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Issue # 054 September 27 2013

"What's Happening In New South Wales"

"What's Happening In Queensland"

Danger Signs For Housing Market

Hot Property To Spark Sunshine State Surge

Sydney and Melbourne property markets are running hot with Sydney auction clearance rates just shy of 90 per cent and Melbourne's clearance rates just under 80 per cent. Experts say house prices are not in bubble territory yet, but there are danger signs. 24 September 2013. More.

Sydney’s inner-city housing market may be blisteringly hot, but southeast Queensland will be the standout performer, delivering double-digit price growth annually over the next three years, according to real estate agent John McGrath. Sydney's house prices were likely to rise by 10 per cent or more this financial year, Mr McGrath said. 21 September 2013. More.

Cairns Market Awaits Tourism Development Considering The True Cost Of Negative Gearing Those with negatively geared property need to factor in the opportunity cost associated with losing money over a period of time when calculating the breakeven point of their investment. According to Smartline Personal Mortgage Advisers, understanding the real impact of negative gearing costs reinforces the argument that it’s generally best used as a short to medium-term investment strategy. 17 September 2013. More.

Off-The-Plan Values Coming Back At 15% Below Purchase Price Sydney’s off-the-plan apartment market is in a property ‘bubble’ and is an inflated market that valuers are seeing through, according to Just Think Real Estate’s Edwin Almeida. Pointing to the Sydney suburbs around Parramatta, including Westmead and Granville, Almeida told Property Observer that overseas buyers are falsely inflating property values by trying to ‘save face’ when valuations come in short. 24 September 2013. More.

Sydney On Track For Property Boom, Prices Set To Rise 20pc, Says SQM The recovery in Sydney's residential market will turn into a boom next year, with low interest rates and improved sentiment fuelling a 15 per cent to 20 per cent increase in housing prices, according to SQM Research. 17 September 2013. More.

High Demand For Low Prices In Coffs Harbour Coffs Harbour is seeing a rise in demand for low priced stock, according to PRDnationwide research. RDnationwide’s Property Watch report showed a 12 per cent increase in house transactions from the same period last year, reflecting a renewed demand for affordable housing, particularly among investors. 24 September 2013. More.

The Aquis, a tourism based development just north of Cairns, has caused a stir in the local property market – despite not receiving final approval yet. The $4.2 billion “mega resort” near Yorkey's Knob, developed by a Chinese investor, is expected to have a positive effect on Cairns’ idle property market which has fallen behind since the GFC. 25 September 2013. More.

Brisbane Property Market To 'Upgrade' The Brisbane property market should pick up this financial year, as “upgraders” look to buy their next house. But a longer term trend could see smaller lot sizes embraced as a way to maintain housing affordability. Business research and forecasting group BIS Shrapnel released its residential land report for 2013-2018 on Monday, which showed new housing starts and lot construction in Brisbane continued to fall during 2012-13. 16 September 2013. More.

Secondary Properties, First-Class Profits "Location, location, location" is one of those catch phrases drummed continually into the head of anyone who even skirts close to buying real estate. From the agent to the financier to the guy driving your cab - everyone will tell you, if the site isn't in the right position, you're creating a rod for your own back. If you look around, however, there are plenty of properties located in the most inauspicious spot just waiting for someone to turn a sow's ear into a silk purchase. 17 September 2013. More.

Sydney To Boom Over The Next 12 Months… But Southeast Queensland To Follow Well known real estate agent and chief executive officer of McGrath Estate Agents, John McGrath, is predicting Sydney prices will boom over the next 12 months. However, he suspects southeast Queensland will have the strongest growth market in Australia over the next three years. 24 September 2013. More.


State Of The Nation Continued… "What's Happening In Victoria"

"What's Happening In South Australia"

Array's $8 Million Crowning Jewel Penthouses Grace Yarra's Edge

What Can You Get At The Top End Of The Rental Market In Adelaide?

The crowning jewel at the top of the Array tower in Yarra’s Edge is two, multi-level fourbedroom penthouses with a price tag of $8 million each. The east and west penthouses span over levels 38 and 39 and feature 424 square metres of indoor living space and over 62 square metres of alfresco space. 24 September 2013. More.

With an engineer- designed staircase, 3.3m ceilings, a state-of-the-art kitchen and heated pool, this brand home in Norwood, Adelaide has just been rented for $1200 per week. Real Estate agent Nick Ploubidis of Professionals - Norwood was able to find a tenant for the designer home within one week of it going on the rental market. 16 September 2013. More.

Melbourne Tops 80pc Clearance Rate After hovering above 70 per cent for much of this year, Melbourne’s auction clearance rate exceeded the 80 per cent mark over the weekend. Australian Property Monitors (APM) recorded a result of 80.1 per cent for Melbourne, up from 72.9 per cent last week. RP Data recorded a preliminary result of 76.9 per cent, up from 72.5 per cent last week. 24 September 2013. More.

Victorian Market Still Below Its Best: RP Data Two useful statistics for measuring the health of the local market, particularly the private sale one, are the number of days a dwelling is on the market for and the amount the vendor discounts the property over the course of the advertising campaign. A review of those metrics for the Melbourne private sale market for houses shows that time on market is approaching the lows of 2010 and 2007 but that vendors expectations are less likely to be matched by the market. 26 September 2013. More.

Growth Boost For CBD Living A block of 15 apartments, to be sold in the CBD, will help boost growth in Bendigo and create a more livable city. The upper levels of the historic Webb and Co building will soon be revamped and made available for purchase, after several years of work by the current owner. 23 September 2013. More.

Higher Demand, Clearance Rates Signal Rising Property Market Spring has sprung when it comes to property sales. Both Sydney and Melbourne are reporting very high auction clearance rates, and buyers are having a harder time securing homes with a lot more competition making house hunting frustrating. In midSeptember, the Sydney clearance rate came in on top, racking up a 84.3% with more than 800 properties under the hammer. 25 September 2013. More.

$5b Infrastructure Project Brings Potential Property Gains The Braemar Bulk Export Project has been designated a Major Development by the South Australian Government, moving the approval process another step closer to finalisation. The proposal incorporates a 385-kilometre infrastructure corridor that would link the upper Spencer Gulf to iron ore resources in SA’s northeast. Infrastructure and Mineral Resources Minister Tom Koutsantonis says the corridor would provide a low-cost, high-volume export solution for transporting iron ore to port. 25 September 2013. More.

The Game-Changers For Accessing Capital Cities' CBDs A new report has been released highlighting the critical condition of accessibility Australia's largest CBDs are experiencing, providing a 'game-changer' for each city that will shape residential demand in years to come. The Tourism & Transport Forum's (TTF) report, Accessing Our CBDs, analyses how to improve transport in the CBDs of Australia's five biggest cities and how this will shape them, and the surrounding areas. 18 September 2013. More.

Adelaide Shuns Middle-Brow Apartments Adelaide | The State Government’s move to abolish stamp duty for city apartments has had a limited effect, as high profile developments continue to struggle to sell. Despite well-publicised launches, developments such as Sturt Street’s New Mayfield and The Rowlands Apartments, off Grote Street, have had limited success, while the site for Gouger Street’s proposed TangCheng development is being sold. Developers say there is high demand for affordable one-bedroom and studio apartments, as well as high quality penthouses. 23 September 2013. More.


State Of The Nation Continued‌ "What's Happening In Western Australia"

"What's Happening In The Northern Territory"

Perth Vacancies Rise, But Stabilising Nationally

Renovation Sector Feels Pain Of Property Slump, Says BIS

New figures have revealed that residential property rental vacancies have remained largely stable during August, at 2.2%, according to SQM Research. Across the country there are 61,077 vacancies recorded, with a 0.3% increase across the country since August 2012. Perth had the biggest standout in vacancies, increasing by 1% since August 2012, which SQM Research largely attributes to the commodities boom downturn causing less employees to seek temporary residence. 24 September 2013. More.

The state of Australia's home renovation sector has been described as ''alarming'' by analyst BIS Shrapnel. The company's managing director, Robert Mellor, said an unprecedented plunge in approval figures for alterations and additions was seriously hurting builders and suppliers. The value of approvals plummeted from $6.86 billion in financial year 2009-10, at the height of the last property boom, to $5.91 billion last year, according to Bureau of Statistics figures. 25 September 2013. More.

Dissecting The Market What Makes Australian Property A Smart Investment? Australia remains one of the most sought-after countries on international property portal TheMoveChannel.com. Sydney, Perth and Melbourne are all high on the wish list of Down Under destinations. But what makes Australian real estate a smart investment? The country’s sunny weather and relaxed lifestyle has long been a big draw for overseas buyers looking for a new life. 19 September 2013. More.

Where does the property market really stand at the moment? RP Data senior research analyst Cameron Kusher breaks it down for you. Rental rates across the capital cities have been increasing over the past year and have risen at a faster pace than inflation. Over the 12 months to April 2013 capital city house rents have increased by 3.4% compared to a 3.0% increase in unit rents. 18 September 2013. More.

Alarm At Lowering Agent Bar Housing Lots Shrink By Up To One Third New houses in Australia's capital cities are being built on plots of land that are up to one third smaller than 10 years ago, says industry analyst BIS Shrapnel. BIS Shrapnel's report, Outlook for Residential Land, says property developers are now producing smaller lots to encourage demand. 16 September 2013. More.

Housing Prices On The Rise, Latest Data Shows Housing prices continued their rise in the week after the federal election, figures show. The RP Data-Rismark Daily Home Value Index for the five mainland state capitals rose by 0.5 per cent in the week ending Sunday, September 15. The rise brought the annual rise in housing prices, which bottomed out in mid-2012, to 5.7 per cent. 16 September 2013. More.

WA Landlords Must Lodge New Security Bonds Private landlords in Western Australia are being reminded that they must lodge new security bonds. WA Consumer Protection said the bonds must be lodged with the Bond Administrator to comply with changes to tenancy laws which came into effect in July this year. Existing bonds will need to be transferred to the Bond Administrator by 31 December 2014. 19 September 2013. More.

A plan to reduce education and professional development standards for real estate agents will put consumers at risk, real estate agents say. The National Occupational Licensing Authority has proposed changes to lower the industry standards. Real Estate Institute of the NT chief executive Quentin Killian said home buyers and property investors were most at risk from the changes. 20 September 2013. More.

Nightcliff Our Only Real Rental Hot Spot The Darwin rental market was "not as strong" as expected, according to the results of a study published by Australian Property Investor magazine. The magazine, using data compiled by SQM Research, compiled a list of the 100 capital city suburbs with the lowest rental vacancy rates. Just one Darwin suburb - Nightcliff made the list. 13 September 2013. More.

FHBs Need To Return To The Market To Underpin Next Recovery Stage: BIS Shrapnel The Reserve Bank of Australia is to go easy on interest rates in the next 18 months and there could be the possibility of more cuts if property conditions worsen, according to BIS Shrapnel. BIS Shrapnel has forecasted 156,800 dwelling commencements across the nation as the final result for 2012/2013, an annual increase of 8%. 18 September 2013. More.


State Of The Nation Continued… "What's Happening In Tasmania"

"What's Happening Internationally"

MLCs Scrutinise Bid For Basic Rental Home Standards

Rural English Estates Continuing To Perform Well As An Investment, Latest Survey Shows

Tasmanian Upper House MPs are considering whether to give more power to the Residential Tenancy Commissioner when dealing with property owners. The Government is trying to enshrine in legislation basic standards for rental properties, including hot and cold water, a separate bathroom and cooking facilities. The legislation passed the Lower House in April and is now being debated in the Legislative Council. 18 September 2013. More.

Gen Y, First-Time Buyers Optimistic On Housing Costs The company behind Australia’s number 1 property website realestate.com.au, REA Group (ASX: REA), has released the annual results from its Housing Affordability Sentiment Index (HASI) survey. The results of the HASI survey show that “the perception of affordability has improved across the country, with this year’s HASI revealing that all states and generations have experienced an increase in their sentiment towards the cost of housing over 12 months. 24 September 2013. More.

The investment performance of rural estates in England, boosted by the strong growth in farm land values, continues to perform well against other asset classes according to a new survey. The Savills 2013 Estate Benchmarking Survey shows that average gross income on all estates increased by 5.3% to £212 per acre, which is a continuation of the upward trend that began in 2001. 24 September 2013. More.

Negative Gearing Is Not The Way Forward: Kevin Lee Most people confuse cash-flow and gearing believing they're the same thing; they're not. Cash-flow is the pre-tax income your investment property generates week after week, whilst gearing relates to how your investment property is financially structured after tax. Few investors are aware that negative gearing is a financial trap. In a nutshell, negative gearing is where you lose money month in month out - because you believe the value of the property will increase sufficiently over the short term, to offset those monthly losses. 17 September 2013. More.

Controversy Corner Proposal To Give Councils Power To Force Homeowners To Fix Their Dilapidated Houses Councils will have greater powers to make homeowners fix their dilapidated houses under proposed new laws to be tabled in Parliament today. And homeowners who don't remove car wrecks and other mess from their front yards will be slapped with $390 fines under the proposed changes. Councils now only have the power to act if a property is considered a risk to public health or if the property is structurally unsound. 24 September 2013. More.

Derelict, Uninhabitable Property Boosted By Ideal Location Putting the old real estate adage "location, location, location" to the ultimate test, this derelict, uninhabitable property is arguably Hobart's worst house. But its central location, on Goulburn St between Harrington and Barrack streets, means the CBD, Salamanca, schools, restaurants and everything a Hobartian could need is practically on your doorstep. Slater and Gordon research reveals location continues to be the No.1 priority for home buyers, while the condition of the property ranked last. 17 September 2013. More.

Soft Start Tipped For Australian Market The Australian sharemarket is expected to have a "softish start" on Monday as the US faces a disruptive budget and debt showdown. AMP chief economist Shane Oliver said US markets gave up some of their mid-week gains to close lower on Friday, with the Dow Jones Industrial Average falling 185 points (1.19 per cent) and the S&P 500 shedding 23 points (0.7 per cent). 22 September 2013. More.

If you would like to voice your opinion on any article you have read in the State Of The Nation Newsletters or elsewhere that has concerned you, please send the article and your opinion on it to us and we will include it in a future issue of the State Of The Nation. Send your opinion to kevin@smartpropertyadviser.com.au

Some Parting Advice “When you invest for cash flow in the right areas, you have greater control of your financial future and you won't find yourself in a boom-bust situation.”

Until Next Time… Kevin Lee www.smartpropertyadviser.com.au

State of The Nation Issue 54 Sept 27, 2013  
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