Monday 31 August 2015

TO SOME, RENTING IS A BETTER ALTERNATIVE THAN BUYING A PROPERTY


Whilst it has always been the “Australian Dream” to own a property (even if the bank really owns it) those dreams aren’t on the wish list for every Australian.

The 2011 Census shows 67% of all Australians were owner/occupiers but the number of households who own their home outright has fallen since 1996 from 40.9 per cent to 32.1 per cent. However, the number of households who own their home with a mortgage has increased from 25.5 per cent to 34.9 per cent.

With the lowest mortgage interest rates since the late 1950’s, it could be argued that now, more than ever, was the best time to buy a property and get on the “housing ladder.”

The Queensland's Government “Great State” First Home Owners Grant shows that there has been a surge in the number of first home buyers taking advantage of the $15,000 grant, Queensland Treasury figures show. The number of applications processed in May for the grant, which is given to first home buyers who build a new home, jumped almost 10 per cent compared to the April figure. Many regions experienced double digit percentage increases, particularly the existing home building hotspots.

But of course, this grant is only for first time home buyers and they can only buy brand new homes.

For other home buyers, home loan affordability can be an impediment to purchase, for although mortgage interest rates are low, this very fact creates demand and with demand comes price increase in home prices.

Back in 1982, the Bureau of Statistics revealed that 168,000 or 10% of home buyers spent more than 30% of their gross household income on housing costs. Nearly 30 years later in 2011 these numbers had soared to 640,000, equivalent to 21% of all home buyers.

The trends in housing cost burdens reflect rising real house prices. The history of house prices indicates the recent boom in which real house prices escalate to higher levels than they peaked in the previous boom.

It is therefore not surprising to find that young first time buyers are finding it increasingly difficult to purchase a home. On “a person” basis the rate of home ownership, the prime 25 – 34 year age group has slumped from 56% in 1982 to only 34% in 2011.

The “Australian dream” of home ownership is under threat.

With growing concern over housing affordability plaguing would be first home buyers, the issue of whether to rent or buy is more hotly debated now than it has ever been.

As property prices continue to rise, many young Gen Y’s are concerned that they may have missed their opportunity to get onto the property ladder altogether in the area and location of their choice.

At the same time some commentators insist that Australian housing markets are just too expensive so it makes more financial sense to rent.

For singles and couples without children, the Brisbane Unit Market offers good value and a property of choice.

The Brisbane News reported in 25th March 2015 that Inner-city apartment hunters are in for a bonanza, with a huge supply of new developments set to flood the Brisbane market in 2015.
“But property consultancy Urbis moved to quell the jitters of developers at a business breakfast on Wednesday morning, reassuring agents and investors that demand for inner-city living in the river city has hit record levels.”

“Urbis director Mal Aikman said reports of a glut in the apartment market in 2015 thanks to the release of a wealth of new large scale developments had been wildly exaggerated but admitted supply would easily outstrip demand in the coming year, creating a boon for buyers.”

Some experts are concerned that Brisbane's unit market is approaching an oversupply situation and are even warning against buying new units in the area. "Brisbane is facing a potential oversupply due to the many projects currently under way, so investors are right to be concerned about this and some caution is advised if purchasing in this market," says Linda Phillips, head of research at Propell.

But many professional couples don’t want to live in a Unit – they prefer the leafy suburbs  between 5 and 120 km from the City but prices for such homes near to the CBD are expensive.
A recent report in the “Courier Mail” suggested that the number of suburbs with million dollar homes is set to double as low interest rates drive up demand.

Seven of Queensland’s 10 million-dollar-plus median suburbs were in Brisbane, but the capital has another eight neighbourhoods on the cusp of hitting seven-digit medians.

With demand surging, eight other suburbs across Brisbane could soon join the 10, including semirural Gumdale - which fell just $7000 shy of a million-dollar median value. Inner city Clayfield was just over $13,000 shy of the mark, while Rochedale needed a rise of just $15,000 to the million median.

St Lucia was the only seven-digit median suburb to be among the fastest risers over the first three months this year - coming in second off a 7.4 per cent jump in value. The biggest quarterly riser was inner city East Brisbane where the median value for houses ($750,465) was up 9.6 per cent over three months.

Buyers and sellers also seem to have cottoned on to good neighbours of popular suburbs - with suburbs next to the more expensive Graceville - Corinda and Sherwood - both logging a 5.5 per cent jump in median values in the first three months of this year. Corinda went to $690,164 while Sherwood was now sitting on $813,439.

Real Estate Institute of Queensland chief executive Antonia Mercorella said the industry was seeing a strengthening in the prestige market across the board.

“We’re seeing sales volumes in the premium market improving consistently over the first three months of the year,” she said.

For those couples who can’t afford such suburbs but want to live in them, the only option is to rent. Renting is a viable alternative for many couples.
They do this for a number of reasons:

Home ownership in the lifestyle suburbs they desire is too expensive, so they rent in beachside or inner suburbs where there’s a cafĂ© culture, restaurants, nightlife, entertainment, recreational facilities and easy access to work and instead buy an investment property where they can afford to.

Many professional couples rent in the area of their choice and have one or two investment properties so they have start on the first rung of the property ladder.

Although it is said that paying rent is “dead money” when renting, there are no rates to pay or body corporate fees, or insurance to pay.

It is estimated that it costs 6% of the purchase price in Stamp Fees and legal and mortgage costs and 4% in real estate agent fees and legal fees to sell a property, so a tenant won’t be paying these costs.

The most obvious advantage to renting is flexibility; and tenants can freely relocate from home to home and area to area once your lease expires.

But because of the costs associated with buying and selling property, as a home owner there is less flexibility when it comes to moving house.

One of the big bonuses to renting is that you avoid costly maintenance, repair, rates and insurance bills that go hand in hand with home ownership.

As a tenant, it’s the landlord who is responsible for taking care of such ongoing expenses.

BUT the most obvious disadvantage of renting is being uncertainty as to whether the tenant can remain in the property as long as the tenant wants to and not be asked to leave at the end of the lease or if the property was to be sold.

Tenants have very little say in how long they occupy a rental property.

Essentially the home is never really the tenants.

For instance when renting, the property manager and landlord can come into the property at any time, as long as they provide sufficient notice and have good reason, such as regular inspections which can happen as frequently as every two or three months.

Also tenants cannot make any changes to the property to improve the living space or even put pictures up on the wall without the landlord’s permission.

The other consideration as a tenant is the rising cost of renting. Even though renting may currently be the cheaper option, rents will always continue to rise in line with the increasing values of properties and in some suburbs, there could be little choice of rental properties.

Further, you never stop paying rent, whereas most people will pay off their mortgage within 25 to 30 years.

When you buy a home however, you have a certain sense of stability and you are building equity in the property as property values increase and the amount of mortgage owed is reduced if the owner has chosen a “principal and interest” method of payment.

So whether people buy or rent, there will always be a market for people who wish to buy and those that wish to rent.

There was a 36% increase in the number of private rental properties in Greater Brisbane from 2006 to 2011, so obviously the demand for rental property is not going to reduce.

Sunday 30 August 2015

CLEAR THE DECKS TO SELL YOUR HOME


Your home is a very personal space with all your “things” on display to please you.
But buyers aren’t you and may find your “things” can sometimes be distracting.

To maximise your chances of selling your home, you need to follow these expert tips;-
DE-CLUTTER - but if you can’t, try hiding your “things” in matching baskets or a nest of draws.
RE-PAINT if you can and use the same colour palette with neutral colours.
ADD TEXTURES that are striking and attractive such as a rug or hanging print.
FOCUS on a part of a room which will draw attention in a positive way such a rug or a centrally placed piece of furniture.
DON’T SEPARATE – photos and prints in the same type of frame should be group together.

CAPITAL GROWTH FOR PROPERTY INVESTORS


Although any capital gains in Australia are subject to a Capital Gains Tax, property investors are still finding the advantages of capital growth.

When considering an investment property to buy, property investors look at the rental income potential first, because they need an income from the property to service the interest on the mortgage loan and cover the costs of maintenance, repairs, rates, insurance and the agent’s property management fees. Like any “business’ these costs are known as “Operating Costs” and are tax deductable form the income receive.

If the income from the investment is less than the “operating” costs of the property, then the investment is known as a “Negative Geared Property”, meaning the property investor can offset any tax liabilities from other sources of income by the amount of “loses” made on the property.

In such cases, the investor will look to the capital gain when the property is sold to “repay” the financial losses in the property over the years the property has been owned and history shows the longer a property is owned, the highest the capital growth.

Capital gains are only payable in the Tax Year in which the property was sold and all costs associated with the purchase and the sale of the property (but not the “running cost”) can be deducted from the “profit” made on the property – the Capital Gain.

For example, if a property was purchased for $200,000 and the cost of purchase was $10,000 including Stamp Duty,  mortgage establishment cost, legal fees and searches, and the property sold for $550,000  but the agents fees including marketing and the legal cost were $15,000, the actual capital gain would be $350,000 less $25,000 = $325,000.

Capital Gains Tax is set at 50% of the net capital gain so tax would be assessed on $126,500. The tax rate would be based on the current tax rate paid by the property owner.

With interest rates at the lowest level in Australia since the late 1950’s – over 65 years ago, it is rare that a property is negatively geared as in most cases, the rent received is more than the outgoings, so for investors who have a high tax threshold and pay tax at a high tax rate, the benefits of negative regearing to reduce the tax liability is almost eliminated.

Nowadays, for the investor, a property can be viewed as a totally income producing investment with the income providing a “profit” from the rent received and a capital gain as properties increase in value particularly in parts of Sydney and Melbourne.

The recent volatility in the stock mark has also seen investing in real estate as a good strategy.

However, it is not all good news for investors. Location is still the key factor in selecting an investment property as property investors in the “mining towns” have now discovered to their cost with falling rents and falling property prices. In some locations, rents have dropped from $1,300 per week for a 4 bedroom home to $280 per week (If you can find a tenant) and from a purchase price of $650,000 to a selling price of $320,000 (If you can find a buyer!)

In some new suburbs in the outer suburbs of the metropolitan area, “marketeers” are still active in encouraging interstate investors to buy a brand new property because tenants like new homes and there is the maximum tax relieve available in the depreciation rates of the construction and fittings.

But, attractive as these properties are, there can be a decline in the rents that such “new” properties can achieve after the first year and this will effect the property selling prices if a number of properties come onto the market as investors decide to sell their properties.

Although costing more, many astute investors chose properties within 10 km of a capital city's CBD and achieve a good rental returns and capital growth.

Beware of investor magazines and "blogs" that provide tips on the “Next best investment Suburbs”.  In some cases, the statistics of a “30% capital gain growth” has already occurred and may never achieve such growth again. This is particularly true in the semi-rural areas and regional centres.

The “pointers” to future capital growth haven’t changed over the last 30 years – they are;-

  • Within 20 km of a capital city or main tourist centre.
  • Where there are good transport links.
  • Where Infrastructure has been build or there is a guaranteed commitment to build the infrastructure.
  • Within 5 km of a shopping centre, hospital, airport, and university-educational establishment and good schools with a “brand name’.
  • In the “catchment” areas of sought after schools.

Friday 28 August 2015

BRIGHTEN YOUR HOME



Here are some key tips that can easily brighten your home.

NATURAL LIGHT
Allowing more natural light into your home is the easiest and cheapest way to brighten your home.

USE MIRRORS TO DOUBLE THE AVAILABLE LIGHT
The best and cheapest way to make any room look bigger and brighter.

WHEN CONSIDERING A RE-PAINT
Consider using gloss paint on the doors and window sills and surrounds and natural colures for the walls based on a white flat finish – pale pastel and white help brighten a room.

PAINTINGS AND PRINTS
Art work and prints can brighten a room and need not be expensive.

NEW LIGHTING
Although it can be expensive to install, the correct lighting will brighten any home and LED lighting can highlight large areas and are less expensive to operate.


Tuesday 18 August 2015

RETAILERS GAIN FROM IMMIGRATION




With the company reporting season in full swing, it has been noted that some retailers, particularly electrical stores such as JB Hi Fi have shown better than expected results due to the growth in the Australian population through immigration.

In the past five years, Australia’s population growth has averaged 1.56% a year which is well above the annual average of 1.37% since 1981.


So the growth rate of the Australian population in the past 5 years is 14% higher than the 34 year average.

WHAT TO DEVALUATION OF THE CHINESE CURRENCY COULD MEAN FOR AUSTRALIA




In his article in the 15th/16th August edition of the Weekend Australian Alan Kohler suggests there are two ways in which the unexpected devaluation of the yuan could effect Australia.
First, he says, the devaluation suggests the Chinese economy could be worse than thought and secondly, it could lead to more capital flowing from China into the purchase of Australian real estate.

In the same edition of the Weekend Australian, Sterling Largin, a global investor, suggest that the Chinese may be admitted to the International Monastery Fund (IMF) and their currency may be added to the “Special Drawing Rights” basket of currencies designed as a reserve for IMF members.


He suggests that if the Chinese currency does receive this status, the Australian Dollar will increase in value against the $US.

CHINA AND THE FUTURE OF THE AUSTRALIAN ECONOMY




“Is China the Future of our Economy?” - so asked Terry McCrann in his article in the Sunday Mail Queensland. He believes China is fundamental to our economy and the future growth of the economy. Although he acknowledges the downturn in the demand for Australian resources by China, Terry gives the examples of the increasing number of Chines students enrolling in Australian Universities and Chinese purchasing property in Australia.


He says that by purchasing new properties and those “Off the Plan” the Chinese have added to the economic recovery in residential construction which has a “Flow through” effect over the whole economy. And with the fall in the Australian Dollar this demand from China and Asia could increase depending, of course, on the value of the Chinese currency.

Saturday 15 August 2015

To Rent - Two Storey 3 Bedroom Unit – Jubilee Pocket - Queensland - Whitsundays



$250 PER WEEK
This two storey unit is tucked away at the bottom of a small complex in a quiet residential area of Jubilee Pocket very close to transport, shops & school bus route. Downstairs is an open plan lounge dining with a good sized kitchen. A spiral staircase leads to the bedrooms above. The master bedroom has aircon and a private balcony and there is a balcony across the rear of the property which can be accessed by the further two bedrooms. Owner may consider furnishing the property if required. Pets may be considered on application.

Fore Rent Huge Studio Apt - Heart of Airlie Beach Queensland Whitsundays


This fully furnished & self contained studio apartment is right in the heart of Airlie Beach just a short walk to public transport, clubs, shops & restaurants. Forget small and pokey this studio is really spacious with a separate area for the bed, an internal laundry and good sized open plan lounge, dining and kitchen with split system airconditioning. For the lazy days when you don't want to venture into town, take a short flight of stairs to the beautiful inground pool & spa or enjoy a cool drink at the onsite bar with the spectacular ocean views!

For rent - Backing onto Rain Forest Whitsundays Queensland


Set on a hill backing onto rainforest, this large highset home combines all the benefits of a quiet rural position and fast easy access to Cannonvale, Proserpine or beyond. With 3 double bedrooms, the main with air con and two full sized bathrooms. The huge open plan living area is fully tiled & is airconditioned. The kitchen is well planned and modern. There is a good sized deck on two sides which allow you to enjoy the expansive district views whilst alfresco dining or enjoying that evening glass of wine. Underneath there is plenty of room for three vehicles and/or boats or other toys, with further storage on hardstanding behind and large enclosed laundry which has a full wall of shelves for storage too.
The property is not fenced but the owner would consider a pet on request.