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There are lots of ways property investors can make mistakes. And knowing what makes a mistake is one of the best means of avoiding them occurring! It doesn’t matter how experienced you are in property investment, it all comes down to making sure you’re prepared with education and the right resources for every step of the journey. Let’s take a look at three of some of the biggest mistakes that you can make as a property investor.

1. Relying on low-interest rates

If you are making any kind of payment on a mortgage right now, then you should be pretty happy when you take a look at your interest statement. Why? We’re currently sitting on some of the lowest consistent mortgage rates going. Variable rates currently float at around 5%, and as investors we’re taking advantage of those very low interest rates in order to be get hold of larger loans, and also using the low rates to pay off mortgages faster.interest rates

 

But what happens when they go up again? Interest rates are currently quite low, and it’s predicted that they’re going to edge closer towards the rate of 6-8%. If you’re getting into investing and hoping that the rates are going to stay as low as they are, then think about what your potential is for borrowing, and make sure you take into consideration the possibility of increased mortgage repayments. If you’re counting on existing interest levels staying in place for the long term, you might find yourself overextended. It’s vital that when you’re an investor that you have a buffer in place to accommodate for any changes to interest rates and other changes in circumstances that can lead to having to find extra money from somewhere. I have spoken about this in the past and you can read more about it if you like. It’s well worth a look for anyone who’s currently an investor and who doesn’t really have a plan in place.

2. Investing with no clear strategy

Buying property ought to be an economically rewarding and positive experience that ultimately increases your wealth and financial position and makes your goal lifestyle more accessible. There are many ways that you can stand to make money out of real estate – and this is the crux of the problem for some people. With so many ways that you can make some money, it can be appealing for would-be investors to strike at many potential opportunities. Often at the same time. This can lead to disaster as there’s the potential for your borrowing capacity to seize up, you might be denied a loan that you need to get a property, or a property that you ‘flip’ doesn’t get the result you were banking on.

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Whatever it is, you can access the range of property investment strategies out there, you just need a plan to do it. I’ve seen it happen plenty of times. An investor gets really excited by a real estate agent about the potential of a property to make them a huge return over a short period of time and they jump on the opportunity –  without taking into account the facts about the property and all of the potential hazards and troubles to be aware of.

There’s no point in living from income to income and restricting your current lifestyle, just as a way to try and maximise your property investments while you’re banking success on your future. There is a better way, and a better approach to investing that allows you to live comfortably and with no impact to your current lifestyle – provided that you have a plan in place and know where you want to be financially and how you want to get there.

But what makes up a property plan? How do you construct it?

A property investment plan is made up of an analysis of your current financial state, combined with an estimate of where you want to be for retirement/for your goals in the future. From there you then make a calculated projection based on what you have today, and what assets and properties you need to purchase to get to where you want to be. A good plan takes into account risk and potential ups and downs in the property market, but makes projections based on historical figures and projected interest rates and rates of appreciation and value increases for property. Once you have an idea of where you want to be financially, you can then get started with working out what kind of property you need to buy to get there.

Does it sound complicated? It can be! It’s not a big secret that doing well in property isn’t something that everyone does – and not everyone gets past one or two investment properties – because they don’t have a plan. If you want to get ahead with investing you can come in and see our team who can put together a financial plan with property investment for you – and it’s obligation free. You can get in touch with us here.

3. Not Being A Smart Buyer

A smart buyer is typically characterised by someone who isn’t afraid of stepping out of their comfort zone in order to be able to achieve their best result. This might mean looking for property to buy not only in a familiar area or suburb, but in another suburb, city or state entirely. It can be a bit scary for first or second time investors to look for property in an area that they’re unfamiliar with, but remember that with the right research, you can successfully buy property all over Australia, and thus create a more balanced property portfolio that is equipped with a host of different investment types. With a balanced portfolio you can better weather the property market peaks and troughs and find yourself in a better position financially.

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The key point is that you can find a huge number of houses in a large number of neighbourhoods and suburbs around Australia, and since there will always be more opportunities for you to make money from real estate, keep your focus on your plan and keep educating yourself about new areas and new possibilities.

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You see the articles day in day out in investment property magazines and online, telling investors where they can buy next to best achieve high growth in property investment. I’ve always been quick to tell people to steer clear of hotspot-spruikers, because the hype surrounding the hotspot usually means that the time to buy has already passed…

property investment hotspot

Sure, I know that there are times when it’s acceptable to buy property in a certain area if it looks like something of note is going to happen, like an infrastructure boost or industry-related boom (see any mining town property price spike for examples!) and in this case it’s something that investors are usually onto through research and conducting due diligence. Researching areas for growth can be a great way to find property that will experience great returns, but you need to find them by doing the work.

Buying in high growth areas is great – provided you know what you’re looking for and how to do it. What I’m saying is that it isn’t the best strategy to follow hotspot reports in the media and then buy property based on what others are saying, because by the time a ‘hotspot’ hits the media it’s usually been around for a few months and everyone has hopped on that bandwagon already.

What I’d like to share is:

How to identify areas about to see a growth spurt

Identifying high-growth areas has become a super-competitive element to property investment. Everyone wants to find the next boom town and buy up big, so here’s a few tips on how to identify possible high-growth areas.

1. Look for areas that are undergoing gentrification

property investment hotspot

 

What’s gentrification? Any area where it used to be not so family friendly, but where you’re now seeing more families moving in.

Top Tips

  • Look at affordable areas in regions that you are interested in
  • Look at property prices over the past 2-3 years
  • If price growth is steady, look for younger professionals with good incomes – as this is usually a sign that the area is about to gentrify
  • Look for renovations or new buildings
  • Keep an eye out for new cafes and lifestyle stores

2. Look for the ripple effect

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If you’re keen to get into a particular area but think you’ve missed the boat you can get into a surrounding suburb. This approach needs good timing, so you need to know what stage of the property cycle the suburb is in to get maximum results.

Top Tips

  • Check property value by looking at surrounding price. If the difference is more than 5%, chances are they’re playing catch up!
  • Watch median property trends. Set up alerts for surrounding suburbs to stay up to date. Look for properties within your budget that are as close to the growth as possible.
  • Try to buy within 10km of the city centre, as you’re usually pretty spot on for growth with properties within this band

3. Look at the state of supply and demand

property investment hotspot

Supply and demand is pretty much everything for growth past a certain point. If there’s no more capacity to build you can be pretty certain that prices will continue to rise.

Top Tips

  • Look for areas where the rental yield is rising. People usually tend to buy in the same area they rent, too.
  • Look at the demographics of people in the area, and at the average rental income of the people in that area. People with better financial situations are one of the usual driving factors for gentrification.
  • Look for population rising in an area. While population in itself isn’t enough to drive prices higher it can when combined with other indicators such as rising income and low supply.

4. Look for large infrastructure being built

property investment hotspot

The area might see a spike as workers come to the area for jobs.

So is there a perfect investment market? Well, no. The perfect investment market doesn’t really exist, but great investment properties can be found in any market! Plus, it doesn’t matter how amazing the property might be, or what kind of hot spot it’s in if it’s out of your price range, so always make sure you’re up to date with a portfolio review and updates of your financial situation.

If any of this sounds good to you and you’d like to find out more, get in touch here for your complimentary 1-2-1 session with one of our property investment coaches:

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It is no question that Gen-Y are finding it harder and harder to purchase a home, and are instead opting for vacations and shopping, along with other lifestyle choices, rather than saving to get a house deposit. Why? How about the fact that it’s peddled  as being a HUGE undertaking that, thanks to commentators and social media articles about the un-affordability of housing, now seems impossible.

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The people to blame are those who go around saying just how unmanageable saving for a house deposit really is.

It is no wonder Generation Y don’t think there’s any point. Can anyone blame Gen Y for splurging on shopping and going on trips overseas when the prospect of saving for ten years just to buy one house seems so impossible?

These experts might feel they are sticking up for the poor ol’ Gen Y, but they’re really not doing them any favours. Sure it’s good to know the home truths about home ownership or property investment, but it has to be something that they still strive for, and can realise.

So how do you go about it, if you’re in the lucky bracket of home-ownership-impossibility that is Gen Y? You’ve got to make it important and prioritise your spending if you’d like to own your property. It will probably be more expensive to own your house than to rent in the initial stages, and for a Gen Y person that can be the difference between some lifestyle choices. With the emphasis on buying and owning things in the here-and-now, that can take some discipline, but you’ll be SO much better-off in the long haul.

There was a Melbourne couple recently I spoke to who said that they felt like they’d never afford a house. They had a child and were living in a three-bedroom house, and were paying a pretty high rent for this property. If they took the step of downsizing their rental property from a three bedroom to a two bedroom place, they’d save around $130 a week, or $6240. I guess the bottom line is here, that if you choose to spend your money rather than save some of it, you won’t get very far with home ownership.

The couple I was speaking to were on a single income of more than $80,000, quite a bit higher than average. By getting cheaper rental and implementing a careful budget they could save $300 a week. In five years this would amount to around $80,000 in savings.

Using this amount as a 20 per cent deposit they could buy their first home up to a value of $550,000. However, they would probably be better off buying a cheaper $450,000 home with a more manageable mortgage.

Plus:

  • It’s a lot easier to buy your own home before having a family of your own
  • If you’re young and don’t have and kids it’s far easier to have flatmates who can supplement your income
  • It is also easier in the short term to do things like buy a property with mates and then do it up, which then adds value to the property and means you can perhaps sell it after a few years so everyone has a deposit for their own home.

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If none of the above appeals and the idea of saving is a big turn off, then you can take the cheaper option of renting and have more money to spend. It’s all about your own choice and there’s plenty of people online who will tell you that it’s the best and only way to do it. But remember if you’re young and want to own your own home, don’t be put off by the naysayers and get out there and DO IT. Home ownership is achievable, but it isn’t easy and hasn’t ever been that way. Mortgages have always been a big financial cost, and it’s better to be a homeowner and property investor than it is to pay off someone else’s mortgage.

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If you’re ready to start investing or just want to find out more about property investment and how you can use it build a successful lifestyle and to achieve your goals, then get in touch today to find out more.

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What are your lifestyle goals?

Do you want to:

  • Pay off your mortgage sooner?
  • Work less?
  • Take more holidays?
  • Financial independence
  • Secure retirement plan
  • Kids education
  • All of the above?

If you look at the statistics, people need help in addition to their existing wage and super to achieve any of these goals. And property investment remains an attractive choice for many people with low interest rates and rising house prices across the country.

BUT…

There is no guarantee of success in property investment, and if you don’t understand how it works – the chances are you’ll be like 98% of all property investors who never reach their goal.

property investment

Below are 10 strategies that will secure your success.

At Alliance Corp we help you develop a property investment plan that matches your goals.

  • We develop a long-term wealth generation plan to suit you
  • We don’t sell properties – we help you buy them
  • We buy in certain locations and not others to ensure that you get the best possible property
  • We help you buy multiple properties in a portfolio as fast as possible
  • We help you manage your finances safely to get the most our of your opportunities.
  • You can trust our independent advice and experience to deliver results

The top 5 reasons why most property investors fail on their own

  1. They have no plan
  2. They don’t understand how banks work
  3. They don’t understand how property investment works
  4. They buy too few properties/risk management
  5. They don’t have a long term view.

The top 5 reasons why some property investors only partly succeed

  1. They buy the wrong property
  2. They don’t buy enough properties
  3. They don’t manage cashflow within the portfolio
  4. They don’t buy as soon as they are ready to do so
  5. They run their plan on emotion, not on a plan

The top 10 property investment strategies to guarantee success

At Alliance Corp’s upcoming workshop on 16th October in Melbourne we will cover why you should…

  1. Buy multiple properties and use leverage to succeed
  2. Hold onto properties for the long term
  3. Buy low risk properties
  4. Understand the mechanics of how the banks work
  5. Consider the importance of having a cash flow strategy before making any decisions.
  6. Develop a strategic plan to guide you, before you start buying properties
  7. Apply rigid rules about where and when you buy and where you won’t
  8. Understand the difference between a property wealth planner like AllianceCorp and a realestate agent, developer, project marketer or traditional buyers advocate
  9. Address all of the negatives – like market crashes, job loss, previous experiences, etc
  10. Know what it takes to be the kind of person who will successfully invest in a property portfolio

If you’d like to know how each of these 10 key strategies work then fill out your details below to attend our upcoming workshop in Melbourne, Brisbane and Sydney.

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Property Power Workshop

There’s nothing worse than going into what is undoubtedly one of the biggest financial decisions you’re ever going to make and feeling like you’re not adequately prepared. There is certainly a whole lot of information to take in about the whole property investment process, so I’ve compiled a list of some of the most important things to take care of when you’re getting ready to start investing.

Property Investor Checklist

 

I hope this helps you. It’s a document that you can keep to refer to, and hopefully will go some way towards making the property investment process easier. It doesn’t matter what stage you’re at in the process of investing: Perhaps you’ve already bought an investment property and want to streamline the process for your next property, or perhaps you’re new to investing and need to make sure you get everyone done right.

Whatever the reason, just keep on reading and getting your head around the whole deal, and remember to consult with a professional for guidance and advice when you need it. We can help, after all, we’ve gone through the property investment journey before (hundreds of times with all of our clients – and for ourselves) and are well equipped to advise, manage and even deal with the whole process for you, leaving you free to focus on what’s really important: family, education and your life.

Register here for your complimentary and obligation free session with one of our property experts to learn more about investing today:

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Are you looking to get into property investment as a way to achieve your goals? It helps if you know what your goals are, so that you know what you need to achieve them!

property investment

It’s not a huge secret that property investment eventually yields greater wealth through capital growth. And then,  even though we all know that money doesn’t buy happiness, greater wealth means more choices. And having choices is generally something that makes people pretty happy. Basically, property investment is an effective way to build your wealth and to enjoy a better quality of life through having greater choice. It’s pretty simple, really. Some common goals for investment that I’ve heard people say over the years include:

  • Provide for retirement
  • Financial independence
  • Passive income
  • Give the kids greater options for study
  • Travel more in retirement
  • Have more options for other investments
  • Pay down the mortgage
  • Diversify investments

It doesn’t have to be some lofty goal either – you might just really want a brand new car, and that’s fine too! No matter what your goals are financially, property investment is a great way to get ahead financially. The strategies that we use are simple, effective and tried and tested.

Of course, it depends on how soon you want to achieve your goals, and how much money you’ll need to make them possible, and as many people have seen in the past, property investment is a great way to grow your wealth over a period of time. If you’re looking to ‘get rich quickly’ then property investment probably isn’t the best and safest way to go about this, because property investment is a ‘get rich slowly if you play your card right’ kind of situation.

property investment

Take a look at the next section for some commonly asked questions about property investment.

Q. Don’t I Need A Huge Deposit?

A. Well, yes and no. If you’re getting into property investment for the first time and looking to buy your very first property then yes, you will need to save a deposit and approach a bank for a loan.

To get to this stage you need to be prepared to save aggressively! That might mean reducing your credit card limits or delaying a move to part time or contract work. If you own your own business you might need to pay yourself a salary to make yourself an attractive prospect for banks. If you’re still looking for your first investment property then you probably need to read our eBook Seven Reasons Why Property Investment Can’t Be Ignored before you read this one. If you’re ready to start investing then great! You should take a look at this information about property investment.

Q. Will I Need To Sacrifice My Lifestyle?

A. Saving up a deposit and then putting it to towards a house is fine for your first property. But what about when you want to buy more houses and create and investment portfolio? What then? Do you need to save as hard, and sacrifice as much every time you want to buy another invetsment property? Surely there must be a better way. You know of course, that I’m going to tell you that there is! The reality is that you can start with as little as 5% of the property purchase price, plus funds to cover your lawyer and stamp duty. How? Equity.

Q. What is Equity?

A. 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.

Accessing the equity in your home is one of the easiest ways to buy investment properties, and you may already have a property that will allow you to use this technique. Releasing equity from your home in a structured way allows you to keep your savings
in the bank. For investors, the usual situation is that most want to combine the benefits of not using their own savings with tax minimisation advantages when buying an investment property.

If you’re interested in finding out more about releasing the equity in your home or in building a property portfolio then please get in touch and register here for your complimentary and obligation free session with one of our property experts:

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It’s the start of a new month, and that means that the RP Data roundup is out. Let’s take a look at what the statistics say, and what it all means for property investment in general. Remember that it’s important to consider all of the information when investing in property, so this is a great source of staying across the whole spread of information available to investors.

We could see from the RP Data report that housing values housing values have made a small start moving into spring, with overall dwelling values reporting a rise of just 0.1%, according to the RP Data CoreLOgic Home Value Index. This was calculated across the month of September. This worked out to be a 2.9% capital gain over the third quarter of 2014 overall. This flat result for September resulted from five of the eight capital cities recording a loss over the month, with only Sydney (0.8%), Brisbane (0.7%) and Adelaide (0.9%) recording increases in dwelling values over the month.

property-investment

September saw gains in capital city dwelling values by 2.9%, which RP Data research director Tim Lawless said was driven by exceptionally strong conditions across the Sydney and Melbourne markets, where the quarterly capital gain was 4.1% and 3.7% respectively. In addition to this, Adelaide saw a solid increase in values during September, with 3.1% capital gains over the quarter.

Brisbane (0.6%), Darwin (1.4%) and Canberra (1.4%) showed capital gains in dwelling values over the most recent quarter and Perth (-0.6%) and Hobart (-1.0%) were the only capitals to record a decline in dwelling values over the September quarter.

Overall, RP Data’s report has shown that overall, dwelling values are now 9.3% higher over the twelve months to the end of the month of September 2014, with every single capital over this period recording an increase in dwelling values. Sydney is driving the trend, no doubt about it, with a huge increase of 14.3% over the past twelve months. A big gap exists between Sydney and the next best capital city, Melbourne, where values increased by 8.1%. Darwin came in third (7.1%) and Brisbane came after Darwin with 6.4% increase. Adelaide (4.8%), Hobart (4.6%), Perth (3.2%) and Canberra (1.7%) also all recorded gains in dwelling value.

property-investment

Despite the cooling off over September, signs point to values remaining strong.

Auction clearances kept on pushing past the 70% mark week after week, and the RP Data real estate agent and valuation platforms remained strong, and this is indicative of heightened levels of industry and mortgage market activity.

According to RPData’s research head Tim Lawless, more listings are going to enter the marketplace as the weather warms up. He says that the big test for the housing market is whether the additional stock is going to be taken up by an increase in buyer numbers.

He says: ”The annual rate of appreciation in dwelling values has actually been moderating since reaching a peak in April this year. The fact that the annual trend of capital growth has been trending lower is an important factor to note as it highlights that the rate of capital gain is no longer accelerating. Even though housing market conditions remain very buoyant, we have been seeing the 12 month trend drifting lower since peaking at 11.5per cent in April.”

“The softer September result is also likely to be seen as a positive indicator by the Reserve Bank which has recently raised concerns about the level of value growth and speculative investing in the Sydney and Melbourne housing markets,” Mr Lawless said.

It’s true that the high rate of capital gain has sparked debate around the sustainability of the housing market around Australia, and you can read more about this here, here and here. Mr Lawless does state that most of Australia’s capital cities are showing a sustainable rate of appreciation. Also, he goes on to say that the Reserve Bank has recently singled out Sydney and Melbourne as the markets that require some caution, particularly from investors who are buying into markets at a mature time in the growth cycle, at high price points and where rental yields are very low. It’s quite clear from looking at the consistently high auction clearance rates, and the ongoing increases in dwelling values that demand is high, and properties are going on the market and being met with hungry buyers. This much is true.

What we can learn from the RP Data report is that buying in these areas at such a time is better suited to home buyers, not investors. If you’re looking to buy a property that is going to achieve high growth and good capital gains then it’s important to research other areas that are experience good results, but without the saturated focus that’s currently taking place in Melbourne and Sydney.

property investment

Additionally, Mr Lawless noted that when you look back through the cycles of the housing market, the current growth phase isn’t as aggressive as what was recorded over previous cycles.

At their peak, on a rolling annual basis, capital city dwelling values increased at a faster pace over each of the previous three growth cycles in 2009/10, 2007 and 2001/03. The big difference over this cycle is that growth has been very much concentrated within the nation’s two largest capital cities and has increased for a longer period than the previous two growth phases.

Mr Lawless said that what is concerning is that we have now seen the ratio of housing debt to disposable income reach a record level at 137.1 per cent and we are seeing substantial investor concentrations within the two largest capital cities, particularly in inner-city unit markets within these cities.

“The Reserve Bank has recently highlighted the risks that are becoming more evident in the Sydney and Melbourne housing markets and therefore it is no surprise that the Reserve Bank, together with APRA, is now contemplating the likelihood of introducing macroprudential tools to reduce some of the exuberance in the housing market and rebalance investor demand without having to resort to monetary policy,” Mr Lawless said.

So essentially, the RP Data report lets us know a lot of what we already sort of knew: Melbourne and Sydney and recording some huge growth and continued gains, and whether this is being fuelled by foreign interest, home buyers driving up prices or a combination of lots of different factors, it remains that you can always navigate any stage of the market provided you do your research and enlist expert advice.

If you’re ready to get more information about the possibilities for you as an investor, then get in touch with us here.

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The number one question I am asked by people is:

When should I invest in property?

Friends and clients alike want to know whether they need to wait until they reach a certain level of financial security, or until they can afford to pay a huge deposit before they start to invest. My answer is always the same: Invest as soon as you are able. You will always get a return on your initial investment provided that you follow a plan and are prepared to adopt a ‘get rich slowly’ attitude and hang on the property long enough.

property-investment

Property investment, despite what you might have read or heard, is not a ‘get rich quick’ game, and you will be disappointed if you enter the investment world expecting quick gains. It’s not to say that some people haven’t gotten lucky with ‘hot spots’ in the past, but I never advocate jumping on the bandwagon and trying to predict trends.

So How Do I Invest?

The best way to invest in property is by knowing the market, doing your research, ensuring you have a buffer and investing again and again as soon as you are able to.

It remains though, that the age old ‘when to invest’ question strikes many people down with fear, because undoubtedly there are a lot of things to consider, and sometimes it can get a bit overwhelming. But it just means that it’s all the more important to have a plan! It also remains that there are no simple answers, really, to any of these questions. You need to have a comprehensive approach to property investment as a whole, and to seek advice from professionals when looking to take the steps towards investing. After all, say that you want to get fit and are really serious about it, you’ll read as much as you can about diet, exercise and the best way to approach the whole task before, during and in an ongoing capacity to ensure you stick to your goals. You will probably even consult with dieticians, physicians and personal trainers to ensure that you have the best and most supportive team behind you. You’ll probably also find that you’ll be more geared for success and will have a better plan to follow than if you went it alone.

property investment

Investing in property uses pretty much the same tactics. You start by consulting experts in the field, and by reading as much as you can about locations, prices, reports and data before you even think about buying your first investment property. The people that you’ll have to consult with when you’re considering investing in property include solicitors, conveyancers, buyer’s agents, estate agents, property managers and a whole host of other services you might not even have known about. That’s really why I created AllianceCorp, as a one stop service for everything to do with property investment, because I knew that property investment could be a dizzying ride with people to see and things to arrange. As an investor myself I wanted to make the process easier for people who wanted to get into property investment for themselves.

When Do I Invest?

It’s impossible to point to a certain time in history where anyone should or shouldn’t have purchased property. Hindsight is a beautiful thing, and no-one has a crystal ball, so even the people who watch the market as closely as they can won’t be able to predict trends and prices. There are so many factors at play that it’s just important to look at your own personal circumstances and pinpoint when YOU can afford to invest.

Of course you will always get people saying that the best time to buy is when there’s not a lot of competition from buyers, and at this time in the market. And yes, according to economics and any analysis of the markets it’s true on paper, but if you can’t afford to invest at the time when everyone is telling you to invest, then quite simply the time isn’t right for you.

property-investment

It’s a key factor is that you should enlist professional advice at any stage of the market cycle when you’re considering a purchase to ensure that you’re in the best position and that you have adequate funds to proceed with your investment. The best plan will lay out a long term strategy with constant reviews and updates to ensure that adjustments are made as necessary, and to ensure that you stay on top of your buying capacity. You’ll also have an exit strategy in place at some point. Finally, it is not just about when you buy, but more importantly where and what you buy.

Never try to second-guess what the market will be doing in the future. Base your property investment decisions upon well researched professional advice and be prepared to adapt your strategy to suit changing circumstances including your own as well as what’s happening on the world stage.

If any of this sounds interesting to you, then register below for your obligation-free session with one of our property coaches today!

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For a look at the auction clearance results from the weekend have a look at this article. I know that people are watching the housing markets carefully with a lot of talk going on about bubbles and skyrocketing prices, so this is just a bit more information about the auction clearance results from the weekend from RP Data Australia. I can’t stress enough that a good investment strategy can help investors mitigate the peaks and troughs that are inevitable in any investment market.

Homebuyers appear unfazed by warnings from the central bank that Australia’s housing market is too hot, with Sydney recording its strongest ­September auction weekend on record. The result points to a bumper spring selling period to rival the record 2013.

The Reserve Bank of Australia last Wednesday warned against soaring house prices and an increasing imbalance between soaring ­lending to investors and weakening occupier finance.

But if consumers have any concerns, they did not show over the weekend, with the national auction clearance rate above 70 per cent for a fifth week according to preliminary figures from RP Data Australia.

property-auctions

Sydney had a month high 927 auctions of which 78.5 per cent sold according to RP Data. Melbourne had 104 auctions, compared to more than 1000 the week before, as sellers sat out the Grand Final.

Andrew Wilson, senior economist at Fairfax Media’s Domain Group, said that while the housing market remained strong, price growth has slowed.

“I cannot understate how strong the market is but it is not as strong in terms of house price rises,” Mr Wilson said.

Yet buyers were prepared to pay up with many homes selling above their quoted reserve prices. A two bedroom home in the Sydney suburb of Surry Hills sold under the hammer on Saturday to local investors for $1.41 million, above the reserve of $1.2 million. This was a 47 per cent increase on what the house sold for in 2013, according to selling agent Con Fotaras of Belle Property.

property-auctions

“This is a strong sale price showing how popular the area is, especially with car access and proximity to Central ­station,”Mr Fotaras said.

“It was last sold for $960,000 last year and has only had minor cosmetic work and a DA approval for a four bed, three bath property with parking.”

A preliminary weighted average clearance rate of 72 per cent was recorded this week across capital cities compared with 70.8 per cent last week and 73.5 per cent this time last year, according to RP Data Australia.

The most expensive sale reported to Domain Group in Melbourne a $1.6 million block in Glen Waverley. The 1433 square metre block has the potential for a 10-bedroom home. “Most auctions in Melbourne were held in areas strong for Chinese buyers, such as Glen ­Waverley,” Mr Wilson said.

The most expensive property reported in Sydney was a $5.7 million city ­apartment at The Residence Hyde Park. The three bedroom apartment, at 68/14-24 College Street, sold prior to ­auction through Simon Polito of Laing Real Estate.

Investors remain key buyers, Domain’s Dr Wilson said.

At Summer Hill in Sydney’s inner west an investor outbid first home buyers and young families for a post-war cottage. The 19 Smith Street house sold for $900,000, $400,000 more than what it sold in 2013 and following an extensive renovation.

The agent, Richardson & Wrench ­Pyrmont Glebe, Eileen Carroll, said ­buyers and sellers were undaunted by the RBA’s warning that the market was too hot. “I think the market is really strong but most buyers and sellers seem ­comfortable with where prices are at,” Ms Carroll said.

Another Surry Hills property, a one-bedroom apartment at 360 Bourke Street sold for $647,000 at auction – $117,000 over reserve. The buyer was the underbidder on the property when it last sold in 2012 for $478,000, according to selling agent, Belle Property’s Mr Fotaras.

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Originally published as Are Real Estate Prices Too Hot? Buyers Say No.

Well, there’s a lot going on in the property market lately, and there’s been a lot of talk today about negative gearing, about being in a bubble, whether the property market is over inflated or not, and what everything thinks about the reserve bank’s actions to curb the rising housing market. I have to say, I put this information and news articles on here so that you have a source of information to read which you can then make your own judgements about.

Ultimately though, I have to remind you of one key thing that you MUST to remember while everyone is running around saying that the sky is falling: The Property Market will always go in cycles. Always. That’s an undisputed truth geared by economics and human behaviour.

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You need to remember that as a property investor you’re not trying to time the market, and you’re not looking for the ‘right’ time to buy – you’re looking for a great house at the right price in the right location that will be attractive to renters. You’re looking to build an investment portfolio of property that meets a plan and set of criteria designed to get maximum gain over a long term period, to set you up for your life later on. Keep that in mind, and don’t lose your head, and always remember to do your research and consult with your property coach and team of investment specialists. Our team can ALWAYS find a great property at a great price, no matter the market. We have been doing this for years and have weathered property peaks and troughs before, and know that the key to success is time in the market, not timing the market.

So have a read of this piece from the Australian to see what’s happening in the world of property investment finance. Our team are always available for a chat or an email if you have any questions about anything to do with your portfolio or investing.

THE vast majority of property investors taking advantage of negative gearing are “mum and dads” earning less than $80,000 a year, countering the long-held view that the property investment measure was a tax lurk for the rich.

Australian Taxation Office data shows that of the 1.266 million Australians who declared that the rental on their investment properties didn’t meet the interest repayment in 2011-12, 883,325 earned less than $80,000.

More than 70 per cent of people who accessed negative-gearing benefits, where losses on property investments can be deducted from taxable personal income, only owned one investment property. A further 18 per cent owned two investment properties.

About 60,000 clerical staff earning less than $80,000 benefited from negative gearing, as did 54,000 teachers, 46,000 sales staff and 35,590 nurses and midwives. Lizzy Hubbard, a 29-year-old teacher from The Ponds, in Sydney’s northwest, said negative gearing was helping her pay for an investment property she had purchased in Muswellbrook in the NSW Hunter Valley.

“I really did want to get into the property market, and I knew it would be difficult to get into,” said Ms Hubbard, who purchased her house when she was 25.

“I hadn’t moved out of home, but I knew I could get a steady income and one day I would be able to benefit from my investment.”

Ms Hubbard admitted she didn’t know the details of negative gearing, and had gone through Aussie Home Loans instead, but knew that an increased tax refund had made it easier to save and pay back her loan.

With no sign of a slowdown in house-price growth — investment bank UBS has forecast that tomorrow’s Australian Bureau of Statistics figures will show a 10 per cent year-on-year increase — calls to address affordability and the debate around the housing bubble will continue.

With a tax review likely over the coming months, a number of economists are already calling for negative gearing to be abolished or pared back to make property investment less attractive, leading industry groups to lobby for it to remain.

“Negative gearing works effic­iently over the life cycle of Australians, with younger people relying upon the concession with a shift towards positive gearing as people get closer to retirement,” said Nick Proud, the executive ­director of the Residential Development Council.

“Individual investors incentivised by negative gearing have ­increased over the past 30 years and their emergence will reduce the future reliance on the pension.”

Mr Proud pointed out negative gearing applied in the majority of OECD countries and said its removal in Britain had not improved housing affordability.

Originally published on The Australian.

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