mrd

Interest rates might be at the peak of the cycle after the Reserve Bank of Australia (RBA) talked up the prospects of a slowing economy, while leaving rates on hold. The RBA on Tuesday kept interest rates unchanged for the fourth consecutive month, leaving the official cash rate at a 12-year high of 7.25 per cent, after its board meeting on Tuesday.

RBA governor Glenn Stevens said high petrol prices, as well as tighter financial conditions, were working to “restrain” domestic demand.

Interest rates rises by the central bank and commercial banks have led to subdued spending by consumers, while there has been a fall in labour markets, Mr Stevens said.

“On balance, while the inflation outlook remains concerning, the board’s assessment continues to be that demand growth will be moderate this year,” Mr Stevens said in a statement.

“Looking further ahead, inflation in both CPI and underlying terms should decline over time, provided demand continues to evolve as expected.”

Source: Nine News

• 141 new homes are needed a week to meet demand in the Gold Coast
• Capital growth prospects are good over the medium and long term

WHILE the most enthusiastic and optimistic apologists for Gold Coast real estate accept that the market is doing it tough, most insist the outlook is bright.

It’s all about fundamentals, according to RP Data national research director Tim Lawless, one of the nation’s top property analysts.

“Despite the current soft conditions, the solid fundamentals are likely to remain a positive driver of capital growth over the medium and long term,” he told the Gold Coast Bulletin.

Over the past calendar year the population of the Coast increased by 18,000 new residents, creating a demand for 7360 new dwellings – 141 new homes a week.

“The centrally located suburbs positioned along the Pacific Motorway account for over half the total population growth,” said Mr Lawless.

“With such a strong rate of growth, demand remains exceptionally strong and is a positive sign for the market.”

Source: News.com

Good Morning St Kilda on Riverwalk Investors,

It is very exciting to see the progress of “St Kilda on Riverwalk” with completion still on track for October. Riverwalk as a precinct is almost complete and we have a number of close friends that have chosen to live and rent in Riverwalk because of its great location; including Wendy from our office.

I bumped into friends at Robina Town Centre yesterday that had moved into the Riverwalk precinct last week. They were loving the fact that they could simply walk over the bridge to the movies, shops, cafes. He commutes to Brisbane by train (a 5 min walk away) for work each day and prefers that then living in Brisbane.

When looking at areas for achieving capital growth, buying as close to the “bullseye”; as Nick describes it, is the key. While we do not recommend high density apartments in the heart of capital cities, your purchase into a medium density apartment in what has been earmarked as the Gold Coasts new CBD will be one that you will be very happy with. With 3 billion dollars of infrastructure and development unfolding in Robina alone and the vast majority of construction spending being disproportionately weighted to commercial buildings, the future will be encouraging for you with regards to values and rents. Nick and I settled on our Riverwalk property last November and have been very happy with it!

Naturally we don’t have a crystal ball but one plus one always makes two, and when you combine a large population increase that demands a roof over their head with good infrastructure, development and employment opportunity; we believe you will always be very pleased with the performance of this investment.

Please find below the progress of St Kilda for June. In the next month the rendering will be nearing completion and external painting will be well underway. Electrical and plumbing fit offs and carpentry fit outs of apartments as well as tiling, painting, screens, robes will all be much further advanced.

External Works

• Roof – nearing completion
• Windows and sliding doors – nearing completion
• External painting - underway
• Rendering – nearing completion
• Balconies – balustrades underway, tiling to follow

Internal Work

• Painting – underway and nearing completion
• Tiling – underway
• Joinery – kitchens and vanities installed
• Fixtures – baths, basins, toilets installed
• Shower screens, robes & mirrors – underway
• Airconditioning units – underway
• Whitegoods – underway
• Lift – underway

Happy Investing,

Katrina Lockhart

Roy Morgan Consumer Confidence Rating has stopped falling – up 1.3 points to 92.0. Now 48% of Australians expect bad times for the economy in the next year
Article No. 776 – Latest Roy Morgan Consumer Confidence Rating: July 11, 2008

So, what are you expecting? I ask this because you will get out of life what you expect… not what you deserve!

Life and the economy move in cycles. Many people fall victim to these cycles. To avoid “victim status” and ensure an onwards & upwards journey (good times & bad) you must maintain a right attitude and right focus.

Katrina and I are very positive about the future. In recent months we engaged the services of Business Consultants who are assisting us to restructure our business to facilitate our growth plans moving forward.

My ‘mrd journey’ has taught me much to date and there are a few interesting parallels that I would like consider between building a traditional business and building an investment property business.

Read more…

Time Flies Like An Arrow. Fruit Flies Like A Banana!
Groucho Marx (1890 – 1977)

From the same newspaper on the same day… but do the following two articles sound like a contradiction to you?

City To Boom Again
Townsville Bulletin 08/07/08

TOWNSVILLE could be on the cusp of another housing market boom. Property experts predict the current softening of the market is about to turn, despite a slowing national economy and rising interest rates. A BIS Shrapnel Residential Property Prospects report forecasts a 22 per cent increase in median house prices from 2008 to 2011.

REMAX Excellence sales agents Lyn Griffiths and Rohan Banning are predicting that will have a significant effect in Townsville. Ms Griffiths said Townsville’s real estate market generally lagged behind Brisbane trends by around 12 months. “Townsville’s property market has softened after more than six years of growth but we believe this is the calm before the next boom”, he said. “We firmly believe the next 12 to 18 months will provide a real window of opportunity for buyers to get in on the ground floor before the next wave of price rises. “It is fairly safe to say Townsville property won’t be getting much cheaper in the future”.

Townsville Housing Sales Drop
Townsville Bulletin 08/07/08

TOWNSVILLE’S residential property market is declining and its industrial sector is at its peak, new research has confirmed. The Herron Todd White property market indicators last month show what many in the industry had thought – rising interest rates and inflation have taken hold.

So… is it just me, or do these two articles seem at odds to you too?

Although most property investors say they understand that real estate is a “long term” investment, it is surprising how many will be overly influenced by the short term changes to the market.

Read more…

Chris Richardson, of Access Economics, was quoted by the BRW Magazine as saying: “A core reason that I am more optimistic than the federal Treasury on the economic outlook for 2008-09 is that the number of Australians is growing strongly. A remarkable third of a million people were added to the population last year – the biggest gain this nation has seen. Part is due to a mini baby boom, but mostly to booming levels of net migration.

More people means the potential for more growth. Good gains in numbers of potential workers are boosting the supply side of the economy, and good gains in overall population boost the demand side. The May (Federal) budget included a decision to lift the migration intake by a further 37,500. Chances are that Australia will beat official migration targets in the short-term as expatriates return home. The strong Australian dollar means that local salaries have improved relative to salaries in the United States in particular.
BRW Magazine, Page 24, 26 June 2008

Property prices have defied expectations and proved resilient in the first few months of the year, according to research released by RP Data and Rismark International. While the share market has fallen around 11 per cent since the beginning of the year, property values have held steady on a national basis – although there have been fluctuations between cities.

RP Data national research director Tim Lawless said Perth was the only capital city where house values fell over the period. Brisbane, Adelaide, Darwin and Canberra all notched up increases, and Melbourne and Sydney were neutral.

But it’s not all good news. While values have held up, market activity has slowed down, with houses taking longer to sell.

A housing shortage is likely to underpin the market and keep demand strong. Rismark International’s head of research Matthew Hardman says high construction costs provide a natural floor under property prices in major centres.

A MILLION new homes need to be built over the next five years to cope with Australia’s booming population, new figures out from the Housing Association show.

The number of houses currently being built falls well short of this, and according to the HIA, there’ll be a shortfall of at least 175,000 houses if current building rates continue.

The outlook is even bleaker if household sizes keep shrinking – ie more people choose to live alone – this could blow-out to a 240,000 shortfall.

“Supply must increase rapidly to meet expected demand,” said the Housing Industry Association’s chief executive of policy, Chris Lamont.

“Without a substantial increase in production there will almost certainly be a growth in the number of homeless and further affordability woes.”

He said the increased demand for new housing was driven by two main factors: rising immigration, and more people choosing to live alone.

Australia’s population grew by 332,000, or 1.6 per cent last year.

Source: news.com.au

I had lunch today with one of the mrd team members. We discussed an article that I received today, written by a fairly high profile player in our industry. Our lunch time discussion inspired me to write this blog; which I trust will challenge some mindsets and paradigms.

The article attacked the notion of an investor focusing on capital growth, encouraging us to pursue cashflow in their property research; with capital growth described as “a bonus”.

As we chatted, my co-worker scoffed at this suggestion and went on to outline his personal situation and speculated on where he might be now, had he swallowed such recommendations when he was starting out.

In the 10 years since starting his investment journey, following the mrd “set ‘n’ forget” for busy people ^TM method of investing (even before it was called that) he has averaged 43% per annum compounding return on the equity he had invested. He had turned $20,000 available equity into about $800,000 – with little input of time on his behalf – using gearing and tax advantages to afford to buy and hold the best property he could.

Read more…

Hi Clifton Views Purchasers,

Clifton Views is progressing quickly now with stage 1 due for completion in September 2008 and stage 2 due January 2009.

There is some great stuff happening in Cairns as a copy of an article from the Sunday Mail below explains.

When researching an area in which to invest, the fundamentals that support its long term capacity to grow; and by grow I mean double in value every 7 – 10 years at least, is vital when making a well informed low risk investment decision.

Population growth is one of those factors that underlie and sustain an area’s price growth potential. Supply and demand will always be the major determining factor for price movement. So what we want to see is a place people want to live and are moving in droves creating a problem for councils and governments! New planning needs to take place, infrastructure spending is required and managing the growth in relation to urban development, transport, environment etc. is critical.

This is the case for Cairns!

An article released in the Sunday Mail, 18 May 2008, speaks of State Government plans to accommodate up to a 70% of the projected 100,000 new residents moving to North Queensland in the next 20 years, in Cairns.

This huge growth would be a 46.7% increase over the current population of approximately 150,000 people. That’s an extra 3,500 people per year moving into the city.

Following is the article from the Sunday Mail. Below that is your Clifton Views Construction Update and photos.

Read more…