Property Investment

WARMER weather will combine with other favourable conditions to fuel the appetites of potential property investors, according to Australia’s largest independently owned mortgage broker.

The latest Australian Bureau of Statistics housing finance report saw the value of investment housing loans drop for the first time in four months in June 2010 by a seasonally-adjusted 3.6 per cent to $7.3 billion, the lowest value reached since February this year.

However, this compared favourably to $6.5 billion in June last year.

Many market commentators say this buyer group had been holding back until the election was over and the traditionally strong spring selling season begins. They won’t have to wait much longer.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard says that according to RP Data, Australia typically sees higher than average property activity from September through to November.

“This year should be no exception, despite a possible lag effect from the hung parliament,” she said.

“There are already more properties on the market than usual at this time of year.

“That is good news for prospective investors, as is property prices plateauing in many areas and dropping in some; rental prices increasing; strong population growth continuing; consumer sentiment rising and the sharemarket continuing to be unpredictable.

“Housing undersupply is a serious issue in Australia and ABS building approval figures show a fall for a third consecutive month in June to reach the lowest level since August last year.

“Hence, many investors believe the long-term potential of property as a stable asset class is excellent.

“With fewer new properties there is bound to be a pick-up in rental price growth — we are seeing that happen already.

Spring will see investors warm to real estate

“Australian Property Monitors Rental Market Report for the June 2010 quarter shows that from April to June, rental prices for houses rose nationally by 0.7 per cent, bringing annual growth to a relatively small, but very encouraging, 3.1 per cent.

“The unit market was stronger, with rents increasing nationally during the last quarter by 3.5 per cent, bringing the annual growth rate to 4.2 per cent.

“This bodes well for people who research the property market thoroughly, have a long-term strategy in mind and investigate all their finance options so they make a sound investment decision.

“Prospective buyers must be aware that lenders have tightened loan assessment criteria for investors as well as owner occupiers.

“Many have limited their loan to value ratios to 90 per cent of the purchase price for both buyer groups, with some going even lower.

“Also, genuine savings are essential, whether in the form of a cash deposit or existing property equity.

“Both buyer groups will need to plan ahead to satisfy their chosen lender’s requirements.

“Preparing for rate movements is also vital to the planning process.

“The cash rate will probably remain stable for the next couple of months but many lenders are signalling that funding costs may force them to raise borrowing costs independently of the RBA’s rate cycle.

“It will be interesting to see how many Australian investors spring into the property market over the next quarter and what effect, if any, lender rate rises will have.”


The level of household debt in Australia has risen over the past three decades from less than 50 per cent of household disposable income to about 150 per cent.

Ric Battellino, the Reserve Bank of Australia deputy governor, has sought to allay concerns that this indebtedness means we face a risky unsustainable outlook. He said that 75 per cent of household debt was held by the upper 40 per cent of income-earners.

The bank’s governor, Glenn Stevens, had earlier given the RBA’s estimate of Australia’s dwelling price-to-income ratio, which found that dwelling prices in capital cities were typically 4.8 times disposable household incomes – about half the ratio put by the doomsaying international survey Demographia.

The Commonwealth Bank chief executive, Ralph Norris, was asked after the bank announced a $6 billion profit last week whether the housing doomsayers were nuts.

”I wouldn’t go as far as to say they’re nuts but I think that it’s very easy to make assertions based on averages,” he said. ”You come to a different view when you look at the fact that the incomes based around averages are not relevant to the average person that has a mortgage.

”So you know, we’re in a situation here where, in my view, the housing market in Australia is healthy.

”There will obviously be variations in price and we shouldn’t be surprised if there are, you know, drops of 5 per cent or 10 per cent, as there are obviously increases in value.

”But I think the range of value is not going to be anything that suggests a bubble and a collapse of the housing market in Australia.”

Deutsche Bank issued a research paper last week suggesting Australia’s house prices were not as vulnerable as doomsayers argue.

While acknowledging that on many comparisons Australia had a high house price-to-income ratio and high levels of household debt, the Deutsche Bank economists Phil O’Donaghoe and Adam Boyton argued the vulnerability of Australian housing was ”overblown”.



”The housing market is perhaps the most common vulnerability we are asked about in the Australian economy,” the said.

”Combined with the role played by the US housing market in the financial crisis, investor awareness and suspicion of this key asset class is perhaps understandable.

”But we have long held the view that a broader assessment of the Australian housing market offers a more sanguine conclusion.”

The Deutsche Bank report noted that mortgage debt obligations in Australia were fully recourse loans and borrowers’ mortgage obligations extend beyond the mortgaged property, therefore providing a greater incentive for repayment relative to the United States.

Battellino suggests the strongest evidence on the sustainability of household debt was the low level of arrears. This was evident again this week in housing repossession data.

Repossession actions lodged in the NSW Supreme Court for the first six months of 2010 totalled 1198.

There were 3800 last year and 4000 during 2008. The peak year was 5300 in 2006.

Foreclosures in the US rose 4 per cent from June to July, exceeding 300,000 for the 17th month in a row, according to RealtyTrac.

The number of foreclosure activities, which incorporates all phases of foreclosure including default notices, scheduled auctions and bank repossessions, totalled 325,229 in July.

Lenders seized 92,858 properties last month, the second highest monthly total since RealtyTrac began tracking repossessions in 2005. Total foreclosure activities reached 1.65 million in the first six months of 2010.

Deutsche Bank noted that Australian house price concerns were ebbing. ”The pulse in housing finance has moderated in line with rises in the cash rate. The housing cycle points to a steady moderation in price pressures.

”Elements of the market which had been described by the RBA earlier this year as demonstrating elements of ‘considerable buoyancy’ have moderated. Auction clearance rates have also slowed.” From a peak of 72 per cent at the end of last year, auction clearance rates had fallen by last month to 61 per cent, Deutsche said.

Story by Jonathan Chancellor

 A new survey confirms high-income property investors have returned to the Australian property market with the intention to buy, a considerable shift from the same time last year. There has been a nine per cent increase in demand by investors looking to buy a property at the upper end of the market, according to the’s Consumer Insights Report (Buy).

Twenty-five per cent of investors were searching for properties to buy in the $500,000 or more price range, up from 16 per cent in April 2009.

General manager of sales and operations for Peter Wright says the research findings paint a promising picture of the property market.

“The report revealed one in two property seekers now believe the market is rising – a result not observed for two years,” he says. “Of those who believe the market is rising, the perceived reasons for growth include a seven per cent increase in investors returning to the market (35 per cent), a shortage of properties (54 per cent) and a growing economy (40 per cent).

Confidence returns for property investors

“Investors were also one of the top three homebuyer groups (39 per cent) that have sought pre-approval for finance with the intention to buy or build. First homebuyers and investors were also more likely to say they had thoroughly researched the market – up by 16 per cent and eight per cent from the last wave respectively,” Wright says.

The report also showed that investors were more likely to be male, aged 50 to 64 and living in high income households, while female investors were more likely to be younger, aged 25 to 34 years (30 per cent), compared to males (21 per cent). Both male and female investors were more inclined to come from double income households (54 and 50 per cent respectively).

The report is an in-depth survey that delves into the psyche of the Australian property buyer, covering topics such as buy, rent and share. The survey ran from May 31 to June 3 with 4082 Australians taking part.

Source: Australian Property Investor

Don’t let the slow real estate market keep you from having the home of your dreams. You don’t have to move, you just need to improve. And this is the perfect time to do so.
Never before have all the stars been so perfectly aligned to facilitate the remodelling needed to give you your perfect palace. Materials costs have been lowered to increase sales, building contractors have reduced their fees to attract more clients, and interest rates are the lowest they have ever been. If you’ve ever wanted to tackle a home improvement task, this is the time to do so.
Here are five good places to start:
1. Kitchen Remodel

— If your kitchen is tired and run down, this is a great time to remodel it. Cabinet manufacturers are pricing more competitively, granite prices have fallen, and contractors are itching to work. The contractors that were busy building homes during the housing boom are now fighting each other to get the kitchen remodelling jobs, and the homeowner is the one who wins. Since it is the kitchen that is said to sell the home, the improvements you make now will benefit you greatly when the market turns around and you put your home on the market.



2. Bathroom Remodel — No longer just a place to shower and shave, bathrooms have been elevated to spa status. If your bathroom doesn’t measure up, this is a fantastic time to bring it up to date. Popular improvements this year include heated flooring, natural materials such as stone and wood, multiple shower heads with massaging jets, higher counters with vessel sinks, and soft colours with mood lighting for that ultimate spa experience.

3. Bedroom Addition — There is always great value in adding another bedroom to your home. Whether you create an ultimate master retreat, a welcoming guest room, or a home office, the extra room will always increase your profits when you go to sell. The long line of craftsmen needed to implement a room addition are all willing to bargain now to get your job. From the architect to the contractor, to the carpet salesman, they are all offering the best deals in years.

4. Decks — Outdoor entertaining is a huge trend with homeowners, and adding a deck is a great way to welcome your friends to the great outdoors. From a simple square deck to a multi-level masterpiece featuring an outdoor kitchen, materials and labour costs have come down to make this an ideal time to take on that outdoor living project.

Story by Barbara Green –
Barbara Green is The Design Diva and owner of Sensibly Chic Interior Design. She creates one of a kind interiors that reflect your taste, lifestyle and budget.

S&P credit ratings expert confirms the strength of the housing sector but questions the benefit of high home prices for society

A managing director of a credit ratings agency responsible for scoring the quality of Australia’s mortgage debt has questioned the social impact of the nation’s soaring house prices, even while she confirms the strength of the sector.

Standard & Poor’s managing director of rating services Fabienne Michaux said the strength of Australia’s mortgage quality is a success on the capital markets but the high valuation of homes underlying the debt presents a long-term risk to the basic fairness in society.

“The social implication of house prices in the longer term is a key issue,” she said. “One of the things people were proud of was that (Australia) was fairly egalitarian and even and everybody had basic rights to housing and basic education and good healthcare.”
“Those are the sorts of things that start to chip away when you’ve got people who can’t afford to actually to find somewhere to put a roof over their head.”



The median national city median home price was $468,000 in May, according to RP Data-Rismark, following years of nearly uninterrupted increases in value, driven by a shortage of available new land, a cumbersome building approvals process and tax incentives that reward owners to purchase and hold second homes.

There is an estimated 200,000 home shortage in the nation, expected to worsen as a recovery in building stalls. Ratings agencies such as Standard & Poor’s grade the quality of the mortgage debt that is repackaged and on-sold by local lenders to institutional investors.

While confirming the strength of assets underlying Australia’s residential mortgage backed securities market, which has issued $352 billion since 2000, Ms Michaux noted home owners are unwise to take too much satisfaction in becoming property millionaires.

“Ultimately the utility of the house is still that you’re living in it,” she said. “When you pass it on, it’s still one house. If you’ve got two kids you’ve got half a house each.”

Story by Chris Zappone Fairfax Digital

I’ve been thinking lately of setting up the lounge in the toilet. The dining room table too, and maybe the kitchen, if I can squeeze it in. There’s the obvious matters of hygiene to overcome but at a pinch, you can always do at least some of the ho-hum toileting stuff in the old kitchen sink, as shown by New York Post editor Col Allan when he was on Aussie shores.

In this chilly weather it’s been easy to sort out where the warmest, sunniest part of the house is. Yes, the smallest room in the house is also the brightest, while the places you actually want to spend time in (for longer than it takes to read the morning news or a trashy mag) are darker and cooler than a cave.

In an old house it’s easy to think ‘well that’s how they did things 100 years ago’. But the loo in question is actually in a newish rear extension that also houses the south-facing kitchen and dining area. Someone needed to give that draughtsperson a compass and show them which way was north.

It’s little wonder that we have one of the highest environmental footprints in the world (per capita) if this is how we continue to design houses. Short of hanging out in the toilet all day, or the bedrooms (which also face north), enticing though it is to sleep until lunch, the only way to get warm in the “dark zones” that are the living areas is to really crank up the heater. Last power bill? $600. And that’s not even including the gas for the main heater, so you can probably factor in another few hundred dollars there. If the house design is hurting my hip pocket, it’s also sucking up a more natural resources than it has to.

The place I’m talking about is a rental. If it was mine I’d be tempted to call in a builder to sort the mess out. But realistically, it’s much harder and way more expensive to fix something once it’s built rather than just plan it well in the first place.

Admittedly it doesn’t help  that it’s a home with gorgeous old high ceilings, up near which there’s probably a metre-thick blanket of warm air floating, hovering enticingly above our heads. But I can live with them, they look great and help keep the house cool in summer, even though they’re not recommended in modern green homes.

But a home that takes advantage of the lower-in-the-sky winter sun and baths the living areas in warmth is high on my wish list at the moment. Building codes such as BASIX in NSW have done a lot to raise awareness amongst home builders that the direction you face your main living areas is important. But it seems there’s still a fair way to go.

It makes sense that as energy prices rise over time, home buyers will also be prepared to fork out more for energy-efficient properties that keep them comfortable and cut their utility bills. We’re not there yet … but we can only hope the day comes soon. Then many more homes would be designed with such basic but vital things as the path of the sun in mind.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.

She writes for

The current housing market is awaiting the savvy buyer. With the consecutive rises by the reserve bank, European PIGS Economy treat, Revolving door Labour Prime Minister and now threat of a coming election.

If you have cash – that is no bank finance required – you are KING. The last three real estate contracts written, in Everton Park and McDowall, have been cash unconditional. The savvy buyers have purchased at well discounted prices. Motivated sellers have taken the offers and moved on.



Tighten bank conditions, over jealous building inspections, have made these contracts very attractive. Remember when you negotiate on a property there are three levels of negotiations: price, time and conditions. Which one is more important to you, in the current market make your offer as attractive as possible.

I don’t believe that these conditions will be sustainable due to the housing shortage, so if you are cashed up make the move now. This particular mille second in time is a buyers market.

Investments are on everyone’s mind at the moment and this week, we discuss something that is often overlooked.

For every property investor, Landlord Insurance is essential. Buying an investment property is usually part of a wealth building strategy and being the landlord, you would not want to see that disappear. Landlord’s insurance is important to help protect you from certain aspects of owning an investment property including:

  • Rent default – loss of rent
  • Legal liability
  • Theft and malicious damage by tenants or their guests
  • Accidental loss of damage
  • The extra costs of rebuilding such as architects fees and removal of debris

It is important to have proper protection for not only the investment property but also the belongings you provide to your tenants. The Landlord insurance is generally a relatively small cost but could save you thousands of dollars should something go wrong.

So why is it that many landlords in Australia don’t protect themselves accordingly? If you don’t organise it yourself, your property manager should make you aware of it and even offer to organise it for you. The two main reasons that a landlord should take out a landlord insurance policy in Australia is to protect them from rent default and theft & malicious damage by tenants. There seems to a be a reliance on most tenants doing the right thing, however sometimes it may not be the tenant but rather one of their guests.


Also make sure you have adequate public liability insureance. Remember is someone injures themselves on your property you are liable. Many landlords who own units or townhouses within community titles believe they are covered under the Body Corporate. NB: Body Corporate covers you in a public area. If someone breaks a leg inside your unit/townhouse you are liable – check your cover.

The rule of thumb with risk is to insure what you can’t afford to lose. So, be sure you are protected and take out the necessary landlord’s insurance. Failure for a tenant to pay rent for a few months could see significant financial stress on your circumstances which could ultimately lead to forced asset sales.

Seeking cover for buildings and contents, loss of rent and legal liability needs to be at the top of your list of priorities and so does understanding the policy terms and conditions that are set out in the policy because the types of loss for which you are covered are defined clearly and it’s only those losses that are covered.

On Saturday 8th of August I was lucky enough to be awarded the number one metropolitan Sales Person within the Madeleine Hicks Real Estate Franchise for 2008/2009 for New South Wales and Queensland.  Its the second year I have achieved this.

With this in mind you’d think that I’d know my stuff.  Yeah! I’m the expert!  No way. With the goal posts moving every day I am reminded how much this industry is motivated by emotions rather than pure business rules of supply and demand.

A Day is a Long Time in Real Estate

“Madeleine the property is over priced” … “I want 4 bed 2 bath 2 car etc and I don’t want to pay any more than $$$ and I want it now!” …  “Madeleine my property is worth $$$$ because I’ve loved it for so many years and lots of sweat and tears went into this home”…  In the middle of all this emotion is reality and my day consists of wading through the quagmire and finding this elusive reality.

Today I have a truck load of quagmire to get through!!! Wish me luck.

Below are some helpful hints on everything you need to do berfore you move:

  • Plan your move from as early as possible. Consider also that the first and last days of the month are extra busy.
  • Consider having a garage sale to remove unwanted and unnecessary items.
  • Begin using up large supplies of frozen and canned goods
  • Have you moving company conduct a household goods survey in orcder to provide you with a written estimate as to cost.
  • Pre-arrange for the telephone and utilities to be connected at your new home for the day you move in. .
  • Have rugs and drapes that you are taking cleaned and arrange any alterations that may be required for them to fit into your new home. If you intend on doing your own packing, start collecting suitable containers around four to six weeks prior to your moving date. You can purchase specialised containers from most moving companies.
  • A Guide to Surviving Your Move
  • It can also be handy to collect packing materials such as: tissue paper, paper towels, newspaper, tape, scissors or a sharp knife, felt marker, notebook and pencil.
  • Set goals and deadlines to ensure that all packing is completed by moving day. You may want to pack one room per week. Attach a list of contents to each carton.
  • Pack a box for instant needs on arrival. Such as; cleaning equipment, dish towel, crockery, cutlery, coffee and tea, desired food and drinks, saucepans, toilet paper, toiletries, garbage bags, torch, tool kit.
  • Be on hand when the movers arrive or arrange for somebody to be there on your behalf. They will need to direct the movers and may need to sign documents on you behalf pertaining to costs.
  • When you arrive at the new house, ensure that the house is ready for occupancy prior to the removal van arriving.
  • Check all goods ask they are unloaded.