mrd

New house packages often aren’t the best investment.

NEW house and land packages are not the best investments, according to a new analysis, with higher returns more consistent from properties in established areas.

Greenfield estates don’t perform as well as established areas, when it comes to investment returns, 6 Point Property managing director Simon Pressley says.

“We’re not talking about principal places of residence, which is an emotional decision about where you want to live,” he says.

Pressley, a financial planner with a real estate licence, says because greenfield estates are generally released in stages, buyers tend to always buy in the newer stages, even if the price is $20,000 or so higher.

“Just because an area is destined for population growth does not necessarily mean that it is an automatic investment property no-brainer,” he says.

“Imagine you’ve purchased your new property in stage one for $450,000. A year later stage two is sold for $470,000. What is your stage one property now worth?

“A further year and stage three is sold for $480,000 and so on. The value of your property will always be a margin below whatever the new stages are sold at.

“Meanwhile, the market in built-up areas is probably growing quite nicely. Properties released en-masse or in stages, as happens with new housing estates, often creates an initial over-supply situation.

“For values to rise, we need competition and that occurs when there is under-supply.”

Property valuers and investment buyers rely on recent sales data to determine what an asset is worth.

If there is a large number of similar properties, it is very difficult to say that one is worth much more, unless there is something compellingly different about it.

While new estate marketing agents concentrate on promoting things such as artificial lakes, new appliances and tax depreciation, this offers little real value when it comes down to the hard numbers that make an investment stack up.

But investment manager for new home builder Ausbuild, Sean Porlier, says there are advantages of buying a new home as an investment over an older one.

“You don’t have to spend any extra money refurbishing and all the appliances are new and under warranty, so you won’t have to replace the oven, stove and dishwasher for many years to come,” Porlier says.

“There are also no hidden building costs in our investment homes, such as unexpected site or retaining costs, and most properties are full turn-key homes which are ready for a tenant to move straight into.”

New homes are also in demand from tenants, which helps boost the rental return.

There are extra tax benefits from buying a new investment home, as you can claim depreciation on it.

Porlier says investors are showing renewed interest in property since the global financial crisis.

“Many people watched the value of shares plummet, while property prices have remained relatively steady,” he says.

“Investors are once again appreciating the long term stability and capital growth that property offers.”

via There’s limited value in new homes | Courier Mail.

Australia  experienced one of the strongest housing markets in the world during 2010, new research shows.

But likely interest rate hikes will slow the market in 2011, the Global Real Estate Trends report predicts. The report, released by Canada’s Scotiabank, tracked the housing markets in 12 advanced economies throughout 2010. Home prices increased in Australia, Canada, France, Sweden, Switzerland and the United Kingdom. They remained flat in Germany and the United States, and fell in Ireland, Italy, Japan and Spain.

Australia led the pack, thanks to relatively low unemployment and tight housing supply. But interest rate hikes and a cut to the first homeowners grant slowed a “red-hot” property market in 2010 to some degree, the report said .Economist Adrienne Warren anticipates the Reserve Bank of Australia will lift interest rates by an additional 75 basis points in 2011. Australia’s close trade ties with Asia and resource wealth would continue to underpin a solid pace of domestic activity. ” Higher interest rates will worsen already strained affordability,” Ms Warren said in a statement. Canada’s market also fared well, but was “one of the most volatile” expected to be tempered by more moderate employment and income growth in 2011. The UK property market staged a strong early-year recovery while Germany’s decade-long housing slump also came to an end. But it was a different story in Spain, Ireland and Italy, where the market continues to fall. Japan’s two-decade long property slump continued in 2010, and is expected to slump further in 2011 on the back of a weaker economy.

The surprise result came from the US where the housing market stabilised.That trend is expected to continue, with the report predicting the US Federal Reserve to maintain its record-low 0.25 per cent rate through the end of 2011.

via Australian housing market strongest in the world | Courier Mail.

Jessica Elder | December 20th, 2010

THE city’s tourism industry will begin 2011 in its best shape for almost three years with 2.8 million tourists expected to visit the Gold Coast during the Christmas-New Year holiday period.

The Gold Coast’s “comeback” figures, revealed last week, showed the city had broken the 10 million visitor mark for the first time since 2008.

Mantra Group, the biggest accommodation provider on the Gold Coast, has reported increased bookings for December and January.

Mantra marketing manager Susan Sullivan said the holiday season was a welcome relief.

 read more….

The Psychology Of Investing

The way our attitudes and emotions play a role in how we invest and what we buy is of great interest to both psychologists and economists. Known as behavioural finance and behavioural economics, the theory is that investors and consumers don’t behave rationally.

Human foibles, bias, irrationality and inconsistency all affect our success as individual investors and the movement of markets as a whole. In one recent study, only 22% per cent of respondents were described as ‘rational’ when it came to money matters.

read more.

Our Record Run Continues

Australia’s remarkable run of economic growth – 19 years – makes it a member of a very elite club. In fact, says CommSec Chief Economist Craig James, you’d be scratching your head to find any other countries that can lay claim to the same performance.

The current economic expansion began in the September quarter of 1991. The nineteenth year of the expansion was completed in the June quarter 2010 and the twentieth year of growth has begun with the Australian economy expanding by 0.2 per cent in the September quarter. While growth was only modest in the latest quarter, arguably Australia is still in the strongest position of any global advanced economy, says James.

read more.

In life circumstances can change as fast as Melbourne’s weather. You take three steps forward then one (or two) backwards. Sanity and success will elude those who fail to maintain a “sober attitude”. To excel in any endeavour will require “Doing The Hard Yards In Secret”.

Great achievement in any field will cost you. Think of the budding would-be-next swimming sensation. No glory, no accolades – just 4:00 AM starts six times a week; repeating laps for two hours before most people are awake. A gruelling toil with no recognition along the way… no wonder so few swimming sensations are made.

Investors too must maintain a “sober attitude”, toughing out any hard times… knowing payday will come.

Therefore…

• Don’t get caught up in euphoria when market conditions are booming; because they never last!
• Likewise, don’t allow poor market conditions to get you down; because they never last either!

Where emotion drives an investment decision, poor judgment will likely follow!

For those familiar with bible parables have you noticed they all start with “And it came to pass…”?

Did you catch that? It came to pass… NOT STAY!

So when you are faced with a new challenge tomorrow, just remember… it came to pass.

• When the GFC arrived, it came to pass.
• When the unemployment rate went up; it came to pass.
• When the property boom hit Perth in 2005 or Melbourne in 08/09 or Sydney in 2009… it came to pass.

The good, the bad and the ugly… they’re all temporary… and it all passes.

History shows that our property market grows steadily and consistently. Well researched median priced residential real estate in our major cities doubles in value about every seven or eight years, on average. It’s just those peaks and troughs in between, causing emotional euphoria and angst for some, that needs containing; ha, ha.

Christmas Wrap Up

Read more…

On Thursday we received a fantastic update from the new on site managers @ Clifton Views. Given we have a number of clients who own property there as well as a number of others looking at taking advantage of the special offerings right now (see below), I thought I’d post a copy for all to read:

Good morning to all

Lewis & Pheasant Nominees Pty Ltd would firstly like to wish you all a very merry Christmas and a very happy and safe 2011.

Clifton Views is going great guns! Our rentals have taken off and I cannot keep up with the demand at the moment especially for furnished apartments. I have run out!! And have run out of 3 bedrooms to let – we are now starting to achieve very significant increases to the rental incomes received in the past – slowly but surely. Let’s hope this continues into 2011.

Read more…

Last of the Best Opportunity

Developer’s Special Offer has been snapped up by savvy investors who have recognised bargain buying.

Read more…

Congratulations to our “Three Winners Drawn In Apple iPad / iPhone Competition”!

At noon today (EST) three people had their names drawn in our competition. They were each given the choice between a brand new Apple iPad or iPhone 4.

Commiserations to those who missed out… especially to my family and staff who were not allowed to enter at all - ha, ha.

Read more…

In a small Southern town there was a “Nativity Scene” that showed great skill and talent had gone into creating it.

One small feature bothered me. The three wise men were wearing firemen’s helmets.

Totally unable to come up with a reason or explanation, I left.

Read more…