A new survey has revealed that 50 per cent of respondents believe house prices will increase in the coming months, while 80 per cent believe it’s a good time to buy.

The latest consumer sentiment survey by RP Data and Nine Rewards, released in May, saw more than 1000 participants answer a range of questions on what they expect from Australia’s property market over the next six to 12 months.

According to RP Data, the survey results reveal a substantial upward shift in consumer expectations for the housing market, but there have been distinctive differences from region to region.

In Perth, for example, 59 per cent of respondents expect house values to rise during the next six months, and 56 per cent of respondents in Sydney expect the same. In contrast, no survey participants in Tasmania expect house values to rise over the next six months.

When asked whether now is a good time to be buying property, 80 per cent of survey participants agreed, compared with 76 per cent of respondents in the October 2012 survey. When asked whether now is a good time to sell, 37 per cent of participants said yes, compared with 29 per cent in October last year.

When asked what are the most important factors when choosing a property, almost half of survey respondents said their personal financial situation is the most important, followed by prospects for capital growth (20 per cent) and interest rates (12 per cent).

RP Data says that as consumer confidence in housing market conditions rises, there are likely to be a larger number of sales as the year progresses. The number of buyers has already risen by about 4.3 per cent compared to the same time last year.

Subsequent to dwelling values having gained a solid 2.8% over the first three months of 2013 according to RP Data's capital city dwelling index, the month of May indicates a softening in values. RP Data national research director Tim Lawless confirmed it is likely to be down nearly 1% for the month.   Business Spectator economist Stephen Koukoulas from consultancy Market Economics, believes that the ‘possibility of a sharp fall in house prices is very remote’, saying that protective factors that will prevent this happening are 'weakness in new housing construction, strong population growth, and the ability for the RBA  to cut the cash rate even further'.

In February, he had predicted house prices to rise 10% over 2013 as part of an 'upward trend' after dwelling values rose 1.2% in January according to the RP Data-Rismark index. 

Koukoulas said if the price decline gathered momentum, the cash rate could fall to around 2% or even 1% in a 'worse case scenario'.  He believes that while it’s not clear what is behind the recent house price dip, he points to the recent fall in consumer sentiment and an 'updrift' in the unemployment rate as to possible factors.

However, he draws a clear distinction between Australia and the house price collapses in the US, the UK, Ireland, and Spain, and says the Australian housing market is 'fundamentally different' because the house price bubbles in these countries were accompanied by a housing construction boom, while housing construction in Australia is slow. 'Perversely, perhaps, this weakness in new housing construction is good news for now as it means there is little risk of a glut of property coming on to the market should there be a more worrying house price fall in the months ahead,' he adds.

Some advisers recommend the PIE buying formula – P.I.E. being Population growth, Infrastructure and investment, and Employment opportunity and diversity.  

The theory is that a location with those three elements at work will deliver real estate growth. As a method of reducing principles down to a digestible and easily-understood formula, it’s a reasonable approach.  

But some base their investment strategies on the P only. They believe that following population growth is the key to successful property buying. That is not only simplistic, it’s dangerous.  

I often receive emails from investors questioning why certain high population growth areas don’t feature is my hotspotting reports. They’re bemused because someone has advised them to buy in the population boom locations.  

They're making the mistake of looking at only one side of the equation - demand. The other side of that equation is supply - and that's where the problem lies.  

Developers invade the high-population-growth places - and often build too much new product. No matter how high the population growth rate, it won’t create capital growth if developers generate an over-supply.

That’s why many of Australia’s leading population growth areas have some of the worst-performing property markets. You could almost argue that rampant growth in resident numbers is a signal for property buyers to stay away.

The Gold Coast is the most obvious example. It has been a national leader on population growth for 20 or more years, but is a habitual under-achiever on capital growth thanks to over-building by developers. It is currently showing glimmers of recovery, after five dreadful years, but I would hesitate to recommend it to investors because we can be confident developers will do it all over again, as they have many times in the past.  

Five years ago I was interested in the Wyndham and Melton municipalities in Melbourne, because they had many of the growth-generating factors I look for in a hotspot. After initially delivering good real estate performance, they declined as developers moved in and over-supplied those markets with house-and-land packages.  

Today, both those locations have poor capital growth rates, well below city averages. Over-building has meant vacancy rates have been 6% or 7% or higher for much of the past three years (although more recently vacancies have come down to more acceptable levels in both Melton and Wyndham).  

The same syndrome is now impacting a couple of Queensland’s boom cities. Both Gladstone and Mackay have sharply rising vacancies, despite their myriad growth factors, because developers have overshot again.  

Both places have strong futures, thanks to their links to the resources sector and their expanding export facilities, but right now investors need to be cautious and selective.  

The overall message for investors is that they need to look beyond population growth and ask deeper questions – including questions about vacancy factors and the amount of new housing supply in planning.

Author: Terry Ryder  

Interest rates are at an all-time low.  This provides borrowing rates of less than 5% from many banks. Property enquiry rates are continuing to escalate, converting into a rising rate of sales Australia wide.

And many experts are predicting a further 0.25% interest rate cut over the next two months

This month’s Your Investment Property magazine has revealed its National Top 50 Hotspots which include Mackay, Ipswich, Rockhampton, Toowoomba, Townsville, Emerald and Bowen.

And in the Queensland Overview, the major focus is on Mackay and Brisbane, with Gladstone, Bowen, Townsville, Rockhampton and Townsville rating a mention.

If you are interested in knowing more, email Catherine@wfscanberra.com.au for the latest property research material and gossip.

The ATO recently released a statement about their concern over people investing into property with their super without fully understanding their obligations under the law.

Their concern is based on real life examples where incorrect structures or lending arrangements have been setup by the individuals.

This has resulted in a number of funds becoming non-complying and penalties being issued for the breaches. This problem is caused by trustees trying to implement the complete strategy without getting the appropriate advice and having so many parties involved in the process.

Here is a short list of some common mistakes;

- Incorrect entity name on the front page of the contract

- Purchasing the property directly in super without setting up the Bare Trust arrangement

- Incorrect lending arrangements where the name of the lender is the incorrect entity

- Rental income and Interest expenses coming or going into the wrong bank account

- Using the same Corporate Trustee for both the super and the bare trust to reduce the costs

- Using the property for personal use (including related parties)

- Lack of liquidity within the Self Managed Superannuation Fund

Buying property in super can be a very valuable strategy if it is implemented correctly and it is appropriate for your situation. WFS Canberra has been providing advice on implementing Super and Property strategies for over ten years and has experience in all aspects of buying property in super including;

• Establishing an SMSF
• Obtaining loan approval for an SMSF to buy property
• Establishing a Bare Trust
• Sourcing Property for an SMSF
• Ensuring your Investment Strategy is sound and acceptable to the ATO
• Holding your hand through all aspects of the transaction to ensure it progresses smoothly and avoids all ATO scrutiny.

An investment journey begins for Wholistic Financial Solution clients - Glen and Natalie Dickie. These two clients have made it into a 4 page article in the Australian Property Investor Magazine where professionals have agreed with Catherine’s advice and strategies!

Click here to read the full article!

Latest statistics (2010) show that there is a housing shortfall of around 32% across the nation. Developers simply cannot keep up with the demand.  Why is this?

For a long time Australia has had a housing shortfall.  Put very simply we don’t have enough developers building houses to keep up with the number of Australians wanting housing.  However, the chronic shortfall we are now seeing has been greatly exacerbated by the Global Financial Crises (GFC).  The GFC saw finance approvals plummet.  Finance became very hard to get.  Finance Approval rejection rates went up by 30% and the hoops that lenders were making finance applicants jump through simply made the finance process untenable.  Many developers simply could not get finance to commence their projects so they stopped building.  And this was at a time when our population was growing at an extremely high rate.  So dropping building starts and a growing population has created a huge undersupply of housing which is only predicted to get worse.

The RBA has again moved into new territory today – with the board deciding to reduce the cash rate by 25 basis points to an all-time low of 2.75%! Depending on how the major lenders choose to pass on these savings – this could result in homeowners paying the lowest rates on their mortgages in recent history – which is going to be welcome news to most!

The RBA – citing low inflation numbers and generally pessimistic market expectations – reduced the cash rate to again attempt to spurn economic activity in wake of a global market which is again experiencing jitters – with the European debt market showing signs of volatility. The actions of the RBA to date have been relatively successful in maintaining a steady level of growth domestically – even if it is a bit less than predicted towards the end of last year.

As a result of this announcement it is important to take the time to compare what you are currently paying on your home loan with the best deals available in the market – as you could be paying thousands of dollars more than you should.

If you would like a mortgage review – FOR FREE – contact Tanya@wfscanberra.com.au

Anyone can do it? Are you sure? Anyone?

Well let's look at some facts?

Of the 1 in 10 Australian Tax Payers that Invest in Property:

60% earn less than 50k pa,

85% earn less than 80k pa.

So perhaps not anyone can do it.  But anyone, or any couple jointly, earning more than $50,000 per annum can do it. 

In comparison to other types of investment such as stocks, bonds, forex, commodities, etc Real estate investment makes a lot more sense to a lot more people.

Along with the basics of fresh air, food and water – shelter or a roof over our head, is one of the most basic human needs.
It is for these basic reasons that real estate is a simple and attractive investment.
All wealth creation strategies require discipline, commitment planning and a long term focus
As the old saying goes "you've got to be in it to win it" and you will never make any money as a real estate investor if you never actually invest in real estate.

And once you’re in it – you need to hold on tight for it’s not also a smooth road.
Along with every positive piece of press you may come across about real estate investment, there will probably be a negative article on the facing page of that newspaper.

I have often advised client’s simply to not listen to the press.  In fact, don’t even read the newspapers or watch the news.  By the time it is in the news it is too late.  BY the time the press are talking about a housing boom, it has already boomed.  By the time, they are talking about a housing slump, it has already slumped.

A real estate investor has to be ready to ride out the ups and downs of the Australian economy, just like any other investor.  Rule one – BUY.  Rule two – HOLD as the housing market rises.  Rule three – HOLD as the housing market slackens.  Rule four – SIMPLY HOLD.

Sometimes residential house prices will go a sky high. At other times, prices will hit rock bottom so fast you will want to jump on the nearest bargain before the end of the day.
The fact of the matter is, real estate investment is a viable option for most of us, and once you get started -- the hardest part is usually done.
The key to becoming a successful real estate investor, no matter who you are, is making the right decisions from the outset.  This book will give you all the education and information you need to make your real estate journey a safe and enjoyable experience.

Before you buy learn how

1)      Assess the residential property market in the area, the demand and supply, the demographics, the average rental prices and vacancy rates, the infrastructure (both existing and planned) and much, much more.  The later chapters of this book will take you through all the things you need to consider in detail.

2)      Work out how to get finance, how much can you borrow, how you should structure your finance. More on this later.

3)      Decide your strategy – are you looking for positive or negative geared properties, cash flow or capital gain. 

4)      Work out whose name to buy in? Yours? Your Partners? Joint? Or a Company, Trust or Super Fund.

5)      Understand the basic steps in the real estate purchasing transaction

6)      Learn how to do due diligence on a property

7)      And much more…..

It may sound overwhelming but if you work your way through this book you will know everything you need to know.  So hang in there.

So yes, anyone who is willing to learn all the basics of Investing in Real Estate can do it.