5 common mistakes that property investors should avoid

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We are currently experiencing some favourable property investing conditions, with interest rate cuts, motivated vendors and discounted properties helping to make this a buyer’s market.

But don’t rush in without being aware of these common mistakes that can hamper your chances of success.

1) Not having a property investing strategy
A lack of a property investing strategy or buying rules is probably the biggest mistake that new investors make.

Many investors will take the plunge and buy a property, and then try and figure out what their strategy is afterwards.  This is doing things in reverse.  To give yourself the best possible chance of success, you need to pick a strategy and decide what your long-term goals are, then find a property or properties to match.

There are many different types of strategies that can be employed by real estate investors and their relevance always depends on the investor’s individual circumstances, income and time of life.  They include:

  • The Renovation Strategy – This is a strategy used by real estate investors who buy properties, add value through renovations, and on sell them quickly.
  • Capital Growth Strategy – Investors who buy properties in areas with high rates of projected capital growth to provide equity in the future – e.g as a retirement plan.
  • High Cash Flow Strategy – This is a strategy often used by investors who want to use their income from real estate investments to fund their lifestyles.

2) Lack of market research
Too many investors dive in without doing enough research on the suburb that the target property resides in.  Here are some of the things you need to consider;

  • Suburb / postcode performance trends – are prices going up or down where you intend to buy, what is the make up of mortgage holders vs renters?
  • How long properties are taking to sell in your suburb – so you can get a idea of the level of demand
  • The median price for similar properties in the area - so you can tell (broadly speaking) whether your target property is priced competitively
  • Study the area on the council website – so you can ascertain if there are planned developments / infrastructure improvements etc locally which can increase prices in the future

3) Paying too much
Probably the biggest reason why investors don’t make money is also the most obvious, paying too much for the property.

Often the cause for this is relying on third party advice, and it’s easy to see why this may happen when the bank, valuer, vendor etc will all have a different opinion on what a property is worth.

In a market like the one we are currently experiencing (motivated vendors and discounted properties a plenty) there is no real excuse for the savvy investors amongst us not to pick up properties at a discount and get that instant equity that is every investors best friend.  So how can you do this?

  • Make up your own mind on what the property is worth, and do it using the very latest data.
  • As a minimum, find out the sales history of the property, the on-the-market history and what comparable properties have sold for recently.

The more information you can get hold of using the latest, reliable data, the better informed you are going to be when making an offer.

4) Going it alone
It is the common mistake of first-time real estate investor to take a DIY approach.

Consider the benefits of having a team of expert professionals in place before making serious decisions about properties to add to your investment portfolio.  If you can, get this team together to be called upon when you need them;

  • Contractors such as plumbers, painters, cleaners, pest controllers
  • Solicitor
  • Valuer
  • Property manager
  • Financier / mortgage broker
  • Accountant
  • Building / pest inspector
  • Real estate agent

Forge long-standing relationships with people you trust very early on in the piece and seek advice before you start making conditional offers on properties.

Choosing the right experts will reduce your investment risk right from the start, and no doubt save you money and mistakes in the long run.

5) Missing out on opportunities because others have got there first
Most investors can tell you a story of an amazing deal that they just missed out on, the one that got away.

Hardly surprising when the traditional way to find property investments has been scouring classifieds or trawling through property listings websites, whilst there are over 1 million other property investors out there in the market.

Well, times and technology have moved on and there is no longer any reason for investors to make these common mistakes.

How Real Estate Investor can help!

Real Estate Investor develops and provides revolutionary real estate software and tools for property investors – which can help you avoid the common pitfalls that dent many investors’ chances of success.

The forthcoming exclusive webinar demonstrations and Fast-track to Property Profits Live Workshops will show you:

  • How our search engine can find just the properties that match your investing strategy, from the hundreds of thousands that are currently on the market, helping you beat the rest of the market to the best deals
  • How you can quickly and easily get information about a suburb’s performance to complete your due diligence
  • How you can estimate the value of unlimited properties online using the platform the banks, agents and valuers use
  • The simple way to find discounted and positive cash flow properties
  • How to manage and optimise your portfolio to maximise your profits

To register for a free, Real Estate Investor, no-obligation webinar demonstration, please click here.

Or you can attend a free, Fast-track to Property Profits Live Workshop, by clicking here.

Attendees to both will receive a free ‘Top 200 Highest Yielding Suburbs in Australia” Report valued at $199.

Good luck with your investing!

 

 

 

Are you happy with your Superannuation Fund?

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Dear Friend,

Let me ask you something…..

Are you happy with the performance of you Superannuation Fund?

According to analysis by research company SuperRatings, the average balanced super fund – the type favoured by most  workers – has lost money for the past five years after taking into account inflation.

SuperRatings found the average fund has returned only 2.5 per cent a year since 2006, while the annual inflation has been 2.9 per cent over the same period.

This means that $100,000 invested in an averaged balanced super fund in 2006 would in real terms be worth only about $98,000 today.

The worst part of this is that whilst their superannuation funds are losing money, the fund managers keep charging ongoing management fees and expenses, further eroding the fund’s value….

It’s a bit like adding insult to injury, wouldn’t you agree?

Surely you can do better than that by investing in Land in Victoria which has had proven capital growth of 8% to 10% per year, see table below

More specifically, Bendigo (see article below);has grown at 16%  from Dec 2010 to Dec 2012.

So if you are fed up losing money in your Superfund, and you believe it’s time to take back control, check out the following website

www.LandBanking.com.au

Konrad Bobilak,

CEO – 21st Century Property Direct.

P.S. No wonder this has been Jamie McIntyre’s No #1 Recommended Investment Strategy for 2012.

The suburbs that are bucking the market trend

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Areas such as Torquay and Albert Park are defying the real estate slump. Source: Herald Sun

BATTLER suburbs, new housing estates on Melbourne’s fringe and several seaside towns are defying the property market’s downward trend.

Some areas are reaping big rewards for investors, with median prices rising up to 30 per cent in the past year.

Data collated exclusively for the Herald Sun shows the top 10 areas for achieving peak median price over the past year.

Torquay (30 per cent) tops the list and sea-change competitor Sorrento (20 per cent) is doing well, as are Albert Park (29 per cent) and Box Hill (16 per cent).

Real Estate Institute of Victoria spokesman Robert Larocca said the data indicated buyers who might have held off were now returning to the market.

“Especially in the metropolitan areas, the over-arching theme is affordability. Some houses are going for around half a million dollars now, and these properties are mainly on the city’s outskirts,” he said.

“Looking wider outside of Melbourne, a clearer trend emerges. Outer suburbs showing new growth with new housing estates doing well. And the main factor here is population growth.”

Bureau of Statistics figures show that from 2005 to 2010, Melbourne’s population increased by about 85,000 a year on average.

The rate of population increase has since come down, easing the strain on housing supply. The drop is less pronounced in more affordable areas, which are seeing prices continue to rise.

Mr Larocca said inner-eastern suburbs, like Richmond in particular, were increasingly popular.

“In the soft market, these areas are still standing out,” he said.

“Another point is that regional centres, like Ballarat and Bendigo, are currently at peak values. Also, Geelong has been performing better than Melbourne’s flat market.”

Mr Larocca expects population growth will continue to be a factor in determining the popularity of affordable suburbs, based on National Housing Supply Council figures.

“Generally, the market is likely to continue to struggle, as Victorian projections of housing supply show that the current under-supply of 17,000 homes will get worse over the next five years and won’t be in balance until 2023,” he said.

“That would mean that inner suburbs will continue to see price falls in the short term and then, after five years, we would expect they would begin to recover as more properties become available.”

The suburbs that are defying the plunge:

Torquay (non metro)* $ 685,000

30%
Albert Park* $ 1,712,000

29%
Woodend (non metro) $ 652,000

21%
Derrimut* $ 480,000

20%
Sorrento* $ 915,000

20%
Greenvale* $ 673,250

17%
Bendigo (non metro) $ 320,000

16%
Daylesford (non metro) $ 435,000

16%
Box Hill* $ 990,500

16%
Ocean Grove (non metro) $ 523,750

15%
Corio (non metro)* $ 250,000

14%
Dromana* $ 555,000

12%
Sebastopol (non metro) $ 251,500

10%
Grovedale (non metro)* $ 345,000

8%
City of Greater Bendigo (non metro) $ 294,000

7%
Lilydale $ 490,000

7%
Upwey* $ 483,750

3%
City of Ballarat (non metro) $ 290,000

2%
Narre Warren South* $ 452,500

1%
Mernda* $ 421,000

0%
Hoppers Crossing* $ 340,000

0%
These areas have outperfomed metropolitan Melbourne
Geelong West (non metro)* $ 452,500

24%
Castlemaine (non metro)* $ 400,000

17%
Mount Evelyn $ 413,250

10%
Abbotsford* $ 797,500

9%
Ivanhoe* $ 1,255,500

8%
Box Hill South* $ 825,000

8%
Ringwood North* $ 601,500

7%
Warranwood* $ 660,000

7%
Williamstown $ 905,000

6%
Richmond $ 853,000

5%
Alfredton (non metro) $ 339,750

5%
Seddon* $ 653,500

2%
Eltham $ 645,000

2%
Doncaster East $ 741,944

1%
Caroline Springs $ 445,000

1%
Noble Park North* $ 420,000

0%
Cranbourne North* $ 348,000

0%
Healesville (non metro)* $ 435,000

0%
Mill Park $ 418,250

0%
Glen Waverley $ 762,500

-1%
Balwyn North $ 1,154,500

-1%
Cranbourne West* $ 319,000

-1%
City of Greater Geelong (non metro) $ 380,500

-2%
Endeavour Hills* $ 415,000

-2%
Delacombe (non metro)* $ 309,500

-3%
Seaford $ 418,500

-5%
Wendouree (non metro) $ 235,000

-5%
Melbourne Metro $ 550,000

-5%

Original article from  http://www.heraldsun.com.au/news/more-news/the-burbs-that-buck-the-trend/story-fn7x8me2-1226274180211
February 18, 201212:00AM

Seven positive signs for Australia’s property markets

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Yes, there is some good news out there. It isn’t making the headlines, but it is out there nevertheless.

Here are seven positive points to help you make it through your real estate day.

  1. The vacancy rate is tight. In most capitals and major regional markets it remains under 3% and is much lower in Brisbane, Sydney, Perth, Canberra and central Queensland. Rents growth is starting to accelerate, and we know of numerous examples where more than 30 rental submissions are being received for vacant rental dwellings across Brisbane.
  1. Sales have improved since mid-year, and those vendors who meet the market are selling – and now, often quickly. It is still a buyer’s market – with the high supply of stock for resale – ensuring that you need to realistically price and market your property well in order to make a sale. Investors are starting to take their properties off the market and are renting them out again, as they are attracting good rental yields.
  1. Last year’s interest rate drop is having some impact – with the number of owner-occupier loans up 2% in December. Housing investment loans rose 7.5% in December, after a 2.7% rise in November. First-home buying activity is currently at a two-year high. Generic prices might be still falling, but there are signs that the housing sector is starting to turn the corner. The latest housing finance data provides a degree of encouragement. Home loans have now increased for nine consecutive months, and the investor market is doing the bulk of the heavy lifting. We have been saying for some time that it is the investors who will get the housing market back on its feet.
  1. Hamilton Harbour – one of the first major Queensland apartment projects to face settlement since the GFC – is settling well. No, that isn’t strong enough – it is going great guns! I nearly said gangbusters, but that might be taking it a bit too far. At the time of writing, 89% of the 435 apartments sold since early 2009 have settled, with an overall 95% success rate likely by the end of this month. We originally wrote about Hamilton Harbour in July last year, stating that it should be on the industry’s “must-watch” list; it was a litmus test for the Brisbane market – a beachhead, if you will. Sadly, few seem to be watching, and the media are not writing about it. This is big news for Brisbane-town. Other, lesser projects (if you ask me), also appear to be settling well. The average price of a settled apartment in Hamilton Harbour is $526,000, with just over $200 million worth of property settled so far. Over 220 apartments have been leased in both the towers since late November last year. The average gross rental yield – based on evidence to date and being rented out for 50 weeks per annum – is 5.3% across the investment stock. The one-bedroom and one-bedroom with study units are achieving the higher yields.
  1. The Melbourne Institute-Westpac confidence survey shows that late last year, price pessimists in Brisbane dominated (-10%) versus this month’s positive result of 27% (percentage of those expecting a rise minus percentage expecting a fall) – a 180-degree turn in just three months. The Good Time to Buy a Dwelling Index is up in Queensland and also in Western Australia. Queensland’s pending state and local elections will hopefully lift confidence higher.
  1. While we don’t need to build as many new homes as we once did, outside of Melbourne, Adelaide, Canberra, Cairns and the Gold Coast, the new housing markets aren’t oversupplied. There is a lot of nonsense written about supply – published often by young’uns who can count (well, sometimes just) but have little understanding about how the new housing market actually works. At present, for example, there is a lot of commentary (and press) about a pending oversupply of new apartments across inner Brisbane. Now, whilst there is lots of new mooted apartment development – approved in council – the fact remains that not enough new product is actually being built. Over the last five years for example, 13,000 new dwellings were required to accommodate the population growth, yet – based on the official statistics – just 8,017 new dwellings were approved. Last year, just 1,902 new dwellings were approved, against an annual average demand for 2,650 new housing starts. At present there is a serious short-fall.
  1. To finish, everything cycles, including the property market. The Brisbane market, for mine, is at six o’clock on the property clock or at the bottom of its cycle. Many investors try to pick the bottom of the market.

Yet, the direction in which property values travel is only partially dependent on the broader market conditions. Recent studies show that about 40% of growth (or otherwise) can be explained by trends in the overall market. The all-important 60% comes down to more individual factors such as location, the style of housing, its design and inclusions, and the income/demographics of the area.

However, a 40% swing in your favour shouldn’t be sneezed at, especially after what the Brisbane market has been through of late.

Original article by Michael Matusik from

http://www.smartcompany.com.au/property/048235-seven-positive-signs-for-australia-s-property-markets.htm

Property crash just a myth

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ONCE again, the apocalypse has been averted and the four horsemen have ridden off to create havoc elsewhere. Rather than the much-heralded assault on the Australian residential housing market, as has been predicted for the past five years by an ever-increasing host of international and domestic doomsayers, we are instead witnessing an orderly retreat.

There’s little doubt that Australian property is likely to be subdued for at least the next few years and that values here are likely to decline. As in previous times, the property market appears to be settling in for a prolonged hibernation after a debt-fuelled run-up. But those gleefully predicting a US-style crash in the Australian property market are so far wide of the mark it beggars belief that anyone bothers to listen.

About the only place there has been a US-style property market crash in the past few years is in the US, a catastrophe sparked by reckless lending and a total failure of regulatory oversight that ricocheted around the globe in 2007, sparking round one of the global financial crisis.

Those American-style excesses (loans to borrowers with no ability to repay) were almost universally repelled in this market. As a result, we’ve largely avoided the after-effects. That hasn’t stopped the hyperbole by an ever increasing mob of normally reputable commentators. But the facts are far more sobering.

The official figures released this week by the Australian Bureau of Statistics clearly show a downward trend in the domestic housing market. Overall, we experienced a 4.8 per cent national decline in the 12 months to the end of December. But the manner in which the declines were carved out provides the most interest. Australia may be a nation in the throes of a once-in-a-generation economic transformation, with resources squeezing out traditional industries, but there has been little evidence of that in demand for housing.

Among the biggest surprises was that Brisbane, one of the beneficiaries of the resources boom, led the housing market price declines with a 6.7 per cent drop in the year to the end of December. Adelaide and Melbourne were next. But the biggest surprise was the pullback in Perth residential real estate, shedding a whisker under 5 per cent. Unlikely as it may seem, Sydney was the best performer of all with a decline of just 2.7 per cent over the year.

Australian residential real estate is expensive on just about any measure. And it is clear it has reached a tipping point, for it has outgrown the capacity of Australians to service the debt required to buy a property. Not only that, the stronger dollar has made our property more expensive for foreign investors. But to employ that argument as the exclusive rationale for a domestic property market collapse is naive and ignores basic economic fundamentals of market operations – supply and demand.

Given the tighter lending criteria imposed upon our banks during the boom years up until 2008, the only way that we will experience an American-style property crash here is if there is a serious lift in unemployment, which would spark loan defaults and a flood of distressed property onto the market.

That’s not impossible. But it is highly unlikely given our current historically low unemployment level and our place in the global economy as a resources supplier plugged into the only growth region in the world right now.

For a US-style property collapse to occur here, we would need to see sovereign debt defaults across Europe, the disintegration of the European Union and an international banking crisis that would cripple even China. And if that happens, we’ll have bigger concerns than the price of our homes.

As with any market, there is a delicate balance between supply, demand and price. For those pining for ”the good old days” when we had ”affordable housing”, it is time for a reality check.

Housing was never affordable. All that’s changed in recent decades has been a shifting of the equation surrounding supply, demand and price. In the good old days, the only reason housing was far cheaper – on an average earnings basis – was credit was restricted. Up until financial deregulation in 1983, our banks had to labour under the yoke of federal regulations that prohibited them from offering home loans to customers above 13.5 per cent. Credit was in such short supply, few were offered enough cash to buy a home.

It wasn’t until our banks discovered cheap offshore credit in the mid-1990s, and brought the cash onshore, that we suddenly had ”affordable” home loans. But the cheaper credit simply shifted the price of real estate higher.

It was a windfall for the banks, for the real estate boom resulted in ever larger loans. And those larger loans bloated the earnings of our major banks, a financial perpetual motion machine that now came to an end more than two years ago.

As a nation, it’s left us with a serious, but not insurmountable foreign debt problem. (That’s right, it’s a private, not a government, debt that is the problem.)

It also is the reason global ratings agencies are considering downgrading our banks, particularly given the threat to international finance from Europe. And it goes a long way to explaining why our banks have aggressively switched back to domestic funding, to raising their cash at home. The adjustments are in place. A crash? Don’t bet the house on it.

If you aim at nothing, you will hit it with great accuracy, every single time (How to triumph at New Year’s Resolutions)

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Did you know that according to surveys only 8 percent of people successfully achieve their New Year’s resolutions, which means that 92% fail to keep their promise? The majority of these resolutions revolve around health and fitness, dieting, and quitting smoking, and to a lesser extent creating wealth.

While New Year’s resolutions are well-intentioned, unfortunately most people fail to keep them, and in a very short period of time, they ultimately go back to their old habits. Before they know it, they find themselves in the exact same situation or set of circumstances they were in the year before.

So what is the cause and reason behind this mass failure by people to achieve their goals and change their habits?  And more importantly, what specific actions can be taken to avoid falling into the 92 percentile of people that fail?

Here is my personal step by step guideline to achieving success in property investing in 2012;

1. Choose a ‘realistic goal’.

Irrespective of where you currently are financially, regardless of your risk profile, or how close you are to retirement, whatever your situation, if your goal in 2012 is to secure your first investment property, be clear and specific on what you aim to achieve. That is, asserting generically that you ‘want to buy a property this year’ is perhaps too vague a statement, inevitably leading to hesitation in purchasing arising from overwhelming confusion. Rather, get specific here; specify the exact suburb, number of bedrooms, and rental yield that your property will generate and make sure that the price point of the property is based on a financial pre-approval from a mortgage broker or bank.

2. Create a ‘Game Plan’

Write a detailed business plan, 1 to 2 pages, detailing the action steps that you will need to take to buy your first investment property. This could involve things like catching up with your taxes from the previous years, speaking to a mortgage broker about how much you can borrow, or speaking to an accountant on the best structure you should be using to buy the property. Make sure that you put a deadline on every step that you need to take towards buying your first investment property. In the event that you find yourself passing those deadlines, seek help from your mortgage broker, accountant or a 21st Century Property Direct Consultant.

3. Break it down into smaller goals

Rather than focusing on one big goal, dissect your ultimate goal into smaller chunks. By achieving several smaller goals you will feel that you are moving closer and closer towards achieving your ultimate big goal. This momentum will create a feeling of achievement and satisfaction. For example, such small goals might be getting a pre-approval from a mortgage broker for 90% LVR, then getting legal and accounting advice, then if the only missing ingredient is your ability to come up with that 10 per cent deposit, then you will need to write a list of all the possible ways you can raise it. This could involve things like exploring the possibilities of joint ventures with family or friends, or finding properties that are being sold below market value and trying to settle against the higher valuation, or finding ways to raise money by selling something, working overtime, etc.  Each small step will propel you towards your larger goal.

4. Create a support network of like-minded people and become accountable to them

The key point that I stress here is that your ‘support network’ needs to consist of like-minded individuals, and investors who have achieved your goals. The absolute worst thing you can do is to choose people in your support network who are ‘frenemies’, sceptics, and more importantly, those who have not achieved any results in property (you will find the two go hand in hand). I recommend joining investment clubs, networking with people at property seminars, or getting a referral to other investors through your mortgage broker, accountant or solicitor. Once you have identifed your support network, meet with them regularly, and share openly with them your goals and deadlines.

5. Seek ‘qualifed ‘ professional advice

Behind every self-made property millionaire, you will find a team of experts and professionals that have propelled that person to great heights. Here I am of course referring to one’s accountant, solicitor, banker or mortgage broker, real estate agent or buyer’s advocate, quantity surveyor… you get the idea. The key is not only to find these individuals, but rather the ability to correctly pre-qualify them as suitable professionals to deal with. The main qualifying question that I would be asking my accountant or mortgage broker, is ‘How many investment properties do you personally own?’  If the answer is ‘none’ then I would  politely leave the office and look for another suitable candidate. Fifty per cent of your success in property investing will come down to the ‘quality’ of consultants that you are able to align yourself with.

6. Limit the number of goals you set yourself, and focus on the big picture

Setting a goal is the equivalent of making a promise to yourself. Too often I see novice investors set unrealistic goals like “I want to buy 20 properties this year”, or, “I want to retire on one million dollars per year passive income within 2 years”. These goals are often set by individuals who have never invested before, and within a short period of time, they fail, not only to achieve these goals, but in ever setting new goals again. Now, I am not saying that one should not set ambitious goals, rather, set small progressive goals, and once you reach them, continue to set higher ones. You must learn how to crawl before you sprint.

7. Treat yourself with each milestone, and enjoy the journey

There is a saying that ‘Success is a journey, not a destination’, and I tend to agree with that.  Make sure that you reward yourself every time you reach a milestone goal. A reward is a psychological affirmation of your progress and will create positive associations linked to your achieving goals and your ability to improve your financial situation. Most importantly though, is to enjoy the journey and decide that you will never stop learning about investing and property.

Finally, the best advice that I can give to any property investor in 2012 is to invest money in your knowledge first, before you invest any money into a property. As a wise friend of mine once said, “the market is simply a vehicle that transfers wealth from the uneducated to the educated”. Be one of the ‘educated’, and make the journey worthwhile in the end.

Konrad Bobilak,

CEO – 21st Cetury Property Direct.

Housing market tipped to lift this year after falling demand lifts rental prices in late 2011

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The housing market is tipped to gather steam in 2012, after cautious consumers eschewed buying in favour of renting at the end of last year, pushing rental prices higher across the country.

By Myriam Robin

New data by Australian Property Monitors released today showed a 1.1% quarterly rise in rental asking prices, driven by the underlying shortage of housing in most Australian capitals. The Melbourne market was flat.

On the supply side of the property market, housing listings decreased 1% in December, as sellers removed their listings over the Christmas period.

Andrew Wilson, senior economist at Australian Property Monitors, says falling consumer confidence led to weaker property sales, leading to higher rental prices.

“Increasing competition for properties, particularly from home buyers unable or unwilling to enter the property market has resulted in rising rental prices over the December quarter for both houses and units,” he says.

“After flat results over the previous two quarters, landlords have capitalised on the high competition in the marketplace, and are charging a premium for their properties.”

“Sales markets are aligned with confidence – and we’ve seen a lot of low confidence in terms of buyers.”

The largest increases across the country were in units, as they tend to be cheaper for renters and plentiful in metropolitan hubs.

Canberra experienced the largest growth in rental asking prices, up 6.4%, with Brisbane and Perth also growing at 2.7% and 2.6% respectively.

Meanwhile, SQM Research says housing listings decreased by 1% in December, as sellers removed their listings over the Christmas period.

Despite the December fall, housing stock increased 18% in 2011, SQM Research says. This was a decline in the rate of growth from 2010, where it increased by 45%.

SQM Research managing director Louis Christopher says the fact that listings were rising despite falls in house prices showed many of those selling a property were uncertain the falling prices in the market would improve soon.

“If you were a potential seller, and there was a risk house prices would fall even further, you would sell,” he says.

“Many sellers are realising conditions could get even worse.”

Despite this, both Christopher and Wilson expect confidence will return to the housing market in 2012, which according to Wilson should lead to a fall in rental prices.

“It is expected that as the housing price cycle bottoms out, and confidence returns, we will see increased buyer activity in Sydney, Perth, Brisbane and Canberra through 2012 that will take some pressure off the rental markets in these capitals,” he says.

An exception to the rental increases was Melbourne, which Wilson says remains “Australia’s most tenant-friendly rental markets”.

This is due to the large residential developments happening in the city, a factor Wilson expects to continue.

“I think it will be exacerbated over the next year or so when we have a lot of new units come into the markets, and the boom in inner-city high-rise units,” he says.

“It just increases the stock – the rental and investor stock – and that will cause less competition for rental properties.”

Original article from http://www.smartcompany.com.au/property/20120119-housing-market-tipped-to-lift-this-year-after-falling-demand-lifts-rental-prices-in-late-2011.html on Thursday, 19 January 2012

 

Your house: Is it over-valued?

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Your house: Is it over-valued? By Mark Bouris

As the year gets going we can expect different predictions from various commentators about the prospects of the residential property markets.

Usually, real estate agents claim that there’s a buzz in the auctions and the buyers are back, while economists claim that Australian property is still over-valued.

What is actually happening with residential property?

In the past five years the prices paid for Australian property have looked like a sideways ‘S’ snaking along the graph. According to RP Data-Rismark research released two weeks ago, property peaked in May 2007 when it was growing at 4.0 per cent per year, but by early 2008, property value growth had hit zero and was heading south to -1. and -1.5 per cent, where it stayed in negative territory for a year.

Prices recovered in 2009, and from mid-09 to mid-2010 prices growth was almost back to where it had been in May 07; not quite 4.0 per cent but over 3.5.

PROPERTY values are falling in Sydney as the impact of five interest rate rises in seven months starts to bite – especially on the fringe.

However, since the end of ’09, Australian property has dipped and in the year to November 2011, prices were negative again.

It hasn’t been a happy or predictable time but I believe 2012 will see a comeback from property.

One reason for this is that the RP Data-Rismark release showed a sign of recovery in residential property during November 2011. Capital city sales posted a gain of 0.1 per cent and regional/non-capital city sales rose by 0.3 per cent.

The gains might be small, but they are the first rises in a year and it’s a good sign that property is heading in the right direction.

Secondly, interest rates were cut twice in two months at the end of 2011, bringing the official cash rate to 4.25 per cent. This means that those 90 per cent of Australian home borrowers who use a variable rate mortgage should be paying between 6.5 and 7.5 per cent for their mortgages.

It’s not cheap, as such, but it’s a comfort zone for most borrowers.

Thirdly, property has a market value where the price is set by buyers and sellers. Currently, buyers are in control, either saving their cash, shying from debt, waiting for a cheaper market or making offers lower than the seller wants.

But these situations are dynamic and when the dust settles from the holidays there could be sufficient people wanting to take advantage of two interest rate cuts, to kick start the auctions.

Moreover, property is an asset measured in 10-year cycles and there has not been a decade since the end of World War II where property values have not risen. Modest asset growth will return when you measure it decade by decade – we just won’t see the asset inflation we saw in the 2000s.

I’ve always told people who seek my advice that the worst thing you can do is delay buying property, or stay out of it too long. It will rise in value over a decade, even if it doesn’t rise one year from now.

As long as you don’t over pay for property, it’s a safe, steady investment that you can live in and use to provide security for your family.

Property prices turned upwards in November 2011, so now could be a good time to be in market. Even if you can’t afford to buy where you want to live, you can buy an investment property and continue to rent in the suburb of your choice.

This newspaper recently reported the top performing suburbs for houses under $500,000 which were Pitt town, Warwick Farm, South Granville, Canley Vale, Oxley Park and Hoxton Park, so take a look and see what’s out there. There’s also the opportunity, if you’re handy, to buy a place that needs work, and get into the market in that way.

Some people go shares with a friend, or with a parent, so there’s a lot of different ways to take that first step. The important thing with property: don’t over pay; make sure you can service the loan repayments; and buy on the basics of schools, hospitals, public transport routes, recreation grounds and parks. These are the things that will keep an area’s value for the long term.

There are no guarantees, but if you buy on the basics, don’t overpay and only commit to what you can afford, property is usually a good bet.

Original article by Mark Bouris from The Sunday Telegraph, January 15th 2012