Saturday Summary – the most interesting property investment articles I’ve read this week (2013/06/29)

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.

Debunking house price delusions.

Ian Verrender wrote an interesting piece in Business Spectator debunking a couple of myths about the Australian property market.

He explained we’re not the most expensive property market in the world:

A lot of this depends on how you define expensive but one of the best ways to measure this is to compare incomes with house prices.  And once you do, you discover that our property market runs in the middle of the pack.

We are certainly a lot more expensive than America or Japan. But Japan has been an economic basket case for nearly 20 years and America is only just emerging from one of the worst property market meltdowns in its history. So it is a little disingenuous to compare them with us.

Believe it or not, but we are level pegging with Canada, we are slightly more expensive than the UK and we are far cheaper than Denmark, the Netherlands and even New Zealand.

It is worth remembering too that we are a highly urbanised society, with the vast bulk of the population congregating in a handful of cities that hug the coastline. America by contrast has a vast array of cities spread across the country.

He goes on to say:

When combined with a series of cuts to interest rates – 200 basis points in the past 18 months – housing affordability suddenly has risen to its most attractive in almost a decade. That’s prompted many forecasters to up their estimates for price growth this year and next.

But while many would-be buyers have indicated in surveys that they think now is a good time to buy, many still are tentative.

First home buyers are almost completely absent from the market right now. That’s because many rushed in to take advantage of government assistance – federal and state – and since those incentives have been withdrawn, there’s a dearth of buyers now.

Sydney is leading the property market at the moment. On an annual basis, price rises are running at about 3.1 per cent compared with just 1.2 per cent in Melbourne. In south east Queensland – which has been hit hard by the downturn in tourism as a result of the strong Australian dollar – barely any price rises are registered.

 

Valuation problems| Granny Flats | FHB stimulus gone wrong | Joint ventures and more

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

This week’s show:
Gavin McPherson details where he sees many property investors go wrong
Catherine Cashmore argues that governments should stay out of property stimulus
James Freudigmann describes what makes a granny flat
Ken Raiss answers some of your questions on joint Ventures and avoiding double stamp duty
Michael Matusik gives his opinion on ‘desktop valuations’ and other valuation problems

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.

 

A surge of singles hits Sydney’s inner suburbs

Sydney’s young singles are converging on a select few inner-city suburbs, turning them into a hive of cosmopolitan activity according to an article in the Sydney Morning Herald.

This is important to understand as a property investor as clearly you’ll want to own the type of property that will be in strong demand by the demographic living in the area.

For example in Darlington, three out of four residents have never married and, in several other suburbs, more than half are single.

The top Sydney single suburbs are:

  1. Darlington
  2. Chippendale
  3. Darlinghurst
  4. Ultimo/Haymarket
  5. Potts Point
  6. Surry Hills
  7. Camperdown
  8. Newtown
  9. Rushcutters Bay
  10. Bondi Beach

Clearly these are the type of suburbs in which 1 and 2 bedroom apartments would make great investments.

 

City’s destiny is high density

Another article on Domain explains that it’s on for young and old in the Sydney of the future, as baby boomers and first-time buyers drive demand for the same type of property in our major urban centres that have it all.

What’s happening is:

First-home buyers and last-home buyers have something in common: they both want the buzz of living in all-you-can-get urban centres.

This unlikely pairing is changing the face of Sydney, with high-density villages cropping up in response to this demand.

In particular, developers are targeting old industrial sites along the foreshores of the Parramatta River, west of Sydney, in suburbs along the Cooks River and Woolooware Bay, to the south.

What is most notable about this wave of buyers is that they don’t just want apartments – they want shops, public spaces and a sense of community.

The state government has released a draft Metropolitan Plan for Sydney for 2031 and it is clear more high-density urban centres will be needed.

According to state government forecasts, 1.3 million more people will live in Sydney by 2031, and they will require 545,000 new homes and 625,000 new jobs.

NSW Planning Minister Brad Hazzard  says:

It is good that 80 per cent of new dwellings are apartments, many with retail and commercial precincts. ‘People want infrastructure, they want community space, they want retail and health and education all nearby,”

 

One in four borrowers intend to buy an investment property in next four years: Mortgage Choice survey

Property Observer reported that investment intentions remain strong among Australians mortgage holders, a Mortgage Choice survey of 1,000 mortgage holders has found.

[sam id=31 codes=’true’] Just over a quarter (26%) said they were considering using the equity in their homes to buy an investment property with more than half of these (56%) intending to do so within in the next two years.

More than four out of five (83%) said they intended to buy an investment property in the next four years with intention of most being to “buy an average property in an up and coming area and hold onto the property”.

Two-thirds of respondents said tenant demand and buying in the right suburb and street were key factor when choosing an investment property.

Other important considerations were locality to amenities and entertainment such as cafes and restaurants, population growth and new infrastructure being put in place.

Mortgage Choice spokesperson Belinda Williamson said:

“It is really positive news for the property market to see a considerable chunk of homeowners weighing up the decision to purchase an investment property in the near future. With lenders’ interest rates on both home and investment property loans at their lowest point in recent years, it isn’t altogether surprising.”

 

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 market trends | RPData

Australia’s accelerating population growth underpins our property investment market

Nine mistakes property investors must avoid.

Property development guide Part 6 – Finding the perfect site

22 brand new quotes from Warren Buffet

10 interesting ways to make your first million

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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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