“The housing recovery is expected to come to a halt over the next 12 months, the Housing Industry Association’s (HIA) latest report has shown.

According to the HIA’s quarterly National Outlook Report, the  healthy first stage new home building recovery is likely to run out of steam by mid next year.

HIA chief economist Dr Harley Dale said empirical data, observations on the ground, and the slow progress in reducing obstacles to supply all currently point to the first increase in housing this year reverting back to a decline in starts in 2011.

Housing starts are forecast to increase by 20 per cent in 2010 to a level of 165,940, before falling back by 3 per cent in 2011, according to the report.

HIA predicts that the number of housing starts will increase by 22 per cent in the 2009/10 financial year and then by a lowly 2 per cent in the 2010/11 financial year to reach a level of 162,600.

“It is not too late to turn the situation around through policies targeted at new home building combined with more rapid progress in reducing structural supply side barriers,” Dr Dale said.

“Australia needs to build over 190,000 dwellings in 2010 alone to meet underlying demand and over the next ten years we need to build 420,000 dwellings more than we built over the last decade.”"

With a shortgage of new homes being built and rapid population growth the laws of supply and demand should see property prices in Australia continue to steadily rise. ]]> http://www.propertyinvestmentaggregators.com.au/blog/?feed=rss2&p=157 0 http://www.propertyinvestmentaggregators.com.au/blog/?p=153 http://www.propertyinvestmentaggregators.com.au/blog/?p=153#comments Tue, 22 Jun 2010 05:02:40 +0000 PIA http://www.propertyinvestmentaggregators.com.au/blog/?p=153  

All finance brokers in Australia come under the new National Consumer Credit Protection Bill on the 1st July 2010. According to Rosanne Bell, Senior Executive, Registry Services & Licensing for the Australian Securities & Investments Commission:  

“If you currently engage in credit activities under state or territory legislation, and you want to continue to engage in credit activities from 1 July 2010, you need to register with the Australian Securities & Investments Commission (ASIC).  

To become registered, you must complete an online application form and lodge it with us.  Registration opened on 1 April 2010 and so far we have successfully registered over 13,000 online applicants.  Registration will shortly close on 30 June 2010.  

If you are not registered with ASIC by 1 July 2010, you must stop engaging in credit activities until you either become registered or have an Australian Credit License.” 

The new laws are designed to provide conformity to set standards in the Australian finance industry and provide consumers with a greater level of protection.

“Australia’s property market has been named as one of the best in the world, thanks to a 20 per cent increase in house price growth last year.

According to a report of 47 countries by Knight Frank, Australia ranked fourth in terms of house price growth.

Knight Frank’s head of residential research Liam Bailey said the stellar growth in property values was driven by a combination of a 40 year low in interest rates, the increased first home buyer’s grant and population growth.

“With interest rates now rising, the government withdrawing stimulus and the supply response picking up, we expect house prices to slow over the next six to nine months,” Mr Bailey said.

China was the top performing country with house prices gaining 68 percent in the year to March 2010 with Hong Kong and Singapore taking second and third places respectively.

According to Mr Bailey, the overall results indicated that the global recovery is now gaining ground as the proportion of countries moving into positive territory increases.”

Article Extract from The Adviser.

According to data from the Australian Bureau of Statistics, investors accounted for $7.99 billion worth of all home loans issued in April 2010 – a 1.5 per cent increase on the previous month.

“It is clear investors are taking the lead now, after the first home buyer generated boom of 2008 and 2009,” Raine & Horne chief executive officer Angus Raine said.

“It’s also fair to expect that jittery investors are shying away from the volatility of the share market, which has experienced plunging returns in April and May. They are looking for a less volatile asset class for their money, while a quality, well-located investment property can also deliver long term returns.”

Artice extract from The Adviser.

The latest report by the National Housing Supply Council estimates that Australia had a dwelling shortfall of 178,400 as of June 2009.

According to the report, the gap between supply and demand grew by 78,800 dwellings during last financial year. The Council projects this figure will exceed 300,000 dwellings by 2014.

Housing Industry Association (HIA) chief executive Graham Wolfe said the Council’s projections should spark a call to action by all levels of government. “The Council suggests that underlying demand for dwellings is over 180,000 each year and that while Australia has the land to potentially develop close to this level (176,000 dwellings), planning delays and restrictions and developer charges make such an outcome highly unlikely,” Mr Wolfe said.

According to AFG’s latest mortgage index, 34.1 per cent of all mortgages arranged nationally in February were for property investors – the highest percentage ever recorded by the company.

The amount of investor mortgages arranged was 25 per cent higher than the level of investment loans recorded six months ago in August 2009.

AFG’s general manager sales and operations Mark Hewitt said while investor confidence has been rising for several months, the company had not expected the level of investors in the market to be as strong as it was.

“Investors are now the driving force of the market, encouraged by rising property prices in recent months, and the longer term view that a housing shortfall will continue to underpin future price growth as well as rental yields,” Mr Hewitt said.

There is no doubt that the finance industry in Australia suffered a hit, with less money in the kitty, the banks tightened their belts and consumers where forced to jump through hurdles to beg for a loan. Development funding was relegated to museums with people passing by saying, “I remember the days when developers roamed the earth”. And
offcourse construction slowed, which is now increasing our supply & demand problems.

The doom and gloomers that assisted with destroying sentiment in our great country are now walking around with egg on their faces. According to Residex, every capital city and state in Australia except WA country regions recorded positive growth with the average growth over the last ten years being 9.89% and over the Nov 08 to Nov 09 period Australia recorded an average growth of 5.13%.

So what happened and why didn’t the bottom fall out of the Australian residential property market like it did in the USA? And should the sensationalist media reporters and the doom and gloomers be held accountable for their irresponsible statements that caused panic driven mums and dads to sell of their properties in anticipation of a crash in prices? Well those that sold not only took a hit for the sale costs, but also lost thousands in capital growth and will now incur further expenses if buying back into the market at increased prices.

The reasons for our growth are really quite compelling. Australia is not called the lucky country for no reason. And here are the top 10 reasons why residential property did and will continue to grow in Australia.

1. Population growth is strong due mainly to immigration & baby boomers.

2. Undersupply of housing placing strong upward pressure on prices.

3. Rents are soaring due to demand, undersupply & low vacancy rates.

4. Low interest rates on historical standards which helps cash flow.

5. Strong economy fuelled by strong demand for resources from China and Asia.

6. Construction and land prices are likely to rise sharply.

7. Property allows you to leverage your money higher and safer.

8. Confidence in equity markets and superannuation funds was shattered.

9. Investors receive a 50% tax break on property investments.

10. Australia’s lending fundamentals are sound.

State of the Market

NSW – Although NSW is experiencing the largest housing shortage of all states, the affordability factor will most likely reduce capital growth to a lesser extent than other states over the long term. Especially during periods of higher interest rates. However this then drives demand from renters and increases yield for investors as potential home buyers opt for rental accommodation.

Over the last 10 years, Sydney prices grew the least of all states at 6.6% but had a substantial 9.29% growth during Nov 08 to Nov 09. Even still, over the last 10 years investors in Sydney would have seen a doubling of property prices.

The importance of research is paramount to property investing because as they say, you make your money when you buy, and buying an overpriced property
is not going to help. Sydney is now making a run so there are good buying opportunities to be found in affordable stock.

VIC – Victoria is on the move with property prices in many areas at prices that are set to explode. Melbourne prices increases 9.93% over the last 10 years, but actually increased a whopping 10.95% over the Nov 08 to Nov 09 period. Obviously Melbournians didn’t get the news there was a GFC.

The ability to pick up good house and land opportunities in areas such as Melton for under 350k, presents opportunities to see larger capital growth expectations over the next decade. The theory being that it would be easier for a property valued at 300k to double in price than for a 700k property to double in price. Which leads us to our recommendation to always by well placed medium value properties, as that is where the greatest demand and growth will be.

QLD – Whilst the Gold Coast is still overcoming the problems of development stalling and developers meeting the market, there is massive opportunity abounding. Areas such as Inner Brisbane especially along the river and SE Queensland will continue to remain sought after due to population growth, employment and
Government Infrastructure.

Brisbane enjoyed 11.7% growth over the last 10 years, but only increased by 2.67% from Nov 08 to Nov 09.

SA – Well I have always said that Adelaide is the most consistent of all property markets in Australia and once again this has proven correct. The peaks and troughs of the larger capital cities does not seem to have as much effect and property investors in Adelaide generally always get a good nights sleep.

With a comfortable 10.52% growth rate over the last ten years and recording 5.12% growth during Nov 08 to Nov 09, Adelaide investors are laughing all the way to the bank. Affordability issues are not posing a big as a problem to Adelaidians as they may be in Sydney, so strong demand will continue to see prices rising steadily. With the northern areas of Adelaide still in strong demand with a predicted 2000 soldiers including spouses and children relocating to the RAFF Edinburgh
base over the coming month’s development in the area is booming. Two new super schools, new shopping centers and the construction of the northern expressway all
adding to the demand. Full turnkey house and land packages starting in the low $200k range offer great opportunities for investors.

NT – The top end had a top run recording 10.71% growth over the last ten years, and a staggering 15.63% growth in Darwin and the NT overall recorded an amazing 17.04% growth in the Nov 08 to Nov 09 period. My good friends in Darwin that sold a few years ago and investedin the share market are now feeling the frustration, whilst those that bought and held and added value to their properties are now out in Darwin harbour in their new fishing boats catching giant Jewies.

Will the NT continue to run, well it’s unlikely to see such an amazing pace for sometime again. Time will tell.

ACT – Canberra saw growth of 10.61% over the last 10 years and 8.07% over the Nov 08 to Nov 09 period. So whilst it is in the middle of nowhere, it proved
to be the 4^th highest growth area in Australia.

WA – Perth recorded 12.2% growth over the last 10 years and struggled to find form over the Nov 08 to Nov 09 period, but still got their with a 0.24% growth rate. WA country was the only area as a whole in Australia to actually record negative growth with a rate of -7.66% over the Nov 08 to Nov 09 period.

Well we all know why, it was due to inflated prices driven by a resource rush to the head that had to cause a brain freeze. Many savvy WA investors that enjoyed the past massive growth flew to Adelaide with wads of cash and bought up affordable houses at comparably bargain based prices.

Wrap up

So will Australian properties continue to grow in 2010? The simple answer is yes if you get it right. The real is question is, what locations are going to enhance growth and what properties should I buy.

Go to www.propertyinvestmentaggregators.com.au for more details or call 08 8297 1333 today.

Property Market report by Les Unferdorben

Director – Property Investment Aggregators Pty Ltd

RLA 221406

This is great news for residential property investors in SA, although more could always be done. It appears that as the property market has enjoyed such a great time, there is now incresed revenue for the govt to use, therefore they have announced a reduction in land tax bases in SA.

This is the current Land Tax base.

Total Taxable Site Value Tax Rate SA 2010

Up to $110,000 Nil – To be up to $300,000 nil when enacted.

$110,001 to $350,000 = $0.30 for every $100 or fractional part of $100 over $110,000

$350,001 to $550,000 = $720 plus $0.70 for every $100 or fractional part of $100 over $350,000

$550,001 to $750,000 = $2,120 plus $1.65 for every $100 or fractional part of $100 over $550,000

$750,001 to $1,000,000 = $5,420 plus $2.40 for every $100 or fractional part of $100 over $750,000

Over $1,000,000 = $11,420 plus $3.70 for every $100 or fractional part of $100 over $1,000,000

Here is an interesting point to consider also:

Land held on Trust in SA

Pursuant to Section 13 of the Land Tax Act 1936, where a property is owned by an individual or organisation on behalf of a Trust, the owner(s) (Trustees) can apply to have that property assessed separately from other land owned by the Trustee in another capacity. (Note: you should set up the trust prior to buying the property)

Contact us now for more info and the right properties to consider.

“•Just how tight is the housing market? Over the last year Australia’s population rose by 440,000 people – the biggest increase on record and the largest percentage increase in 40 years.

The number of migrants increased by more than 285,000 people. But dwelling commencements only rose by just over 131,000. On this basis you would have expected more people to be on the streets and for the rental vacancy rate to approach zero. But it didn’t happen. In fact some Sydney landlords complained that they had to reduce rents or offer rent incentives.

•CommSec found that Australia is building the biggest homes in the world, but at the same time there is new evidence that household size is increasing for the first time in at least a century, or perhaps since European settlement.

•The debate about housing costs and supply will go on in 2010. There is no doubt that rising housing costs are causing children to stay longer with parents and for more young people to share accommodation. State and territory governments have to pay more attention to produce more land, reduce costs for developers and revisit zoning laws.

So What? CommSec expects home prices to rise by 8-10 per cent over 2010. Population continues to grow and not enough homes are being built. For investors, rising rents and home prices is an attractive combination.”

So what does all this mean? Well it means that research will be even more important than ever. Whilst some areas are predicted to have more capital growth than others, it certainly does not mean that all properties in those areas will. You need to get professional and independant research from Australia’s leading property research company, Property Investment Aggregators, before making your decisions.

Go to www.propertyinvestmentaggregators.com.au for more details!