mrd

By Martin Bell

The media is awash with people willing to make predictions about the property market in 2012 and beyond. From those who are optimistic to those who are on the ‘bursting bubble’ bandwagon.

As the Danish physicist Niels Bohr once said “Prediction is very difficult, especially about the future” (funny I never imagined he had a sense of humour). While we don’t claim to have a ‘crystal ball’ there does seem to be a gradual turn in the tone of the media articles in the past month (the significance of which Nick pointed out in his article last year titled ‘The Property Investors Tipping Point’).

We are always interested in vacancy rates as these show the scarcity of suitable accommodation. Historically a drop in vacancy rate is often a prelude to increasing property prices (it’s simple supply and demand).

A vacancy rate of around 3% is considered to be a ‘balanced market’. Recent reports show the Brisbane vacancy rate is now just 1.8% in some areas.

• An article last week quoted Dean Yesberg (Ray White Brisbane CBD principal) as saying “January has been absolute pandemonium”. “We have multiple people lining up for properties, multiple inspections at the same time and multiple applications going on properties”. He said one and two-bedroom apartments were the most popular and on average there had been a recent 5 per cent increase in rents.
• According to the Sunday Mail, while rents in mining areas were extremely high (and many would argue unsustainable) Brisbane has also seen increasing rents (which of course is a follow on from the lower vacancy rate). Inner-city Fortitude Valley house rents rose 112 per cent. Renters in nearby New Farm were slightly better off with a 52 per cent spike. Unit rents in Hendra (Brisbane’s inner north) were up more than 44 per cent. These figures will of course vary slightly from one month to another, across different suburbs and product types (units, townhouses etc).
• These increasing rental returns and reduced vacancy rates attract more investors and increase demand for property. Coupled with population growth this will be reflected in higher property values. The latest State Government statistics (Gold Coast News 30th January 2012) predicts “Brisbane is expected to need an extra 102,000 homes by 2031″.
• In the Sunday Mail on New Year’s day Adam Gray from DTZ blamed simple economics – too many people and not enough homes - “We are not adding much supply but we have added more than 100,000 people in the past 12 months”.
• All this is also supported by the Housing Industry Association (HIA) report from September 2011; forecasting a supply shortage of dwellings Australia-wide . It was interesting that their table of short supply anticipated for 2020 that Brisbane was number one and Gold Coast number three.

See Australian Housing Shortages by 2020 >>>here

See Also…

• Landlords Have Their Pick Of Tenants
• Strong Fundamentals Mean There Is No Australian Housing Bubble
• Gold Coast Real Estate
• Test Of Faith For Property Believers
• Coast Suburbs Packed To The Rafters

To discuss any aspect of your existing investment property portfolio, current market conditions, financing strategies or current unique investment opportunities go >>>here

Happy Investing,

Nick Lockhart
Our Customer Care Program works for you… because investing is personal!

By Larry Schlesinger
Monday, 30 January 2012

There is no Australian housing price bubble, says ANZ in its latest assessment of the Australian property sector.

In its January assessment of the property market, the bank argues that gains in house prices over the past 25 years have been driven by increases in household income and lower interest rates.

The bank forecasts house prices will remain on hold or fall slightly in 2012, but will not crash.

“A combination of lower interest rates, falling house prices and rising household incomes has improved Australian house purchase affordability over the past 12 months,” say report authors David Cannington, senior economist at ANZ, and Paul Braddick, head of property research at ANZ.

“Despite the continued concerns about significant Australian house price overvaluation from some commentators, housing market fundamentals remain supportive,” they say.

According to ANZ’s analysis, all the growth in Australian house prices since 1986 can be explained by gains in average household incomes and a structural decline in the cost of borrowing.

“Cross-country comparisons using partial valuation measures are commonly used to contend the case of overvaluation of Australian house prices. That is, suggesting actual house price growth in Australia has run significantly higher than justified by explained price growth,” says ANZ.

However, international house prices, rental yields and house price-to-income ratio comparisons compiled by ANZ suggest that Australian house prices have not deviated from international trends.

ANZ forecasts housing affordability to improve in 2012 following recent improvements due to softening house prices, rising household incomes and lower mortgage rates.

Among the factors ANZ says will continue to support the housing market is net migration, which is starting to rebound after the recent slowdown and combined with weak housing construction will add to the pressure building within the housing sector.

“While housing construction continues to weaken under the cloud of negative market sentiment and softening prices, forward indicators suggest the recent slowdown in net overseas migration will continue to reverse,” say Cannington and Braddick.

“This renewed housing market tightening will add further upward pressure on rents, household size and provide a fundamental support to flagging market activity, especially for the first-home buyer market.”

However, there will be no marked improvement in new home building in 2012, according to ANZ.

“Soft house prices, weak housing market sales activity and tight credit conditions have dampened residential developer sentiment. Despite the recent interest rate cuts, weak housing market sentiment will continue to weigh on residential development activity through 2012,” says Cannington and Braddick.

via Residential – Strong fundamentals mean there is no Australian housing price bubble: ANZ.

Last week the International Monetary Fund (IMF) updated its ‘World Economic Outlook’ reporting a cut to their world growth forecast for 2012. They expect Europe will fall into a mild recession which will affect other parts of the world including the USA, emerging markets, and developing countries. Projected growth in the advanced economies has been revised down to 1.2 percent this year and 1.9 percent in 2013.

Never Let The Truth Get In The Way Of A Good Story

Different people/groups may ‘spin’ these figures in a variety of ways… but let’s simply take an objective and sober look at the facts.

• For all the talk this report has incited of ‘another global recession’… the same report says global economic growth in 2012 will be 3.3 percent! Dissecting the differences between individual regions and countries paints a positive outlook for Asia… and those countries tied to it.
• 2012 – 2013 growth in emerging and developing economies is expected to average 5.75 percent; down from the 6.75 percent growth in 2010 – 2011
• Despite a 0.75 percentage point downward revision, developing Asia is still projected to grow most rapidly at 7.5 percent on average in 2012 – 2013
• Economic activity in the Middle East and North Africa is expected to accelerate in 2012-13
• Most oil-importing countries in the region face muted growth
• The impact of the global slowdown on sub-Saharan Africa has to date been limited to a few countries, most notably South Africa, and the region’s output is expected to expand by about 5.5 percent in 2012

When reading editorials or listening to TV programs that report on what the IMF said… it’s important to be mindful of what their report actually contained. The points above should be comfort enough for those fortunate to be living in this great country we call Australia; but here’s some more nonetheless:

• “The adverse spillover effects are expected to be the largest for central and eastern Europe, given the region’s strong trade and financial linkages with the euro area economies”
• “The impact on other regions is expected to be relatively mild, as macroeconomic policy easing is expected to largely offset the effects of slowing demand from advanced economies and rising global risk aversion. For many emerging and developing economies, the strength of the forecasts also reflects relatively high commodity prices”

Like me you want to navigate your way through these challenging times and come out the other side better off. I see MORE opportunity to progress financially than in years gone by – we’re facing the perfect storm!

1. Sections of our property market have bottomed and are just beginning to rise – that’s a buying opportunity
2. Interest rates are low and dropping – this will increase demand for property and push prices higher
3. Australia’s population is growing yet new housing numbers consistently fall short – limited demand MUST result in higher prices

I’ll stop there although I could go on.

Swimming is great but care needs to be taken to avoid drowning… so too with investing. At mrd we only recommend the responsible use of the right kind of debt. Don’t make avoidable mistakes… talk to us first!

The Downside Of A Buyer’s Market

In a buyers market when prices are down… so too are valuations. In my experience this is when valuers are at their ‘worst’, making it difficult to access and use existing equity. For those in a position to take advantage of a buyer’s market… DO IT – THERE’S NO BETTER TIME!

Your Next Step

Step one is to have your current position assessed by someone whose motives are not self-centered. NB: Don’t pay to have this done – you don’t need to! For those with the borrowing capacity, buying conditions and some buying opportunities make now a great time to be considering your next investment.

• Heather from mrd finance… along with one of our property mentors will happily (and professionally) assess your current position before discussing your options with you. To request this support simply complete a “My Starting Point” assessment form >>>here.
• Alternatively… contact us with your question(s) on ‘anything property’ >>>here

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On Tuesday week the Reserve Bank of Australia (RBA) will meet for the first time since early December to decide what to do with interest rates. In my opinion it is not a matter of IF they put rates down again… but by how much. As I sit here right now I cannot think of any half-decent argument for keeping rates on hold so I’m predicting another drop. I’ll even go out on a limb and suggest that they should bite the bullet and drop them by 50 basis point (or a full half a percent).

BUT… I do not believe the banks will pass the next rate cut on in full; making the argument for an even bigger rate cut (say 60 or 65 basis points) justifiable. What the RBA is more likely to do, however, is go beyond the usual 25 basis points in February (but not more than 50 basis points) and then when the banks don’t pass it all on to consumers… follow it up with another rate cut in March or April.

My disclaimer, however, is that while I have been consistently right with what SHOULD happen (as proved over time)… the RBA board doesn’t always ‘get it ‘ at first. So let’s sit back and see what they do. Either way, I am again on the record for you to ‘judge’ over the months ahead.

Please send me your question about ‘anything property’ and/or ‘anything economics’ >>>here Read more…

mrd has secured an exclusive offer that matches and surpasses the Qld Building Boost of $10,000

Brisbane Poised For A Change In Status

“…boosted by the emerging resources boom Brisbane has seen CBD office vacancies contract and demand for industrial property grow and is seeing growing airport traffic from fly-in-fly-out workers… sales volumes and rising rents are being seen…

…The Next Stage Is An Increase In Prices..” – Terry Ryder

Stunning Three Bedroom, Two Bathroom Townhomes In A Boutique Project Of Just Eleven Large Homes… but Limited (two only) Spots Available!!!

Stop Procrastinating!

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• Go >>>here
• or call 1300 883 854

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Vaughan Mayberry |The Sunday Mail (Qld)| January 22, 2012

It’s good news for landlords after recent statistics from the Residential Tenancies Authority showed rents remained flat during the second half of last year.

January is usually the busiest month for property managers as university students shore up their digs for the year and workers start relocating from southern states.

Agents are once again reporting massive crowds at recent rental inspections.

Ray White CBD/South Brisbane has one of the inner city’s largest rent roles and principal Dean Yesberg says January has been “absolute pandemonium”.

“We have got multiple people lining up for properties, multiple inspections at the same time and multiple applications going on properties,” he said.

“Last year with the floods there was more pandemonium. There were people that were flooded out of their house trying to find a property so it’s not as busy as last year.”

He said one and two-bedroom apartments were the most popular and on average there had been a 5 per cent increase in rents recently.

On the Gold Coast, LJ Hooker Surfers Paradise principal Tony Tooma says vacancy rates are the lowest they have been for some time.

“We’re down to about a 2.5 per cent vacancy rate and days on market are down to 10 days. Rental rates are holding,” he said.

“The better properties are going the day they become available. We don’t have a house to rent as we have leased them all.

>>>Property landlords have their pick of tenants | Reviews and Recommendations | The Courier-Mail.

An exciting opportunity to purchase in a beautifully designed ”French New Wave” unique boutique style development in the Redland Shire suburb of Capalaba, a bustling eastern suburb of Brisbane and a short drive from Moreton Bay.  The three bedroom, two bathroom plus a powder room townhouses are extra large.  Enjoy your main living downstairs with a beautiful kitchen opening to a separate dining area with sliding doors onto a private patio with ceiling fan.  Upstairs are the three bedrooms and the second living area or retreat.

These townhouses are just a 5 minute walk to the centre of Capalaba’s shopping district and close to Capalaba  Bus Interchange, childcare centres, Moreton TAFE and primary and high school.  Capalaba train station is just 8.6km away connected by bus.

Prices starting from $395,000, low body corporate rates and high rental yields (due to low vacancy rates -1.3% at November 2011) ensure this property is an investor’s dream. “But wait… there’s more!!“ With the Queensland Building Boost Govt Grant and a special limited offer from the developer you could save a further $21,000.

For more details check out the Feature Property Section of the newsletter or for a Complimentary Cash Flow Analysis Report click >>>here

Contact us  >>>here and leave your details or call us on 07-5580-8888 Read more…

I walked into a public bathroom and went into one of the stalls. As I sat down, the person in the stall next to me says, “Hi, how are you?”

“Um, hi, good…” I replied.

“What are you doing right now?” Asked the stranger.

“Ah… Sitting here… Just like you?” I replied, now really starting to feel awkward.

“Can I come over?” The person asked.

“No!” I exclaimed, “I don’t even know who you are!”

The person went on to say,

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The New Year is a time of reflection and goal setting. I’d like to use a parable to share the truth that “There Is No Such Thing As Standing Still”. Happy New Year by the way; I trust you and your family had a pleasant Christmas break and are looking forward to an exciting and prosperous 2012.

Many people have heard of the parable of the talents but for those who haven’t it is essentially the story of a man preparing to leave on a journey who entrusts his wealth to three servants; dividing it on the basis of their abilities. The first receives five (units of currency), the second two and the third one. In modern terms we could say he apportioned $500,000, $200,000 and $100,000 respectively.

Servants one and two set about investing and doubled his money while the third, motivated by fear, simply hung on to the $100,000 (dug a hole in the ground and buried it actually). Inflation reduces the real value of money over time… hence the expression ‘if you’re not moving forward you’re going backwards’; there is no such thing as standing still.

Ponder these:

• Fear is nothing more than faith in a bad outcome
• Optimists and pessimists both hold expectation for a future they can’t yet see
• By definition you cannot overcome if there was no chance of defeat
• Every winner was a possible loser

I hold the view that long-term success (at anything) is ONLY enjoyed by those who push through the tough times. I’m not impressed by the ‘overnight success’ but I am by those who pass the test of time; still standing! Single parents, athletes, business people, accident victims and everyday ordinary people face adversity in the pursuit of their goals. Subject to attitude; the very same obstacles become stepping-stones for some but ‘tomb stones’ for others.

Throughout the 10 years of mrd’s existence I have attempted to evenly split my teaching between (1) the nuts ‘n bolts of (safely and responsibly) investing in property and (2) helping people stay the course when the going appears to be getting tough… the biggest battle is often in a person’s mind!

The Global Financial Crisis (GFC) and now the situation in Europe are classic examples. Doomsayers and fear mongers have repeatedly warned us of an imminent property crash. These self-appointed experts (NB: from other industries) were wrong; time and time again. I’m not suggesting sticking your head in the sand and thinking nothing can go wrong… just that if you are an investor you are ‘playing in the big league’ and you need to be a professional in what you do. Any athlete, musician, parent, CEO (or whatever) that acts from fear rather than responds from knowledge will never be the best they could have been.

Seasons & Cycles

There are four seasons in a year (or in Melbourne in a day); so it is with life. Tough times (in a marriage, the economy, a business or a career etc) pass. The ‘trick’ as I once heard Pat Mesiti say is “When you’re going through hell; don’t stop”!

In the parable I referred to above, slave # 3 reacted to (was gripped by) fear, resulting in a strong rebuke and being called “evil and lazy” by his master. He had the original $100,000 taken from him and given to the servant who had turned $500,000 into $1,000,000. Bob Brown and the Australian Greens would not be happy about that. They’d rather penalise the successful risk taker (via higher taxes) to reward the person controlled by fear. Good luck lifting the living standards of the whole (and by default individuals) by incentivising mediocrity and laziness.

Where To From Here?

In 2012 you are faced with exactly the same decisions as you were in January 2007, 2008, 2009, 2010 and 2011. Will you will turn on the six o’clock news, hear of  the challenges in Europe and sit on the sidelines for another year… or you will look for knowledge and opportunity and take action? Whether with property or not… I sincerely hope you do ‘something’ because there is no such thing as standing still!

For a complimentary financial health check and the opportunity to have your potential borrowing capacity assessed, complete an mrd ‘My Starting Point’ assessment form >>>here

To speak with a property mentor about property opportunities (including Federal or State Government grants), leave your question(s) >>>here

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