Saturday Summary – the most interesting articles I’ve read this week (2014/09/27)

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.

Steve Jobs was depressed when the iPad was released

With the new iPhone just released it would be interesting to see how Steve Jobs would have reacted. In the Steve Jobs biography, Walter Isaacson reported:

“The night after his announcement, Jobs was annoyed and depressed.

I got about eight hundred email messages in the last twenty-four hours. Most of them are complaining. There’s no USB cord! There’s no this, no that. Some of them are like, ‘F— you, how can you do that?’

I don’t usually write people back, but I replied, ‘Your parents would be so proud of how you turned out.’ And some don’t like the iPad name, and on and on. I kind of got depressed today. It knocks you back a bit.”

 

Why politicians won’t abolish negative gearing | Winning auction strategies | Why Sydney’s price growth will moderate | 3 traits of successful investors

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

In this week’s show:
Jennie Brown outlines the 3 main traits she sees in successful investors
Dr Andrew Wilson tells us why he thinks the spectacular property price growth in Sydney of just over 15% in the last 12 months is not likely to continue
Frank Ruffo a top Melbourne agent outlines his auction day strategy to beat the competition and has 3 great tips if you will be bidding this weekend
and more!

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.

 

Is it development costs or land prices causing dwelling prices to rise?

What’s causing our property values to keep rising? In his blog regular Property Update blogger Pete Wargent tackled the question of whether it is escalating land prices which are pushing up dwelling prices, or whether development and construction costs have a role to play too.

While clearly, land prices have increased, Pete says an unbiased observer with no barrow to push would surely conclude that it is both.

There can be no contesting this fact. The latest data from the HIA showed that median capital city lot values have increased by approximately 20 percent over the past five years to March 2014 as looked at here, the most recent gains driven largely by a material annual increase of 5.6 percent in Sydney.

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Read the rest of his thoughts here.

 

Foreign property investment under close watch

The debate over foreign property ownership is heating up again as politicians head to China to investigate overseas investment in Australian real estate. Broker new reports that:

Four MPs from the House of Representatives Economics Committee went to China Tuesday as part of an annual political exchange program, according to The Australian.

The trip will also be used to investigate Chinese foreign investment in Australian real estate, amid claims that wealthy Chinese investors are forcing prices up and decreasing housing affordability for locals.

In November 2012, the Significant Investor Scheme (SIV) was launched in Australia, which allows high-net-worth individuals a way to fast-track permanent residence if they invest AUD$5 million into bonds, certain managed funds, or private companies.

This scheme has come under fire recently for allegedly favouring wealthy Chinese investors to snap up property. Nine out of ten SIV applicants are Chinese nationals.

This trip comes amid accusations that Chinese investors are bending the rules when it comes to investing in Australian real estate.

Under current laws, foreign investors are only allowed to purchase new residential dwellings – in a bid to increase Australian housing stock and not push up prices for locals.

The Australian spoke with a leading buyer’s advocate, who says that FIRB is not taking any responsibility to ensure this.

According to The Australian, “…on the FIRB’s watch overseas investors have snapped up more than 5000 established homes, to the value of more than $5 billion, in the nine months to March.”

Currently, FIRB is only investigating 33 cases of potentially illegal foreign investment in Australia.

“It’s a drop in the ocean. We see it all the time — foreign investors purchasing established property here… The reality is they (the FIRB) are a toothless tiger,” buyers’ advocate David Morrell told The Australian.

Investment in real estate makes up the largest proportion of foreign investment in Australia, according to the latest data from the Foreign Investment Review Board (FIRB).

Approved investment in real estate was $51.9 billion in 2012-2013. This was comprised of $17.15 billion invested into residential property and $34.75 billion invested into commercial real estate.

The majority of foreign investment in real estate, according to the FIRB data, comes from Chinese investment ($5.9 billion), followed by Canada ($4.9 billion) and the USA ($4.4 billion).

According to the latest data from the NAB Quarterly Residential Property Survey: Q2 2014, foreign buyer market share in new dwellings fell from a high of 13.9% in Q1 to 10.2% in Q2.

Foreign buyers were also less active in the market for existing properties, with their share of total demand falling to 7.2% in Q2, down from 9.5% in Q1.

First home buyers on the other hand, were more active in the market for existing properties, making up 18.5% of total demand, up from 16.8% in Q1.

 

Sydney’s undersupply set to end

Your Investor Property magazine reports  that the Sydney property market’s chronic undersupply of residential housing stock is set to diminish significantly due to a record level of apartments on the drawing board.

According to new research from Knight Frank, the city’s strong capital growth has contributed to the high volume of apartments being added to the pipeline of developments.

Knight Frank’s residential research associate director Michelle Ciesielski said that solid population growth in metropolitan Sydney – projected, by the ABS, to be 1.7% per annum out to 2029 – was also driving the new supply pipeline.

Sydney had endured a long period of undersupply, but this was forecast to change significantly due to annual capital growth of 12.15%, she said.

“There are 26,680 apartments currently under construction in metropolitan Sydney… Sydney’s North West region dominates the mix with 9,890 apartments, followed by the Sydney CBD and South regions with a combined 8,200 apartments.”

The research shows that:

  • At 37.1%, the North West region has the highest volume of apartments under construction. This includes Parramatta (1,640) and – in line with the Urban Activation Precincts – Macquarie Park (600), Sydney Olympic Park (585), Wentworth Park (580) and Epping (524).
  • In the South West region, coupled with North, 8,585 apartments (just over 32%) are under construction.

Knight Frank’s NSW project marketing director Andrew Drury said Sydney was widely considered to be one of the best cities in the world for quality of life.

This attractiveness coupled with the Federal Government’s incentive for foreign investment into the local market, has driven competition among foreign and local developers, as well as investors and owner occupiers, he said.

“But the geographic constraint of being located within a basin, together with a trend towards inner city living, means that higher density around established transport hubs will be required to allow more residential accommodation to be built in Sydney.”

 

Weekend video:  Would you make a good witness?

How observant are you? would you make a good witness? Watch this video and find out:

 

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:

Too much investor activity is potentially risky | RBA

Some interesting property numbers

[Video] The latest property news with Kevin Turner | 24th September

This week’s Property Market Trends | RP Data

I’m worried about the Melbourne property market

Aussie housing affordability in 1970 | Pete Wargent



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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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