News Archives - Lime Property Solutions

Dec 05

0

Stamp Duty Must be Reduced

By admin | best investment, Economy, Financial, Investment, Negative Gearing, News, Property Solutions, stamp duty | No Comments

Stamp duty must be reduced

NSW Planning Minister Rob Stokes has recently broken ranks with his Liberal colleagues and suggested that the federal government should make changes to negative gearing. It’s all part of the Sydney ‘affordability’ debate but it is a reduction in stamp duty which is a much better way to improve affordability. Most studies into negative fearing show that its removal is unlikely to drop property prices by any more than half of one percent, yes just 0.5%.

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.

On a very low-priced Sydney home at $550,000, the stamp duty payable to the State Government is over $20,000. Ion the same property, it would likely reduce in value by just $2,750 if negative gearing incentives were removed.

Mr Stokes argued that adding new supply to the market would not make property affordable on its own and suggested changing tax benefits for investors should be changed. In our view, it’s a pity Mr Stokes could not do the arithmetic in the last paragraph and then realise that he and his party can actually do something now to assist affordability rather than doing the political usual of putting it in the ‘too hard’ basket then passing the problem off to someone else. Read more : http://www.domain.com.au/news/stamp-duty-adding-years-to-the-depositsaving-plans-of-sydneys-home-buyers-20161202-gt2jjz/

Property Council of Australia chief of policy and housing Glenn Byres says the $40,000 an average home buyer in Sydney pays on top of their purchase price in stamp duty is a concern. In just four short years, the NSW Government’s stamp duty revenue has doubled from $4 billion to $8 billion. Stamp duty must be reduced if we are to help first home buyers.

If you want to know more about how you can save on stamp duty buying a new property investment contact: info@limepropertysolutions.com.au

Nov 22

0

The Block is a warning for renovators

By Hugh Frame | Auction, best investment, Market, News, Property Research, Real Estate, Research | No Comments

The Block is a warning for renovators

It seems to be easy money, buy an old place, renovate and make a fortune but the reality is the Block is a warning for renovators. Most, if not all of the many series of The Block have actually made huge losses but the average viewer is left with the feeling that renovation is a great way to make money!

The worry is these shows give a totally unrealistic expectation to budding renovators.

Washington Brown, Lime’s preferred supplier of depreciation schedules (www.washingtonbrown.com.au) has recently run some numbers on the supposedly successful sales in the recent Port Melbourne series and the numbers do not add up!

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.

The following is from The Washington Brown Report:-

“ From a financial point of view the development, which consisted of transforming a 1920s art deco building into a luxury apartment block, was one of the worst he has ever seen.

While I understand the magic of television, Channel 9 has outdone David Copperfield in creating the illusion of a profit to the public!

Let’s look at the numbers:

According to reports Channel 9 bought the site for around $5 million, which allowed for 6 apartments. Only 5 were sold on TV and for calculation purposes let’s say the acquisition costs is $4.2 million.

The construction cost and depreciation allowances totalled over $11 million, for the 5 apartments alone.

That’s $15.2 million alone in construction and acquisition costs.

It’s worth noting that under the Income Tax Assessment Act 1997 the initial vendor (ie. the developer) has an obligation to pass on the actual costs of construction to the purchaser, where the costs are known.

Let’s not forget there’s then a variety of other costs involved in buying and selling, and undertaking a property development, including:

Stamp duty
GST on the sale
Demolition
Marketing
Agents’ fees
Legal fees
Interest
Rates

Whilst some of these costs may have been avoided due to contra deals, the bulk would have to be outlaid by Channel 9.

I estimate these additional costs to conservatively be $2 million, which brings the total cost to $17.2 million.

The Block’s total sales realised just a little over $12 million, leaving the development in the red by around $5 million, yet it has been indicated that profits of up to $715,000 were made by the contestants.”

Just Google “How much did the block cost channel 9” , probably best to go to page two of your results and read some of these articles. It is unlikely that any of The Block series has actually made money and the The Block is a warning for renovators, not an endorsement to make money!

If you want to know more about the pitfalls of renovation and how to make money from property without the work and hassle contact: info@limepropertysolutions.com.au.

Nov 14

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Will Donald Trump burst the Australian housing bubble?

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

Will Donald Trump burst the Australian housing bubble?

Speculation is rife on everything financial, with Donald Trump at the wheel of the world’s largest economy; the biggest of these questions for the property investor is will Donald Trump burst the Australian housing bubble? Read more: http://www.smh.com.au/business/the-economy/is-donald-trump-going-to-burst-australias-housing-bubble-20161111-gsnee0

Will Donald Trump affect Australian property prices?

It was written at the weekend, “given his propensity for lying, exaggerating and generally raving, nobody can know what Donald Trump will actually do as president. He probably doesn’t know himself.” The article does not confess to general raving and exaggerating itself in that there is absolutely no evidence of an Australian housing bubble! Australia is the largest island nation in the world, it includes WA and FNQ, Tasmania, SA and everything between. There is a possibility of a ‘housing bubble’ in our two largest cities, but in many other places, prices are less than what they were 10 years ago. This is in Australia and we can’t talk about an Australian bubble, that’s Donald Trump talk!

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home.

According to the bond market reaction, Trump may burst the Sydney/Melbourne housing bubble by causing interest rates to rise.

The Trump plan, in its essence, is very simple and markets clearly believe it will work. He is planning a major infrastructure investment and, unlike Australia, he won’t let public servants constantly get in the way of the infrastructure momentum. But he will re-fire the American steel furnaces, because he doesn’t plan to use Chinese steel.

Trump also plans to lower the US tax rate and suck the enormous sums that American corporations are holding overseas back into the US. Along the way he will make it harder for Canadian, Mexican and Chinese exporters to tap the US market. He says that will be done via higher tariffs. The world is going to move from an increasingly globalised one to one where nations will look more inwards. But given today’s communication and transport systems there is a limit to this change.

The more common fear is that he could start a trade war with China that would cause a global recession which would obviously affect Australia. That would not be a good way to achieve lower housing prices. Hopefully there is enough sanity left in Congress to prevent such madness and just consider the more benign interest rate story.

The last Reserve Bank board meeting was forecasting another RBA rate cut or two by the middle of next year. Trump’s policies, if implemented, will cause a period of inflation resulting in RBA increases and that could certainly cool down the Australian housing market.

So will Donald Trump burst the Australian housing bubble? The media are always looking for stories which may deliver this result, time will tell but maybe they are on to something here that will see prices stabilise in Melbourne and Sydney.

If you want to know more about possible ‘property bubble bursts” or discuss buying new property investment, contact: info@limepropertysolutions.com.au.

Nov 07

0

Buying your first home is not easy, Bernard Salt

By Hugh Frame | best investment, Economy, Investment, News, property cycle, Real Estate | No Comments

Buying your first home is not easy, Bernard Salt

Buying your first home is not easy, Bernard Salt, some of our younger generations, Gen X and Gen Y, seem to miss the humour of one of our best known demographers, Bernard Salt, who has now written two articles over the last couple of weeks suggesting firstly, that they might like to stop buying expensive avocado lunches and save for a home or even give up their overseas holidays and save instead for a house deposit! Like me, Bernard is a “baby-boomer”, one of the lucky who just drifted through life buying cheap properties and having a ball!

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home)

While his recent articles should not be taken too seriously, or rather too literally, I do feel some annoyance at how hard the world is perceived to be to some of the younger generations trying to jump on the first step of the property ladder. It has never been an easy step to take, Buying your first home is not easy, and it can be annoying when we baby-boomers are reminded just how easy it was for us to get started.

Read more Bernard Salt article here: https://goo.gl/wGnqiK

My first home was bought in the UK. I was a 21 year-old teacher and the very small two-bedroom duplex I purchased was around eight times my annual income. I managed the deposit through working for the previous four years, sometimes up to 126 hours per week during all the long university breaks and saving by staying at home. On a couple of occasions, I did take lower paying jobs which offered me free accommodation and free meals in holiday destinations like France and the Channel Islands. While I didn’t save much on these jobs, I at least had the opportunity to explore and enjoy a different culture. Travel expenses were absolutely minimal as I hitch-hiked most of the time.

When I eventually moved in to my first home, I had most of the basics from presents from a large family. I had a bed, lounge suit and necessary kitchen-ware and linen. I made most of the ‘furniture’ from cheap melamine sheets and watched a black and white television gifted to me as most people were switching to colour. I did have an old car that was serviced by me with the help of a friend. I had to take on another evening part-time job to help make ends meet. The only time I could ever afford to eat-out was at family gatherings where usually, my parents were paying. Every couple of weeks, if the budget allowed, we may have had a bottle of wine. Eight years after buying the house, I had my first 10 day trip overseas.

This was a lifestyle very typical to all my friends, it did not seem ‘hard’ and it certainly was not unusual. The older generation thought, quite rightly, that we never had it so good.

In speaking to older Australians, including many European immigrants from the 50’s and 60’s, it seems their life was similar. Many tell stories of building their own first home with the help of friends and sleeping on mats on the floor until they could afford a proper bed.

I’m very glad the world has changed and our standard of living has improved immensely since the 1970’s but I do think Mr Salt, tongue in cheek or not, is putting out a very important message; it is not easy to get on to the property ladder buy it never has been! It does often take some sacrifice in current lifestyle and it does involve living on a tight budget …. and always has!

‘Affordability’ is always an issue after a period of cyclic growth. Buying your first home is not easy and never has been. The same stories emerge after every growth cycle. We had the same discussions in Sydney in 1989 and again in 2003 after the last two major growth cycles. After a few years, income increases, borrowing rates change and things become easier – affordability increases! If we make the necessary sacrifices and budget/lifestyle changes now, then there may be a good chance that advantage can be taken during the next phase of more-affordable housing. It will happen, it always does, just be ready for it and don’t expect to start off with everything that your older neighbours have; it’s taken them all their life to get to where they are!

If you want to know more about this or discuss buying new property investment, a great way to ‘save’ towards your own first home, contact: info@limepropertysolutions.com.au.

Nov 02

0

Banks are destroying your land titles

By Hugh Frame | banking, best investment, Financial, Investment, Mortgage, News, Research | No Comments

Banks are destroying your land titles

Last week we had a couple of days hold up with a refinance matter with one of our clients; the reason was that the banks are destroying your land titles and there may be some hicups in going digital!

It is reported today in the business section of the Sydney Morning Herald –

Affordable Housing fix is years away

By Hugh Frame | best investment, Economy, Investment, News, Properties, Property Research, Real Estate, stamp duty | No Comments

Affordable Housing fix is years away

Don’t you get fed up reading about the latest ideas on affordable housing? Now we read again something we all know, the affordable housing fix is years away!

The latest government inquiry, costing thousands of dollars again has been abandoned and placed in the ‘too hard’ basket yet again, good and not surprising news to the property investor but not so good news for the first home buyers in our major capital cities.

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home)

It’s reported today, “Treasurer Scott Morrison’s speech on housing affordability might look like an improvement on his predecessor’s “get a job, a job that pays well” advice. It’s not. In practical terms, it’s nothing at all.”

It’s reported as one of the government’s favourite sort of problem, “one they can flick responsibility for onto the states and spend some years “thinking” about it without actually doing anything constructive.”

So the problem is all about supply, or is it state land use regulations, or is it tax policy and something to do with the cost of supplying expensive social housing? Maybe it’s all about changing our capital gains tax rules or getting rid of negative gearing or just moderating the rules on new land releases? It might also help to charge developers more for appropriate infrastructure around new releases or developments, (struggling to understand this one?) or just a simple case of easing the huge amounts of stamp duty payable on the purchase of a property?

Of course, the answer may just be reviewing the first home owners grants, introduced in 2000 to assist with the additional costs in building caused by the introduction of the GST or maybe it’s just about lowering interest rates even further and keeping them low?

Now you know what some of the issues are you should have some idea of how easy this is to rectify! For a fuller explanation, you might like to try and understand this article: https://goo.gl/pE6vAR

I really think it is fair comment to assume that property investors have little to fear in the future about what government can or will do to make owning a property more affordable. The one thing that is very true and understandable about the issue is that affordable Housing fix is years away, if ever.

If you want to know more about how to make money out of the ever increasing price of property, contact us at info@limepropertysolutions.com.au.

Oct 24

0

Empty bedrooms? Put your money where your mouth is!

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

Empty bedrooms? Put your money where your mouth is!

Apparently Sydney now has 20 years of future housing stock in empty bedrooms? Put your money where your mouth is NSW if you want to utilize more of this ‘space”.

Downsizing is too costly for many older Australians

The first point of this new argument must be defining who has these ‘extra bedrooms”? While some bedrooms in the homes of empty nesters may be empty some nights of the week, many do not have empty bedrooms gathering dust. After years of being cramped with children, it’s a later life treat to own enough space for a study or an area to pursue a hobby. These rooms can also be used as exercise rooms to keep ageing bodies trim. Most are also grandparents who require bedrooms for visiting children and grandchildren; they are perhaps underused but certainly not empty.

(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home)

It’s also time to review the massive disincentives placed on older Australians to downsize. Many empty nesters will never consider downsizing because the appropriate type of housing is just not being built. Sure, we are constantly being warned about the forthcoming glut of apartments in most of our east-coast city markets, but many older Australians are not prepared to give up their gardens or a small private area where they can allow their ‘fur-children’ some space to run around outside the home. A smaller garden is often an attractive proposition but no garden at all is a deal-breaker. We need more villas and town homes in the established suburbs where the majority of these older Australians currently live.

The financial penalties for retirees downsizing can be enormous. Just imagine, an older retired couple in a slightly above average (larger) home worth $1.5 million. The home sale, including marketing and legal costs will cost them around $30,000. They buy a smaller town house at around $900,000 and they say goodbye to another $40,000 in stamp duty, another $2000 on legal fees and probably around $10,000 in removal expenses and buying some new furniture that ‘fits” their new surroundings. Basically, they would need to budget around $100,000 of their, (in most cases) diminishing wealth just to move.

Having made the move, they find that they have an additional $400,000 in the bank. This may be enough to stop many of their senior benefits, including pension payments. The argument, of course, is that they don’t need any government funding now but this misses the point that older Australians do love their children and grandchildren and they see it as an essential legacy to leave an inheritance to their family.

It will always be difficult to persuade older people to move out of their family home to free up empty bedrooms for the younger generations but as long as our governments insist on penalising such a move, the bedrooms will stay “empty”. Read more https://goo.gl/jBePqx

If you want to know more about appropriate house type investment contact us at info@limepropertysolutions.com.au.

Oct 18

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Forecasts for Housing Price growth

By Hugh Frame | best investment, Economy, Investment, News, property cycle, Research | No Comments

Forecasts for Housing Price growth
We seem to be by bombarded by various forecasts for Housing price growth, or maybe I should say, in some cases, housing crashes or bubbles bursting.
If you are feeling in a particularly negative mood, or perhaps you are a first home buyer waiting for the market to crash in order that you can buy, then its best to try and get a hold of the many international companies, looking at the Australian housing market from the outside, to find the doom and gloom price crash scenarios. Just last week, Deloitte Access, (not for the first time) tipped property to be the ‘worst investment’ over the next few years; I’m sure they’d love to get it right just once!
If you are interested in hearing a more positive forecast for real estate prices, you can usually depend on the Real Estate Industry itself, particularly some of the better known, (not necessarily more accurate!) organisations like Domain or Hotspotting “ guru” Terry Ryder, who infamously wrote that there was ‘no mining boom’ a few years ago and high prices, high rents and growth would continue in some of our mining boom towns!
(Please contact us at info@limepropertysolutions.com.au for further information or the chance to discuss this and other issues in the comfort of your own home)
Probably, by far, the most dependable forecasts we have are those done by BIS Shrapnel on behalf of QBE, the most recent being the Australian Housing Outlook Report 2016-2019. This report is published in October each year and the latest has just recently been released.
While the press report on this release loves the opportunity to use phrases and words like “The Boom is over” and “Prices Plummet”, the experienced property investor will find absolutely nothing out of the ordinary or unexpected in the report. In summary, Sydney has hit the top of its growth cycle and we may see a small correction in the price of units and an even smaller correction, if at all, in house prices; exactly what happened after the 1988 and the 1993 Sydney ‘booms’ but maybe not as much as the small corrections of the last two booms – just don’t expect any price growth over the next 3 years. The forecasts for Melbourne are very similar although we may see a slightly larger correction in unit prices and a small correction in house prices.
Brisbane is forecast to see a drop in unit prices due to the very high level of unit development in the CBD and fringe but house price growth will continue, making the Brisbane house market the strongest growth market in Australia over the next 3 years.
Take away the emotive language of this daily mail article and the truth behind it shouldn’t hurt any property investor in our east coast cities too much and, in fact, should see Brisbane house investors continue to smile! Read more https://goo.gl/a6XArr
If you want to know more about the QBE Forecasts for Housing Price growth or find out more about growth suburbs contact us at info@limepropertysolutions.com.au.

Sep 30

0

What Sydney Housing Bubble?

By Hugh Frame | best investment, Economy, Investment, mortgage rates, News, Properties, Real Estate | No Comments

What Sydney Housing Bubble?

Another international story about “The Bubble” – what Sydney housing bubble? Should be he title! It seems that every month or so we read of overseas ‘experts’ (and very occasionally some local ‘expert economist”) telling us here in Sydney that doom is on the horizon for house prices in Sydney. Instead of peering over price growth charts in their far-away offices on the other side of the world, maybe they should just try finding a property to buy or rent in our great city before predicting yet another housing price crash!

Highlights from the recent UBS Global Real Estate Index Report place Sydney as the fourth-biggest housing bubble in the world. A bubble is something that is about to burst so this suggests that our young in Sydney actually will have no problem at all in entering the housing market as prices tumble when the bubble bursts. How many people do you know who actually believe this is close to coming true?

Bubbles burst when a city ends up with a major over-supply, populations decline and/or when loan repayments become impossible. With all the warnings of bubbles bursting in Sydney over the lifetime of anyone reading this article, it has never happened! Sure, towards the end of a boom period, we have seen prices correct by a few percentage points but no-one alive can ever tell you about the time the Sydney Real Estate market bubble burst.

If you actually believe this overseas take on the Sydney market, then you must also believe the following is about to occur:-

Sydney’s building boom is about to leave us with a massive oversupply of new stock
Sydney’s population boom is about to come to a screeching halt
Sydney is about to be hit with a very large unemploymnet problem
Interest rates are about to increase dramatically leaving home owners unable to pay their mortage

If you are concerned about interest rate hikes, read this: http://dailym.ai/2dno9k3 – they are likely to remain low for decades! As for the likelyhood of the other factors – forget it!

It would be great for our younger generation trying to make their first step on the housing ladder if there was the slightest element of hope in our non-existant bubble bursting- what Sydney Housing Bubble – and maybe the topic makes for a little light banter around the BBQ but I’m convinced anyone who knows this great city also knows the story of the bubble bursting is just pie in the sky.

Is there an oversupply and should property investors be concerned?

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

Is there an oversupply and should property investors be concerned?

In the last few blogs, we have been discussing the game-changing projects now being undertaken in the heart of Brisbane and the Big Australia policy all pointing to the need for more property and opportunity for property investors, so is there an oversupply and should property investors be concerned?

There is little doubt that there are some pockets of short-term concern in our major cities. Fringe suburbs in Sydney are seeing small corrections in some unit prices, inner Melbourne has seen substantial falls in some unit developments and Brisbane units are seeing slight falls in yields in some areas. It’s all very temporary, we have been in much worse temporary over-supply situations before and again the over-supply is in relatively tight pockets where just too much of inappropriate property development has taken place. I use the word ‘inappropriate’ because the vacancy rates are highest in small cheaply-built units that really depend on one and one only selling point – relatively good location. This type of apartment may be popular for students and young professionals leaving home for the first time but they do not attract the owner-occupier or the longer-term tenants wanting a larger space to call ‘home’. When other ‘better’ options are available in a market place, it tends to be the inferior properties that suffer from long vacancy which in turn drives down rental yield as landlords strive to attract fewer renters.

It’s all temporary anyway, and the recent report on Sydney’s population boom makes this abundantly clear; we need more homes for an exploding population. Sydney is now growing faster than predicted putting more pressure on the city’s housing needs.

Rob Stokes, NSW Planning Minister, describes this population boom as a “symptom of Sydney’s success”. Sydney’s population is expected to leap by more than 2.1 million people in the next 20 years – about 170,000 more than predicted only two years ago. In 2014 Sydney was projected to have a population of 6.25 million within 20 years, up from 4.29 million in 2011. The updated projections anticipate a 6.42 million population in 20 years.

It’s planned that 1/3 of this new population will be housed in new high density corridors along major transport routes, one third will be in higher density existing areas and the remaining one third will be housed in our expanding growth corridors, particularly in the west and south-west. In the Camden area in the south-west, the population is expected to rise from 58,000 in 2011 to 224,000 in 2036. In Parramatta the population is expected to double from about 200,000 in 2011 to 416,000 in 2036. The City of Sydney population is expected to increase at a similar rate – from 183,000 in 2011 to 315,000 in 2036. Stark rates of growth are anticipated in the Hills, Botany Bay, Liverpool, and Blacktown.

Over-supply? ….. Maybe in small pockets but for a very short time!

News

Stamp Duty Must be Reduced

The Block is a warning for renovators

Will Donald Trump burst the Australian housing bubble?

Buying your first home is not easy, Bernard Salt

Banks are destroying your land titles

Affordable Housing fix is years away

Empty bedrooms? Put your money where your mouth is!

Forecasts for Housing Price growth

What Sydney Housing Bubble?

Is there an oversupply and should property investors be concerned?

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