Saturday Summary – the most interesting property investment articles I’ve read this week (2013/06/22)

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.

Expert views: how to tackle a property bubble that won’t burst – BRW

As the Australian residential property market continues to perplex, BRW asked 3  property experts on the best way to play the current environment.

Monique Wakelin advised:

..to be particularly wary of Melbourne’s new apartment sector, which is widely thought to be over-supplied. There has been a surge of spruiking and property investment seminars, she says, much of it targeted at self-managed super funds.

“Investors need to be exceptionally wary. It is cloaked very cleverly in what looks like advice. But really it is just clever sales technique.”

With the market weak, she advises investing in safe properties and taking a long-term view.

Houses in desirable areas are the safest. If the buyer can’t afford a house, established apartments (not new) in small blocks (not high-rise), are most likely to hold their value.

“It’s never a case of categorically staying out of the market,” she says. “It’s not about picking your time, it’s about picking your asset.”

Catherine Cashmore suggested:

…buyers need to adopt a “low-growth mindset”, and assume future value gains will be lower than those of the past. This means ensuring they can hold property long term without leveraging to the hilt, rather than buying and assuming they can sell it for more in a few years.

She advises buying established properties and steering clear of high density developments.

Usually new accommodation, particularly units, is poor-quality accommodation built with investors, the rental market and mostly the student market in mind. City fringe locations are risky because new land releases reduce the scarcity factor.

 

Why the property market is not really falling | Finding Gentrification Hot Spots | Reducing vacancy rates

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:
Louis Christopher from SQM Research says our real estate markets are improving
Chris Rolls from Rental Express explains how he reduced his average vacancy rate down to a few days a year not weeks.
Michael Yardney takes us on a gentrification journey
Terry Ryder from hotspotting.com.au talks about the ‘ugly duckling suburbs’

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.

 

The great Australian property dream has turned sour

Jess Irvine starts her article in news.com.au in an interesting way. She says:

I haven’t weeded the garden in three months. I can’t. I don’t have one.

She explains that the great Australian dream has turned sour because of affordability and backyards are a luxury many young Australians can no longer afford.

We have to change the way we live.

And we are.

The dream of the quarter acre yard has been slowly dissolving for decades.

The most recent building approvals show local councils in capital cities approved 152,272 new dwellings last year (only half the number needed to keep up with population growth). Of these, 90,110 were free standing homes and 62,165 were multi-dwelling homes like apartments or terraces.

Apartments and multi-dwelling homes used to account for only 20 per cent of new homes. Today it’s more like 40 per cent.

For young couples, apartment living is a sensible option. Apartments in the centre of town offer exciting night-life, cafes and cut down cost of commutes.

And an increasing proportion of children too are growing up in apartments. This happens in many major cities. Think New York. Hong Kong. Paris. The key is building good quality apartments with plenty of parks and facilities nearby.

Housing is a basic human right. But a big backyard, increasingly, is not.

Our cities are hitting the limits of acceptable urban sprawl.

If we want to ease the affordability squeeze on young families, the only way is up.

 

Chinese investors developing appetite for Sydney real estate [sam id=34 codes=’true’]

ABC News reports that Chinese buyers poured $4 billion into the sector last year.

With one billion serious savers and more than a million millionaires, a new generation of Chinese investors are making their presence felt in the Australian property market.

The trend is not surprising considering the rapid rate of expansion of the middle class.

According to the Organisation for Economic Cooperation and Development (OECD), 135 million Chinese have now joined the middle class. By 2020, that number will grow to a staggering 540 million.

Many of them are also savvy investors who look to purchase properties close to the train station, prestigious schools and the CBD.

Generally, Chinese investors also like to buy in suburbs that are well known in the Chinese community and in Sydney, this means Hurstville, Chatswood, and Ashfield.

One of the reasons apartments in Sydney’s better suburbs are performing strongly is that Baby Boomers are buying up big according to this article in Domain.  They say:

 

Note the signals in all the noise on the economy | Christopher Joye

Economist Chris Joye writes one of the best articles I’ve read for a while on the state of our current economy in his blog for the Australian Financial Review

I can’t do it justice summarizing it in the space available so please read it by clicking here.

You’ll see Joye makes 3 points:

  1. We’ve had a disturbing glimpse of the rocky investment future that lies in wait with the recent bout of financial market volatility.
  2. The Reserve Bank of Australia is in no hurry to slash borrowing rates, which it thinks are already at record lows.
  3. And, yes, monetary policy works. “We’re beginning to see early signs that those interest rate-sensitive sectors are responding,” Treasury secretary Martin Parkinson said during the week. “Leading indicators in the housing sector are picking up, non-residential construction is picking up, and consumption is solid.”
  4. Expect a new debate to emerge about how the RBA should respond to a revival in inflation.

 

Blogs you may have missed this week:

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

This week’s property news video with Kevin Turner | 19th June

Vacancy rates rise in May

This week’s property market trends | RPData

Property development guide part 5 – Financing your project

Developers offer some serious incentives in the Melbourne apartment market

Only a country of reindeer, oil and gas is a better place to live than Australia.

[post_ender]



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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 (2013/06/22)' have 2 comments

  1. June 22, 2013 @ 10:03 am Darren Randall

    I am looking at buying a property on the Gold Coast for retirement. I would buy the property now and rent out until I retired in about seven years. When I retire we would down size our Canberra property and buy a smaller property in Canberra (as my wife does not want to move to the Gold Coast) and use some of the money to pay down some of the loan in the Gold Coast property. We would then live between the Canberra property and the Gold Coast property. I was just after your opinion on what you believe would be the better option between – buying a new property on the Gold Coast or buying an established property on the Gold Coast?
    Thank you

    Reply

    • June 22, 2013 @ 1:08 pm Michael Yardney

      Darren
      Thanks for your question.
      The Gold Coast market is starting to improve, but it has always been a very volatile market and is likley to continue to be so because of the large holiday demographic.
      I would suggest you buy your investment property in one of our 4 big capital cities which are likley to out perform the Gold Coast.
      Then in the future still holiday on the Gold Coast and pay someone rent for the time you vacation there while someone else pays you rent on your better performing property.
      It’s a mistake to try and mix you investment and a holiday property

      Reply


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