The state’s premier seaside suburb saw a 100 per cent spike in average weekly house rent – from $245 to $490 – a snapshot of the rental market by real estate analyst RP Data shows.

The Bay is one of nine hot property sites across the state recording house rent rises in excess of 20 per cent last year compared with 2010.

Among the big movers were West Beach (up 40 per cent), Whyalla (38 per cent) Roxby Downs (29 per cent) and Royal Park (27 per cent).

Unit rents also soared more than 20 per cent in Warradale, Wayville, Salisbury, Rose Park and Mile End.

The Real Estate Institute of SA said a lack of buying commitment was driving greater demand for rental properties in popular locations.

“More people are wanting to move to luxury properties in suburbs like Glenelg and West Beach but they are taking the rental option instead of committing to buying a home,” institute president Greg Moulton said.

“The rental increases in places like Roxby and Whyalla are tied to more people moving up there to work as the increase in mining operations comes to fruition.”

But the average weekly cost of leasing homes was also falling in other locations, RP Data found, with the worse hit St Georges (down $175 to $475), Aldgate (down $128 to $473) and Newport Quays (down $90 to $360).

RP Data has also revealed West Lakes is the most expensive suburb to rent a house, costing $580 a week on average. Peterborough in the state’s Mid North provided the cheapest housing accommodation at an average of just $145 a week.

But Peterborough provided landlords with the greatest gross rental yield – 7.7 per cent. In contrast, gross rental yields in West Lakes were 4.3 per cent last year.

Overall, the property market is set for an increase in rents this year, according to real estate agent Anthony Toop.

“We are likely to see up to 10 per cent increases in rents in the more affordable inner city suburbs,” he said.

Source: Adelaide Now

But do not expect to make any big gains if you put your home on the market in 2012, as agents say significant growth is still three to five years away.

In the past two weeks, Ray White Northeast agent Shane Illman has sold four houses to first-home buyers and said he expected the trend to continue.

“This year I have seen a big increase in the number of new homebuyers coming to open inspections,” Mr Illman said.

“I expect that to continue during the year but it depends on the banks as well.

“You need bank support for home loans in order to get new homebuyers in the market.”

Mr Illman said that 2012, like 2011, would be a buyers’ market.

“If buyers can hold on to their houses for three, four or five years, they will definitely see some growth in the property value,” he said.

“But we aren’t going to see any quick gains in this market.”

As of September 2011, Vista, Golden Grove and Holden Hill were the best performing suburbs reporting increases in house prices of 13.9, 10.6 and 7.3 per cent respectively.

Highbury reported the biggest decrease in house prices of 4.3 per cent, while Modbury and Redwood Park both dropped 3.9 per cent, according to RP Data.

Toop & Toop Golden Grove agent Len Allington said buyers should continue to focus their attention on properties in Golden Grove in 2012.

“The suburbs that have seen growth have seen it for a reason and that will continue,” Mr Allington said.

“Good infrastructure, schools and parks all make a difference.

“This year I think we will see some of the older homes in Golden Grove come on the market as older owners downsize.”

Brock Harcourts Gold director Andrew Simpson said 2012 would be a year of stability.

“Correctly presented and well priced homes will sell,” he said.

Investing in the future
TROY and Jessica Stearnes were thinking of their future when they decided to build their home in Golden Grove.

The couple, who bought land at The Settlement development in 2008, moved into their four-bedroom, two-bathroom house a year ago.

“We have always loved the northeast and we wanted to be close to our parents,” Mrs Stearnes, 24, says.

“We also wanted to be close to the schools here for when we have kids.”

The pair spent $500,000 on their 649 sq m block and home.

“We spent the extra money and got a larger house because we want to remain here for the long haul,” she said.

“Golden Grove is where we want to raise a family.”

Mrs Stearnes said the suburb’s stable house prices were part of its appeal.

“We always knew that Golden Grove would remain stable or increase in worth and that is part of the reason we built here,” she said.

Mrs Stearnes listed good public transport, shopping centres and lots of open space as other factors.

“I work in the city and I can get on the O-Bahn quite easily. We just love it here.”

Source: Leader Messenger

 

 

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Canberra tops the list

Canberra is no longer just a hotspot for politicians, it’s now topped a list of the best places to invest in property.

TEN17 January 2012

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Canberra: Not just popular with politicians. Source: Supplied

 

 

 

Perhaps it’s properties like the PM’s residence, The Lodge, that makes Canberra popular with investors. Picture: AAP Source: AAP

 

 

 

 

PROPERTY investors should think of Canberra as one of the best spots in the country, a new survey finds.

Canberra tops a list of 50 hot spots identified by an expert panel for magazine Smart Property Investment.

They said the city’s high incomes and a scarcity of land would underpin strong growth in property prices.

The panel also highlighted 18 suburbs and towns in NSW, including Muswellbrook, Bathurst, Penrith, Blacktown, Neutral Bay and Goulburn – making that state dominant.

Resource towns in Queensland and Western Australia were strongly represented, particularly the boom regions of Surat and Bowen Basin and the Pilbara.

There were also six areas in South Australia and four in Victoria.

The magazine’s editor, Phillip Tarrant, said the investment hot-spots were chosen based on their population growth, demand for housing, income level, employment, vacancy rates, previous capital growth and current gross rental yields. 

He said while capital growth on investment properties was no longer guaranteed, it was still achievable if buyers did their homework.

“If you pick your suburbs and areas carefully, capital cities can offer a good, safe investment,” he said yesterday.

“However, for investors chasing more lucrative returns, strong, diverse regional centres are proving a very popular choice with the experts.”

 

Read more: http://www.news.com.au/money/property/act-tops-property-hot-spots/story-e6frfmd0-1226246022686#ixzz1jwoati1r

Government figures released to The Advertiser show 6562 first-home grants were paid between December 2010 and November 2011, compared with 8135 in the same period the previous year.

The most popular areas for first-home buyers are in Adelaide’s outer northern and southern suburbs, including Paralowie and Morphett Vale.

Finance Minister Michael O’Brien said the foreshadowed axing of Federal Government first-home buyer support caused a rush in 2010.

“There was a reasonable `pull forward’ effect where people made purchase decisions that they may otherwise have deferred,” Mr O’Brien said.

“There is also general softness in the housing market (currently) which is reflected nationally in construction starts and a general fallback in property values.

“What we’re seeing in SA is pretty well mirrored in the other states.”

In this year’s Budget, the State Government announced it would cut its $8000 first home bonus grant by July 1, 2013.

Real Estate Institute of South Australia president Greg Moulton said the drop in first-home purchases was larger than the cutback in activity across the general market.

“Affordability is one issue (for first-home buyers) and banks are getting tougher with their lending criteria,” he said.

“Stamp duty is just ridiculous. If I was a state government I’d be looking at other ways to get money.

“It’s a hell of a slug for people trying to save a deposit and buy a home.”

Mr Moulton said conditions for buyers would improve in 2012 as interest rates were forecast to be further cut.

The first half of next year would be the best time to enter the market as sellers had reduced their prices to meet a wary market, he said.

Figures show the number of first-home sales increased in the second half of this year after bottoming out at 456 in April.

The Housing Industry Association says releasing new land would bring down prices and help first buyers.

Opposition finance spokesman Rob Lucas said the state tax regime was one of the highest in the nation and high stamp duty costs made it hard to attract and keep young people in Adelaide.

Source: Adelaide Now

This city can be found on Australian’s South Eastern coast and has a historical past since 1836 that can be traced back the time when it was one of the well-known British colonial areas. It quickly established itself as one of the major trading points in Australia with a prosperous economy, high opportunities for employment and the city and surrounding areas continues to appeal to substantial overseas interest. It is debatable as to whether or not the climatic conditions in Adelaide is too warm for most expats, but there is certainly no shortage of individuals who want to live and conduct business in this city.

Officially categorized as the 5th largest Australian city, Adelaide real estate also carries a populace of 1.3 million with overseas residents making up the higher percentage. Notable groups in the area include the Italian, English, Scottish, Greek and Vietnamese even though there are different nationalities sprinkled in and around the area. Whilst still categorized as the 5th biggest city the rate of development in the Adelaide population is lower than areas like Melbourne, Perth and Sydney.

Adelaide real estate economy seems to have rebounded from the financial meltdown during 1992 to emerge as the centre for government services in addition to having substantive manufacturing, commodities, services and defense sectors in and around the city. This rebound continues to expand in strength and size and most investors believe that sectors such as Adelaide property market is well-positioned to boom in the future.

The transport system in the city is very efficient, reliable and modern making it easy to travel between points in Adelaide in just twenty minutes.

Adelaide Real Estate – property prices
The recent economic downturn worldwide affected the property market in all countries, but the Australian and Adelaide  real estate market rebounded faster than most. Indeed, the real estate market has been growing with property prices increasing significantly in recent years. This renewed growth in the property market is a good indication that Adelaide economy and the city itself continues to appeal to a lot of overseas investors.

Source: Home Street Real Estate

A luxury property at Glenelg North, now listed with Toop & Toop, is nearly $1 million less than the last time it was on the market.

The 5 Cygnet Court property has a price guide of $6.9 million. When listed by another agency in June 2010, the asking price was $7.75 million.

LJ Hooker West Lakes sales partner Donna Farquhar is considering enlarging the “reduced $100,000″ sticker on a house she is selling on Semaphore Rd, Exeter.

Despite the property being rented out for $480 per week, she said the owners were “motivated to sell”.

“Realistic pricing is so important because there is so much competition out there,” Ms Farquhar said.

Real Estate Institute of SA president Greg Moulton said it was “critical” that vendors set a realistic price.

“Otherwise, there is no way you will sell your property,” Mr Moulton said.

“People are being very careful with their money and even though it is an emotional purchase, they are not going to pay more than the property is worth.”

Source: AdelaideNow

Mr Moulton said the biggest discounts were in properties worth more than $2 million, where a 2 per cent discount or more was common.

Toop & Toop managing director Anthony Toop said vendors needed to be careful when considering an asking price for their property and should not be seduced by the idea of getting the highest price.

“The pricing should be left to the valuers and the sales and marketing left to agents,” Mr Toop said.

“Rather than having an agent price the property for you, they should point out to you homes that have sold in that area and are most similar.

“Don’t consider sales before 2011 because the 2009 and 2010 sales may be well over the price you will achieve at the moment.”

Mr Toop said it was vital that a property was correctly priced from the outset of a sales campaign as potential buyers were unlikely to return.

While we wait for capital growth to soar on our investment property, maintaining a low vacancy rate is not only appealing, but essential. Attracting the right tenants to your property is critical and can avoid the financial and emotional pain of dealing with ever changing tenants, difficult tenants, or, the dreaded “tenants from hell”!

When investing in residential property it is important to look at things through the eyes of your future tenant.

What will attract a GOOD tenant to your property and how do you ensure they stay, long term? Never forget that your investment property is your tenant’s home and attracting a house-proud tenant will always pay dividends.

Good tenants are attracted to specific qualities:

- A good tenant will be attracted to a property surrounded by nice houses with good, quiet neighbours
- Is the neighbourhood safe and secure? If the local area showcases the work of graffiti artists and vandals, is this likely to be attractive to good tenants
- Is there access to public transport and shops?
- Is the property in a built up area and if so, does your property provide access to secure off street parking?
- Families will be interested in local schools, what are they like, are they close by and do they have good academic status?
- Young people may prefer the café and cinema scene or access to recreational facilities such as gyms, pools, local sport fields and clubs?
- Is the property pet friendly and have a backyard for the kids?
- Entertaining areas such as an outdoor BBQ in a private covered patio or balcony are always attractive as is a modern kitchen, bathroom and open house plan.

Above are just a few things to consider when purchasing an investment property. Once you have attracted GOOD tenants it is essential you keep them and this is where you, as a landlord must shine. For tips on being the BEST Landlord visit www.landlordspecialists.com.au and sign up for your 7 vital facts.

Source: realestate.com.au

Renting might be preferred because it allows for a more flexible lifestyle and the ability to relocate quickly compared with buying your own home. However, a good investment return together with additional benefits leaves home owners ahead and we will show you why.

REIA’s Deposit Power Housing Affordability Report for the September 2011 quarter showed that of the family income, 33.6% is required to meet a mortgage loan repayments, compared with a tenant who will contribute 24.6% of weekly income to rent. At face value, renting could appear to be more economical. However, when one takes a more complete view over time, which takes into consideration the returns from buying a house as compared to investing, in either shares or bank deposits, the conclusion will be different.

To answer the age-old question of renting versus buying, REIA looked at past statistics for the New South Wales residential property market.

The following assumptions and methodology were undertaken:

• House purchase price being the median house price during the year of purchase.
• Buyer has 20% deposit. Monthly loan repayments are calculated using the standard variable mortgage rate at the time. The loan term is assumed to be 25 years.
• 3. Stamp Duty calculated using the NSW rates payable June 2001 for a $384,000 house – $12,770.
• 4. Tenant changes residence every five years. Home owner changes residence only at the beginning of the period.
• 5. Other expenses for a tenant consist of removal costs of $1000 in 2008, adjusted by CPI for other years.
• 6. Other initial expenses for a home buyer consist of stamp duty ($3,000 in 2001) plus expenses (listed on the following page) for 2008, adjusted by CPI for 2001.
• 7. Reoccurring expenses for home buyers consist of maintenance adjusted by CPI for following years plus council rates and home building insurance expenses.

The data sources are as follows:

• Median house prices – REIA data for the relevant period.
• Monthly median rents – REIA data for the relevant period.
• Term deposit interest rate – the Reserve Bank one year term deposit interest rate, F4    retail deposit and investment rates.
• Standard variable mortgage rate – the Reserve Bank banks standard variable rate, F5 indicator lending rates.
• CPI – the Australian Bureau of Statistics, catalogue No.6401.0, Consumer Price Index.
• All Ordinaries Index – Yahoo

• · Finance data (includes capital gain only, no dividends).

• Average personal tax rate – the Treasury website

• Other expenses – Housing NSW, A Guide to the Cost of Home Purchase.

REIA’s methodology was as follows:

• Tenant’s expenses consist of median rent and other expenses.
• Home buyer’s expenses consist of monthly loan repayments (interest and principal) and other expenses (as listed above).
• In the first period the tenant has a savings amount, equivalent to the 20% house deposit, as well as the difference between tenant’s and home buyer’s expenses.
• For a tenant these differences in expenses are, under one scenario invested into banks in the form of bank deposits and under another scenario invested into the stock market by purchasing shares.
• Under the investing into the bank deposit scenario, in the first period the tenant invests an amount equivalent to the 20% house deposit. During the following periods the tenant’s savings compound by the bank term deposit interest rate, adjusted by the average income tax rate, and the difference between tenant’s and home buyer’s expenses is added.
• Under the investing into the stock market scenario, in the first period the tenant invests the amount, equivalent to the 20% house deposit, into shares. During the following periods the tenant’s savings compound by Monthly All Ordinaries Percentage Change, and the difference between tenant’s and home buyer’s expenses is added.
• Equity for the home buyer is calculated as the difference between the median house price and the total principal of the loan remaining.
• Total principal of the loan repaid is calculated as Loan amount divided by the total number of months of the loan multiplied by the number of months which the loan has been repaid for.

The result of the comparison of two scenarios is shown on the graphs on the following page.

With the volatile stock market in the past ten years, it is interesting to note that the amount of savings under the bank deposit calculations over the 10-year model is the same as if the money was invested in the stock market.

Our calculations did not take into account the more complicated taxation involved with the stock market, and also did not take into account dividends being reinvested back into the stock market. 

Within half a year after buying, buying proved better than renting due to the capital appreciation of houses during this time. After about three years, keeping the money in a bank deposit was better than investing in shares due to the flat stock market during this period.

Investing in shares becomes more profitable after the third year but after the Global Financial Crisis (GFC) starting in 2007 holding shares proved worse than investing in a bank deposit. 

Between years seven and year eight keeping the money in the bank was better than investing in shares. After August 2009 with less significant increases and decreases in the share market there was not much difference between the two investment scenarios.

In around September 2006 the tenant investing in shares was better off financially than the home buyer. However this proved short lived, with this situation only continuing for a bit over a year before the GFC seeing the return of housing performing better than the tenant’s share portfolio.

Over the last 10 years buying a house has been a better option in terms of monetary gains.

Similar conclusions are reached when the calculations are done for a 25 year period with a house being purchased in 1986, as shown in the graph below. In this case, the home buyer is ahead of the renter who either buys shares with excess funds or deposits these in a bank by a factor of 6.

Source: REIA News

Welcome to Safe as Houses, a series delving into a topic close to the heart of many Australians – property. This is not a series on where the market might be heading. Instead we aim to explore how we view property and float some alternative ideas.

Judging by media reports, a great number of us are transfixed by interest rate changes and consumed with anxiety about falling house prices. But should we be? Today, Keith Jacobs from the University of Tasmania explores who the real losers are when prices fall.

One of the most fascinating and enduring aspects of Australian politics is the cacophony of criticism directed at the federal government whenever house prices fall. The assumption made is that the value of property is a proxy for the state of the economy.

A fall in the value of property is therefore bad news and evidence that we stand to lose should prices continue to decline. We expect governments to put in place measures so that homeowners and investors can accrue wealth and buyers can return to the market.

Over the coming months, the cacophony of criticism is likely to intensify, as real estate, developer and property lobbyists demand extra government funds to boost housing market activity. According to the recent data published by RP Data-Rismark, the value of our homes has fallen by 4% in the last 12 months, with Canberra being the only capital city where prices have increased. In Brisbane there has been a 7.5% fall, while in Melbourne prices are down by 5.8%.

But is it really bad news if the value of homes starts to fall? Certainly, there are people who do stand to lose when prices decline, such as householders who plan to sell their home and move to a smaller or less expensive home and those planning to move abroad and need to sell their home.

Those who have the most to fear when house prices fall are mortgage lenders, the real estate companies and property developers. Their opportunities for generating profits are threatened by a slowdown in the housing market.

Yet there are many individuals who stand to benefit when prices fall, not least those who have been unable to gain a foothold in the owner-occupied market, householders who plan to trade-up to more expensive properties, newly arrived migrants who plan to buy and renters living in homes that might have otherwise be advertised for sale.

What is frequently overlooked is that any increase in the value of our homes accentuates an affordability crisis. In the last 20 years, Australian house prices have quadrupled in price, yet average earnings have failed to keep up, only increasing by two-fold over this period.

The cumulative impact of house price inflation has been considerable. It is estimated that there are as many as 1.25 million low-income households paying more than 30% of their income on housing related costs, that there are 250,000 people who have placed their names on public housing waiting lists and as many as 60,000 individuals who are homeless. The shortage of properties for let has enabled unscrupulous landlords to raise rents and many households have no choice but to live in homes that are in poor condition.

Yet the crisis of affordability and the conditions endured by many households is often sidelined because so much of the media reporting on housing issues is fixated on monthly changes in house prices in the suburbs of our capital cities. The barrage of house price data reported in media outlets serves to shift our gaze from the inequities that underpin the housing market and the stress endured by so many low-income Australians.

Why has this crisis of affordability not been addressed by government? A major reason is that powerful industry groupings such as the financial sectors, property developers and real estate lobby groups have been spectacularly successful in maintaining pressure on the policymakers to privilege wealthy homeowners at the expense of less well-off households.

Some fascinating research undertaken last year by Judy Yates of University of Sydney makes explicit how subsidy arrangements favour well-off homeowners. If we include inputted rent and capital gains that are not subject to taxation, total government expenditure on housing stands at just over $53 billion per year, most of which ($45 billion) is expended in the form tax relief for owner-occupiers and rental housing investors ($5 billion).

By contrast, those households living in rental accommodation are subsidised by $3.2 billion. For individual homeowners this subsidy amounts to around $8,000 per year, investors are subsidised by $4,000 while concessions to private renters amount to just $1300 per household and public housing tenants $1000 per year.

Recent analysis published by the Australian Bureau of Statistics estimates that the median net wealth of households who rent in 2009 was just $55,265 whilst householders who own their home but are paying off a mortgage had a median net wealth of $487,183. Those homeowners who own their property outright had a median net wealth of $737,394 – 13 times greater than the median wealth of those who rent.

It is an uncomfortable truth that government policies have been instrumental in maintaining housing inequality. The current taxation arrangements serve the interests of homeowners and rental investors, and politicians are reluctant to advocate reforms that might damage their electoral prospects.

Those in Australia who are fortunate enough to own their own home have become accustomed to believing the value of their home should rise and that the capital gains they accrue should be exempt from tax. The media in their role have largely failed to make explicit the societal implications of the current housing arrangements.

Our obsession with the value of our homes has, in effect, stymied the scope for a more critical coverage of the politics of housing to shed light on how resources have been distributed to those who are well housed at the expense of those who are experiencing housing stress.

Source: theconversation.edu.au