Sunday, December 23, 2012

Article of interest - Courtesy of LJ Gilland Real Estate Pty Ltd

Why you should get busy investing in residential property in 2013: Terry Ryder

By Terry Ryder
Thursday, 20 December 2012

The biggest twits in real estate are the people waiting for the trough. 

Many tell me they’re not going to act until “the market bottoms”. I ask how they think they’ll be able to identify the bottom when it arrives. They don’t have an answer. 

Primarily, I think, they’re waiting to read about it in a newspaper. 

Here’s the problem. There’s nobody writing for newspapers with sufficient expertise to know a trough from a peak. 

Here’s another. By the time journalists start writing about the market bottoming, after receiving a press release from an attention-seeker, it will be too late. It will have occurred six months earlier. 

And here’s the biggest problem. While people have been scratching their bottom waiting to pick the bottom, the bottom has already happened. In many key markets, it’s already part of history. 

It may not feel so for some people, but 2012 has been a much better year in real estate than last year. Darwin and Perth have had huge rental increases and prices have started to follow. The bottom has long since passed in those two cities. 

The latest figures for Sydney and Brisbane also indicate the declines of 2011 and early 2012 have been arrested, and those markets are also moving forward. 

Around Australia, many regional markets have left their troughs in the distant past and have had strong growth years in 2012. There are dozens where prices grew 5% or more in the past 12 months. 

The trough-seekers have been piling into markets like Gladstone this year, having missed the trough which happened two to three years ago. 

It doesn’t get any better than this for property buyers. All the indicators – including rising sales activity, increased lending levels, improved clearance rates, six interest rate reductions and seven consecutive quarters of improved affordability – declare that now is the moment. 

So, following an improved 2012, next year will be better again. I’m expecting growth in all the capital cities except Melbourne (Hobart I’m not sure about – weak economic fundamentals may be counter-balanced by the advancement of key construction projects and state government spending packages). 

The regions will again provide the most upside for property investors. Many regional towns and cities have been solid in 2012 and some have been very strong.  There will be more growth markets in 2013 than this year. 

It’s important to pick the right ones. The key factors to look for include diverse economies, proactive local councils, spending on infrastructure and expansion of jobs-creating businesses. 

The best capital growth will be found in those that experienced significant rental growth in 2012, but not the same level of price growth – yet. 

Most likely these will be regional areas touched by the resources sector but not dependent on it. Toowoomba in Queensland and Tamworth in NSW provide a couple of pertinent examples. These places have been important, prosperous regional centre’s long-term but have an additional powerful element to their economies with the emergence of resources activity in their area of influence. 

These are safe places to invest – you’re getting the benefit of the mining sector without the risk of buying in a mining town. 

So here’s the best tip for getting the best out of 2013: get busy now. Don’t be a herd animal. Most investors follow the pack and end up like pigs feeding at the trough, in a shambolic frenzy – except, it’s not a trough any more. By the top everyone’s gorging themselves, it’s well on the way to the peak – or has already passed it.”unquote

Kindest Regards

                             

Removing the hassle from Sales and Rentals.                               

L J Gilland Real Estate PTY LTD

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Why you should get busy investing in residential property in 2013: Terry Ryder

Why you should get busy investing in residential property in 2013: Terry Ryder

Big 75-basis-point RBA cash rate cut needed in February to override consumer sentiment: John Edwards

Big 75-basis-point RBA cash rate cut needed in February to override consumer sentiment: John Edwards

Thursday, December 20, 2012

5 Tips for finding a place to rent at this time of year - L J GILLAND REAL ESTATE PTY LTD

Top 5 tips for finding a place to rent at this time of year

With the festive season now upon us many of us are planning to move house due to changing jobs, moving interstate, and with January historically one of the busiest times for people looking for a rental it's important to make sure you are ready and prepared for securing the place you want. So here are our top 5 tips to be best prepared:

Start early, do a search in the area you would like to move to now so you understand what you can afford with your budget.

Set up your email alerts now. Property Manager's will be busy loading up newly available rentals in early January so don't miss out on your perfect rental.

Remember to check surrounding suburbs when you search, as some suburbs have very low vacancy rates, so next door suburbs may be an option.

Make sure you have all your documentation ready, eg references, proof of employment and income.

If you don't already have a 1Form tenant application form set up, go to 1Form.com.au now, most agents like LJ Gilland Real Estate accept these for your application.

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Sunday, December 16, 2012

Perth CBD moves up to 20th most expensive market to rent office space in the world: CBRE

Perth CBD moves up to 20th most expensive market to rent office space in the world: CBRE

Kensington Lane precinct within Central Park Broadway to be Singaporean hotelier's first Australian hotel

Kensington Lane precinct within Central Park Broadway to be Singaporean hotelier's first Australian hotel

Article of interest by RP Data Research Blog - Why does Sydney have the most expensive housing market? - Courtesy of LJ Gilland Real Estate Pty Ltd

http://blog.rpdata.com)">RP Data Research Blog - Why does Sydney have the most expensive housing market?


Why does Sydney have the most expensive housing market?

Posted: 29 Nov 2012 03:32 PM PST

Sometimes when people try to answer this question, they point out that more expensive property prices are offset by higher wages in Sydney; and this argument is true.  Sydney wages are higher, but not to the same extent as property prices compared with other cities.  Based on a data released by the Australian Bureau of Statistics this week, the gap between Sydney and Melbourne wages is only around $5,000 (9.2%) per annum, Brisbane is fairly similar, with a wages being $5,100 (9.4%) lower per annum.  Perth wages are roughly on par with Sydney’s, showing a $490 (0.9%) difference.  The largest gap between Sydney wages and the other capital cities is apparent in Hobart where the difference is a more significant $10,500 (19.3%) per annum.

The data released by the ABS is unfortunately quite lagging, being current to June 2010.  To compare apples with apples, we have provided median dwelling prices from June 2010 to highlight what might be described as some inequity of dwelling prices when we compare Sydney incomes with dwelling prices.

Looking at the differences between average wages and median dwelling prices, the only capital city where the comparison of incomes and dwelling prices is roughly equitable is in Melbourne.   Melbourne dwelling prices and incomes are roughly 9% lower than Sydney’s.  A more up to date look at current dwelling prices shows that in October this year, Melbourne’s median dwelling price is now 11% lower than Sydney’s.

Looking at Australia’s third largest city, Brisbane, shows that incomes are 9% lower than Sydney’s, but dwelling prices are 15% lower.  Since June 2010 the gap between Brisbane and Sydney dwelling prices has widened to nearly 25%.

Adelaide dwelling prices are 25% lower than Sydney’s while wages are tracking 17% lower.  Based on median prices to October 2012, the gap between Sydney dwelling prices and Adelaide’s has widened to 30%.

Average wages/salary’s across Perth are only 1% lower than Sydney’s but median dwelling prices are 7.2% lower.  The October median dwelling price data now shows Perth dwellings to be 13% more affordable than Sydney’s.

The gap between Sydney and Hobart wages and prices is the largest of any city, with Hobart wages averaging 19% lower than Sydney’s, however, dwelling prices were getting close to being 40% lower than Sydney’s back in June 2010.   More recent October data shows the median dwelling price in Hobart to be 43% lower than Sydney’s.

The average wage in Darwin is only 2% lower than Sydney’s, however, median dwelling prices are 10.5% lower.  Darwin is one of the only cities were the gap between median dwelling prices has narrowed since 2010 (a reflection of the recently strong growth conditions in Darwin), with the Darwin median dwelling price recorded at 8.3% lower than Sydney’s median dwelling price in October 2012.

Finally, in Canberra, the average wage/salary is 6% higher than Sydney’s, making Canberra Australia’s highest paid capital city.   While incomes are higher than Sydney’s, dwelling prices were 13% lower than Sydney’s back in June 2010.  Based on the October median price data, Canberra dwellings are now 7.5% more affordable than Sydney’s.

The question still remains, though, why are Sydney prices so much more expensive than other capital cities.  Like any pricing related question, the answer often comes back to the relationship between demand and supply.  From a demand perspective, Sydney has the largest population of all the capital cities and the second highest level of population growth (based on raw numbers rather than percentage change).  New South Wales also attracts the largest number of overseas migrants.

From a supply perspective, the inefficiencies surrounding land release and development across New South Wales has resulted in an insufficient level of new dwelling construction, creating a housing market which is undersupplied.  The undersupply of housing tends to place some upwards pressure on prices.

Other reasons, apart from the higher incomes argument, likely come down to a handful of other factors.

§ Geographically, development and urban expansion in Sydney is curtailed by the large tracts of national park and the large number of waterways located across the Sydney metro region

§ Sydney is one of Australia’s most mature housing markets.  The long established inner city and coastal areas tend to push the overall median prices up.  In fact, the outer western and northern fringes of the Sydney metro region provide some of the most affordable capital city housing markets across the major capitals.

§ Another factor is the high cost of vacant land across Sydney, which is much higher than any other capital city.

Kindest Regards

Cassie Jonassen

                             

Removing the hassle from Sales and Rentals.                               

L J Gilland Real Estate PTY LTD

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How to sell Australian Property to the savvy Chinese Investor Article & Negative Gearing by RP Data Article for friends & Clients, LJ Gilland Real Estate Pty Ltd

LJ Gilland Real Estate Pty Ltd (http://www.ljgrealestate.com.au) thought this article would be of interest to you as follows:-

How to sell Australian property to the savvy Chinese investor:

By A.Taylor
Tuesday, 11 December 2012

More Chinese left for an international holiday during China's Golden Week holiday in October than ever before in history, according to official data. Many of them came to Australia, hunting for property.

Our Hong Kong call center worked around the clock taking queries from Chinese real estate buyers in locations around the world, including the GoldCoast.

Buyers viewed 66% more property on our international property portal Juwai.com as Golden Week approached. Then, once Golden Week started, traveling Chinese buyers switched to their phones and iPads – giving mobile traffic a 99% boost.

Chinese buyers have spent millions on luxury residences in new towers like the Broadbeach Oracle and the Soul and Hilton buildings in Surfers Paradise, according to recent reports.

As I write this, there is a three-bedroom, four-bath residence on the 22ndfloor of The Oracle for sale at $1.8 million. Perhaps it will sell to a Chinese buyer, too.

If so, it might well go during the next peak travel periods of Christmas and Chinese New Year (in February 2013). It is no surprise that Chinese New Year is the busiest travel time of the year, but Christmas?

Yes, Christmas. Santa isn’t just for Westerners any more. Christmas has become a key travel period for high-net-worth Chinese in part because it is the ultimate symbol of the allure of Western culture.

It is during holidays like Christmas and Chinese New Year that many high-net-worth individuals combine overseas holidays with overseas property scouting. And we all hold the purse strings a little less tightly when on vacation.

There has been a significant rise in the number of enquiries about Australia that we receive from potential buyers, with many of our wealthy Chinese customers telling us they plan to take up Australia's new Significant Investor Visa.

Even the Chinese think of Australia as "the lucky country". This new visa exempts the language requirement and is more flexible with residence guidelines, which is lucky indeed.

With so many Chinese investing in Australian property, the question that vendors and agents ask me most often is, "Would my property appeal to Chinese buyers?"

If your property is in a major metropolitan area like Sydney, Melbourne, Brisbane, Adelaide or Perth, it could interest a Chinese buyer. But you don't have to be in a city centre. There is high demand for working farms, as well.

Residential properties with income and projected capital growth near mines and mining areas make a good investment case and therefor attract Chinese buyers. Other types of properties that attract Chinese investors are new developments, which even non-residents can purchase.

Even what the Foreign Investment Review Board calls "second-hand dwellings" are very appealing to Chinese buyers. Second-hand housing is popular with buyers who know Australia already, including those who already have one or more properties here. Second-hand housing is also very popular with the Chinese Australians because it is in Chinese rather than English.

It may be beyond the scope of this article, but there is more demand than ever for large investment opportunities, like those above $50 million. In fact, a journalist contacted me about one such deal as I sat at my desk writing this article.

If your property fits into one of these categories, what should you be doing to reach the Chinese buyer? Here, I'll share my top tip with you.

If you are a vendor, make sure your agent acts on this advice: write your advertising copy and property descriptions with the flavor of destination and lifestyle marketing more than of traditional local property marketing.

Remember, the typical Chinese buyer is part foreign tourist and part savvy investor. Copy like, "Malvern delight – off main road, fully renovated, period charm," does not help sell your listing to the Chinese buyer.

Instead, the copy should focus on Australia as a safe investment, on the lifestyle the property offers, the number of total rooms, transportation links, the quality of schools, suburb highlights, the security of investment and local property value trends.

As Mr. Mortlock has pointed out the right words can help sell your property faster and for a higher price.

When marketing to the Chinese buyer, be sure to choose your words carefully.

Andrew  is the founder and CEO of sales and marketing of a Chinese real estate portal for property in Australia and around the world.

Negative gearing and its impact on the housing market

by Cameron Kusher on December 13, 2012 

In its most simplistic form, negative gearing for investment housing allows investors to deduct their losses against their personal taxable income.  These losses may occur when the investor incurs costs such as interest on a home loan as well as maintenance and other small expenses on an investment property. However, it is important to note that negative gearing is not unique to the property asset class; it also applies to businesses and shares in Australia.

The most important thing to realise about asset negative gearing is that it is fundamentally off-setting a loss.  Although you can claim that loss on your tax return, the investor must carry the cost of that loss throughout the year.  Ultimately, when investing, most purchasers would be hoping that rental rates increase over time and result in the asset moving from a loss-making one to an income producing one.

It is also important to note that between September 1985 and September 1987, negative gearing laws were changed.  The government quarantined negative gearing interest expenses on new transactions.  As a result, investors could only claim interest expenses against rental income, not other income.

Given that negative gearing provides a benefit to investors, we look at the impact these changes had on the investment market over the two-year period.  The first component is the impact the changes had on the rental market.

According to the rental component of CPI data, rents across the capital cities rose by 21.8% over the two years to September 1987 (the period during which negative gearing laws were changed).  The increase in rents was most pronounced over the period inSydney (26.1%) and Perth (31.1%).  As a comparison, over the two years to September 1985, rental costs rose by a lower 17.0%.

The data clearly shows that rental growth was present over this period and it was greater than it was over the two year period directly preceding it (The above chart shows the period for which the negative gearing rules were changed and are bolded black).  Here you can see that rental growth was well above average, particularly recent averages, but it was not unprecedented with rents growing by a greater amount on an annual basis in late 1982 and early 1983.

Another important determining factor is the demand from investors over this period.  Unfortunately the Australian Bureau of Statistics does not provide information on the number of loans to investors; rather it provides the total value.  The total value of investment finance commitments in September 1987 was 41.5% higher than in September 1985.  These figures seem to suggest that at that time there was no weakness in demand for investment housing however, a clearer outcome would be apparent based on the number of loans rather than the value.

The reason why negative gearing was reinstated in September 1987 was that it was proclaimed that rents rose sharply on the back of a fall in housing market investment.  However, it doesn’t look as if investment in the housing market dried up throughout this period. Rents clearly did rise quite sharply throughout as demonstrated.

Many in favour of removing negative gearing from property say that it should occur due to the fact that housing is an unproductive asset class.

My argument is that given that housing provides shelter, if investors don’t purchase these assets, it would then be the responsibility of the Government to provide this shelter.  Ultimately, that would mean that anyone that pays taxes would be funding housing for those who can’t afford it themselves.

One of the arguments against negative gearing is that the tax deductions afforded to investors in the housing market reduces government revenue.  However, if investors did not provide shelter to those that can’t provide it to themselves, government revenue would already be reduced due to the fact that this responsibility would fall on the Government.

If we look at the recent Australian Bureau of Statistics (ABS) dwelling approvals data, it is interesting to see just how much of the new housing supply is created by the private sector as opposed to the public (government) sector.  According to the ABS dwelling approvals series which began in July 1983, between July 1983 and October 2012, 4,355,266 dwelling approvals have been given to the private sector compared to just 228,843 to the public sector.  Over the last 29 years (give or take a few months), public housing approvals have accounted for just 5.0% of all dwelling approvals.  This is less than 8,000 approvals by the public sector each year!

Over the 12 months to October 2012, 145,515 dwellings approvals were granted to the private sector (98.6%) compared to just 2,065 to the public sector (1.4%).

The most recent Census data shows us that of those homes occupied, 29.6% are rented (investment properties).  Based on this data, if we assume that without the private sector building homes for investment purposes, the public sector would have to account for 29.6% of all dwelling approvals to cover those in rental accommodation.  Over the past 12 months this would have equated to 43,684 dwelling approvals.  If we also consider that the median home price across Australia as at October 2012 was $386,000, and if the Government had to buy the land and build 43,684 homes, this would cost the Government of the day $16,861,900,480 based on the number of approvals and the median home price.

Of course this is a rather simplistic calculation and if the Government were to build homes on their own land it would cost them less as that figure includes land and building.  Also, it is unlikely that private investment in residential housing would cease without negative gearing but I would expect that it would fall.

The most recent taxation statistics data shows that over the 2009-10 financial year, $4.81 billion in net rental deductions were claimed by taxpayers.

In order for the Government to break even to allowable deductibles from tax returns they would have to be building those 43,684 homes at a cost of $110,100.  Based on the current median home price across the country at $386,000, they would have only been able to build 12,461 homes over the past 12 months or 8.4% of the total building approvals over the past year.  It should be noted that not all new builds are for investment purposes but if we assume that 29.6% are there is a significant short-fall.

When you look at these figures it is obvious why negative gearing is unlikely to be removed.  Whether the removal of negative gearing impacted investment or not, and whether it lead to an increase in rents is a secondary concern relative to how much it would cost the Government to supply public housing for the almost 30% of Australians that don’t own their own home.

These figures are not to suggest that if in the case negative gearing was removed, there would be no investors in the market however, the appeal of negative gearing is part of what attracts many investors to the market.  Without negative gearing it is likely that there would be fewer investors and therefore less private developers delivering new homes coupled with a greater need for the public sector to provide housing.  The flow on effect may also be that there would likely be lower demand for housing credit.  Although some proclaim removing negative gearing would cause house prices to fall, I would expect that new housing supply would be even tighter as developer’s struggle to achieve pre-sales for new development, this may in-turn force prices higher than they otherwise would be.

By looking into the figures in more detail, it makes good economic sense for the government to allow housing investors to negatively gear their properties so that the significantly greater cost of providing social housing is not borne by the Government and ultimately the Australian taxpayer.

 

Please keep a look out for our website translated to Chinese.

 

http://sellingguide.realestate.com.au/video/why-list-online  

 

 

 

 

Also, here is the link to the Selling Guide website specifically set up for our sellers.

http://sellingguide.realestate.com.au/

 

 

Best regards,

Linda & Carlos Debello

http://www.ljgrealestate.com.au

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http://au.linkedin.com/in/lindajanedebello

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This will be the week - The Experts | Switzer

This will be the week - The Experts | Switzer

Friday, December 14, 2012

Linda & Carlos Debello thinks you'll find this interesting

Subject: Linda & Carlos Debello thinks you'll find this interesting

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