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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.

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

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.

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.

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

Gladstone - strongest queensland property market

Thursday, October 04, 2012

Investor darling mining town Gladstone strongest Queensland regional housing market, while Bundaberg struggles like the Gold Coast

By Cassidy Knowlton
Monday, 09 July 2012

Regional areas have outperformed capital cities in the year to March, according to ANZ, with Gladstone leading the way in Queensland. 

"Despite being lower in annual growth terms, regional house prices have been more stable than capital city house prices, which have seen larger price falls across all major states and territories," notes the Australian Housing Chartbook.

"Across states/territories and regions, house price growth has continued to differ, reflecting varying economic performance across Australian industries."

"Queensland has shown the greatest intra-state variation in regional house prices, reflecting the divergenteconomic performance of regions exposed to the tourism sector (i.e. Cairns, Gold Coast) and mining-relatedservices (Gladstone, Mount Isa)," the report says.

Click to enlarge

 

Source RP Data, Rismark, ANZ


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