Investment property loans grow
Investment property loans grow
Posted on Wednesday, May 21 2014 at 8:36 AM
Over the past four years the number of investment property loans in Australia has grown by 37 per cent compared to an increase of only 4 per cent in the number of owner-occupied loans.
These are the latest findings
from the Roy Morgan Research Consumer Single Source survey of about 50,000 people per annum. In 2010, just
under one million Australians aged over 18 had an investment property loan
compared to an estimated 1.31 million as at March this year – an increase of 37
per cent. Over the same period, the number of Australians with an
owner-occupied home loan increased from 4.66 million to 4.83 million, an
increase of only four per cent.
According to the survey, the growth in investment property
loans has come predominantly from the 35 to 64 age group, which accounts for 78
per cent of the increase. About 12 per cent of the 50 to 64 age group now hold
an investment property loan (compared to 9.4 per cent in 2010), and 11.3 per
cent of the 35 to 49 age group had one (up from 8.5 per cent).
Within the same time period, the proportion of those aged
50 and over with an owner-occupied home loan also increased, with the greatest
growth in the 50 to 64 age group, up from 31.6 per cent to 34 per cent.
“Going forward, government
policy and the economic climate will play a major role in whether people choose
to invest in the property market or take out a home loan. Older Australians
will face the prospect of cuts to pensions, and with the proposal for the
pension age being increased to 70, this could impact the investment property
market,” Norman Morris, Roy Morgan
Research industry communications director, says.
“Younger Australians may
continue to find it difficult to enter the property market, either for
investment or owner-occupied, because for both types they’re competing with
more cashed-up older property buyers.
“The future of negative
gearing, increased property investment by self-managed super funds and interest
rates are some of the factors likely to play an important role in the
attractiveness of borrowing for investment property in the future.”
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Queensland property records solid growth
Queensland property records solid growth
Posted on Thursday, May 22 2014 at 8:08 AM
Queensland’s residential property market enjoyed steady growth in the year to March amid increasing buyer confidence, according to the Real Estate Institute of Queensland (REIQ).
The REIQ March
quarter median house price report reveals solid and sustainable house and unit
price growth in most of Queensland’s local government areas.
REIQ CEO Anton Kardash says the results show Queensland’s real estate
market is firmly in recovery mode.
“Median prices are on the rise and properties are selling quicker
throughout Queensland, as buyers take advantage of more favourable market
conditions,” he says.
“Total house sales numbers for the state recorded their fourth
consecutive quarterly increase, up 8.3 per cent over the March quarter 2014.
“The unit and townhouse market has now finally followed suit, with
significant increases in activity across the state.
“We’re seeing sustainable growth without any rapid price swings, which
is the sign of a healthy market.”
The results found all but three of the major regions across Queensland
posted a steady or better median house price result over the year.
According to the REIQ, the Brisbane median house price remained
relatively steady over the March quarter, down just 0.4 per cent to $560,000.
For the full year from March last year, Brisbane’s median house price
increased 5.9 per cent, on the back of increased sales activity over the
period.
The top performer of all major regions outside Brisbane in the March
quarter was Cairns, which recorded a median house price increase of 5.6 per
cent to $375,000.
“Cairns is performing strongly as investors return to the market, buoyed
by growing confidence in Queensland’s tourism regions,” Mr Kardash says.
“This includes the Gold and Sunshine Coasts, where properties are
changing hands quicker and prices are recording steady increases.”
After four consecutive quarters of increased sales activity, the Gold
Coast posted an increase of 4.2 per cent in its median house price to $500,000
over the March quarter.
The Sunshine Coast also recorded a positive result, with its median
price up 2.0 per cent to $465,000 over the March quarter.
Another solid performer was the Fraser Coast, which recorded median
house price growth of 2.9 per cent to $300,000 over the three months to March.
In Toowoomba, sales activity remained steady over the quarter, with the
median house price easing 1.2 per cent to $325,000.
In the remaining major regional centres, sales activity continued to
ease, however median house prices remained relatively steady for most.
In Rockhampton, the median house price was up 3 per cent to $329,500
while Townsville was up 2 per cent to $364,000 over the quarter.
In Mackay and Gladstone, median prices fell 1.2 per and 0.6 per cent respectively,
while Bundaberg saw its median drop 3.8 per cent to $269,500 over the March
quarter.
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Plan to drive Victorian jobs and investment
Plan to drive Victorian jobs and investment
Posted on Tuesday, May 20 2014 at 8:49 AM
Melbourne is set to become a powerhouse of jobs, investment and greater opportunity with the release of the Victorian Government’s new city-shaping strategy to 2050, Plan Melbourne, Premier Denis Napthine announced today.
Joined by Minister
for Planning Matthew Guy, Napthine says Plan Melbourne integrates game-changing
transport projects with job-creating urban renewal and activity precincts,
close to homes and services that people need.
“I’m delighted to
release this final plan for our city that will deliver more jobs, more
transport choices, more homes and more lifestyle opportunities across
Melbourne,” Napthine says.
“It is vital that
Melbourne’s livability is treasured and maintained. Plan Melbourne outlines the leadership and direction for Melbourne
to remain a great place to live, and do business well into the future.
“The plan creates a
clear picture of Melbourne’s infrastructure-led growth to 2050 and a long-term
plan integrating Victoria’s regions with metropolitan Melbourne.”
Napthine says the
plan would be the strategic framework behind the biggest infrastructure program
in Victorian history.
The plan reflects
newly committed transport projects such as the Melbourne Rail Link, including
the Melbourne Airport Rail Link, and the full East-West Link road project,
connecting the Western Ring Road at Sunshine West to the Eastern Freeway.
Guy says the plan defines
a new blueprint for the city by unlocking land within existing urban areas, and
a strong transport foundation upon which to attract investment and locate jobs,
businesses, and services close to where people live.
“This is a
comprehensive plan for Melbourne that caters for a projected population of 7.7
million people by 2051 and provides a solid foundation to meet these
challenges,” Guy says.
“For the first time,
there’s a dedicated authority, the Metropolitan Planning Authority (MPA), to
implement Plan Melbourne and together with local government we now have
the roadmap needed to forge a productive way forward for our great city.”
Structural reforms
to the Victorian planning system and a monitoring framework have been put in
place to ensure the plan can be delivered. Five new metropolitan sub-regions,
with representation from all metropolitan councils, have begun work to
coordinate infrastructure priorities across state and local government.
To implement the
strategy, the MPA will be given planning authority powers for metropolitan
Melbourne, and will use these powers in precincts and locations identified in the
plan, including urban renewal precincts, national employment clusters, activity
centres, and health and education precincts.
The MPA will work
closely with local councils as well as government departments, local residents
and other interested parties.
Urban renewal of
Fishermans Bend, E-Gate, Arden-Macaulay and along key rail corridors are a
major part of the strategy.
National employment
clusters will be in Monash, Latrobe, Sunshine, Dandenong South, East Werribee
and Parkville, with concentrations of interconnected businesses and
institutions.
Key activity and job
centres will continue to be a focal point in areas such as Dandenong, Box Hill,
Ringwood, Essendon Fields, Narre Warren, Broadmeadows, Epping and Footscray.
In addition, the
plan prioritises 25 health and education precincts in locations close to homes
and transport connections to accommodate new highly skilled jobs and value-adding
industry.
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Sydney residential vacancy rate at 1.7 per cent
Sydney residential vacancy rate at 1.7 per cent
Posted on Tuesday, May 13 2014 at 10:39 AM
Pressure remains on the Sydney residential rental market and Wollongong, Albury and the Northern Rivers have seen large falls in available properties, according to new data released by the Real Estate Institute of New South Wales (REINSW).
The April
2014 REINSW Vacancy Rate Survey saw the number of properties for rent
across Sydney rise 0.3 per cent to 1.7 per cent.
“Inner Sydney vacancy rates remain the tightest,
despite an increase of 0.3 per cent to 1.6 per cent. In middle Sydney
availability rose 0.4 per cent at 2.0 per cent and outer Sydney was up 0.2 per
cent at 1.7 per cent,” REINSW president Malcolm Gunning says.
“Wollongong vacancy rates have hit lows last
seen almost three years ago, with a decline of 0.8 per cent to 1.5 per cent.
Across the Illawarra region vacancy rates are at 1.6 per cent, down 0.5 per
cent.
“Wollongong is an attractive proposition for
those who wish to relocate from Sydney. Its beachside location is a more
affordable option for those who are seeking a more relaxed lifestyle and this
is putting pressure on the number of properties available.”
Vacancy rates tumbled 0.5 per cent in both
Albury and the Northern Rivers at 1.6 per cent and 1.5 per cent respectively.
They represent the two lowest vacancy rates in the state.
Newcastle’s vacancy rate was up 0.5 per cent to
3.0 per cent, however across the Hunter region vacancy rates were down 0.1 per
cent to 3.0 per cent.
The South Coast fell 0.3 per cent to 2.2 per
cent and New England was down 0.1 per cent to 3.4 per cent.
The Central West has the most rental
accommodation available at 4.9 per cent, a rise of 1.4 per cent, while Coffs
Harbour was up 0.2 per cent to 4.0 per cent.
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High residential prices not indicative of bubble
High residential prices not indicative of bubble
Posted on Thursday, May 15 2014 at 9:27 AM
Increased residential property prices in Sydney, Melbourne and Brisbane are a result of normal market movement and not indicative of a property bubble, according to a survey by the Australian Property Institute (API).
Seventy-four per cent of respondents to the 32nd
API Australian Property
Directions Survey believe that increased
residential property prices in Brisbane are a normal market movement, while 59
per cent of respondents thought the same of the Melbourne market.
The result was more varied for the Sydney
residential market, with 40 per cent of respondents believing increased prices
were normal market movement and 36 per cent believing it was a temporary spike.
Aldo Galante, API Victoria president, says that
when the current historically low interest rates were taken into account, the
movement in prices was expected.
“Approximately 50 per cent of respondents named
low interest rates as a significant driver for increased demand and prices
across Sydney, Melbourne and Brisbane,” Galante says.
“While price growth has slowed, we believe that
significant falls in prices are unlikely.”
Many first homebuyers have found it difficult to
enter the property market, with survey respondents naming housing
affordability, competition from residential property investors and the lack of
government subsidies as the three main factors impacting this group.
“Unfortunately there are numerous factors
working against first homebuyers,” Galante says.
“There’s a limited supply of affordable housing
across Sydney, Melbourne and Brisbane, and much of this is being purchased by
those investing in property, both inside and outside of Self-Managed Super Funds,
as well as by existing homeowners looking to upgrade their family home.
“The effect of this is most strongly felt in
Sydney, where residential property prices have increased significantly. With
many first homebuyers being priced out of the owner-occupier market.
“As a result, there are a growing number of
first homebuyers who are choosing to enter the market by buying an investment
property rather than a place of residence.
“This allows them to get on the property ladder
by buying a more affordable property in an area they can afford to buy in, but
wouldn’t necessarily choose to live in.”
Sydney’s residential property market is expected
to peak in late 2014, with Melbourne’s market approximately six months behind.
The majority of respondents also believed that interest rates would remain similar
for the next 12 months, but move higher over the next three years.
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What the Budget means for your investment property
What the Budget means for your investment property
Posted on Wednesday, May 14 2014 at 12:19 PM
Do you currently own a blue-chip apartment or a three-bedroom pad in the suburbs? You can breathe a sigh of relief – negative gearing wasn’t axed in the latest Federal Budget.
Homeowners
planning to sell their principal place of residence also won’t have to pay
capital gains tax (CGT). At the moment, if an investor sells an investment
property, CGT is calculated. But the family home is the only property exempt
from this tax and will remain so for the foreseeable future.
Another huge win
for investors is the fact that interest rates are likely to remain low for some
time, with inflation forecast to hold steady at 2.5 per cent for the next few
years.
Steve McKnight of
Property Investing says it’s hard to see where the pressure for significant
interest rate increases will come from.
“Real estate
investors have good cause to believe that home loan interest rates will be
stable at current historical lows for some time yet,” he says.
Investors trying
to enter the booming Sydney and Melbourne markets, and other capital cities for
that matter, might also find prices start to stabilise.
McKnight believes
the Budget will probably lead to a dip in consumer confidence and less spending
in the short-term.
“As such, this will
put something of a wet blanket on the property market until at least spring,”
he says.
“The biggest
impact is going to be in Canberra (where there will be job cuts to public
servants.) ACT homeowners and investors need to consider their property positions
and take corrective action now.”
However,
investors thinking about purchasing a National Rental Affordability Scheme
(NRAS) property down the track will have to choose another option. That’s
because the government will be discontinuing round five of the NRAS Scheme,
saving $235.2 million over three years.
“Since its
establishment in 2008, NRAS has delivered 14,575 new homes for low and moderate
income households and was on track to provide 23,8884 more,” Urban Development
Institute of Australia national president Cameron Shephard says.
The scheme will
remain in place for investors who already own NRAS property and funding for
properties already tenanted won’t be impacted. However, uncontracted funding
from earlier rounds, or contracted funding that hasn’t been used within agreed
timeframes, will be returned to consolidated revenue.
Shephard admits
NRAS became too bureaucratic and administrative but he believes there would
have been other solutions, rather than scrapping the program.
“They’ve thrown
the baby out with the bath water,” he says.
“We suggested to
keep the scheme but make it more efficient. Now the Federal Government is
walking away from any sort of public housing and we think that’s wrong.”
The government
has also ditched the Housing Help for Seniors program. The program was
introduced in last year’s budget, to assist seniors who wish to downsize their
home. The axed program saves $173.1 million over five years.
Executive
Director of the Retirement Living Council Mary Wood says it’s disappointing.
“Senior
Australians should be allowed to choose homes that allow them to age in place,
but the scrapping of the Housing Help for Seniors creates less housing choice
and puts more pressure on residential aged care and the taxpayer,” she says.
“However, we
congratulate the Federal Government on a positive initiative that will no
longer subject retirement village operators to double taxation if ownership of
a village changes because of a company acquisition.”
The First Owners
Saver Accounts, which helped first homebuyers save for their first home, was
another scheme scrapped by the government.
But investors
keen to use a Self-Managed Super Fund (SMSF) down the track to purchase an
investment property might soon have more funds to do so.
There will be an
immediate increase in the superannuation rate from 9.25 per cent to 9.5 per
cent, from July 1 this year. It will increase by 0.5 per cent until it reaches
12 per cent in 2022-23.
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NT axes first homebuyer grant for existing dwellings
NT axes first homebuyer grant for existing dwellings
Posted on Monday, May 12 2014 at 11:15 AM
The Northern Territory First Home Owners Grant (FHOG) will be directed towards the construction of new dwellings from 1 January 2015.
Additional changes to the grant remove the current
property value limit of $600,000 and increase the value of the grant for the purchase
or building of new homes from $25,000 to $26,000. These changes will take
effect from Budget Day May 13.
NT Treasurer Dave Tollner says the removal of the value
limit for new homes will reduce red tape by simplifying the application and
assessment process. It has the added benefit of removing the requirement that
the buyer pay for a valuation of the property.
“These are practical changes that will make the grant
more appealing and flexible to first home buyers that are buying or building
new homes,” Tollner says.
Currently, a grant of $12,000 is available for the
purchase of established homes in the urban area, essentially Darwin, Palmerston
and Litchfield. A grant of $25,000 is available for the purchase of established
homes outside the urban area.
To stimulate the construction of new homes, and
encourage the take up of the government’s program of accelerated land release,
the grant will only be available for the construction or purchase of a new home
from next year.
To assist first homebuyers who might be relying on the
FHOG to help fund the imminent purchase of an existing home, the government
will maintain the payment for existing dwellings for eight months.
“This will ensure an orderly transition and allows
buyers who are currently in the process of buying a home, or intending to do so
in the near future, with sufficient opportunity to take advantage of the FHOG
as part of that purchase until the end of the year,” Tollner says.
“But ultimately, we want this grant to encourage the
construction of new homes, create more jobs in the residential construction
sector and improving housing affordability by increasing housing stock.”
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Industry calls for negative gearing retention
Industry calls for negative gearing retention
Posted on Friday, May 09 2014 at 12:46 PM
The Real Estate Institute of Australia (REIA) says any change to negative gearing would impact on the supply of housing and the level of rents in an already tight rental market.
In its pre-budget submission, the REIA’s analysis of the impact of the
Henry Review recommendation that deductions and income associated with rental
property should be discounted by 40 per cent shows this would result in rent
increases of more than four per cent.
“To amend the current negative gearing provisions for housing would be
treating real estate differently to other asset classes, create a distortion on
the investment landscape, and result in a resource misallocation,” REIA
president Peter Bushby says.
“The view that negative gearing is for wealthy investors is a myth. ATO
data shows fewer than 80 per cent of the total individual taxpayers that are
claiming a tax deduction for property earn less than $80,000 a year.”
The REIA also wants to see improvement in the quality of delivery of
vocational education and training.
“We have to ensure that the Australian Skills Quality Authority’s
funding is enough to see nationally approved quality standards are met for
vocational education and training (VET),” Bushby says,
Mr Bushby said he was concerned at the Audit Commission recommendations
that VET policy and programs should be devolved to the states.
“There is a clear role for the Federal Government in developing national
standards to ensure the quality of competency and curriculum through national training
packages,” he says.
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New era for Queensland real estate
New era for Queensland real estate
Posted on Wednesday, May 07 2014 at 9:48 AM
Queensland has new real estate legislation, which includes the abolishment of maximum commission rates and warning statements.
The split of the Property Agents
and Motor Dealers Act resulted in the creation of industry specific
legislation, including the Property
Occupations Act (the Act), which was passed by the Queensland Parliament
last night.
Attorney-General Jarrod Bleijie said the Act would allow Queenslanders to
purchase property without unnecessary red tape and regulation.
“Buying a house is one of the biggest decisions we can make in our lifetime
and the simpler we can make the process, the greater Queenslanders are
protected,” Bleijie said.
“Lengthy contracts can often do more harm than good, with many people
either skimming over important information or in some cases people not reading
the finer detail at all. This is a win-win for all Queenslanders.”
Key legislative changes include:
- Removing the requirement for agents to disclose to
a buyer the commission the agent is receiving from the seller; - Extending the statutory limit on lengths of
appointments for a sole or exclusive agency from 60 days to 90 days to better
reflect market realities; - Deregulating the maximum commissions rates to allow
contractual freedom ; - Abolishment of a separate warning statement,
instead this will be included in the relevant contract; and - Stricter disclosure of third party benefits to
buyers.
Real Estate Institute of Queensland (REIQ) chairman Rob Honeycombe said
the simplified laws would deliver important benefits for both real estate
professionals and consumers.
He said the Act and the other associated legislation passed would cut
red tape and make it easier to buy and sell real estate throughout Queensland.
“The REIQ has been fighting for industry-specific legislation for many
years on behalf of our members and for the betterment of the entire profession
in Queensland,” he said.
“Previously, the real estate sector has long been legislatively bundled
in with a variety of other occupations and the REIQ always felt that our
profession deserved its own specific legislation.
“The new laws will also empower consumers as never before, making it
easier than ever for them to navigate the entire spectrum of real estate
transactions.”
The legislation is expected to come into effect within the next three to
six months.
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Major threat to Victorian commercial agent licensing
Posted on Tuesday, May 06 2014 at 12:18 PM
The future of commercial estate agent licensing is at risk under a State Government proposal to remove it for large transactions, according to the Real Estate Institute of Victoria (REIV).
The plan, if adopted, would leave Victorian consumers exposed to
unlicensed and untrained operators who won’t be covered by codes of conduct or
have stringent probity checks.
The proposal was first announced by the government in early January as
one of 36 red tape reduction reforms – seeking to remove the requirement for
commercial agents to hold a licence for “large commercial transactions”.
REIV chief executive officer Enzo Raimondo said the move would greatly
increase consumer risk and lower standards.
“It will be a free-for-all,” he said. “Agents dealing in commercial and
industrial transactions below a certain amount will be licensed, while others
won’t. Meanwhile, consumers will be left confused.
“The proposal will create a messy, two-tiered licensing system in this
state.
“It’s the most illogical, ill-thought-out proposal to impact the
industry in years.
“Every other state in Australia has licensing in place to protect
consumers, yet Victoria has decided to drop licensing without a valid reason.”
Raimondo added that commercial agent licensing system is in place for a
reason.
“Licensed agents are bound by the Estate
Agents Act, Sale of Land Act, Instruments Act and Estate Agents (Professional
Conduct) Regulations,” he said.
“These acts and regulations deliver security to those buying and selling
commercial real estate in Victoria.
“Agents also require qualifications and professional development which
further enables them to service and support those buying, selling or leasing
commercial real estate.”
Raimondo said the proposal had been developed without consultation with the
REIV.
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