July 2009: Green shoots appearing for property investors

Welcome to your July edition of propertybuyer’s market update.

In this edition we will look at…

1. Tide Turning for Property Investors
2. Client Stories
3. Tax Busting & Hotspotting workshop – Thurs Aug 6th
4. Inspiration Corner - Thoughts of the Month

 

1. GREEN SHOOTS APPEARING FOR INVESTOR MARKET

Since the onset of the Global Financial Crisis investment in Australia’s residential markets has seen a lacklustre performance where investors have been somewhat thin on the ground - however investors are starting to venture back into property on the back of strong rental yields and an overall improvement in confidence.

 

 

 

One of the most useful ways to understand the ratio of owner occupiers to investors in the residential market is to analyse housing finance commitments. This data is published by the Australian Bureau of Statistics and acts as a very good barometer of future levels of market activity.

Both owner occupier and investor finance commitments started to trend downwards at the beginning of 2008 as interest rates reached a peak and the reality of the global financial crisis crystallised.

Home buyers were much quicker to return to the market, responding to low interest rates, the boost to the First Home Buyers Grant and strong buying conditions. Since September last year the value of owner occupier housing loans has increased by a whopping 42 percent. Over the same period the value of investment loans increased by a comparatively small 6.6 percent.

The tide turned for investors much later, with the value of investment loans continuing to decline up until the end of February ’09; the last time the level of property investment was this low was back in 2002. Since this time investor finance commitments have been moving upwards, increasing by 18 percent to the end of May.

The return of investors to the market was delayed due to several reasons. Investor confidence had been eroded significantly; not just by the state of the global economy but also by the shock of seeing share portfolio’s halve in value and the prophets of doom and gloom suggesting property values were likely to do the same. With Australian property values proving to be very resilient, and, in fact showing modest increases since the start of the new year, investor confidence is likely to have improved markedly.

Investors are also likely to be waiting for first home buyer activity to start winding back before moving back into the market en masse. There is a considerable overlap between investor and first home buyer buying preferences, with both segments often targeting similar properties. Investors are likely to shy away from such competition. As the deadline approaches for the wind back of the First Home Buyers Boost (the boost will be halved on October 1st and removed entirely on January 1st) investor numbers are likely to gather further momentum.

In terms of the peak investment timing, investors who are prepared to buy now are likely to be buying into the market at a very attractive time. Rental rates have increased by 34 percent over the last three years and now appear to be peaking. Securing a rental lease at peak rental rates has obvious benefits for an investor with regards to cash flow.

The rise in rental rates, together with overall flat property prices over the last year has resulted in solid gross rental yield improvements. Nationally, houses are now returning a gross rental yield of 4.5 percent and units are returning 5.3 percent. Darwin is providing the best gross yields at 6.4 percent and 6.1 percent for houses and units respectively.

Additionally, for those investors who are targeting properties priced over $500,000, competition in the market is comparatively light. Some of the most popular investment regions are likely to be found closer to the city, within the inner and middle rings of the capital cities where first home buyers are generally priced out of the market.

(Article provided by RP Data property pulse).

 

If you are considering buying and would like to get the upper hand with a professional buyers’ advocate representing just you (not the vendor), sourcing and negotiating the best opportunities throughout Sydney and Australia, then please call our team on +61 2 9975 3311 or email us for an obligation free chat. Click the picture below to send us your wishlist...

 

2. CLIENT STORIES

Buyer type: Home Owner

Buyers brief: Negotiate only

List price: Auction

Purchase price: $660,000

Saving: Beat 4 other buyers buy buying pre-auction and saving a potential $30,000

Time taken: 9 days

Buyers’ agent comment – David McElveney:

Andy and Shannon were clients of PropertyBuyer when I joined the company but the actual search did not move into full swing until they had found the property they wanted to buy. I started by inspecting the property and quickly realised that in the price range and the condition and position of the property they chose would create the conditions for competitive bidding from other buyers. I also knew that the current shortage of properties caused by the seasonal deficiency of Sydney's winter real estate market would make things extra tough. Once they had instructed me on price and their motivation to buy I pursued the property as hard as possible and there was a limited time period to secure the property prior to auction. Within a 9 day period we secured the property just the night before auction and beat as many as 4 other bidders who were found around the auction signboard scratching their head wondering what had happened. It took a lot of convincing of the agent and the vendor to forgo the auction when they most likely would have achieved a higher purchase price.

What our clients say:

“I had been a little skeptical of the property market and my ability to get a foot in the door! The confidence shown by David after we explained our wish list was impressive and left me feeling that the property we were looking at was achievable. David worked extremely hard throughout the week and kept updating me when bids were being submitted. That he was able to secure the property prior to auction is a testament to his skills as a negotiator, and for the price he said we would get it for.”

Andy and Shannon

Buyer type: Home Owner

Buyers brief: North West of Sydney

List price: Vendor looking for over $820,000

Purchase price: $780,000

Saving: $40,000

Time taken: 21 days

Buyers’ agent comment – Matt Corbett:

Godwin and Maria had been clients for some time, but the actual search did not fully begin until they had sold their home in the south of Sydney. I started by recommending a reputable sales agent to them and assisting them throughout the process. Once they had exchanged on their old home, there was a limited time period to secure a new home which met all of their requirements. They wanted a larger family home close to their work places in Sydney’s north west. Within 3 weeks we exchanged on a lovely 5 bedroom home with pool in Westleigh. I was recently asked over for dinner and it was wonderful to see them so happy in their new home.

What our clients say:

“Just a few lines of great praise, admiration and of course a million thanks to Matt and the team at “Property Buyer” for helping us locate not just a house but the right “HOME” just as we wanted. My wife and I have to say that the experience we had was extremely professional and very helpful indeed. You saved us thousands with your negotiation skills and of course worked very hard in helping us occupy the house just at that crucial time prior to our daughter’s marriage. To add further, throughout the process you were kind, patient and reliable because you gave us your best attention, time and listened carefully to our specific requirements. Thanks also for connecting us with a reliable Mortgage Broker and Lawyer we could trust as much as your reputed company. The whole process was a marvellous experience and trouble free.”

Godwin & Maria

Buyer type: Investor

Buyers brief: Eatern Suburbs

List price: Vendor looking for over $950,000 at auction

Purchase price: $930,000 before auction

Saving: $20,000

Time taken: 40 days

Buyers’ Agent comment - Saul Rudnick:

The clients brief was very specific needing to complement the existing portfolio we had previously created. What we were looking for was in very low supply and thus all of the open for inspections were filled with potential buyers. Due to the competition being excessively high, the vendor was adamant on going to auction. Patience, market knowledge and a solid long term relationship with the selling agent, made it possible for us to secure this price for an eastern suburbs semi at a very reasonable price prior to auction.

What our clients say:

“I'd like to thank you both for assisting with my purchase. I much appreciate the expertise & professionalism you both brought to the deal and the dedication / persistence. It has certainly taken a lot of emotion out of the whole transaction and enabled me to make decisions with a cool head.” Fong Yee - Investor

3. tax busting strategies and hot spotting

Our next seminar “Tax Busting Strategies & Hot Spotting for Property Investors” will be held on Thursday 6^th August at North Sydney Leagues club.

It’s that time of year again when we think about tax and prepare our tax return.

How much do you really take home?

Would you like to have more money in your own pocket and develop truly tax effective investment strategies?

Part 1 Seminar - Tax Busting Strategies for Property Investors

Tax planning is something that every person should do as early in the new financial year as possible - rather than rushing all your expenditure or making hasty investment decisions in the month of June. A carefully considered tax plan needs to consider a range of options.

Henry Chow, Principal of Tax Liaison will be presenting an action packed and hands on information seminar and provide top tax tips including:

· Outline of tax deductible and non-tax deductible expenses when owning property

· Outline of legal structure when purchasing property

· Deduction of interest when purchasing property

· Depreciation – including accessing the phantom cash flow

· Varying your salary tax (Section 15/15 PAYGW Variations) to increase your cash flow

· Principal Place of Residence tax strategies and capital gains tax concepts

· Where to minimise tax audits with the ATO when owning a property

Henry Chow is a CPA Accountant with a difference- not only has he had over 18 years business experience- he has had 5 years with the Australian Taxation Office and 2.5 years with international accounting firm KPMG. He has been on both the Government and commercial tax and industry experience so he knows what to advise clients when reviewing and advising on tax and commercial law.

Part 2 Seminar – Hot Spotting for an Investment Property

Many property investors will stop at one or two investment properties. Either they run out of cash flow or lack the knowledge or motivation to build a substantial portfolio.

One of the most common questions property investors ask is “Where is the next hot spot?”

In this session, Rich Harvey will uncover the myths about hot spotting and present his top property tips on:

· How to identify property hot spots

· 10 critical questions to ask about an area

· Methods for identifying growth properties

· Which types of properties are in high demand

· Buying high yield investment properties

· How to build a sensible property portfolio

Rich Harvey, founder and Managing Director of propertybuyer will present many tips that could propel your knowledge to the next level. Rich Harvey is a professional economist, licensed real estate buyers agent and experienced property investor. Rich & propertybuyer have won numerous awards, including the NSW Real Estate Institute (REINSW) "Award for Excellence" in Buyers' Agency for the last 4 years running. He was the winner of the prestigious National and NSW Telstra Business Awards and most recently named the 2009 “Buyers Agent of Australia” by the Real Estate Institute of Australia (REIA).

Date: Thursday 6^th August 2009

Time: 6.15pm – 8.45pm (6.30pm start)

Venue: Mackinnon Room, North Sydney Leagues Club, 12 Abbott Street, Cammeray, NSW

Investment:

$30 single ,$50 per double

Early bird discount: Book before Friday 31 July and only pay $25 single and $40 double

Book NOW: Call our office now on 02 9975 3311 or CLICK HERE TO BOOK ONLINE

for our seminars.

This seminar is tax deductible. Look forward to seeing you there.

4. Inspiration corner

“If there is any one secret of success, it lies in the ability to get the other persons point of view and see things from that persons angle as well as from your own.” Henry Ford

“The greater the loyalty of a group towards the group, the greater is the motivation among the members to achieve the goals of the group, and the greater the probability that the group will achieve its goals.” Rensis Likert

“None of us is as smart as all of us.” Phil Condit

[firstname], thanks for reading our July update. We’ll be in touch next month.

If you would like to buy a property and have a professional buyers advocate on your side sourcing and negotiating the best opportunities throughout Sydney and Australia then please call +61 2 9975 3311 or email us to find the easier way to buy property. .

Warm regards

 

 

Rich Harvey

Managing Director

Tel: +61 2 9975 3311

www.propertybuyer.com.au