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Monday, February 24 2014
The Reserve Bank of Australia has noted while weak conditions in the labour market had weighed on consumption growth, the increase in housing and equity prices over the past year had raised the possibility that consumption growth could outpace that of income in the period ahead. The board members noted in the February minutes that the effects of low interest rates were clearly evident in the housing market, where prices had increased further and turnover had picked up to be just below average. "These conditions were expected to provide further support to new dwelling activity over the period ahead, and leading indicators of dwelling investment had increased," the minutes noted. The members also observed that the softness in commercial construction meant that there was labour available to support the strong growth of higher-density dwelling construction. Growth of housing credit was gradually picking up, particularly so for investors. The members discussed the staff forecast for the domestic economy, which was a little stronger over the next year or so than at the time of the November Statement on Monetary Policy, in part due to the lower exchange rate. GDP growth was expected to strengthen a little through 2014, though would be likely to be at a below-trend pace. Growth was then expected to pick up to an above-trend pace by mid 2016. But the outlook for the labour market was little changed, as the effect of the softer tone of the recent employment data had been largely offset by the slightly stronger growth outlook. The inflation forecasts had been revised higher, reflecting a combination of the lower exchange rate and the higher-than-expected December quarter CPI outcome, slightly offset by a softer outlook for wages growth. Underlying inflation was expected to be around 3 per cent over the year to mid 2014 and was then expected to decline towards 2.5 per cent. Members recognised that conditions in the labour market tended to lag economic growth, and that the labour market had remained weak following the period of below-trend growth in activity. The minutes noted further signs that the expansionary setting of monetary policy was having the expected effects, with more timely indicators having been more positive for consumption, dwelling investment, business conditions and exports. "Although inflation in the December quarter had been higher than expected, there were several possible explanations. "The Board noted that it was likely the inflation reading contained some noise as well as some signal about inflationary pressures, but also presented something of a puzzle in interpreting the mix of activity and price data. "Also, the further depreciation of the exchange rate since the December meeting was expected to add to inflation for a time, although the outlook for slightly slower wage growth was expected to help keep domestic cost pressures contained over the medium term. "At recent meetings, the Board had judged that, given the substantial degree of monetary policy stimulus already in place, it was prudent to keep policy unchanged while assessing the continuing impact of that stimulus." Paul Bloxham, chief economist at HSBC suggests the bottom line was today's minutes reinforced the RBA's shift to a more neutral policy bias and their greater comfort with the current level of the AUD. "The outlook for the labour market and the degree of persistence of recent strength in inflation will be key factors determining the timing of future rate hikes. "We see the RBA's easing phase as done and also see it as likely that the RBA may need to lift the cash rate before the end of the year," Paul Bloxham said. Tuesday, February 18 2014
MacQuarie bank has predicted two further rate cuts this year. There view is not shared by all including the RBA which is expecting a pick up in GDP to 2.75%. ONly time will tell Friday, February 14 2014
 If you are considering upgrading your property you may be looking at your existing home and feeling it could make a good investment property. Whether it is the right move for you will depend on a number of factors. Many people assume they can simply redraw or set up a new loan on their old home (which will become an investment property) and claim that debt as a tax deduction. This is not correct. Contact us for an initial discussion.
What are the secrects you need to know before you start investing?
All the best Greg Carroll Friday, February 14 2014
Not all properties are treated equally by lenders. There are some properties that lenders like, some which they will have restrictions around, and some which they just won't touch at all. What does this mean for you. It means you may not be able to fund a particluar property purchase of they you may have to tip in additional cash to get the deal across the line Below are some the the property types where lenders may have restrictions or may not fund at all.
Units less than 50m2 Number of units in one complex Lenders may also choose to restrict their exposure to certain apartment blocks. If they have already financed a number of purchases in a particular complex they may not support any further transactions. Inner city units and hi-rises Serviced apartments/Student accomodation Lenders may need to see additional detail to determine the level of acceptable lending. In particular they will want to see the current letting agreement and if there are any restrictions associated with having the property released from the letting pool. Commercial property Company title Heritage listed Warehouse conversions Multiple units on one title Rural property Aged care security and retirement villages Vacant land Thursday, February 13 2014
ONE of the country’s biggest banks expects house prices to rise as much as 20 per cent before the end of next year, with lifts predicted to begin soon in parts of Queensland. ANZ chief economist Warren Hogan told the Committee of Economic Development of Australia that the “housing market is at the early stages of a solid cyclical upswing” fed by low interest rates and market shortfalls. “We expect a 15-20 per cent lift in home prices between 2013 and 2015,” he said with long-awaited rises already underway in Sydney and Melbourne. “I am sure Brisbane, Sunshine Coast and Gold Coast will lift in terms of house prices in the next little while,” he said in the Sunshine State yesterday. Mr Hogan said investors and “new participants” in the market — such Chinese and other overseas buyers who typically did not need to borrow in Australia - were pushing increases. “They’re quite active and their judgment on what is fair value for property is very different from others in the market,” he said. “I think that’s something to keep an eye on.” But experts agreed Australia was not in a house price bubble yet. Commonwealth Bank head Ian Narev said: “We never say never — but we don’t think we are seeing even the early signs of a bubble at the moment.’’ Queensland Treasurer Tim Nicholls said there was no evidence of a housing bubble in the state. “In Queensland we’re seeing steady but moderate growth in house prices, so we’re not overly concerned about a bubble here,” he said. “We think that Queensland growth rate is about right. We’d like to see some more growth coming through in terms of the number of houses and approvals coming through, but in terms of prices, we’re not seeing a bubble coming through here.” Mr Hogan agreed it was not a bubble “but it could be”. “If you whack the big four banks together, the system is only growing at five per cent, even though we’re writing new mortgages at 18 per cent ... Overall credit growth is still quite tepid so you wouldn’t say that that’s a bubble.” Wednesday, February 12 2014
 Asbestos materials of various types were commonly used in Australian property construction between 1940 and 1990. Asbestos materials were embedded in wall cladding, roofs, gutters, drain pipes, vinyl flooring, electrical wiring thermal insulation, boilers, exhaust pipes, switchboards, thermal insulation and inside fire doors. The new National Work Health and Safety Act of 2011 requires owners of buildings constructed before 2003 to conduct an asbestos survey. Where asbestos materials are identified, this triggers the mandatory requirement for an asbestos register and asbestos management plan (AMP). Some property owners appear to be unaware of this new obligation. An asbestos register is necessary to track of asbestos materials remaining (or removed) in investment properties. Asbestos may also be located in inaccessible areas and unfortunately discovered during re-development with sometimes disastrous and costly results. Asbestos materials if disturbed can cross contaminate internal areas of the buildings, requiring evacuation, loss of rent and potential occupant litigation. Asbestos removal is a legally notifiable project, which can result in extremely costly asbestos removal projects. Careful investigation during due diligence can forewarn investors, revealing the true cost of asbestos removal. Armed with detailed information and cost options, investors can then more accurately evaluate if they wish to proceed with the purchase or avoid the risk. Wednesday, February 12 2014
Australia’s economic growth is expected to pick up pace this year thanks to a lower exchange rate and stronger activity in the housing and retail sectors, according to the latest forecasts from the Reserve Bank of Australia. Investment in the mining and resources sector is forecast to peak some time this year and a pick up in the non-mining sectors of the economy is needed to maintain economic growth. “Until recently, survey measure of current business conditions have been below average, consistent with subdued non-mining investment,” the RBA said in its quarterly statement on monetary policy. “A number of indicators, however suggest a gradual increase in growth over time.” “The depreciation of the exchange rate should provide some additional impetus to activity in the traded sectors of the economy,” the RBA said. The bank said that business conditions improved in the latter part of 2013. “Retail sales and the Bank’s liaison point to a pick up in household consumption growth in the December quarter and measures of consumer sentiment remain a little above average levels,” the RBA said on Friday. Wednesday, February 12 2014
While Sydney and Melbourne’s property markets may struggle to sustain their phenomenal recent growth rates, Brisbane is being tipped to benefit from its ample room for capital growth and rental yield potential. Brisbane’s property market is showing signs of growth early this year, which is good news for buyers seeking a relatively affordable investment. RP Data’s research director Tim Lawless suggested this week that while the “investment fundamentals” are waning in markets such as Sydney and Melbourne, investors might turn to Brisbane because it’s much earlier in the growth cycle. The stage that a property market is at in the growth cycle is influenced by the level of supply and demand. In Brisbane’s case, increasing demand could certainly see values climb above the current median of $462,000. Throw in the city’s solid rental yields, which are hovering round the 5% mark and notably higher than averages in both Sydney and Melbourne, and there’s plenty of reasons for optimism. Monday, February 10 2014
The housing market is in the early stages of a solid cyclical upswing, buoyed by low interest rates, but it's not a bubble, ANZ Bank chief economist Warren Hogan says in a Committee for Economic Development of Australia report. "Our view is that prices remain largely explained by low interest rates, sharply improved affordability, the release of pent-up sales demand created over recent years and an unprecedented (and increasing) shortage of physical housing stock," Hogan writes. He says the majority of future price gains will be in Sydney, Perth and Melbourne, with investors driving the upturn in the market. Friday, February 07 2014
 Leading agent John McGrath has forecasted that the strongest east coast market over the next three years was likely to be south-east Queensland. "The market I am really excited about is south-east Queensland." "Prices in Brisbane and the Gold Coast are still below pre-GFC levels, while Sydney is about 10% above now, so there is a greater likelihood of better capital growth in the sunshine state over the next few years." Currently, the median house price in Brisbane is $470,000 whereas Sydney is $775,000. Brisbane’s median apartment price is $383,000 compared to $557,000 in Sydney. RP Data also provides joint Brisbane-Gold Coast data showing a 4.9% growth in house prices and 2% in apartments. McGrath says a "phenomenal spring season" in Sydney last year, I was expecting another good year for Sydney," but the strongest market over the next three years is likely to be south-east Queensland. "In short, we ain’t seen nothing yet! We’re just at the beginning of the recovery." McGrath suggests of south-east Queensland.   |
