I believe the reason most people procrastinate is FEAR. They are afraid of the risks associated with investing. They focus on all the things that could go wrong “the what ifs” and console themselves that it is much safer to nothing.

This is however untrue, as doing nothing and delaying actually increases risk and increases the problem.

If you decided you needed $2 million by retirement would you sooner have 30 years to accumulate it or 5 years?

If you start early then you have a lot of time to build to this number which means your risk level is low. You can take small incremental steps and you will be less concerned and impacted by the markets ups and downs.

Investing earlier means your investments have the opportunity to go through a number of investment cycles. Think of each investment cycle as an opportunity to double your money. The more cycles you go through the more chances to double your money.

And if things did go “pear-shaped” you still have time to start and rebuild again.

If you wait to take action until 5 years before retirement then you have a very steep hill to climb in a short space of time. To achieve your target you will need to take a more aggressive investment approach, you will be vulnerable to market volatility and if things go wrong you will not have time to rebuild. So this is a high risk approach.

The longer we delay action we are actually putting ourselves in a position where we will need to take greater risk to achieve our goals.

Yet this is actually what most people to. They delay and defer until they don’t have a choice and then take on riskier investments with promise of higher growth or higher returns. And that’s how we end up with situations like Storm Financial and Banksia where people lose everything.

As the saying goes “The best time to plant a tree was 20 years ago. The second best time is today”.

According to a new QBE housing outlook prepared by BIS Shrapnel Brisbane is predicted to be the standout performer between 2015-16 and 2017-18. The report has forecast cumulative price growth of 13.2 per cent for houses and 2.3 per cent for units.

However in other capitals the picture is not so rosy.

In Sydney house price growth will slow from 22.3 per cent in 2014-15 to 7.3 per cent in 2015-16 – and then prices will then fall 2.7 per cent in 2016-17 and another 2.3 per cent in 2017-18. Unit median prices are expected to follow a similar trajectory, with growth of 14.6 per cent in FY15 to be followed by growth of 4.8 per cent in FY16, a decline of 2.7 per cent in FY17 and a decline of 3.5 per cent in FY18.

Hobart is forecast to experience a 4.9 per cent increase in house prices and a 2.2 per cent decrease in unit prices, while Canberra house prices are expected to rise 3.4 per cent and unit prices fall 2.7 per cent. Melbourne values will climb 2.8 per cent for houses but fall 4.9 per cent for units. Adelaide house prices will go up 0.8 per cent, while unit prices will fall 0.8 per cent.

Perth is forecast to experience a decline of 2.4 per cent in house prices and five per cent in unit prices, while Darwin is expected to see falls of 2.5 per cent for houses and 5.2 per cent for units.

Contact us to get your investment plans moving

Queensland is tipped to replace New South Wales as the most optimistic state regarding the residential property market and lead the country for price and rental growth over the next two years, according to the NAB Residential Property Survey.

The NAB Residential Property Survey found market sentiment improved notably in Queensland and was less negative in SA/NT, softened in Victoria and NSW and fell to a new low in WA.

NAB Group chief economist Alan Oster said the NAB Residential Property Index fell -7 to +10 points in the September quarter - its second consecutive fall - with the index now below its long-term average (+14 points), however it’s not all negative as the overall picture masks some big differences across individual state markets.

“The survey also suggests that yield compression will continue as capital growth outpaces rental growth in all states,” he said.

“Foreign buyers were notably more active in Victoria, where they accounted for just over 1 in 4 of all new property sales and around 1 in 7 sales of established homes.

"In established property markets, foreign buyers accounted for around 11.3% of all apartment sales and 9.5% of house sales. These ratios were significantly higher in Victoria, where foreign buyers accounted for around 1 in 5 of all established apartment sales and just over 1 in 6 houses.

The report noted expectations for national house price growth over the next 1-2 years were scaled back to 1.5% and 1.8%.

"However, this also masked a notable improvement in Queensland, which is now predicted to be the leading state for capital growth in the next few years (2.6% & 3.4%). In contrast, expectations were cut back in NSW (2.2% & 1.8%) and Victoria (1.9% & 1.9%), and remain weak in SA/NT (-0.2% & 0.5%) and WA (-0.7% & 0.4%)," it read.

"In 2016, the slowdown in average national house price growth to 2.3% is largely driven by a moderation in both Sydney and Melbourne prices growth. NAB Economics expects house price growth to decelerate in Sydney to 1.2%, while price growth in Melbourne will ease to 3%. Brisbane is tipped to see the fastest house price growth (4.5%), and the Adelaide market is expected to improve (2.4%). Perth will remain weak, although price declines are forecast to ease."

(Source: Propery Observer)

Most Australian investors believe Brisbane is a more affordable alternative to Sydney and Melbourne, according to a new survey by Property Investment Professionals of Australia (PIPA).

Chair Ben Kingsley said investors were increasingly looking outside the two largest capital cities for assets.

“Investors are seeing Melbourne and Sydney performing very well and they’re looking for alternative markets that they think they can get in before the market starts to move,” Mr Kingsley told wire service AAP.

“Sydney’s market has started to slow and Melbourne is approaching the peak of the cycle.”

“Probably over the last six months there has been some speculation in the Sydney market, and the Melbourne market is enjoying a good Spring but I suspect that will slow down into 2016,” Mr Kingsley said.

Of the investors surveyed by PIPA, 58 per cent identified Brisbane as the capital city offering the best investment prospects, well ahead of the 17 per cent that chose Melbourne.

Just 11 per cent named Sydney, while six per cent chose Perth and five per cent selected Adelaide.

About 20 per cent of investors said they had put their investment plans on hold because of concerns about a property bubble.

Tighter lending conditions were the key worry for investors, as regulators sought to slow the growth of investor lending.

Price corrections, the removal of negative gearing, long periods of vacancy and oversupply of property are concerns.

Chinese buyers nearly doubled their investment in Queensland property to almost $1 billion in 2014-15, according to The Australian.

The newspaper said Queensland’s Foreign Ownership of Land Register revealed ­investors from China spent $872.5 million buying land and property while Hong Kong investors spent $112 million.

The total of $984.5 million is more than double the $463 million spent by Chinese investors in Queensland the previous year.

China has been the top source of foreign investment in Queensland real ­estate for the past three years.

The Australian reported that Chinese buyers own 3585 parcels of land covering 237,490 hectares, while British investors own 5904 properties covering 2.2 million hectares.

Singapore has overtaken the US as the second-biggest source of foreign investment in real estate in Queensland. Singaporean investors spent $421m last financial year — nearly three times more than the year before.

Analyst Michael Matu­sik told The Australian that Chinese buyers were buying more than half the new apartments being sold off the plan in Brisbane and the Gold Coast.

Westpac yesterday raised it's home lending rates by 0.2% and NAB, CBA, ANZ and Macquarie will most likely raise rates in the coming weeks. But that's not the end of it - there is still more to come.

The rate increase has come as a result of Westpac's need to hold more capital to protect deposit holder funds. Former CBA chief David Murray's enquiry into the financial services sectors highlighted that the major banks and MacQuarie were holding a significantly lower percentage of capital relative to the their loan book compared to the remainder of deposit taking institutions. The average risk weighting of the majors loan books sits at around 16% while the remainder of the market sits around 30-35%.  APRA wants to see that risk weighting increase to 25%. 

APRA has been steadily applying pressure to banks to increase their capital holdings to strengthen their balance sheet to market shocks. Westpac and other banks have had to go to market to raise more capital which has diluted the banks return on equity. 

Westpac chief executive Brian Hartzer said Westpac would be maintaining its return on equity target of 15 per cent. Which means further capital raisings will mean further rate hikes. This is likely as Westpac and other banks would need to raise more capital in response to pressures from global regulatory changes known as Basel IV.

So we can expect to see more rate hikes out of the majors.

This certainly creates opportunity for smaller lenders in the market who are already meeting their capital requirements and already have competitive offerings - some with rates below 4%.

With all the changes in the market now is an ideal time to talk to us to review your lending. Contact us today.

As I have been indentifying for some time there have been significant over supply risks building in Brisbane inner city units. The latset HTW property clock (pictured) puts Brisbane units at the top of the market. 

One major lender has already tightened it's guidelines for Brisbane inner city units in response to the increase risk levels. No doubt other lenders will follow.

The perennial issue of land supply and the escalating costs facing new homebuyers is not going to be solved anytime soon but there is movement at the station in regards to addressing this key bugbear in urban development.

Contributing issues to the undersupply in housing stock include a general inadequate investment in infrastructure, slow planning and approvals processes, high taxes and charges in the provision of housing, and in the case of a city like Sydney, the lack of undeveloped land due to geographical factors.

The Housing Industry Association had previously reported in its HIA-CoreLogic RP Data Residential Land Report, during the March 2015 quarter, the residential land price in Australia increased by 4.1 per cent compared with the previous quarter. This represented an increase of 8.2 per cent compared to the same quarter of last year. During the March 2015 quarter, residential land transactions fell by 5.2 per cent compared with the previous quarter to be 17.6 per cent lower than the same period 12 months earlier. The March 2015 quarter represented the third consecutive decline in land transactions in Australia.

The low sales rates combined with the increase in prices suggests that low supply is the cause of this price growth instead of a slowdown in demand.

The HIA’s senior economist Shane Garrett examines the underlying trend: “Land is the big driver of price increases in some areas. If you look at the figures nearly all of the increases in dwelling prices are explained by increases in the price of land whereas building cost increases actually in some parts haven’t gone up by much in relation to general price levels, so land is a big driver.

“The data shows that the land supply situation has tightened in recent years and manifested itself in higher prices and fewer actual lot transactions in the biggest markets.”

Garrett reflects on New South Wales where Sydney has the biggest demands as far as housing is concerned — the population is increasing, interest rates are low and there is a lot of new home building going on with detached dwellings and units.

“On a national basis land is the single biggest input to new home building and it’s something that the HIA has campaigned on for quite some time,” he says.

Bret Fleming, director of planning and design with consulting firm Urbis, says that as Australia’s population reaches 40 million in 30-40 years time, there is a requirement to make sure that supply and demand don’t get too far apart. He also asks are we in fact building the right type of dwellings in the right locations?

“Developers need to provide a variety of dwelling types, buyers can then climb up the housing ladder – give people the opportunity to buy in and trade up in the same area as their needs change. We’re now seeing more two bedroom product available in developments.”

So what more can be done to increase land supply and tackle affordability?

Fleming says, “We’d like to see more political will around the issue of housing demand and greater accountability that would go right down to a local government level whereby councils are obliged to provide a certain amount of land to accommodate certain population growth, but ultimately it comes down to political will and change is a sensitive issue in terms of introducing apartments into the middle ring or taking out farmland on the periphery of the city, so some sensible debate around that is needed. I think the recent changes in the federal government will help that as well. They seem to be emphasising the importance of our cities more than they have, which is nice considering they house 90% of our population.”

The HIA’s Shane Garrett says, “What we would like to see improved is the infrastructure funding mechanisms, (the introduction of) some sort of user pays scheme where buyers would pay back the infrastructure charges to some sort of local government authority for delivering these services over a period of say five, 10 or 15 years.

“And we would like to see the taxation burden relieved – the residential building sector is the second most taxed industrial sector of the economy.

On the new appointment of Jamie Briggs as Minister for Sustainable Cities and the Built Environment by new Prime Minister Malcolm Turnbull both Fleming and Garrett were favourable in the creation of this ministerial portfolio.

Urbis’s Bret Fleming: “It’s very much a step in the right direction. The federal government are actually tuning their mind to this and hopefully we will start to see some policies which will flow through to the state level and we will start to get some consistency and certainly Malcolm Turnbull is making the right noises in regards to infrastructure investment. It’s not just around roads any more but around public transport as well.”

HIA’s Shane Garrett says, “We welcome a dedicated government minister. It will be interesting to see if it translates into much action on the ground but the fact it has happened in the first place is a step in the right direction and something that we would welcome and are hopeful it will deal with some of the supply bottlenecks.”

It will be intriguing to see the results of future Land Reports from CoreLogic RP Data to see if there is a greater equilibrium between supply and demand, but in the meantime, first homebuyers are continuing to look at alternative options and locations in purchasing their first property and it’s likely developers will continue to respond with a variety of dwelling types.