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 10

0

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 09

0

Chinese property investors – Brisbane more attractive option.

By Hugh Frame | best investment, chinese investment, Economy, finance, foreign investment, Market, Property Research | No Comments

Chinese property investors may see Brisbane as a more attractive option.

A recent media article is suggesting that new Chinese property investors may see Brisbane as a more attractive option.

Brisbane more appealing to Chinese property investors

Chinese buyers have been at their most active in the Melbourne apartment market over the last few years but it now appears that there are a number of issues that will slow down Chinese investment to such an extent that inner-city apartment projects will be shelved and sales may fall through.

Generally throughout Australia, various issues have been arising which have made it much more difficult for Chinese buyers. Foreign Investment Review Board rules have stated for some time that non-residents can purchase only new units and townhouses but until recently, the rule was not well policed. Even so, the Chinese have been prolific buyers in Melbourne’s off-the-plan apartment market. Just last week, Westpac announced it would stop writing mortgages to non-residents, while other major banks have reduced loan-to-value ratios and tightened eligibility criteria.

As Australian banks have been making it tougher for foreign buyers, the Chinese government is reining in money flowing through underground banks. The Chinese are only permitted to send $US50, 000 ($68,000) limit per person each year outside the country and with the crackdown on underground banks buying property investment in Australia is more difficult.

Now, on top of all this, the Victorian government introduced a foreign buyer stamp duty surcharge and then more than doubled it to 7 per cent in just a year!

All of the above has led to fears that Melbourne’s already over-supplied inner-city apartment market will see new projects shelved and existing off-plan sales may fall through.

The 7 per cent in just a year tax on foreign property investment is sending out the message that Victoria does not want any more Chinese investment. In comparing buying an apartment in Brisbane versus Melbourne, the foreign property investor is now $40,000 worse off, diluting Melbourne’s competitiveness one agent has said.

Considering the relative price points, over-supply and general finished quality and size of units, these foreign investors are probably going to be much better off putting their money in Brisbane anyway in the medium term.

Click here for the full story: http://goo.gl/Ue2Rv7

May 05

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Will the budget affect investment property prices?

By Hugh Frame | best investment, Economy, Financial, Market, Property Research, Real Estate | No Comments

Will the budget affect investment property prices?

Like every federal budget we have ended up with a few winners and a few losers but our main interest is will the budget affect investment property prices?

Mr Turnbull in Canberra

Tuesday night did not really give us any surprises as nearly all measures announced had been flagged in the previous few weeks. We knew there will not be any changes to capital gains tax or negative gearing while we still have the Turnbull Government. We have a few commentators who do believe that the crackdown on superannuation tax concessions for the rich, coupled with a budget day cut to interest rates, could increase the flow of funds into negatively geared investment property.

On the other hand, with only the top 4% of earners affected by the caps now placed on superannuation, in the unlikely event that they do decide to park their ‘extra’ funds into negatively geared investment property, it is still unlikely that this would have much of an effect on the Australian property market. With all the arguments on the topic of negative gearing we’ve been hearing pre budget, with more to come as we lead up to the election, we should all now be aware that negative gearing is a general investment strategy which just happens to work for investment in property as well as all other investment assets.

We may see some of the 4% of high earners look for some tax relief in negative gearing through property, but it is highly unlikely that this will generally affect investment property pricing.

Of course, another group to ‘miss out’ on the budget were first time property buyers. Had we seen some greater incentives on assistance for this group, then we may have seen small differences at the entry level of the property market. However, again the first home buyer has been ignored so no changes there.

Two links here for those interested in further media comment: http://goo.gl/9aWnlW and

http://goo.gl/StLBlL

May 04

0

The Gold Coast – A place for property investors

By Hugh Frame | best investment, domain, Investment, Market, News, Property Research, Research | No Comments

The Gold Coast – A place for property investors

Sydney has been the best investment market in Australia for the last few years but close on its tale for capital growth in the last couple of years has been The Gold Coast – A place for property investors!

The Gold Coast was voted one of the top three places in the world to buy a second home in by the well-respected Knight Frank annual global The Wealth Report 2016, that strip glitz along 57 kilometres of Queensland coastline placed in the same international league as places like the Cote d’Azur in the south of France, and Spain’s Ibiza. surfers-sunrise

The Gold Coast suffered a major downturn in prices immediately after the Global Financial Crisis. There were a few major factors that saw the Gold Coast investment property market take a big dive but the principle two were reasons were an oversupply of luxury units and secondly the tourism based economy collapsed as tourist could no longer afford to come to Australia because of the high dollar (and of course many lost a lot of money in their own home markets).

Australian tourism is again riding a high wave and job growth over the last 3 years in the Gold Coast has been close to the strongest in Australia. Infrastructure projects have been happening everywhere from the billion dollar plus light rail system (completed a couple of years before Sydney even started!) to the new roads, and New Town centres such as the massive expansion happening in Coomera. Add to this the expansion in the University and medical precinct expansion, airport expansion, the upgrade of the Casino and the up and coming Commonwealth Games, just to highlight a few, it’s little wonder we are seeing increasing prices, increasing population and a vacancy rate hovering around just 1%.

You can read more by clicking here: http://www.domain.com.au/news/golden-future-of-the-coast-20160426-gof1v1/

The Gold Coast – A place for property investors

The final paragraphs are worth reading – “With both construction and land costs significantly lower than in Sydney and Melbourne, prestige home owners and buyers can get significantly more for their buck. As a result interest is growing exponentially from interstate in what’s been named the fastest-growing major non-capital city in the country by property marketers CBRE. Two years ago, 10 per cent of inquiries for properties on the Gold Coast were from the southern states, says Gold Coast director Nicholas Clydesdale. “Now it’s over 40 per cent and it’s growing all the time.”

What the experts say

“It’s certainly a bonus if [HNWIs] can see some upside in the capital value of their asset over the holding period.” – Michelle Ciesielski, Knight Frank

What’s on trend

By the middle of this century, the Gold Coast … will “be a city of truly metropolitan scale”. – Bernard Salt. KPMG

What to look for

“We’re now expecting very strong growth.” – Marwan Rahme, Kanebridge

Apr 21

0

Good news for Sydney’s first home buyers

By Hugh Frame | best investment, Investment, Market, property cycle, Property Research, Real Estate | No Comments

Good news for Sydney’s first home buyers .. . and not much to worry about for property investors

So Sydney has a median price below $1million again. The latest data published by Domain shows that a median priced Sydney property will only cost $995,804! This is an almost 4.7% drop from the peak prices of six months ago.

property-bubble Interestingly, this percentage drop is slightly more than the house price drop of 2008 to 2009 at the height of the global financial crisis. It is the largest drop since the end of the last Sydney house price growth cycle of 1996 to 2003. For those with longer memories of the end of the last growth cycle in Sydney, it’s not a lot to be concerned about and in fact, is pretty much the expected outcome after such a long and large period of price growth.

We should try and cast our mind back to 2004-2006 after the end of the last Sydney ‘boom’ in 2003. The next headlines which we will be seeing pretty soon will concern the number of investment properties sold off plan to property investors in 2014/15. As prices drop and we approach an oversupply of units, bank valuations will not nearly match the prices paid by investors in these ‘late purchase’ off plan investments. A bank valuation of say 15% less than the purchase price may mean that the potential buyer can only borrow 15% less than was originally intended. Investors will not be able to borrow enough to settle and/or will walk away losing their deposits on units that are now not worth as much as they are paying for them. The result will be that more inexperienced developers will be forced into liquidation and there we have a whole new set of headlines coming our way.

Maybe I’ll refer you back to this blog in a few month’s time when the first headlines appear. The moral of this story? It’s all cyclical.

Apr 21

0

Sydney’s rental affordability crisis for low income earners

By Hugh Frame | Investment, Market, News, rent, Research | No Comments

Anglicare’s recent survey into affordable rent in Sydney and the Illawarra has found that it getting almost impossible for couples on Newstart allowances or and single pensioners to find a rental property they can afford. It’s not much better for pensioner couples. affordable properties

If they want to live within 20 km of the Sydney, then it becomes impossible to find any investment property that can be rented by people on our lowest incomes.

The survey found only 76 properties advertised across greater Sydney and the Illawarra on April 2 and 3 would not leave someone on income support payments facing rental stress. Rental stress has been defined as spending more than 30% of income on accommodation.

This is maybe not too surprising with the huge growth in property prices reported in Sydney over the last 5 years but it is maybe more surprising to find that only nine properties were found in the Illawarra.
Read more: http://goo.gl/LuOeGT

Apr 04

0

Rezone Point Piper

By Hugh Frame | best investment, Building, Investment, Market, News, Properties, Property Research, Property Solutions | No Comments

Let’s rezone Point Piper to fit the Big Australia advocates

Australia’s population is growing faster than any other developed country, so here’s a great idea to make room for our increasing population – rezone Point Piper to fit the Big Australia advocates. Our population is now growing by one million every 3½ years. Many Australians have doubts about this, the world’s biggest immigration program, the developed world’s highest population growth.

point-piper

Bob Carr or recent Foreign Secretary, Premier of New South Wales and friend of Harry Triguboff of Meriton fame, is suggesting we rezone Point Piper to very high density along with many other areas Sydney. Of course, this is the huge problem with growth and development; it’s a fantastic thing to have as long as it’s not in my suburb!

Mr Carr has highlighted three challenges to all supporters of a Big Australia.

(1) They should link their population build-up to infrastructure. State and commonwealth governments should be able to guarantee Australia would not be laying out new suburbs that leave residents beyond easy walking distance from public transport.

(2) Big Australians need to get honest about the intensified zonings required as both Sydney and Melbourne climb to 7 million by mid-century. This is where Mr Carr makes the sensible, but tongue-in-cheek suggestion of re-zoning Point Piper to lift its population from its current 6000 to a robust 30,000, pumping up its R2 zonings to allow stepped towers rising from, five stories on Wolseley Crescent reaching 30 in Wunulla Road!

(3) His third challenge to the advocates of Big Australia, is to link higher population growth to progress towards a sustainable Australia. Spell out that any immigration above, say, 90,000 per annum would be dependent on certified progress in benchmarks such as stepped reductions in water use per head or carbon emissions per head. Rapid population growth is making it harder to maintain recent progress. More (treated) sewage means a bigger dump of nutrients into our rivers, more cars a rise in ground level ozone, more multi-unit dwellings, the return of harbour overflows. Read more: http://goo.gl/qARZP2

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Apr 04

0

More larger homes available for young families?

By Hugh Frame | best investment, Economy, Market, News, Real Estate, Uncategorized | No Comments

Call to unlock $1 trillion in housing wealth – making more larger homes available for young families.

Helping our retired population downsize could assist in making more larger homes available for young families. One of the blogs further down this page was highlighting the fact that a recent survey shows Australians aged over 65 suffer the second highest relative income poverty rate of the wealthy countries in the Organisation for Economic Co-Operation and Development with only Korean retirees worse off than Australians.

larger-homes

Catherine Nance of PWC has written that many baby boomers could boost their standard of living if penalties that apply to selling the family home were removed.

Her report Unlocking Housing Wealth – options to meet retirement needs proposes a range of policy changes including:

Targeted stamp duty relief for older Australians downsizing to smaller homes, similar to stamp duty relief for first home buyers.

Partial relief from the age pension means test for people who take out reverse mortgages or downsize their homes.
Greater assistance for seniors who rent their homes, who are at a relative disadvantage to homeowners.
Some tightening of the age pension asset test for very wealthy retirees, possibly through a cap on the exempt value of the family home.

I’m sure these measures would assist our many asset rich but cash poor retiring Australians. The other question to be answered would be if these measures would assist in freeing up family homes in Sydney and family homes in Melbourne, in particular, for young families who require larger homes closer to our major city centres?

Property bubble fears are overblown says CBA

By Hugh Frame | best investment, Market, News, Properties, property cycle, Property Solutions | No Comments

Property bubble fears are overblown

Property bubble fears are overblown, it always seems hard for our largest bank CBA to avoid being caught out ripping off their average client. If it’s not stealing money through financial advice that only benefits the Bank and their Financial Planner, then it’s about making claims on life and trauma insurances almost impossible for those who have paid insurance to CBA in good faith for years only to be turned away when they need to claim!

The following story is closely related to our last Blog. This time the Commonwealth Bank of Australia chief economist has spent his bank-funded time doing something that will be exceptionally helpful to us all!

property-bubble

He informs us, (after much counting and checking I should imagine) that the headline about an Australian House Bubble has now appeared three thousand and ninety three times (3093) in the media over the last 12 months. Isn’t that fascinating!

Mr Blythe goes on in his article to explain with some nice graphs that like nearly everyone else in Australia who knows a little about how the Australian Property market operates, that there is no bubble and we are very unlikely to see one for a very long time.

Again, a headline similar to No Nuclear Attacks on Australia Predicted This Month! … Another headline we could write about but what is the point?

Full story http://goo.gl/7wVAU7

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