Kitchen and bathroom renos on the decline, but property prices holding

Posted on Monday, January 16 2012 at 11:21 AM

Investors are more likely to have daggy kitchens and older bathrooms for the next 12 months with renovations on the decline, but property prices are still firm, says the Housing Industry Association’s Kitchen and Bathrooms: Past Growth and Future Prospects 2011/2012 report.

“According to the Armageddon club, prices should have fallen through the floor by now,” the report says.

“Irresponsible commentary explicitly or implicitly talking of imminent, savage declines in price first gathered momentum in the current cycle back in late 2003 and are still going. Households and businesses get spooked by such talk and the current rife practice of undervaluation of residential property directly reflects price crash fears, so the talk is expensive, not cheap. But it’s just talk and we maintain our view there will be no crash.”

However, kitchen and bathroom renovations are being put on hold. The total value of kitchen installations is forecast to fall by $172 million in 2011/2012, before increasing by $147 million to a value of $2.7 billion in 2012/2013.

The total number of bathroom installations in new homes is also forecast to decline by 10.4 per cent in the financial year 2011/2012, from 299,300 in 2010/2011 to 268,200 in 2011/2012. Interestingly, the report says the average value for a new kitchen costs $19,011, which is less than a kitchen renovation ($19,900). New bathrooms are also cheaper than renovated ones, with the difference in price being around $3000, from $12,120 to $15,000.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/oCDZxvR4lx4/kitchen-and-bathroom-renos-on-the-decline-but-property-prices-holding

Confidence back up on the Gold Coast

Posted on Friday, January 13 2012 at 5:37 PM

The Gold Coast’s successful bid to host the 2018 Commonwealth Games has brought back a much-needed confidence boost to Queensland’s glitter strip.

Results from a Property Council-ANZ property industry confidence survey shows sentiment drastically improved in the December quarter of 2011. A total of 27 per cent of respondents felt that economic conditions for the city, known as a surfer’s paradise, would improve over the next 12 months. By comparison, only 8.5 per cent of respondents in the previous quarter felt conditions would improve. Similarly, only 34 per cent of respondents felt that economic conditions would deteriorate over the coming year, down from 51.9 per cent in the previous survey.

Queensland executive director of the Property Council of Australia, Kathy Mac Dermott, says the increase in positive sentiment is only rivaled by the resource-bolstered northern and central regions of the state.

“This upturn in confidence could be a sign that the property industry on the Gold Coast has been encouraged by the city’s successful bid to host the 2018 Commonwealth Games and the investment in infrastructure the event will create,” she says.

“Queensland as a whole experienced the second highest increase in confidence across the country.

“However, the latest survey indicates that the availability of debt finance as one of the three biggest influences on business decisions in the coming quarter.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/YgwPBjXi2ek/confidence-back-up-on-the-gold-coast

Mixed feelings on the Grantham land swap

Posted on Thursday, January 12 2012 at 3:46 PM

This week signalled one year since Grantham, in Queensland, was ravaged by flash flooding. In this time a new town has resurfaced just up over the hill from the old town, with sweeping vistas and flood-free land. Some locals say it’s an exciting fresh start while others say the land swap deal by the government could have been fairer.

Miles uphill from the increasingly abandoned old Grantham town to where the new land lots have been distributed in a Lockyer Valley Regional Council ballot system – an Australian-first land-swap deal – a couple of houses have already been relocated, a handful are under construction and one has recently been completed, according to Herron Todd White Toowoomba director Bradley Neill.

However Neill said the matter is quite complicated because while the majority of property owners participating in the land swap appear content, others would have preferred to have been offered the opportunity to sell their block back to the council for the value their block was worth pre-flood, rather than be offered a flood-free block in exchange for their flood-ravaged one.

Others couldn’t afford to relocate or rebuild, even with the government funds available, said Neill.

Then, of course, there were those who weren’t given their preferred block of land.

“Some blocks have steeper sloping contours so it might be more difficult to build a slab home than other blocks,” said Neill.

The Lockyer Valley Regional Council reported that 49 per cent of the 72 flood-affected Grantham families participating in the independent ballot were granted their first choice of land lot; 75 per cent of participants were granted their top three preferences, and 85 per cent received their top five preferences.

Of the 105 flood-free blocks offered for exchange, sizes ranged from 1000 square metres, to 2000 square metres, up to 4000 square metres and 10,000 square metres, reported the council.

Neill said there are no sales through yet to provide an accurate valuation on how much higher the new land lots will be valued at compared to the old Grantham blocks.

“However in theory if they moved their flood-affected dwelling up to the new block it should be worth more than when it was sitting in old Grantham,” said Neill.

The same applies to the valuations of the flood-affected blocks recently handed over to the council, said Neill. “There’s only been two flood-affected dwellings bought by a local; one of the blocks was in front of his own property so he bought it for $92,500, pre-flood it was valued at around $200,000.”

Elders Gatton principal Barry Niemeyer said that “considering the blocks have elevation, views and no possible flooding”, it’s very likely they’ll be valued higher than the blocks in the flood-affected areas of Gatton.

Like Neill, Niemeyer said that until a block is sold in the new area it’s only going to be “a guessing game”.

Allison Graham of Gatton Real Estate said her agency recently listed one of the exchanged, elevated blocks for sale; it’s a 2020-square-metre vacant block and the asking price is $118,000.

Graham said the council had already set the new value on the rates notice at around the $130,000 to $140,000 mark.

A similar size vacant block “on the flat” with services pre-flood would have been valued at around the $90,000 mark, she said.

Niemeyer’s real estate agency in Gatton has taken a good proportion of Grantham flood-affected families onto its rental list and said the pressure on rental demand in nearby Gatton has been enormous.

He said when the families do move onto their new land lots the pressure will be eased a little, particularly important at a time when the first stage of the new Gatton prison was just opened last week, signalling the arrival of 350 prisoners and the 1.5 jobs per prisoner they’re expected to generate in the town.

“This new stage will drive demand for 600 dwellings. On my rent roll I have 280 properties and only four are currently vacant,” he said.

Neill said the investors were the ones who lucked out because the owner-occupiers were able to use the State Government handout – some reportedly received up to $150,000 in assistance – to pay for house relocation costs or to help fund the new build, while investors were denied these funds.

“A lot of the investors have taken up the land swap because even though they may be faced with a big capital outlay in the long term they’ll have a more saleable asset,” said Neill.

Graham said that while there weren’t a big proportion of investment properties affected – “because most of the rentals are generally in the more elevated part of lower Gatton near the school” – she knows of one rental property that was flood damaged however it was brick so the owner just made some repairs and renovated a little then moved some new tenants in.

“Another investment property was sold at a reduced price, the investor received an insurance payout, then the new owner even bought it in time to qualify for the land swap,” she said.

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How to turn a new year’s resolution into reality

Posted on Tuesday, January 10 2012 at 10:07 AM

Most of us make some sort of new year’s resolution every year. Whether it’s paying off debt, saving more money or getting our finances in order, there is usually some sort of goal hanging around our heads in early January. It’s easy to make a resolution – the difficult part is turning it into reality.

If you have big plans for your financial future in 2012, there’s no better time to start achieving your property goals than right now! A few simple steps and before you know it, you might have found your next property.

Step 1. Realise the potential.

Gavin Hegney of Hegney Property Group says by this time next year, interest rates will probably be down around three quarters of a per cent. This means rental yields will be equal to the debt you have to pay on residential property in places like Perth.

“You’ll get yields on property equal to borrowing costs,” Hegney says.

“With a drop in interest rates, something has to give.”

Rents are also likely to rise, so now is the time to realise the future potential of investing in property and do something about your future, while everyone else is still recovering from the 2011 hangover!

Step 2. Research.

If your goal for 2012 is to buy a property, then get online and start looking at properties in your desired area! You can go to open homes, check with council to see what plans they have in store for your desired suburb and also start researching which homes sell for what and where. Jane Slack-Smith of Your Property Success adds you might also need to spend money to improve your knowledge. This could be a $200 property report, a property course or buying some software.

“It’s like going to the gym. If you pay $100 for a month and you don’t go, you feel bad. It’s easy to say ‘I will go on realestate.com’ and then put it off.”

If you don’t have the cash, consider the local library. Borrow books that inspire you and books that will motivate you to go out there and get that property!

Step 3. Get your finances in order.

Hegney says investors should revisit their loan situation and make sure they’re getting the best interest rate.

“Fixed rates have really changed and there are incredible deals at the moment,” he says.

This might mean a trip to your broker or bank, but don’t just ignore the great loan options around right now.

Slack-Smith adds you should also write down your financial goals, because this will remind you daily of what you plan to achieve in 2012.

Step 4. Set a budget.

Slack-Smith says many people need to work out how much money they can spend or save. With interest rates dropping, you might suddenly have a bit more cash.

“Get rid of the credit card or find out how much equity you have,” she says.

“Take action. Tap into the equity, do something now.”

Step 5. Get lines of credit in place.

“Prepare for the worst but expect the best,” Hegney says.

“If necessary, look at increasing debt but don’t use it.”

He adds a line of credit is about managing your risk, just in case you lose an income or if your wage is reduced.

“If the worst case scenario happens (with the European debt crisis) you’ll be in an ideal position. A low market is low on sentiment and that means people won’t be viewing numbers in the light they should be viewed. They see the glass half empty, not half full, and usually that creates an undervalued market. When that happens, people should actually be less scared and prepared to take more risk.”

Step 6. Found a property you like? Look for something with land.

Hegney says investors focus on yields in a slow market but the prospect of capital growth should also be remembered. For this reason, he advises investors to look for properties with rental yields of close to five per cent but 70 per cent of its value should be in the land.

“This means you’re not giving up capital growth when it returns,” he says.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/4iDA77COsE8/how-to-turn-a-new-years-resolution-into-reality

Queensland building approvals ahead

Posted on Wednesday, December 07 2011 at 3:28 PM

While the nation saw building approval declines of 0.7 per cent for the month of September, Queensland’s building approval rate remained steady at 5.7 per cent, according to Queensland’s Deputy Premier and Treasurer Andrew Fraser.

“…the HIA (Housing Industry Association) released its new home sales report, which actually showed that Queensland again bucked the national trend – achieving a 5.7 per cent increase in the volume of detached house sales while Victoria, New South Wales and Western Australia all posted declines,” said Fraser.

Fraser credits the performance to the $10,000 Queensland Building Boost starting to flow through the sector, combined with the Reserve Bank of Australia cutting interest rates in early November.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/WarwPyY-0qE/queensland-building-approvals-ahead

Uncertain super policy rattles SMSF investors

Posted on Thursday, January 05 2012 at 10:05 AM

Earlier this week The Australian newspaper reported that unions and welfare groups are placing pressure on the Gillard Government to slash contribution incentives for middle and higher income earners. API investigates what this might mean for property investors in an era of uncertain superannuation policy.

In a follow-up article on Wednesday The Australian reported that the Labor Government had already halved the concessional contribution ceiling to superannuation from $50,000 to $25,000 per year for those aged under 50; for those aged over 50 the same ceiling was halved from $100,000 to $50,000.

“From July 1 the cap for people over 50 is set to halve again to $25,000 a year, although the government has promised to introduce legislation to retain the $50,000 cap for people with superannuation fund balances of under $500,000,” reported The Australian.

But Prime Minister Gillard has since provided some glimmer of hope that she won’t be caving in to pressure from unions and welfare groups, stating that no further changes would be made to her government’s superannuation policy.

This guarantee from the Prime Minister follows recent announcements that the compulsory employer superannuation levy would be elevated from nine per cent to 12 per cent; partially funded by the mining tax, and that the under $37,000 income earners would be exempt from paying the 15 per cent tax rate on superannuation contributions, reported The Australian.

Buyers advocate Peter Rogozik of Peter Rogozik Property Consulting said the declining superannuation contribution ceiling and uncertainty over possible further policy changes is certainly making the potential to buy property through a SMSF more challenging and is likely to throw a shadow of doubt over choices in doing so.

He said the self-managed superannuation rules and superannuation contribution policy are “very complex and changing all the time” so individuals need to be careful about what they’re doing and attain independent expert advice before buying a property under a self-managed superannuation fund (SMSF).

While there are “tax haven” incentives to contributing to a SMSF, the number one problem with buying property through SMSF funds instead of buying property direct in the investor’s personal or company name is that equity can’t be leveraged, said Rogozik. “So when the property doubles in value every seven to 10 years as it does with a well chosen property, the equity gained can’t be used to continue building the property portfolio.”

The second problem with buying a property under a SMSF is if individuals decide to change the structure afterwards to take advantage of the equity gain and leverage it to buy another property, said Rogozik.

“If you want to change the name on the property title to an individual name there are substantial costs involved in stamp duty and capital gains tax – the ramifications of putting the wrong name on the contract and title can be horrendous; costing hundreds of thousands of dollars.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/nD6aBrTX_XM/uncertain-super-policy-rattles-smsf-investors

Property prices set to rebound

Posted on Tuesday, January 03 2012 at 5:25 PM

After much speculation in recent months over the interest rate cut effect on property prices, recent data proves it was certainly a gear changer in November 2011, with the greatest increases recorded since December 2010, according to RP Data-Rismark‘s November Hedonic Home Value Index results.

In November, the index reported that capital city home values rose by 0.1 per cent and regional dwelling prices climbed by 0.3 per cent in seasonally adjusted terms.

Rismark’s Christopher Joye said this positive result in November is a confidence boost for the first quarter of 2012, which is now projected to experience a price rebound particularly as new home loan approvals for established dwellings continue to rise since the downturn in March last year.

Over the 12 months to November 2011, the total return for investors in capital city property markets remained positive overall at 1.2 per cent, however significant diversity still remained across these housing markets, said RP Data senior research analyst Cameron Kusher.

“Although home values have fallen across each capital city, Sydney and Canberra have been the most resilient with dwelling values off just -0.5 per cent (seasonally adjusted) and -1.6 per cent (seasonally adjusted) over the year respectively,” said Kusher.

Over the three months to November 2011, Darwin and Canberra were the strongest capital city housing markets, with property values up by 0.3 per cent seasonally adjusted, reported the index.

Meanwhile Melbourne and Brisbane values were the weakest capital city markets in the same period, with values in both cities down by 1.7 per cent.

In gross rental yield terms across the capitals in the three months to November Darwin took the gong with 5.5 per cent for houses and six per cent for units, while Melbourne experienced the weakest gross rental yields of 3.7 per cent for houses and 4.3 per cent for units.

 

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/mcGoenbcT_E/property-prices-set-to-rebound

NT cattle farmers hold breath for interest rate savings

Posted on Wednesday, December 07 2011 at 4:57 PM

The drop in the official interest rate down to 4.25 per cent yesterday may provide some relief to small property holders if the big banks decide to follow suit, however for big landholders with business finance it could mean the ability to continue holding in a climate of slow sales activity.

In the Northern Territory’s top end it would be an even bigger breather for farmers struggling to hold onto their farms following the Federal Government’s temporary cattle export ban to Indonesia mid this year.

Luke Bowen of the NT Cattlemen’s Association said that while the media tends to focus on the urgent need for interest rate cuts for small property holders, the large cattle property holders are often paying significantly higher interest rates – around the 10 per cent mark – compared with small property owners due to being considered a higher risk by lenders.

Anecdotally, because of this high-risk climate, lenders aren’t always as willing to pass the official rate cut down, however it would certainly be the cash injection they desperately need right now if it was passed down, said Bowen.

Cattle property owners are hoping that agricultural finance lenders like Rabobank’s willingness to pass down the full 25 basis point cut on its standard variable rate in November is a sign that it could happen again following yesterday’s official rate cut announcement.

However even if the official rate cut is passed down to NT cattle property owners in the coming week, considering that buyer enquiry and buyer finance is mostly coming from offshore, the interest rate drop isn’t likely to provide a stimulus to these big property buyers.

Herron Todd White’s Terry Roth said that after some months of investor uncertainty, enquiry has started picking up from offshore buyers again as they look for long-term solutions for food security, however this foreign interest is mostly in the larger properties.

“What’s happened is the quality properties with good access to the ports and with good quality cattle suitable to the Indonesian market have held up stronger in value than those properties with poor access to the ports,” said Roth.

“The smaller family operations with under 8000 head of cattle are struggling the most because there’s not as much interest in these properties, there’s more corporate interest in the bigger properties with a minimum of 15,000 head of cattle.”

Their property values have plummeted as a result, said Roth.

“Some properties have seen 15 to 20 per cent drops, however I heard a bloke on the radio the other day talking about a 40 per cent drop on his cattle property,” said Roth.

Bowen said that only one cattle property has been sold since the cattle export ban.

This wouldn’t have been the case if the Federal Government didn’t suddenly place a ban on the NT top end cattle export industry, Roth said.

“The live export ban really threw a spanner in the works this year, reducing investor confidence and weakening property values,” he said.

Five months after the ban was lifted on July 7, cattle exporting to Indonesia has slowly started again, however farmers are still struggling to sell much of their cattle to Indonesia because many of their cows have exceeded Indonesia’s 350-kilogram limit, a limit introduced a couple of years ago, said Roth. “There’s now a huge cattle displacement problem; we’re now hearing stories of farmers having to freight over to other states.

“It’s been a real shock to the cattle supply system, many farmers have basically lost an entire season,” Roth said.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/XQ42lcIclek/nt-cattle-farmers-hold-breath-for-interest-rate-savings

New asbestos legislation from January

Posted on Wednesday, December 07 2011 at 5:08 PM

Fines of up to $60,000 could be dished out from January 2012 for workplaces, including unit buildings, not complying with new Federal Government law changes on asbestos, according to Archers Body Corporate Management director Andrew Staehr.

The new law will require all buildings built prior to December 1, 2003 to be inspected for asbestos-containing material (ACM) and recorded on the asbestos register. If ACM is discovered then a management plan needs to be set up so that residents or workers in the building can identify where the ACM is and how to treat it.

Prior to the new legislation the cut-off date was December 31, 1990.

Because any shared common property areas are classed as ‘workplaces’, all bodies corporate and unit owners, including the residential sector, must comply with the new legislation, said Staehr.

Failure to comply with the new laws will result in heavy fines up to $60,000, which will be passed on to unit owners, or up to six years imprisonment for body corporate managers.

Any company carrying out demolition or refurbishment work must also comply with the management plan to avoid being fined, Staehr said.

“Body corporate management companies should be making preparations to have their buildings inspected by early 2012, and we are appealing to all unit owners to ensure their body corporate managers are aware of the changes,” Staehr said.

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Accidental damage by tenants on the rise

Posted on Tuesday, December 13 2011 at 11:36 AM

Accidental damage claims are outweighing malicious damage claims, proving that bad tenants aren’t the only damage culprits, according to landlord insurer Terri Scheer.

Over the recent 12-month period, Terri Scheer figures report that malicious damage claims increased by 34 per cent, while accidental damage claims increased by 46 per cent over the same period.

The same figures also revealed that the average malicious damage claim increased by 3.6 per cent over the past year, while the average accidental damage claim rose by 16 per cent.

“These figures challenge the stereotypes that exist in relation to rental property
damage,” said Terri Scheer insurance manager Carolyn Majda.

“There is a widely held misconception that good tenants won’t cause damage. The figures show that this is far from true. Even the best tenant can cause accidental damage to a property,” she said.

Majda said that accidental damage could be sudden and unexpected including a broken window, red wine spillage, or damage by small children, but excludes gradual wear and tear.

Malicious damage occurs out of spite or ill will like punched-in walls, kicked-in doors, intentional floor damage, or arson, she said.

Majda said that despite the higher increasing rate of accidental damage, malicious damage remains a more common claim; the average value of individual malicious damage is 27 per cent higher than claims for accidental damage.

“Malicious damage is often more extensive than accidental damage and more
likely to be spread over a number of rooms,” said Majda.

“Terri Scheer has paid claims as high as $40,000 to repair malicious damage by
tenants.

“In addition, malicious damage claims are often accompanied by claims for loss
of rental income during the time it takes for the damage to be repaired

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/ZrN4MZ8Hwrk/accidental-damage-by-tenants-on-the-rise