Property News and Views

Check this page regularly for the latest info on property investment.

Excerpt from article in The Australian - 2009

THE conditions are perfect for property investment - low rates, population growth, strong rents and a shortage of housing in most capital cities. So where are all the investors?
 
Part of the reason is that investors are not getting the first-home-owner grant. But an online poll of 500 residential property investors by Matusik Property Insights has found that fears about rising unemployment and the worsening economy are also causing people to defer their decision to buy rental properties.

One in five is still waiting for prices to fall. Half of those surveyed expected next year to be a better time to invest.

Investors were not attracted by talk of increasing rents, director Michael Matusik said.

Consumer sentiment figures released this month by the Westpac-Melbourne Institute Survey confirm Matusik's findings. The survey of 1200 people found pessimists still outnumbered optimists and, with the prospect of more unemployment, that's unlikely to change soon.

Matusik, however, said investors might delay their decision to buy too long. He said fixed rates were starting to increase, as were property prices at the bottom part of the market.

During the past month or so, several of the big banks have increased their fixed mortgage rates, even though variable rates are expected to go even lower. Some economists believe fixed rates will continue to rise as banks manage their risk.

Of course, fixed rates are decreasingly popular, given the cash rate is expected to fall to 2 per cent by the end of the year, but fixed rates are a barometer of the longer term trend in interest rates, so they are worth watching. It also pays to remember that just because the Reserve Bank of Australia cuts rates, that doesn't mean banks have to follow suit.

Only time will tell whether the one in five investors in Matusik's survey is correct and property buying will be better next year.

Excerpt from an article in the Daily Telegraph 'Investment beyond the slump' - 2008

WE have all heard the saying "as safe as houses". But from an investment point of view, putting all your money into bricks and mortar may not always be the best way to go.

After all, there have been plenty of harrowing stories recently about stressed sales where vendors have lost thousands of dollars off their initial investment.

Despite the apparent property slump and ever-decreasing levels of home loan affordability, statistics remain positive.
Real estate analysts Residex say the median home value rose six per cent in the past year to $584,000.

However, a recent report commissioned by the Australian Securities Exchange (ASX) and Russell Investment Group show Australian shares to be the best investment option for long-term returns.

The Long-Term Investing Report released in May found domestic shares posted a 13.3 per cent return per annum over the past decade compared with 11.6 per cent for residential property during the same period.
So, in these uncertain times, should we be putting our hard-earned cash into our homes or the share market?

Would we be better off putting our money into managed funds or investing more in our retirement by beefing up our superannuation? What about non-traditional forms of investment such as art, jewellery or even wine?

It will come as no surprise that Michael Yardney, author and director of Metropole Property Investment Strategists, believes home ownership is the ideal long-term investment option.
Yardney, who wrote How To Grow A Multi-Million Dollar Property, says property investment is the safest way for average Australians to grow their wealth.

“More Australians are managing to become wealthy through property than any other way,” Yardney says. “Property is a pretty safe investment over the long term. (The property market) is under-pinned mostly by owners rather than investors so it does not see the volatility a share market does and you have better control over property than shares because in tough times, you can lease it, re-paint it, fix it up and add value to it.”

There are decades worth of data to support the claim that long-term property investment is a low-risk, high-return path.
Yardney says property values double every decade. So if you buy a home today for the Sydney average of $584,000, in around 10 years you can consider yourself a property millionaire.

Sydney mortgage broker Jason Pitkeathly bought his first investment property 15 years ago when he was just 22. Since then the father-of-one has bought seven properties and amassed a profit of well over $1 million.

“I have a share portfolio as well but I lean towards property investment as the way to go,” Pitkeathly says.
“Property is something I know and understand; it’s something you can see, feel and touch and I’m more confident investing in it.
“It also doesn’t have the day-to-day volatility of the share market so I consider it a better long-term prospect.”

Raine and Horne CEO Angus Raine says the rental crisis is making property investment an attractive option again and up to one third of first-home buyers are foregoing the $7000 First Home Owner Grant to become investors rather than owner-occupiers.
“Savvy young buyers are recognising that the long-term tax benefits of buying an investment property while living with mum and dad can outweigh the one-off lump sum benefit of the FHOG,” Raine says. “With rental vacancy rates at all-time lows, buying a rental property means the taxman and tenants can help young Australians climb the property ladder.”

Brisbane house prices up 20% - Courier Mail article
Excerpt from article in NEWS.com.au  - February, 2008

HOUSE prices increased by over 20 per cent in Brisbane last year, it has been revealed ahead of the latest Reserve Bank decision on interest rates.

While the average increase in house prices across the eight capital cities rose by 12.3 per cent in 2007, homes in Brisbane and Adelaide experienced an increase of more than 20 per cent, according to figures released by the Australian Bureau of Statistics (ABS).

Houses in Brisbane increased in value by 21.6 per cent in the 12 months to December, while homes in Adelaide went up 20.2 per cent.

You can copy and paste this link into your browser to read the full article:
http://www.news.com.au/couriermail/story/0,23739,23156094-5011140,00.html