Weekend reads – Must read articles from the last week

There are more interesting 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 ones I’ve read during the week.

The weekend will be over before you know it, so enjoy some weekend reading.

Why developers are delaying or abandoning half the apartments they planned to build

It would seem the sun has set on the apartment boom.

According to this article from abc.net.au there has been a significant slowdown in completion for planned apartment builds.

The property market upheaval brings billionaire investor Warren Buffett’s oft-quoted piece of wisdom to mind: “Only when the tide goes out do you discover who’s been swimming naked.” Future Sydney Scenarios

We are witnessing more naked developers as half-finished projects dot the landscape of our major cities.

As the year progresses, many more operators who’ve pushed the boundaries will join them.

“Areas of oversupply will see a bit more chaos in the next six to twelve months,” Scott Gray-Spencer, local head of capital markets at the global real estate firm CBRE, told ABC’s The Business.

Mr Gray-Spencer sees areas more than 10 kilometres from the city centres of Sydney and Melbourne, and parts of Queensland, as the most vulnerable.

Job losses mounting up

Construction jobs are an important support for the economy. Spending in the sector flows through to other industries, including the manufacturing, retail and services sectors. 

propertymarketupdate

Given the importance of this part of the economy, it’s hardly surprising the Reserve Bank is keeping a close eye on activity — or lack of it.

Governor Philip Lowe and his deputies have been at pains to point out that the property slump has been contained and will not derail the economy.

However, almost 40,000 jobs have already been lost in the construction sector during the past year as the regulator-driven crackdown on lending started to bite.

Investors sidelined  

Property investors, who were major targets of the crackdown, accounted for almost 50 per cent of mortgages two to three years ago.

They have largely left the market and political uncertainty may keep them on the sidelines for longer as they await the outcome of the looming federal election.

Should Labor win, it’s likely investors will wait to see how its plans to curb the negative gearing and capital gains tax concessions pan out.

Even though Labor’s proposed negative gearing changes will not affect new housing, investors may still be worried about price growth because the next buyer is unable to negatively gear.

So it could be some time before developers see an important group of buyers return in force. Sydney In Future

If the banks don’t stop them, the less generous tax laws might.

“At the moment we’re seeing a lack of sales in the marketplace,” said Luke Mackintosh, partner with EY Real Estate Advisory Services.

Projects stalled

It means developers are finding it hard to get to what’s called financial close.

Financial close tends to happen about 12 months after a site is purchased.

During that 12 months, developers go through the planning process and start marketing.

Typically, 80 per cent of the development must be sold to get finance.

Once that’s achieved, a developer can get finance and start construction.

Read the full article here

How do debt ratios come down?

What needs to happen for our debts ratios to come down?

This Blog by Pete Wargent explains what we need to consider.

Debt bomb deflation Oliver House Debt Australia

A question for today: we have heard that debt levels are high in Australia, so how do household debt ratios actually come down?

There is no one simple answer.

Rather it’s a combination of a whole range of factors coming together.

I’ll look at ten of the ways below.

Firstly, it’s important to note that the debt to disposable income in Australia peaked 9 to 12 months ago, and now sits at 1.89 times disposable income.

So it’s not over two times income (or even three times!), as is sometimes claimed, and the ratio is not still rising.

Rba1

There’s been a lot of alarmist reporting about this (surprise!) but these things can have a way of balancing themselves out, and within about 18 months the ratio will probably have eased to more comfortable levels.

Read the full article here

Is it the right time to buy yet?

Has the time come to get back into the market and purchase a property?

In this article for Switzer, John McGrath looks at why it might just be.

In challenging markets, it can be very hard for people to see the opportunities they present. sale-sign-auction-house-property-market

We know Australian property is a safe and reliable asset class that will always do well if you buy quality homes and investments in desirable locations and hold for the long term.

There will be times when we have buyers’ markets, like we do now in Sydney and Melbourne; and there will be times when we have sellers’ markets, like we did in both cities between 2012-2017.

Every time a boom comes around, we are reminded of the capital growth property can achieve.

People kick themselves for not buying five or 10 years ago as they see prices going up and up.

Then, the market inevitably turns and people forget that lesson.

They huddle amongst the herd where they gain comfort from doing nothing.

That’s how people miss opportunities.

You should always buy property for the long term. sold sale

Generally speaking, I encourage buyers to forget about market timing and focus on personal timing.

Simply buy when a great property comes along that is within your budget and then hold it for the long term to catch the next wave or two of major growth.

But if I had a crystal ball, I’d tell you the best time to buy is either week one of a two or three-year boom or the final week of a downturn.

I reckon Sydney and Melbourne are close to their floors and this means there is ripe opportunity for buyers who are willing to go against the crowd.

Granted, this isn’t easy to do.

If you’re looking to buy today, you’ll probably have at least one parent plus a few siblings, friends and colleagues telling you “you’re crazy”.

Some will say the mythical bubble is about to burst, others will tell you that prices are likely to drop further and it’s best to wait.

Problem is, no one can pick the bottom.

Not even those of us with decades of experience in the market.

Your best play in Sydney and Melbourne today is to buy a high quality asset, when a really good one becomes available, within your budget at the 10-15% discount available right now. 

How today’s buyers are benefitting in the falling market 

  • Prices are 10-15% down, so you’ll pay less than what many other buyers were willing to pay a year ago. (The fact they were willing to pay those prices and the banks were willing to Hand Drawing A Graph About Real Estate Market Concept Imagelend on those valuations should give you comfort that prices will go back to those levels again).
  • You’ll have far less competition, with most auctions only attracting one or two bidders.
  • Interest rates remain very low and there is wide speculation of one or two cuts in the near future due to concerns over stalling economic growth and reducing consumption. If you can buy your first property at a time of low interest rates, you have a big advantage as it’s those first five years that are most expensive – when the bulk of your P & I repayments are covering only the interest, with just a little bit paying down the principal.

If we dig down to buyer groups, I’d say first home buyers and upgraders will benefit most from today’s market conditions.

Read the full article here

Sydney first-home buyer stamp duty exemptions and concessions on the decline

While Property prices in Sydney fall – so do the number of first-home buyer stamp duty exemptions and concessions.

An article on Domain.com.au looks at the figures.

Sydney properties are becoming more affordable as prices fall, but the number of first-home buyer stamp duty exemptions and concessions have taken a sizeable drop of more than 20 per cent in the past year, new data shows.  Sydney suburbs

About 6200 exemptions and concessions were granted to first-home buyers in NSW over summer, data from Revenue NSW shows.

There were 7940 issued over the same period last year.

“We have seen a bit of a drop-off in first-home buyers in the past few months,” said Domain research analyst Eliza Owen.

“Even though property prices have become cheaper, in some ways it has become harder to get a mortgage [due to tighter lending restrictions].”

Last month, 1961 exemptions were granted, the lowest monthly number since July 2017, when the threshold lifted from $550,000 to $650,000 while the concession cap increased from $650,000 to $800,000.

The change boosted first-home buyer activity, Ms Owen said, prolonging price growth at the lower end of the market as the downturn took hold.

“Those who could afford to may have already utilised the policy and now we’re seeing that … drop-off,” she said.

“[But] even when we talked about a surge in first-home buyers, once investors started dropping out of the market, it was still at a relatively low level compared to some of the previous peaks we’ve seen.” 34079710_l

Monthly lending to first-home buyers peaked last April and has been on the decline since, the most recent data from the Australian Bureau of Statistics shows.

But the proportion of first-home buyers in the owner-occupier market is still growing, with first-home buyers responsible for almost one-quarter of loans.

The number of grants issued for new homes is also in decline, with about 1770 issued over the past three months —  3.8 per cent less than the previous summer.

Among those looking to make the plunge are Mervin Sayseng and Stephanie Nowicki, who are buying a house and land package in Riverstone – about 48 kilometres north-west of the central business district.

“I don’t think that prices will go down much more, at least in our range,” Mr Sayseng said.

“We’ve kept our budget at $650,000 … due to stamp duty concessions and how much we had saved. For established homes, [the threshold], it’s very limiting.”

Where are first-home owners buying? (March 2018 to February 2019)

Suburb Postcode Number of first-home owner grants Number of first-home duty exemptions or concessions Total benefits
Liverpool 2170 223 559 $12,381,227
Campbelltown 2560 98 598 $12,139,904
Westmead 2145 200 497 $11,534,265
Werrington 2747 315 450 $10,201,736
Spring Farm 2570 369 427 $9,482,673
Blacktown 2148 86 420 $8,711,434
Gosford 2250 31 421 $7,864,976
Penrith 2750 157 305 $7,329,220
Parramatta 2150 145 273 $6,956,928
Homebush 2140 157 246 $6,727,298
The most common suburb or town for the postcode has been shown. Source: Revenue NSW.

In the past year, $6.6 million was given to first-home buyers in Riverstone.

The most benefits were cashed in in Liverpool, followed by postcodes covering Campbelltown, Westmead and Werrington.

Of the top 20 areas, postcode 2205 — covering Arncliffe, Wolli Creek and Turella — was the closest area to the CBD.

Read the full article here

10 extreme homes from around the world

We’ve heard of tree changes and sea changes – but that’s nothing compared to these homes.

Discover the 10 most unusual and extreme homes around the world in this article from Realestate.com.au .

Thought your pink walls were a bold statement?

Sure, your place might have character.

But does it have a Wikipedia entry?

Feast your eyes on these mind-bending properties from around the world.

These amazing homes prove anything is possible if you dream big enough. Perhaps one of these properties might inspire your next DIY or renovation project (though possibly on a smaller scale).

  1. Bubble treehouse

Floating among the branches of a Canadian forest are a small cluster of some of the strangest houses you may ever see.

Free Spirit Tree Houses has created a little village of these unique structures for holiday-makers to discover while enjoying the incredible natural surrounds.

Bubble treehouse
Ever wondered what life in a bubble is like? Picture: Kerry Maguire / Free Spirit Spheres

  1. 732 copycat Disney castles in Turkey

No this is not a mirage. You’re looking at hundreds of luxury houses built in neat rows, their pointed towers somewhere between the iconic Disney castle and a classic French chateau. These houses are located in Turkey and they stand empty, like a deserted Disneyland theme park.

The villas, close to the town centre of Mudurnu in the Bolu region, are sadly sitting empty due to a sharp dip in the housing industry in Turkey, causing investors to file for bankruptcy protection.

Turkey disney castle mansions
There are more than 700 villas in the development. (Photo by Adem ALTAN / AFP)

  1. Pole house, Great Ocean Road

Created in 1972 by architect Frank Dixon, this house sits on a 15m-platform, 40m above Fairhaven Beach on Great Ocean Road, with spectacular views of the ocean and Aireys Inlet lighthouse.

It was a family home for years before it was saved from demolition and transformed into a luxury holiday home. It features retractable floor-to-ceiling windows, a perimeter walkway with a glassed balustrade, a floating fireplace, and now has more living and accommodation space.

Pole house in Fairhaven
The Pole House in Fairhaven. Picture: Alison Wynd / News Corp

  1. Beer Bottle Temple, Thailand

Buddhist monks from Thailand’s Sisaket province collected more than a million empty beer bottles to build their stunning Wat Pa Maha Chedi Kaew temple.

This temple is located in the city of Khun Han, more than 600km northeast of Bangkok, near the Cambodian border. Heineken Beer gives the building its green colour and local Chang beer adds a contrasting dark amber. Bottle caps are used to create colourful murals and natural light creates amazing, ever-changing prisms and shadows around the temple.

It’s a perfect place to reflect on the world as it reflects back on you. Putting it together took six years, and the monks are still adding to their unique habitat. The temple lures tourists in with its unusual charm, and the monks who call it home accept donated bottles to finish their masterwork.

bottle temple
The main building at Wat Pa Maha Chedi Kaew, more commonly know as ‘The Million Bottle Temple’. Picture: Mark Fischer / Creative Commons

Think your beer bottle collection could match this? Read about what could be Australia’s best-ever man cave.

  1. Hotel Costa Verde

Fancy spending time in the cockpit of a former jet while relaxing in four-star luxury? Costa Verde’s Phoenix hotel suite is located in Costa Rica and is made from the salvaged body of a 1965 Boeing 72

“Our 727 home features two air conditioned bedrooms – one with two queen-sized beds and the other with one queen-sized bed, each with its own private bath,” writes the company on their website.

You’ll have a private entrance up a river rock, spiral staircase, and 360-degree views of surrounding gardens from $US180 a night.

Converted Vehicles
Hotel Costa Verde is forged from the body of a Boeing 727. Picture: Costa Verde

  1. Shoe House, USA

Created in 1948 by shoe maven Mahlon N. Haines, the Shoe House has become a must-see road trip stop in York, Pennsylvania.

Patterned after a high-topped work shoe, the five-level house is made of wood, covered with wire and coated with cement stucco.

Conceived as an advertising gimmick, the property is full of riffs on the shoe theme; including a shoe-shaped dog house out the back.

The giant shoe has passed through the hands of various owners (many connected with Haines) and has undergone extensive preservation and restoration in recent years. It’s currently run as a museum to the Haines legacy.

Shoe house
The Haines Shoe House in Hellam, Pennsylvania, United States. Picture: CrazyLegsKC / Creative Commons

Is your shoe collection taking over? Read 3 stylish (yet practical!) ways to store shoes.

  1. Stone House, Portugal

On the Nas Montanhas de Fafe of Northern Portugal sits “the House of Stone” – Casa do Penedo.

The home was built in 1974 as a family retreat, fashioned from several boulders located on the mountain. Though it may look basic, the home has two storeys, a fireplace and a swimming pool.

It’s the ultimate in sustainable home design and offers its residents a blissful escape from noisy 21st-century surrounds.

Portugal stone house
It looks like a stone, but is actually a comfortable home perched on a hill. Picture: Feliciano Guimarães/ Creative Commons

Love a remote dream home? Read about a remote ‘steel tent’ home perfect for getting away

  1. Mushroom House, USA

Looking as if it’d be more at home on Mars, New York’s Mushroom House (also known as ‘Pod House’) is as distinctive as they come.

Located in the Rochester suburb of Perinton in upstate New York, the house is a popular local landmark, which hasn’t bothered the three sets of owners a bit.

Created in 1971 for Robert and Marguerite Antell by architect James H. Johnson, the five interconnected ‘pods’ are meant to look like the Daucus Carota flower (dubbed Queen Anne’s Lace in North America), but to most people it ends up looking like otherworldly toadstools or lily pads.

Either way, it’s one dramatic way to live. Mushroom House was sold for $799,900 in February 2012 (the original asking price was $1 million).

Mushroom house New York state Perinton
The Mushroom house is also known as the Pod House and is tucked into the natural surrounds in New York state. Picture: Daniel Penfield / Creative Commons

  1. Bubble House, France

Architect Antti Lovag created this jaw-dropping wonder for fashion designer Pierre Cardin. Palais Bulles, or the ‘Palace of Bubbles’, was built in 1989 in Théoule-sur-Mer, just outside Cannes.

The bulbous creation has been a popular destination for the European social and entertainment scene and boasts stunning views over the Mediterranean Sea. It features 28 rooms, an amphitheatre, gardens and pools.

Palais Bulles’ 10 bedrooms are decorated by famous contemporary artists and are intended to inspire a return to the caves of our ancestry.

Bubble house

Palais Bulles (“Bubble Palace”) is a large house in Théoule-sur-Mer, near Cannes, France, that was designed by the Hungarian architect Antti Lovag. Picture: Getty

  1. International Space Station, the Universe

There’s a bunch of fabulous and fascinating properties around the world, but we’ve looked skyward for number one.

Space. The final real estate frontier.

The International Space Station (ISS) is our only true home in space, having housed a rotating crew of astronaut residents for more than 15 years.

A research outpost for the best and brightest, the ISS has to make extraordinary people as comfortable as possible while they’re floating weightlessly 400km above the planet.

They live in 14 pressurised modules and even have a stunning picture window, called the Cupola, that lets them enjoy a view to trump pretty much all others.

Wonder how much a module rents for…?

An image of the backlit International Space Station, taken in March of 2009. Picture: NASA

An image of the backlit International Space Station, taken in March of 2009. Picture: NASA

Read the full article here

Weekend video: WOW! 5 Magic Tricks That You Can Do

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again 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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