Saturday Summary – property investment articles 22nd December 2012

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.

Economic review and outlook: Blue skies ahead?

AMP Capital’s Shane Oliver gave a widely reported end of year review where he said:

This year saw more worries: Renewed fears about Europe; more US “double dip” fears; weaker growth in the emerging world; US drought threatening higher food prices; and ongoing Middle East tensions.

However, despite the wall of worry it turned out to be a good year for investors. Key themes for 2012 were:

  • Soft global growth, but no recession. While global growth softened from 3.8% in 2011 to around 3% and profits were downgraded, both were better than feared a year ago. In other words the falls in share markets in 2011 anticipated the economic slowdown of 2012.
  • Easy money. Slowing growth and benign inflation resulted in plenty of monetary easing globally – both rate cuts and quantitative easing. This contrasted to the global monetary tightening that continued into early 2011.
  • More Europe, not less. The European Central Bank’s bank funding operation and its threat to buy bonds in troubled countries combined with an ongoing theme from European leaders of “more Europe, not less” and more support for Greece reinforcing a determination to defend the euro, all helped head off the threat of a major financial crisis emanating out of Europe.
  • The US comeback. While US growth has been subdued, the commencement of open ended quantitative easing by the Fed has kept growth going at the same time that signs of rebuilding gather with a housing recovery, surging oil and gas production, a manufacturing renaissance, and an ongoing tech boom.
  • Cyclical bottom in the emerging world. Increasing signs that growth in the emerging world has bottomed has also added to global confidence. Chinese growth specifically appears to have bottomed out around 7.5%.
  • Australia has also had a decent share of worries with a rapid slowing in mining investment at a time when non-mining sector activity remains weak. Growth for 2012 looks like coming in around 3.5% but this masks a slowdown to a 2-2.5% annualised pace. Inflation has been benign, despite carbon pricing, allowing the RBA to cut the cash rate back to its GFC low of 3%.
  • An overwhelming investor theme in 2012 was the chase for yield in the face of zero interest rates in major advanced countries and falling rates elsewhere against a backdrop of investor caution. This benefited high yield assets. The following table shows returns for major asset classes.

To read more including asset returns for the major class of investments click the SmartCompany article here

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The worst advice given to property 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.

There are so many people willing to give advice to property investors but it’s hard to know who you should listen to and what advice is good.

Margaret Lomas from Destiny Financial Solutions  sets the record straight as she reveals the most detrimental pieces of advice that can be given to property investors.

Australia has had a boom and gloom economy over the past year.  Michael Yardney says that looking back, 2012 will be remembered as the year the property market turned.

Michael will  also answers a question from Lee about selecting a property mentor, what are the characteristics of a good one and what are the signs to be aware of when choosing a good wealth coach or mentor.

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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The end of the buyers’ market drawing near, with Australian property prices set to rise in 2013

Leading Sydney based estate agent John McGrath is expecting a more buoyant market in both Sydney and Brisbane in 2013, especially with the latest official interest rate cut taking rates to the historical low benchmark of 3%.

He says that this is the same interest rate as during the GFC, and many in the financial markets predict more to come next year.

Interest rates have a profound effect on property markets, although the impact of a collective 1.25-percentage-point cut in official rates this year has been tempered by the banks not passing them on in full.

As the holidays draw near, McGrath suggests spending some of your spare time considering how you can leverage current market conditions to build wealth for the future.

He feels we’re in the final stages of a buyers’ market and prices are only going to rise (not dramatically, but in a reasonable fashion) from here.

With home loan rates, especially fixed rates, in the low 5% bracket, you don’t need a sky-high yield to make your next investment property pretty much pay for itself. There’s also the opportunity to upgrade your home at a time when the higher up you go on the price scale, the better the savings.

Read the rest of his thoughts in Property Observer here.

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John Edwards from Residex gives his property investment predictions for 2013

Those of us interested in property investment are pleased that values are starting to improve in our capital cities, but where are the best performing areas?

And how can you get the best return on your real estate investments?

Click here to watch a short video of John Edwards from Residex as he joins Peter Switzer to discuss what’s ahead for property in 2013.

There are some interesting predictions for interest rates in this video. Will rates really fall that low?

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Key statistics for 2012 Victorian Property Market

Melbourne’s property market surprised me this year, performing better than expected. Recently the REIV have reported their 2102 key stats:

Metro sales 69,000 residential sales in Melbourne with 23 per cent by auction compared to 72,000 in 2011 with 24 per cent by auction
First Home buyers  More active first home buyers with an estimated 29,000 compared to 24,600 in 2011
Victorian sales  90,000 residential sales in Victoria compared to 96,000 in 2011
Overall clearance rate  Auction clearance rate of 61 per cent compared to 59 per cent in 2011
Highest turnover  Melbourne and Frankston had the highest number of residential sales for the second year in a row. Substantial increases in sales were recorded in Pakenham and Croydon
Highest clearance rates  The highest clearance rates were recorded in Donvale (82%), Hughesdale (82%), Heidelberg (80%) and Kew East (80%)
Highest volume of auctions The largest volume of auctions was again in Richmond with 455 and a clearance rate of 67 per cent. Reservoir was second with 419 auctions and clearance rate of 52% and St Kilda third with 362 auctions and a clearance of 57 per cent
Value of auction sales There has been $11B in auction sales in 2012 compared to $13.7B in 2011
Value of all sales* There was $30.2B worth of homes sold in Victoria, $27B of which was in the metropolitan area compared to $35.4B in 2011 and $43.8B in 2010

 

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:

Many Aussies will spend more than you think on Christmas!

Property investors – look what happened to vacancy rates in November

The unfortunate truth about investing

The future of our cities



Want more of this type of information?


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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