Saturday Summary – the most interesting articles I’ve read this week (2014/08/16)

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

Enjoy your weekend…and please forward to your friends by clicking a social link buttons on the left.

Property spruikers signal overheating market

The Australian Financial review warns that the current stage of the property cycle has delivered a new wave of get rich quick property spruikers.

They quote one promoter who:

..boasts he can show Australians the secrets of how he and his friends “built fortunes in real estate, starting from scratch with no special skills and not a lot of spare cash”.

All you need do is attend his “property millionaires” tour where you can learn how to develop, renovate and churn property.

“Many of you want to flip properties…We want to teach you how you do that safely, securely, and make money.”

There’s nothing new about this and unfortunately the landscape will be littered by those who take up the offer of getting rich quick.

Regulators, who say co-ordinating enforcement is tricky, fear much of the demand for off-the-plan apartments is being driven by double-digit commissions.

Cash payments of $40,000 are routinely made to advisers who recommend apartments, typically to self-managed super fund investors.

In turn, investors are promised double-digit returns, guaranteed tenancies, regular rental income and perks, such as ‘‘free’’ furniture, in a bid to invest in off-the-plan developments.

Tim Mackay, a financial adviser at Quantum Wealth, said high-pressure sales seminars promising easy wealth had become common.

“Aspirational investors should view it as a canary in the coalmine and tread cautiously.

If in doubt seek independent advice,” he said.

Buying well at auction in a hot market | Appraisal vs valuation | Reno Tips | Using a Buyers Agent

Another great Real Estate Talk show produced by Kevin Turner. If you don’t already subscribe to this excellent weekly Internet based radio show.

Details of this week’s show:
I give some great tips to help you buy at auction with confidence.
We get to a few of your questions in the show including one about taxation and another about buying property on a low income.
We tell you something you may not know about buyers agents and what they do or more particularly what they can do for you.

You should definitely subscribe to this weekly audio program. Click Here It’s free and you can listen on the go on your smartphone, iPad etc.

Latest Housing Finance Figures

In his blog regular Property Update Blogger Pete Wargent breaks down the latest RBA housing finance stats for the financial year just ended and concludes that the results are positive considering the uplift in activity related to new home sales and construction.

The value of owner occupier loans increased in June by another 1.8 percent, a strong result.

Meanwhile, investor loans to a record high, which is no surprise given the inverse relationship over time between the level of dwelling commitments and the cost of debt serviceability – interest rates are continuing to fall to record lows and investor demand continues to pull away to record highs.

The market still has momentum, though we expect to see the breakdown of investor demand by state show a heavy focus on certain city locations, and the data in recent months shows that in aggregate investor loans may now look a little toppy, for the time being at least.

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New dwellings – data stronger in FY14

If the Reserve Bank wanted to see residential construction to boom, then it will be pleased to have seen a strong pick up in new dwelling loans in 2014.

There was a nice 4.6 percent lift in the number of loans for the purchase of new dwellings in June, taking total activity in this sector around 8 percent higher on a rolling annual basis through the course of the financial year.

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Accordingly the value of finance for new dwellings was also up strongly over the past year.

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Read the rest of Pete’s analysis here.

Stop the presses. 109,900 jobs created!

While everyone else was writing about the rising unemployment rate, Peter Switzer put a different spin on things, saying the headlines should have created the headline, “109,900 jobs created!”

Yep, that’s the jobs score since January, which is not bad for seven months work where Joe Hockey’s Budget spooked consumers for about two months or maybe more.

He then quotes his interview with AMP’s Shane Oliver who pointed out a few things you need to know about this data:

– First, it could be dodgy as the ABS has changed its statistical sampling method, so we will need about three months to see if this was a rogue number. No economist saw this coming and these guys and gals have developed predictive models to help them guess where the economy is going.

– Second, the participation rate rose and this was a part-cause in the spike in the unemployment rate. We economists always say a rising participation rate is a positive sign as it indicates workers are now positive about finding work, and when more show up looking for work, it increases the likelihood of a rising unemployment rate until they find work.

– Third, the ANZ job ads numbers have been showing a positive trend upwards and this is a good forward indicator for the economy.

– Fourth, the unemployment rate is a lagged indicator, which came from news and an economy of around six months ago, so it’s so old news!

Just about every other indicator from housing to retail and even to manufacturing and the services sector are all saying the economy is improving and not going backwards. And if you are not prepared to take my word as an economist, then take it as a journalist! (I know it’s an oldie but it’s a goodie.)

Chinese Property Investment Set to Surge

Companies that specialise in helping Chinese buyers invest in Australian property say business is booming on the back of a surge of new clients from their target market.

Ausin Group (Finance), which provides property and mortgage broking services to Chinese clients in Australia, expects home sales to surge by two-thirds and says loans for buyers will double during the upcoming year as a result of the ongoing rise in demand from the Peoples Republic of China.

They suggest surging demand from China is “here to stay” with no signs yet of a slow down in the country’s outbound property investment trend.

Chinese investors emerged as the biggest foreign buyers of Australia property in the year ended June 2013, beating out the Americans with $5.9 billion of spending on commercial and residential property. This figure marked a 42 per cent gain on the preceding year.

The big banks no longer feel that overseas investors are a significantly greater risk than local buyers.

Fun weekend video: How suggestible are you?

Enjoy this fun video and test your imagination:

Blogs you may have missed this week:

If you didn’t have a chance to read my daily blog, here’s a list of some of the blogs you missed this week:

Sydney auction market still hot | Dr Andrew Wison

Sydney leads as national clearance rate dips to 65.9%

Don’t expect Melbourne values to rise by 44% over the coming year

Interest rates – more important than they ever were

[Video] The latest property news with Kevin Turner | 13th August

Regional property markets underperform



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About

Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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