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.
The rise of 1 bedroom apartments
A whole bunch more of us are going to be flying solo in the not-too-distant future, and one-bedroom apartments may well top our wish-list when it comes to living arrangements according to an article in Domain.
According to Australian Bureau of Statistics data, the fastest-growing household type is the lone-person dwelling, which is projected to grow by an average of 2.2 per cent a year, reaching 3.2 million households, or 28 per cent of all households, by 2031.
”We know that inner-city areas are in growing demand from Gen Y and that many of the most proven investment locations lie within a 10-kilometre radius of our major CBDs,” says the director of Metropole Property Strategists, George Raptis.
”However, it’s not just about the postcode; your apartment should be within walking distance of the amenities young people want to live near, such as shops, restaurants and cafes, and public transport.
You also need to seek out the best street in the neighbourhood, preferably one that’s quiet and tree-lined, and always avoid buying on busy roads.”
Raptis says to look for units in smaller complexes with a good floor plan.
”Many people think that a one-bed apartment will be boxy and uninviting, but if the layout is right, they can have as much if not more appeal than something large and imposing,” he says. ”Check that there is ample storage and, as a bonus, a balcony – these add square footage and therefore value to your investment.”
Our experts reveal their favourite property investment strategy – part 2.
Another great Real Estate Talk show produced by Kevin Turner. If you don’t already subscribe to this excellent weekly Internet based radio show.
Here are a few of this weeks guests:
George Raptis– from Metropole Property Strategists in Sydney
Paul Giezekamp– from Property Secrets
Sam Saggers– from Positive Real Estate
Margaret Lomas– from Destiny Financial Solutions
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, iTunes etc.
How Baby Boomers are going to change our property markets in the future
The first group of baby boomers has just turned 65, which makes me ponder how this enormous group of Australians are going to affect the property market in future years.
To give you an idea of how big this group is, the Bureau of Statistics says there were 249,800 people aged 65 on 30 June 2012, an increase of 37,500 people compared to 12 months earlier. Our ‘grey army’ is going to get bigger and bigger and there’s no doubt they’re going to impact the market.
Here is what McGrath things may happen:
- An increase in demand for apartments. Generally speaking, people in their 60s will at some point look to downsize their living arrangements. This is usually because the family home is too big to maintain and/or they want a lifestyle change. Apartments are appealing as they’re smaller, with no gardens to maintain, and they’re usually clustered around shopping, dining and entertaining precincts.
- Not all downsizers or people aged 65-plus are retirees. Many are still working and plan to continue working – either because they enjoy it or they simply can’t afford to stop, especially after the big super fund losses of the GFC. In NSW, this group is increasingly leaving Sydney and telecommuting from lifestyle areas with close commuter access, such as the Blue Mountains and Bowral. They’re also going further afield to areas such as Port Macquarie, which has an airport with several daily flights to Sydney. In many regional areas, apartments are scarce so these buyers are looking for character cottages. This individual trend alone is driving up prices and on many occasions, our offices have had more buyers from Sydney than from the local area inspecting the homes we have for sale.
- Along with the rest of the population, older Australians are living much more frugally right now – paying off credit cards, paying down debt and so on. I expect to see a resurgence in the prestige apartment market once the global economic outlook improves, but until then, many downsizers will be looking at more modest apartments and townhouses for the next phase of their lives.
- For 65-ers wanting to buy a house, single level is the preferred option. While they might be fit and healthy now, in 10 or 20 years’ time their knees might not be as good and climbing stairs will be a major hassle.
How to assess your next property investment like a valuer.
Your Investment Property Magazine gives some good advice on how to place a value on your next potential investment property:
- Be realistic and objective – don’t let your heart rule your head. This is business.
- Research your market – This is the cornerstone of understanding value. Take your time, talk to local agents, go to auctions and jump on the internet. Informed decisions pay off.
- Carry out a thorough inspection – measure the home’s dimensions, turn on the taps, look at the stumps and walk the boundary. Look for every positive and negative you can.
- Seek independent information – estimated projections on rising values and rentals from the organisation selling you the property are worthless. Seek actual information from local independent professionals and try to substantiate any information yourself.
- Position, position and what was the other thing? Never ignore the basics. If it’s on a train line or next to an arterial road, it will be trouble. Look at the surroundings.
- Compare like with like – try and find comparables as similar as possible to the subject. These will be your beacon.
- Think like a local – if everyone in the street wants lock up car accommodation, make sure your property doesn’t buck the trend.
- Watch for overcapitalisation – a half court tennis court may seem like a good idea, but unless the owner is raising a Tomic, most buyers will find it next to worthless. Be honest about what it really adds.
- Think land, dwelling, ancillaries – breaking down the property into its parts can help you see the whole.
- Use recent comparables – if you’re using sales from a year ago when the market was booming, you are relying on false evidence. Keep it current.
5 habits property investors can learn from Warren’s Way
1 – Modelling and moving with the times
Buffet’s mentor was the legendary value investor Benjamin Graham, who espoused his theory of buying shares in companies at a margin of safety to their intrinsic value….
2 – Focus on quality
One of the surprising aspects of Buffet’s approach to many is that he has not tended to seek out smaller or unknown companies that nobody else could have thought of investing in. Instead, Buffett has invested in huge global brands….
In today’s era of higher household leverage investors in property would be very wise to focus on quality suburbs and quality established properties which are in continual and very high demand. Chasing yields in areas of lower demand could be a risky approach as evidenced in some overseas markets.
3 – Be wary of dilution
4 – Seek sustainable growth
Buffet seeks companies which have the potential for sustainable growth from within, rather than those which tend to ‘grow’ through acquisition.
Similarly property is ideally suited to being a long-term investment and investors should not be deceived into thinking that it is a one-way bet. To have any realistic hope of outperforming over the long haul, investors should seek out urban areas and suburbs which will show real and sustainable household income growth for decades to come.
I know of no better way than to follow demographic trends and look to major financial centres. The population is booming in four of our major capital cities.
5 – Quality assets that are temporarily out of favour
Seasoned property investors often look to profit from a similar approach. Australian capital cities experience property market cycles but prices rarely tend to move contemporaneously. Melbourne, for example, has shown tremendous price growth through what has been a lean period for Brisbane.
Experienced investors aim to learn to recognise such cycles and acquire property after a prolonged lull in price growth while always remembering that over the long term quality is the key to success.
This is just a snippet of Pete’s blog that you can read here
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:
RPData reports a record gap between median house and unit prices
Is the USA property market finally on the move?
Interest rates are likely to hit a record low of 2.75% soon
Why Australia will experience another boom
Our property markets are moving: Chris Joye