Saturday Summary – the most interesting property investment articles I’ve read this week (2013/10/19)

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.

Housing is not unaffordable – Stephen Koukoulas

Stephen Koukoulas writes in Business Spectator  that first home buyers are not locked out of the market by unaffordable house prices. He concludes:

The end point is that housing is somewhat expensive, but no more than at any time over the last 15 years or so. The debt servicing of a mortgage needed to buy an average house is about where it has been over the last 30 years, so no issues here. What’s more, there is nothing wrong with renting. One third of the population do.

If you have any concerns about whether we’re heading for a bursting bubble or not it’s worth reading the full article which suggests that new borrowers are better off now – in terms of their repayment schedule – than the average of the last three decades.

repayments on new housing loans

 

Stop reading newspapers for property advice! |Can investors still borrow 97%? | Are NRAS good investments?

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:

Andrew Mirams from Intuitive Finance answers the question “Can investors still borrow 97% of the purchase price of a property?”
Terry Ryder lists his rules for successful property investing
Australasia’s top real estate agent explains why open homes are an advantage to the seller of a property

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.

 

Where have all the first home buyers gone?  Michael Matusik

In his regular missive Michael Matusik writes the first home buyers have gone and they are not coming back.

Why?

  • They were brought forward.  If it wasn’t for the FHOG, this trend – the decline in FHB numbers – would have started more than a decade ago & the decline would have been far more gradual.  Demographics shape everything.
  • Generation Y – the largest rental group – is more interested in travel & other lifestyle things than being saddled with a home loan.  They are partnering later, if at all, & history shows that unless one is getting serious about a relationship (and having children is being discussed or on the way), then the momentum to buy your first home is limited.
  • Potential FHBs are happy to share accommodation, especially higher priced rental (and better quality/located) properties and experience the lifestyles that are outside their ability to obtain through home purchase.
  • HECS debt is also strangling FHB interest.  Under-employment is also having an impact.  Our employment situation is still somewhat shaky.
  • Expectations are out of whack.  Many FHBs want their first home to be like the one they currently live in.  Many still live at home – without paying rent or doing too much around the house.  There are plenty of options for FHBs to buy a property – for example, a third of all house sales in SEQ are still priced under $300,000 – but these properties aren’t good enough for many of today’s FHBs.

 

Soft housing finance data should not really be a worry. Pete Wargent

Regular Property Update blogger Pete Wargent writes in his blog that investors should not be worried about weak finance data and especially the lack of first home buyers in the market:

In all truth, weak releases like this are exactly what owners and investors in the hot sectors of the real estate market (at this time essentially meaning investor-favoured medium-density properties in prime Sydney locations where auction results are hitting at scorching levels – as I anticipated here long ago) want to see.

If housing finance numbers and property price data elsewhere remain soft, this should in theory reduce the calls for interest rate hikes allowing the market more time to run upwards. The ongoing weakness of markets such as Adelaide and Hobart are actually a boon for property owners and investors elsewhere.[sam id=36 codes=’true’]

It was interesting to note during a stroll along Sydney’s Broadway yesterday how a number of new apartment developments are coming along.

Investors in Sydney would likely be wise to look away from the markets which have a forthcoming risk of oversupply – which include the Central Business District and some of its immediate surrounds and parts of the inner south, where thousands of new units will come online in the coming few years.

This boost in apartment construction is part of a fairly typical residential property cycle. Those who get caught out over the coming decade are likely to include those paying premium prices in 2013-14 for new or off-plan properties just at the time when a glut of new supply is set to become available – supply-constrained suburbs with massive and growing demand will as ever represent a smarter investment.

Note that a huge proportion of property sales are presently to investors, a trend which those interested in buying property would be wise to take heed of.

 

Why buy now? John McGrath

John McGrath writes in The Swizer Report that  reports :

The new cycle of growth on Australia’s eastern seaboard has begun. Reality is, the best time to buy in places like Sydney would have been about six months ago. But by no means have buyers missed the boat – there are still plenty of reasons to buy today.

Here are some things to think about for specific buyers looking to invest, buy their first home, upgrade or downsize.

Investors

Not only are rents continually growing, we are also at a stage in the market cycle where there is real potential for good capital growth in the very near term. And all at a time when interest rates are incredibly low….

First Home Buyers

Today’s low interest rates make property far more affordable than it was when the grants were around. Add to this, rents are rising at a time when it is actually cheaper to buy in a huge number of suburbs.

Upgraders

The great news for upgraders is that the market is stronger at the bottom and tends to be  weaker at the top, so upgraders have the opportunity to secure a great price for their current home then buy in at greater value for money further up the price scale. It’s a real win-win scenario.

 

110 oligarchs own a third of Russia’s wealth

The Independent reports:

A staggering 35 per cent of household wealth in Russia is owned by just 110 people, the highest level of inequality in the world barring a few small Caribbean islands, a report by a major investment bank says.

By contrast, billionaires worldwide account for just 1-2 per cent of total wealth, Credit Suisse said. Russia has one billionaire for every $11bn in wealth while the rest of the world has one for every $170bn.

The fall of communism saw Russia’s most prized assets sold off to businessmen later known as oligarchs. President Vladimir Putin allowed them to keep their wealth in exchange for political loyalty.

 

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:

Housing affordability affects new home buyers and low income earners the most- Tim Lawless

We’re not as rich as we used to be – latest ABS stats

US financial situation could push up home loan rates faster than expected

Look what’s happening to Sydney property prices – Pete Wargent

The latest property video from Kevin Turner | 16th October

The latest property statistics & opinion: Michael Matusik

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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


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