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Catherines Chat

Wholistic Financial Solutions provides a lot of essential information and updates regarding the property investment industry. Check this page for the updates.

RBA cash rate cut needed in February

Friday, December 28, 2012

The Reserve Bank needs to cut the cash rate by a large amount in one big hit to stimulate a recovery in the housing market, according to Residex chief executive John Edwards.

On the back of November Residex housing market data, which shows many markets in negative territory or treading water, Edwards says the Reserve Bank should look to cut the cash rate by 75 basis points in February.

“Should the RBA continue along the road of small reductions, there is a real risk that it will need to reduce the cash rate to 2% or less.

“However, should it move to a much more significant reduction in February (of around 0.75 percentage points), this would probably achieve its objectives and bring the cycle of small rate adjustments to an end.

“The outcome would be the removal of constant press about the likely poor outcome as the resources boom comes to an end.

“Importantly, it would be probably sufficient to stimulate consumer spending and encourage small business investment. In all probability, this outcome would lead to a much improved level of consumer sentiment,” he says.

Edwards says housing markets had done better in 2012 compared to the previous year, but had failed to keep pace with inflation.

“The majority of cities have produced negative real rates of growth (after taking inflation into account). In fact, the real growth was a -2.8% in housing while for units it was -1.23%,” says Edwards.

Despite the poor performance of the market in 2012 in real terms, Edwards says he expects all adjustments in house prices since the GFC to be “recovered in the medium term, and prices are anticipated to be equal to or better than before the GFC”.

Mackay's Northern Beaches booming

Wednesday, December 05, 2012

IT'S still a wise move to invest in Mackay's housing market and the Northern Beaches will be a buyers' hot spot.

This is the opinion of Xcel Properties managing director developer Kim Clarke.

Xcel Properties released more house and land packages to market at its popular master-planned estate Plantation Palms recently.

"The city is struggling to keep up with its growing population - 1500 new homes needed to fill the demand every year," Mr Clarke said.

"With all the uncertainty the market did slow down for a couple of weeks, but that was Australia-wide.

"In the last few weeks we have seen it pick up again, particularly in Mackay."

Despite a drop in consumer confidence, Mackay was still a worthy choice for investment, Mr Clarke said.

"I think one of the things that impressed in the most about the Mackay city, is its strong economy.

"It has strong agriculture, strong manufacturing in Paget, and then the businesses that are servicing the surrounding mines."

Northern Beaches is one of the fastest-growing areas in Mackay and Mr Clarke said that was about to ramp up as major projects came online.

"There is the new school, it's close to the shops and eventually there will be bus routes and cycle ways that link up to the shops and beaches," he said.

"People living in Plantation Palms will be able to walk, or cycle if they prefer, to school and to the shops."

Mr Clarke said the area was unique because the majority of the land was bought off a sole owner.

"The Symons family owned the whole area years ago... we are able to work with the Mackay Regional Council to think about the planning of the estate and the area."

The new packages are part of the Stage 3B and comprise 46 lots from 535 to 881sq m. They are priced between $199,000 and $285,000.

Mr Clarke said the range of people looking to buy the packages was broad, but he noticed a strong trend in buying smaller lot sizes.

"There seems to be a lot of older couples who are looking to downsize," he said.

"But the first-home buyers, which are generally your young married couples, are looking that to go that way as well.

"First-home buyers usually want to invest between $380,000-$440,000 mark.

"But in saying that, there will always be people wanting to buy the bigger blocks with the larger manor homes as well."

What's available?

 Stage 3B comprises 46 lots from 535 to 881sqm,

  Prices range between $199,000 and 285,000

Thousands needed to run mines

Wednesday, December 05, 2012

MORE than 13,000 machine operators, 6000 graduates and more than 7000 tradies will be needed by 2015 to keep Queensland's mining industry ticking over.

Skills researcher Kinetic Group's boss Derek Hunter concedes these are "uncertain times" but said a flood of activity was still headed our way.

"If you stop looking at the headlines and look at what the activity in the industry is right now, it's as high if not higher than it has ever been," Mr Hunter said.

"We have got significant new growth in productivity from 2013 onwards."

As of April, there were 20 mining and gas projects in Queensland alone, amounting to more than $64 billion in investment.

That includes BHP Billiton's Caval Ridge and Daunia mines already under construction, which will deliver a total of 2450 jobs in construction and during operations.

"These are not pie in the sky figures - the companies already invested are unlikely to stop them going through to production unless there was the most amazing crash," Mr Hunter said.

He noted that even the global financial crisis, though it created a few "blips" for the industry, had only mild long-term effects.

Mr Hunter said the danger was this boom to bust mentality, if something stopped booming, then surely it had bust.

"We have to change people's heads about that - companies have shareholders to satisfy so action must be taken as soon as there is difficulty.

"Certainly (BHP Billiton Mitsubishi Alliance) is laying people off, they have closed a couple of mines in the past few months.

"But they have absorbed most of them back into the organisation."

Daunia

  • Open cut mine, 2960 hectares
  • Production expected to begin next year
  • Full production of 4.5 million tonnes per annum expected in 2014
  • 1000 employees required in construction phase, 450 during production
  • Caval Ridge
  • Open cut mine, 6706 hectares
  • Production expected to begin in 2014
  • Full production of 5.5 million tonnes per annum expected
  • 2000 employees required during construction, 500 during production

Flood of activity' still coming in QLD

Wednesday, December 05, 2012

MORE than 13,000 machine operators, 6000 graduates and more than 7000 tradies will be needed by 2015 to keep Queensland's mining industry ticking over.

Skills researcher Kinetic Group's boss Derek Hunter concedes these are "uncertain times", but said a flood of activity was still headed our way.

"If you stop looking at the headlines and look at what the activity in the industry is right now, it's as high if not higher than it has ever been," Mr Hunter said.

"We have got significant new growth in productivity from 2013 onwards."

As of April, there were 20 mining and gas projects in Queensland alone, amounting to more than $64 billion in investment.

That includes BHP Billiton's Caval Ridge and Daunia mines already under construction which will deliver a total of 2450 jobs in construction and during operations

"These are not pie in the sky figures - the companies already invested are unlikely to stop them going through to production unless there was the most amazing crash."

He noted that even the global financial crisis, though it created a few "blips" for the industry, had only mild long-term effects.

Mr Hunter said the danger was this boom to bust mentality, if something stopped booming, then surely it had bust.

"We have to change people's heads about that - companies have shareholders to satisfy so action must be taken as soon as there is difficulty.

"Certainly (BHP Billiton Mitsubishi Alliance) is laying people off, they have closed a couple of mines in the past few months.

"But they have absorbed most of them back into the organisation."

Flood of activity' still coming in QLD

Wednesday, December 05, 2012

MORE than 13,000 machine operators, 6000 graduates and more than 7000 tradies will be needed by 2015 to keep Queensland's mining industry ticking over.

Skills researcher Kinetic Group's boss Derek Hunter concedes these are "uncertain times", but said a flood of activity was still headed our way.

"If you stop looking at the headlines and look at what the activity in the industry is right now, it's as high if not higher than it has ever been," Mr Hunter said.

"We have got significant new growth in productivity from 2013 onwards."

As of April, there were 20 mining and gas projects in Queensland alone, amounting to more than $64 billion in investment.

That includes BHP Billiton's Caval Ridge and Daunia mines already under construction which will deliver a total of 2450 jobs in construction and during operations

"These are not pie in the sky figures - the companies already invested are unlikely to stop them going through to production unless there was the most amazing crash."

He noted that even the global financial crisis, though it created a few "blips" for the industry, had only mild long-term effects.

Mr Hunter said the danger was this boom to bust mentality, if something stopped booming, then surely it had bust.

"We have to change people's heads about that - companies have shareholders to satisfy so action must be taken as soon as there is difficulty.

"Certainly (BHP Billiton Mitsubishi Alliance) is laying people off, they have closed a couple of mines in the past few months.

"But they have absorbed most of them back into the organisation."

Apartments in Mackay - the next big thing

Wednesday, December 05, 2012

IT'S going to be apartment bonanza in Mackay as several new projects ramp up or are set to get under way.

Honeycombes Property Group has launched its $25 million apartment project in East Mackay after winning their development approval.

Branded Carlyle Apartments, the development is Honeycombes' first project to start in the Mackay region with construction set to begin at the end of November.

Meanwhile there has been a surge in activity at the riverside Lanai Apartments residential resort with six Lanai apartments sold in the September quarter, including two-bedroom and plus-study and three-bedroom designs.

Blacks Real Estate marketing agent Peter Francis said buyers had sensed Mackay's market was on the move and were securing competitively priced receiver stock at a prime point in the property cycle.

"With professional on-site management, Lanai has achieved yields of up to 8.84% net in the last 12 months," Mr Francis said.

"Given the fundaments of Mackay's market, the receivers have always had confidence in Lanai's value, and this surge in activity bears out that view."

Honeycombes director Richard Wallace has shrugged off the doom and gloom shrouding the mining industry and said Mackay was still an investor's hot spot.

He said there the strong demand for short -term accommodation would continue given Mackay was the gateway to the Bowen Basin.

"Mackay is crying out for quality short-term accommodation due to the large number of people who visit the area as a result of the growth and expansion of the mining industry in recent years," Mr Wallace said.

"Carlyle also caters to owner occupiers who are looking for a work and lifestyle balance, which people seem to think they need to sacrifice when basing themselves in a mining town.

"The apartments provide a solid investment opportunity given the resource-fuelled economy which continues to drive the area and attract people to Mackay."

Mr Wallace said there were several benefits to investing in apartment type complexes, as opposed to stand-alone houses.

One of the benefits was the body corporate structure, which gave investors piece of mind, he said.

Lanai Apartments general manager Emma Purtill agreed with this.

"There is someone here all of the time making sure everything runs smoothly."

Ms Purtill said during the week the majority of their clients were business travellers, but she had seen a rise in family tourists in the past few months.

Project snapshot

Carlyle Apartments

  •  Ranging in size from 61sq m to 103sq m,
  •  Modern open-plan apartments
  •  Priced from $330,000 to $505,000.

Lanai Apartments

  •  Range of apartments from two - three bedroom designs - all rooms have private balconies
  •  Prices have ranged from $477,500 to $515,500
  •  Permanent residential, long-term, corporate and holiday rental options

'Pit-to-port project' announced for Abbot Point

Wednesday, December 05, 2012

BILLIONS of dollars from India are inundating Queensland's mining industry as hopeful proposals to develop the Galilee Basin to the west of Rockhampton, Mackay and Gladstone evolved into solid projects.

Deputy Premier Jeff Seeney was keen to spruik what these dollars and the mining revenue the projects would create, in a week where news on astonishly large mines now appears commonplace.

On Wednesday, Indian giant GVK announced it had signed a construction deal to build the multi-billion dollar third terminal at Abbot Point, near Bowen.

It came just one day after a $4.2 billion plan for an ACMI mine in the same area released its environmental statement, a crucial step on its path to construction.

Prime Minister Julia Gillard watched the pen hit the dotted line on the GVK deal in Delhi, but was unable to answer questions on her returning flight on Thursday.

Mr Seeney may not have been in the room when GVK boss Dr Gunapati Venkata Krishna Reddy signed the deal with Brisbane builders Smithfield and Korean steelmakers Samsung C&T, but he knew what was coming.

He said there were still management plans for GVK to put together but the "game stoppers" were now out of the way.

"I'm very pleased to see the progress," he told APN on Thursday evening.

"These major projects will provide the next generation of Queenslanders with jobs and the state with income for schools and hospitals."

Mr Seeney said he was keen to encourage the investment of not just GVK but other Indian mine developers Adani and ACMI.

And he emphasised that all applicants were treated exactly the same, whatever their origin.

The LNP government is currently facing allegations from mining magnate Clive Palmer that Indian investors had been given favourable treatment ahead of other developers.

The deal rounds off GVK's trio of massive Queensland investments including the Alpha Mine, plus 500km of railway connecting the mine to a GVK port capable of handling 70 million tonnes of coal each year through its two ship berths.

The Alpha Mine and GVK's neighbouring project Kevin's Corner will both produce roughly 30 million tonnes of coal per year, making them two of the largest energy coal mines in the world.

Alpha is due to start mining in 2015, with Kevin's Corner to follow suit 12 months later.

The port will need to be ready to handle the first Alpha coal deliveries.

The Abbot Point expansion is expected to cost between $2 billion and $4 billion with early estimates pointing to a total cost of $10 billion for the mine, rail and port package.

It will create 650 jobs during construction with another 100 needed to operate the port full time.

GVK's Mr Reddy described the deal for his company as a "key strategic development".

"This is the first major step towards finalising the construction contracts and completing the financing for the project which is well under way," he said.

Full steam ahead for mining in Qld

Wednesday, December 05, 2012

ALMOST $13 billion in coal projects are being built in Central Queensland, even as the world's multi-national mining firms release trickles of information on cost-cutting and job losses.

Hit by a global fall in coal prices and the increasing cost of doing business in Queensland, coal giants have sliced contractors and staff from projects.

But the region is far from surrendering to the tumbleweeds.

Three new mines, two extensions and one giant port expansion in the Bowen Basin have Rio Tinto, Anglo American and BHP Billiton Mitsubishi Alliance shelling out billions in an apparently difficult time.

These six illustrate how the industry is powering on.

Rio's Kestrel Mine expansion was announced in 2007, but it was still an astonishing project by the numbers.

From first sod to completion in 2013, the $2 billion Kestrel will have provided jobs for more than 1100 workers between the still-operating mine and its expansion work.

A Rio spokeswoman said the extension alone had taken "4.2 million man hours so far and more than 3000 tonnes of steel had been used".

Anglo American's $1.7 billion Grosvenor project only started building in June with first coal to be mined by late next year. However, underground mining would not start until 2016.

Grosvenor will supply more than 1000 jobs during construction and operation.

It will need 3000 tonnes of structural and reinforcing steel, 13,000cu m of concrete and take estimated four million man hours to build.

BMA has perhaps the most ambitious schedule with expansions of Hay Point Coal Terminal and Broadmeadow Mine worth a combined $3.4 billion.

Add that to the building of its two new mines - $4.2 billion on Caval Ridge and the $1.6 billion for Daunia - and it amounts to more than $9.2 billion worth of construction.

BHP Billiton chips in half of the funds for its projects, with the rest funded by alliance partner Mitsubishi.

Earlier this year, BMA shuttered its Norwich Park and Gregory mines when they stopped making money.

However, the giant was clearly looking beyond the horizon when it green-lit this fleet of emerging projects during the boom times.

Daunia will employ about 1000 during construction and 450 when running in 2013.

Hay Point's expansion will have used 1000 workers by the time it is finished in 2014

Caval Ridge will need 2000 to build and another 500 to operate when it starts in 2014.

 

ON THE GO

Rio Tinto

Value: $2b

Jobs: 1100 (construction and operation)

To open: 2013

Grosvenor (new)

Anglo American

Value: $1.7b

Jobs: 1000 (construction/operation)

To open: 2013/2016

Daunia (new)

BMA

Value: $1.6b

Jobs: 1000 (construction), 450 (operating)

To open: 2013

Caval Ridge (new)

BMA

Value: $4.2b

Jobs: 2000 (construction), 500 (operating)

To open: 2014

Broadmeadow (expansion)

BMA

Value: $900m

Jobs: TBA

To open: 2013

Hay Point (port expansion)

BMA

Value: $2.5b

Jobs: 1000 (construction)

To open: 2014

TOTAL VALUE: 12.9b

Mackay leading property revival in September quarter

Wednesday, December 05, 2012

THE Mackay property market was regional Queensland's top performer during the September quarter, contributing Queensland recording its strongest house sales numbers in nearly two years.

According to the Real Estate Institute of Queensland (REIQ) September quarter median house price report, the number of house sales throughout Queensland increased significantly over the quarter.

"The mining areas of Queensland appear to have come off the boil a little, perhaps due to sharp property price increases over the past 12 months in Gladstone and Mackay in particular; however, sales in these regions remain strong," REIQ chief executive officer Anton Kardash said.

The top performer of all major regions was Mackay, which posted a median house price increase of 4.7% to $445,000. Over the year its median house price increased 4.9%.

REIQ Mackay zone chairwoman Sally Richards said numerous factors contributed to Mackay's continued steady market conditions and, despite changing local employment conditions, the prospect of growth for the following quarter and beyond was positive.

"We have found more recently that there has been increased interest in the higher priced homes such as the $400,000 to $600,000 price range.

"These people are upgrading or moving to Mackay," Ms Richards said.

"There is a significant amount of increased development and building activity in the region, resulting in strong demand for new home and land developments."

An absence of first home buyers due to the removal of the $7000 First Home Owner Grant was expected to end following the introduction of the new $15,000 First Home Owner Construction Grant, she said.

Strong Performer

 West Mackay: 9.3% increase in median house price to $427,000 and 7.1% increase in growth over 12 months.

Newcastle fringe suburbs attracting first-home buyers and investors with many options under $300,000: HTW

Wednesday, December 05, 2012

 

Towns and rural villages within an hour’s drive of Newcastle present first-home buyers and investors with many opportunities to acquire property priced under $300,000, though in some cases, employment, shopping and transport options may be limited.

Valuers Herron Todd White pick Cessnock, the fringe suburbs of Lake Macquarie and range of small rural towns to the north, south and west of Newcastle, where houses can be picked up below this benchmark.

“At Cessnock in the west, very basic and dated housing can be acquired for $150,000 to $200,000 as well as in fringe villages like Aberdare and Millfield.

“Further west in the town of Singleton, the coal mining boom is impacting on housing, seeing basic prices again rising to the $250,000 to $300,000 range.

“Singleton can further expect to benefit from the M15 expressway due to open in September 2013 making the region more accessible,” says HTW.

Outer-suburb buyers are being spurred on due to a tight rental market in Newcastle with the Real Estate Institute of NSW reported a 1.6% vacancy rate in October.

The median price of a Newcastle house is $655,000 and $430,000 for units, according to RP Data with BIS Shrapnel tipping strong capital growth of around 6% per annum over the next two years.

Apart from being Australia’s sixth biggest city with a population of 550,000, Newcastle is also a beneficiary of coal mining investment activity and is well connected to Sydney plane, train and by car via the Newcastle Freeway and the Pacific Highway.

Herron Todd White notes that affordable houses are “typically in areas with limited employment opportunities, shopping, education, and public transport.

“The typical purchaser of affordable housing is quite varied and includes a wide range of owner-occupiers, first home buyers and investors.

“In the current economic climate we are finding the most remote of locations experiencing greater sales periods than their more centralised counterparts.

South of Newcastle, first-home buyer and investor opportunities can be found on the southern fringes of Lake Macquarie, with cheaper housing is priced from around $250,000 to $300,000 in areas such as Doyalson and Wyee.

“Similar pricing occurs in the small villages near the Pacific Highway like Morisset, Dora Creek and Awaba.

Buyers with a penchant for rural living might consider the more remote areas of the upper north and north-west, around towns such Dungog, Stroud, Gloucester and  Buladelah, suggests HTW, with houses priced from as low as $150,000 to $200,000, but where “services and facilities are more limited”.

“Finally in the coastal areas of the north-east, lower end property around Hawks Nest and Tea Gardens can be acquired for around $250,000 to $300,000.

“Just to the south around Nelson Bay, older houses can sell for as low as $300,000.

“Over the last few years these coastal areas have experienced a significantly weakened market with the typical purchaser – an investor or holiday house purchaser having departed the market and sales periods have noticeably increased,” says HTW.

By Larry Schlesinger

By Larry Schlesinger
Monday, 03 December 2012


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