The combination of low interest rates, foreign buyers, upgrader enthusiasm and investor momentum saw 2013 emerge from its property holding pattern and the market become reinvigorated.
RP Data analyst Cameron Kusher said he believes momentum in property will continue into the new year, propelled by investors and upgraders.
He also believes values will climb further, though not as sharply in 2014. Another of his predictions is that gross rental yields in Sydney and Melbourne will continue the decline they commenced in latter 2013, leading investors to look at alternative growth zones. These are good tidings for the Far South Coast of NSW. The last few months of the year had seen keen interest in the area, with properties that were priced right being snapped up, some as soon as they came on the market.
However, Mr. Kusher issued a warning about other economic wild cards, like the unemployment rate, stating “If it reaches 6.25% it will be the nation’s highest unemployment rate since September 2002. If people start to become nervous about their job security it is likely to result in a lower level of demand for housing.”
Rates are at their lowest levels since the 1960s and inflation is currently at 2.2%. Keep in mind that the Australian interest rates don’t operate in a bubble – they respond to what’s happening in the global economy. The recent fall of the Australian dollar of 2.5 cents against the U.S. dollar as a result of the U.S. winding back its stimulus is a reminder that inflation could increase if the dollar keeps falling and the cost of imports increase. If inflation increases we could see a rise in interest rates. The all important question now is whether the RBA will increase or decrease rates, or leave them as is in the new year.
With keen interest from both local buyers and those from interstate in Merimbula, Bega, Tura Beach, Eden and Cooma and the current low interest rates together with confidence in the real estate market, vendors should not delay listing their properties for sale. Now is a prime time to sell.
There’s no doubt that yield is the golden word for investors. Other things may come into play, such as lifestyle or infrastructure potential, such as the Bega Hospital and Eden Wharf developments, but the income return on the property is usually the major concern for the purchaser. The Sydney market has been hot for investment properties to the extent that Investors are crowding each other out, resulting in a slight drop in yields. That gives regional towns on the South Coast and Monaro such as Bega, Merimbula, Tura Beach, Eden and Cooma the inside track for investors looking for positive returns.
Yield is generally calculated annually as a percentage. It is based on the asset price or market value of a property. The gross yield is the income (i.e. rent) derived from the investment before expenses are taken out. The net yield is the income less expenses. These expenses could include stamp duty, legal fees, pest and building inspections, repairs and maintenance, property management fees, insurance, rates, strata management fees.
The yield is stated as a percentage and is worked out as –
Gross yield = annual rental income / property value x 100
Net yield = annual rental income – annual expenses / property value x 100
The return or total return includes capital gains. It is quoted as a percentage and is retrospective, based on the gain or loss of the investment during a particular period.
Increasing housing demand drives property prices up and this can affect the yield of an investment. The more prices go up, the lower the percentage between rents (income) to property value. According to Australian Property Monitor’s figures for the September quarter, this is exactly what is happening in Sydney right now. With the current low interest rates many investors are considering purchasing property for negative gearing. Purchasers should ask the right questions of Real Estate Agents to ensure they know the likely net yield on a property before they purchase.
Politicians make all sorts of promises in the lead up to an election, trying to convince you that they’re the best choice. We all know how often those promises fall flat! Real Estate Agents can promise you the world as well. But with a ramped-up spring selling season underway, you don’t want to make the mistake of listing with an ineffective Agent and “miss the boat”.
So let’s push the promises aside and look at some facts:
1. We won’t charge you a Marketing Fee
2. Our online marketing strategy will give your home a higher profile than other sellers
3. Your property will be on more websites than any other local agent.
4. We use Youtube and Facebook to attract more buyers
5. Qualified Buyers are emailed when you trust us to sell your home
1. We get Home Sellers more money in their pocket and we can prove it
2. Our Sales Consultants train EVERY week in negotiation, relationship-building and client care
3. Our Sales Consultants have a hotline to industry mentors which gives us the negotiation edge
4. If a Buyer asks “What will they take?” we answer “The advertised price”.
1. We won’t lie to you, “buy” your listing or ask you to accept an offer from a “tyrekicker”
2. We use hard evidence to justify the suggested selling price
3. If we don’t live up to our promises, you don’t have to pay us
Profile & Experience
1. Fisk & Nagle First Choice has been operating for 40 years
2. With five offices across the Far South Coast and Cooma, we have better exposure and bigger reach than any other agent in south-east NSW.
3. Our offices hold the most prominent position in Bega, Cooma, Merimbula, Tura Beach and Eden
4. Our signage and window displays are bigger, brighter and more noticeable than other agents
Who will you elect to sell your home?
In May Representatives of the Real Estate Institute of NSW, President Christian Payne and CEO Tim McKibbin met with New South Wales Treasurer Mike Baird to discuss how the New South Wales Government can help stimulate the property market in NSW.
Amongst a range of issues discussed the Real Estate Institute of NSW put forward the argument that reducing stamp duty will stimulate real estate purchases and result in increased revenue to the NSW Government. On their website the REINSW states –
“REINSW believes that the best way to bolster the NSW economy is for the State Government to act now and cut the rate of transfer stamp duty in order to stimulate transactional activity in the property market and as a result potentially boost state revenue by hundreds of millions of dollars.“
They cite the outcome for Governments that have introduced stamp duty cuts. For example:
This is strong evidence that decreasing property transfer duty rates does indeed boost revenue. The REINSW also suggested at the meeting that the NSW Government should reinstate the first homebuyers’ incentives for purchasing existing properties. They felt that limiting the grant to cover purchase of new properties only had been a failure, causing a detrimental impact on the NSW property market. Their position is that the Government should take steps to improve housing affordability, which will consequently improve the New South Wales economy.
Have you ever thought about how the internet has completely changed the way we buy and sell real estate? Many years ago, home sellers would choose to list their home with a variety of real estate agents. Buyers would walk into their local real estate agent’s office and be taken for a drive by an agent. They were often shown properties that were irrelevant to their requirements. It would take at least a week to find an appropriate house to buy. When an offer was agreed to, the real estate agents would have to drive to the seller to get contracts signed.
In the early 90’s, buyers would generally view properties for sale in a real estate agent’s office window. Sometimes they would use a box-like, large mobile phone to call and enquire. Sellers were more knowledgeable and were beginning to recognise the benefits of exclusive agency listings. The only way, however, buyers could view a property was by physically visiting it. There was no internet.
Every activity used a lot of time. Real estate agents took phooks, and had to wait for them to be developed. If the property was advertised in a local newspaper, the photos and blurb had to be physically handed to the editor. Ownership information had to be obtained, with council permission, from floppy discs. Hand written letters were written to owners, and envelopes sealed with tongues!
How the times have changed. The launch of the internet changed buying and selling real estate in so many ways. Real estate agents were given the opportunity to expose properties to a world-wide market. Ownsership information was instantly accessible, and digital photos could be emailed to buyers, newspapers, and be immediately available for potential buyers to view. There was suddenly more time to spend with customers. Today, the internet saves huge chunks of time. Buyers can sift through properties without even speaking to an agent. When a buyer wants to inspect a property they are usually ready to buy. They can even see what the surrounding houses look like on Google Street View. Social media like YouTube, Facebook and Twitter can expose a property virally, and real estate agents can communicate with both buyers and sellers more efficiently. Technology and the internet has changed the way real estate is bought and sold. If you want maximum exposure for your home, choose a real estate agent who uses the internet and is up to date with technology.
One of the biggest trends in renovating we might be about to see emerge is the mini-makeover.
Think: paints, cupboard handles, tap fittings, wallpapers (yes, wallpapers going up, not coming down) and the polishing of timber floors. Also light fittings and window treatments. Anything that changes the feel and adds a bit of pizzazz without spending the big bucks.
If that sounds like the ’70s revisited, perhaps it is. Hopefully not with such garish results, though. And yes, if you are thinking, ‘hang on, hasn’t everyone been doing this all along?’ In part you are right. But the difference is the mini-makeover will be used by householders to make do for much longer than in recent years.
Why will we see this replace bigger aspirations – at least for now? It’s a meeting of several forces. First, the property market isn’t going anywhere in a hurry at the moment, so the belief that you can do a big reno and flip the property to make a good quid is quickly dissolving. Second, Australians are saving more than we have in years and there’s a propensity to pay down debt. That means making do with what we have and not taking on huge loans to expand our lifestyles. More broadly, employers continue to report that the biggest thing employees are chasing isn’t dollars but work-life balance. Money is still important, yes, but there’s a greater focus on living a life outside of the office, and people aren’t jumping ship for an extra $5,000 or $10,000 like they were a few years ago.
So if they are working less and aren’t prepared to move for a bit more cash, it’s a fairly reasonable conclusion that people will be looking to make their dollar stretch further by extending the life of their current home.
A few weeks ago, most people were banking on a rate cut – and in fact we’ve ended up with out-of-cycle rises by all four major banks and at least five smaller lenders. And with the ANZ Bank now rolling out its own decision at a set time each month, we could be in for some lengthy wait times in each of the coming months to see which way rates will go.
The Reserve Bank makes its announcement on the first Tuesday of every month and ANZ isn’t wheeling out its move until the second Friday, which means a wait of at least three days . So where does that leave borrowers? Slightly confused? Yes. Powerless? No.
If ever the banks were going to start breaking the cycle for rate rises, now isn’t necessarily a terrible time from a consumer perspective, thanks to the amount of information at borrowers’ fingertips about what rates are available in the market, and the relative ease for many to switch providers and make up the cost of doing so by negotiating a lower interest rate from their new lender.
The administrative pain of getting your documents together, filling in some forms and swapping some direct debits is very small when we are talking thousands of dollars saved over the life of the loan.
The very sweet part is that having switched now to loans that will attract no exit fee thanks to the Federal Government’s ban last year, it won’t be that hard – or expensive – to move again should there be a cheaper or better-suited offering elsewhere.
Australian borrowers will have to wait at least another month for more interest rate relief after the Reserve Bank surprised everyone by leaving its key rate unchanged. The Reserve Bank yesterday kept its cash rate at 4.25 per cent, defying expectations of a third rate cut in a row.
With the cash rate sitting at 4.25 per cent it is still in a position other western central banks can only envy, with considerable room to lower rates to stimulate growth should it be necessary.
This pause is then a genuine pause, not the end of the rate-cut program.
The Reserve needs Europe’s recovery to continue, and it needs Australia’s employment situation to stabilise, even as the Australian dollar stays well above parity with the US dollar. This will involve not so much a lowering of the jobless rate, but an increase in employment, which was flat in 2011.
If Europe deteriorates again or job growth continues to flat-line, rate cuts will resume again. And, as the Reserve notes, the inflation outlook gives it room to cut them aggressively if necessary.
Banks have warned that home buyers could miss out completely on a pre-Christmas rate cut, amid a worsening economic situation in Europe and rising borrowing costs.
Senior government ministers are urging the big banks to pass on in full the 25 basis-point rate cut announced yesterday by the Reserve Bank, but the Australian Bankers’ Association said the banks were not obliged to do so. However rising borrowing costs and the medium-term economic outlook for the global economy could stay their hand.
At least two smaller banks have already passed on the cut, but banks are not required to match RBA rate moves in full and the RBA no longer determined the actual cost of money for banks in Australia.
There’s a strong expectation the banks will follow the Reserve Bank either on the way up or on the way down but there are times – and this is one of them – when the cost of money diverges from the Reserve Bank’s interest rates.
Treasurer Wayne Swan and Finance Minister Penny Wong today both urged the banks to consider consumers and pass on the pre-Christmas cut in full. They understand the banks are operating in a global environment and it’s a tough time. But the banks also have to understand the tough environment that their customers, families and small business face.
Tony Abbott believes the banks should be passing on rate cuts in full. That’s what happened under the former government, that’s what the current treasurer says should happen and the current treasurer should use his authority and try to ensure that it happens.
The Reserve Bank cut its cash rate by 25 basis points to 4.25 per cent yesterday, the second rate cut in as many months.
Property investors have rushed back to the housing market, with Australia’s biggest mortgage broker, Australian Finance Group, processing $2.9 billion worth of mortgages last month -up 18.4 per cent on October.
Investors accounted for two out of every five mortgages written in November, a record for AFG and no doubt helped by the interest rate cut last month.