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.
House prices could rise up to 7% in 2014
Australian Property Monitors economist Dr. Andrew Wilson believes 2014 will be a good year for property. He told The Australian Financial Review that this year house prices are likely to increase by only 3% to 5 %
Wilson is sticking with his recent 2013 forecast made at the start of the year of a 3% to 5% rise in house prices over 2013 but bases his higher forecast for next year on historical trends, where lower interest rates drive up house prices, but with a small time lag.
Wilson wrote in the February APM housing market report that Australia’s housing markets started 2013…
“encouragingly with solid indications of rising buyer activity and increased confidence from sellers”.
“The revival of Australia’s housing markets in 2012 has been confirmed as leading indicators such as auction clearance rates point to a market heating up.
“Australia’s housing markets are off and running in 2013, building on the buyer momentum generated through 2012 but now translating to more generalised and comprehensive market outcomes,”
How to avoid tenant horror stories
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:
Peter O’Brien from Metropole Property Strategists explains how to protect yourself as a landlord
Brad Beer tells us that it is not just owners of new properties who can enjoy the benefits of tax depreciation
Rob Balanda explains what you should do to make sure you remain in control of your offer
Ken Raiss from Chan & Naylor accountants discusses estate planning
Greg Hankinson from Metropole Property Strategists discusses this year’s renovations
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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A return to the 1950s “glory days” is on the cards
With interest rates at historic lows Commsec chief economist Craig James wonders if we’re heading back to the good old days. In Property Observer he says:
The last time that money market interest rates were at current levels was 53 years ago. In March 1960 the minimum interest rate applied on loans accepted by authorised dealers on the short term money market was 2.69% with the maximum rate of 3.38% and an implied weighted average rate of 2.70%.
Certainly very low interest rates were common through the 1940s, 1950s and most of the 1960s. For instance in 1952, the 3-month commercial bank deposit rate was just 0.71 per cent and even in 1956 it had lifted to only 1.25%.
Housing loan rates held at 5.00% through 1959 and 1960. Trading bank overdraft rates were between 5.00-6.00% in the late 1950s/early 1960s.
All these gems of information are contained in the hard copy Reserve Bank Statistical Bulletins of the era and the forerunner – the Commonwealth Bank of Australia Statistical Bulletins.
Of course a key reason why interest rates were low was because wages and prices were under control. In the 1958/59 year, wages rose by 2.5%, retail prices rose by 2.6% and the consumer price index rose by 1.9%.
Do these growth rates seem familiar? Wages are growing by 3.4% currently with inflation around 2.5%. Certainly other indicators are a bit different with the economy growing 7% in 1958/59, but slowing to 4.4% in 1959/60. And unemployment was hovering near 1-2% in the late 1950s/early 1960s.
So could a cash rate near 3.0% become the ‘new black’? If inflation sticks near 2.5% and if Aussies continue to apply a conservative approach to taking on debt, a new economic glory period could be ushered in, similar to that which existed in the 1950s.
So how many investment properties do Australian investors really own?
You’ve probably hear me quote that most real estate investors never get past their second property and that’s why I consider they’ve failed in their investment objectives.
These stats were confirmed by Cameron Kusher form RPData where he reported that:
According to the ATO data, 72.8% of individuals that owned an investment property owned just one. Meanwhile, 18.9% of individuals owned 2 properties while just 0.9% of individuals owned 6 or more.
How the Rich Got Rich
Jeff Haden writes on Inc.com that if you want to become wealth it makes sense to see how others did it. He examines the IRS (US department) stats and concluded:
- Working for a salary won’t make you rich.
- Neither will making only safe “income” investments.
- Neither will investing only in large companies.
- Owning a business or businesses, whether in part or partnership, could not only build a solid wealth foundation but could someday…
- Generate a huge financial windfall.
It’s much the same in Australia…
Most of Australia’s high net worth individuals made their money in business – but the opposite is not true. Most people who open a business do not develop high net worth.
The next group of people who develop financial wealth are employees and self employed people who treat their property investments like a business
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: