Foreign developers snap up property in Australia

Posted on Tuesday, December 20 2011 at 5:04 PM

Foreign developers are making the most of bargain buying conditions in Australia and snapping up property.

Property research company CBRE reports the residential development sector has been heavily targeted by offshore groups and foreign companies currently have more than 13,000 apartments either planned or in the marketing phase. Based on average apartment completions in Australia in 2011, this represents a market share as high as 32 per cent.

CBRE executive director of global research and consulting, Kevin Stanley, says foreign developers haven’t been this active since the beginning of the boom in the late 1980s and early 1990s.

“Asian developers, predominantly from Singapore, are leading the pack, accounting for 92 per cent of all apartments presently being proposed or developed by foreign companies in Australia,” he says.

Singaporean developers are responsible for almost 5000 apartments being planned or under way. Sydney and Melbourne account for 79 per cent of where the 13,000 apartments are being planned. Foreign developers are also facilitating apartments on the Gold Coast (10 per cent), Brisbane (six per cent), Perth (three per cent) and Adelaide (two per cent).

“We’re also aware of site purchases in regional areas of Australia close to mining centres, such as Mackay, where population and employment growth is very high, although to date there are no apartment numbers available for these projects.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/cFT1oFHzajY/foreign-developers-snap-up-property-in-australia

Report shows housing supply at tipping point

Posted on Friday, December 23 2011 at 12:11 PM

There’s a widening gap between the demand for homes and the number being delivered, according to the Residential Development Council (RDC).
Executive director Caryn Kakas says the Australian Government’s National Housing Supply Council – State of Supply Report 2011 confirms there’s a projected housing shortfall of 215,000 dwellings nationally.

“The report identifies major gaps between the demand for homes and the available supply with the disparity being particularly pronounced in New South Wales and Queensland,” she says.

“This is the result of a significant number of barriers impeding the housing market. These include record levels of development taxes and charges, inefficient planning systems and the failure of governments to deliver linking hard and soft infrastructure to new communities.

“The gap between supply and demand is projected to rise to 640,000 homes over the next 20 years. If we want to ensure this isn’t the future of housing in Australia, the tipping point for action is now. “

The RDC suggests those on low to moderate incomes be given more support and the planning system should be reformed.

However, property analyst Michael Matusik says those who wrote the report have a “vested interest”.

He told Property Observer there’d be no undersupply unless migration picks up.

“Australia’s population growth has slowed by close to 150,000 in just two years, with a 100,000 drop in the actual growth rate over the last 12 months. As a result, the underlying demand for new housing has dropped from 180,000 starts per annum to around 125,000. While dwelling starts are declining, we’re now building too much stock,” he told Property Observer.

“Unless new housing starts decline in earnest or population growth accelerates, Victoria, South Australia, Tasmania and the Northern Territory face an oversupply. Perth and Canberra are better positioned, with Queensland currently at equilibrium and New South Wales undersupplied.”

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Foreign spending in Queensland improves

Posted on Wednesday, December 21 2011 at 4:05 PM

Queensland is set to offer strong property investment opportunities over 2012, according to a research report recently released by Colliers International.

“Stable government, rule of law and transparent accounting practices, as well as an enviable quality of life for residents have continued to underwrite a positive investment track record for the Gold Coast, Brisbane and Queensland generally,” said Colliers International researcher Lynda Campbell.

Easing interest rates are likely to be a turbo charger for foreign investment in Queensland in 2012, added Campbell. “This means that the upside potential for the Australian dollar appreciation against other currencies may be constrained so that Australian property assets should not be impacted by exchange rate considerations as much as they have been during the strong appreciation against the US dollar during 2010 and 2011.”

China still dominates foreign spending in Queensland, with the Gold Coast the prime recipient, Campbell said.

Despite foreign spending declining in Queensland since it peaked in the 2007/08 financial year with a figure of $620.8 million across 1495 transactions, the 2010/11 financial year saw spending ease back a little on the previous year, recording $334.2 million over 733 individual transactions.

Of this total spend in Queensland, the Gold Coast was the number one choice for foreign buyers, with $165.3 million spent in the region alone across 310 transactions, followed by Brisbane with a foreign spend of $86.2 million across 180 transactions.

In the same period, Chinese buyers represented one-third of all foreign buyers in Queensland for the second consecutive year.

“Property investment in Queensland should also be encouraged by the substantial investment ($50 billion) in the state’s mining and resources sector in 2012. This is expected to have significant economic flow-on benefits throughout the state, generate strong employment growth and create demand for multiple land uses including residential housing,” said Campbell.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/OFkmACHorEY/foreign-spending-in-queensland-improves

Predicting interest rates

Posted on Monday, December 19 2011 at 5:22 PM

Most investors always have some sort of New Year’s resolution. Buy another property, pay down mortgages or do more research in one area. This Christmas people are confused. No one knows exactly how bad the European crisis will get and for investors, that means no one knows what will happen to interest rates in 2012.

Housing Industry Association economist Harley Dale says it’s the most uncertain Christmas the world has experienced for “years and years” and those hoping for some extra cash this Christmas might be thinking that right now is a good time to lock in their interest rates.

Les Harris of Mortgage123 says many locked-in rates are sitting below the six per cent mark.

“A lot of investors are happy to lock in because they know what their commitments are, they know the rent and what they have to come up with each week.”

However, Hale predicts rates will fall by at least 50 basis points anyway, so you might be better off staying variable for now.

“Rates could fall by 50 points, they could fall by 300. It’s an absolute lottery,” he says.

“If there was a GFC (global financial crisis) mark two, the Reserve Bank would have to cut rates by more than what they did in the GFC because the banks won’t pass it all on. That would mean the cash rate falling by more than 300 points. I stress that’s not our core view though, you would need a Lehman Brothers equivalent collapse for that.”

Before you panic, Hale points out “some kind of intervention” from the European Central Bank is almost inevitable and so a European meltdown most probably won’t occur.

In fact, things could turn around for the better and then growing inflation pressure in Australia would actually see interest rates increase.

“If people are after a bit of peace of mind and they value stability, then fixing at least part of a loan is a good option to consider, given the heightened uncertainty. It comes down to peace of mind. Do people feel comfortable taking a punt on that happening?” Hale asks.

“But if you look at what’s going on, you would have to say that rates have got to fall further, so there’s probably more savings to be made with a variable loan.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/C9Mg559oomI/predicting-interest-rates

Small developers be wary when impacting vegetation

Posted on Thursday, December 15 2011 at 12:50 PM

As urban development increasingly encroaches on rural areas, and as property investors are increasingly dabbling in small developments, it’s important to become aware of the upfront costs that could arise if vegetation is sacrificed for new construction, according to Herron Todd White’s rural director Tim Lane.

While the legislation has been floating around since the ’90s and was most recently set in stone under the Vegetation Management Act 1999, it’s only now hitting mum and dad developers as the urban sprawl edges closer to rural areas and as many investors try to cash in on small development opportunities near the mining activity typically rurally zoned, Lane said.

First-time developers are the ones most likely to be faced with the unexpected vegetation offset costs, rather than the big corporate developers with swags of expert legal advice and project managers to oversee the due diligence process, he said.

Lane said rather than waiting for the environmental impact statement to be returned with offset conditions subject to the development approval and a hefty upfront cost to pay prior to proceeding, small developers should seek expert legal advice to determine if this could be an issue.

Vegetation offsets are triggered when a development impacts a specific type of vegetation, depending on the region. In Central Queensland the common vegetation types are bluegrass and brigalow woodland.

A developer can offset this impact by paying an upfront and ongoing fee to a property owner in the same region to protect and manage that identical vegetation initially impacted by the development, Lane said.

“The vegetation management agreement (VMA) generally continues for up to 25 years; it could be a significant sum depending on the impact and the individual circumstances,” he said.

The vegetation offset is also recorded on the title of the property owner who agrees to manage the vegetation.

The offset could also be triggered if a lot is subdivided and vegetation is removed only to set the new boundaries, even if the purpose is to just change the title to gift the land to family members, he said. “The impact can be up to five times of that specific area requiring vegetation clearing.

“For example, one large hectare might require five hectares of vegetation protection on another landholder’s property,” said Lane.

The idea of the VMA is to eventually return the region’s vegetation back to normal growth levels.

In Lane’s time identifying potential landholders to undertake the VMA and negotiating the agreement on behalf of the developer, he’s seen some good reasons why the developer’s due diligence of potential offsets is crucial in this process.

He remembers a small developer who bought a block with a development approval and because he didn’t seek legal advice on what the vegetation offset cost highlighted on the development approval meant, “years later that block still remains a cattle paddock”.

Brisbane-based partner Brian Healey of Holding Redlich Lawyers agreed that if a buyer of development land is unaware that the existing approval attached to the land is subject to vegetation offset conditions, the viability of the proposed development may be in jeopardy.

“It’s important that buyers of land with development approvals in place make themselves aware of whether or not the existing development approval requires a vegetation offset, as such conditions will bind buyers when they seek to develop the land under the existing approval,” said Healey.

“Unfortunately for developers, the standard conveyance may not flush out these issues. Buyers will need to undertake a more complete due diligence and review pre-existing development approvals before deciding whether or not to proceed with the purchase.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/p0r8RWUvf30/small-developers-be-wary-when-impacting-vegetation

Holiday rentals push up yields for landlords

Posted on Thursday, December 15 2011 at 2:08 PM

The Christmas holidays are just around the corner and for some landlords, their properties are likely to be in higher demand over the next month or so. While permanent rentals provide more stability, The Stayz Group Accommodation says now is a good time to switch your property from a permanent rental to a holiday-let pad, if you’re thinking about changing.

Business development director Justin Butterworth says the obvious reason is that you can probably get some extra cash if you holiday-let your property.

“Depending on the location of your property, it may be possible to charge your monthly mortgage repayment amount for a one-week stay, in which case you would only need to rent your property for 12 weeks a year to break even,” he says.

This quarter’s results (from 1000 holiday rental property managers surveyed) found that the occupancy rate was 28 per cent between July and September. Respondents were more optimistic about summer and predicted 45 per cent occupancy for the October to December quarter. However, 57 per cent of property managers said they were concerned about the increased cost of living, while 46 per cent noted that overseas holiday destinations are another concern (because they’re seen as more attractive with the higher Aussie dollar).

Interestingly, Queensland holiday-let properties had the highest occupancy rate in the country (38 per cent) despite the recent floods and downturn in tourism.

“With the Christmas holiday season drawing near, we’re seeing an increase in the occupancy rates of the other states, with more people taking holidays as the working and school year comes to a close,” Butterworth says.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/aoe8btCVjl8/holiday-rentals-push-up-yields-for-landlords

$58m sale a sign of confidence in Darwin

Posted on Tuesday, December 13 2011 at 1:47 PM

A recent sale of a Darwin high-rise has set a new record for commercial buildings.

The nine-story Wood Street Jacana House building has been bought for $58,750,000.

First National Commercial principal Jeremy O’Donoghue says the sale is reflective that confidence is picking up again in the Darwin market.

“Obviously there’s a lot of reasons, including the US marine supply base and the US defence being announced,” he says.

“Darwin is seemingly one of the only places that offers a bit of return.”

He adds falling interest rates have also been helping the market.

Chief executive officer of Real Estate Institute of Northern Territory, Quentin Kilian, says the expected $36 billion Inpex announcement (which has the potential to tap into 12.8 trillion cubic feet of gas in the Browse Basin) is also increasing confidence.

“Financially, if Europe collapses, then all across the world will be an impact on financial markets. While I can’t say here we’re isolated, we do have a lot of activity going on that won’t be impacted by it,” Kilian says.

“Inpex says they’ve got the money so the logic to that is that our products here will still continue (to sell). As long as the Asian market has growth rates above seven per cent, it still gives us the comfort that we can continue to buy.”

Quentin believes high-end buyers are also coming back.

“In areas like Larrakeyah, a house there recently had an offer of $1.3 million, but the vendor is holding out for $1.5 million or $1.6 million. People are looking to wait until the market turns around again. Given the fact we’ve seen a doubling of first homebuyers in this flurry of activity, I think it will keep ascending next year. The early part of the year will tell us the activity is continuing or whether it’s just a blip.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/s8lGJzdOGt8/$58m-sale-a-sign-of-confidence-in-darwin

Four big banks slammed for not helping first homebuyers

Posted on Friday, December 09 2011 at 4:15 PM

In the wake of the controversy about the four major banks delaying their passing on of the Reserve Bank’s full interest rate reduction, RateCity has called on the banks to offer First Home Saver Accounts.

The company says only six per cent of first homebuyers are using the government scheme for boosting savings, despite initial projections that the accounts could be helping half a million Australians by 2011.

RateCity chief executive officer Damian Smith says more people would save for their first home if the four banks offered a similar scheme to the government.

“We’re surprised that the take-up remains low,” he says.

“The scheme is actually very attractive if you’re planning to enter the housing market for the first time in the next few years. Something clearly isn’t working and we think more flexibility and wider availability, especially from the big four, is the key.

“For example, assuming you start with a $20,000 sum and deposit $1000 per month for the next four years at a base rate of 4.8 per cent, taking into account interest earned and tax saved, a first homebuyer could potentially have the final balance of just over $81,000. By contrast, the best online savings account available at the moment would leave you with a balance of $77,000 after that time – so you’d be over $4000 better off with the first home savers scheme because of the rate boost and the lower tax rate.

“One of the issues is clearly availability – when none of the major four banks offer these accounts, over 80 per cent of Australians won’t see them on display.

“Here’s an opportunity for the big four banks to do something really positive – after a week where they copped very negative headlines. Offering these accounts shouldn’t cost them much at all, as the interest rate boost and tax subsidy are provided by the government. We urge the big four banks to work on getting these products out into the market, to give first homebuyers a great reward for disciplined savings.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/Q3b6SWFrJvs/four-big-banks-slammed-for-not-helping-first-homebuyers

$10,000 building grant buyers must act now

Posted on Thursday, December 08 2011 at 9:53 AM

To access the Queensland Government’s $10,000 Building Boost, new homebuyers need to act now, despite the January 31 deadline, according to the Sunshine Coast building industry.

FKP’s head of Queensland development Gary Kordic said the official $10,000 Building Boost deadline for eligible buyers might be January 31, however paperwork and contract requirements actually need to commence one month prior to final sign off.

“You need to engage builders in December, not January,’’ said Aquatic Homes director Liza Sterlson.

“Most of the Sunshine Coast is in holiday mode until the first week of January and, after that, builders won’t be able to wrap up plans, undertake soil condition reports and other feasibility studies in the time available before January 31.’’

Morcraft Homes director Steve Morcombe said surveyors, engineers, draftsmen, and other necessary professionals would need to be booked before the end of December to meet the January deadline.

He said the current period would also be the most affordable time to buy before the carbon tax adds further cost to building a house.

“You haven’t been able to build cheaper than right now, and the current window of opportunity is only going to last a very short time,’’ said Sterlson.
“The price of land is very low and builders can’t go any cheaper.’’

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/m2XJaJ9RwlQ/$10000-building-grant-buyers-must-act-now

More relief for investors as RBA drops rates

Posted on Tuesday, December 06 2011 at 3:20 PM

It’s the Christmas present all homeowners were hoping for – the Reserve Bank of Australia (RBA) has lowered the cash rate to 4.25 per cent in its final meeting of the year.

It’s the second drop in two months, potentially making your investment property that little bit easier to hold. For those who negative gear, it could mean repayments are now about $50 less per month. For those into positive gearing, your pay packet each week is likely to start looking even better.

RBA Governor Glenn Stevens says the reasons behind the drop include the fact that growth in the global economy has slowed and Europe’s financial problems continue to deteriorate.

“China’s growth has been slowing,” Stevens says.

“Trade in Asia is now, however, seeing some effects of a significant slowing in the economic activity in Europe. Financial markets have experienced considerable turbulence and financing conditions have become much more difficult.”

Domain property expert Carolyn Boyd says the reduction is good news for people paying off a mortgage, provided that banks pass on the cut.
“This will put an extra $60 in the pockets of borrowers each month,” she says.

“It’s a smart idea to keep your repayments at the same amount as you were paying before this cut. That way, you can pay your mortgage off sooner but have no less money in your pocket than you did last month. There’s plenty to gain here with no extra pain.”

Mortgage Choice spokesperson Belinda Williamson says the decision might entice some buyers who’ve had a ‘wait and see’ approach, while managing director of tax depreciation company DEPPRO, Paul Bennion, adds the rate cuts could also see rental yields improve for investors.

“In most capital cities throughout Australia, rental yields for apartments have increased to above five per cent over the past 12 months,” he says.
“Rising rental yields combined with falling interest rates and very competitive property prices are a financial trifecta which will result in renewed activity by property investors during 2012.”

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/Di4GWFYv334/more-relief-for-investors-as-rba-drops-rates