Saturday Summary – the most interesting property investment articles I’ve read this week (2012/11/30)

There are more property investment 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 interesting 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.

Don’t invest in apartments without a car park

In an article in Property Observer  Larry Schlesinger quotes Monique Sasson Wakelin who suggests that property investors should avoid buying an apartment that does not come without a parking space.

Wakelin says there are plenty of developers and estate agents “flogging carspaceless apartments” who are happy to tell would-be investors that it is a good idea to buy these sorts of properties.

“They talk about the paradigm shift away from car ownership and all those tenants happy to limit car use to the occasional hire vehicle for weekends away,” she says in a News Limited newspaper column.

But while there are some people who are happy not to own a car, they remain in the minority.

Wakelin says this is borne out in the 2011 census data, which shows that more than four-fifth (81%) of households own one or more cars.

Among those who live in apartments and flats, the figure is slightly lower at 75%.

Sasson Wakelin says her advice has remained steadfastly constant on this issue: “Don’t handicap your investment property by restricting the pool of potential tenants and future owners. A car park space is a must.”

Delving further into the census data shows that 77% of Australian use a motorised vehicle to get to work and only 12% take public transport – the rest cycle, walk or work from home.

But Sasson Wakelin says investors being close to public transport is still important for an investment property.

She says being close to public transport is a “major plus” for investors because 1.7 million Australians work in the city or in the surrounding inner suburbs, making it “neither desirable nor feasible for everyone to drive to their place of work”.

Demand for property remains high in suburbs that have good public transport options because it means they can choose between their car and catching a bus, train, tram or ferry, says Sasson Wakelin.

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Trouble ahead as first home buyers get older

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

More first homebuyers plan to purchase their first property later in life.   61% of first homebuyers aged over 30 plan not to buy for at least 2 years.  This figure has jumped from 54% just 12 months ago.  Michael Yardney explains why this is a worry.

Michelle Hutchison from Rate City has evidence that first home loan activity has increased and she explains why it is likely to continue grow.

Is it just me or are the boom and bust cycles getting quicker.  Terry Ryder says it makes good press but is it in fact happening.

Bart Mead from Propell Valuers  joins us to debunk the most common property valuation misconceptions.

Our good friend Pete Wargent answers questions today about the market cycles, how long they last – how to predict them and the implications for the property market of all the doom and gloom reporting at the moment.

Have you ever wondered about the value of a carpark and if you really need one in an investment property?  George Raptis tells us what he thinks one is worth and why it should be non negotiable in your investment.

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.

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Housing affordability improves but still poor

In his Macrobusiness blog economist Leith van Onselen writes:

In March 2010, just before Australian house prices peaked, the Sunday Telegraph published an article citing Commsec research showing the sharp deterioration of housing affordability over the past 50 years.

This week, Commsec published the below chart showing that Australian housing is the most affordable in a decade, requiring only around 380 weeks on the average wage (just over seven year’s income) to buy a typical house. This is down from around 430 weeks average wages (just over eight year’s income) required to buy a home in 2008 and 2010.

While the improvement in housing affordability is clear, Australian housing still remains unaffordable compared with pre-2000 norms.

According to Commsec, a typical Australian is still required to work some 90 weeks more to buy a house currently than was the case during the late-1980s peak or when  mortgage rates hit 17% in 1989-90.

Read more here…

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6 reasons why Dent picked out Brisbane as Bubbletown

In his excellent blog, regular Property Update contributor Pete Wargent gives his thoughts on why American Harry Dent picked Brisbane as the biggest real estate bubble in the world.

In fact he gives a cynical look at why Dent made these claims – it couldn’t have anything to do with wanting to sell more books could it?

Pete says:

Read Dent’s past books they are stocked full of pretentious, third person “we foresee the next boom period running from January 2037 to March 2039” type predictions and the overwhelming majority of them are just plain wrong.

It would be tempting to say that Dent’s infamous ‘Dow 40,000’ prediction that the Dow Jones would reach 40,000 points by the end of the last decade was the crappiest prediction in the entire history of crap predictions, but even that howler wouldn’t get the gig. His NASDAQ prediction was even worse!

This hasn’t stemmed the book sales though. People love to read about predictions, but Dent has a problem in that…

Read all 6 reasons and the full blog here

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5 Big Questions about the American Economy

With so much confusion about what’s happening with the US economy, one of my favourite columnists, Morgan Housel of Motley Fool suggested 5 important questions that should be asked about to help you better understand.

They are:

1. What happens with the fiscal cliff?

The fiscal cliff is probably the single most important issue America has faced in the last three years

2. Will there be a long-term shift in labor versus capital?

The economy has moved in three long cycles over the last 100 years. From the early 1900s through the 1930s, workers did poorly while owners of capital did very well. From the 1940s through the 1970s, workers did great while owners of capital did so-so. And from the 1980s through today, workers have done poorly (most real wages have stagnated) while owners of capital have done extremely well.

Are those three periods coincidental, or does the economy move in consistent cycles that favor labor in one, then capital in the next? If it’s the latter, then it’s possible that the next 50 years could be more favourable to workers and less to owners of capital.

3. Will China go the way of Japan?

Twenty years ago it was assumed that Japan would become the world’s economic superpower. It grew faster, was more productive, and had more ambition and potential than any other country in the world — just how we see China today.

Of course, Japan didn’t live up to expectations. One big reason was demographics.

How will relaxing the one-child policy and other shifts in China’s demographics play out over the coming decades? Answer that, and you’ll have a good idea where its economy is heading.

4. How will demographic shifts affect America?

America is blessed with one of the youngest populations in the developed world. But they are getting older.

Not only will older Americans make up a larger portion of the population, but they are living much longer than before. A healthy 25-year-old female can now expect to live close to age 100.

How will this change the economy? Will it mean the new retirement age is 80 instead of 65? And if people are living longer, will they need to save much more for retirement?

5. What impact will health care costs have on wages?

Want to know more about the US economy? Read the full article here

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US to become ‘world’s biggest oil producer’

The US will overtake Saudi Arabia as the world’s biggest oil producer “by around 2020”, according to an International Energy Agency (IEA) report.

The IEA said the reason for this was the big growth and development in the US of extracting oil from shale rock.

This has enabled the US to gain significantly more extractable oil resources.

As a result, the IEA predicts the US will become “all but self-sufficient” in its energy needs by around 2035.

The US shale oil industry has grown significantly in recent years.

It extracts oil from the ground using a method called fracking – pumping down a mixture of sand, water and chemicals at high pressure.

The industry says the method is safe, but critics say it could cause earthquakes and pollute water sources.

The IEA predicts that the US will be producing 11.1 million barrels per day by 2020, compared with 10.6 million from Saudi Arabia.

Currently the US imports about 20% of its total energy needs.

The IEA also expects that the US will overtake Russia as the world’s biggest gas producer by 2015, again thanks to fracking, which can also be used to extract natural gas.

My thoughts:

Don’t write of the US economy, they have some very substantial and profitable companies and this substantial growth in US oil and gas production could have significant geopolitical implications, as it may make the US less concerned about the Middle East.

Source: BBC

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Blogs you may have missed

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

Are properties really more affordable?

Australians are richest people in the world

Property Investment Traps

First home buyer warning: prepare now for higher interest rates!



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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


'Saturday Summary – the most interesting property investment articles I’ve read this week (2012/11/30)' have 4 comments

  1. December 1, 2012 @ 10:25 am karl

    Thanks Michael, It’s good to have a no bs commentary about property and worldly events, very much appreciated

    Reply

    • December 1, 2012 @ 10:57 am Michael Yardney

      Thanks Karl – this type of positive feedback helps make the effort worthwhile

      Reply

  2. December 7, 2012 @ 6:10 pm Twin City Tower

    Hello,
    It’s a pleasure for me to say something about your unique Blog that showcase the updated facts about real estate and property investments in global market. I have already shared your Blog with my friends and hope you will come up with new sharpen ideas with your next post. Keep it up!

    Reply

  3. December 17, 2012 @ 6:51 pm celesteperez

    Thanks for sharing your thoughts on property investment.

    Reply


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