mrd

It was recently reported that the All Ord’s Index was sitting at a level equal to that of September 2001. Compare that with a property my wife and I settled in February 2002; for $165,000… it is now worth about double; just 6 years later. Using the “Rule of 72″ (I am happy to explain this in a future newsletter), this property has appreciated at an average of 12% per annum.

I recently received my Superannuation statement; for the period 30th June 2007 to 31st December 2007. It states that the “Net Earnings Rate” was 0.62%!

I am sure my ‘Super’ did better than an average of 0.62% over the past 6 years; nevertheless I was VERY surprised to see how pathetic my capital gain was during the 2nd half of last year – even considering my obvious ‘property bias’.

THE Gold Coast has confirmed its position as one of the nation’s biggest development boom centres with a study showing an astonishing $66 billion worth of major projects in the region.

The Colliers International research report released yesterday is the most exhaustive development report in the nation and focuses on the region stretching from Beenleigh to Pottsville in northern NSW.

The biannual report shows a trend of soaring growth on the Gold Coast, with development dollars up 381 per cent from 2001, and 58 per cent from 2005.

The analysis includes only projects worth more than $10 million, but looks at private sector activity such as housing and commercial developments as well as public spending on major infrastructure projects such as the $543 million Tugun bypass and the city’s $1.2 billion desalination plant.

Along with more than $8 billion worth of spending on infrastructure projects, residential developments such as Hope Island’s marina quays and Tweed Heads’ Cobaki Lakes, both valued at more than $2.5 billion, are spearheading an unprecedented level of development activity.

The $66 billion being spent on projects either planned or under way is $21 billion more than the 2005 figure, and $53 billion more than 2001.

Colliers International Gold Coast director Tony Boyd said the research showed the Gold Coast was hurtling towards a new era.

“Major developments are under way in every sector of the market which, on completion, will see the Gold Coast become Australia’s most sophisticated city,” he said. His views were shared by the Urban Development Institute of Australia’s Gold Coast president Col Dutton.

“It shows that the Gold Coast is graduating as a city,” he said.

“The growth of the Gold Coast has been underestimated for years,” Mr Dutton said.

“There is still a lot of money being spent in the traditional sectors such as housing, but in terms of infrastructure, commercial and industrial spending, it really has come on in leaps and bounds.”

Mr Boyd said it was hard to compare the Gold Coast’s $66 billion development spending spree to other centres, but he added that it would be “right up there”.

“Certainly, on a per capita basis we would say it is the largest scale of development in the country,” he said.

Source: Couriermail.com.au

The Courier Mail Newspaper had headlines highlighting the losses in the stock market. “FEAR struck at the heart of Australian investors who pushed the share market to its worst losing streak in 25 years. Severe erosion as investors flushed away more than $282 billion has been wiped from the value of the all ordinaries this calendar year and $383 billion since the market’s peek in November.”

Yet the same newspaper also pointed out that while all this is going on, Gold Coast residents went on a $32 million real estate spending spree last Sunday afternoon, defying the prospect of rising interest rates and the stock market crash.

An edition of the Courier Mail earlier this month pointed out “Property prices keep heading skyward” – “Experts say population growth and a robust economy drove the spending spree, and prices are tipped to grow another 5 to 10 per cent this year.”

The January 2008 ANZ Property Report says “In risk-adjusted terms, residential property has delivered vastly superior returns to all other broad asset classes. Affordability conditions for new home-buyers and renters will deteriorate further unless appropriate policy action is taken. A dramatic tightening of the housing market will force already soaring house prices and rents sharply higher.

BRISBANE’S housing price growth has broken the 20 per cent-a-year barrier.
The latest RP Data Rismark Hedonic Index found the growth figure for houses and units in Brisbane rose a combined 20.57 per cent in the year to November.

House values increased by 19.52 per cent in the year and units were up by a staggering 26.35 per cent.
Local agents say the strong growth figures will ensure the market remains active over the holiday period.
Many agents believe Queensland’s strong housing market will see sales continue right through the weekend.
This is despite the week between Christmas and New Year’s Eve traditionally being one of the slowest for the housing industry.

Read more…

“THE majority of Australians end up retiring and trying to survive on less than the average wage,” booms the self-described longest-running wealth education advertisement on television.

“Imagine that. Life without the money to do even the little things you love wouldn’t be good.”

John Fitzgerald’s Untold Wealth infomercials which offer buyers of an investment education package the prospect of making millions “from scratch” have been running on Australian television for over five years.

But what infomercial viewers are not told is that Fitzgerald, a Queensland property developer, uses that education package to attract investors to his associated “investment seminars”.

Seminar attendees are encouraged to buy Fitzgerald’s own often poorly located — and often lower-quality — property developments. Independent property valuers have warned that those investors who have bought poorly located properties through Untold Wealth — rather than investing in better locations — could have cost themselves hundreds of thousands of dollars in potential gains. Here’s the rub. Viewers are spruiked the $299 education package with “all profits” going to the Toogoolawah school for disadvantaged children.

Read more…

• Up to half of people aged 48-61 will rely on pension
• Bottom 25pc of boomers have saved just $300,000

As many as half of Australia’s baby boomers will run out of money in retirement, an expert says.

Professor Sol Encel, in Adelaide to address the Australian Association of Gerontology’s national conference on ageing, said that between a quarter and a half of people now aged 48-61 will be reliant on the old-age pension.

Professor Encel said latest figures from the Centre for Economic Modelling in Canberra showed that the top 25 per cent of baby boomer savers had put away about $1 million each, but that the bottom 25 per cent averaged savings of only $300,000.

“Finance experts will tell you (this amount) isn’t going to last 25 years, which is the expected lifespan for 60-year-olds,” Professor Encel said.
He said that boomers have already been defined by class, income and education and that these differences would be sharpened by loss of income and large differences in superannuation benefits.

“There are enormous variations in income, education, occupation, health and housing in the boomer population,” he said.

“They are as diverse as any previous generation, as they age, their social situation will be dominated by class differences; it’s absurd to lump boomers together as some homogenous block.”

Source: News.com.au

Anyone holding out on purchasing a home, hoping the property market will ease, should be warned – a real estate expert warns it could double in the next five years.

Sunshine Coast leading agent and acting REIQ spokesman Tom Offermann said yesterday “there will be no easing in the market”.

“All indications are that our market will pick up in strength and will be very kind to property owners in three to five years,” he said.

“I would expect medium term capital growth rate of between 10% and 15% to continue, which will see a doubling of prices in the next five to six years.”

This would mean a small two-bedroom home in Maroochydore, which was on the market for $420,000, could expect to be worth close to a million by 2012.

While housing affordability was reaching crisis levels on the Sunshine Coast, Mr Offermann said there were many people around prepared to buy.

“A lot of people coming from other states and overseas find that homes in the $400,000 to $600,000 range within in 10 minutes drive from the beach very attractive at a price they’re willing to pay to enjoy the lifestyle,” he said.

Source: thedaily.com.au

ANZ Property Outlook – Jan 2008 – Residential Property

In risk-adjusted terms, residential property has delivered vastly superior returns to all other broad asset classes.

Affordability conditions for new home-buyers and renters will deteriorate further unless appropriate policy action is taken.

A dramatic tightening of the housing market will force already soaring house prices and rents sharply higher.

By 2010 we project a record housing shortage of nearly 200,000 homes which risks becoming an intractable imbalance as renters and first-homebuyers become collateral damage in the Reserve Bank’s ongoing war on inflation.

Safe as houses… Much has been written about reduced yields on investor housing and house price ‘bubbles’ in recent years. However, as an asset class, housing has continued to deliver remarkably strong and relatively stable investment returns.

In raw terms, since 1984, residential property has enjoyed an extraordinary compound annual total return of 13.4%, only slightly below that of equities (13.8%) and far above both commercial property (10.3%) and bonds (9.4%).

But in risk-adjusted terms1, residential property has delivered vastly superior returns to all other broad asset classes.

Source: ANZ

What is the difference between a Pigeon and an American Stock Broker?

Read more…

Developers are flooding to semi-agricultural Gatton, 90km’s west of Brisbane, in anticipation of an influx of prison, defence and tertiary education staff as new infrastructure is built there. Trinity Group, Consolidated Properties and Brisbane developer John Narramore have acquired a 355 hectare site at Gatton in the Lockyer Valley township, and have plans for a $300 million residential subdivision encompassing 2200 lots. The project would double Gatton’s population of 9000.Source: ITP – Matusik Report, The Australian Financial Review, Page 47, 13 December 2007