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

How to Buy Property in Your Super Safely

Friday, May 17, 2013

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.

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 Tanya@wfscanberra.com.au

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.

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

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.

 

Queensland Property Growth

Friday, March 22, 2013
Hi all,
Only two weeks till I go on an extensive filed trip around QLD looking for the best property investments.  One has caught my attention as an example;
Everton Park – eight kilometers north of the Brisbane CBD - experienced the highest median price growth in 2012 for units and townhouses, according to the latest Real Estate Institute of Queensland (REIQ) data.

The median unit and townhouse price for Everton Park for the 12 months up until December is $430,000 – a 22.9% increase on the median price of $349,813 in 2011.

However suggesting some volatility in the suburb, it experienced a December quarterly fall of 16.1% to $390,000.

Sherwood – 9 kilometres south west of the CBD - comes in second place, experiencing an 18.0% annual growth from $372,500 to $439,500.

Chermside was the weakest performing suburb in the Brisbane city, falling 15.8% annually from $431,000 in December 2011 to $363,000 in December 2012.

 

Region

Median sale 12 months December 2012

Median Sale 12 months December 2011

One year change

Everton Park

$430,000

$349,813

22.9%

Sherwood

$439,500

$372,500

18.0%

Stafford

$407,500

$360,000

13.2%

St Lucia

$479,000

$425,000

12.7%

Hamilton

$477,500

$427,500

11.7%

Taringa

$434,000

$390,000

11.3%

Teneriffe

$555,938

$512,500

8.5%

West End

$523,000

$483,550

8.2%

Balmoral

$465,000

$431,500

7.8%

Bulimba

$549,500

$510,000

7.7%



Stay tuned for a more comprehensive report when I return from my trip with actual visual context and research backed up by local knowledge

Queensland Property Growth

Friday, March 22, 2013
Hi all,
Only two weeks till I go on an extensive filed trip around QLD looking for the best property investments.  One has caught my attention as an example;
Everton Park – eight kilometers north of the Brisbane CBD - experienced the highest median price growth in 2012 for units and townhouses, according to the latest Real Estate Institute of Queensland (REIQ) data.

The median unit and townhouse price for Everton Park for the 12 months up until December is $430,000 – a 22.9% increase on the median price of $349,813 in 2011.

 

However suggesting some volatility in the suburb, it experienced a December quarterly fall of 16.1% to $390,000.

Sherwood – 9 kilometres south west of the CBD - comes in second place, experiencing an 18.0% annual growth from $372,500 to $439,500.

 

Chermside was the weakest performing suburb in the Brisbane city, falling 15.8% annually from $431,000 in December 2011 to $363,000 in December 2012.

Region

Median sale 12 months December 2012

Median Sale 12 months December 2011

One year change

Everton Park

$430,000

$349,813

22.9%

Sherwood

$439,500

$372,500

18.0%

Stafford

$407,500

$360,000

13.2%

St Lucia

$479,000

$425,000

12.7%

Hamilton

$477,500

$427,500

11.7%

Taringa

$434,000

$390,000

11.3%

Teneriffe

$555,938

$512,500

8.5%

West End

$523,000

$483,550

8.2%

Balmoral

$465,000

$431,500

7.8%

Bulimba

$549,500

$510,000

7.7%



Stay tuned for a more comprehensive report when I return from my trip with actual visual context and research backed up by local knowledge

Positive signs for 2013 Property Market

Friday, December 28, 2012

Mortgage industry bigwig John Symond has tipped a gradual improvement in the housing market in 2013 and for interest rates to fall further.

“I am pretty confident the housing market throughout the country has bottomed out,” he says.

Symond believes there will be a “very gradual increase in [property] values across the board”, but not the 15% or 20% annual spike that occurred pre-GFC.

“I believe the property market will now head into a healthy state of growth with only gradual increases and that is on the back of low interest rates,” he says.

He is also starting to see a return of property investors to the market due them having the “greatest choice in the number of properties on the market in Australia’s history” combined with the low interest rates.

“I am confident we will see a healthy gradual improvement in housing across the country and I believe the regional centres will see that increase as well because overall Australia still has a shortage of housing,” he says.

Symond says he also expects interest rates to head lower in 2013.

Daily Mercury article on Mackay

Friday, December 28, 2012

A MULTI-NATIONAL Chinese company is planning a $5 billion coal project for Central Queensland which will dwarf some of the region's biggest mines.

The MacMines China Stone project will mine up to 60 million tonnes of coal per year, 45 million of which will be exported.

Those are figures comparable to the enormous coal mines being developed by GVK Hancock and Adani.

When China Stone hits peak production, it will export four-times more coal than Central Queensland's largest mine at the moment - Goonyella Riverside near Moranbah.

MacMines will build the sprawling project 300km west of Mackay, halfway between Charters Towers and Clermont.

It will be amongst good company, with China Stone's neighbours to include billionaire Clive Palmer's Waratah Coal and Indian giant Adani.

It is also of the same scale as GVK Hancock and Adani's multi-billion-dollar mines which will soon demand thousands of workers.

Like those two Indian energy giants, MacMines comes with a powerful pedigree.

It is entirely owned by the Chinese Meijin Group - a firm with more than 14,000 on its payroll and an annual revenue topping $1.25 billion.

Meijin has interests in coal mining, iron, steel production, energy, real estate and even ceramics.

China Stone will need to build a rail line, like its Galilee competitors, to link its mine to a coastal loading terminal, likely Abbot Point.

MacMines must now wait for the Queensland Government to finalise the terms for a future environmental impact statement before it can continue its path towards approval and construction.

This is to be completed by the end of April.

MacMines staff were unavailable to speak to APN before deadline on Wednesday.

10 tips from property market analysts about what to expect in 2013

Friday, December 28, 2012

Here are 10 tips from property market analysts about what to expect in 2013:

1. Sydney to do better, but best NSW prospects still in the regions: Terry Ryder

Hotspotting.com.au’s Terry Ryder expects the Sydney market to do better in 2013 but still tips a number of NSW regional towns to outperform the capital city. Regional towns, he says, are more affordable and have provided much better capital growth over recent years. He expects the following regional market to continue to outperform Sydney in 2013: Dubbo, Tamworth, Gunnedah, Mudgee, OrangeGoulburnAlbury and Wagga Wagga. For more on capital city vs regional prospects in 2013 watch the full webinar with Terry Ryder.

2. Luxury market to recover first: Janusz Hooker

LJ Hooker deputy chairman Janusz Hooker says a recovery in the housing market is “inevitable”, with the luxury high-end market expected to be the first to enjoy price recovery having been hit the hardest by the downturn. His advice to property investors is to “look for places that went down the most and also watch the big cities – when they move it fans out to the regions usually within six to 12 months”.

3. Sydney sub-$750,000 market the strongest in Australia’s “BHP of real estate”: John McGrath

McGrath Estate Agents CEO John McGrath says recent weekend clearance rates indicate clearly that the under-$750,000 market is still strongest in Sydney, with McGrath averaging a 69% clearance rate in this bracket, followed by 65% for the $750,000 to $1.5 million sector. "Sydney remains the BHP of Australian real estate – the big blue-chip market that generally outperforms the rest, says McGrath, who predicts a 2% to 5% price rise in the under-$750,000 market and a 5 to 8% rise in the $750,000 to $1.5 million bracket.

4. Consider the outer suburbs of Adelaide and Brisbane: Margaret Lomas

Destiny Financial’s Margaret Lomas says property investors are starting to take a look at the outer suburbs of Adelaide and Brisbane, with activity picking up towards the end of 2012. These were areas were house prices started to move up a little bit in contrast to the rest of the market, which mostly stagnated, she told realestatetalk.com.au.

5. Rent vs buy equation to sway more first-home buyers and renters into the market: Tim Gurner

Tim Gurner, director at Melbourne-based property development company Urban Inc, says the buy versus rent equation will sway strongly towards buying in 2013, “so we’re expecting to see a lot of first home buyers and renters return to the market”. Urban Inc is currently developing Alessi in West Melbourne.

6. Perth and Sydney to perform, Brisbane held back by unemployment: Aaron Maskrey

Aaron Maskrey, research director at PRDnationwide, expects Sydney to experience steady, but modest growth of around 5% throughout the upcoming year. He says Perth should also be a stronger performer in 2013, with a combination of mining investment and low interest rates helping to shift this market off the bottom of its property cycle. “A conservative estimate of price growth during 2013 would see Perth increase in value by 2%, but such is the swing with this resource affected region, greater market sentiment could give rise to 6% growth." Maskrey says Brisbane finds itself in a similar situation to Perth and would have been included with Perth’s forecasted growth but for the sharp rise in unemployment. “With a rising rate of jobless residents, any potential growth that was initially forecasted for Brisbane is now expected to be temporarily suppressed in early 2013,” he says.

7. A more generic uplift in property prices for Sydney then Melbourne: Matthew Chun

Becton CEO Matthew Chun is more bullish on the Sydney property market than Melbourne in 2013. Chun tells Property Observer he expects “meaningful price growth” in Sydney of 4% to 8% with modest growth of 2% to 4% in Melbourne. Chun also expects a more generic recovery across the Sydney market, while Melbourne will be restricted to growth from unique, well-located properties within 10 kilometres of the CBD. “Outside of this zone growth will be flat, and I also don’t expect much growth in the Melbourne apartment market,” he says. Becton's two key projects are Divercity in Waterloo and Newleaf in Bonny Rigg in the west of Sydney.

8. West Melbourne land market has better prospects: Jeff Garvey, director of ID Land

Jeff Garvey, director of Melbourne residential developer ID Land, says the outer west growth corridor, which includes suburbs like Truganina and Plumpton, have good prospects, in contrast to the perception that the Melbourne land market is struggling. Garvey says the area is supported by “really big infrastructure projects” including the $5 billion regional rail link running from Southern Cross to Werribee and due for completion in 2016. In addition, Truganina is only 20 kilometres from the Melbourne CBD. 

9. Don’t expect or wish for the cash rate to reach 2%: Joe Sirianni

Joe Sirianni, executive director at mortgage brokers Smartline, anticipates only one more rate cut in 2013 and says were the cash rate to fall to 2% it would undermine confidence, which he says is the key issue. “We’re living in changing times and the use of interest rate cuts as a lever to stimulate the economy just isn’t having the same impact as it has in the past. Therefore, I think the RBA will realise that there is little point in going much lower with the cash rate.  A cash rate of 2% would be unprecedented in Australia, and I think there’s a danger that if rates were cut to this level, it would un-nerve most people and exasperate the already low levels of confidence,” says Sirianni.

10. A modest recovery in new housing in NSW in 2013 with better buying conditions: Craig D'Costa

Craig D'Costa, senior development manager of Sekisui House, a co-developer of the $2 billion Central Park project in Sydney, says a recovery in the housing industry will be a key factor in boosting the NSW economy. "The housing industry is forecasting NSW to achieve a modest increase in housing starts for 2013, this comes of the back of government led stimulus for new home buyers with substantial saving in stamp duty and grants. Overall, improved affordability and better buying conditions will underpin home buying activity next year in 2013, with upgraders and investors also likely be very active sectors," he says.

 


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