia’s foreign liabilities are virtually all held in Australian dollars or hedged back to Australian dollars. As foreign investors seem happy to hold assets in Australian dollars, domestic borrowers are protected against exchange rate risks. During the global financial crisis this helped shield the country against the increased volatility of the exchange rate.

“Nevertheless, the high and rising share of debt in gross foreign liabilities might make Australia more vulnerable to changes in world financial market sentiment and rising cost of debt,” the report says.

Story by Teresa Ooi www.theaustralian.com.au

View the original article here

The Reserve Bank of Australia unexpectedly increased its benchmark interest rate on concern stronger growth will cause inflation to accelerate, driving the nation’s currency toward parity with the U.S. dollar.

Governor Glenn Stevens raised the overnight cash rate target a quarter point to 4.75 percent in Sydney, saying the economy has “relatively modest amounts of spare capacity” and citing risk of “inflation rising again over the medium term.” It was the RBA’s first move in six months.

The move signals Stevens wants to avoid a repeat of 2007, when he held off raising rates for months as slowing inflation masked a build up in price pressures. Growth in Australia, which skirted a recession during the crisis, may strengthen as energy companies such as BG Group Plc add construction jobs.

“They’re trying to nip inflation in the bud,” Matthew Circosta, an economist at Moody’s Analytics in Sydney, said on Bloomberg Television. “Back in 2007 they were behind the curve” in raising rates and “I don’t think they want to make the same mistake this time around.”

The Australian dollar climbed to 99.71 U.S. cents as of 3:31 p.m. in Sydney from 98.82 cents before the announcement. The S&P/ASX 200 Index of stocks was little changed at 4,702.70.

Economists’ Forecasts

The decision, predicted by seven of 24 economists surveyed by Bloomberg News, was the second straight in which Stevens defied the majority of economists’ forecasts.

Stevens’s move comes a day before the U.S. Federal Reserve meets to consider pumping additional stimulus into the world’s largest economy. The divergence in monetary policies has stoked the Australian dollar, which has gained about 11 percent this year against the U.S. currency.

Australia’s jobless rate, at 5.1 percent in September, is about half the level of unemployment in the U.S. and euro zone. The International Monetary Fund predicts Australia’s growth will advance to 3.5 percent next year from 3 percent this year as resources investment intensifies.

“While the labor market is not as tight as in 2007 and 2008, some further strengthening would appear to be in prospect, judging by the trends in job vacancies,” the central bank said in today’s statement. “After the significant decline last year, growth in wages has picked up somewhat, as had been expected. Some further increase is likely over the coming year.”

End of ‘Moderation’

A “moderation” of inflation for the past two years “is probably now close to ending,” the RBA said.

Two days ago, BG Group said it will begin building a $15 billion liquefied natural gas venture in Queensland state, generating 5,000 construction jobs. Investment there and in Western Australia, including Chevron Corp.’s A$43 billion ($42.5 billion) Gorgon liquefied natural gas project, is growing because of stronger Chinese demand for raw materials.

“The bank still sees Australian interest rates as likely to continue to rise as the mining boom progresses,” said Ivan Colhoun, head of Australian economics at Australia & New Zealand Banking Group Ltd. “This likely reflects the need to move nominal rates higher to match any rise in inflation and, at some stage, to also raise real interest rates too.”

Today’s increase was announced half an hour before the running of the Melbourne Cup, dubbed “the race that stops the nation,” and means the central bank has moved borrowing costs in the past five meetings on the day of Australia’s richest horse race.

Banks’ Response

Borrowing costs at ANZ, Commonwealth Bank of Australia and Westpac Banking Corp. are under review, according to spokesmen at the lenders. National Australia Bank Ltd. spokesman George Wright said no decision has been made “at this stage.”

Treasurer Wayne Swan has urged banks not to boost borrowing costs by more than any central bank increases. Australia lawmakers are sensitive about the RBA’s rate increases as more than two-thirds of the population own homes, compared with less than 50 percent in some European nations.

Australia’s central bank signaled after its Oct. 5 meeting that the decision to leave borrowing costs unchanged was “finely balanced” with the case for an increase, as a rising currency helped ease inflation concerns. Most economists had forecast a quarter percentage-point increase at that meeting.

Job Market

While the government’s consumer price index rose 0.7 percent from the second quarter, less than the 0.8 percent median estimate in a Bloomberg News survey, that may be shrouding intensifying price pressures. An Oct. 7 report showed the biggest back-to-back monthly job increases since 1988.

The central bank’s measures of core inflation showed annual price increases also slowed last quarter. The bank aims to keep inflation in a range of 2 percent to 3 percent on average.

Stevens had paused after boosting borrowing costs in six quarter-point steps from October 2009 to May this year, the most aggressive round of rate increases among Group of 20 members.

Companies such as BHP Billiton Ltd., Rio Tinto Group and BG, the U.K.’s third-largest oil and gas producer, have helped spur a hiring surge as they increase shipments of iron ore, coal and energy to China.

The growth in mining investment was a reason IMF staff last week said Australia is starting to exhibit “early signs” of inflation pressures.

“With inflation projected to remain close to the top of the 2-3 percent target band, the RBA needs to guard against inflation expectations becoming anchored at too high a level,” the IMF staff said in an Oct. 29 report.

Among 33 members of the Paris-based Organization for Economic Cooperation and Development, Australia last year was the only advanced economy to avoid two consecutive quarters of contraction — a standard definition of a recession — along with developing economies Slovakia and Poland.

To contact the reporter for this story: Michael Heath in Sydney at mheath1@bloomberg.net;

To contact the editor responsible for this story: Chris Anstey in Tokyo at canstey@bloomberg.net

IT is only a matter of time before interest rates rise again, with board minutes from the Reserve Bank of Australia (RBA) revealing that it "could not wait indefinitely" due to rising inflationary pressures.

Minutes from the latest RBA monetary policy board meeting, taken on October 5 and released on Tuesday, say that while the overall global outlook was broadly unchanged since the RBA board’s previous meeting, interest rates would need to rise "at some point".

A gradual tightening in resource utilisation meant that inflationary pressures would strengthen, the minutes say.

The minutes reveal that the decision to keep the cash rate on hold at 4.5 per cent, taken at the October 5 meeting, was finely balanced.

"While the board recognised that it could not wait indefinitely to see whether risks materialised, members judged that they had the flexibility to do so on this occasion," the minutes said.

Based on the medium-term inflation outlook, a case could be made to increase the cash rate at the October meeting as developments had been broadly consistent with central forecasts, the minutes said.

But members decided to leave the cash rate unchanged after accepting that the economy was expected to continue growing at trend in the near term, credit growth had softened and the rise in the exchange rate would effectively be "tightening financial conditions at the margin".

Board members also said it was "still possible" that downside risks to global growth could materialise.

"Members felt these arguments were finely balanced," the minutes said.

Overall, they concluded that it would be "appropriate to hold the cash rate steady for the time being," until evaluating further information at the next meeting, on Melbourne Cup Day, November 2.

The board noted that, despite the release of unemployment figures showing a 5.1 per cent unemployment rate in August, there had been a relatively limited amount of economic data released over the past month.

After rising to around record high levels in the June quarter, Australia’s terms of trade were estimated to have increased further in the September quarter but were then expected to decline gradually.

The minutes also noted that a slowdown in the pace of household borrowing had been accompanied by a cooling in the established housing market, and that the borrowing slowdown was a "welcome development".

There had been little new information on price and wage inflation, with consumer price index figures due out later in the month.

Good rainfall had led to conditions in the farm sector improving significantly.

In Europe, Ireland had been a focus of concern in financial markets and members noted that periods of "acute stress" in Europe were "likely to recur".

Meanwhile, business investment was expected to strengthen over the next few years and offset a scaling back in public investment.

Prospects for growth in Asia remained "solid" despite slowing from earlier in the year as the prices of many of Australia’s export commodities remained at high levels, board members said.

"Domestically, members noted that the economy appeared to be evolving broadly in line with the bank’s expectations," the minutes said.

The outlook remained for public spending to slow but for private demand to pick up, particularly in business spending.

Story by Kim Christian www.thesatellite.com.au

Sydney has been awarded the dubious distinctions of being the city where mortgages account for the highest proportion of income in the world, and with the highest proportion of mortgage arrears in Australia.

Sydneysiders spend an average of three-quarters of their monthly income on property repayments, according to a survey by realestate.com.au, with the average house price at $626,444 and the average monthly repayment around $4,123. In contrast, the average repayment in London is less than two-thirds of monthly income, and less than half in New York.

A separate survey by Moody’s has also revealed that Sydney also has Australia’s highest level of mortgage delinquencies, with the Fairfield-Liverpool region recording a delinquency rate of 2.77%, and accounts for 4.24% of all arrears in Australia. Even so, Moody’s Arthur Karabatsos highlighted that, overall, Australia has a low level of arrears compared to similar economies.

India’s richest man, Mukesh Ambani, has moved into his new home — a 27-storey mansion worth $1 billion.

The enormous Mumbai palace has three helipads, a dance studio, a ball room, a 50-seat theatre and an underground car park for 160 cars, according to media reports.

The 37,000 square metre home is believed to be the world’s most expensive and took seven years to build.

Mr Ambani, 53, is a major shareholder at Reliance Industries — an oil, retail and biotechnology conglomerate.

Forbes magazine has ranked Mr Ambani the fourth-richest man in the world and values his net worth at $29 billion.

The tycoon’s mother, wife and three children will live with him inside the 173m tall monolith, alongside 600 staff members.

The building has been named Antila, after a mythical island, and has views over Mumbai and the Arabian Sea.

Shiny Varghese, an Indian design magazine editor, said Antilia was "obscenely lavish".

"But we are heading into the sort of culture where money is not a question when setting up a home," Mr Varghese told The Guardian.

But an associate of Mr Ambani told the newspaper there was nothing obscene about Antilia, and that the businessman had simply "built a house to his requirements".

"He can’t just walk into a cinema and watch a film like you or me," the unnamed associate said.

"So he has built a house to his requirements like anyone else would. It’s a question of convenience and requirements. It’s only a family home, just a big one.

"It’s just another home that someone is living in. It’s no big event."

Story from ninemsn staff reporters

THERE are plenty of pitfalls the first-time real estate investor needs to avoid, writes Anthony Keane. Here’s a list of the most common errors and how to avoid them.

Getting your foot in the door of property investment can be a scary proposition.

It’s not every day you sign up for hundreds of thousands of dollars of debt for something you are not living in.

History has shown that, for long-term investors, the rewards are usually worth the risks, but there are plenty of traps the first-timers need to avoid.

Tax, interest rates, tenants, property agents, renovations and insurance are among the key areas where mistakes can cost investors big money, or at least deny them some of the profits they seek.

Today, Your Money examines some of the traps for first-time property investors.

Seminars that bite

University lecturer, author and investor Peter Koulizos warns about so-called "property education" seminars that are really just sales seminars designed to flog overpriced property to pumped-up investors.

"But I would encourage people to try to see lots of seminars just leave your chequebook at home," he says.

"You get different perspectives and you can get good information, but just go with your eyes wide open."

Where’s the research?

"Some people spend more time researching the plasma TV they are going to buy, rather than the property they are going to buy," says Koulizos, who wrote The Property Professor’s Top Australian Suburbs.

These days we are spoilt for choice, with a wealth of information about property prices, trends, hot and cold suburbs, tips, traps and warnings in the print media and online.
Buying for tax purposes

Koulizos says many people look at property investing as a way to get a bigger tax refund.

"But you are only getting a refund because you made a loss," he says.

This practice is known as negative gearing, but seasoned investors know that a positively-geared investment where the property pays you a profit is the ultimate aim.

First-time investors are usually negatively geared in their approach, so they may as well get their tax refund back sooner.

Louise Carr, a property strategist with investment group Ironfish, says completing an income tax variation form can help smooth out your cashflow rather than get a lump sum refund.

"This way you can organise to get your tax back on a weekly or fortnightly basis with your pay," she says.

Depreciation debacles

One of the best tax benefits from property investment is being able to claim a deduction for depreciation of items within the property and the building cost of the property.

You don’t physically pay these costs, so effectively it’s free money coming back through your tax return.

However, many investors don’t understand depreciation, Carr says.

"Deductions for new homes can be up to $15,000 a year.

"We often find that some accountants don’t make people aware of it. We recommend going to an accountant who owns property themselves, so they know the advantages and are aware of tax legislation."

A depreciation schedule will list all your depreciation deductions. They typically cost $500-$600 and are available through a quantity surveyor, are tax-deductible themselves, and are available through a quantity surveyor.

Bad advice

Everyone has an opinion about buying property and these days opinions are deeply divided about the short-term outlook for real estate investment.

There are also different opinions about what to buy, where to buy and tax strategies, and investors should not rely on the advice of friends and family members, who may have completely different financial situations.

Carr says getting good professional advice is crucial to owning the right investment.

"People who get advice from friends and relatives find that their investments are generally not set up properly," she says.

Paying too much

Ian Lloyd, an advisory board member of property and finance group Investa Solutions, says some investors are paying more than they should.

"There are developers out there who, I believe, are offering properties that are overpriced," he says.

Lloyd says some government schemes and incentives are prompting people to create properties and developments that are "a little manufactured" and slug hefty management fees, Lloyd says.

Property management is another area where people can pay too much.

"Don’t pay letting fees or re-letting fees to property managers," Lloyd says.

"For every week of rent you give up, for example for a letting fee, that equals 2 per cent of your rent. So if you pay an 8 per cent management fee but there’s two weeks’ rent for letting, it’s 12 per cent, then if it’s re-let and there’s another fee, you are in effect paying 14 per cent.

"If you can negotiate a flat fee something like 10 per cent you don’t lose rent upfront through letting fees."

No safety net

Investors can lose everything if something goes wrong and they don’t have the financial firepower to cover the costs and their loan repayments.

"Have a strategy where you have set up a reserve," Lloyd says.

"A good finance broker or adviser can help you set up a buffer that would mean if you lost your job you could still keep the property."

Carr says it doesn’t have to be cash an available line of credit could be enough protection.

"Have a kitty of $20,000. Then if you run into trouble or tenants don’t pay on time, you can still sleep at night."

Interest rate panic

Fixed-rate loans have lost popularity in recent years, but fresh talk about rising rates can prompt many beginners to fix.

Koulizos says some people can get trapped in a long-term fixed rate loan say five years because they panic when rates are relatively high.

"Then in about three, six or 12 months the rates start to come down again but you have locked yourself in for years paying a higher rate," he says.

"Generally people fix at the wrong time, but fixing rates can be good especially if you are risk-averse."

Easily scared off

Some investors decide to sell up after just one bad tenant, Koulizos says.

"You can easily get rid of a tenant who’s doing the wrong thing, but as soon as you sell, your asset will not be going up in value," he says.

The vast majority of tenants are not bad people, and if you treat them well most of them will respond in kind.

Renovating? Use your head

Koulizos says many people renovate an investment property with their heart, not their head.

"They renovate a property like they want to live in it, and can over-capitalise," he says.

Save the crazy colour schemes and top-of-the-range fittings for your own home. Rental properties with neutral colours are likely to attract a broader range of tenants.

Ignoring insurance

Landlord insurance is vital for property investors. It’s tax-deductible and not as expensive as you might think.

For example, Carr says a policy that covers things such as malicious damage, accidental damage, rental default and legal liability would cost you $255 a year through major landlord insurer Terri Scheer.

"Some investors think ‘I have a property manager – I don’t need landlord insurance’, but they do," she says.

Lack of patience

"Property is get rich slow," Carr says. "Some people don’t believe that property prices will double again, but historically they have doubled every seven to 10 years."

"The more times you go through the cycles, the more money you are going to make."

The Perth real estate market has experienced a winter of discontent, with property prices dropping 4.8 per cent in the three months to August, according to RP Data-Rismark.

The real estate consultancy said the Perth market was the worst performing of all capital cities last winter, with the homes around the nation averaging a 1.2 per cent drop.

Perth’s median price – once the highest in the nation at $500,000 – is now $460,000 following a 3.3 per cent reduction in the value of dwellings in the past year.

This is barely above the $457,000 Australian average, following a 3.9 per cent increase across the nation in the year to date.

RP Data’s research director Tim Lawless said no further capital gains were expected this year as the market battled increasing interest rates.

"Just 12 months ago mortgage rates were 160 basis points lower and the market was still benefiting from the first home buyers boost," he said.

"Since the RBA has normalised rates with six hikes, combined with additional bank top-ups, capital growth has halted."

Christopher Joye, the managing director of Rismark International, predicted further interest rate increases, with the headline rate expected to peak at seven to eight per cent before any discounts.

Mr Lawless said rental yields across capital cities are showing signs of improvement, and creating big investment opportunities.

The rental yield in Perth was 3.9 per cent in August, up from 3.8 per cent a month earlier. Units rents were steady in both months at 4.3 per cent.

"This has resulted in an overall improvement in rental yields. The outlook is likely to be positive for investors but not so great for renters as vacancy rates remain exceptionally tight and rents are now rising," Mr Lawless said.

Kim MacDonald, The West Australian

IT’S no secret overseas investors have identified Australia as a growth region when it comes to buying property.

The funds are coming in not only to buy direct assets but also via investing in Australian real estate investment trusts, which are now more focused on the local property market than at any time in the past three years.

Jones Lang LaSalle research on global capital flows confirms Australia’s attraction to investors led it to be ranked seventh in the world as a destination for cross-border investment for the first half of 2010.

The report says cross-border investment in Australia increased more than five-fold, at $US1.8 billion, compared with $US319 million at the same time last year. The research reveals Britain has been the most popular destination for cross-border investment so far in 2010, with $US7 billion invested, while Germany replaces the US as the second most popular destination.

The US was in third place (from second in the first half of 2009), despite a doubling in transactions in the American market from $US2.2 billion to $US4.3 billion.

The director of international investments at Jones Lang LaSalle in Australia, Simon Storry, said the country’s ranking confirmed the view that Australia remained a destination of choice for foreign investment.

”We expect Australia to continue to be on the radar of foreign investors for the remainder of this year,” Mr Storry said.

”Commercial real estate in Australia has offered solid and stable returns and an attractive environment for investors seeking stability in their globally diverse portfolios.”

The Jones Lang LaSalle research reveals a near-doubling of global commercial real estate transactions in the first half of 2010, compared with the same period a year ago.

According to the report, total global commercial real estate investment was $US132 billion for the first half of 2010, compared with $US76 billion in the previous corresponding period and, after reaching a low of 31 per cent of total volumes in the first half of 2009, cross-border activity was back above 40 per cent, a trend set to continue.

Mr Storry said this reflected a general market pick-up, a return to the globalisation of real estate investment and a search for value by investors.

Carolyn Cummins Sydney Morning Herald

Sydney’s yo-yoing auction clearance rate slipped to 57 per cent amid the bumper 588 weekend listings. There had been a 61 per cent success rate the previous weekend.

Clearance rates have averaged 67 per cent so far this year, the weakest weekend result being 51 per cent in early July.

The easing success rates, combined with the high number of properties on the market, has prompted suggestions that better buying conditions were on the way.

”It’s moving towards a buyers’ market, but I wouldn’t say it was there quite yet,” said John Edwards, chief executive of the real estate monitor Residex. ”Clearance rates consistently below 60 per cent is a buyer’s market.”

It was the second busiest Saturday this year – falling short of the super Saturday in March when 70 per cent of the 680 vendors sold their houses and units at auction.

Given school holidays and the grand final, there are just 170 auctions scheduled next weekend.

The weekend’s highest sale was a three-level, cliff-top Vaucluse house which sold pre-auction for $4.3 million. The six-bedroom house last traded at $4.1 million in 2007, reflecting a subdued 1.3 per cent annual growth.

Another Vaucluse house, a modernist house designed by Tobias Partners, was passed in at $6.7 million. It was initially listed early last year with $8.5 million-plus hopes. The three-bedroom, four-bathroom house was built in 2007 after the 696 square metre block cost $2.75 million in 2005.

In 2007 a neighbouring residence sold for $8.5 million, and although that house was new at the time, keen observers of Vaucluse real estate thought the latest offering was superior in design and finish.

Figures from Residex show Sydney’s price growth fell last month by 1.45 per cent to a $658,500 median house price.

Sydney unit prices also fell 1.16 per cent in the month to a $468,000 median. However, country NSW’s median house price rose 1.88 per cent to $342,500, according to the Residex data.

The Labor government’s agreement with independent MPs could help with property values in regional Australia, Mr Edwards said.

The government’s pledge to invest in building affordable homes in regional cities and to spend on infrastructure could be one of the most significant policy shifts of modern times, he said.

”Just the development of 15,000 new homes in regional Australia suggests a capital outlay in the order of $3.7 billion. I have for a long time suggested that the only way to solve the unaffordability crisis in our capital cities is to create growth in our regional areas and in turn encourage a good percentage of our city dwellers to relocate to a better lifestyle. This process will by its very nature reduce the capital growth rate in our most unaffordable capital cities but it will in the longer term be beneficial for society and ensure there is no housing bust that is so often suggested by many.

”It will cause a better balance between capital growth and rental returns in the future.

”This is because cities will have tighter rental markets with higher rental costs due to lower investor activity because of dwelling cost and expected lower capital growth rates.”

Story by Jonathan Chancellor Sydney Morning Herald

Larrikin carpenter Scott Cam, of Channel Nine’s Domestic Blitz, gives us his top ten tips for home reno projects. Scott tells us about essential tools for the DIYer’s toolbox (see our DIY section), the move towards building with sustainable wood products and gives us an insight about builders’ beer etiquette.

What are essential tools for the home handyman?

Scott: “The main thing to remember – when you are a home handyman or woman – is to not go too big too early and not have power tools that could cut your fingers off. So, I think hand tools are the most essential thing.”

Toolbox essentials

• Screwdriver set
• Pliers
• Multigrips
• Tin snips
• Wire cutters
• Hand saw
• Square pencil
• Level and shifter

What is the best power tool someone could buy? Or should weekend renovators just hire large tools?

Scott: “The most important power tool you can have is a cordless drill, one with a hammer component so you can drill into masonry or concrete or brick.”

“I don’t like the concept of people that aren’t really up there on power tools to go out and hire a nine inch power saw because it’s so easy to injure yourself with those. So if you hire power tools, make sure they’re small ones.”

What’s your favourite power tool?

Scott: “I’ve got about 300 power tools and 10 circular saws. I really like my chainsaw – it’s petrol driven – and my big circular saw. You have to be very experienced to use a big chainsaw and it can be dangerous for the home handyman.”

What is the most important building tip to remember when revamping your home?

Scott: “Be prepared to make sure you budget. Be careful of variations. If you’ve got a plan, stick to that, and don’t change things along the way because that’s when you get into strife and you’ll run out of money.”

“And be prepared, when you’re in old homes and you’re knocking a few things down, that you’ll have to rewire the whole place, as there’s no point putting wiring in when you’re half way through – so there’s $10,000.”

* Scott advises renovators to check the plumbing and electrical on homes more than 40 years’ old.

Where is the line between home renovation and home demolition?

Scott: “It’s based on your foundations. If you’ve got bad foundations from the start, which a lot of houses had in the old days, (when) they used to just lay the foundations straight onto the ground with no footings. Sometimes a builder or an engineer may need to get involved and say, ‘look there’s no point in renovating, here, it’s best to knock this down’.”

Easy building project for the weekend renovator?

Scott: “Without a doubt it’s to put a deck on the back of the house with a pergola over the top – creating a new room – an extension. It’s an easy extension to do and make it covered, so it’s all-weather.”

“You put a little clear roof on the pergola you knock-up; and a deck underneath that, put a table and chair out there, some blinds coming down to protect against the wind and the rain, and you’ve got yourself a full extension of your house. And even when it’s pouring with rain you can sit out there. It’s without a doubt, an easy way to add value to your home and get a better standard of living.”

Are people moving towards using more sustainable products? Are the products more expensive? Any special precautions people should take when using these products? For example, embedded nails.

Scott: “We use a lot of plantation timber these days in the building industry and I also use a lot of recycled hardwood, which is quite expensive, but it’s a great feature timber. It’s very hard for the home handyman to nail into second-hand hardwood – you’ve got to be on your game!”

“As far as treated pine is concerned, it’s the way to go for your outdoor stuff because it lasts a lot longer and the price is cheap. I think that’s the way we are going in this industry, if we don’t do that, we’ll run out of timber, so we’ve got to start using the stuff they can grow in the pine plantation.”

But if you’re after a bargain, visit a demolition yard, or scout around a house block where someone is demolishing a house, to get second-hand timber. This timber could have embedded nails in it – so take care!

The best advice for our weekend carpenters?

Scott: “Know your limitations, and once you start something, make sure you finish it! Don’t take two years to build it – start it and finish it!”

“And the other thing is, make sure you get beers nice and cold for the 5 o’clock knock-off. There’s nothing finer than sitting at the end of the day and having a cold beer and admiring what you’ve accomplished for that day. It just doesn’t get any better. It’s magnificent!”

Do you think the internet is helping people with renovation/building information? Is it making the building industry lose (or gain) business.

Scott: “I think it’s a great thing that people are doing stuff at home and people are getting stuck into it. I’m not real good on the internet, I need to get in there a bit more myself, but a lot of my friends go onto the internet and find out information.”

“If people do get out of their depths and go a bit hard, then it’s great work for us to come along and fix those things.”

* Article written by Angela Erini

Source: www.realestate.com.au

Australia’s economy is the envy of the developed world.

Not only did we escape the global downturn with hardly a scratch, but we’re in a very strong position to withstand any more external economic shocks.

We have interest rates back up to average levels and government debt at much lower levels than any of our overseas counterparts.

This means that if the US fell into recession again, or even if China’s economy took a turn for the worse, Australia still has the levers to stimulate the local economy.

When it comes to housing, the strength of the local market has overseas investors and commentators all worked up, even given the moderation in price growth experienced over the last quarter.

Foreign financial markets are convinced that Australian housing is the next big bubble that is about to burst.

Many major retail and investment banks recently released their perspectives on the situation and they all came to the same conclusion – there is no speculative “bubble” in the local property market.

Even if you subscribe to the view that Australian housing is relatively expensive, the sequence of events that would need to occur to spark heavy prices falls is unlikely.

During the global financial crisis Australian property suffered only a 4 to 5 per cent fall in price.

In the US, the 30 per cent fall in property prices was driven by subprimehome lending, and the typical oversupply that accompanies high levels of speculation.

In Britain a similar size fall in prices was driven by a domestic bank credit crunch that was a result of a global credit crisis. Both led to a combination of a collapse in demand and distressed selling.

In Australia we have no subprime lending sector to talk about and a significant undersupply of new housing.We have interest rates at levels higher compared with other international economies, so the Reserve Bank could respond to any overseas credit rationing by dropping interest rates again.

Even in the extreme event of another economic storm which  would force banks to withhold new lending, it is unlikely to lead to a wave of distressed selling.

Homeowners with a mortgage are in a strong position. A report from one of the big four banks, considered to be Australia’s largest home loan provider,  stated that its average home loan to home-value ratio is only 43 per cent and that 70 per cent of customers are paying their mortgage in advance, and are an average of nine payments ahead.

Australia has an undersupply of housing because of the natural increase in population and immigration.We have an economy where unemployment is approaching historic lows and incomes are set to rise strongly.

If we also take into account strong gross domestic product, retail sales and consumer sentiment indicators, and low mortgage arrears and delinquency rates, doomsayers will continue to be off the mark when it comes to predictions of house price collapses in Australia.

Anthony Ishac is the general manager of the Fairfax Media-owned Australian Property Monitors.