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July 29, 2010

Some borrowers could be better off fixing


As a general rule, the best strategy for most borrowers is to get the lowest possible variable rate loan, with the highest possible monthly repayments.

But from time to time, there’s a brief window in the market where fixed rates might be more attractive for some borrowers, and it’s possible such a window is open right now.

By DAMIAN SMITH

Research conducted by RateCity shows that the average three-year fixed rate across more than 100 lenders has dropped by 14 basis points since June to a new low of 7.64 per cent. This compares to the average standard variable rate which increased in the same timeframe to 7.06 per cent. That’s only 60 basis points difference in favour of the variable rate.

Similarly, the average four-year fixed rate has dropped five basis points since June to 7.96 per cent, and a difference of only 90 basis points versus the variable rate.

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July 28, 2010

Unaffordability or just puppets of the rumour mill?


If I didn’t work in the real estate industry, I would have little concept of who or what to believe.

By CATHERINE CASHMORE

It brings to mind the recent controversial advert depicting Julia Gillard as a puppet of the Labor machine, however instead I wonder if the true puppets depicted should be the public at the hands of the great media machine?

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July 27, 2010

Investing in retirement living


The retirement living sector is booming thanks to Australia’s rapidly ageing population. So how can savvy property investors get a slice of the action?

By RICHARD ANDREWS

Unless you’ve been living under a rock for the past 10 years you would know that Australia’s population is rapidly ageing. The maturing of the country’s demographic profile is changing the nature of our living arrangements and driving a boom in the retirement living sector.

At the time of the last nationwide Census in 2006, there were almost 2.7 million Australians aged over 65, making up around 13 per cent of the population.

Australia’s aged population is concentrated in the eastern seaboard states, with South Australia and Western Australia also holding reasonably sized aged populations. Tasmania and the territories have much smaller aged populations.

Looking forward to 2016, the Australian Bureau of Statistics estimates that this age demographic will grow dramatically in every state, with a nationwide average increase of 54 per cent.

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July 26, 2010

Finding profitable renovation projects


There’s one question in particular that’s commonly asked by investors who are trying to learn more about making money from adding value to property, and that is: “What suburbs do you recommend for finding profitable deals to renovate/resell?”

Ana StankovicBy ANA STANKOVIC

The answer to this is simple. While the old mantra of ‘location, location, location’ is right on the money when looking to purchase/renovate and hold a property, it doesn’t hold true when looking at turning over properties.

If you’re looking to make money from renovating and selling a number of properties, your focus will be on adding the most amount of value in the least amount of time possible.

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July 23, 2010

Old vs new


When it comes to property selection, are there better returns for investors in old, established suburbs or new, up and coming areas?

By BEN POWER

Conventional wisdom holds that older, established suburbs outperform newer suburbs in capital growth. But newer suburbs deliver higher yield.

This is backed up by data. According to Australian Property Monitors (APM), for the past 10 years, prices for three-bedroom homes in inner suburbs, which are older, have risen by 92 per cent, middle suburbs by 73 per cent, and outer suburbs, typically newer ones, by 76 per cent.

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Property doomsayers got it wrong


“Doomsday” economists were adamant that Australia’s housing market would collapse under the combined weight of affordability issues and the global financial crisis last year and many still insist there’s a growing housing bubble. But house values rose over 2009 and continue to do so.

By MICHAEL YARDNEY

According to Macquarie Bank economist Rory Robertson, claims of a housing bubble “don’t stand up to serious scrutiny”.

In a recent report in The Australian, Robertson says, “Most observers can see positives, including a growing economy and limited new housing supply despite rapid population growth, and negatives, including higher mortgage rates recently alongside funding stresses and de-leveraging in local and global financial systems.”

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July 21, 2010

First homebuyers = first time investors


Whether you’re buying your first home or your first property is an investment, the fundamentals are the same.

By JANE SLACK-SMITH

Twelve years ago I decided it was time to start taking control of my financial future and I put together a savings plan and a set of long-term goals. Ten years ago I bought my first home; now I have many investment properties. The property portfolio I have today will be worth double what it’s worth now in another seven to 10 years because I’ve bought all my properties with the same fundamentals.

I speak to hundreds of people each year through seminars, workshops and as clients who are looking at buying property and creating a portfolio that allows them to essentially make money while they sleep. Let’s face it, who can even think far enough ahead to imagine retirement? But the reality is that with a few fundamental rules applied to your first property purchase you won’t have to be hanging out until you’re 70 to put your feet up.

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July 20, 2010

Is Abbott or Gillard brave enough to stop the profiteering?


There is a way that interest rate movements by the banks could be more fairly controlled, but will the next-elected Federal Government be brave enough to do it?

By STUART WEMYSS

Since the beginning of 2008, Australia’s top five banks have increased their mortgage rates by 0.92 per cent to 1.19 per cent more than the Reserve Bank of Australia (RBA), citing higher funding costs as the reason behind the increases.

Despite this message, in the past 12 months we have seen the banks report record profits, such as the Commonwealth Bank’s half-year profit of $2.9 billion – up 13 per cent.

More now than ever, Australians are highly skeptical of the banks and their profiteering behaviour, as competition in the banking sector evaporated when many second-tier lenders were acquired by the Big Four during the global financial crisis.

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July 19, 2010

When’s the best time to buy property?


One of the questions I’m repeatedly asked as a buyers agent is “When is the best time to buy a property?” The short answer is “when you can afford it”… but let’s dig a little deeper to find some more clues.

By RICH HARVEY

Property cycles

The property market moves in cycles and the market in Perth is typically at a different stage of the cycle to Sydney. Property markets rise and fall due to the effect of interest rates, population growth, migration, employment markets and consumer confidence – just to name a few.

Prices rise quickly in a rising market then level off before we hit the declining market stages and the cycle repeats itself. There are no precise rules around the timing of each property cycle as the economic conditions of each decade are often unique. Some investors espouse the rule that property doubles every seven to 10 years, but such a blanket cliché brings false hope.

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July 16, 2010

My favourite suburb


My favourite suburb in Australia is Marino, about 18 kilometres from the Adelaide CBD. Let me tell you why.

By PETER KOULIZOS

Some of you who have read my book will be thinking, “Hang on, if Marino is such a good suburb then why didn’t you include it in your book?”

Excellent question! My book, The Property Professor’s Top Australian Suburbs, includes suburbs that are primed for better than average capital growth in the future and are priced at around or below the respective capital city’s median house price.

The median house price in Marino is well above Adelaide’s median house price, making it too expensive to be included in the book. However, when I started teaching in property investment almost 15 years ago, Marino was number one on my list of suburbs to do well. Either by good luck and/or good research, I was proven right!

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