Saturday Summary – the most interesting articles I’ve read this week (2014/10/11)

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.

Loan default looms for millions of Australians

The Brisbane Times reports that:

More than 2 million people, or 13 per cent of the estimated 16 million Australians using credit, are at risk of credit default.

That includes about 600,000 people who are at “high to extreme risk” of defaulting, an analysis of credit records by credit agency Veda shows.

The state carrying the highest proportion of residents at risk of default in the next 12 months is Queensland at 16 per cent, while ACT has the smallest proportion at risk at 10 per cent.

In NSW and Victoria, the risk of default is 13 per cent.

big spender

Life will become interesting when interest rates move up in the next year or two.

Is there still life left in this market? | Reviewing your portfolio | Adding another property | The best ownership structures | Which location?

Another great Real Estate Talk show  produced by Kevin Turner. If you haven’t already, subscribe to this excellent weekly internet-based radio show.

In this week’s show:
Shannon Davis and Louis Christopher give us the good news on that front and say there is no need to panic about missing out.
Some tips today from finance guru Andrew Mirams.
George Raptis tells us what due diligence you need to put in place when looking to add more properties.
and more!

3 ways to botch your investment strategy

There are many ways investors can make mistakes. And being aware of what can go wrong is the best way to avoid catastrophes from occurring. Your Investment Property Magazine explains there are immediate risks which spring to mind:

1. Relying on low interest rates.

The fact is, interest rates are at all-time low levels and eventually they will increase to the historically ‘average’ mortgage interest rate of around 7.5% to 8%.

If you’re paying 5% now, that’s a huge jump of more than 50% on your current repayments. Therefore, if you rely on current interest rates staying in place for the long term, you could end up financially overextended.

2. Investing without a clear strategy.

With so many potential ways to make a buck, it can be tempting for would-be investors to haphazardly employ several strategies at once.

Worse still, they could have so many ‘stars in their eyes’ about the potential profits coming their way that they fail to put in place any solid strategy at all.

3. Buying in an overheated market.

There is mentality that develops among some investors, which virtually scares them into thinking that they must secure their next investment immediately, lest they risk missing out on a rare and especially profitable real estate goldmine.

Chinese developers dismiss house price fears

The Australian Financial Review reports:

Chinese property developers have dismissed claims that Asian investors are artificially inflating local house prices,

Johnson Zhang, the head of prominent developer Country Garden, said there was an irrational “fear of foreigners coming to Australia to help it develop.”

“I feel [the house price] debate has errors,” he told the AFR. “Remember, foreign investors including Asians can only buy new properties. There is a huge second-hand market with enough housing there for locals.”

China’s Greenland Group echoed similar sentiments, suggesting that an influx of Asian developers was helping bring new housing supply to the market.

Foreign property investment in Australia under close watch

The debate over foreign property ownership is heating up again.

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.

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.

Google’s internet balloons will ring the globe within a year

According to Technology Review:

Within a year, Google is aiming to have a continuous ring of high-altitude balloons in the Southern Hemisphere capable of providing wireless Internet service to cell phones on the ground.

The balloon project, known as Project Loon, was on track to meet the goal of demonstrating a practical way to get wireless Internet access to billions of people who don’t have it today, mostly in poor parts of the globe.

For that to work, Google would need a large fleet of balloons constantly circling the globe so that people on the ground could always get a signal.

Weekend video: Amazing 7 year old boy on Ukraine talent show

There are lots of videos on You Tube with great segments of the talent shows around the world. This one is worth watching.

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:

Make your property stand out during the spring selling season | Peter Boehm

5 lessons property investors can learn from farmers

Latest Economic & Housing Market Indicators | October 2014

My biggest four lessons in four years at API Magazine | Lauren Day

The 10 most important life lessons of a property investor

Baby boomers- from work to retirement | Chris McNeill



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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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