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Issue # 062 January 31 2014

"What's Happening In New South Wales"

"What's Happening In Queensland"

Affordability Pressures To Increase Demand For Units

Ipswich Investors Taking Advantage Of Granny Flats

The growing price gap between houses and units may push more buyers to opt for units, a senior RP Data analyst has said. Based on median prices, houses across the capital cities are now 16.5 per cent more expensive than units - a record high price gap, statistics from RP Data showed. 30 January 2014. More.

Granny flats are becoming an increasingly popular option for investors in Ipswich since the local council relaxed its planning laws. Sonia Woolley, director of Brisbane-based Vision Granny Flats, said local governments across Australia are changing their planning laws to provide more opportunities for low income earners to live in established suburbs and address the issues of housing affordability. 28 January 2014. More.

Chinese Buyers Fuelling Sydney Property Hotspot Demand Public servant Tina Ford said she could hardly believe it when her three-bedroom Chatswood apartment sold this month for $1 million at an auction in which all 16 registered bidders were ethnic Chinese. 29 January 2014. More.

'Lofting' Raises Bar On Overcrowded Flats Landlords seeking to exploit desperate Sydney renters have taken to subdividing flats horizontally as well as vertically cramming more tenants into even smaller spaces - prompting strata experts to warn it is only a matter of time before it causes a tragedy. With a critical shortage of low-cost rental accommodation in Sydney, overcrowding appears to be spreading, but horizontal subdivision or "lofting" is a relatively new factor, joining hot-bunking - beds used in shifts - as a way of making more money from the same space. 28 January 2014. More.

Yes, The Toilet Is In The Kitchen Inner city living can create space challenges. But this is one of the more o riginal solutions we’ve seen… 4b/114 Burton St, Darlinghurst may be a true real estate one of a kind. Leaving nothing to the imagination, its toilet and shower on full display as part of the kitchen. Though not everyone’s cup of tea, the apartment is a small studio, and would unlikely host more than one resident. 27 January 2014. More.

Toowoomba Deliver Strong Growth For Investors There are few better examples of the potential for investors in regional Australian than Toowoomba. Queensland’s biggest inland city (population 155,000) recorded price growth in 2013 that outperformed capital city Australia, with the possible exception of Sydney. Most Toowoomba suburbs delivered double-digit growth in their median house prices last year, headed by Rangeville (the No.1 location in terms of sales volumes) which rose 14% and Newtown which rose 16%. 27 January 2014. More.

Brisbane's Most Traded Street It’s an investor’s dream equation - buy one house, sell two. Lyndhurst Road, Boondall, in Brisbane’s north, was a hotspot for investors and first home buyers alike in 2013. The road recorded the highest number of sales in the greater Brisbane area during the year, with 17 of the 163 properties on the road changing hands, figures from the Real Estate Institute of Queensland reveal. 22 January 2014. More.

Brisbane Inner-City Suburbs Primed For Growth With Brisbane’s residential property market set to heat up this year, a property research analyst has highlighted the five suburbs investors should be focusing on. Lachlan Walker, director of Place Advisory, said his top five picks for investment in Brisbane at the moment are Woolloongabba, Newstead, Spring Hill, Kelvin Grove and West End. 22 January 2014. More.

First-Timer Grants Aren’t Helping Affordability: Report Not enough is being done to improve housing affordability in New South Wales, according to a report prepared for government. The House prices, ownership and affordability: trends in New South Wales briefing paper suggests grants targeted towards first homeowners haven’t been effective in improving affordability. 21 January 2014. More.

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Queensland Has Fast Growth, But Picture Mixed: Commsec The latest Commsec State of the States report is pointing to Queensland for the fastest economic growth rate across the country, causing Premier Campbell Newman to note that the state is the best to “invest, employ and grow your business”. 21 January 2014. More.

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

"What's Happening In South Australia"

Victoria Market: Moderate Increases In Rental Costs Over Last Year

It Looks Like A Bungalow From The Outside, But Is Really Three Units

Melbourne renters have seen only moderate rises in rents over the past year, especially when compared to Sydney. At the same time investors have seen static yields but potentially benefited from imp roved capital growth. Over the past year the median weekly rent for a house in Melbourne has risen by $10 and by $8 for units. Currently the median rent for a house is $437 per week and $389 for a unit. 28 January 2014. More.

A group of units in West Croydon in Adelaide's west could earn their next owner more than $43,000 a year. The three units are on one title and located at 1-3/41 Rowell Cres which is also on the corner of Mielle St. Each earns between $240 to $300 per week. The selling agent says this amounts to $43,160 a year in total. Originally a character bungalow, the property was extended over the years to create three separate units, each joined to one another. 30 January 2014. More.

Live With No Neighbours In O'Halloran Hill Investors Told To 'Keep An Eye' On Melbourne Experts are optimistic about the performance of Melbourne’s property market in 2014, but things may get worse before they get better. Real Estate Institute of Victoria CEO Enzo Raimondo said even though he was optimistic about the state’s property market, there are still reasons to exercise caution. 24 January 2014. More.

There should be no complaints about a lack of space at this O'Halloran Hill property in Adelaide's southern suburbs. It is a large land holding of 8084sq m with a 144m street frontage at 1527-1531 Main South Rd. The property consists of an original 1800s four-room stone cottage and separate stable - believed to have been a stopover for horses travelling to Victor Harbor. There is also a 1985built three-bedroom house with an outlook across the fields to Flagstaff Pines and through to the hills. The main bedroom has an ensuite. 30 January 2014. More.

RACV Customers Warned Of Scams As Insurer Issues Refunds

Top Sellers Report: NSW & SA Are Red Hot For Sellers

More than 200,000 RACV Insurance policy holders will receive refunds totalling over $11 million, following the announcement of a court enforceable undertaking from RACV Insurance’s underwriter, Insurance Manufacturers of Australia (IMA). Consumer Affairs Victoria has released a statement warning customers against possible scams that may target the refund process. 24 January 2014. More.

Would you consider selling, if you knew that there was a high demand for property in your suburb? We’ve released our latest quarterly Top Sellers’ Market data, which takes into account the supply and demand figures for each Australian suburb using data. 26 January 2014. More.

Red Tapes Puts Owning Home Beyond Many

Bait Pricing’ Outlawed In South Australia

Planning and building regulations are adding about $15,000 to the price of every new home in Victoria, the Master Builders Association has claimed. It says this leaves thousands of cashstrapped buyers unable to fulfil the great Aussie dream of owning their own home. In its pre-budget submission, the association has called on the Napthine government to ease housing affordability pressures by cutting red tape ahead of the November state election. 24 January 2014. More.

Legislation that aims to protect South Australian homebuyers and strengthen the real estate sector’s integrity has come into effect. The government says the new laws will give consumers a greater level of protection from “dodgy practices” and create greater confidence in the profession. One such measure outlaws the practice of ‘bait pricing’. 29 January 2014. More.

Infill Project Welcomed As Potential Future Standard: UDIA Summer Auctions: Coastal Vic Heats Up For 2014 Welcome to the first of our summer market wrap posts! With the Christmas-New Year’s break behind us, the property market is starting to pick up again with auctions mainly occurring in coastal and regional areas throughout the first few weeks of the year. Over the first 3 weeks of 2014 there were 52 auctions reported to the REIV, with 26 selling and 26 being passed in, 12 of those on a vendor bid. 23 January 2014. More.

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A new housing plan for South Australia’s Marden area has seen the state government’s assistance with the project welcomed by the Urban Development Institute of Australia (SA), who say that this type of infill is the way forward for new homes. The proposed redevelopment of the 2.1 hectare site along River Street in Marden provides a framework for urban infill development that UDIA (SA) executive director, Terry Walsh, is commending. 29 January 2014. More.

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

"What's Happening In The Northern Territory"

Market To Pick Up In Feb: RE/MAX

Leanyer Is Leading Address

Property market activity is likely to rebound in February, with RE/MAX predicting buyer demand will surge. After a postChristmas lull, buyers and sellers generally begin to return to the market by the second month of the year, RE/MAX Western Australia managing director Geoff Baldwin said. 29 January 2014. More.

Leanyer is hot property and has been named the best suburb in the NT. Data released today by shows the Darwin suburb is ranked No.1 above other high achievers - Coconut Grove and Rapid Creek. New home owner Chat Novio, 42, just bought a home in Leanyer. 25 January 2014. More.

Lack Of Rent Growth Confirms There Is No Shortage Low Fees, Taxes Drive First Home Buyers To WA As first home buyer levels continue to sit at record lows in most states, Western Australia has continued to buck the trend. Low home prices and generous government concessions have combined to drive growth in the area, says Homeloans general manager sales Greg Mitchell. “We have seen a definite trend of first home buyer levels remaining relatively high in WA. In particular, we have noticed this in new builds and at the lower end of the market up to $500,000,” said Mitchell. 29 January 2014. More.

Agent Fined $5,000 For Not Completing Compulsory Professional Development Mark Alan Henderson, a real estate agent located in Western Australia's Spearwood, has been fined $5,000 for failing to complete the compulsory professional development (CPD) program. The program is a condition of the renewal of his triennial certificate, and he has been ordered to pay the $5,000 and costs of $600 as a result of not completing the CPD. 23 January 2014. More.

As 2014 progresses it will become increasingly clear that over-supply is a bigger issue than shortage in Australian property markets. It may also become apparent that the greatest threat of a future market downturn will not come from the mythical price bubble concocted by journalists who don't care too much about accuracy or balance but from an emerging serious over-supply in some markets. 22 January 2014. More.

But Outlook Stays Bright: Expert Property listings are down in Darwin - but there is still a large number of houses for sale, real estate researchers RP Data say. The latest data was part of the company's property market indicator summary for the week ending January 19. The report showed that Darwin had 111 new listings in the past 28 days - down 25 per cent. But the big picture was brighter with total listings, including houses and apartments, up by 24 per cent to 986 properties. 21 January 2014. More.

"What's Happening In Tasmania" WA Homebuyers Are Building Holiday Resorts At Home As more West Australians choose to replace vacations with 'staycations', homebuyers are changing the way they build their properties, according to one of WA's top builders. The number of people a ccommodating at-home holidays by incorporating pools into house plans has doubled over the past few years with some spending up to $50,000 on outdoor living areas, says Dale Alcock Homes general manager Dean O'Rourke. 22 January 2014. More.

Sandy Bay Chateau Inspired House Last Week's Most Expensive Sale: RP Data A chateau-style Hobart residence was the most expensive sale of the week at $1.7 million, according to RP Data. Situated in the affluent suburb of Sandy Bay, the imposing six-bedroom European-inspired abode Greystanes includes open fire places in every bedroom, six bathro oms, a butler’s pantry and an eat-in kitchen. Located at 3 Melrose Court the spaci ous C1910 house features gorgeous timber panneling and French doors. 23 January 2014. More.

Housing Finance Lifts TAS Economy: CommSec Rental Vacancies Up In CBDs The level of rental vacancies among residential properties has increased across Australia, with CBDs and mining towns the most affected. SQM Research figures show the level of rental vacancies rose over December to hit 2.6%, equating to 73,082 tenant-less properties nationwide. This represented a 0.4% increase on November figures and a 0.3% increase on 2012 figures. 21 January 2014. More.

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Tasmania has the country’s worst ranked economy, but key housing indicators suggest the state may pick up in coming quarters, a new report has found. The CommSec State of States analysis rated Australia's state and territory economies on eight key indicators. While Tasmania came last on most factors, the state secured sixth place for housing finance, with a 20 per cent improvement over the last 12 months. 20 January 2014. More.

State Of The Nation Continued… "Market Update"

"What's Happening Internationally"

Criticism Of SMSFs And Property ‘Ill-Founded’

Home Building Approvals At Six-Year High

The debate that is “swirling” around SMSFs and residential property investment is not based on true figures, according to the SMSF Professionals’ Association of Australia (SPAA). Evidence to date suggests SMSF trustees are cautious investors when it comes to property, SPAA’s head of education, Liz Ward, told SMSF Adviser’s sister publication, The Adviser. 28 January 2014. More.

New dwelling consents, including apartments, rose to a seasonally adjusted 2,169 in December from 2,016 a month earlier, according to Statistics New Zealand. Annual residential issuance rose 30 per cent to 21,300 in 2013 from a year earlier, the most since 2007 when 25,590 permits were issued. The annual gain in new dwelling consents was driven by increases in Auckland and Christchurch, the country's two biggest cities, whose property markets have been bubbling away due to a lack of housing stock. 30 January 2014. More.

Mortgage Trusts Experience ‘Modest Flows’ While few conventional mortgage trusts have remained open post-GFC, those remaining trusts have begun receiving modest fund flows in 2013, according to new data from SQM Research. 28 January 2014. More.

Lower Income Renters Would Pay The Price Of Change History may not teach us much, but it does show that you can't keep a bad idea down. And this bad idea resurfaces with a regularity that, if it applied to ageing human bodies, would deprive prune growers of their livelihoods. At issue are claims made last week by economist Saul Eslake that negative gearing provides a "large subsidy from people who are working and saving to people who are borrowing and speculating". 27 January 2014. More.

Capital Growth 'Not A Given': Expert As the baby boomer generation retires, investors should not assume their properties will continue growing in value, according to a wellknown property mentor. Kevin Lee, founder of Smart Property Adviser, said Australia was undergoing a never-before-seen demographic shift. Mr Lee said between January 2012 and December 2020, 5.4 million Australians are expected to reach the age of 65 and retire. “If they were working, they exited the workforce, they exited the tax base, they exited the compulsory superannuation funds as a contributor and they also exited the stock market - because most superannuation monies go into the stock market,” he said. 21 January 2014. More.

Controversy Corner

Land Values Are The Crux Of Affordability, And There's No Easy Solution

Australian Securities And Investments Investigating Mortgage Broker Fraud

It has practically become a national pastime for Australians to remark on just how expensive the property market is in this country. Be it BBQs, social functions, or even over a casual drink after work, affordable housing is always a hot topic of conversation. 22 January 2014. More.

Borrowers have been warned about a disturbing rise in fraud by mortgage brokers who are pushing up incomes and falsifying other information on the promise that it will help clients secure a dream home otherwise out of reach. 23 January 2014. More.

Fast But Affordable: Australian House Price Growth Rated Global Leader Australian house prices have grown faster than those in any other major economy and are forecast to outstrip even countries recovering from the GFC in 2014. But low interest rates, high incomes and only modest employment declines mean Australian houses are still relatively affordable, says credit ratings agency Fitch. 22 January 2013. More.

Property Starts Strong in 2014- Unemployment Threatens Long Term Growth Australian interest rates remain at a record low with the cash rate at 2.5 per cent since August and many commentators expecting it to remain at that level when the Reserve Bank board next meets on February 4. 20 January 2014. More.

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Some Parting Advice “If you keep your tenants, you keep your income – An investor’s mentality.”

Until Next Time… Kevin Lee

State of The Nation Issue 62 Jan 31, 2014