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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.

Unlock your wealth - free workshop

Friday, November 16, 2012
Tomorrow a group of us financial 'so called' gurus are running an all day wealth workshop.  Tickets were $249, now reduced to $39 and I can get 50 people in for free.  Link is To Learn more click here
http://www.unlockyourwealth.com.au/?repxa=cOml5wFoG0+W1WtC5DDIiA==
If any of you want to come - please contact me directly rather than book on the site. Or turn up to Ainsle Football club 8.45am tomorrow.
Really beneficial day if you are free tomorrow.

Housing Price Growth to continue

Wednesday, November 14, 2012

We are returning to moderate housing price growth, but no bubble: Terry Ryder

Talk is cheap because supply exceeds demand.

The cheapest talk comes from economists speaking about real estate, because supply (endless) is hugely in excess of demand (zero). There’s also a low price on the articles of most journalists about property because the demand is for a David Jones product but most of the supply is coming from Gone Bonkers.

So, after two years of price decline or stagnation in our major cities, at the first sign of price recovery they’re out there talking up a bubble.

Yes siree, if you crave a bit of media limelight the shortest route is to contact a lazy journalist and give them a sound byte with the word “bubble” in it.

Data from the various research sources indicates we’ve had three or four months in which the average result across the state and territory capital cities has been a rise in median prices.

I’m not sure how reliable the data is, because organisations like RP Data are so desperate to be first with the news that they’ve been calling the monthly price movement on the last day of the month, something that’s difficult to do credibly. Indeed, this week RP Data declared the October price movement 10 days before the end of the month. Is the need for publicity really that desperate?

Nevertheless, the trend evident in the figures from various research sources is one of big-city prices now starting to trend north, slowly.

Further to that, a number of forecasters are predicting rising prices in the near future. BIS Shrapnel is tipping growth in all eight state and territory capitals in the next three years, with the strongest to be in PerthBrisbaneSydney and Darwin, where the rises are expected to be solid but not spectacular.

National Australia Bank published its survey of Australian property professionals, most of whom are expecting moderate growth in the next 12 months.

So we appear to have a return to price growth, though small, with the prospect of more moderate rises.

But there’s no middle ground with media. It’s either boom or bust. Now it seems even the smallest rise in house prices instantly has the label “bubble” slapped on it. Alternatively, a cut in interest rates gives rise to fears of a bubble.

David Uren, who writes about economics for The Australian, recently tried to link fears of a house price boom in Australia into an incoherent rave about inflation and global financial instability. Some fairly innocuous remarks by business leaders have been portrayed by journalists as fears about a bubble, when the people quoted never used that terminology.

Bubble talk has been around for the past five years. It started when a metropolitan newspaper journalist misquoted RBA governor Glenn Stevens and the mistake was repeated as fact by media outlets around the country. Economists and journalists have been promoting bubble talk ever since, although Stevens never said the words reported. It wasn’t merely a beat-up – it was a lie.

I’m still waiting for someone who subscribes to the bubble theory to actually define it. So far, nobody has. The term implies that something has been over-inflated and will burst.

Despite all those dire predictions about a collapse in our home prices since 2007, mostly from publicity-seekers based overseas, the forecast implosion hasn’t happened.

So why are we talking about a bubble now, when capital city prices have barely budged after two years of mediocrity? Because we’re beset with writers and commentators who are shallow, lazy and like the sound of their own voices.

Terry Ryder

How can you tell if a property deal is dodgy

Wednesday, November 14, 2012
How can you tell if a deal is dodgy? You can’t, but here are some clues:

 

  • If there is a middleman between you and the supplier (excluding standard real estate sales), then there is going to be big commissions built in. While the property may be OK, the commissions usually run from around $15,000 up to $40,000. You won’t know about it, as it’s often provided as an after-sales “kick-back” and it doesn’t have to be disclosed – there is no law around property investment advice, and so no disclosure requirement. Such a big commission will, in this subdued environment, take years to recoup and put a dampener on leveraging ability.
  • If the property exists in a state other than where it is being marketed, there has to be a reason why the locals haven’t snapped up the deal.
  • If the person advising you to buy the property is also representing the seller then it is not possible for their advice to be independent – it is biased, and the deal is likely better for the marketer than it is for you.
  • If the company selling the property waxes lyrically about how you are their first concern, it’s likely to be dodgy. It’s fine to sell property as a middleman but not fine to claim that your interests are with the buyer.
  • If there is any kind of incentive scheme, such as a rent guarantee or bonus, something is likely to be up. Property that makes a viable investment can sell itself.

Now is the time to take extra care. If you’d like to invest in property, you can do so safely, but you have to have your eyes open and take responsibility for your own successes and failures. Protect yourself with the following guidelines:

  • Beware of property being marketed by a seminar or telemarketer – such campaigns are expensive, and these people are paid big commissions that are hard to recoup through capital appreciation. Don’t believe claims that commissions aren’t built into the price – this is simply not possible.
  • Never sign a deal on the day you see it. If an extra incentive is offered to do so, be doubly wary!
  • Always confirm the value of a property through recent sales. Only recent sales can determine the actual value.
  • Be aware that forecasts on income are based on historical figures and do not consider future supply.
  • Be extra careful of off-the-plan – especially tax advantaged ones. They are often part of a huge development which will affect future supply and impact on your yields.

Most importantly, become educated before you become an investor. Too many people decide to invest and then go looking for a property, and this is why they are so vulnerable. Get that education under your belt first and then you will know how to spot a dodgy deal at 10 paces.

Margaret Lomas

Perth as a Standout in September

Wednesday, November 14, 2012

By Larry Schlesinger
Tuesday, 06 November 2012

Capital city house price growth slowed in the September quarter to 0.3%, led by a 1.8% rise in Perth's house price index to a median of $489,000, according to preliminary figures from the ABS.

If past revision history is anything to go by, Perth house prices are likely to be revised upwards in the December quarterly update, which is released in February.

The ABS revised its Perth June quarter result upwards from 0.6% to 1.2%, with Perth house prices now up 4.4% for the year to September.

The preliminary estimate for Perth follows rises in the previous three quarters (+0.5%, +0.9% and +1.2%), with the rise in the September quarter 2012 “driven by clusters with median prices below $700,000”.

Recently released RP Data-Rismark figures (which are not revised) show Perth house prices up 0.9% for the October quarter and up 3.8% year-on-year to a median of $475,000.

The ABS 0.3% rise for to the weighted average of the eight capital cities follows the previously reported June quarter increase of 0.5% being revised upwards to 0.6%.

As a consequence, the through-the-year movement has been revised from an estimated fall of 2.1% to an estimated fall of 1.9%.

Sydney also recorded an increase of 0.3% to $605,000, following falls in the previous two quarters.

Sydney house prices are 1.3% for the first nine months of the year, with the ABS noting that the small September quarter gain was driven by “clusters with median prices at the top and bottom of the range of prices.

“These rises were offset by falls in clusters with median prices between $650,000 and $1 million."

Melbourne’s house price index rose 0.2% to $468,000, the first rise in six quarters, to leave house prices down 2.3% for the year to September.

Brisbane house prices gained 0.4% to $434,000, while Hobart was up 0.2% to $348,000.

These rises was partially offset by falls in Adelaide (-0.6% to $384,000), Canberra (-1.1% to $535,000) and Darwin (-0.5% to $547,000).

The ABS also made revisions to capital city data for both June (first revision) and March (second and final revision) quarters

In June: Sydney (+1.5%, revised from +1.4%), Perth (+1.2%, revised from +0.6%), Adelaide (+0.4%, revised from +0.5%) and Darwin (+2.5%, revised from +5.1%). This was partially offset by falls in Melbourne (-0.2%, revised from -0.4%), Canberra (-1.2%, revised from -1.3%), Brisbane (-0.2%, revised from +0.1%) and Hobart (-1.0%, revised from -0.4%).

Final price indexes for the March quarter 2012 show no movement following a revision from a second preliminary estimated fall of 0.1%.

The movement through the year to the March quarter 2012 was revised from a fall of 3.5% to a fall of 3.4%.

In March the following second revisions were made: Perth (+0.9%, revised from +0.7%), Canberra (+0.7%, revised from +0.3%), Melbourne (-1.1%, revised from -1.3%), Adelaide (-0.9%, revised from -1.2%), Hobart (-2.9%, revised from -2.0%).

Property Recovery still well underway

Wednesday, November 14, 2012

Well, that was quick, wasn't it? Almost before it got started, the real estate recovery is over. Dead. Finito. No more recovery.

It echoes the mining boom. That's finished, too. The $300 million in resources developments under way are a figment of someone's imagination.

Just as the rise in lending for home purchases, with first-home buyer loans up 18% on last year, must be a mirage. The significant rises in residential rents in multiple locations I read about must have been a misprint. The improvement in clearance rates was clearly a dream and the gradual improvement in city prices from other sources a fabrication.

None of that counts because one month's figures from one careless research source found a small decline. On that flimsy basis, media organisations around the nation declared the market recovery over. Not a hiccup or a blip, but dead and buried.

AAP declared that the market had dropped because the impact of interest rate cuts had ended. This was roughly four weeks after the October reduction by the Reserve Bank and two to three weeks after the response of most lenders. I'm sure RBA board members would fascinated to learn that the impact of its rates decisions lasts only a matter of days.

There were many similar stories. The journalists who wrote those articles and keyed in those headlines should be ashamed, but I'm sure they're not. It would require a concern for accuracy, fairness and balance – a basic sense of professional decency – to have any remorse over a presentation of news that made a mockery of analysis and added to the great overwhelming pile of misinformation that's afflicting real estate consumers.

Why happens if the next month's figures come out and show a small rise in property prices? What stunningly inappropriate headlines will accompany that news? "Market in miracle rebound"? "Skyrocketing prices defy downturn."? "Economists warn of price bubble"? "US analyst predicts price crash"? "Sub-editor's brain explodes trying to dream up new superlative"?

Anyone who's been around real estate longer than five minutes knows sales data is never smooth or consistent. It's common to access data from four different sources about one location and get four conflicting answers.

One month's data from one source is meaningless.

To place such a categorical conclusion on a single month's figures from just one source - particularly a source that's so desperate to get into print that it's become careless – is irresponsible.

It's the reason newspapers are dying a long, slow, agonising death. Low standards, inexpert writers, cheap sensationalism.

Sadly, some of the new forms of media present as little better.

What's really happening in capital city markets? Nothing much has changed – there is a gradual, almost grudging, recovery underway in most cities, an event supported by most of the data coming in from multiple sources.

The markets in Perth and Darwin are rising strongly and investors thinking of buying need to get busy. Sydney and Brisbane are also trending in the right direction. Adelaide, Canberra and Melbourne are still patchy, with conflicting data from various research sources.

Outside the big cities many regional centres have had strong markets for some time, headed by Gladstone, Mackay and Emerald in Queensland.

The general trend is a return to growth, though moderate in most cases, notwithstanding one dodgy set of figures.

Terry Ryder is the founder of hotspotting.com.au and can be followed on Twitter.

Should you Invest in Property or Shares?

Wednesday, November 14, 2012

Shares or property?

Ahh, that old chestnut…  It’s a question that is often asked.  What performs better?  Shares or property?

On a capital appreciation measure over the past decade, the past half-decade, and over the past three years, residential property has well and truly outperformed shares.  Over the most recent 12-month period shares have outperformed the housing market.

It’s important to note that the share market has shown periods where capital gains have been substantially higher than what has been achieved in the housing market.   As can be seen in the ‘rolling annual change’ graph below, the annual growth rate in the ASX 200 has been has high as 39% over a 12-month period (the year ending February 2010); share prices have also fallen by more than 40% in the space of a year, which is what happened during the GFC (the ASX 200 fell by 42.7% over the year ending November 2008).

Capital city dwelling values haven’t shown anywhere near the same level of volatility.  The largest rise over any 12-month period, based on the RP Data-Rismark eight city aggregate index, was 21% over the year to May 2002, and the biggest fall was recorded just recently when dwelling values fell 5.3% over the year to May 2012.

While the volatility of the share markets may appeal to some, it is the stability and resilience of residential housing that is likely to be one of the key reasons why investing in the housing market is a popular choice for mum and dad investors.

Click to enlarge

Click to enlarge

Tim Lawless is national research director of RP Data.

Mining Boom to continue in 2014

Wednesday, November 14, 2012

By Larry Schlesinger
Monday, 12 November 2012

Australia's mining-led construction boom will peak in 2014 with the value of planned projects already starting to contract, according to the Deloitte Access Economics September quarter Investment Monitor.

Deloitte Access Economics expects investment levels to continue to rise in the short term and then peak in 2014 as fewer projects move through planning to the construction phase.

It notes that investment in mining projects has been the “major driver of economic growth” but says that “all good things must come to an end”.

Mining investment projects currently account for nearly half (46%) of all major construction projects  either under construction or mooted, with transport and storage infrastructure projects (many tied to mining projects) making up nearly a third (31%).

The report finds that the value of planned projects has fallen back slightly over the past three months by $10.6 billion to $465 billion due to a lack of new resources projects, and some project cancellations, including BHP Billiton’s $20 billion Olympic Dam mine expansion project near Roxby Downs, as well as the delaying of the Port Hedland outer-harbour port expansion project in the Pilbara region in WA.

“While the bulk of other resources projects in planning are still on the agenda, there are question marks over the scale of some potential projects, such as Fortescue’s $6.2 billion Solomon mine expansion and [Gina Rinehart’s] Hancock Prospecting’s $9.5 billion Roy Hill project," says Deloite Access Economics.

Question marks also hang over Xstrata’s possible $6 billion Wandoan coal mine in Queensland, which has been placed on hold until market conditions improve, while BHP Billiton’s plans for a $3 billion expansion of the Peak Downs coking coal prospect have been shelved.

The Investment Monitor, which tallies all private and public engineering construction, non-residential building and equipment investment projects in all Australian industries, found the value of projects increased by $6.2 billion, or 0.7% from the June quarter, and has increased by 3.7% over the past year.

As the chart below shows, the mining boom accelerated from March 2011, but has slow-down since the start of the year.

Value of definite projects by status ($billion)

Click to enlarge

"Housing Boom and Bust 2012/13 Report" SQM Research

Tuesday, October 09, 2012

One of Australia's most respected and dynamic property analysts, SQM Research's Louis Christopher, has recently released his annual "Housing Boom and Bust 2012/13 Report". This report provides a keen insight into the state and prospects of the Australian property market.

At the most fundamental level, the report provides solid news for average property owners and, as a consequence, the broader Australian economy. Christopher contends that "the remainder of 2012 and 2013 is likely to see a recovery in dwelling prices" and that "the lower end of the capital city market is likely to outperform the upper end". The recovery will be driven by the impact of low interest rates on the lower and middle end of the market.

Importantly, the main impetus of the recovery is likely to occur in markets that have struggled over the last five or so years. Christopher said "the best performing areas in Sydney are going to be in Sydney's outer ring, particularly in the west and south-west". He also identified the struggling Queensland Gold Coast and Sunshine Coast regions as areas nearing a property value floor.

Christopher pointed to low vacancy rates in these areas as a sign of strong demand for middle and outer-ring property.

"Given the rate cuts that have happened many renters who are living out there would now like to be buyers," he said.

"It's better news for sellers. If they are looking to sell in the next 12 months they will probably see more buyer demand."

As always, however, there are risks. The report analyses the impact of five scenarios on the market for 2012/13. In the first and most likely scenario, the commodity boom experiences a downturn, causing the terms of trade to fall and then level out. This scenario assumes that the dollar will be close to parity and the Reserve Bank will cut rates by 50 basis points before Christmas.

If this occurs, Mr Christopher said we can expect house prices to grow between 2 and 14 per cent across Australia. The only exception would be mining towns.

Sydney could expect house price growth of 5 to 9 per cent next year, Melbourne 2 to 5%, Brisbane 3 to 7%, Perth 6 to 12% and Adelaide 2 to 5%.

But the report says this price growth will occur in the lower and middle end of the market while prestige properties continue to underperform.

"At this point in time the prestige market is not showing any signs of recovery at all," Mr Christopher said.

He said the predictions in the report could be bad news for buyers who have waited on the sidelines for house price falls in the order of 40 per cent as predicted by Dr Steve Keen, colloquially known as Dr Doom.

Queensland Booming Property Market

Thursday, October 04, 2012

Retail investment in Queensland contributed the highest share nationally over F2011/12, according to Colliers International.

Colliers International’s National Retail Investment Review 2011/12 says that for transaction activity over $10 million, Queensland recorded 26 sales over the period – three of which were among the top 10 biggest sales nationally.

Major sales included Industry Superannuation Property Trust’s purchase of a 50 percent share in the Myer Centre Brisbane for $366 million, Australian Prime Property Fund Retail’s acquisition of 50 percent stake in the Cairns Central Shopping Centre for $261 million and the sale of Noosa Civic to Queensland Investment Corporation for $200 million.

The 50 percent stake in the Myer Centre Brisbane was the largest retail acquisition in Australia over the period.

Nationally Colliers recorded a total of 83 major retail investment transactions over the period, with a total value of $4.244 billion. This is an increase of 8 percent on the previous financial year.

Queensland, New South Wales and Victoria accounted for around 77 per cent of sales by number, Colliers says.

Stewart Gilchrist, Colliers International National Retail Director said investor demand for quality shopping centres was resilient over the 2011/12 financial year despite volatility in retail trade data.

“Investor demand for quality shopping centres was buoyant, but there was also strong interest in underperforming centres with repositioning potential,” Gilchrist says.

“There has been strong interest in prime regional shopping centre assets from institutional investors from Australia and overseas, with demand continuing to exceed supply.”

Neighbourhood centres led activity with 35 sales over the period, but a historically high number of regional centres were sold, with seven centres comprising 44 per cent of all sales by value.

Fifteen sub-regional centres sold, up from five the previous financial year. The sub-regional category saw the biggest jump in sales volume of all sectors.  Source:Property Ezine

A link to a webinar worth watching if you are serious about property investing

Thursday, October 04, 2012
http://www.propertyobserver.com.au/webinars/free-webinar-why-the-mining-boom-is-far-from-over

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