Upgrading is back in fashion

Tweet

With its extensive renovation and heated pool, these designer digs look a hot prospect....

Seller Enthusiasm in property market

Tweet

Take some time to check out this 2 min video that summarises rising seller enthuasiam in Melbourne! Enjoy!

Check it out here

Featured Ideas

Tweet

Country-inspired? Gives me this warm fuzzy feeling, how comforting. soft & warm colours

So homey.. loving the olive green feature wall!

Do you get that sense of tranquility or is it just me??

Something about me and wood.. so Balinese!

Now this is just stunning!!

Amazing how nature and greenery adds extra beauty

For more, check out this link

SYD: Don't believe crazy boom theory

Tweet

 

WHAT'S DRIVING ECONOMY?

• Low interest rates 
• Rising confidence
• A surge in investor activity are the current drivers of the Sydney housing market together with a solid performance by the local economy - is about as close to a boom next year

WHAT'S SLOWING ECONOMY?

• Sydney’s unemployment rate is now rising towards 6 per cent and predicted to continue to rise.
• Wages and profit growth remain subdued in a low inflation economy with a stagnant stockmarket continuing to constrain growth in the prestige market.
• The prospect of sharply falling rental yields will also prove a disincentive for new investors.
• Prices growth in Sydney is likely to peak over the next six months, with continued solid growth dependent on a sustained revival in the economy and unemployment falling to or below 5 per cent. 

"There are a lot of reasons that prices will be kept in check" says Australian Property Monitor’s Andrew Wilson.

To find out more, click here

How to spot a housing bubble??

Tweet

The recent strong growth in the housing market, coupled with record-low interest rates, has raised fears about a real estate price bubble. House prices are at their highest in three years. Mortgage lending is picking up. There has been increased demand from investors!!

Last week, the Reserve Bank hosed down fears of a housing price bubble as "unrealistically alarmist", with its assistant governor Malcolm Edey saying prices were rising in line with incomes over the past decade.

But what constitutes a housing bubble? How do we know if we are approaching one, or already in one? Can a bubble only be identified in hindsight?

Previous housing price bubbles ... housing prices in Ireland prices more than tripled, while in the US, they rose by 70 per cent.

There's no definitive checklist, but here is a list of factors analysts say are central to determining whether a bubble is forming.

1. Property prices

Australia's housing market ... growing in popularity as an investment vehicle

A sharp rise in housing prices is one of the first indicators.

Figures show that the capital city house prices rose 4 per cent in the three months to August, the largest growth since April 2010.

The forecasts for housing price growth is more bullish. 

For Sydney, home prices are projected to soar by 15 to 20 per cent next year, and that's after growth of 9  to 12 per cent this year, data firm SQM Research said last week.

As a comparison, the European Central Bank estimated at between 1995 to 2005, homes prices in Ireland more than tripled while in the US they soared by 70 per cent. The prices then sank by more than 30 per cent when the financial crisis hit. With the benefit of hindsight, such steep price rises can be see as signs of a bubble about to bust.

House prices in Australia are considered to be expensive, experts agree. In a housing bubble, they also have to be seen as unsustainable.

At this stage, analysts say Australia's above-average population growth, an actual excess of demand over supply - and only a gradual lift in construction, coupled with low vacancy rates and rising rents, are legitimate factors feeding the strong rises.

2. Credit growth

Strong credit growth has been cited as a key factor in fuelling a housing bubble that would eventually burst. It can be driven by low interest rates and loose lending standards, which could then lead to mortgage borrowers being over leveraged.

Higher debt = higher leverage = sudden change in the wider economy such as a rise in unemployment could see these mortgage holders struggle to repay their debt = higher risk

Australia's cash rate is at 2.5 per cent in attempt to boost economy by growing the housing market as the economy rebalances away from mining-led growth.- a 60-year-low. 

Credit growth has lifted off its historic lows from earlier this year, but remain very soft relative to previous years. Housing credit growth lifted by 4.7 per cent in the 12 months to August. Part of the reason why credit growth is growing at a slower pace is that about half of households, according to anecdotal evidence, are not reducing their regular mortgage payments as interest rates fallen, the RBA said.

However, this slow growth should be viewed together with Australia's high household debt-to-income ratio, which the RBA has warned about. It is at 147.3 per cent, lower than the record-level of 153 per cent which it reached before the financial crisis, according to data from the central bank.

3. Lending standards

Closely linked to a strong rise in credit growth are banks' lending standards. As we noted earlier, the availability of easy credit to US homebuyers who usually wouldn't be granted loans fuelled a housing boom that was ultimately unsustainable.

Looser lending standards are also expected to spark strong growth in the volume and turnover of property, meaning that more people are buying and selling homes to make a profit. Volume growth remains light in Australia.

Housing turnover has lifted from low levels, the RBA noted in its September board meeting minutes. But they remain relatively low compared to the previous decade.

However, the modest growth in credit poses a difficulty for mortgage lenders, and could entice them to loosen lending standards to draw in more clients. RBA warns to "maintain prudent risk appetite and lending practices, especially in the current low interest rate environment".

4. Speculation

One sector of the housing market that has attracted the attention of the RBA is the growth in the number of investor-owners. The RBA has warned such investors not to expect the same strong growth in house prices that Australia experienced in the 1990s and early 2000s.
The analysts warned that Australian banks have more investment property in New Zealand and the UK - 32 per cent compared to 20 per cent and 12 per cent respectively.

"significant growth in negatively geared investment property over the last 20 years should be of concern"

Australia's large exposure to a very highly leveraged landlord population is a significant systemic risk. ... We do not believe that these implications have been fully considered by the banks, regulators or market participants.

The RBA has also been keeping a close eye on the self-managed superannuation fund (SMSF) sector, which it warned "represents a vehicle for potentially speculative demand for property that did not exist in the past".

The sector has increased its property holdings, after legislative changes allowed super funds including SMSFs to borrow to invest in assets such as property.

Further reading:

• European Central Bank: Asset price bubbles: how they build up and how to prevent them?
• RBA: How should central banks respond to asset-price bubbles? 

High-rise rush threatening city's liveability

Tweet

A high-rise housing ''gold rush'' is eroding Melbourne's edge as a liveable city, with an extra 39,000 apartments planned for the next three years!!

 Uncontrolled housing growth would be a blow to Melbourne's reputation as an attractive city in which to live and work -- More than 22,000 inner-city units were constructed between 2010 and 2012, and another 39,000 have been released for sale by the end of 2015 in towers where construction or off-the-plan marketing has already begun.

The city is heading towards becoming a dormitory rather than a centre for knowledge-intensive industries = UNSUSTAINABLE (research by Monash Uni)

Looking high and low for a good investment

Tweet

DECISIONS DECISIONS DECISIONS!!!

Choosing the right floor in a high-rise apartment is crucial - determines how much you pay and future cash flows. Research is a must but your due diligence is waaaaayy more important when you sign a contract with a developer before it is even built!

• Lower floor - could be easier to get a respectable rate of return

• Higher floor - could get premium returns but risk when there are larger projects and the view from an apartment can be fundamentally the same on the 12th and 30th floors. You might miss out on the cachet of being on the top floor, but you'll pay a lot less on the 12th.

The off-the-plan market relies on the perception you can pay today's prices for an apartment that will be worth more when it is finished - the theory is that the market will have moved up a gear by then.

That can be the case, but there have been situations in which unit owners have lost views because another building has gone up next door. Such an eventuality can pull down values even before you get the keys.

It is vital to talk to the relevant council, not just the developer, before buying off the plan.

Open plan dining area ideas!!

Tweet

So much character without being messy! Magnificent!

Contemporary and modern - almost like a story book

Very elegant.

Very chic!!

Country inspried kitchen - LOVE IT - homey and bursting with personality

What to ask when buying investment property?!

Tweet

You should also have a good rapport with your advisers: find someone who speaks your language and doesn’t use a lot of jargon, and whom you believe will act in your best interests. Sounds logical and simple enough right? But trust me, in the heat of desperation or mixed emotions, we can forget little things like that which will pay off in the long run.

Accountant: What experience do you have with setting up structures within which to buy property?

It is critical that you work out in whose or what name the property should be held before you finalise the purchase contract. The easiest option is to buy in your personal name, but this may not be the best option for your circumstances. Rounds 14 and 15 have more information about structures. 

Make sure you consult an accountant who understands property and will be able to give you guidance in this area.

Banker: What are the interest rate, the upfront, ongoing and exit fees of the most appropriate loan for my circumstances? 

It’s relatively easy to determine the interest rate of a loan, but what can be more difficult to find out are some of the hidden fees. (When I say hidden, I mean that they are somewhere in the contract but they are often specified in the small print or somewhere among the volume of pages that makes up the loan contract.

Typical upfront fees include application, establishment and valuation fees) 

Many loans have regular ongoing fees that are generally charged monthly. Banks can also charge hefty exit fees if you pay off the loan too early or want to terminate a fixed rate loan before the end of the period interest rate if the fees and charges are very high.

THIS COULD BE YOURS!!

Building or pest inspector: Can you please provide me with a written report and an estimation of the repairs that are required on this property?

A verbal report is not worth the paper that it is not written on! 

A written report provides a permanent record of the  inspection carried out. It can be very useful to show the selling agent to try to discount the asking price by factoring in repair costs. It could also be critical at some time in the future if a building fault is discovered that  should have been apparent to the inspector at the time of the inspection.

Conveyancer or lawyer — Is there anything out of the ordinary in this contract? 

Contracts that deal with land are legal documents and they can be difficult to read and understand.

A conveyancer or property lawyer should be able to read through the contract and determine if your property or contract is typical or whether there is something that should be noted.

For example, it might be heritage listed or there might be an easement (a section of land you cannot build upon) on an unusual part of the land.

Mortgage broker: Do you charge for your services?

Mortgage brokers should not charge you for their services. They are paid by the lender with whom you decide to take out the loan.

Mortgage broker: What is the best and most appropriate loan for my circumstances?

One of the great advantages of speaking with a mortgage broker is that they have access to the loans offered by many banks, whereas when you speak to someone at your own bank they can only offer you loans from their own institution. 

Your mortgage broker should have around 20 or more lenders on their panel from which they can select the right loan for you.

This means that they will have hundreds of loans that you can choose from.

Real estate salesperson or agent: Why is the vendor selling the property?

If you can find out why a vendor is selling a property, this can greatly enhance your bargaining position. A vendor may need to sell for a number of reasons: they may have already bought another property; separation or divorce may cause a sale; or following a death, the estate just wants to sell off the property.

Some vendors may want to sell, but don’t need to sell. They may just be trying out the market and if they get the price they want, they will sell. You must remember that the salesperson or agent is working for the vendor, so they shouldn’t tell you, the prospective purchaser, anything that will disadvantage their client.

They don’t have to tell you why the vendor is selling.

Check out this book!!!

Valuer: What is the market value of this property?

Just because an owner puts a price on a property, doesn’t mean that it is worth that much. The price specified might be the price that they hope for or need to sell at to buy their next property. 

If you are unfamiliar with property or don’t have any idea about the worth of a particular property, you should ask a valuer to value the property you are considering. 

If you are borrowing money to buy the property, the lender will probably have the property valued, but this may not be the market value of the property.

The bank’s valuation will probably be based on a worst-case scenario where it wants to know what it could sell the property for if you default on the loan and it has to sell in a hurry — in other words, a fire sale price.

Before you make an offer on the property, you should have a very good idea what its market value is!!

Choosing whether to hold or sell investment property

Tweet

Click here for more..

Holding property

Accountant — What items can I depreciate in order to boost my tax benefits?

• There are many items in and around a property that can be depreciated and added on to your expenses to reduce the income tax you pay. Your accountant should advise you to have a depreciation schedule done by a quantity surveyor.

• Ideally a depreciation schedule should have been done when you bought the property.However, you can organise for a depreciation schedule to be done on your property at any time.

• You need to be clear about what you can claim in order to assess your property’s performance overall.

Property manager — What are your fees and what are the conditions of the property management agreement?

• Property managers usually charge a general upfront property management fee and then additional fees, such as a new lease fee, renewal of lease fee, payment of utilities fee and inspection fee.

• When selecting a property manager to look after your property, don’t just focus on the upfront property management fee, as all the other fees can actually add up to more than the upfront fee! (A standard upfront fee can range from 6.6% to 8.8% of the gross rent but all the other management fees can total thousands of dollars a year)

• Read the property management agreement carefully and pay particular attention to the termination clause. This clause details how much notice you need to give them if you want to change property manager or possibly manage it yourself. Sixty days notice is an industry norm, but if you can negotiate and terminate it earlier, it can work to your advantage.

Selling property

 Real estate salesperson or agent — What is my property worth?

• Before you select an agent to sell your property, you should invite three local agents to the property and ask them for an appraisal: this is their opinion of the worth of the home. Three different agents will probably give you three different prices. You think you should sign up the agent who provides you with the highest appraisal? Wrong!

• Something you might not know... Unfortunately a few rogue agents use a practice known as buying the listing. They know that if they provide you with a relatively high price, you will select them as your selling agent, and if and when the property is sold, they will collect the commission.

• The reality is that an overpriced property stays on the market for a much longer period of time and often sells for below its market value as prospective purchasers think that there must be something wrong with the property for it to be for sale for so long. 

• Do your own due diligence so that you have an idea what your property is worth by finding out what comparable properties have sold for so that you are not ‘sucked in’ by an artificially high appraisal.

• Don’t be attracted to the agent just because they offer the lowest sales commissions. A recommendation from a friend or colleague who has used an agent in your area is one of the best indications of which agent you should choose to sell your property.

Accountant — What is my capital gains tax (CGT) liability and am I eligible for the CGT discount?

• An accountant experienced with property should accurately calculate your CGT liability based on what you paid for the property, the costs of improvements and the sale price.

• They should also be familiar with the CGT discount and know if you are eligible for it, based on the ownership structure and the length of time you have held the property.

How to choose a dishwasher based on energy ratings

Tweet

A dishwasher with a high star energy rating, say 3.5 stars, is more efficient but more expensive than a dishwasher with a lower star rating, say 2 stars. What do the extra ‘stars’ actually mean to your usage, and possibly your bill???

 

Other considerations when purchasing a new dishwasher include:

• Basket design – current options are between 12 and 15 place settings in load capacity

• Program time – normal programs vary between 60 minutes to over five hours (true!), with an average time of just over two hours

• Water consumption – normal program use is listed between 10.2 litres and 22.7 litres per cycle (an average about 13 litres)

• Noise levels – when comparing noise levels, 50dB is the level of normal conversation and 70 dB about the level of a vacuum cleaner. There is a difference between sound pressure (dB) and sound power dB(A), so 45dB is approximately 33dB(A)

• Machine quality - ease of service, availability of parts and expected life of appliance  



The above table shows you could save more than the difference in purchase price over the life of the appliance in running costs for your dishwasher just by choosing a more efficient model from a quality manufacturer.

• **Annual energy consumption as tested for and displayed on rating label. See www.energyrating.gov.au for details.