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OWNING a place of your own has been an entrenched part of Australian culture since Federation but the “Australian dream” now seems unattainable for many. The latest in a long line of depressing statistics about the difficulties of buying a home are figures from the Real Estate Institute of Australia showing that in major cities such as Melbourne, a household on average wages cannot afford a median-priced house.

Explanations of the situation often assume that we have a relatively short-term problem. They boil down to economic factors: too much demand and too little supply. Some people suggest that housing markets will ultimately self-correct through declining house prices and, however unpalatable this may be to those who already own a house, this will help people wanting to buy and deal with affordability problems.

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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 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.

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THE Gold Coast property roller-coaster has hit new highs with house prices skyrocketing a staggering 7.9 per cent in just five months.

New research shows that southeast Queensland has soared beyond the price boundaries of its southern neighbours, with Sydney recording a lacklustre 1.4 per cent growth by comparison.

Rismark International head of research Dr Matthew Hardman said the report, conducted in conjunction with RP Data, proved that investors could not go past the Coast when it came to capital gains.

Source: GC Bulletin

INVESTORS are returning to the property market, lured by better prospects for capital gains and rising rental yields.

If you’re after good capital gains, several basic objectives should guide you, including buying real estate in a quality location with good population growth and attractions that ensure future strong demand.

There are pockets in high-growth locations across Australia that offer higher rental yields, according to Michael Matusik, head of property advisory firm Matusik Property Insights.

“There are some belts in Australia where you can get a yield of 5 per cent, especially townhouses or units near a railway line or other infrastructure or houses in a growth area where there is land supply, such as growth areas west of Brisbane,’ he says.

“Longer term, about 70 per cent of returns from residential property are derived from capital gains rather than rents, so that should be your focus,’ Michael Matusik says.

Source: The Australian

SYDNEY is in the grip of a second property crisis with the supply of new houses falling to levels not seen since 1975 and research forecasting rents to rise by as much as 40 per cent within two years.The results of a study, by BIS Shrapnel, has shown construction of new homes in Sydney has hit an historical low, rivalled only by the slump of the mid 70s.

Coupled with housing affordability, low to middle income earners are being warned that prices are likely to spike again within four years with “steep price increases”.

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