May 31

Truth about Chinese investment property buyers

By Hugh Frame | best investment, chinese investment, foreign investment, Market, Property Research, Real Estate | No Comments

Truth about Chinese investment property buyers

It’s time someone helped to get rid of the myths behind the Chinese buying ALL our investment property and have a look at the truth about Chinese investment property buyers.

The idea of Australian residential housing being bought up by foreign owners, particularly the Chinese, just does not stack up. Sure, we go to auctions and it would appear that most of the people attending the auction are Asian but this surly should be of no surprise as, according to our last census in 2011, 2.4 million Australians are of Asian background! That’s 12 % of our population, more than double the number of indigenous Australians.

12% of all Australians are of Asian background. The Asian community are prolific property investors

The vast majority of ‘Chinese” buyers in our market are Asian Australians. It’s always good to have a scapegoat, it seems it makes us feel better when things don’t go our way and after years of price growth, people priced out of the market are using overseas-based Chinese buyers as the scapegoats responsible for our housing affordability.

The media doesn’t help this perception. “Chinese” buyers over other ethnic groups such as Indian, French or Canadian have fuelled public concern over whether these buyers are inching the Australian dream further out of reach. The generalisation of the term “Chinese buyers”, to include anyone of Asian appearance or with an Asian surname, has placed local and international buyers in the same basket, and exaggerated the extent of Chinese interest.

So what are the major myths about Chinese buyers pushing prices up by buying investment property? What is the truth about Chinese investment property buyers?

Here are six of the most common misconceptions:

1. Overseas Chinese investors are pricing Australian first home buyers out of the market

Not True – Offshore Chinese investors and first home buyers generally don’t compete for the same properties.

2. Chinese buyers with endless financial means are bringing suitcases full of money

Not True – The majority of average buyers are looking at properties priced between $500,000 to $800,000.

3. Chinese buyers tend to overpay on properties

Not True – Chinese buyers like to negotiate, and some agents would even say they’re savvy buyers. Sure, they’ll pay a premium if they think it’s worth it, or it has unique features. But so would local buyers.

4. Chinese buyers aren’t concerned about dwelling size

Not True – Chinese buyers are not looking for micro apartments and in a survey they said they do not want to buy a property investment under 50 square metres although they may start off with a smaller investment property because it’s more affordable.

5. Chinese investors leave apartments and houses empty because they’re not chasing rental return.

Not true. Again, the majority surveyed wanted yields of around 5% if possible.

6. Most Chinese buyers shun properties with a street number 4, and the right number play a big part in their decision making

It’s true that the number eight is linked to good fortune and the number 4 is seen as unlucky but the sale price will more likely depend on the property, particularly for younger Chinese buyers.

For full details on this story go to: http://goo.gl/AarvP7

May 30

0

Property investment surge in Sydney

By Hugh Frame | Auction, best investment, Economy, Investment, Negative Gearing, Property Research | No Comments

Property investment surge in Sydney

On May 20^th the blog was about a property investment surge in Sydney according to auction clearance results and a possible change to negative gearing laws.

Auction clearance rates decline dramatically

According to Domain, we had a huge number of investors rushing to get in before Mr Shorten changes the rules in 2 year’s time. Just a couple of days later, the same organisation published an article supporting this supposed “huge increase in property investors” entitled FOMO, (short for Fear of Missing Out), where they stated:

“Forget about John Symond’s warning of “Armageddon” for house prices if negative gearing is abolished. At least in the short term, the artificial deadline on negative gearing is likely to push up Sydney property prices, regardless of who wins the election.

Last weekend’s boom-like 80 per cent auction clearance rate has experts wondering if it’s set to be repeated this weekend, indicating the boom is back. Labor has set a termination date of July 1 next year for the policy that delivers tax breaks to investors. After that, only buyers of new properties will be able to negatively gear.”

This ‘boom” was based on little else but the auction clearance rates which were based on about half the number of auctions that took place at this time last year when the real Sydney price boom was entering its last quarter.

It’s time we all have to accept as property investors that for the time being, and probably the next few years, the price rises in investment property in the city of Sydney are over.

From the very positive headlines of two weeks ago, we now read, “ Sydney recorded a clearance rate of 72.8 per cent on Saturday a far cry from the remarkable 80.3 per cent rate recorded two weeks ago. Sydney hosted higher numbers of auctions on the weekend with 599 home listed to go under the hammer compared to 573 the previous weekend. Auction listings however continue to track well below the levels of last autumn with 858 auctions conducted on the same weekend last year.”

So, in summary, if the freak clearance figures we saw a couple of weeks ago were due to a huge surge of property investors who were frightened of missing out because of small changes to negative gearing in two years time if Labor win the election, then the results of Saturday must be interpreted as “Sydney Property investment buyers now convinced Mr Turnbull will win next election”. All based on Auction clearance results of course…. I don’t think so!

Read full story: http://goo.gl/LwtyYN

May 24

0

Lose your credit rating without even knowing

By Hugh Frame | banking, finance, Financial, Home Loans, Mortgage, News, Research | No Comments

Lose your credit rating without even knowing

How can you lose your credit rating without even knowing that you had done anything wrong?

Cartoon by Michael Mucci
Banks seem to have us where they want us

Just a couple of weeks ago we had a new client with a very stable well-paid government job, excellent equity in an investment property, owing nothing substantial to anyone apart from his very manageable investment loan and looking to buy another property but to our astonishment was actually rejected by the first lender approached on his behalf. Another lender was approached and the client had no problem in getting the loan after “the problem” was fully explained.

….. So what was ‘the problem?’ Quite simply, he had approached a couple of lenders by himself over the last year to see how much he could possibly borrow. In his search, he had found very good lower rate deal and switched his loan – no problem. While he was doing this, he took advantage of a couple of really good interest free deals on a couple of credit cards, something that is encouraged by our government and some financial planners, “If you’re not happy with your lender, shop around and move” and why not take advantage of interest free periods on your credit card?

This all seems sensible and very reasonable, until he applied for a new investment loan only to discover that his credit rating had been lowered considerably to the point of him being a bad risk! Like the author of today’s SMH story our client had never defaulted or been declared a bankrupt and had been in well-paid secure employment for over 10 years. His rating was below 700. The ratings are done on a scale from 0-1000, excellent is 800-1000; very good is 700-799; good 625-699; OK 550-624 and below average was zero-549.

The problem? … every time he applied to a credit-card provider for a new loan or a new card, an inquiry was made to the credit data base and each inquiry, while not raising any concerns, stays on your credit rating and affects your credit rating!

The marks you get because you have changed your loan provider or applied for a new credit card stay on your credit rating for five years until they are rolled over.

Michael Evans conclusion to the article he has written about his own credit rating is,

“In a system where the major financial institutions have significant pricing power, credit score cards can feel like they’re stacked against customers trying to encourage competitive behaviour.

Trying to get one back against the banks comes with a cost, and it’s not always in the fine print.”

I agree, and it’s well worth your time to have a look at the full article on this link: http://goo.gl/Uv6eUz

May 23

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Advantages of renting over buying a home

By Hugh Frame | best investment, Financial, Investment, Negative Gearing, Properties, Property Research, Real Estate, rent | No Comments

Advantages of renting over buying a home

This little blog seems appropriate following the last blog but this time we look at the advantages of renting over buying a home.

More options in property investment and renting than buying your own home.

For many years, Lime Property Solutions has assisted young couples in particular build substantial equity in property through the relatively new coined phrase “rentvesting”.

In the same weekend, a ‘Domain” article tells us First-home buyers are turning their back on the Great Australian Dream of having their own home to live in and are instead increasingly opting for an investment property first. Described as ‘rentvestors’, a third of investors in 2016 were first-time buyers who had not yet bought their own home, a Mortgage Choice survey found.

So in today’s blog we’ve given you two separate articles to go to on the same subject. As we’ve always said, “Rent money is NOT dead money as long as you take a position in the housing market.”

So if you crave freedom and options but are fighting against the need to put down roots and buy your own home, here are a few reasons why you might consider an alternative.

Negative Gearing
Spreading the risk
Liquefying our assets on retirement
Rent can be cheaper
Freedom to move

See more here: http://goo.gl/Yit4lg and also http://goo.gl/1iFYxM

May 23

0

Generation Rent: How do you get enough income to retire?

By Hugh Frame | best investment, Economy, Financial, Investment, Negative Gearing, rent, Research | No Comments

Generation Rent: How do you retire?

A very interesting article in this weekend, “Generation Rent: never buying a property will mean saving more for retirement or the big question it alludes to Generation Rent: How do you retire?

The article correctly points out that Generation Rent will retire into an aged pension and superannuation system that was not set up for people who rent. Recent figures released also point to the fact that one third of all private renters are now classed as ‘long-term’ this figure rising from just one quarter twenty years ago.

Generation Rent faces something no other generation has collectively experienced before – renting in retirement

Terry Burke from Swinburne University states, “Income support systems are premised on outright [home] ownership and therefore Australian pensions tend to be much lower than equivalent countries,”

In Sydney, if you live in the city’s cheapest suburb, Marsden Park, and you retire owning your own average-priced home, you will still be $360,000 better off than a renter. Of course, we have seen the median price of property in Sydney exceed $1 million for a short time so it would stand to reason that most renters will never accumulate this amount of funds without being in the property market.

The Association of Superannuation Funds of Australia data estimates that for someone to afford a comfortable retirement at 65, a single would need $545,000 and a couple would need $645,000, REST Industry Super chief operating officer Andrew Howard said.

Financial experts say it is possible, although challenging, for lifelong renters to comfortably cross the finish line into retirement.

After income dries up, a larger nest egg is needed and savings from not having a mortgage need smart investment. The key would be to invest the difference rather than simply saving, so why not contact Lime now and learn how easy it can be to be a rent-investor? http://goo.gl/1fvwnf

May 20

0

Investors surge back into property market as election looms

By Hugh Frame | Auction, domain, News, Property Research, Research | No Comments

Investors surge back into property market as election looms

Interesting headline from Domain “Investors surge back into property market as election looms.”

I read this story initially with the thought that this really makes sense for a couple of reasons, however the large spike in purchases and signs of a booming market yet again, just don’t seem to be here!

For any would be property investor the time for procrastination is certainly gone. While we still don’t think that we will see a change in the law for negative gearing, in the unlikely chance that this does occur, Mr Shorten and his team is assuring the Australian public that all current rules will be ‘grandfathered” which basically means that there will be no changes what so ever to anyone who owns an investment property before any new rules are introduced.

With this knowledge, it would be quite understandable to see “Investors surge back into property market as election looms” but the on the ground reality for Lime Property Solutions at least is that there has been no major increase in enquiry over the last few weeks and as far as we can see from number of auctions and clearance rates, there are no signs of a rival in house price growth in Sydney and in fact we are still seeing a market in correction with prices still sliding … not something you would expect with a surge of investors heading back to the market.

The recent article states:

“NSW remained the favoured state for investors, with investor activity up 30 per cent over the month to March, an analysis of Australian Bureau of Statistics data by Domain Group chief economist Andrew Wilson shows.”

“Residential investors have stormed back into Australian housing markets with lower interest rates and the prospect of changes to property taxes set to continue to fuel growth in this market segment over coming months,” Dr Wilson said.

While this statement may or may not be true, I’m not quite sure why figures for March are the signal that investors are coming back into the market because of an election called two months later?

I do think Dr Wilson doers a great job of presenting himself as The Expert while constantly supporting and spruiking up the real estate market, particularly in Sydney. I totally agree with the concept of investors surging back into property market as the election looms as it makes such perfect sense for them to do so. We’re just not sure if the headline is a wish for the near future rather than the reality of the day.

Full story: http://goo.gl/I7nGPu

May 17

0

More Massive infrastructure spending for the Gold Coast

By Hugh Frame | best investment, Economy, Investment, News, Property Research, rent | No Comments

More Massive infrastructure spending for the Gold Coast

It’s very much changed days since the Global financial Crisis for the Gold Coast as More Massive infrastructure spending for the Gold Coast is announced.

Outside of Sydney, Australia’s sixth largest city has shown the best capital growth in Australia over the last few years and all pointers are that it’s not going to stop for some time.

More Massive Infrastructure spending for the Gold Coast Artist’s impression of new Casino

Even the most conservative of commentators is suggesting that over the next twelve months, both weekly rents and average dwelling prices will rise and maybe substantially.

The local population is growing, vacancy rates are very low, employment growth is around the highest in Australia thanks mainly to the huge increase in our tourism industry since the lows of the GFC and the massive infrastructure projects that are taking place from the spending on transport links like the new light rail project, the new town centre and other infrastructure being built around Coomera, the upgrade of the universities and airport and of course, the 2018 Commonwealth Games, just to mention a few, and now a possible $2 billion to be spent by Crown on Jupiters Casino.

The Star Entertainment Group and its Hong Kong partners may build up to five new towers with 3000 hotel rooms and apartments on the Gold Coast as part of a $2 billion master plan centred around the expansion of its ageing Jupiters casino.

Construction of a proposed 200-metre high hotel and apartment tower, which includes 350 apartments and 700 hotel rooms of 4.5-star quality, will start in 2017. Four further towers may be built at two-year intervals depending on demand for the initial tower.

Negative Gearing proposed change by Labor would be a mistake

By Hugh Frame | best investment, Economy, Home Loans, Investment, Negative Gearing, News, Property Research, Real Estate | No Comments

Negative Gearing proposed change by Labor would be a mistake

Negative Gearing proposed change by Labor would be a mistake according to John Symond of Aussie Home Loans fame.

Aussie John has been taking it on the chin as he is being seen as having done a u-turn on the issue. Basically this whole story is based on the fact that no one in this democracy who is in the public eye should ever be permitted to change their mind. Aussie John has just committed this terrible sin!

Negative Gearing Proposed change by Labor would be a mistake – Aussie John

When we look at the context of Mr Symond’ apparent u-turn, it makes the circumstances of his turn around even more understandable. Placed on a panel on ABC the entertainment programme Q and A way back in 2013, Mr Symond was asked by a single mother in Perth about what could be done with negative gearing to assist people like single mother’s get on to the property ladder? Perth was having a long interrupted run in the mining boom and house prices in Perth had gone up by over 200% in the previous 10 years. “Aussie John” did suggest in a sympathetic manner that maybe a look at negative gearing and all of the Australian taxation system may, in fact, help.

Three years later, mining boom well over, an Australian Economy not doing too badly after our mining boom thanks mainly to our hugely increased residential construction industry, the hot topic of the day being negative gearing and the effect it may have on the Australian property market if changed and a leading figure in our residential lending area is asked to comment on the topic ……. plenty of time to think and analyse in a pretty different financial environment from 3 years ago and HE CHANGES HIS MIND!

Is this really a story of deceit and unreliability? Or maybe it’s just a story of an experienced property person understanding a changing market – after all, that’s how he really made his millions, understanding a dynamic market! He is not an elected representative promising not to introduce a carbon tax or promising to make no cuts to the ABC budget, he’s a highly successful and clever property guy who really understands what slight changes in our economy can do to a very dynamic market place.

Mr Shorten, instead of criticising this man for supporting one political party over another, maybe it would be better to listen to what he has to say and act on his advice.

Body Corporate management of your property investment

By Hugh Frame | Uncategorized | No Comments

Body Corporate management of your property investment

There are hundreds of thousands of management corporations throughout Australia

For many entering property investment in a multi home development for the first time, there is some confusion over Body Corporate management of your property investment and the general role and responsibilities of a body corporate.

There is a section on our website under FAQ’s that will help to clear some misunderstandings. Click here: http://propertyinvest.co/property-investment-frequently-asked-questions-faqs-information/

There are hundreds of thousands of units and townhouses across Australia, but surprisingly few people understand how they’re managed When a land title is shared between units or an apartment building, the owners of the properties make up a group called the ‘Owners Corporation’ or sometimes referred to as body corporate or Strata Corporation.

Rob Honeycombe, managing director and principal of Bees Nees City Realty in Brisbane says many buyers are relatively clueless when they buy their property investment.

“The buyer goes to a bank manager, they deal with a real estate agent and a conveyancer or solicitor, but at no point do any of them have the expertise or the time to actually explain [body corporate] to them,” he says. “Unless the buyer makes a point of asking questions, they’re not going to get the answers. The majority of buyers get through that process without having anything explained to them in terms of what a body corporate really is, how it works and what their rights and obligations are.”

As recently as this month, Lime Property Solutions was assisting a new client sort out expensive insurance they had in a property investment purchased before coming to Lime Property Solutions. The client was actually paying full insurance on the property and was surprised when it was explained that only a small amount of Landlord insurance was necessary on the property as his strata fees were already covering the building insurance.

Body Corporate management of your property investment

Some property investment clients do not like the idea of paying a strata fee for their investment property and cite house and land packages as maybe a better option. This can be false economy. Remember a big part of the cost of Strata Fees is usually building insurance so if you are in a Body Corporate there is no individual building insurance to concern yourself with. In a house and land, this cost could easily be more than $1600 per annum. Add on to this the general outside maintenance costs of house and land plus say a $10,000 to $12,000 bill for a new outside paint job and roof repair every 10 or 12 years (these ‘outside’ costs would all be covered by a Body Corporate), then a good well-ruin strata can be just as inexpensive as a property without a body corporate. Click here for full story: http://goo.gl/w5x5Nr

May 10

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First Home Buyer’s assistance

By Hugh Frame | Economy, finance, Financial, Home Loans, Market, News, Property Research, Real Estate, Research | No Comments

First Home Buyer’s assistance – The state gives a leg-up into home ownership

On the East coast we all know about the first home owner’s grant and the State assistance given with stamp duty but in the West first home buyer’s assistance can include the state gives a leg-up into home ownership by taking a share of the new property!

First Home Buyer’s assistance in WA

Kelmscott in Perth is one of the many properties in the scheme

During the mining boom as property shot up in value in WA, a new State scheme was sponsored by the WA government. Singles earning between $50,000 and $70,000 a year and couples earning less than $90,000 a year can buy a house, with the state government as a ‘silent partner’ paying up to 30 per cent of the cost.

Over 1000 West Australians on ‘modest incomes’ have partnered-up with the government to buy new homes under a revitalised shared ownership scheme.

The owner may have an 80/20 or even a 70/30 mortgage with the state government of Western Australia. The owner only pays mortgage on the remaining amount and can buy back the government’s portion at anytime in the future. The home is entirely the owners, free from inspections or any other type of tenancy rules.

The properties in the scheme are freshly built and range from one-bedroom units to four-bedroom homes spread throughout Perth suburbs hat include sought-after suburbs such as Subiaco, with some also available in regional centres like Albany and Bunbury.

The scheme was instigated in 2011 after the rapid rise in house costs paralleling with the mining boom which forced many moderate income earners out of the market. That coincided with the 2010 peak in the number of people waiting for WA Department of Housing rentals at more than 24,000.

The scheme is well received in WA and is an obvious real assistance to young people trying to enter the housing market for the first time. I’ve never heard any politician in NSW mention this scheme. Is this something that Sydney could consider to really help the first home buyer with a real foot-up? Full story: http://goo.gl/VbI8hg

May 2016