Monday, July 27 2015
As I flagged back in my article in May there is a major problem looming for off the plan unit buyers.
An article in the Fin Review this week also highlighted the issue
A number of major lenders have just pulled the rug out from under the feet of unit buyers and potentially left them high and dry. "This is causing alarm across the industry," said Tim Brown, chief executive of the Mortgage and Financing Association told the Australian Financial Review.
"Many of these are first-time buyers who will not be able to fulfil their finance obligation under the contract and will lose their deposit as many of the banks will not finance any investment loan over 80% and in some cases will not lend on investment at all," Tim Brown said.
Having put down a 10% deposit, apartment buyers typically arrange finance for the rest as the apartment nears completion - now set to find that finance has become both more expensive and harder to secure.
Many lenders will no longer accept a 10% deposit and now require minimum 20% purchaser funding. The tests for loan servicing have now also substantially changed meaning people may now qualify for significantly less than at the time they signed a contract.
Some lenders have also basically said they will not honour previous approvals. So buyers who thought they had their lending locked in may also be in for a rude shock.
With people not being able to settle this could have a substantial negative impact on unit prices as contracts fall over.
If you have bought a unit off the plan you need to have your situation reviewd as a matter of urgency to assess your options. Contact us today for an assessment.
Tuesday, July 21 2015
(SOURC: THE PROPERTY OBSERVER)
News Ltd columnist Alan Kohler says it will take nothing short of a recession to bring Australian house prices down.
Australian house prices were not in a bubble, but instead, in a "new normal" and are not going to come down on their own, the columnist said.
But he noted Deloitte Access Economics’ latest economic outlook where director Chris Richardson said: “The chance of a recession is higher now than it’s been for quite some time. China’s economy is the key.”
Alan Kohler referenced the RBA's recent comments:
“…there are no examples internationally of large falls in nominal housing prices that have occurred other than through significant reduction in capacity to pay (e.g. recession and high unemployment).”
And: “There is no mechanism to get a large and sustained level shift down in prices while a substantial fraction of the population can -- safely and sustainably -- service the obligations involved in paying the higher price.”
Finally: “…there is no example in Australia or internationally where supply expansion on its own generated housing price declines of a similar order of magnitude to the increases in prices seen in some Australian cities in recent years.”
Noting what’s happening in China, Alan Kohler suggested there is no chance of interest rates going up, so serviceability is only likely to improve.
"In fact, rates are more likely to come down further to try to prevent a recession here."
Kohler concluded the one bright spot was the big increase in the supply of apartments, which has resulted in smaller price rises among apartments than house, especially in Melbourne.
"Those who own a house already are winners; those who don’t will have to buy a flat."
Tuesday, July 21 2015
Tuesday, July 21 2015
Selling your old home at the same time as buying a new one can be challenging as it’s difficult to know where to start.
It might seem obvious, but the number one thing people overlook is actually finding out the full costs of a move including what they can afford and how much a lender will be prepared to lend them.
People often get so caught up in the emotion and excitement of looking for their perfect home that they overlook the financial realities and costs of such a move. There are a multitude of factors and costs that come into play when changing properties many which most people don’t anticipate. This often means people find themselves caught in a bit of a bind at the 11th hour and often have to wear a lot of unexpected costs to proceed and end up with a more expensive loan than they anticipated.
Not a great start to something that was meant to be a positive experience.
Getting a proper financial evaluation up front before you start looking means you can get a much clearer understanding of what your options are and the implications of different scenarios.
One of the tools we use for our clients is our Property Changeover Calculator. This allows us to assess the outgoing and incoming costs associated with a move so a client has a better understanding of their end financial position and likely ongoing costs.
We can also explore a range of “what if?” scenarios to assess the impact of different sales and purchase prices.
This means our clients are better informed upfront, and means we can determine the appropriate structure for their needs before they proceed.
Contact us to discuss your next move or even just to get a financial check up
Tuesday, July 21 2015
Valuation firm Herron Todd White has just released it's latest national property clock and has identified Brisbane as a market on the rise. This is consistent with the view of a number of independent researchers including BIS Shrapnel which have pegged Brisbane for growth over the next few years.
Tuesday, July 14 2015
Buying an older property can be like buying an older car. Sure you might get it at a cheaper price but that doesn't't mean you will get a better return over the long term. There's a number of factors that could turn your bargain buy into an expensive lesson.
Yes you can claim a deduction but you don't get all of that outlay back. If your income is $80,000 only 32.5% so you still have to front up with rest.
With a new property it is certified at various critical stages to ensure it meets current building codes and standards. PLus new properties come with a 6 year structural warranty.
Tenants and rent
So cheap does not equate to good. And a cheaper price does not mean the house will be cheaper to run.
Contact us to discuss your property investment strategy.
Friday, July 10 2015
According to onthehouse.com.au Queensland comes out on top for high-yielding and still growing suburbs. Of 56 suburbs across Australia where the average rental yield surpasses five per cent and the capital growth predictions are at least three per cent for the next eight years Queensland suburbs make up 41 per cent of the list with 23 suburbs appearing.
Affordability is a main contributor to high rental yield rates, with 75 per cent of the suburbs on the list having median values below the national median of $491,000 for houses and $452,500 for units.
The median house value in Brisbane sits just below the national median at $484,500, while in Sydney the median house value is almost double that at $961,000.
Friday, July 03 2015
Recent data is showing that vacancy rates are rising and as we have discussed previously there is a building over-supply of units in inner city Brisbane
This means you need to ensure the rental property you purchase attracts good quality tenants and does not remain vacant for long. This means putting aside property features that may appeal to you as an owner-occupier and buying with a tenant in mind.
Check your emotions at the door
Easy access to employment hubs, schools, sports and leisure facilities
Vacancy history and trends
The right property manager
Wednesday, July 01 2015
Brisbane is the only capital city tipped to buck the national trend of easing median house prices in real terms over the next three years, according to housing forecasters, BIS Shrapnel.
But its housing market outlook has warned of a looming oversupply of inner city Brisbane apartments.
The BIS Shrapnel Residential Property Prospects 2015 to 2018 puts Brisbane's estimated median house price in this year at $520,000, which researcher Angie Zigomanis said that was still below Brisbane's June 2010 peak in real terms. Coupled with low interest rates, Brisbane's affordability was at levels seen in the early 2000s.
A total rise of 13 per cent in the Brisbane median house price is forecast over the three years to 2018, while the median unit price is forecast to rise by a total six per cent. Its new dwelling supply overall, without any significant rebound expected in population inflows, was set to move the Brisbane apartment sector nto ioversupply, "with some impact across the broader market."
But significantly, Brisbane is tipped to be the only capital city that will not experience a decline in median house prices in real terms in the next three years.
Nationally low interest rates will support further price growth in undersupplied residential markets in 2015/16, but the spectre of tightening interest rates and deterioration of affordability will create conditions for price declines in a number of cities from 2017, according to the forecaster.
"But doomsday predictions for the residential market are likely to be overblown.
"Although Australia’s residential property markets are forecast to steadily weaken from 2016/17, as a combination of rising supply and the prospect of a tightening in interest rate policy impacts on prices, any downturn will be similar in magnitude to that seen over 2011-2012."
According to the company’s Residential Property Prospects, 2015 to 2018 report, Sydney and (to a lesser extent) Melbourne have broken away from the other capital cities, with both estimated to have recorded double-digit percentage rises in their median house prices in 2014/15.
Solid population growth, reasonably positive economic conditions and an underlying dwelling deficiency have underpinned this rise, and affordability is increasingly becoming a concern. In contrast, weaker recent price growth in the other capital cities means that affordability is not as strained, and it is subdued local economic conditions and/or an underlying excess dwelling stock that have impacted the market.
“Most capital cities are building apartments at record rates, driven by investor demand,” said Zigomanis. “As these projects are progressively completed, strong tenant demand will be required to support rents and consequently values upon completion.
He noted the detached house market is less reliant on tenant demand and more exposed to owner occupiers. Together with the stimulatory effect of variable interest rates at more than 40-year lows, this is expected to support median house prices in most capital cities over 2015/16.
The strongest conditions over 2015/16 are forecast for New South Wales, Queensland and Victoria, where BIS Shrapnel estimates the markets are in overall deficiency at June 2015.