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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.

Brisbane Property Market

Wednesday, March 30, 2016

Whilst the Brisbane property market perhaps didn't meet the expectations bestowed upon it in 2015, with modest gains of around 5% on average, the greater Brisbane region threatens to surge in the years ahead.

"With affordability much less of an issue, comparatively high rental yields and improving economic conditions" there is a lot more growth to be found in Australia's 3rd largest city.

"Brisbane housing market fundamentals are arguably healthier than the larger capitals"

Tim Lawless - CoreLogic RP Data - March 2016

Who Said Mackay is Over!

Monday, September 09, 2013

 

The train is departing, All aboard!

The Daily Mercury yesterday announced the opening of a BHP Daunia mine and has created over 900 jobs while boosting the economy by $1.4 billion.

Relate this to another story they printed yesterday informing us of another airport upgrade which backs up the recent million dollar refurbishment.

"Mackay's perfectly positioned to be Central Queensland's integrated transport hub, so we're in the sweet spot for the Bowen Basin. Mackay is the capital of the Whitsundays so this is the place that people want to come through."

Now, combine all of this good press with the attached housing boom predicted from the election and we have the perfect storm for buyers to invest in Mackay.

See all three articles here:

  1. Airport Upgrade
  2. Daunia Mine Creates Over 900 Jobs
  3. Abbott will Trigger a Housing Boom

Demand Continues to Outweigh Supply

Monday, August 19, 2013

Rental vacancies in South-East Queensland are being squeezed as demand continues to outweigh supply. The Real Estate Institute of Queensland (REIQ) says vacancy rates remain under 3% in SEQ and in most cases are tightening even further. Brisbane's vacancy rate is 2.1%, but rates are also trending lower in all other major regions of the south-east, REIQ's CEO Anton Kardash says. Cairns, Bundaberg and Fraser Coast regions all recorded vacancy rates below 3%. Kardash says competition for rental properties is attracting more investors, with property investor activity in Queensland up 14.9%, according to the REIQ's interpretation of ABS finance data.

Four Queensland Areas to Outperform Rest of General Property Market

Tuesday, August 06, 2013

 

QUEENSLAND has four of the top ten areas in Australia tipped to outperform the rest of the general property market.

The latest Top 10 Best Buys report by property analyst Terry Ryder of hotspotting.com.au, tips Emerald/Galilee Basin, Ipswich, the Sunshine Coast and Toowoomba as the markets to watch.

He said all four were considered to have the drivers which would achieve capital growth above the norm in the near future.

Mr Ryder said the Sunshine Coast market, which had struggled in recent years, was set to achieve some growth for the first time in five years.

"Having previously been hampered by a struggling tourism economy, an oversupply of dwellings and poor affordability, the coast is heading into a new growth phase,'' he said.

"We are actually seeing a number of markets which are tourism based such as Cairns, Hervey Bay, the Whitsundays and Sunshine Coast, are now starting to come back,'' he said.

The Sunshine Coast was being helped by multiple factors, the tourism industry was stronger, the market was more balanced in terms of supply and demand, and recent price drops had made it more affordable.

Fly in, fly out, workers were settling on the Sunshine Coast and most importantly there is major infrastructure being built there.

"Nothing generates property price growth like major new infrastructure, which generates jobs, economic activity and improved amenity for residents,'' he said.

"We believe the best part of the Sunshine Coast for investors to consider is the southern precinct from Kawana south to Caloundra.

"This is where most of the key new infrastructure is being built.''

Mr Ryder had highlighted the Sunshine Coat five years ago as a "no go zone'' an area not to invest in, but he said the fundamentals had now turned around.

Although the property market in Emerald and the Galilee Basin area were currently in temporary decline, Mr Ryder believed the amount of future infrastructure spending for the area as a result of the mining industry would soon turn that around.

"There is anything up to eight or nine big coal mining projects (for the area) proposed, you only need one or two of those to happen for Emerald to have a big lift,'' he said.

"There is going to be good buying opportunities now if you believe in the future of Emerald as we do.''

Ipswich was selected as it is considered one of the growth corridors of southeast Queensland and has experienced strong population growth, with about 5000 new residents added every year.

"Prices rose strongly in the five years to 2009 (before tapering of) giving the suburbs of Ipswich City the strongest capital growth averages in the Greater Brisbane region,'' he said.

"Big infrastructure developments include the $2.8 billion upgrade of the Ipswich Motorway and the $1.5 billion rail link to the Springfield master planned community,'' he said.

He said many suburbs were still very affordable in Ipswich with East Ipswich, including suburbs such as Booval, Eastern Heights and Silkstone, one of the most "under rated precincts'' in the area.

Toowoomba was identified in the report because it was one of Australia's strongest regional centres and it benefited from a diverse local economy and closeness to the Surat Basin resources province.

"We particularly like places like Toowoomba that get some benefit from the resources sector but don't depend on it,'' he said.

"Toowoomba has plenty of affordable investment options, a recent survey ranked the city the most affordable place in Queensland, relative to total incomes.''

National top ten best buys 2013-2014

Albury-Wodonga

Dubbo

Emerald/Galilee Basin

Ipswich

Kwinana precinct

Midland precinct

Palmerston

Rockingham

Sunshine Coast

Toowoomba

source: hotspotting.com.au


By Michelle Hele

Property has Historically Low Volatility

Friday, August 02, 2013

 

Housing prices are fundamentally less volatile than the share market.  This has been clearly demonstrated by the performance of the share market over the few years prior to 2010.  Many investors in the share market and investors in superannuation (who invests it in the share market) saw their investments and retirement funds drop by as much as 40 -50% over a mere few months. 

House prices can go up and down (as the graph below indicates) however they have never fallen by 40- 50% in a few months.  In fact the long term average of Australian property is around 10-11%.

 

 

 

The share market on the other hand has had a long term average (before the GFC) of around 9-10%.  It will be interesting to see whether this measure is still correct in a few years time when the long term effect of the GFC can be measured.

Suffice to say, and as demonstrated by the graph below, the property market is simply less volatile than the share market. A major reason for this is that property in Tangible, real ‘bricks and mortar’ and it fulfils the fundamental human need of a ‘roof over your head’ (see next chapter).

 

 

The Importance of Capital Growth

Monday, July 15, 2013

"Population growth and housing demand are the strong fundamentals that create capital growth"

Capital growth = the difference between the value of the property and the original cost price

Capital growth is the main reason so many investors choose to invest in real estate over any other investment option.

Put simply, the supply of land is finite, as they say ‘they’ve stopped making it’, whereas the population is ever-increasing and the demand for property is growing at a faster rate than the supply.

These facts alone provide a very stable support mechanism for continued capital growth in Australia.

When I say Capital Growth is the ‘main’ reason investors choose real estate I am cognisant of the fact that some investor focus on cash flow rather than capital gain.  This strategy is viable in certain circumstances which I will explain in later chapters.  However, capital growth IS, without a doubt, the best way to maximise your wealth creation.  Take a look at the graph below.

The above graph illustrates that the property is making an $85 a week loss (also known as negative gearing which I will explain in later chapters).    $85 a week equates to a $4420 pa loss (before tax breaks considered).  However, the property has gone up by 10% (which is within Australia’s long term average of houses doubling every 7 – 10 years). 

So this Investor has lost $4,420 to make $35,000, or a Net Profit of $30,580* 

*(35,000 – 4,420)

I believe this is a far superior strategy than to invest in positive cash flow properties which may put $50 a week in your pocket but not grow in value.  However, there are horses for courses and I will explain in later chapters when, how and why – positive cash flow property can work for some investors.

To maximize your capital gains in a property, it would be best to buy at a time when the market is close to the bottom of the demand cycle.   However, the ‘bottom’ of the cycle can’t always be picked so it’s better to be in the market anyway, rather than hold back waiting for the next ‘bottom’.  This is known as ‘time IN’ the market rather than ‘timing’ the market.
Investors who are interested in making the best capital gain possible should focus on areas where house prices are likely to rise by more than the national average. Later chapters in this book will give you an idea as to what to look for to identify these areas.

Factors such as

1)      Has the property got good capital growth potential, i.e. is the current price likely to increase as demand increases in the area?

2)      Is there a ripple effect?

3)       Is the land size desirable?

4)      What is the prospect of splitting the block? 

A good strategy can be to create instant capital growth by buying a property at less than market value.  Just because a property might be listed at market value, it doesn't mean the seller won't take less for it. Sometimes an urgent sale is required for reasons such as ill health, divorce or the vendor needing to settle on another property. Decide on what you think it is worth and what you're willing to pay in order to get the best capital growth possible.
Shop around. To invest in real estate and create wealth through capital growth you must buy smart with careful consideration not to over capitalize on the investment.  The later chapters of this book will help you learn to buy smart.

 

Do you want to know more? Click here to watch five free webinars on - ‘Proven, Must Know, Property Investment Advice’

Catherine is in Queensland, Again!

Friday, July 12, 2013

Catherine is spending her weekend in Rockhampton researching the investment property market. She is using her time in Rockhampton to get a general feel for the area and also to meet with real estate agents looking at different properties to see whether or not they would be suitable investment properties. Catherine has been kind enough to send us some photos whilst on her property hunt.

Also, please take the time to have a look at an Economic Report by Michael Matusik on Rockhampton.

 

 

 

More Good News for the Property Market

Monday, June 24, 2013

Investors have increased their borrowing rate to more than $70 billion pa
for home loans - ABS

Growing confidence in the Australian property market is underlined by the
latest ABS lending figures which show a jump in borrowing activity by
investors.

Low interest rates and the expectation that interest rate will fall even
further has been a key issue that has encouraged investors to increase their
borrowings over the last year. Property investors in Australia are now
collectively borrowing on average more than $1 billion each week to purchase
investment properties.

Australians are eager to invest in properties: now - QBE
More than twice as many Australians are looking to buy in the next 12 months
compared with the number that bought in the last year.

According to QBE LMI's 2013 Mortgage Barometer report, more than 50% of
Australians believe now is a good time to buy. In addition, nearly 70% of
respondents said they intend to purchase property over the coming five years
- a significant increase on last year.

The perception that now is a good time to buy continues to exist. In 2013,
one in three think that the best time to buy is in the next six months, and
more than half believe the next 12 months is best.

This sentiment is in line with almost half of respondents' thinking that
property prices will increase strongly in the next three years, and more
than a third believing prices will be more than 10% higher in 2013.

Confidence in Housing Market Improves

Thursday, June 06, 2013

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.

Sharp Fall in House Prices 'Very Remote'

Friday, May 31, 2013

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.


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