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I’m really excited about our upcoming presence at the Home Buyer’s Show next weekend from the 29th til the 31st of August. We were there for the shows in Brisbane and Sydney but, being a Melbourne-based company, we’re always particularly enthusiastic about seeing people in our home city.

If you want to learn about investment tactics and tips from leaders in the field you should come along to this not to be missed opportunity to get a huge amount of information in the one place.

I will be speaking from 1.30 – 2pm every day in the Expert’s Lounge.

If you haven’t heard me speak before you should definitely come along where you’ll have the opportunity to not only hear some talks but also to ask questions. The Home Buyer’s Show is invaluable for anyone thinking about getting into property investment.

Today I’m going to tell you about potential benefits and challenges that you may face as investors buying off the plan (OTP) property. An OTP property is literally taken ‘off the plan’ because there is little besides the blueprints of the property. You can invest in a building before construction has even started or while it is being built. By working with the developer, you own a brand new property ready for the growing marketplace – often with some tax benefits or gains along the way.

Benefits of Off The Plan

Buying off the plan properties make for a low initial cost for investors, which is a great selling point for the first time investor, or for someone who is looking to add to increase their property portfolio. You only pay a 10% deposit when you sign the contract but you don’t actually have to pay the balance of the contract until the property is complete. Plus, in a rising market you can enjoy any capital growth that happens with the property. OTP properties often increase in value while they are being built, so it’s definitely a bonus with the property. I do have to say here that property is a long-term investment. Providing that you are buying your OTP property with the intention of holding long term, buying off the plan works well for most investors.

property-investment-australia

Also, if you are buying off-the-plan property in Victoria there are substantial stamp duty savings available. The Victorian Government has reduced stamp duty if you purchase before a property is built. As construction of the development occurs the rate of stamp duty increases until the building is complete and the full rate of the stamp duty applies. The concession is always greatest if the property is bought before construction commences.

Challenges Of Off The Plan

Investment opportunities are not guaranteed to be easy, no matter their nature or location. You will have your homework cut out for you as you look into developers and make sure that the road to your new property will go according to plan.

When looking at developers find out everything you can about them. Figure out the financial viability of the company. Developing properties is an expensive business and disaster can strike quickly. You want a developer that has a solid reputation, successful results, and is friendly towards investors. Try to choose a developer that will allow you to inspect the site and the blueprints. It is a large bonus if they will air your recommendations about the design. If they have a model of the finished product, inspect it. You should use everything within your means to know what this property will look like once it is finished.

The location of your investment is crucial. A developer should allow you to see where your investment will be, which gives you a chance to see the area. Does it appear that this place is frequented by possible renters? Are there nearby business, roads or schools that will draw in more investors? The location is as important as the property itself.

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Things To Be Aware Of

Just as with all forms of investing, buying off the plan does have some dangers. In particular, paying close attention to floor plan design can prove the difference between an apartment that has tenants queuing to move in (and never wanting to move out), and one that fails to keep tenants interested. A well-designed property will always outperform a poorly designed property. As a guide to the overall size when buying off the plan apartments, one-bedroom properties should be no less than 52 or 53m² internally plus a balcony space of at least 10m². It’s best to have a one-bedroom apartment with upwards of 55m² internally, plus balcony for a total space of 65 to 75m².

As a general rule, two-bedroom apartments should be no less than 75m² internally plus 10m² of balcony, but 85m² internally is a much more appropriate living space. Three-bedroom apartments should be no less than 100m² internally but once again 110m² is much more appropriate.

Not withstanding this guide for overall size, a larger property is obviously better than a smaller one, but will of course cost more. Regardless of this, a smaller well-designed property will often outperform a larger poorly designed property.

At AllianceCorp we have team members who are experts in off the plan property purchases and are happy to answer any of the questions you have about buying off the plan properties. You can register here for your complimentary and obligation free session with one of our property experts:

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Property investment is something that can be very financially rewarding. Investing in a property takes a lot of planning, but it’s certainly one of the most stable and lucrative means of growing your wealth for retirement. The idea of having a place to call your own resonates with many people, and considering 80% of people who have retired are reliant on the pension for their lifestyle, it’s certainly something to consider to build your position in the future. At AllianceCorp we have some of the best strategies around, and some of the best industry experts on our team to help you on your journey to wealth.

As a head start we’ve compiled this handy list to consult when you’re ready to start investing for your future.

  1. Know Your Budget

property investment melbourne

The financial commitment of investing is something that many people balk at, but done the right way, property investment can be a successful and on-going endeavour. It doesn’t take away from the fact that you need to know what you’re doing with your money. Aside from being financially sound and getting a loan from the bank, there are a couple of things to keep in mind.

Have a deposit ready for the loan. Most estimates say you should have 20% of the total cost ready to pay as a down payment. Being able to do this proves two things to most banks. First, it proves that you are serious about investing. They can trust you with a loan because you have put so much into this already. Second, it shows you are financially viable. If you can make a deposit like this and keep going, it generally means you have worked your budget to where you can adapt to almost any major purchase.

If you already have a history of saving, investments and loans, it can reflect well upon the rest of your coming housing loan. This is a fundamental rule of getting credit. A lot of loan giving is trusting in the other party, with a stringent contract holding that trust up. If you can prove that you have a history of paying bills on time with the appropriate amounts, then it is all the more easy for you to get your loan. Something else that we talk about in more detail that you can use as a strategy is when you get the equity from a home you already own and use it to buy another house. You can read more about that here.

  1. Government Assistance and Stamp Duty

The Australian Government supplies the First Home Owner’s Grant. This financial support program is intended to help bolster the finances of investors who are buying a new property.

This fund can be used to soften the blow of the down payment or be used to help keep your bank account healthy during the process of payment. The amount given by this fund varies on your position as a property buyer.

The other factor to consider is Stamp Duty. In Australia, Stamp Duty refers to the price for transferring property from one holder to another. This can make up a large portion of up front prices and should be taken into account for every single budget revolving around buying the right property for you. The exact cost changes from property to property and is based off a number of things. You will pay more stamp duty for an investment property than you will for your own home, so it’s something to consider when you look at tax and allowances.

  1. Make a Budget and Stick To It!

After First Home Owner’s Grant has been considered, your financials looked at, Stamp Duty paid and a budget formed you will have a rough idea of what you will have to pay per month to start paying down your loan.

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The economy fluctuates in both directions every day and there is no telling when it may spiral or take off. You need to pad your budget in case interest rates begin to rise. There is nothing worse than calculating a razor sharp budget that will let you live as you want and pay off your bills quickly, only to have your payments rise by a few hundred dollars. We also talk about a strategy that we recommend to every one of our clients called the Master Facility. It allows you to pay off your loan and invest with no impact on your lifestyle and you can learn more about the life changing Master Facility here!

  1. Know What Property You Want

We have been talking about finances a lot. There is a reason for that. Paying off a property is a huge accomplishment. However, there is so much more than tinkering with numbers before you even move in. There are a multitude of property opportunities and you need to ask yourself what you are looking for.

If you are looking for a family home, the answer may be fairly easy. You will want to live in the house, pay it off and maybe sell it for more than you paid. This is standard for the majority of investors and a safe move. Alternatively, you may be looking at property investment as more of a financial opportunity. Investing into a rental apartment complex or a storage warehouse can become a second income for you. Many people pursue this direction while some undertake both paths. There is a lot of advice written about these two kinds of property investment, but you will probably know which one you are looking for already.

  1. Consider Location

Property investment melbourne

Is the location exactly what you want for the property? For example, buying a home for a family should be weighed against what the area offers. Where are the nearby schools? What kind of school is it, are there public transit stops nearby and are there grocery stores nearby? Many more questions become very relevant as you begin to think about it. As property investors you need to think about what is going to be attractive to renters.

Does the area have the requirements to create a successful property opportunity? Nearby commercial zoning is important for creating attractive options for potential renters. Nearby malls, stores, restaurants and parks can be a big green light indicating a prime area for investment. Does the income of the area support your idea for a property? Creating an eco-friendly, designer brand apartment complex may not work in low income housing as well as it might in a hip neighbourhood area. Buying the right property heavily depends on what you want and what is around it.

  1. What Condition is the Property In?

Consider what you will need to bring the property up to your idea of acceptable. Is the property you have your eye on going to need repairs? Investing in newer properties generally means you will not have to worry about condition immediately, but may bring about a higher price. Conversely, an older building may cost less, but with a little hard work you can make it look incredible.

Before investing in a property, new or old, hire a contractor or architect to inspect the grounds and the property itself. Make sure that the person you hire is certified in their field, as this inspection will influence what you will end up spending on this property. Similarly, hire an exterminator or animal control officer to take a quick look around the house and grounds. An infestation of funnel web spiders in the basement would be nice to know about before you sign on that dotted line.

  1. Use The Master Facility

Conditions change – the economy drops, you get in a car crash, a utility bill is higher than expected, you get a speeding ticket or something else equally annoying happens. The things you think are concrete now may not exist in a few months. No matter what happens in your life, a loan still has to be paid off. That’s when your master facility will come into its own. Having financial room to move is the best place to be. Read more on the master facility in this free eBook or get in touch for a chat with one of our coaches.

When you’re making an investment, these tips are important to consider. When you’re buying a property you need to ensure that you’re doing it in the smartest possible way. And in doing so, you’ll be able to get the most out of your investment.

If you liked this information then why not register here for your complimentary and obligation free session with one of our property experts:

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What is equity?

You might have heard people talking about equity but have no idea what it means! It’s easy to be amazed when you hear about friends or colleagues buying investment properties, especially when they’re on similar salaries and lead similar lifestyles. There’s no secret though, and what many people have done is used the equity that they’ve built up in their homes to give them a kick start.

Equity is what makes up the difference between the market value of your home and the balance of your mortgage. If you’ve had your home for a few years and paid off some of the mortgage, that combined with a rise in value of your house could mean that you’ve built up some reasonable equity.

Equity can be a very valuable element when it comes to investing in property, as you’ll soon see. Your mortgage broker can also be a very useful asset when it comes to finding out how much equity you have in your home, and you might find that you’ll be able to borrow sooner than you think!

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How equity can help

Here’s the lowdown: Let’s say you want an investment property that’s valued at $400,000. You can add additional purchase costs to this – stuff like legal fees, stamp duty and insurance – and you’ll end up with a cost of $420,000. Let’s also assume that you meet the loan approval requirements and that a lender will fund 80% of your property’s market value. This amount could be potentially more if you’re happy to pay lenders mortgage insurance (LMI) as you’re seen as less of a risk. So basically, the bank will lend you $320,000 but you still need to come up with an additional $100,000 for the deposit and the other up front expenses. This is where your equity comes in.

 

Let’s say your home is valued at $500,000 and the balance of your mortgage is $300,000. The $200,000 difference is your equity. As investors, you can access up to 80% of your home equity without taking out LMI, and in this example it equals $160,000. So basically instead of having to save and scrimp to come up with a cash deposit for the $100,000 you need, you can simply draw down on the equity in your home.

Important things to consider

equityMany investment gurus will stress the importance of repaying your loan on your home as soon as possible. The equity that you get from your home to purchase an investment property is tax effective but the remaining debt on your home isn’t! So the loan on your home costs you much more in the long run than the loan on your investment property. Your main place of residence isn’t the only source where you can get equity from – you can also use the equity of another investment property to fund more purchases. Check out our two part series on adding value by renovating for more information on how you can increase the equity of an investment property.

 

So there are basically two different strategies you can use to access your equity:

  1. Cross collaterisation. Quite simply you use the equity in your home to secure a new property using your home and the new property. You put no money down and the lender combines your home and investment together, and gives you a new loan that combines the purchase price and your costs. In this strategy your home will be directly linked to your new investment property, and also your lender will take the title over your home to secure the new loan as well as the title over the new property.
  2. Separate loans. This is a good strategy as it allows you to access only as much equity as you need to pay the deposit and the costs of the new property as a top up loan or line of credit. You can even use a separate lender to take another loan to get the remaining funds to complete your purchase. Once again you don’t need to pay forward any money, but the titles of your properties are separated and you have greater flexibility. Another advantage to this method is that you might have enough equity and serviceability to complete another purchase sooner!

There are positives and negatives with each of these methods. If you use cross-collaterisation you might find that over time lenders will start dictating conditions which you might not be comfortable with. They might only lend you money based on your new investment loan.

 

Many people who want to invest will use mortgage insurance so that they can buy more properties, and one of the benefits of cross-collaterisation is that you don’t have to get LMI, as the lender is tying up all available equity in your property – rather than just the amount required.

Really, you want to be able to combine the benefits of using none of your own savings and maximising your tax advantages when buying investment properties. Releasing equity in your home is a way to do this.

Property investment is a long term strategy and the more exposure you have to a market the more opportunity to build your equity and keep buying properties.

You need to have an exit strategy in place and to have information on hand about how to navigate tax and charges, and know strategies to minimise your financial commitment and impact to your lifestyle. Remember how we talked about how important your mortgage broker could be earlier? Well they can help you to work out how much equity you have in your home and how best to access it to fund your investment. They have access to a wide range of sources and insider knowledge, so be sure to consult with the professionals when you’re considering drawing down on your equity. At AllianceCorp we are happy to give you guidance and to meet with you to discuss any questions or concepts that you need help with.

Register here for your complimentary and obligation free session with one of our property experts:

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So you want to invest in property? 

Property Investment AustraliaThat’s great! There’s a lot to learn, but with diligence and a desire to get ahead you’ll go far. Even reading this is a great step.

Check out these seven property investment tips that I created to give you an overview of some of the things that you need to consider where property investment is concerned. Plus, if you’re after more information we regularly run property investment workshops which are free to attend and which you can really get a lot out of.

1. Be conscious of stamp duty and take advantage where you canstamp-duty-house

This is one of the biggest and most significant costs associated with buying a new house as an investment. Owner occupiers may be able to avoid stamp duty but property investors have to pay it up front. The best thing you can do is to stay up to date with legislative changes and updates. There are actually a could of different charges that have to be paid with the purchase of a new investment property, and these are different per state. There’s stamp duty, the transfer fee (which can be as little as $100 ranging into thousands of dollars) and the mortgage registration fees (usually very minimal fees). As the costs differ from state to state, it’s worth checking out what the cost is per state and looking into buying a diverse range of properties.

2. Check out the neighbourhood

Property Investment AustraliaGet to know your target suburb by getting in there and living like a local: eat in the cafes, walk around the parks and figure out what kind of people really live in the suburb you’re targeting. Census data cannot always be trusted to present the most accurate picture of who lives in a suburb. For example, if you see lots of families with young babies it’s likely that these families will need pre-school in a few years so it may be worth considering proximity to pre-schools in your search. Being as informed as you can is never a bad thing.

3. Be organised

get-organsied This one seems like a no-brainer but when you start to collect information, it can pile up and before you know it you’re swamped! At the start of your property investment journey it helps to start a system for collecting and storing information. If you happen to have worked in an office before you might be more organised than some when it comes to word processing and storing and collating information. If you’re pretty hopeless at getting organised or taking care of files and folders and information, you can take a look at these areas to improve on:

  • Name things correctly! By using a single naming convention for your folders and files and sticking to it, you’re more likely to know where things are and when you touched them. It can be helpful to write out your naming convention and sticking to somewhere that you can see it all the time.
  • Keep the important stuff. Solicitors, estate agents, sellers and purchase agreement; keep it all until you’re certain you don’t need it any more. You never know when you’ll need that letter from your lawyers.
  • Back it up. Take care to save and save your information on a secondary source. It may seem unimportant intially but if anything goes wrong you won’t lost documents and files.
  • File your print documents. You’ll get a lot of specially signed information and documents. Scan these and also file them in a particular place.
  • Log your expenses for easy tax and account keeping.

 

4. Get rid of bad debt where you can

GoodDebt-BadDebtAny debt that isn’t actually actively working to make you an income is bad debt. This sort of debt can damage your chances of working with a lender and can mount up, causing you undue stress or concern in the future. If you use the time that you perform your due diligence (say three months) to work on also paying off as much debt as you can, you’ll be surprised how much more a lender will loan when you’re free of personal debt! This additional amount can also be the difference between an ok investment property and an excellent investment property that you really want.

5. Get better at getting finance for your property investment

Don’t let the lenders say no! Unless you’re really great at convincing banks to part with their money, you might need to employ the services of a professional like a mortgage broker. Even if banks say no, never accept a ‘no’ as straight up defeat. Banks wouldn’t be in business without people to lend to, you just need to find a creative way to work with them to achieve your finance goals, and this can be anything from using different lenders to transferring debt from one place to another.

6. Work out your exit strategy

property investment strategyIt’s easy to focus on the acquisition stage and to pour all of your energy into more and more property investment. Some people are heavily focused on growth, so they set targets and work to acquire a certain amount of properties for each year. But what happens when they decide to cash out? Tax can be a big hindrance to selling your property and so you need to have thought out your exit as much as you think about your entry into the market. You need to figure out how you are going to dump as many of these properties as possible, at the right time to achieve your goals. If you have 10 properties you may want to offload over half of them, but beware: this process could take many years to do it in the most tax-effective way. Starting out, you must focus on the start, but so too should you map out when you want it all to end.

7. Make good contacts and keep them

Build solid relationships with your mortgage broker, solicitor, planner, accountant, managing agents etc is vital to ensuring a smooth working relationship. It can be something as simple as sending a Christmas card or something, just a little touch to help keep the relationship strong.  Being polite while being assertive will help you to maintain a good relationship with these people. Make sure you treat everyone with respect so that when you need something down the line it’s more likely to be a positive interaction. AllianceCorp Property Experts have a whole range of services and education choices for prospective property investors and future home owners. We love to work with our clients to give them the best possible advantage for their future.

Get in touch today and speak to one of our friendly property experts about how you can build your wealth today!

Register here for your complimentary and obligation free session with one of our property experts:

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Melbourne’s mid-winter home auction market recorded another solid result for sellers at the weekend with a 74.3 percent clearance rate – the highest weekend result recorded so far over July. The Melbourne auction results are as follows.

Auction sales levels in Melbourne are holding firm over winter with consistent results being reported each weekend. Auction clearance rates have averaged 73.2 percent since the Queen’s Birthday weekend compared to break 67.1 percent over the same period a year ago.

High winter rates have been recorded despite higher listing numbers with 3780 properties going under the hammer over the past 6 weekends compared to 3257 auctioned over the corresponding period a year ago.

 Melbounre-Auction-Results

Auction numbers have increased over recent weekends as the market now moves through the mid-winter trough. This weekend 548 homes were auctioned compared to 478 last weekend. Auction number will continue to rise and test the market over the coming weekends through to spring.

Melbourne’s inner city suburban region produced the best result at the weekend with a strong auction clearance rate of 87.9 percent. This was closely followed by the north with 87.8 percent, the inner east 84.6 percent, the north east 72.1 percent, the west 71.4 percent and the inner south with an auction clearance rate at the weekend of 70.7 percent.

Standout sales results in the inner city included a  4  bedroom home at 6 Survey Street Richmond sold for  $1,766,000 by Collins Simms, a  3  bedroom home at 35 Seacombe  Street Fitzroy North sold for  $1,545,000 by Chambers Real Estate, a  4  bedroom home at 69 Bendigo  Street Richmond sold for  $1,516,000 by RT Edgar and a 3 bedroom unit at 11/55-59 Moor  Street Fitzroy sold for  $1,410,000 by Jellis Craig.

Auction Results Melbourne

Moor St Fitzroy sold for $1,410,000

The most expensive property reported sold at auction at the weekend was a 4 bedroom home at 30 Dawson Avenue Brighton sold for $4,680,000 by Buxton. The most affordable property reported sold at the weekend was a 2 bedroom unit at 7/23 Ashley Street Reservoir sold for $265,000 by Ray White Northcote.

Melbourne’s home auction market has proven to be particularly resilient so far this winter producing remarkably consistent results in what remains clearly a solid seller’s market overall.Auction Results Melbourne

Latest ABS home loan data has revealed a surge in investor activity in Victoria. The value of loans approved for residential investment soared over May to a new monthly record of $3.04 billion – the first time the $3 billion mark has been exceeded over a month in Victoria. The value of investor finance approved is now 28 percent higher over the first 5 months of this year compared to the same period a year ago.

Investor activity now accounts for 48 percent of overall home sales finance activity in Victoria and continues to fuel prices growth in the Melbourne market.

Originally published on the APM as Melbourne July 19th auction report 

To find out how you can benefit from these strong auction results, register here for your complimentary and obligation free session with one of our property experts:

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A recent report by Ryan Fox and Peter Tulip for the Reserve Bank of Australia has presented some interesting information about renting versus buying in the latest Reserve Bank Report, which you’ve no doubt seen in the news and media of late. The RBA calculated that housing prices in Australia have risen by an estimated 2.4% a year (after adjusting for inflation and costs) and that housing prices would need to rise by 2.9% per year to make buying a better option than renting. After looking at the inflation of housing the RBA has suggested future housing price growth would be less than the historic average.

Housing prices Australia

They went on to say that because of this “the average household is probably better off renting than buying.” Cameron Kusher, a senior analyst for RP Data has estimated that suburbs experiencing annual growth of more than about 5.5% over the past 10 years would likely have outpaced inflation.

Sydney hasn’t achieved quite that growth as a whole, but still achieved 3.6% annual growth over the past ten years. Melbourne only just got there but managed at 5.6%. Brisbane houses were just outside the range with 5.2% with annual growth over the past decade. Kusher said that many suburbs within these cities were likely to have beaten the RBA’s estimate, and he stated that realistically, most Melbourne and Sydney suburbs have grown in excess of this 2.9%. Such a change doesn’t necessarily mean that prices will continue to rise at the recently seen levels, but there are further benefits to buying as opposed to renting, regardless of the financial ups and downs.

The figures that the report has put forward do make a compelling case for some suburbs in some areas, but the fact remains that when you buy a home – you’re actually getting something for the money you’re paying. When you’re renting a home, you’re still paying someone else’s mortgage. Plus, people who are renting still need to be saving a portion of their earnings for a time when they do want to invest – and thus it’s difficult to compare the spending habits of a home-owner to a renter.Property Investment

Paul Bird, a spokesman for realestateview.com.au noted that the outlook for purchasing was actually looking good, given the ongoing strength in the market and the fact that interest rates are remaining on hold for the time being. Mr Bird went on to state that over the next three months that the market is “expected to be strong, and certainly meeting if not ahead of the predicted 2.9% in the next few months.” Another report from Aussie Home Loans argued that the cost of an apartment rental in Sydney (approx. $500) exceeded that of a standard home loan, which they calculated at $431.52 at their current rate of 4.84% on an average $355,000 loan.

Property InvestmentUltimately, there are certainly benefits to renting when your financial situation demands it, but if you’re in the position to buy it’s certainly something worth considering. There really is no ‘best’ time to buy; sure there are times when you’ll stand to make more money initially, based on when you purchase property, but the fact remains that the longer you wait the longer you stand to miss out on your overall long term returns. No one can predict the market entirely, and no one knows which way housing prices will go. Sure, we can make educated guesses and watch trends, but the housing market remains an educated process and requires people to try to predict. The only real factor that will make a difference to your eventual wealth is your time in the market, not the time when you entered the market.

To find out more, register here for your complimentary and obligation free session with one of our property experts:

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RP Data – Rismark Home Value Index Release

The June RP Data Rismark Hedonic Home Value Index finished the financial year only slightly into double digit growth figures, with capital city dwelling values moving 1.4% higher for the month after posting a 1.9% decline in May.

Capital city dwelling values have shown a 1.4 per cent capital gain over the month of June 2014, with all cities apart from Adelaide and Darwin recording a rise in dwelling values. According to RP Data research director Tim Lawless, the strong result has partially reversed last month’s 1.9 per cent fall and provides a -0.2 per cent decline in dwelling values over the June quarter.

Annual_Change

Over the 2013-2014 financial year the top performing cities for capital gains have been Sydney and Melbourne where dwelling values are up 15.4 per cent and 9.4 per cent respectively across each city. The Brisbane housing market, where conditions have generally remained relatively sedate, is now gathering some pace with dwelling values moving 7.0 per cent higher over the past twelve months, the third strongest result of any capital city. On the other hand, the index results show that the softest performances over the past year have been recorded in Hobart (2.5 per cent), Canberra (2.9 per cent) and Adelaide (2.9 per cent).

Over the current growth cycle, capital city dwelling values are up 15.5 per cent, with Sydney recording the most significant capital gain at 23.1 per cent growth since the end of May 2012. Adelaide’s housing market recorded the least significant capital gain over the cycle to date, with dwelling values rising by 5.6 per cent.

According to RP Data’s Tim Lawless, the recent volatility in the month-to-month Index reading is likely to be a seasonal factor. “The last time we saw a negative quarterly movement in our combined capital city index was May last year. The recent reduction in capital gains is likely a correction from the strong market conditions reported over the first quarter of the year.”

Dwelling_Changes

“Looking through the monthly movements, the trend in performance is much more important. It shows that the quarterly rate of growth peaked across the Australian housing market in August last year at 4.0 per cent. Since that time the rate of capital gain has generally trended towards a more sustainable level. The slowdown in dwelling value appreciation will be a welcome relief to policy makers and those seeking to buy into the housing market,” Mr Lawless said.

Changes_12months

From a total returns perspective, Sydney once again stood out as having provided the most outstanding performance. Combining the capital gain with the gross rental yield over the year has provided Sydney home owners with a total return of 20.2 per cent over the financial year. Melbourne, Darwin and Brisbane have also recorded a total gross return in excess of 12 per cent over the year.

Rolling_Changes

Across the different price segments of the housing market, the broad middle -priced sector of the market is now showing the highest rate of annual change. Dwelling values at the most affordable end of the capital city housing markets have moved 8.8 per cent higher over the past year compared with a 10.3 per cent capital gain across the most expensive suburbs and a 10.6 per cent increase across the broad middle fifty per cent of the capital city market.

Looking at rental markets, gross rental returns are currently recorded at 3.9 per cent for capital city houses and 4.6 per cent for capital city units. The yield environment is lowest across Melbourne where gross yields are averaging just 3.4 per cent for a typical house and 4.3 per cent for units. Darwin continues to show the highest gross rental yields at 6.1 per cent for houses and 5.9 per cent for units.

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Mr Lawless said, “With interest rates remaining low for the foreseeable future, it is doubtful that housing values will start to slide, at least not at a macro level. What is more likely is that natural affordability constraints will start to dent buyer demand, as will the low rental yield scenario’s that are very much evident across the largest capital cities of Melbourne and Sydney.”

Other indicators such as clearance rates are holding relatively firm which, according to Mr Lawless, further reinforces the notion that the housing market isn’t set to show a market correction.

Over the month of June, clearance rates strengthened and are generally around the high 60 per cent mark across the capital cities week on week. Average selling and vendor discounting rates also levelled out at relatively strong readings, and listing numbers remain relatively tight.

“Activity across RP Data valuation platforms has also held firm at relatively high levels suggesting mortgage demand isn’t dropping off just yet,” Mr Lawless said.

Originally published as Australia’s capital city dwelling values ends 2013-2014 financial year 10.1 per cent higher.

New apartment sales are on the rise in Brisbane and the demand is growing.

According to an article by Venessa Paech (realestate.com.au 11 June 2014)

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Lachlan Walker, Director of Place Advisory Director, said the sales rate was well above historical averages and that demand is showing no sign of slowing down. A new report from Place Advisory showed that there were a total of 1,225 new residential apartments for sale at the end of March 2014. This number of apartments will only supply the market at its current state for less than six months.

“With new apartment sales remaining strong and supply having fallen to an historical low, it’s evident there is a continued undersupply of new off-the-plan stock in inner Brisbane,” Lachlan said.

While some commentators have implied that the Brisbane market is likely to be oversupplied in the near term due to the proposed pipeline of apartments, in our opinion the majority of these projects will never actually make it to the open market, hence the undersupply will endure in the near term.

There is indeed a substantial pipeline of proposed apartments, today numbering 22,000, but this has existed now for more than six years and is to be expected of a city whose population is set to double in the coming years.

“In reality, the lending hurdles and the banks’ tight purse strings will ensure only feasible residential projects enter sales and marketing and evolve into the construction phase.”

There are many reasons that these rental properties become popular, these include affordability, smaller households (demographically), and different choices in lifestyle options. These properties  are clearly becoming more popular for their affordability and lifestyle options which appeal to a growing range of families and people looking to rent.

bris_apptOwner-occupiers returning to market

Investors have been active in Brisbane’s new apartment market but the rise of the owner-occupier appears to be happening. “The re-emergence of owner-occupiers is a positive sign for Brisbane’s market – it’s evidence of the continuing improvement in sentiment, as well as the improvement in market conditions, which is creating an urgency amongst buyers,” Mr Walker said.

It was seen that two-bedroom apartments accounted for more than half of the total transactions over the March quarter, while one-bedroom sales represented 40% of sales.

The most popular price range seen for dwellings was $350,000 to $450,000.

According to the Place Advisory report the best performing projects in Brisbane during the quarter were;

  • Abian with 108 sales
  • Broadway on Anne with 58 sales
  • Southpoint with 46 sales
  • Proximity with 45 sales
  • 38 High Street with 44 sales

“Going forward the inner south will be the area to watch – there is high demand from buyers in the inner south and it has a high potential for change,” said Mr Walker.

bris_appt_2One Toowong development is giving away free scooters (including registration and a helmet) to buyers of their one-bedroom apartments to underscore the lifestyle advantages of living in a transport and amenities hub. Bruce Goddard, a marketer from Place Projects said that “Residents of this development won’t need a car. It epitomises the concept of inner city living which the council is advocating, and which more and more people are gravitating towards.

These results reflects a real growing demand for convenience and accessibility from renters in the inner city hubs. Brisbane will be one to watch as the demographic changes and the rental and property market shifts to accommodate them.

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In the last couple of weeks we’ve seen solid results from the Sydney and Melbourne markets. This was to be expected, with the strong demand for key properties continuing to keep prices strong at auctions and across the unit and housing market as a whole.

But what about the Brisbane property market?

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The capital of the Sunshine State is in the middle of a recovery period – something that started late last year following a long period of inactivity after an overheated market drove up prices from 2001 to 2008. Brisbane’s prices appreciated by about 230% over that 7-year timeframe alone!

So this time, even though the values of properties are expected to lift, it’s only expected to be a mild shift – potentially up by another 11%, with attached properties at a mid-tier level predicted to rise by up to 19%. As a potential investor or someone who’s looking to expand their portfolio in the Brisbane area, what are some things that you need to consider? A recent report by Michael Matusik has suggested that the normalising of interest rates could spell a slowing of dwelling prices, and a reduction in dwelling prices expected if home loan rates rise to over 7%.

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There will always be a demand for property in liveable areas, and Brisbane’s property market continues to be an area bolstered by its many attractive traits as a city, including stable population growth, good job creation, solid household incomes, comparative affordability, good renovation activity and positive infrastructure delivery. Yet the Brisbane recovery is more about being able to see how prices will shift and what it means for you the investor (or potential investor).

What is known through looking at demographics is that Brisbane has an ageing population, many of whom will be looking to downsize and/retire in the next decade. This type of age shift could fuel an increased demand for attached homes in a smaller style to suit the buyers. From this, as area that could see growth is in the retirement market, as more people look to make a lifestyle shift. Baby boomers will be selling to downsize and change up to meet their lifestyle needs, and Matusik has predicted that the resale of baby-boomer homes may exceed demand, including the demand that comes from from people looking to upgrade.

Brisbane Property InvestmentThe demand in the Brisbane property market for new apartments to rent is likely to be subdued for a few years, at least until the excess supply is absorbed – Brisbane is flooded with new stock, with record numbers of new apartments being built across the inner city. An interesting area to watch will be rental prices in new and established apartments across the inner city, and also the number of first homebuyers entering the market, both as investors and as residential buyers.

It’s clear that there are several factors behind market shifts and keeping abreast of the changes is an important factor in a successful property investment strategy. At AllianceCorp we keep a close eye on Lifestyle and Demographics in an effort to stay ahead of unexpected changes.

Brisbane is a market that we’ll really be looking closely at over the next few months to see how it goes, and we always advocate being as educated and prepared as you can when you’re considering creating an (or expanding on your) investment portfolio.

Whether you’re looking to purchase a new property or wanting to add to your portfolio, AllianceCorp can help you to work out what your options are by looking at your financial position, and then providing advice based on our combined years of industry experience and industry know-how.

Come to our next workshop or book  your complimentary and obligation free consultation with on of our Property Experts and find out how you can manage to build a passive income flow through property investment.