A trickle of hope for house prices in the Murray-Darling Basin

Posted on Thursday, March 22 2012 at 3:58 PM

First there were fights over water, now it seems environmental groups are clashing with politicians over house prices in the Murray-Darling Basin. The Australian Conservation Foundation (ACF) claims the tide is finally turning for property investors and owners across the Murray-Darling Basin, with the selling prices of houses in 90 local shires linked to the river’s health.

ACF economic adviser Simon O’Connor says houses in all parts of the Basin increased in value between 2006 and 2010, but house prices performed the strongest where the river is in good health.

“Some opponents of a strong Murray-Darling Basin Plan have tried to suggest that returning more water to the environment would damage house prices in the Basin, but our study, using a more detailed set of data, tells a different story,” he says.

“There is in fact a strong correlation between healthy rivers and healthy house prices.”

The ACF study used Australian Bureau of Statistics house price data from 90 councils and shires in the Basin and matched this information against the Murray-Darling Basin Authority’s Sustainable Rivers Audit, which rated the ecological health of the Basin’s 23 major river valleys on a scale of extremely poor to good health.

However, Senator Barnaby Joyce has slammed ACF’s findings as “incomplete”.

“The ACF has released data from 2006 to 2010 even though this whole process only started going pear shaped when the Labor Government released the flawed Guide to the Murray-Darling in late 2010,” he says.

“The Age reported earlier this year that house prices in 14 irrigation towns had experienced average falls in house prices of 4.2 per cent since the guide was released. This is a much more relevant and up-to-date dataset.

“The ACF even tries to claim that house price falls in the Basin aren’t that bad, because house prices have fallen by more in Brisbane over the past year. I’m not sure if they’ve turned on the TV for a while, but the city’s biggest flood in 30 years may just have had something to do with that. 

“House prices should naturally increase with the development of an irrigation economy over time. People buy houses with money, not with frogs.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/KsMVxSURrLQ/a-trickle-of-hope-for-house-prices-in-the-murray-darling-basin

Demand for premium property softens

Posted on Monday, March 19 2012 at 3:13 PM

The number of Australian suburbs with $1 million median price tags declined by 13.8 per cent for the 2011 calendar year following the 2010 peak, according to RP Data.

A total of 194 suburbs claimed the $1 million median price tag in 2011, a fall of 31 suburbs from the 2010 count, said RP Data.

The fall in premium numbers was likely due to the broader market conditions and slower sales activity due to weaker demand in 2011, because to be eligible for the rich list suburbs needed to record a minimum of 10 sales over the 12-month period, said RP Data research analyst Cameron Kusher.

He said over the past 10 years suburbs recording a median house or unit price over the $1 million mark had risen from 43 to 225 suburbs in 2010.

Kusher said over the 10-year period Tasmania was the only state not to feature a $1 million suburb.

In 2002, the only states and territories featuring suburbs with median prices over the $1 million mark were New South Wales, Victoria, Western Australia and the Australian Capital Territory.

The only states and territories excluded from the 2011 rich list were Tasmania and the Northern Territory.

Only 59.5 per cent of all rich list suburbs were from NSW, highlighting that the state had seen its strong growth in the high-end market over previous years, said Kusher.

He said the 2008 and 2011 calendar years were the only two years where the volume of rich list suburbs fell year on year and consequently when capital city home values recorded an annual decline.

Compared to the top 20 per cent most affordable capital city suburbs, where a 1.6 per cent fall had been recorded, and across the broad middle 60 per cent of suburbs where a 2.4 per cent decline has been witnessed, the most expensive 20 per cent of capital city suburbs recorded a value decline of 4.8 per cent.

Kusher said he had little expectation of a premium market recovery for 2012, as the poor performance of the equities market, the unstable global economic situation and lower levels of demand for debt by consumers – particularly to buy luxury items such as premium homes – will continue to weigh the sector down.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/8itfG_fo1Ug/demand-for-premium-property-softens

Not all pre-approved home loans are the same

Posted on Wednesday, February 29 2012 at 1:40 PM

Do you have pre-approval for a home loan? If so, you probably have a set budget in mind and an idea about the type of property you’re looking for. But according to Smartline Personal Mortgage Advisers, anyone with pre-approval should be cautious about any offer they make before they sign a contract.

Director Chris Acret says not all pre-approval loans are the same and borrowers need to know exactly what they’re getting.

“In some instances, the pre-approval process can be pretty basic if the lender has just done an initial credit check and reviewed the borrower’s credit score, providing a conditional approval,” he says.

“If the lender hasn’t actually looked at a full application and reviewed the borrower’s individual circumstances, they’re really just saying ‘yes, you can probably have a loan’ rather than ‘yes, you can have a loan and this is how much we’re prepared to lend to you’. There’s obviously a very big difference between the two.

“Some lenders do a more detailed pre-approval that provides the borrower with a lot more confidence. Armed with this, they know exactly how much they can afford to borrow – so minimise the chances of wasting time looking at properties outside their budget – and that the lender is actually comfortable lending them that amount.”

Potential homebuyers should be cautious about going through the pre-approval process out of curiosity or if they’re not really serious about looking for a property, particularly if they do so several times.

This is because seeking a formal pre-approval puts a credit enquiry on the person’s individual client record. If you have too many credit enquiries within a short period of time on your credit card record, this is seen as a negative by the bank as you’re viewed as ‘shopping for credit’.

“Quality mortgage advisers have access to detailed information about the products and policies of the various lenders and can perform a credit check to confirm that you have a sound credit history,” Acret says.

“They’ll be able to give you an idea as to whether you’d be likely to secure a loan and if so, how much you’d be able to borrow.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/XXHn1AaoYqM/not-all-pre-approved-home-loans-are-the-same

8 tips for positive cash flow investing

Posted on Thursday, March 15 2012 at 9:35 AM

In the current property cycle cash flow positive properties are increasingly on the investor’s hit list, but many don’t fully understand what to look for, according to Robert Projeski of Australian Mortgage Options.

The first step is to be clear on how much the property needs to return to be positive cash flow, said Projeski.

“This may depend on your income, your tax position and your level of comfort with debt, but once you know, you can look at the best finance for it and whether the likely rent will be enough,” he said.

“If debt is something you’re comfortable with and can manage well, you may consider using equity to fund the shortfall in high growth potential properties.

“Make sure you understand the pros and cons of this sort of strategy well, before you choose this option. You may also use equity in funding the property. Be aware that most investors who fail have simply pushed themselves too close to the edge and any changes in interest rates or rent have them against the wall. Talk to a mortgage broker and good tax accountant to establish your best position.”

Projeski offers eight tips:

1. Do your homework – eg. RP Data, investment magazines etc.

Between RP Data and investment magazines you’ll have access to statistics showing average rental returns, property values and sales history for most areas. If you find the highest ‘average’ on rental return and then research properties in that general location or just outside of it, then you have at least a good starting point to work from.

2. Do your research online first

The ability to find suitable properties online, in your own backyard and all over the world, are magnificent. You have the ability to shop and research 24/7, which can give you access to a host of opportunities. Doing your research for specific property types, prices, locations and styles of housing this way means very efficient use of your time. Using alerts can give you access to new listings within your search criteria delivered right to your inbox. Consider looking for lower value properties (often the best returns), blocks of units as well as motels, hotels, boarding houses and lucrative student accommodation.

3. Check out properties without leaving home (Google earth)

This is a fantastic free program that helps you survey an area using satellite technology. It’s great for looking at properties that aren’t in your backyard. You can get a fair idea of the layout of the area and look at the properties you’ve found on the internet.

4. Speak to as many local agents as possible

Talking to a number of real estate agents in an area can give you an overall picture of the area, help you understand the growth potentials relating to the local economy and what areas potentially to avoid. However, sometimes the areas they tell you to avoid can still be good to invest in. This can be done remotely by telephone and email. Many agents are quick to respond to emails, but an initial telephone call can be quite effective too.

Sometimes it’s more beneficial to have face-to-face conversations if you’re close by, giving you a better basis to establish a good rapport with the agent. Remember, agents want to make sales, so as a potential investor, they’re likely to keep you posted on any suitable properties on the market or that are coming up.

5. Get the lowdown on the local rental market (property managers)

If you’re looking to invest in an area, speak to property managers, as they usually know the rental market better than the sales people and have a good idea on rental demand and returns. They understand where the tenant demand is, what they’re likely to pay for specific style and location of housing.

6. Employment, transport, shopping and schools

As an investor, look closely at existing employment centres such as factories, shopping centres as well as easy access to public transport. Where there’s work, there are people. It’s worth finding out about any infrastructure works in planning as this can make properties more attractive for tenants and re-sale later on. Also, look at shopping centres and schools in close proximity to the property, which will make it more attractive for families and ensures highly rentable properties.

7. Always start your offers ‘low’

Once you’ve found a potential property that has a higher than usual return or potential for growth, calculate what price you could pay to have it work for you – then make your initial offer low. It may seem like a very low offer, but what do you risk? Remember it’s a buyers’ market and a rejection is an opening for further negotiation.

If a property has been ‘for sale’ for a while, the vendor may be particularly motivated to sell even at a lower price. Investing is all about numbers – make more offers and eventually you’ll be successful in buying a property at a price that adds up.

8. Look for properties that are different or unusual

Consider unusual properties where you can potentially get a better than average yield. For example, look at old ‘Queenslanders’ or other properties that can be renovated, have the potential of turning a block into two lots, or a simple creation of space, eg. separate living areas.

Consider granny flats as a potential for double tenancies. In New South Wales there are new laws that allow for multiple rental properties on one title to meet the growing rental demand and the ever-present housing shortage. Consider an old motel that might be able to be renovated to provide individual permanent rental for students. This can work particularly well near training hospitals and universities. Be creative, some properties may have a back lane access presenting opportunity to rent out sheds for storage to tradespeople or to accommodate boats and caravans.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/LWSX_gNY1oM/8-tips-for-positive-cash-flow-investing

Ten hotspots named for Adelaide

Posted on Wednesday, March 07 2012 at 2:51 PM

Ten Adelaide ‘hotspots’ with future development or investment potential have been identified by development company Zybek Consulting and Management (ZCM). The suburbs are Prospect, Clearview, Woodville, Oaklands Park, Port Noarlunga, Bowden, Gawler, Semaphore, Mount Barker and Seaford.

ZCM director Simon Zybek says the suburbs were chosen because the State Government is investing heavily in those areas as potential transit-oriented developments and they’re set for positive growth.

“Those areas and regions are expected to experience the greatest growth and will most likely be centred on the transport corridors, infrastructure projects and major industries,” he says.

“Unlike Australia’s major cities, Adelaide has predominately lower density housing and this, coupled with Adelaide’s growth, suggests there are good times ahead.

“The major drivers for Adelaide will be population growth, predominantly as a result of the State Government’s push for a larger portion of immigrants, resource projects, defence contracts and education.

“The current market is a great time to land bank a good development site, however you still need to be diligent when purchasing a development site.”

Zybek adds nearly 80 per cent of development sites reviewed by the company are either overpriced or not as attractive as they first appear. 

“A high percentage of potential sites are risky propositions and are often presented as being more developable than is actually the case.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/s8GbPhBYeK4/ten-hotspots-named-for-adelaide

Areas set for growth beyond the mining boom

Posted on Thursday, March 08 2012 at 1:39 PM

The cities and towns most likely to offer sustainable house prices beyond the mining boom are those geographically close to significant areas of population, according to BIS Shrapnel’s managing director Robert Mellor.

In some regions and cities, the dramatically expanded population from the mining boom could widen the permanent population base, increase foreign attention and create new industries and services to prop up jobs, said Mellor.

Perth is the most likely mining hub to see sustainable growth as a capital city while Gladstone stands a better chance of remaining more sustainable than other more remote mining towns, he said.

At one or more points throughout the mining boom property prices in these mining-related areas will take a hit as “nothing’s impregnable”, said Mellor. Though the distance from Perth to the east coast could always remain its disadvantage, he said.

Australia’s honeymoon period in mining job growth might be five years, maybe 10, maybe more, said BIS Shrapnel senior economist Tim Hampton. “The minerals boom is clearly a huge benefit for the Australian economy. However, it will come to an end, and much of the structural change is irreversible.”

Some experts would disagree with Hampton and the use of the term ‘boom’ which insinuates that the growth ahead is a short-lived boost rather than the continued and growing demand for Australia’s natural resources. Property analyst and adviser Simon Pressley of 6-Point Property is one of these critics.

Pressley preferred to describe the mining ‘boom’ as a mining ‘revolution’ that will continue to grow on par with Asia’s rise, particularly China, India, South Korea, Vietnam and Indonesia.

He said Australia needs to stop focusing on the US and Europe and concentrate on the growth story of Asia.

Hampton agreed with the principle that the rise of Asian demand for Australia’s natural resources will continue to support prices and keep infrastructure investment at a high level into the next decade, “however once the construction stops so will the growth of jobs; it doesn’t take as many workers to operate the mines as it does to build them”.

Before the mining boom is over the Federal Government’s policies need to be decidedly strengthened to ensure Australia’s economic growth remains resilient, said Hampton. “The steps include investing in infrastructure and skills, making the tax system more efficient, reducing red tape and ensuring that the industrial relations system is non-combative. Businesses also have a role to play, including investing in efficiency-enhancing technologies. The ageing population makes these steps even more pressing.”

While economic growth in Europe and the US is shrinking and Asia is the emerging economic epicentre, disparity exists on the home front with parts of Australia emerging from hibernation while other parts remain in a slumber, according to BIS Shrapnel’s latest Long-term Forecast Update to be presented at conferences in the five major capital cities from next week.

In the update, BIS Shrapnel has forecasted Australian unemployment levels to peak at five per cent for another six months before trending down to 4.5 per cent by the middle of next year, fuelled by the nation’s gross domestic product (GDP) increasing from just above three per cent for the year to June 2012 to 3.5 per cent for year to June 2013.

While the national unemployment rate is forecasted to shift down comfortably next year, it’s not so evenly spread. Some states and territories are expected to perform significantly better than others, said Hampton.

He said states, territories and regions with strong demand for mining-related employment – Western Australia, Queensland, Northern Territory and New South Wales – will obviously take the charge with economic growth and housing activity, while those regions heavily dependent on non-mining related manufacturing, tourism, retail, finance and business services will continue to tread through a rough patch.

Victoria’s growth is slowing, said Hampton, partly the result of “winding down after a strong period of dwelling building activity over the past couple of years”.

“South Australia is doing it tough due to the high Australian dollar, but activity will be supported by a number of very large construction projects over the next few years, including the Olympic Dam expansion,” he said.

However, Mellor said that everyone keeps talking about the Olympic Dam expansion at Roxby Downs but he couldn’t see this project having the same impact on Adelaide as what other projects are having on other mining towns and capitals. “It might lead to a pick up over the next 18 months though.”

Hampton said Tasmania would continue to struggle due to the high Australian dollar weighing on its manufacturing and tourism industries. “The Australian Capital Territory is likely to experience low growth as government departments reign in spending.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/KnJWOX197d0/areas-set-for-growth-beyond-the-mining-boom

New planning scheme for Toowoomba

Posted on Friday, March 09 2012 at 2:31 PM

The Toowoomba Regional Council has implemented a new, comprehensive planning scheme by merging eight former council planning schemes into one, according to the Queensland Minister for Local Government Paul Lucas.

Member for Toowoomba North Kerry Shine says this major change will better help Toowoomba City achieve a target of an additional 80,000 people to a population over 162,000 by 2031.

“With the coal seam gas boom and the massive growth much of the regions are experiencing, exciting times are ahead for the Toowoomba region,” said Shine.

“Combined with a $707 million mining industry with five coal seam gas and coal mines already operating on the region’s doorstep, having the most modern and up-to-date planning scheme that considers all the opportunities and challenges of the region shows Toowoomba is ahead of the game.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/Zhe1Cc9RWco/new-planning-scheme-for-toowoomba

Sales stronger in outer Melbourne metro

Posted on Thursday, March 08 2012 at 4:25 PM

The Victorian Government’s release of its September 2011 quarter Victorian Property Sales Report has reported a 3.8 per cent fall in the state’s median house price, following a rise of 2.2 per cent the previous quarter.

Meanwhile the median price of Victorian units saw a 2.3 per cent decrease in the September 2011 quarter, despite a 2.4 per cent increase in the previous quarter.

In the Melbourne metro area house prices dropped a little further in the same quarter, down by 4.1 per cent for houses, however units appeared to hold stronger with a 2.1 per cent decline.

Nine of the 11 suburbs to see more than 100 sales for the September 2011 quarter were in the outer Melbourne metropolitan area. They include:

Reservoir (105), Pakenham (200), Berwick (199), Frankston (137), Werribee (110), Hoppers Crossing (138), Craigieburn (148), Sunbury (134) and Point Cook (128).

The other two suburbs with sales volumes exceeding 100 sales for the September quarter were from regional Victoria. They were Mildura (119) and Traralgon (107).

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/ybBLjWZEt-c/sales-stronger-in-outer-melbourne-metro

Caution with marginal seat promises

Posted on Thursday, March 01 2012 at 10:28 AM

Signalling the start of election month in Queensland, followed by the Australian Capital Territory election in October, it’s time to consider if marginal seat suburbs with infrastructure and service promises by political candidates could be the road map to investment opportunity.

Brisbane-based Scott McGeever of Property Searchers Buyers Agents expects that in what has been a fragile property market investors will be more cautious than ever when listening to government or opposition election promises, even if government dollars are already being spent on roads or small gentrification improvements in a marginal suburb prior to the election.

However, he said if Queensland Premier candidate Campbell Newman is successful in being elected into the seat of Ashgrove, locals are likely to see more investment in the area due to the desire to hold that seat and state premiership, “but probably only subtly”.

“I think investors are more likely now than ever to wait for legislation to happen in terms of infrastructure promises before buying on speculation,” he said.

“Take for example the rail line to Kippa Ring – many investors bought there off the back of a State and Federal Government commitment and now who knows what’s happening with that project? What I do know is that the property market is currently very flat.”

He refers to the shelving of another project, the bypass to cut through Kenmore.

McGeever said investors are always safer if private development is proposed and under way in an area in addition to government promises.

In Canberra, the ACT election gets under way in October and already the sitting government has launched into campaign mode with proposed gentrification of its town centres in some of its marginal seat areas.

Canberra-based Tim Dalton of Dalton and Peace The Estate Agents said proposed gentrification in these areas could certainly signal where potential new opportunities for investors will be in the coming years in rental demand and capital growth.

However like McGeever, Dalton said nothing’s certain until it’s legislation and private spending starts pouring into an area.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/fxwpeLZN4AM/caution-with-marginal-seat-promises

Borrowing doors open for investors

Posted on Thursday, March 01 2012 at 3:07 PM

More doors could be open for potential homeowners this year, following a new study into lending criteria by Australia’s financial comparison website

RateCity.com.au The company analysed the loan-to-value (LVR) ratios of home loans and found there are now more than two thirds of home loans with LVRs of 95 per cent and above. This compares to about 50 per cent of home loans two years ago.

RateCity’s chief executive officer Damian Smith says it’s the first time in more than three years that this proportion of home loans offered Australians borrowing power of 95 per cent and higher of the value of a property.

“In early 2008, there were quite a few loans – 21 per cent in fact – that didn’t require any deposit at all. The global financial crisis saw lenders really tighten their belts on mortgage criteria by requiring much larger deposits – so almost all of these high LVR home loans disappeared,” Smith says.

“After a couple of years of really tight lending criteria, things are starting to loosen up again. While there are still no home loans in our database with 100 per cent LVR, many lenders are taking on more risk than they have in the past three years by offering higher LVRs.”

Smith said many lenders have loosened their lending criteria to encourage growth in a slow mortgage market.

“Last year the Australian Bureau of Statistics recorded 536,511 home loans financed in 2011. While that’s slight growth, 11,000 more borrowers than 2010, it’s still the second lowest total number of home loans financed since the year 2000.

“One of the biggest barriers for potential homebuyers is saving for a deposit and the easiest way to encourage more buyers is by offering borrowers bigger loans with smaller deposits.”

Three of the four major banks changed LVRs on some of their home loans this month and now offer 95 per cent, while ANZ continues to offer 90 per cent.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/7p4_s-oTpRI/borrowing-doors-open-for-investors