Monthly Archives

June 2016

Jun 30
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Property investment in Sydney falls as clearance rates decrease

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Property investment in Sydney falls as clearance rates decrease

So we learn that this weekend property investment in Sydney falls as clearance rates decrease at Saturday’s house auctions. I think most people understand that there are certainly a lot fewer homes put up for sale through auction or private treaty over the winter months than there is over other times of the year. Fewer homes for sale obviously equates to fewer buyers but does it really follow on Sunday’s headline, “Winter freeze brings weaker clearance rate for Sydney auction market”?

Investment property sales at auction drop over a cold weekend

Investment property sales at auction drop over a cold weekend

It just strikes me as unbelievable that properties placed on the market at least 4 weeks ago should not sell because of a typical winter cold snap! I can’t imagine getting excited about spending close to $1million or maybe more on a new dream home or a very appealing investment property, no doubt taking the trouble to go out and inspect on at least one occasion, maybe even getting building and pest reports but deciding on Saturday morning that perhaps it’s just a bit too cold to attend the auction!

We also seem to have a great need in the Real Estate industry to find excuses for things going wrong or not working out as predicted. I am not suggesting that the temperature can make a difference to clearance rates but surly we would know this before taking on a mid-winter listing? Anyway, regardless of reason, auction clearance rates fell quite dramatically both in Melbourne and Sydney over the weekend which means also that property investment in Sydney falls as clearance rates decrease. It may be as much to do with a generally softening Sydney market due to a general election coming up or a possible change to negative gearing or even the most obvious that Sydney prices are just now unaffordable with the lowest rental yields on record.

Even so, there were some interesting results with a few homes still selling well above expectation. You may read more about this here: http://goo.gl/qw0P3f

Jun 27
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Rentinvestor means you are interested in tenancy and landlord issues

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Rentinvestor means you are interested in tenancy and landlord issues.

As more and more new owners of investment property continue to rent, being a Rentinvestor  means you are interested in tenancy and landlord issues, you don’t want to be the “tenant from hell”, we often read about but you certainly want to avoid the” nightmare landlord”.

It would seem that we have a disproportionate number of tenants whose landlords are deciding to manage the properties themselves and this is very often a sign to keep well clear of becoming a tenant!

Auction-market

As a Landlord, do not try to manage your own property investment

Landlords who do not wish to pay a qualified and experienced agent always have a reason for not using an agent. The first of these might just simply be that the Landlord does not want to spend the tiny percentage of his rental, a cost that is fully tax deductible, on agent fees. I’d say this sign of financial ‘tightness’ would suggest you may be contracting yourself with someone who may not be keen on spending any money on necessary and urgent repairs as they come along. In some cases, landlords will decide to manage their own investment property in order that they can just flaunt the Residential Tenancies Act and they cannot find an agent to work for them.

Even if you find Landlord/manager who seems to do a reasonable and fair job, many have problems in obtaining a refund of their rental bond. Often the bond has not been lodged with the correct authority and/or the owner has very different ideas of ‘fair wear and tear’ to an experienced agent who works with hundreds of tenants each year.

There are some things a new tenant can do for protection like being thorough on an initial inspection and taking many photographs at the beginning of a new lease.

The Greens want Canberra to take over responsibility for rental standards from the states by introducing a national tenancy act as the rules currently vary from state to state. This would seem to be a good idea which will help all tenants. As far as the property investor owner being your first point of contact as a tenant however, we would recommend you keep looking until you find a place with good professional management.

Read more: http://goo.gl/gssv0s

Jun 21
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Investment property –how much can I borrow

By | banking, best investment, Economy, Financial, Investment, Negative Gearing, News | No Comments

 Investment property –how much can I borrow?

Investment property –how much can I borrow? The answer to the question, “ Investment property –how much can I borrow“, seems to change month by month and sometimes week by week but currently, in a nutshell, the answer is an awful lot!

The critical changes in the mortgage market over 2015 with the introduction of tougher bank lending rules for property investors now seem to be being reversed. Most of the big banks decided they would not lend for property investment at all if mortgage insurance was necessary, so in most cases, the property investor had to be in a position to borrow only 80% of the value of the new investment property. At the same time, the amount they were prepared to lend as a ratio of income was also decreased quite substantially making it much more difficult for buyers to fund an investment property.

Investment property borrowing capacity seems to vary weekly

Investment property –how much can I borrow. Investment property borrowing capacity seems to vary weekly

Now, we are told, some lenders will write loans that were 9.4 times a property investor’s income and we are also seeing banks like Westpac now prepared to lend up to 90% of the value for property investment. In a few cases, some lenders have not dropped their Loan to Value ratio for property investment below their ‘normal’ 95% LVR.

So for a new Investment property –how much can I borrow today? Australian banks have always allowed property investors to borrow a significantly larger multiple of their income than owner-occupiers, despite a crackdown on lending to landlords. This has just been confirmed by some new research by Macquarie. This outcome should not come as a surprise to anyone although the tone of today’s media article suggesting that more tightening in mortgage lending is likely suggests otherwise.

Why would any sane lender offer more to an owner/occupier than a property investor? The lender is obviously going to include some, if not all of the property investment income in assessing a loan as well as, in most cases, some of the tax advantages the property investor will be entitled to through negative gearing. This obviously means that the property investor can afford to borrow substantially more on than an owner/occupier who will have to find the funds to pay the entire due mortgage with their after-tax income!

The research also points out that  banks were offering deeper discounts of up to 1.4 percentage points off their standard variable mortgage rates, a trend that is likely to squeeze bank profit margins; something that will probably not give many of us sleepless nights!

Read more: http://goo.gl/13F2Gk

Jun 20
0

Does your suburb influence your vote?

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 Does your suburb influence your vote?

We are asked in this recent article, “does your suburb influence your vote?”  Without going any further, I’ll drop the bomb-shell now and tell you it probably does!

Yes, if you live in one of Sydney’s many million dollar plus suburbs, they is a very high probability that you have a Federal Liberal Member of Parliament representing you. It would also seem you have a much higher probability of owning at least one other investment property and take advantage of negative gearing to lower your tax burden.

The Blue areas have excellent, expensive investment properties

The Blue areas have excellent, expensive investment properties

There are a couple of suburbs that are bucking the trend but it is not necessarily the home owners of the area who are not voting Liberal but more likely to be their tenants living in an investment property in one of the popular ‘hipster’ suburbs like Surrey Hills. High earning renters in these areas tend to have other priorities apart from housing such as priorities relating to gay marriage and the housing affordability crisis but are less interest in the economy. These are the voters that can convert safe Labor seats into Greens seats.

An examination of the 15 electorates with the most expensive median property price in NSW shows that 11 of the 15 are Liberal seats.

If we examine the median house price in NSW for Liberal voters, the figure is $1.13 million while for Labor seats it’s a paltry $790,000 according to Domain!

There are a few million-dollar seats that have firmly remained more left of centre. These include the suburbs that have gentrified over time and become expensive due to demand, rather than due to their prestige status but still maintain a good percentage of traditional Labor voters. Electorates such as Newtown, Glebe and Surry Hills, has a strong 12.9 per cent Labor trend despite a price tag of about $1.5 million.

So here is another article that should help to clear up some thoughts for Election Day. The inference seems to be that in general if you are well-off middle class you are likely to vote Liberal but if you are not-so-well-off blue collar working class, you are likely to vote Labor! Who would have thought?

Read more: http://goo.gl/jkxdyu

Jun 15
0

Median Price Sydney investment property to cost $80,137 in stamp duty

By | best investment, Economy, Investment, Market, Properties, Property Research, stamp duty | No Comments

Median Price Sydney investment property to cost $80,137 in stamp duty!

NSW treasureer

NSW Treasurer Gladys Berejiklian says a stamp duty and land tax surcharge for foreign property investors will not hurt the local market Photo: Louie Douvis

A Median Price Sydney investment property to cost investors $80,137 in stamp duty after NSW June 21st budget. That’s around $40,000 more than you might expect to pay for the same property today….. and once you have purchased your new Sydney investment property, expect to pay an extra 0.75 per cent land tax from 2017. The stamp duty surcharge will apply from the June 21 state budget, while the land tax surcharge will take effect from January 1, 2017.

Don’t Panic! This will only apply to foreign buyers of investment properties and will not apply to will not apply to Australian citizens, permanent residents of Australia or New Zealanders who have stayed in Australia at least 200 days in the last 12 months.

NSW Treasurer Gladys Berejiklian has announced that the NSW Budget 2016 has announced that Foreign property buyers in NSW will be hit with stamp duty and land tax hikes brining the State more line with the new rules in Victoria.

Based on a Sydney median house price of $995,804, the stamp duty bill for a foreign investor will increase by almost $40,000 – from $40,305 to $80,137. A Sydney median price investment property unit at $656,000 will cost an additional $26,240 in stamp duty.

Tim Pallas, the Victorian State Treasurer, increased its existing stamp duty surcharge from 3 per cent to 7 per cent and a land tax surcharge for “absentee owners” from 0.5 per cent to 1.5 per cent.

The NSW stamp duty and land tax measures are expected to raise $1 billion for the government over the next four years as the new measures are not expected to deter foreign investors. The measures are introduced with the expectation that they will improve housing affordability but it has already been shown in Victoria that the even higher increases have done little to deter foreign buyers so it is unlikely the measures will have an effect on affordability.
Read more: http://goo.gl/iaMVW3

Jun 14
0

All part of the property cycle

By | Economy, property cycle, Property Research | No Comments

All part of the property cycle; cracks emerging in Sydney’s apartment rental markets

This report from last week is one of the first we’ve seen but its all part of the property cycle and it can only get worse for Sydney over the short term.

investment property vacancy rates on the rise

investment property growth in six years time?

Just look back a few ‘blogs’ and you’ll see we have been predicting this oversupply for some months. It is pretty well universally accepted that a property market which is under-supplied, where demand outpaces supply, will witness significant property price increase. The opposite effect, a property market that is over-supplied will see prices level out or correct slightly and all see rental yields fall as landlords ‘compete’ for tenants  for their property investment.

There has been a significant upward movement of vacancy rates in Sydney over the last month of up to 0.4% according to Domain. While the over-all vacancy rate is still below what most would consider a ‘balanced market’ of between 3% and 4% vacancy, it is the third major sign of a flattening investment property market for Sydney. The first sign is softening yields or lower rental to put it another way. Yields in Sydney generally are at all time lows as rental increases have not been anywhere close to price growth. The second major indicator of course, was the slowdown of growth and the correction in prices we saw over the first few months of this year. The next obvious sign is the supply now exceeding demand and watching vacancy rates rise, all part of the property cycle!

 Parramatta has seen one of the largest rises in vacancy rates but with about 61,000 new apartments completing across the city in 2015 to 2017, over 15,000 more units than completed between 2012 to 2014 vacancy rates will certainly raise more over the next couple of years. The forecast is that vacancy rates will peak around 4%. This figure, if it proves to be true, should not cause a great deal of stress to property investors but it does seem rather low.

Full story here: http://goo.gl/bEseIB

Jun 06
0

Property Investment with confidence

By | best investment, Building, Investment, Properties, Property Research | No Comments

Property Investment with confidence

Invitation to all readers!

 

How can you continue with property investment with confidence? It was easy a couple of years ago when we knew that the Sydney property market was just booming, now the reports on a Monday just reflects the auction clearance rate of the weekend, if the clearance rate was high then “The Boom is Back!” and if it was not so high then “House prices heading downward”. This is about the best property investment advice we are likely to get from the media! The fact is the Sydney housing price boom is over but the housing market is dynamic and prices will vary up and down a little around the current median price for the next few years. A small rise does not mean ‘Boom times are back!”  just as a small fall does not indicate ‘The housing bubble has burst”.  Both make good headlines and that is what sells newspapers!

newstead

Brisbane’s best investment property

If you are really interested in what to expect in the property market over the next couple of years, why not come along and listen to and question Paul Riga, Director of independent advisory firm Urbis — an interdisciplinary consulting firm offering services in planning design, property, social planning, economics and research.

Urbis provides the social research analysis and advice upon which major social, commercial and environmental decisions are made. Their unique mix of services provides a property market insight that gives clients a real competitive advantage. Paul will be supported by John Livingstone, Director of JGL Properties the company behind Brisbane’s most iconic new development Newstead Series. Come along and hear the story behind the planning of one of Australia’s newest and most differentiated properties.

Location: Ecco Ristorante

Address: 2 St Georges Crescent, Drummoyne

Date: Tuesday 28th June 2016

Time:  6:30pm

Complimentary food and beverages on arrival

Just email info@propertyinvest.co with your name and contact number to secure one of the limited places.

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