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Top 10 suburbs for rental growth
As we move into the winter season, the climate for investors is very positive. Property prices are slightly softer and rental yields just keep on rising – they’re up 4.6 per cent nationally over the past six months alone, according to RP Data.
In addition, the banks are fighting hard right now for new mortgages and they’re also lending at 95 per cent LVR again, so there are many great deals available for those who want to invest.
There are a few reasons why the rental market is so tight.
We have an undersupply of property, and in addition, we’re nowhere near meeting the demands of our population growth. This is particularly so in desirable locations such as the inner and middle rings of our capital cities and along the Eastern Seaboard.
Fuelling rental demand is Gen Y’s desire for CBD and lifestyle living. Many are renting in the locations they love with no intention of buying because this usually means moving to locations where they don’t want to live (such as outer ring suburbs). Their desire for the Great Australian Dream is simply not as strong as their desire for a great lifestyle.
Other Gen Ys are renting longer to save the deposit, although things are easier now with banks once again lending up to 95 per cent LVR, so a 20 per cent deposit is not necessarily required.
In terms of demand from investors, it’s pretty strong and this is likely to continue. Latest AFG figures show 35 per cent of all new home loans nationally are for property investors.
But it’s not just mum and dad investors out there looking for the typical two bedroom apartment to invest in. We also have an increasing number of people using their self-managed super funds to buy property. Plus there’s an increasing trend in young renter-investors buying an investment property first so they can stay living (and renting) in the locations they like.
Over the year to March Quarter 2011, RP Data stats show that rents went up 5.3 per cent in Sydney; 4.5 per cent in Hobart; 4.4 per cent in Perth and 2.8 per cent in Adelaide. Canberra was up 2.5 per cent and Melbourne 0.9 per cent. Lagging behind is Darwin, down 3.7 per cent; and Brisbane, down 1 per cent.
When you drill down to the suburb level, the numbers become more interesting. Of Australia’s top performing capital city local government areas (LGAs) for rental growth, 22 out of 35 are in Sydney.
Here is a list of the Top 10 LGAs for rental growth over the year to March Quarter 2011.
1. Woollahra, Sydney – Houses – 22.2 per cent to 00 per week
2. Nedlands, Perth – Houses – 20.4 per cent to 5 per week
3. Burwood, Sydney – Houses – 19.6 per cent to 0 per week
4. Sorell, Hobart – Apartments – 18.2 per cent to 0 per week
5. Claremont, Perth – Houses – 17.2 per cent to 0 per week
6. Cottesloe, Perth – Houses – 16.7 per cent to 5 per week
7. East Fremantle, Perth – Houses – 16.4 per cent to 5 per week
8. Ashfield, Sydney – Houses – 15.6 per cent to 0 per week
9. North Sydney, Sydney – Houses – 15.3 per cent to 8 per week
10. Lane Cove, Sydney – Apartments – 15 per cent to 0 per weekSource: John McGrath, McGrath Estate agents
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Canberra property market strong
The Canberra property market continues to go from strength to strength, with development approvals hitting a 10 year high.
According to Collier’s International Apartment Research & Forecast Report, buyer confidence and demand have climbed in the Canberra region, off the back of low unemployment and strong economic growth.
Colliers International director of research Ariel Pollard said the average number of residential dwelling approvals in Canberra increased dramatically over the past few years with 4,805 dwellings in 2010 – up 33 per cent on the previous year.
“This suggests confidence levels in Canberra property market remain positive, and with the increase in household numbers expected to grow by 15 per cent between 2011 and 2021, the additional supply will help ease pressure on demand,” Ms Pollard said.
Colliers International research shows 16 projects are currently being marketed, while 2,128 apartments in the Inner North and South suburbs are under construction.
Source: Spionline.com.au by Matthew Sullivan
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Property investors dive back into the market
Investors appear to be taking advantage of the softer market conditions, with mortgage sales rising 18.8 per cent in May.
According to the latest AFG Mortgage Index, total mortgage volume for May was .5 billion – just 1.7 per cent lower than the figure recorded for May last year.
Victoria and New South Wales saw the biggest month on month upswings in mortgage volumes, increasing by 27.2 per cent and 23.3 per cent respectively.
Both states also had the highest proportion of investment loans with 38.8 per cent of loans in Victoria and 37.9 per cent of those in New South Wales, processed for investors. May also saw a surprise increase of investment loans in Queensland, up to 36.5 per cent – its highest such figure for well over a year.
AFG general manager of sales and operations Mark Hewitt said while property investment has remained at consistent levels throughout the ups and downs of the property cycle, it strengthened significantly in May.
“It is certainly a buyer’s market right now, and investors looking at rising yields are probably better insulated from the impact of rising interest rates than other types of buyers,” he said.
Refinancing remained steady at 36.8 per cent despite higher levels of competition between lenders, and the abandoning of exit fees by many. It seems that many borrowers have adopted a long term view of their lender relationship, as encouraged by AFG.
Source: TheAdviser.com.au
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Top property suburbs revealed
Bellevue Hill, located in the eastern suburbs of Sydney, has been identified as the best place to buy a house over the coming quarter.
According to John McGrath’s quarterly market review, suburbs just outside of Sydney’s CBD offer the greatest buying opportunities for potential home owners.
Breakfast Point, Bronte, Glebe and Haberfield rounded out the list of top five suburbs for houses.
Meanwhile, Cremorne Point, Cronulla, Kensington, Newtown and North Parramatta were identified as the top five suburbs in which to buy an apartment.
Speaking about his top suburb picks, Mr McGrath said while the residential property market had slowed considerably over the last six to 12 months, the inner city suburbs of Sydney were largely defying this trend, recording strong value growth.
As such, Mr McGrath said there were still plenty of sound buying opportunities in the market.
“It is always darkest before the dawn. It seems a lot of people are interested in buying quality property but many are standing on the sidelines looking in. Fear of a second correction has created some hesitation in sections of the market. However this is not representative of the general marketplace in high demand regions, where there is still reasonably strong buying up to million for the right properties and a reasonable depth of demand above million,” he said
“Last year I predicted solid growth in 2011. While that prediction may be slightly delayed, I still feel the worst is behind us and we are at the beginning of a long term growth cycle. My best read is this will gradually move throughout the country starting in major eastern seaboard capitals and continuing for some 3-5 years.”
Source: theadviser.com.au
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Is it important to obtain a pest and building report before purchasing property?
Gambling, not buying
Every now and then I hear about people buying a property they saw for the first time on the day of the auction.
Usually, the story goes that they turned up 20 minutes before the auction, had a look through, registered to bid and bought the property.
These people are taking an awfully big risk. Without doing a pest and building report, you’re gambling, not buying.
Properties can look fine on the outside and still have major structural defects and costly problems like rising damp and termites. A good look around at an open inspection is not going to give you the information you need – you’ve got to hire a professional to check things out.
I’ve heard the argument that some buyers have spent hundreds (if not thousands) on several pest and building reports and they still don’t have a new home to show for it. I understand that it feels like money wasted when you do the report then miss out on the property at auction, especially if it happens again and again.
I’ve also heard the argument that if five other people have registered to bid then it must mean the property is okay, because surely one of them has done a pest and building report.
This is a gamble not worth taking.
When you’re looking at spending hundreds of thousands of dollars, if not millions, on a new home or investment, you’ve got to factor in costs such as pest and building reports on one or more properties. It’s just too important to skimp on.
New Archicentre statistics for 2010 reveal 35 per cent of all homes have some sort of fault. Now, these faults are not necessarily big and expensive faults, but the point is almost four in 10 properties you inspect this weekend will have some sort of problem.
In my experience, water is the major enemy, whether it’s natural water penetration, rising damp or a leaking roof. Rising damp can be an issue particularly for Victorian-era terraces. Termites are also attracted to damp areas, such as underneath a laundry with a leaking washing machine. A termite infestation could potentially cost you tens of thousands of dollars, which makes the cost of a pest and building report pale in comparison.
Now, when problems are identified in a pest and building report, you don’t necessarily have to walk away. If you really love the home and you think you can get it for a good price, perhaps you’ll be able to wear the cost of getting major things fixed. (And maybe that’s what those five other bidders at the auction have done, which is why you can’t rely on other registered bidders as an indication that the property about to be auctioned must be okay.)
One more point. If you’re looking at buying a renovated property, it is a legal requirement that the seller provide you with their Home Warranty Insurance if the property is being sold within six years of the renovation. This pertains only to renovations above $ 12,000 in NSW – it can vary in other states so check with your Fair Trading Department.
Published: Wednesday, June 01, 2011, switzerbroker
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Is it a good time to buy an Investment property?
Investors will be the biggest driver of property activity moving forward, according to new research.
Data interpreted by Mortgage Choice found market conditions currently favour property investors who are looking to benefit from ongoing seller discounting, healthy rental income growth and longer term capital gains.
“The latest data suggests greater movement from investors taking advantage of subdued market competition and housing price reductions,” Mortgage Choice spokesperson Kristy Sheppard said.
“There are many more properties on the market than usual and less buyers to purchase them. Australians who are ready financially and keen to crack the market or build on their portfolio may find that some solid hard work sees them snap up opportune purchases while demand is low
“Other encouraging factors are our healthy population and wage growth and low rental vacancy rates. Rents are rising at a faster pace this year while property values have steadied or dropped in many areas, so rental yields are on the increase. This all bodes well for people who research the market thoroughly, have a long-term strategy and are informed about their finance options.”
Source: Staff reporter, theadviser.com.au
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Pay zero stamp duty on property up to $ 600,000
The government, last year, has introduced some major changes to stamp duty that is payable on a new property purchase. These changes are of major advantage to Australians as they represent a huge saving in buying new property.
NSW Home Builder’s Bonus
The NSW Home Builder’s Bonus will come into effect from 1 July 2010 for a period of up to two years. This is designed to provide stamp duty relief for eligible property buyers as follows:
Pre-construction Stage
Stamp duty will be cut to zero for off-the-plan home purchases worth up to $ 600,000. This represents a saving of up to $ 22,490.
Note this is also available to property investors.
Properties Under Construction
Stamp duty will be cut by 25 percent for people buying a newly-constructed home worth up to $ 600,000
First Home Buyers
First home buyers will also be eligible for the NSW Home Builder’s Bonus meaning that including the First Home Owners Grant of $ 7,000, the potential maximum benefit is $ 22,490.
It is important to remember that these fantastic savings are also available to investors, repeat house buyers and investors alike.
Best regards,
Andrew Krauksts
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2011 Budget fails to address the growing housing affordability issue
Housing industry commentators have slammed the Federal Government for failing to address the growing housing affordability issue in its 2011 Budget.
In announcing the Budget last night, Treasurer Wayne Swan placed an emphasis on skills, training and skilled immigration, as well as improvements to allow more private investment in large public infrastructure.
While these are positive and necessary measures, HIA’s senior economist Andrew Harvey said it was disappointing to see the inadequate funding of housing infrastructure had not been addressed.
“Unfortunately, the Budget fails to deliver any dedicated policies to alleviate Australia’s chronic housing shortage, which at around 200,000 dwellings and growing, continues to place pressure on the household budgets of home buyers and renters,” he said.
“New home building activity is in danger of revisiting GFC-like levels this year, yet the Budget fails to address the excessive cost of new housing which in some instances sees more than 40 per cent of the purchase price of a new house attributable to government taxes, fees and charges.
“Until the high taxation of new housing is reduced, and supply side obstacles removed, Australian families will remain locked out of home ownership and will continue to face high rental costs. There is only one way to make serious inroads into the housing affordability crisis – and that is by substantially increasing housing supply.”
Real Estate Institute of Australia president David Airey agreed and said the Budget had done little to help Australians obtain their dream of home ownership.
“I was truly disappointed to see there were no measures in the Budget to assist those that REIA refers to as being an endangered species – first home buyers,” he said.
First home buyers currently represent approximately 15 per cent of purchasers in the housing market, compared to 30 per cent in October 2009.
“This is a market segment that desperately needs assistance to fund home purchase. REIA recommended in its Pre-Budget submission that the Government conduct a review of the First Home Owner Grant and consider providing first home buyers access to superannuation for the purchase of a home,” Mr Airey said.
“This Budget will do little to stave off expected increases in interest rates, a concern given the critical state of affordability.
“It is disappointing that the Government has not realised the value of implementing long-term solutions to address housing affordability. We need to look at practical measures to give first home buyers the opportunity to realise the dream of owning their own home.”
Source: Staff Reporter TheAdviser.com.au
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