Tuesday, December 31, 2013
Monday, December 30, 2013
Friday, December 27, 2013
Thursday, December 26, 2013
Friday, December 20, 2013
Thursday, December 19, 2013
GULF NEWS BRISBANE COULD BE THE LEFT FIELD OF CHOICE -SET TO BE THE NEXT HOTSPOT!
Searching for the cool property picks of 2014
Brisbane could be a left field choice and there is still value in London areas
- By Paul Preston, Special to Gulf News
- Published: 14:36 December 18, 2013
The year 2013 has been fantastic for most major property markets around the world. The US has seen prices up 12 per cent in the residential sector, with New York back to the peaks of 2007 and with very low inventory levels.
The UK has also seen positive price growth with London being the star performer, with 66 per cent spent on London housing coming from domestic buyers. It is always important that you invest in a market where there is a defined exit strategy and London offers just that with the number of domestic buyers set to increase considerably.
In Asia we have seen Singapore slow down driven by varying factors — the 15 per cent foreign stamp duty to be paid on all properties and a slowdown in population numbers in recent years. In Hong Kong, the top of the market has been slow but the HK$40 million and below has been steady all year with a moderate price growth of around 3 per cent across the residential sector.
Closer to home we have seen Dubai market rally with prices increasing significantly in 2013, a trend which reminds me a lot of 2007.
Best global markets
The question is where are the best global property markets to invest in 2014? Before I give my top picks I want to cover some key fundamentals to pay close attention to when investing.
Firstly, you need to ensure that the jurisdiction allows foreign investors to legally own property in that country. Asian markets such as Mainland China and Vietnam are great examples of strong property markets with strong GDP numbers and strong fundamentals, but do not allow foreign investors to solely own property there.
Although these markets look favourable on paper, if you don’t legally own the property, the chances are you will lose money, not make it. You also need to pay attention to the supply and demand landscape.
You need to invest in locations where you have greater demand outweighing supply levels. If you’re buying as an investment, you need to look for a market with strong tenant demands so that your property gets tenanted quickly and is income generating.
If your property is empty then it will cost you money. Domestic activity is important as this will play an active part in both having the property tenanted but also your exit strategy when it comes to sell on.
Last but not least, you should look to markets where the local banks lend to foreign investors as well as domestic buyers. If you can lend money in the local currency to where the property is, with reasonable LTV levels (around 60 per cent) and the cost of borrowing is relatively low (around 4 per cent) then you have favourable investment conditions.
Two top picks for 2014
Now onto my two top picks for 2014. The first will not be a huge surprise to most, but I still see a lot of value in certain areas of the UK which I feel are undervalued. There are certain areas of London in particular which are set to benefit from government spending and infrastructure projects, which will cut commute times into London considerably.
Locations such as Ealing, West Drayton and Hayes for example will benefit from the London ‘Cross Rail’ development which when completed in 2018 will cut commute time into Prime London, considerably.
Recent reports show that one in three tenants in the UK are set to purchase their first homes in 2014. Higher lending levels and government incentives are fuelling the increase in demand from first-timers.
The markets l believe will be the most active are in the southeast and the London commuter belts, as well as some home counties such as Oxford and Cambridge. The price bracket I see value in is the £250,000–500,000 and will see the highest volume of transactions and appeal to first-timers. Ultra-prime London prices will still increase but yields will soften; the 5 per cent yields that were available in 2013 will strengthen and shorten as prices continue to increase.
Brisbane is a market I really like the look of, more specifically around the Fortitude Valley area where vacancy levels in the residential sector run below 0.8 per cent. Brisbane is a market that has been motionless over the last six years and is now well positioned to benefit from the large corporates moving in the valley.
With low unemployment levels, a young population and with a property market just starting to strengthen, this location of Brisbane has a bright future and is currently undervalued. Local banks will lend up to 80 per cent LTV to foreign investors and with the cost of borrowing a little over 4 per cent, 2014 will be big for Brisbane as Australian-focused investors look for value.
With Sydney and Melbourne having already witnessed significant price growth, Brisbane is set to be the new hotspot.
Wednesday, December 18, 2013
Tuesday, December 17, 2013
Monday, December 16, 2013
Sunday, December 15, 2013
Thursday, December 12, 2013
Wednesday, December 11, 2013
Article by RP Data fyi
The current value growth phase across Australia’s combined capital cities is nowhere near as strong as other growth phases over recent times. Although home values are rising, they are doing so at a much more moderate pace than during previous growth phases.
Home values are higher now than they have been in the past however, a different market characteristic now is that investors represent a much greater portion of the market. This could potentially heighten the risks associated with a downturn in the current growth phase.
Nineteen months ago, the combined capital city housing market reached a low point following a -7.7% fall in home values. Since that time, capital city home values have recorded total value growth 10.3% to November 2013.
In comparison, over the 19 months from the beginning of 2001 home values rose by 31.3%. From the start of 2007, home values were 13.7% higher 19 months later from the beginning of 2009 home values were 19.8% higher 19 months later. So as you can see, home value growth in this phase has been much more moderate, however, home values are also higher.
Interestingly, values were still growing after 19 months in 2001/02 however, values had begun to fall by this point in 2007/08 and 2009/10. In 2007/08 the market was beginning to plunge into the financial crisis and aggressive interest rate cuts were not yet enough to stimulate higher demand and subsequent higher home values.
In 2009/10 low interest rates and the First Home Owners Grant Boost (FHOGB) stimulated the growth in the housing market however, once the stimulus was removed and interest rates started to rise we saw the rate of value growth fall and eventually turn negative.
In the current growth phase we have not as yet seen interest rates rise and there has been no other external stimulus such as the FHOGB, and values are still rising after 19 months.
A feature of the market in this growth phase compared to the previous three growth phases highlighted is that a greater proportion of demand is being made up by investors; of course investors were a part of the market in the previous growth phases however, owner occupiers held greater prominence than they do currently.
So is this market being fuelled purely on investment speculation?
Not quite. Currently, there is a comparatively higher proportion of investment activity in the market when compared to the previous growth phases. Over the 19 months from January 2001, investors accounted for a month-to-month average of 32.2% of the value of total housing finance commitments.
From January 2007 investors accounted for a month-to-month average of 34.8% of all housing finance commitments and from January 2009 they accounted for a month-to-month average of 32.7%. From May 2012 to September 2013 (latest data available) investors have accounted for a month-to-month average of 35.9% of all housing finance commitments.
The level of investor activity throughout the current growth phase is not abnormally high but it is certainly elevated compared to the previous three growth phases analysed. Across this growth phase investment levels are not abnormally high they are escalating.
In September 2013, investment finance commitments made up 37.3% of all housing finance commitments which were the highest proportion since May 2004 (37.5%).
As I see it there are two potential pitfall of the current heightened level of investment in this market growth phase.
Firstly, data suggests that investment activity is highest within New South Wales, Northern Territory and the Australian Capital Territory. Anecdotal evidence suggests that off-shore investment activity is particularly strong in Victoria.
If we assume that the state-wide data is a proxy for the capital city markets, we gain some valuable insight into the characteristics of investors. In Sydney, home values have already risen by 15.9% from their May 2012 low.
In Melbourne home values are now 8.6% higher than their low in May 2012. Darwin values are 15.9% higher than their low in January 2012, while in Canberra, values have increased by just 3.1% from their January 2012 low.
Values are still trending higher in Sydney and Melbourne. In Darwin value growth has moderated while in Canberra values are falling. My point is that if investors are chasing capital growth, in all likelihood and based on timing, they have already missed the best opportunity. If investors are focused on rental return, yields have trended lower across each of these cities over the past year.
Secondly, a potential future weakness for the market is that some investors may not necessarily be ‘committed’ to the asset class. Meaning that if value growth was to slow or start to fall are these investors invested in residential property for the long haul, or will they choose to exit the asset class just as quickly as they have entered?
My opinion is that if they aren’t committed then there is potential risk associated in the future where a significant supply of investment grade units may come to market when investors may be looking to exit poor performing assets.
One final risk of course is a rise in the unemployment rate. Official government forecasts are calling for unemployment rates to peak at 6.25% by the middle of next year. To-date the unemployment rate has been trending higher at a fairly moderate pace and was recorded at 5.7% in October.
If this rate was to rise to 6.25%, it would be the highest unemployment rate since September 2002 (higher than any time during the financial crisis). If we were to see investors look to exit their investment properties such as they did in 2008 in line with an escalation in mortgage arrears, we could see weakening home values much like what occurred in 2008.
Overall there are always risks associated with the housing market, or any market for that fact. We have no doubt that the Australian Prudential Regulation Authority (APRA) are regularly analysing these risks and liaising with the banking community to ensure these potential risks don’t turn into a reality for the market.
2013 The Year that was courtesy of Linda & Carlos Debello
2013: The year of crises which never were
By T Ryder
Thursday, 12 December 2013
Thursday, 12 December 2013
2013 was the year of sensational events that never happened.
We heard about a bubble, but there wasn’t one.
We read that the Australian property market was white hot, but with rare local exceptions it wasn’t so.
There was much discussion about an affordability crisis, when all the statistics showed the opposite.
We were told yet again about the mythical housing shortage crisis, but neither the vacancy figures nor the rental growth data supported the notion. According to the REIA, six of the eight capital cities have vacancy rates ranging from 2.7% to 4.5%.
Some reported that the market had peaked, despite the lack of supporting evidence.
So what really happened in 2013?
It was year in which nothing remarkable happened at all. It was a year “full of sound and fury, signifying nothing”.
Some of our biggest markets sparked to life for the first time in many years. Sydney produced its first year of meaningful growth in a decade, though well short of the runaway boom depicted by an irrational media.
Perth produced its first year of solid price growth since its previous peak in 2007. Melbourne showed some life as well, but annual growth in the median house price was moderate, around 6-7% according to three major research sources. (We ignore the inflated figures published by the REIV).
Elsewhere among the capital cities, there was little to shout about. Darwin started the year as the market leader but its numbers moderated throughout the year. Brisbane showed the first glimmers of a return to price growth, but only 3-4% in annual terms.
Adelaide, Canberra and Hobart were largely non-events. As usual, it depends on whose figures you believe. Using the ABS House Price Indexes as a guide, annual growth was around 1% for all three cities.
All in all, it was a year that at no stage warranted the hysterical headlines it generated. The average result across the state and territory capitals was annual growth around 6% or 7%, with most of that figure generated by just three of the eight cities.
The real star performers were places we never heard about because they were out in the regions. Some regional centres recorded median price growth above 15%, including Port Lincoln in South Australia, Narrabri in New South Wales and Miles in Queensland.
So what did we learn this year?
The greatest lesson is that there is no such entity as “the Australian property market”. There are thousands of local markets, moving in various directions and at different speeds.
We learnt that boom-style growth is more often a curse than a benefit, as developers have an extraordinary ability to destroy those markets with over-supply. Central Queensland was surplus central in 2013, with Gladstone, Mackay and Emerald all experiencing declining markets because of over-building. We have previously seen high-population growth locations like Wyndham City and the Gold Coast go into sharp reverse, weighed down by too many new dwellings.
We learnt that developers don’t really care if major city markets are over-supplied as long as they can flog off their apartments in China. Melbourne is a stark example and inner-city Sydney and the Gold Coast are poised to follow suit. Smart investors will avoid these places.
We also learnt that the worst place to go for balanced and accurate information on real estate is the metropolitan newspaper industry.
So what of 2014?
I expect a solid year, with the price growth more evenly spread than in 2013. Brisbane will rise through the pack to be a market leader in 2014. Sydney and Melbourne will moderate somewhat but still have positive years, while Adelaide will produce its best growth since 2010.
The big struggler will be Canberra. It has an over-supply of dwelling, particularly apartments, and the public service cuts by the new federal government will hurt.
Tuesday, December 10, 2013
Your Valuable Investment Property!
Dear Valued Friends, Associates and Clients,
We at LJ Gilland Real Estate http://www.ljgrealestate.com.au are keeping a close eye regarding the market surrounding and encompassing your valuable investment property e.g
§ Comparable market analysis Sales & Rentals
§ Median
house & unit prices
§ Mortgage
market activity
§ National Market Activities
§ Economic trends and general market updates
REIQ Article - General Market Update for your perusal and information.
Mortgage payments are on the rise according to the ABS. Median monthly mortgage repayments in Australia climbed by 38 and a half per cent in the period between 2006 and 2011 according to data released by the Australian Bureau of Statistics. In a surprise outcome, the fastest growing mortgage costs were in areas outside of major capital cities.
The Sydney suburb of Woollahra has the most expensive median monthly mortgage repayments at $3250, but the fastest increase was recorded in Ashburton in Western Australia, where mortgage repayments increased by a staggering 278.6 per cent. In other news – there’s been a fall in the rental vacancy figures.
Data released by SQM Research shows rental vacancy rates declined in five of the country’s eight capital cities during October 2013 – and there was an unexpected Quinella. The champion was Hobart which saw a 0.3 per cent fall in its vacancies during October this year. Adelaide had the next largest fall recording a 0.2 per cent drop.
Louis Christopher, managing director at SQM Research, says this was the fourth straight month of a national tightening in vacancies. Meanwhile changes to laws in New South Wales could force people to sell against their will. Planned legal changes in the state could force unit owners to sell if the majority of fellow owners in a strata building agree.
The State government’s flagged reforms of strata legislation include a removal of the ‘unanimous agreement’ rule, which requires every single unit owner to agree to sell the building and terminate a strata scheme. Instead, only 75 per cent of owners would need to consent, a move that opponents say would force the remaining quarter to sell.
The Combined Pensioners and Superannuants Association, who believe the move “panders to the development lobby”, warns vulnerable, older residents will be at risk. It might now be a case of watching a delicate waltz unfold between grey power and the New South Wales government.
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