Welcome to the February Newsletter.
We were very distressed by the very sad events that have occurred in Victoria over the weekend. Aside from offering financial and other forms of support we feel so helpless in not being able to do more to help the devastated communities and surviving families.
We know that Australia will continue to stand by its countrymen, as it has done in the past, and stretch out its hand to support these families while they rebuild their lives. For those that did not survive the tragic fires may they rest in peace.
NSM.
Since the last Newsletter there has been considerable movement in the real estate and financial markets so this issue has plenty to read about and an easier to read format.
Auction clearance rates hit 78 per cent in Sydney over the weekend with a total sale price of over $35 million, according to Australian Property Monitors.
Read more ...
Home loans rates are falling faster in Australia than in most other developed countries, according to the RBA. Read more ...
The apartment market has lead the charge in offering the best yields on investment property over the 2008 calendar year. Rental returns in seven key inner city locations hit between 7 to 9 per cent. Read more ...
Speaking at The University of Sydney's International Forum, OECD deputy secretary-general, Aart de Geus, called uncertainty the one pervasive feature of the current economic environment - around the globe, and at home. To a large extent, he said, the uncertainties stemmed from the fragilities the financial crisis had revealed throughout the world. Read more ...
For the week beginning 9 February the important data and events as well as key data affecting the Australian & NZ markets. Articles include: RBA - more to do, then on hold for longer. Consumer Sentiment: will jumbo stimulus offset growth gloom? Australian data: housing finance and labour force figures due. New Zealand data: house prices and retail sales. US data: trade deficit, retail sales and consumer sentiment. US Fed speak: Bernanke testimony, Fisher, Dudley, Evans. Key economic & financial forecasts. The Review is prepared by Westpac Economics. Click here for the full report. (
Many clients ask us where they can find a solicitor to do their conveyancing or an accountant or another type of professional. As we are constantly dealing with a range of professionals we have put some of their contact details on our web site to make it easier for our clients someone. See Useful Contacts on our left menu bar.
The re-emergence of the first home buyer's market in 2009 will spur on the growth of the broking industry over the next few years, according to the CEO of Choice Aggregation Services. Read more ...
First-home buyers are storming back into the property market, lured by aggressive interest rate cuts and generous government grants, but official job figures out today hold the key to whether the recovery is short lived. Read more ...
Having an expert guide you through the pitfalls of buying a property can save time, money and stress. An increasingly popular service is that provided by buyers' agents. Read more ...
Mortgage lenders have encouraged the Federal Government to extend the first home buyer's grant after a noticeable improvement in the housing market since its beefed-up introduction. Loan Market Group said the increased grant, which is due to expire at the end of June, should be extended for another six months to extend the market's recovery. Read more ...
In a bid to fatten up its revenue, the Victorian government has proposed a bill which would shorten the payment deadline for stamp duty from three months to 14 days after settlement. The stamp duty reform, which would also close a loophole involving long-term leases to avoid the payment of the property transfer tax, is likely to generate an additional $900m a year in revenue for the government, the Australian Financial Review reported. Read more ...
2009 The Year Ahead
The tail end of the decade appears to be testing the resilience and gumption of even the most stoic investor. Let’s face it, we move as a flock in a universe where confidence is king. If the lead bird senses trouble and deviates, suddenly we instinctively follow in a wide sweeping arc without ever having actually spotted the danger ourselves (I don’t think even really, really smart scientists have worked out how we do that yet).
It all appeared to be going along swimmingly – a booming mining sector, higher international profile, and historically low interest rates helped create an Australian economic environment where it was just too hard not to make a dollar. But these things, it appears, were a folly now sent to try us. Fast forward to late 2008 and as the world’s most powerful nation got a twinge in its metaphorical back, we all started looking for a Zimmer frame.....more in the full report (
QS Corner - Tax depreciation - Repairs vs Improvements
The Income Tax Assessment Act 1997 allows for the immediate deductions for repairs and maintenance under sub-division 25-10, which states that you can deduct expenditure you incur for repairs to premises (or part of premises) or a depreciating asset that you held or used solely for the purpose of producing assessable income. If you held or used the property only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances. You cannot deduct capital expenditure under this section. .....more in the full report (
We hope you enjoy the read.
Richard Kirby.
Auction clearance rates hit 78 per cent in Sydney over the weekend with a total sale price of over $35 million, according to Australian Property Monitors. Of 96 properties put up for sale, 76 went under the hammer with a medium sale price of $457,500. The result compared with the 51 per cent clearance rate achieved last weekend.
In Brisbane, a clearance rate of 38 per cent was achieved with 6 of 14 properties put up for sale finding a buyer. The rate was five percentage points higher than last weekend’s results. Adelaide registered 14 sales over the weekend with a clearance rate of 43 per cent.
Home loans rates are falling faster in Australia than in most other developed countries, according to the RBA. A report in The Australian Financial Review over the weekend said that the average Australian mortgage fell by 2 percentage points as rates tumbled by 3 percentage points between September and December.
The decline contrasted with the US where mortgage rates have dropped by an average of 0.15 percentage points against a 5 percentage point rate cut between August 2007 and December 2008. According to the RBA, the difference between the Australian and US drops reflected the structure of Australia’s mortgage market – where three quarters of home loans are on a variable rate. In the US fixed-rate loans comprise of three quarters of outstanding mortgages.
The apartment market has lead the charge in offering the best yields on investment property over the 2008 calendar year. Rental returns in seven key inner city locations hit between 7 to 9 per cent.
According to RP Data, the highest yielding property in a major city was Sydney’s Woolloomooloo, which averaged a 9.4 per cent return, The Australian Financial Review reported over the weekend. Other attractive markets included Melbourne’s Burnley (8.2 per cent), Darwin’s Parap (7.5 per cent) East Perth (7.1 per cent) and Adelaide’s Evanston (7.1 per cent).
By Tim Neary | Thursday, 5 February 2009
Speaking at The University of Sydney's International Forum, OECD deputy secretary-general, Aart de Geus, called uncertainty the one pervasive feature of the current economic environment - around the globe, and at home. To a large extent, he said, the uncertainties stemmed from the fragilities the financial crisis had revealed throughout the world.
And in spite of describing Australia's economy as being 'resilient' and 'well-armed', he issued this stern warning: Australia still has the potential to be one of the hardest hit economies in the crisis. "Not only does Australia suffer from the reverberations of the global economic downturn, it is also hit by a negative terms-of-trade shock due to the steep falls in the prices of its commodity exports," de Geus said.
Moreover, he felt that Australia's dependence on foreign markets to finance its external deficit represented a potential economic fault line. "If global banks scale back lending to Australia, it could result in a large gap in credit available to Australian businesses and intensify the depth of the downturn in the Australian economy," he added.
Earlier he said that while its origin was in the US, the collapse of the sub prime market was really only the canary in the coal mine. de Geus called the canary's song one of regulatory and market as well as policy failures. "It swiftly resonated into other financial markets and to other countries," he said.
The re-emergence of the first home buyer's market in 2009 will spur on the growth of the broking industry over the next few years, according to the CEO of Choice Aggregation Services. Brendan O'Donnell told Brokernews the future of our industry "is intrinsically linked with first home buyer," whom he called the "upgraders and investors of the future".
"As their first step into finance they represent the perfect long-term client for brokers. With a preference for using brokers, should the industry collectively match their service expectations they'll build solid links from which to develop the industry. "Broker market share is set to grow in the next few years to 50%, as first home buyers enter the market on the backs of using brokers we're in a strong position as an industry to accelerate this."
According to the latest MFAA/BankWest Home Finance Index, over half of all first time buyers believe that now is a good time to enter the property market. Recent ABS stats showed that in November 2008, first home buyer's accounted for nearly a quarter of all borrowers - their biggest chunk of the lending market in seven years.
By Jessica Irvine | January 15, 2009 | Sydney Morning Herald
First-home buyers are storming back into the property market, lured by aggressive interest rate cuts and generous government grants, but official job figures out today hold the key to whether the recovery is short lived. The jobless rate is tipped to have reached a two-year high of 4.5 per cent and most economists expect it to hit 6 per cent or more by the end of the year. Job losses could lead to an increase in forced property sales while weakening demand for new loans.
But official home loan figures for November show a tentative recovery following a series of rate cuts by the Reserve Bank totaling 2 percentage points and the Rudd Government's decision to double the first-home buyers' grant on established homes to $14,000 and triple it on new homes to $21,000. The number of new home loans rose 1.3 per cent, while the number of first-home buyers jumped 18 per cent, pushing their share of new loans to 23 per cent - the highest since January 2002.
The federal Housing Minister, Tanya Plibersek, said the figures showed the grant increase, designed to stimulate activity in the housing sector, was working. "It seems that first-home buyers are taking advantage of historically low interest rates and the first-home owners' boost to enter the market," she said. Ms Plibersek was speaking after announcing that Edmondson Park in south-western Sydney was one of 33 projects that would share $112 million from the $512 million housing affordability fund. The fund provides grants for sewerage and other infrastructure to lower the cost of building homes.
NSW will receive only 14 per cent of the initial funding pool, while Western Australia benefits the most with 23 per cent. Economists said first-home buyers were likely to continue buying this year as stagnating house prices and spiraling rents made purchasing a house more attractive.
"With strong population growth driving rents higher, low interest rates and the doubled home-buyer grant should see pent-up demand from first-home buyers unleashed over the course of 2009," an economist at Commonwealth Bank, James MacIntyre, said. However, the prospect of job losses continues to hang over the economy. "The extent to which labour market conditions deteriorate will be key to the outlook for households, and the economy generally," he said.
But even as first-home buyers advance, investors are beating a retreat. The value of loans to investors fell 6.1 per cent in November, bringing the annual decline to 27.3 per cent.
An ANZ economist, Alex Joiner, said the lack of finance for investors was a worrying sign for new home building, a key employer and driver of the economy. "Confidence in the property market is still shaky and economic uncertainty is high. The prospect of a climbing unemployment rate throughout 2009 poses a real risk to any significant recovery in the sector."
The retreat by investors is expected to compound the rental shortage and put more upward pressure on rents. Further interest rate cuts are also expected to improve affordability. Financial markets are tipping the Reserve Bank will cut official rates by another 0.75 percentage points at its first meeting of the year on February 3 to help stave off recession, following a string of bad news on building approvals, retail sales and job ads.
Having an expert guide you through the pitfalls of buying a property can save time, money and stress. An increasingly popular service is that provided by buyers' agents. About 30 operate around Melbourne and most are REIV Members. The popularity of this service isn't just confined to the upper end of the market but is part of a trend towards using more professional services.
Most buyers find the investment in the buyers' agent pays off through the time and money saved and the stress reduction. All buyers' agents must be licensed estate agents. They will undertake three main tasks: find a property, conduct due diligence for you and represent you through the sale process.
Through the due diligence process the agent will use their skill, knowledge and, importantly, networks to find out what a fair price for the property would be. While the law requires an estimated selling price to be set, the actual price will be affected by a range of factors. The buyers' agent is an expert at sorting through them to reach an idea of what the eventual selling price may be.
Through the sale and negotiation process they will act on your behalf to get the outcome for you. It's important to note that the market is a buyers' market and having a skilled buyer's agent working for you will help to get you the best deal.
The cost varies from 1 per cent to 2.5 per cent of the sale price, depending on the services the agent undertakes. This fee is often inclusive of a base fee not dependent on success.
Mortgage lenders have encouraged the Federal Government to extend the first home buyer's grant after a noticeable improvement in the housing market since its beefed-up introduction. Loan Market Group said the increased grant, which is due to expire at the end of June, should be extended for another six months to extend the market's recovery.
Group director John Kolenda said more than 5500 people took advantage of the increased grant in October - the first month it became available. He added that direct enquiries from first home buyer's more than quadrupled since the increased grant was introduced.
"There was very little interest from first-home buyers throughout most of 2008 but now brokers and property-related web sites, including our own, are being flooded with interest from these sources," he said. Kolenda said the grant has helped maintain interest in the property market at the lower to middle price range.
Research conducted by the MFAA and Bankwest confirmed that government initiatives had helped boost consumer confidence with almost 40% of first time home buyers saying that the government is doing enough to support them in their quest for home ownership. "Last April, only 14 per cent of first time buyers indicated that they were satisfied with Government initiatives in the housing sector," said MFAA CEO Phil Naylor.
"The massive increase can, in part, be put down to the introduction of First Home Saver Accounts and the increase in the first home owners grant." According to the survey, more than half of all first time buyers believe that now is a good time to enter the property market.
By Agnes Gajewska | Tuesday, 3 February 2009
However, the success of the bill passing has been called into question after several business groups, including the Property Council or Australia, the Tax Institute of Australia and the Australian Bankers Association, as well as the opposition voiced concerns over its effects on property buyers.
Shadow treasurer, Kim Wells, said if the bill was passed, property buyers and businesses could be at risk of being "caught out" by the change. He went on to say that the shortened timeframe would "place significant undue administrative burden and cash-flow pressure on property buyers and businesses."
According to a spokesman for Treasurer John Lenders, however, Victorians would still have more time to pay stamp duty than buyers in other states. The bill will likely be debated this week when parliament resumes for 2009.
