Global recovery looming

Posted on Friday, May 04 2012 at 3:39 PM

The Reserve Bank of Australia (RBA) says global economic concerns are improving and fears of a second global financial crisis were unrealised in 2011.

In its quarterly Statement to
Monetary Policy the RBA reports last year wasn’t as bad as many
doomsayers predicted.

“Most indicators
suggest that the slowdown was mild and it was certainly nowhere near as severe
as the downturn in 2008-2009,” the RBA report says.

“Global economic
growth slowed in late 2011, but that hasn’t developed into a major downturn and
a number of indicators suggest that, outside of Europe, conditions have
stabilised in recent months.”

However, the RBA
has kept the door open for further rate cuts, noting “although global economic
conditions overall have improved, the recovery remains fragile”.

“The global
economy is expected by most forecasters to grow at a below-trend pace in 2012…
Global growth is expected to pick up to around trend in 2013.

“Although the
near-term risk of a severe contraction in global activity from an
intensification of the sovereign debt problems in Europe has eased somewhat
over recent months, it remains the most obvious risk to the global growth
forecasts. Since February, the restructure of Greek government debt held by the
private sector and the second three-year longer-term refinancing operation by
the European Central Bank have helped to support global business and consumer
sentiment a little after some deterioration at the end of 2011.”

The outlook for
Australia is promising. Not surprisingly, the mining boom is continuing to help
Australia’s economy and despite flooding in parts of Queensland in 2011, the
RBA says demand for commodities from China and India is likely to continue.

“Over the year to
the September quarter 2011, export prices for iron ore and coal were supported
by growth in global steel production and supply disruptions in Australia and
elsewhere. This took the terms of trade to their highest level on record in the
September quarter, though subsequent falls in commodity prices saw the terms of
trade decline in the December quarter.”

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Bargain investments under $500,000

Posted on Thursday, May 03 2012 at 12:32 PM

Following a cooling-down period, Brisbane, the Gold Coast and the Sunshine Coast currently offer the greatest bargain shopping for astute investors, with the ability to potentially secure two rental properties on a $500,000 budget, according to a recent national property report released by Herron Todd White and Westpac.

API has provided a summarised
version of the national report below.

New South Wales

Even in high-priced Sydney,
suburbs in the west like Parramatta and Auburn offer units with a $370,000
price tag and gross rental yields of up to 5.7 per cent, the report says.

For longer-term capital growth
in Sydney, investors should look at stable inner-ring suburbs like Neutral Bay,
Leichhardt and Randwick.

In the Newcastle/Hunter region,
suburbs in close proximity to major Newcastle hospitals or the University of
Newcastle are considered strong investment options due to healthy year-round
tenant demand. Waratah, Jesmond and Shortland are perfect examples of this.

Further west, Singleton,
Rutherford and Aberglassyn are all areas demonstrating rental growth from the
strengthening mining sector, according to the report.

Other NSW hotspots under
$500,000 include: Gosford, Wyong, Forster, Taree, Kempsey and Port Macquarie.

Queensland

For gross rental yields up to 17
per cent investors can pick up a property in Chinchilla, though such
investments are deemed “highly speculative”.

The report highlights the
Brisbane suburbs of Mitchelton, Keperra and Kedron for astute buying, all
located within 10 kilometres of the CBD with gross rental yields around five
per cent.

The Gold Coast is bargain buying
central right now. The report highlights three-bedroom townhouses in the
Oxenford/Coomera area, one-bedroom units in the Southport/Surfers Paradise area
and a duplex pair in the Southport/Labrador area “with the land component of
the property adding to potential for long-term capital growth”.

Also on the Gold Coast, suburbs
such as Parkwood, Molendinar and Arundel should expect reasonable capital
growth given their proximity to the new Gold Coast University Hospital and
Griffith University.

On the Sunshine Coast, the
Kawana strip, Maroochydore, Mooloolaba and Caloundra all offer investment
opportunities under $500,000. Construction of the Sunshine Coast University
Hospital is scheduled to start next year.

Other bargain Queensland
hotspots include: Toowoomba, Moranbah, Gladstone, Mackay, Rockhampton,
Bundaberg, Hervey Bay, Townsville and Cairns.

Victoria

In Melbourne, Footscray is the
place bargain buyers should head to, as significant urban renewal is under way.
Houses are still available for around $500,000 and there’s a healthy supply of
apartments for around $310,000, Herron Todd White chief executive officer Gavin
Hulcombe says. Units in St Kilda East are another option.

Other report hotspots include
Geelong, Bendigo and Ballarat.

South Australia

Over the border in Adelaide,
Hulcombe picks the suburbs of Flinders Park and Torrensville for good bargain
buying.

Other Adelaide suburbs highlighted
include Norwood and Parkside. Regional areas highlighted include Victor
Harbour, Goolwa, Robe and Beachport (with ocean views and strong potential for
long-term gains). Roxby Downs, Whyalla, Port Pirie and Port Augusta are also
noted.

Western Australia

In Perth, the report highlights
inner-city apartments generating gross rental yields of six per cent as a good
option for investors. It also mentions four-bedroom houses in established
suburbs of Willetton, Bassendean and Ocean Reef due to their close proximity to
the CBD, quality schools and local amenities.

Joondalup City Centre apartments
are achieving five to six per cent gross rental yields, with potential for even
higher yields as the northern corridor is expanded and the Joondalup Town
Centre continues to develop.

Other WA hotspots outlined
include South Bunbury, Bunbury, suburbs north of the Bussel Highway from Abbey
to West Busselton plus Dunsborough, Dalyellup, Millbridgewith and Kalgoorlie.

Northern Territory

In Darwin it’s still possible to
pick up apartments in a city fringe suburb like Larrakeyah for under $500,000,
Hulcombe says. “But with an influx of workers expected once construction begins
on the new Inpex LNG (liquefied natural gas) plant, Darwin prices look set to
climb again and investors could be the key beneficiaries.”

Another option in the NT is
Katherine – a more affordable option to Darwin with gross rental yields
achievable at six per cent.

Tasmania

Venture down to
Tasmania and investors can expect to easily pick up a quality house for under
$500,000 across most of the state, with plenty of spare change. This excludes
the more prestige suburbs of Sandy Bay, Battery Point and central Hobart, said
Hulcombe.

The report
highlights the following suburbs as good investor hotspots: Launceston, Burnie,
Devonport. In Hobart: Sandy Bay and Newnham.

This information is of a general
nature only and does not constitute professional advice. You must seek
professional advice in relation to your particular circumstances before acting.

 

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Rental demand in Queensland heating up

Posted on Tuesday, May 01 2012 at 3:53 PM

Rental vacancy continues to tighten across Queensland, with the majority of cities now seeing vacancy rates fall to below three per cent, according to the Real Estate Institute of Queensland (REIQ).

The first major contributor to
this tightening vacancy is the slower sales activity over the past 12 months,
leaving potential first homebuyers stationary in rental properties, REIQ chief
executive officer Anton Kardash said.

The second contributor is the
series of natural disasters experienced in the first half of 2011, causing many
homeowners and renters to seek short-term accommodation elsewhere while
dwellings were under repair.

“However, this pent-up demand is now starting to
dissipate with the latest Australian Bureau of Statistics (ABS) data showing
increasing numbers of investors and first-timers coming back into the market,”
Kardash said.

The number of Queensland
property investors increased in February, up from the same period 12 months
ago, according to the ABS lending finance figures.

Across Brisbane the rental
vacancy rate dropped to 1.7 per cent, from 2.3 per cent in December 2011. Inner
Brisbane demonstrated an even tighter 1.4 per cent vacancy rate, down from 1.9
per cent in December.

The Gold Coast rental market is
also tightening, with well-priced houses preferred over units. The vacancy rate
shifted from 5.2 per cent in June 2011 down to 3.9 per cent in March this year.

Looking north to the Sunshine
Coast, the vacancy rate has dropped from 4.9 per cent to 3.1 per cent over the
same period.

Elsewhere in Queensland, the
Rockhampton market recorded a very tight one per cent vacancy rate in March,
the tightest rental market across the state’s major regions with tenancies
filling in less than a week. This should ease though, with local agents
reporting renewed investor activity.

Mackay’s vacancy rate has eased
from 0.7 per cent in December down to 1.7 per cent in March due to leases
expiring and the upper end of the market slowing. Agents report more than 10
applicants per listing. Investor activity is rising.

The Cairns rental market is
improving after a long spell of inactivity. The March vacancy rate was recorded
at 2.5 per cent, down from 3.8 per cent in the same period 12 months ago. A
recovery in the tourism industry and improving job opportunities is reportedly
the trigger for a tightening rental market.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/Pxr3duDT16I/rental-demand-in-queensland-heating-up

New landholder duty proposals in Victoria

Posted on Friday, April 27 2012 at 3:23 PM

Landholder duty proposals in Victoria jeopardise property investment, according to the Property Council of Australia.

Executive
director of international and capital markets Andrew Mihno says the Victorian
government’s draft Duties Amendment Bill 2012 will penalise property
trusts and drive property investment to other states because of high compliance
costs, sweeping taxing provisions and double duty.

“The property
industry supports modernizing landholder duty, but the draft bill will force
businesses to shelve property transactions,” he says.

“The industry is
concerned that the proposed law will discourage investment and force businesses
to look for opportunities outside the state.

“The proposals
are too broad and will catch ordinary contracts that have never been dutiable
in any state.
“These transactions aren’t taxed anywhere else in Australia. Unfortunately, the
measures also leave in place significant problems that hold back investment or
slug investors double duty.”
Key features of the bill include:

• The removal of the 60 per cent land
  rich ratio test.
• A company or unit trust will be a
  landholder if it holds land with a market value of $1 million or more in
  Victoria.
• Landholder duty applies to
  acquisitions of 90 per cent or more of listed companies and listed unit
  trusts.
• The concept of land has been
  broadened to include anything fixed to land, even if it’s only resting on
  its own weight.

“The Government
has a golden opportunity to fix these problems and stimulate further investment
in Victoria by aligning landholder unit trust rules with the company
provisions,” Minho says.

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ClimateSmart Home Service scrapped

Posted on Friday, April 27 2012 at 10:37 AM

The Queensland ClimateSmart Home Service has been scrapped by the State Government, seven months before it was due to finish.

Environment and
Heritage Protection Minister Andrew Powell says the service has stopped taking
bookings as part of the LNP’s commitment to save Queensland taxpayers millions
of dollars.

“By closing the
program seven months early, we’ll save taxpayers up to $5 million. This is all
part of the government’s plan to get this state back on track,” Powell says.

More than 335,000
households across Queensland have already received the service since it began
in January 2009, which equates to about one in five Queensland homes.

In exchange for
$50, households received a power assessment by a licensed electrician, up to
five power saving light globes, four stand-by eliminators, a hot water system
temperature adjustment, a water and power saving showerhead and a customised
power savings plan.

The program is
said to have helped each household save up to 20.4 tonnes of greenhouse gain
emissions over the life of the products.

Homes also
received a wireless power monitor, which identified where power was being
wasted. 

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Darwin’s gas project heats up the property market

Posted on Monday, April 23 2012 at 3:23 PM

The Darwin property market has “definitely improved” over the past couple of months, according to Herron Todd White valuer Terry Roth.

Since the Inpex
decision was announced earlier this year, Roth believes confidence has seen a
dramatic turnaround and sales are picking up.

“All our
financial indicators show we’re in for a positive year,” Roth says.

“We’ve had a big
overhang of units in the CBD and that’s gradually starting to move. In Darwin
when one part of the market moves, all of it moves.”

Herron Todd White
believes vacancy rates also seem to be tightening and driving the investment
market forward.

According to RP Data’s
latest Home Value
Index results, Darwin had the strongest rental market across all
capital cities in the quarter ending March 2012.

The average
rental yield for an investment property is currently 5.7 per cent for houses
and 5.9 per cent for units. The median house price also increased by 4.3 per
cent to $520,000 and the median unit price rose 2.5 per cent to $378,500.

However, while
Roth says anything reasonably priced is now selling quickly, 2011 was a very
slow year.

“There’s
definitely a lot more market activity than there was three months ago, but I’m
a bit concerned about the expectations we’ll see on huge capital growth,” Roth
says.

“People just
aren’t going to move to Darwin if prices get much higher, although there’s a
lot of growth happening in the new Palmerston suburbs.”

The Inpex-Total
Ichthys project will produce 8.4 million tonnes of liquefied natural gas (LNG)
per annum.

At the peak of
construction, a workforce of nearly 3000 residents will be needed to build the
onshore facilities, which will include the LNG plant, a condensate plant,
product loading jetties and a 300-megawatt power station.

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Homebuyers keen to enter the market: report

Posted on Thursday, April 19 2012 at 3:53 PM

A report on the willingness of Australians to buy property has found 40 per cent of respondents intend to get into the market this year, while 61 per cent are keen to buy in the next five years.

QBE Lenders’ Mortgage Insurance (QBE LMI)
released its annual mortgage report, LMI Barometer, which surveyed 1161 people from
across the country.

It found a healthy intent to buy property
in the near future, despite prevailing soft conditions in many markets.

More than half of respondents believe
property prices will remain steady and increase in the coming three years.

QBE LMI chief executive Jenny Boddington
said there was a “clear appetite” for property in the short to medium term.

“Despite the ongoing global uncertainty and
lower sentiment amongst borrowers, our LMI Barometer confirms that Australians intend to
continue purchasing properties and 55 per cent believe it’s important to get
into the market now,” she said.

Almost 40 per cent of Generation Y
respondents said they were also eager to get into the market sooner rather than
later.

Recent cuts in the Reserve Bank’s official
cash rate haven’t affected the majority of respondents’ intentions, but they
have encouraged young buyers to move more quickly.

The cuts were seen as an opportunity to get
into the market as soon as possible by 21 per cent of respondents who are first
homeowners.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/D_iDdGWml5g/homebuyers-keen-to-enter-the-market-report

WA and NT see greatest property tax drops

Posted on Friday, April 20 2012 at 10:55 AM

Despite a slump in the Australian property market and tax revenue over the 2010-11 period, property owners paid $3 billion in property-related taxes, according to RP Data’s Cameron Kusher.

The 47.3 per cent in tax revenue
for state and local governments over the 2010-11 financial period was a drop
from 48.2 per cent the year before, however the total property-related tax
revenue across all governments increased by 4.6 per cent over the year, said
Kusher.

The total value of residential
property transactions in 2010-11 fell by 17 per cent, he said.

Capital city property values
fell by 1.4 per cent and transactions were down by 20 per cent compared to the
previous year.

The three big property tax hits
representing 93 per cent of total property tax revenue to the local and state
governments are through municipal rates (up by 6.9 per cent over the 2010-11
period), then land taxes (up by 4.1 per cent), and stamp duty on conveyances
(up by 0.3 per cent).

Because of reduced property
transactions in recent years it’s clear that the stamp duty tax revenue has
seen a fall, said Kusher.

However the stamp duty has risen
over the 2010-11 period due to increases in New South Wales and Victoria. In
other states stamp duty revenue has fallen in the same period; 14.1 per cent
lower than its record level of $14.3 billion in 2007-08.

“Considering that since the end of the 2010-11 financial year property
values and transaction volumes have continued to fall, we would expect that in
order to grow tax revenue, state and local governments may be looking to again
increase land tax and municipal rates as there is likely to be limited (if any)
growth in stamp duty revenue,” Kusher said.

Each state and territory saw
varied changes over the 2010-11 period, with the Australian Capital Territory
recording a 14.2 per cent increase and Victoria a 10.7 per cent increase.

However in the same period
property tax revenue fell in Western Australia and the Northern Territory (both
by 9.6 per cent), and in Tasmania by 1.9 per cent.

In regards to land tax and
municipal rates, Victoria saw the greatest increases (18.7 per cent), followed
by the ACT (12.5 per cent), while Tasmania saw the biggest decreases (-17.6 per
cent), followed by Tasmania (-1.9 per cent).

Kusher said property-related tax
growth is likely to remain minimal over the coming year and it’s likely the
governments will attempt to make adjustments to inject artificial growth in tax
revenue.

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‘Pay As You Go’ stamp duty in NSW?

Posted on Wednesday, April 18 2012 at 3:54 PM

The New South Wales Government is reportedly considering a proposal to introduce a ‘Pay As You Go’ scheme for stamp duty, whereby homebuyers could stagger payments over a period of time.

In the lead up to the 2012-13 State Budget
in June, the Real Estate Institute of New South Wales (REINSW) made a number of
submissions to the government last week.

The notion of a payment plan for stamp duty
was among its detailed initiatives aimed at reducing cost burden, particularly
on first homebuyers.

REINSW president Christian Payne said
housing supply and affordability were key issues facing the state and needed to
be addressed in the Budget.

“It is only through innovation that we are
going to make inroads into these problems,” Payne said.

Sydney newspaper The Daily Telegraph today reported
the government was seriously considering the ‘Pay As You Go’ stamp duty idea.

Treasurer Mike Baird was quoted as saying
it was under “active consideration”.

Other initiatives included in REINSW’s submission
included cutting the rate of stamp duty and reforming planning controls to cut
red tape.

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Slow body corporate owners paying the price

Posted on Monday, April 16 2012 at 3:49 PM

Body corporate owners who take too long to repair common property or respond to requests could be left to pay expensive bills and legal fees, according to legal firm Kemp Strang.

Partner Roger
Mattar says the “absolute duty” of a body (or owners) corporation to promptly
maintain common property was recently highlighted in the New South Wales
Supreme Court.

“In this case, Mabel Dorothea Fligg
versus The Owners Strata Plan 53457,
the owner had encountered water penetration ever since she purchased the
apartment in 2008,” he says.

“She made several
complaints about the problem but the owners corporation was slow to recognise
her water penetration issue and slow to properly address it.”

By the time the
owners corporation investigated, obtained a specialist report and finally
engaged the tradesperson to attempt to rectify the water penetration problem,
it had caused serious damage to the apartment and loss of amenity to the owner.

In the meantime,
the owner incurred out of pocket expenses for a specialist to produce a report
on the problem, a solicitor to advise on her rights and for costs associated
with commencing proceedings in the tribunal while waiting for the owners
corporation to act.

“Despite the fact
that an agreement had been reached between the owners corporation and Mrs Fligg
in relation to the rectification of the water penetration issue, the Supreme
Court found that Mrs Fligg was entitled to recover most of her out of pocket
expenses,” Roger says.

Roger adds owners
corporations can minimise the likelihood of this sort of situation by;

–      
ensuring
the management committee meets regularly, keeps minutes including any agreed
action items and has a mechanism in place for communications between meetings

–      
setting
benchmarks around promptness of responses to queries

–      
agreeing
to timelines for the strata manager to make recommendations about any issues

–      
setting
deadlines for the strata manager.

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