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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.

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).

 

 

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.

 

 

 

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.

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.

Independant Professionals Agree with WFS Strategies and Advice

Monday, May 13, 2013

An investment journey begins for Wholistic Financial Solution clients - Glen and Natalie Dickie. These two clients have made it into a 4 page article in the Australian Property Investor Magazine where professionals have agreed with Catherine’s advice and strategies!

Click here to read the full article!

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

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.

 

This week we are in Canberra Weekly Magazine

Thursday, March 28, 2013

Bumper Property Growth in 2013

Monday, March 04, 2013
Experts are predicting bumper growth for property in 2013

Some of the key trends supporting this potential growth are;

  • Australians have been saving more after the scare of the GFC!  In fact, 68% of people are ahead on their mortgage payments and credit card debt is historically low.In other words, Aussie’s are being smarter financially…and this means they have more money to invest in property.
  • ‘China’s growth predictions are of a whopping 8% growth this year.  This will have a very positive impact on the Australian economy.
  • There is an implosion of cash from SMSF’s (Self-Managed Super Funds) are flooding into the real estate market…as more investors choose to invest in property directly through their super.
  • The share market is showing signs of entering into another ‘bull run’ which will greatly enhance people’s wealth and their ‘confidence’ to invest in property.
  • The finalisation of the federal election will give investors more ‘certainty’
  • Interest rates are at a historic low making it easier for first home buyers & investors to get into the market
  • Migrants continue to come to the country in large amounts & housing supply still remains tight in many areas…we will likely see rents continue to climb.
  • This makes the rent yields for investors more exciting.
Property prices have remained subdued over the last year but this could all be about to change.  As the uncertainty lingering from the GFC finally lifts, economic stability returns, China booms again and we see a change of Government the underlying property shortage will see prices start to rise.  For anyone who has watched the market through it swings and troughs before will know, once it starts to increase, it just goes up and up, as investors who have been sitting on the fence start jumping in.  So seize the opportunity and get in now before prices rise.

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