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Catherine's Chat

Wholistic Financial Solutions provides information and updates regarding the property investment industry. Learn more from Catherine's chat here.

RBA Reduces the Cash Rate to a New Record Low of 2.75%

Wednesday, May 08, 2013

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

Huge Undersupply of Housing

Tuesday, May 07, 2013

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.

Anyone Can Invest in Real Estate

Monday, April 29, 2013

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.

Good News for the Housing Market, Sounds Good Hey

Wednesday, April 24, 2013

According to new research sentiment within Australia’s property industry has risen to an 18 month high, driven by increased confidence in the housing market and easing financing conditions,.

The latest Property Council-ANZ Property Industry Confidence Survey shows the confidence index for the June 2013 quarter jumped from 107 to 124, the second consecutive quarter of growth (a score of 100 is considered neutral).

The survey polled more than 3100 professionals from the property and construction sector in all states and territories for their forward-looking views.

“While consumer and business sentiment continues to be subdued, the bulk of Australia’s property industry have shifted to a more positive outlook on the future,” says Property Council Chief Operating Officer Ken Morrison.

“Last year’s fence sitters have removed the splinters and made a clear decision to walk on the sunny side of the street.”

“This improved outlook is led by record confidence in the residential sector, and project funding expectations which are now positive for the first time.”

Key findings of the Property Council-ANZ Property Industry Confidence Survey are:

  • Overall sentiment up again: national property industry confidence has increased for the second consecutive quarter, from 107 to 124 on the index.
  • National economic expectations now positive: national economic growth expectations are now positive for the first time, increasing from 89 to 106.
  • Residential continues to build: expectations for house price growth increased 17 points on the index to a record of 124, continuing positive prospects for a housing recovery.
  • Residential construction expectations continue upward trend: since the survey began in 2011, construction activity expectations have increased the most in the residential sector.
  • Funding breakthrough: confidence in funding projects is now positive for the first time since the survey began, increasing from 100 to 110.
  • Spike in new work expectations: Forward work expectations which have been flat over the last nine months increased significantly from 125 to 138 and are consistent with national staffing level expectations.
  • Big states lead the way: NSW, VIC, WA and QLD recorded the largest increases in sentiment.
  • Tick of approval for QLD government: QLD joins WA respondents as the only states who believe that their government is doing a good job planning and managing growth. NT’s government performance index has recorded a massive decline from 91 to 54, putting it on par with that of TAS.
  • Cap rates to diverge: Prime cap rates are expected to compress, with the most compression expected in NSW, while secondary cap rates are expected to ease across the board.

ANZ Chief Economist Warren Hogan says “notwithstanding renewed European concerns and rising tensions on the Korean peninsula, global economic and market sentiment have improved markedly in 2013. Expansive monetary policy settings have buoyed global liquidity and equity markets have rallied strongly.”

These factors, combined with low interest rates and improved buyer/investor interest have boosted property market sentiment.

“Increased population growth and subdued home building activity will see demand/supply fundamentals tighten further,” Mr Hogan said.

Further, Mr Hogan said “The RBA will likely retain a mild easing bias in 2013, and we continue to expect an extended period of low interest rates, with property markets likely to be a key beneficiary.”

All in all, this economic data is very positive for the property investment market.

Gladstone Leads Dramatic Rental Vacancy Rise in Mining Towns: SQM

Monday, April 22, 2013
There is a rising trend in rental vacancies in mining towns across Queensland and Western Australia, according to the latest data from SQM Research.

Some of the mining towns that now have high vacancy rate rises are:

  • Gladstone (QLD) 5.6%
  • Port Hedland (WA) 4.6%
  • Karratha (WA) 3.7%
  • Roma (QLD) 2.6%

SQM Research managing director Louis Christopher says investors need to be cautious when it comes to buying in these towns which have a vacancy rate well above the national 1.9% vacancy rate.

The vacancy rate in Gladstone, Queensland has more than tripled to 5.6% in March from 1.7% a year ago.

In Port Hedland the 4.6% rate compared with 1.6% a year ago. The 3.7% vacancy rate in Karratha compared similarly last March, but with 0.2% two years ago.

“Property investors over the past 10 years have done extraordinarily well if they held real estate in mining towns,” SQM managing director Louis Christopher said.

“However, there is always a risk that when a downturn arrives these markets could have a very rapid and severe correction.”

"We are now watching the data very closely on the various mining towns in the country," he says.

"We remind investors to remain very cautious when it comes to these towns."

Canberra’s rise in rental vacancies has been noticeable since July 2012 and may be associated with a well-known increase in apartment developments, together with federal government attempts to reduce the budget deficit, says SQM.

For other capital cities, vacancies generally remained steady or modestly declined for the month of March. The net result at a national level during the month was 52,931 vacancies, which represented a vacancy rate of 1.9%, which was similar to the preceding month.


Jonathan Chancellor

EOFY Tax Planning

Friday, April 19, 2013

Hello All,

Catherine is away at National’s for Dragon Boat racing and I thought I would take this opportunity to hijack her blog and write about tax. It is getting to the point in the financial year where people need to start thinking about end of year tax strategies and how the tax changes implemented for 2013 can really affect them. For example, does the tax free threshold rising to $18,200 mean that you no longer need to lodge a tax return? The ATO have some good calculators available on their website to help you make this decision. But when in doubt remember to ask a professional.

For those in business it is time to look at whether or not you have contributed enough into superannuation for yourself and does the business have enough profit in it for you to contribute more? It also time to make sure if you are a sole trader that you register with you super provider to claim super contribution’s as a deduction in your personal tax.  As we get closer to the end of the financial year (EOFY) we will give you more hints and tips. Please feel free to comment below if you have any questions you would like answered or have anything in particular you are interested in hearing about for EOFY. Remember that now can be the best time to get in and see your accountant for some tailored strategic advice.

That’s enough from me for now but you might see me again posting on Catherine’s blog as we get closer to the new tax season.

Lexie O’Toole

Investment in Real Estate is Essential for Retirement

Tuesday, April 16, 2013

What are your dreams for retirement? To live near the beach and spend your days walking, swimming, fishing?  To travel the world and see new sites?  To live near your family and be able to spoil the grandkids?  Whatever your dream – the reality is that you will need money to live on.  As a financial planner I often ask my clients ‘how much do you think you need per year to live a comfortable retirement?’ Most people will answer that they think they would need around $50,000 per annum to live comfortably in retirement. Most financial analysts will say that the average amount required at retirement to live comfortably is $500,000 per person.  And this is presuming the family home is already paid off.

And by comfortably, I simply mean being able to eat out one night a week, take a holiday once a year and live a basically comfortable existence.  Nothing extravagant.

The frightening reality is that;

Currently 76% of all retirees in Australia are retiring on less than $20,000pa.  This is only marginally over what is called ‘the poverty line’.

22% of people over 65 need to continue working and this will most likely increase as the Government keeps raising the retirement age.

The current average superannuation payout is only $130,000 for males, and $45,000 for female (2009 figures) – well short of the $500,000 estimated to be required.

People are living longer, and longer and longer.  Generations ago you were lucky if you lived till 65, now people are living well into their 90’s.

Old age pension will continue to deteriorate – there are currently 5 tax payers for every retiree, by 2040 there will be 2.5. Put simply – the Government will not have the funds to keep paying pensions in 20-30 years when a very large proportion of the current generation will be ready to retire.

The retirement age in Australia is currently 65, and if you look at a general break down of 100 average 65 year old Australians these are the statistics:

  • 24 are dead
  • 54 are on pension or welfare
  • 16 are still working
  • 5 are financially independent
  • 1 is wealthy and financially secure

These are sobering statistics but the goods new is that you are reading this book, getting yourself educated and informed and will have the opportunity to become one of the 6 per hundred of Australian’s who are financially independent, wealthy or secure.

So Why Real Estate?

The following chapters will explain to you in detail why Real Estate is superior to all other forms of investment.  That’s a big call I made right there.  But trust me, I am sure by the end of this chapter you will understand why I say that. As the following chapters will explain investing in real estate contains all of the attributes of solid wealth creation such as; capital growth, low volatility, tangibility (bricks and mortar), rising rents, low vacancy rates, high barriers to entry, tax advantages, ability to add value, and the ‘Power of Leverage’.

And the facts speak for themselves.  "Bricks and Mortar" investment is the most common money-making strategy for the Richest 200 Australians according to Business Review Weekly (BRW), which each year publishes an annual list of the nation's wealthiest individuals.

Real estate investment can be a powerful way to start or boost your retirement fund, but you need to do your due diligence and choose the property investment option that is right for you and your financial situation.

South-East Queensland Property Visit

Friday, April 12, 2013

I have returned from my trip and was extremely impressed with Mackay and it was my pick of the towns I visited (Mackay, Gladstone, Brisbane, Townsville & Toowoomba). 


It is just pristine.  The majority of the town is new.  New houses, new streets, new roads, new amenities, new businesses.  Every car that drove down the street was new – BMW’s, 4 wheel drives, etc.  There is significant money there. Great growth prospects.  Major export hub.  I can send you all the economic statistics about predicted growth, etc, but more importantly what I saw told the same story.


I spent the day in Mackay with a local builder.  He drove us to every new development and gave me a full run down on every aspect of each estate and suburb.  Funnily enough the Mackay locals are even more ‘north v south’ biased than Canberrans.  And this was clearly evident as you crossed from one side to the other.  The North is definitely the ‘better side’.  It goes even further, locals don’t want to drive any more than 10 minutes to the CBD, so anything further out than that is ‘not good’.  There are areas of Mackay that are definitely ‘investor glutted’ and you can clearly see this from driving down the streets.  There are mainly rental properties, multiple cars parked in the drive, untidy front yards, etc.  Then there are other areas that are mainly owner occupied, nice wide streets, clean front yards, BMW’s in driveways, young kids on scooters and families playing in the park.  Why is this important?


Resale- the locals simply won’t buy in the investor glutted areas.  So best potential re-sale is in the areas that local want to live. 


So what do you look for in Mackay - A mainly owner occupied area, on the northside, and only 10 minutes from town.


My next picks were Townsville and Brisbane.  I will report more on these areas next week.

SMSF Proposed Changes for 2014

Monday, April 08, 2013

Hi all,

As we probably all know by now the government has released it's proposed changes.  At this stage we can't say exactly how this will affect SMSF and property investing.  It is very disappointing the the government is yet again tinkering with the SMSF rules.  This will erode confidence in SMSF's to some extent.  As usual, the announcements come with no technical detail as to how they will actually work in practice.

All we know so far is 15% tax on earnings over $100,000.  Yet Capital Gains on Properties in super have always been taxed at a maximum of 10%.  My guess is that, if these rules get through, which is doubtful, the following will occur.  When a property is sold and say a gain of $500,000 is realised, then the first $100,000 will be tax free and then the balance of the gain of $400,000 may be taxed at 10% or $40,000. In other words property is still a extremely viable investment option.  You have still made a net profit of $460,000.

However, the tax is still unfair and inequitable as at this stage it appears it will only apply to SMSF's.  Retail and Industry Funds also invest in property on a large scale.  Is the same rule going to apply to the proportion of funds allocated against pension members who have more than $100,000 in income stream.  Probably not, as most people with supposedly super rich superannuation of $2,000,000 or more are smart enough to have their money in SMSF despite the tinkering of the rules.


I will update again when we find out more about this.


Australian housing market “heating up” with FHBs and investors activity to pick-up: APM

Friday, April 05, 2013

The Australian housing market revival has continued into 2013 with “solid indications of rising buyer activity and increased confidence from sellers” says Australian Property Monitors (APM) in its latest market report.

“The revival of Australia’s housing markets in 2012 has been confirmed as leading indicators such as auction clearance rates point to a market heating up.

“Historically low interest rates are the fuel to this emerging fire which is no real surprise given the typical impact of low mortgage rates on buyer activity in previous housing growth cycles," says APM.

It adds that housing markets are “off and running in 2013, building on the buyer momentum generated through 2012 but now translating to more generalised and comprehensive market outcomes”.

Fairfax-owned APM has house prices up 1.5% over the three months to January to a median of $544,000 with units up 0.3% to a median of $413,000.

The Gold Coast has shown the greatest gain over this period with house prices up 2.2% though the key Gold Coast unit market has recorded no gains.

All othe capital city markets have recorded gains of 1% or more in their median house prices over the January quarter, with the unit market more patchy.

APM is confident of a return of first-home buyers in 2013, which along with investors were "significant contributors to the housing market revival of 2012".

“First-home buyer activity was largely generated by changes to various state government incentive schemes that acted to draw forward demand from this group.

“After a subdued start to the year, first home buyer activity is set to rise sooner rather than later, driven by low interest rates, a solid economy, and rising house prices and rents.

“Investor activity is also set to intensify in 2013, driven similarly by low mortgage and deposit rates, prospects of improved capital gains, and solid yields from most local markets," says APM.

APM also notes that the sharemarket is also a solid leading indicator of housing market activity, particularly in relation to prestige properties.

“With the All Ordinaries now holding above 5,000 for the first time in three years, a rising bull market will activate prestige markets that are finally showing early signs of emerging from a sustained period in the doldrums.

APM also notes an improved global economic outlook with the US housing market finally showing signs of life.


By Larry Schlesinger
Thursday, 04 April 2013

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