Jun 21
0

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 [email protected] with your name and contact number to secure one of the limited places.

May 31
0

Truth about Chinese investment property buyers

By | 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

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

Property investment surge in Sydney

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

price-growth

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 | 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

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
0

Advantages of renting over buying a home

By | 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.

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.

  1. Negative Gearing
  2. Spreading the risk
  3. Liquefying our assets on retirement
  4. Rent can be cheaper
  5. 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 | 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

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

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