Joshua Williamson, a senior economist at Citigroup, noted that the Bank of Canada has justified its cut because its economy faces a "significant and complex adjustment" and is keen to shift Canada's reliance on energy to "non-energy output".
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Tuesday, July 21 2015
 Selling your old home at the same time as buying a new one can be challenging as it’s difficult to know where to start. It might seem obvious, but the number one thing people overlook is actually finding out the full costs of a move including what they can afford and how much a lender will be prepared to lend them. People often get so caught up in the emotion and excitement of looking for their perfect home that they overlook the financial realities and costs of such a move. There are a multitude of factors and costs that come into play when changing properties many which most people don’t anticipate. This often means people find themselves caught in a bit of a bind at the 11th hour and often have to wear a lot of unexpected costs to proceed and end up with a more expensive loan than they anticipated. Not a great start to something that was meant to be a positive experience. Getting a proper financial evaluation up front before you start looking means you can get a much clearer understanding of what your options are and the implications of different scenarios. One of the tools we use for our clients is our Property Changeover Calculator. This allows us to assess the outgoing and incoming costs associated with a move so a client has a better understanding of their end financial position and likely ongoing costs. We can also explore a range of “what if?” scenarios to assess the impact of different sales and purchase prices. This means our clients are better informed upfront, and means we can determine the appropriate structure for their needs before they proceed. Contact us to discuss your next move or even just to get a financial check up Tuesday, July 21 2015
 Valuation firm Herron Todd White has just released it's latest national property clock and has identified Brisbane as a market on the rise. This is consistent with the view of a number of independent researchers including BIS Shrapnel which have pegged Brisbane for growth over the next few years. Related articles Friday, July 17 2015
 A surprise interest rate cut in Canada and the prospect of a similar move next week in New Zealand have stoked speculation the Reserve Bank of Australia will follow suit later this year. While the Reserve Bank remains reluctant to cut rates again, the direction taken by two of governor Glenn Stevens' closest global peers helped send the Australian dollar to a six-year low of US73.54¢ on Thursday. The Bank of Canada's cut its benchmark interest rate to 0.5 per cent on Wednesday. The RBA is expected to sit on its hands for a few more months yet, but it is also hard to see how the underlying terms of trade dynamics and mining capex unwind result in anything but persistent sub-trend growth, stagnant wages, and ultimately a lower cash rate. "That sounds very similar to what's happening here in Australia," he said, alluding to the Reserve Bank's repeated call for more "non-resources" economic growth.
Citigroup expects the Reserve Bank to remain on hold next month but cut the official cash rate from its current record low of 2 per cent to 1.75 per cent in November. "What hopefully we'll see come our summer is that the US recovery has enabled the Fed to tighten, that's lifting the US dollar, that's helping other people depreciate and the rest of the world to ride on the US economy's coat-tails." Tuesday, July 14 2015
Buying an older property can be like buying an older car. Sure you might get it at a cheaper price but that doesn't't mean you will get a better return over the long term. There's a number of factors that could turn your bargain buy into an expensive lesson. Repairs Yes you can claim a deduction but you don't get all of that outlay back. If your income is $80,000 only 32.5% so you still have to front up with rest. Structural issues With a new property it is certified at various critical stages to ensure it meets current building codes and standards. PLus new properties come with a 6 year structural warranty. Depreciation Tenants and rent So cheap does not equate to good. And a cheaper price does not mean the house will be cheaper to run. Contact us to discuss your property investment strategy. Friday, July 10 2015
According to onthehouse.com.au Queensland comes out on top for high-yielding and still growing suburbs. Of 56 suburbs across Australia where the average rental yield surpasses five per cent and the capital growth predictions are at least three per cent for the next eight years Queensland suburbs make up 41 per cent of the list with 23 suburbs appearing. Affordability is a main contributor to high rental yield rates, with 75 per cent of the suburbs on the list having median values below the national median of $491,000 for houses and $452,500 for units. The median house value in Brisbane sits just below the national median at $484,500, while in Sydney the median house value is almost double that at $961,000. Friday, July 03 2015
Recent data is showing that vacancy rates are rising and as we have discussed previously there is a building over-supply of units in inner city Brisbane This means you need to ensure the rental property you purchase attracts good quality tenants and does not remain vacant for long. This means putting aside property features that may appeal to you as an owner-occupier and buying with a tenant in mind. Check your emotions at the door Buying new Easy access to employment hubs, schools, sports and leisure facilities Vacancy history and trends The right property manager Wednesday, July 01 2015
 Brisbane is the only capital city tipped to buck the national trend of easing median house prices in real terms over the next three years, according to housing forecasters, BIS Shrapnel. But its housing market outlook has warned of a looming oversupply of inner city Brisbane apartments. The BIS Shrapnel Residential Property Prospects 2015 to 2018 puts Brisbane's estimated median house price in this year at $520,000, which researcher Angie Zigomanis said that was still below Brisbane's June 2010 peak in real terms. Coupled with low interest rates, Brisbane's affordability was at levels seen in the early 2000s. A total rise of 13 per cent in the Brisbane median house price is forecast over the three years to 2018, while the median unit price is forecast to rise by a total six per cent. Its new dwelling supply overall, without any significant rebound expected in population inflows, was set to move the Brisbane apartment sector nto ioversupply, "with some impact across the broader market." But significantly, Brisbane is tipped to be the only capital city that will not experience a decline in median house prices in real terms in the next three years. Nationally low interest rates will support further price growth in undersupplied residential markets in 2015/16, but the spectre of tightening interest rates and deterioration of affordability will create conditions for price declines in a number of cities from 2017, according to the forecaster. "But doomsday predictions for the residential market are likely to be overblown. "Although Australia’s residential property markets are forecast to steadily weaken from 2016/17, as a combination of rising supply and the prospect of a tightening in interest rate policy impacts on prices, any downturn will be similar in magnitude to that seen over 2011-2012." According to the company’s Residential Property Prospects, 2015 to 2018 report, Sydney and (to a lesser extent) Melbourne have broken away from the other capital cities, with both estimated to have recorded double-digit percentage rises in their median house prices in 2014/15. Solid population growth, reasonably positive economic conditions and an underlying dwelling deficiency have underpinned this rise, and affordability is increasingly becoming a concern. In contrast, weaker recent price growth in the other capital cities means that affordability is not as strained, and it is subdued local economic conditions and/or an underlying excess dwelling stock that have impacted the market. “Most capital cities are building apartments at record rates, driven by investor demand,” said Zigomanis. “As these projects are progressively completed, strong tenant demand will be required to support rents and consequently values upon completion. He noted the detached house market is less reliant on tenant demand and more exposed to owner occupiers. Together with the stimulatory effect of variable interest rates at more than 40-year lows, this is expected to support median house prices in most capital cities over 2015/16. The strongest conditions over 2015/16 are forecast for New South Wales, Queensland and Victoria, where BIS Shrapnel estimates the markets are in overall deficiency at June 2015. Wednesday, June 24 2015
Investing should be viewed like a business. At the end of the day it's all about the numbers. But I often meet with people who are wanting their investment to act as a solution for personal issues. When you start doing this you end up with an underperforming investment. The one I often hear is people wanting to buy an investment property that someone they know can live in. Often it's parents wanting to buy something for the kids. Or it can be for a family member or friend. There are a range of issues with this. The most significant is you are using a long term investment vehicle to solve a short term problem or issue. You are picking an area based on where the kids want to live or near where they work without actually researching to see whether the area is a good place to invest - what are the growth prospects like? what is the employment outlook? what are the supply side risks? what's happening with vacancies? what is rental growth like? what point of the price cycle is it at? So what happens? A year or so down the track the kids change jobs, meet someone, move interstate or oversees, or just decide they want to live somewhere else. And you're left with a property that is meant to perform for you over the next 20 or 30 years. And if boughta based on emotion and personal reasons there's a good chance you've bought something that is an underperformer. Investing and personal purposes should be keep strictly seperate. Let the kids sort it out for themselves the same way you did. They'll whinge about how expensive property is - just like you did. And whether you believe it or not they will still find a way to buy their own home the same way you did. If you want to help your kids encourage them save and budget and give them the skills. Saturday, June 20 2015
Some recent feedback from another client. How satisfied were you with my services? On a scale of 1 to 5 (1 being very poor, 5 being exceptional), how would you rank your overall experience with me? Friday, June 19 2015
For most clients we are working with we are developing a long term plan to build income and wealth in retirement. Clients often ask "so when I hit retirement do I sell all my investment properties"? I ask "Why?". If that property has doubled in value since you purchased it isn't there a good chance that it's going to continue to do that into the future. And if it is increasing in value then haven't the rents also gone up over time? So won't they keep doing that as well? Once you sell then you are converting a growth asset to a non-growth asset - CASH. Cash may be safe but only in the short term. Cash does not grow in value. $100,000 in bank is still $100,000 in the bank in 10 years time. But the actual purchasing power of that $100K has gone backwards each year by the rate of inflation. On average 3% per annum. So as soon as you sell, you come to a stand still, and as many retirees have found, when rates are low your yields are pretty ordinary. I have the same thoughts about flipping properties. The costs to get in and out of a property are substantial.
The reality is in most cases to make money you will need a rising market. Why would someone pay above what you have put into a property in a flat or falling market? And importantly you can make money in a rising market by just holding a property without all the effort. But let's say after all that you do make a profit and have some cash in the bank. What then? What is going to fund your retirement?   |