With the high likelihood of an ALP win at the next Federal election, and with it changes to negative gearing and capital gains tax, fear is rippling through the investment property market.

In fact, according to RiskWise Property Research CEO Doron Peleg, price reductions accelerated over the last quarter following the day of the Liberal leadership spill of Malcom Turnbull by Scott Morrison on August 24. In addition, since the Wentworth by-election auction results have been noticeably lower.

This is evidenced by last week’s auction results which saw Sydney have the worse preliminary clearance rates in a decade at 47.7 per cent and Melbourne at a preliminary low of 50.5 per cent.

 “The Liberal Party’s leadership spill that saw Scott Morrison become the new Prime Minister effectively put Labor’s probability of winning the next Federal election at 80 per cent, making potential changes to negative gearing and capital gains tax highly likely,” Mr Peleg said.

“From that point of time, we have seen a significant reduction in consumer sentiment in the residential property sector and major drops in the auction clearance rates.”

Mr Peleg said a few months ago before the leadership spill, the likelihood of a Labor win was lower and changes to negative gearing and capital gains tax were less likely. He said while there had already been a slump in Australian house prices, based on CoreLogic data, this fall actually followed a similar pattern to other downturns in the past.

“At that point of time it was nothing we hadn’t seen before and was in line with previous downturns,” he said.

CoreLogic figures show in the downturn of 2003-2006, dwelling values in Sydney fell 7.1 per cent in the space of 12 months, and during the GFC they fell 7.0 per cent. Dwelling values in Sydney have also fallen by 5.6 per cent since peaking in July last year, which is comparable to the previous downturns.

However, since the leadership spill, figures from Westpac’s Melbourne Institute Consumer Sentiment Index have shown consumer confidence on residential property continues to deteriorate.

“The ‘time to buy a dwelling’ index has fallen 5.7 per cent in the past two months,” Mr Peleg said.

“Consumer expectations for house prices also fell 7.4 per cent in October to their lowest point ever with the biggest drop in Victoria, likely an effect of falling Melbourne housing prices.

“While tighter credit restrictions and other factors have contributed to the current downturn, the significantly increased likelihood that Labor will win the next Federal election – which will be called on or before May 18, 2019 – and make changes to negative gearing and capital gains tax has definitely been a contributing factor to price reductions.

“In fact, these price reductions have accelerated over the last quarter and we have seen that auction clearance results are very low.”

He said the risk of material price reductions had also increased lately, particularly due to tighter lending standards and buyer expectations for price reductions due to the potential changes in negative gearing and capital gains tax.

“This is similar to AMP Capital’s view, who while initially expecting falls of 15 per cent in Sydney and Melbourne spread out to 2020 (about 5 per cent per annum), have revised their estimate to 20 per cent falls due to tighter credit restrictions and fears of low capital growth due to changes in the tax,” he said.

“According to AMP, this would take average prices back to first half of 2015 in those two cities. Nationally they estimate a fall of nearly 10 per cent to 2020 – previously expected to be 5 per cent.

“So we can see with the increased likelihood of Labor winning the next election, it has already impacted the housing market.

“These changes are very likely to impact the market from now until their full implementation and we won’t see any improvement until the market has adjusted to the new lower prices and reduced investor activity.”

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The market is cooling, but for first home buyers the dream of owning a home of their own at a price they can afford is still a long way off.

This article titled “The housing market is cooling. But the affordability crisis isn’t over” was written by Greg Jericho, for theguardian.com on Wednesday 13th June 2018 18.00 UTC

The latest housing finance figures from the Bureau of Statistics released on Tuesday show that investors continue to flee the housing market, but owner-occupiers are also taking out fewer mortgages than they were a year ago. Even with interest rates at, or near, record lows, right now the decision to buy or invest in property is being put off.

Real estate, perhaps more than any other industry, is subject to peaks and troughs. And right now it is in a trough.

In April, for a record 15th month straight, the value of mortgages taken out by investors fell in trend terms. The 2% fall in April was the biggest monthly fall in that period, suggesting that there is still some ways to go before the bottom is reached.

Combined with a 0.2% fall in the value of owner-occupier mortgages (excluding re-financing) it adds up to a 1% fall in total housing finance – the ninth consecutive fall, the longest run since the global financial crisis.

Total housing finance in April was 5% below what it was a year ago – led by a 13% fall in investor financing, while the 2.1% growth in owner occupier finance was the weakest since 2016:

In short, people are staying out of the housing market – and mostly this is coming from investors.

The sharp drop in investor finance is most obvious when you look at the total value of mortgages taken out each month.

In 2015, the level of investment finance actually surprised that of owner occupiers. And even though it dipped once macroprudential rules were put in place to limit banks’ exposure to such speculative lending, by the end of 2016, investor and owner-occupier lending was almost equal. Since then the level of investor finance has fallen by 16% while the value of owner occupier lending has grown by 8%:

Essentially, investing in housing isn’t seen as that great of an investment at the moment.

But while investment property has been the big story, it would be wrong to think that owner-occupiers are now rushing into the market.

While the value of mortgages taken out by owner-occupiers grew over the past year, the number of such mortgages has actually fallen:

The number of people taking out mortgages to buy a home has now been falling for eight months in trend terms. And the pace of the drop has been quite fast – down 8% in that time.

The fall is pretty uniform across the nation as well. In all states the annual growth in the number of owner-occupier mortgages being taken out is lower than it was in September last year:

One area however where things appear to be improving is for first-home buyers. In April, 17.6% of owner-occupiers taking out a mortgage were first-home buyers – down slightly on the month, but still well above where it was a year ago:

But here, however, a bit of care needs to be taken before cracking open the champagne and declaring the problems of housing affordability for young buyers is over.

Overwhelmingly, the increase in first-home buyers comes from Victoria and New South Wales, where last year the respective state governments brought in policies to encourage first-home buyers such as cutting stamp duty and, in Victoria, doubling the first-home buyers grant for homes in regional areas:

But while the figures appear to show a strong surge, in reality the surge was a very quick one in the month the new policies came into effect, and since then it has tapered off quite dramatically:

It would seem that, even with the incentive, getting into the housing market for first home buyers remains tough. After all, despite the slowing of the housing market, the average mortgage size has continued to grow:

Even in Sydney, where the market has come off the biggest peak, the average mortgage size in April was 7% higher than it was a year ago. Even using the less volatile rolling 12-month average, the average mortgage is still 3.8% higher than it was a year ago:

So while housing affordability is perhaps not decreasing as quickly as it was two years ago, it remains a tough market to get into. The housing data suggests that for many investors, the difficulty is not worth the risk given the prospect of poor returns owing to low rental price growth and the already high house prices.

And for those looking to a buy a home for themselves, it appears many are holding off, perhaps in the expectation that this slowing of the market will lead to a fall in house prices, or perhaps because while prices might be cooling now, after nearly five years of running hot while wages growth has been falling, the damage has already been done.

• Greg Jericho is a Guardian Australia columnist

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

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Buyer’s Agency urges property investors to focus on individual strategies

With the New Year’s celebrations well and truly behind us, property market predictions for 2018 have started to dominate the headlines. Forecasts on interest rate movement and price growth in capital cities are in vogue. There is also no shortage of advice on top performing suburbs for capital growth and rental return. So how should property investors really digest all this information?

With the strengthening Australian dollar, some economists predict that a rise in interest rates is imminent, suggesting that a slight rate increase, combined with more APRA restrictions, will likely discourage investors to enter the market.

Sound Property Group, a Sydney based Buyer’s Agency specialised in property investment, is urging investors to focus on their individual strategy first and foremost. “Investors are left to contemplate these predictions and often generic statistics, but in reality, there are different markets doing different things at different times”, according to Andrew Cull, Sound Property’s Director and Founder.

Mr. Cull welcomes the APRA changes, signalling that a market full of highly-leveraged investors, that may not be able to repay their loans, only increases the risk for everyone else in the market. When estimating cash flow, property investors should “overestimate expenses such as interest rates, and underestimate income. This will safeguard the investment against a possible interest rate rise”, he said.

“The starting point for anyone entering the property market, is to look at their own individual strategy and cashflow requirements. An investor’s personal circumstances and needs will most certainly change over time. For instance, a young family looking to grow their equity will require a different type of investment property, compared to someone close to retirement looking for cashflow. A long-term strategy will ensure these lifestyle changes are counted for” said Andrew.

Sound Property encourages clients to engage accountants, financial planners and mortgage brokers in the process, in order to obtain a holistic view of the investment. “Start with a tailored strategy, get a good team in place, buy in established areas with a proven track record, and finally don’t just buy into other’s predictions. These predictions may suit their needs, but may not suit yours”, Andrew recommends.

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Soft Landing Ahead For House Builders According to Industry Survey

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CIMIC’s CPB Contractors wins $84m Sydney Centre

CIMIC’S CPB CONTRACTORS WINS $84M SYDNEY RECREATION CENTRE

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Meriton is taking the wrapper off a bold step upmarket designed to give buyers the ‘sweet’ life — a $1 billion dollar community in the heart of Rosebery.

The Gallery will showcase new Meriton brand the Mint Collection a name inspired by the iconic Minties lollies which were made on the site a century ago.

Stage one, two buildings up to 7-storeys housing 187 apartments, has been given the Mint name.

The completion by late 2019 of a further three stages – Coco, Spear and Amber – will see the 4.9ha The Gallery site occupied by a collection of unique low-rise buildings, terrace homes and penthouse apartments encircling a series of garden courtyards and communal parks.

Meriton bought the former warehouse and industrial property in Rosebery Avenue for $190 million last year and has set out to pay tribute to its past, including its Mintie days.

The Gallery’s buildings will feature ribbons of herringbone tile, designed to hint at wrapped candy boxes.

The master-planned community will be in the heart of Sydney’s new 278ha Green Square urban renewal precinct and represents Meriton’s latest move to meet buyer demand for centrally-located apartments that offer refinement and lifestyle in tranquil settings.

Last week it unveiled the first in what will be a series of boutique buildings – Vida at Mascot – that will showcase a new Platinum Collection.

Meriton founder Harry Triguboff yesterday said that Green Square was a city council-inspired project in what was Sydney’s oldest industrial heartland.

“Green Square ushers in a new era for Rosebery and surrounding areas and presents a chance to raise the bar greatly in terms of quality lifestyles for residents.

“We’ve put a lot of work into planning The Gallery – we intend to be the Green Square market leader.

“We’ve brought in the best of architects and interior designers to produce beautiful buildings and apartments within them that are really large and extremely high on quality and fittings.

Meriton has engaged a different award-winning architect for each stage of The Gallery, ensuring each cluster of buildings will have its own character.

The buildings in stage one, Mint, will include grand double-height entry foyers, designed to reflect the copious sizes of the apartments.

Rooftop gardens will include BBQ areas and at ground level large lawns, shady groves, playgrounds and paths will weave around the buildings.

A grand communal park will sit on The Gallery’s southern edge and pedestrian and bike-friendly paths and streets will lead residents to the visionary $13 billion Green Square retail, leisure and transport hub taking shape steps from their homes.

Old warehouses and factories are making way for not only apartments, but for name retailers, cafes, artisan providores, micro-breweries, and designer stores.

Lifestyle and recreation inclusions at The Gallery will include indoor pools and resident-only gymnasiums.

The Gallery, which will have a childcare centre and café, also will be a stroll from Gunyama Park with its state-of-the-art beach pool, outdoor fitness circuit, and all-purpose sports field.

Prices in the Mint Collection start at $700,000 for a one bedroom and $1.415 million for apartments with three bedrooms, two bathrooms, study, and two car spaces.

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Building your new home is one of the biggest steps you will take in your life. Here are some common myths of home ownership debunked to make your home buying decision easier.

Myth #1:  “I’ll Be Stuck In the Same House, Paying Off The Mortgage For 25 years”

A standard mortgage these days is between 25 and 30 years, but it doesn’t mean you’re forced to stay living in the same place for decades to come. The beauty of purchasing new homes in Perth is that your investment increases in value. So your first, second or third home can simply be a stepping stone to your next goal. Plus one day, you will own the home outright, giving you and your family peace of mind.

Myth #2: “It’s Too Hard To Budget”

Many people worry that the incoming costs which come with building new homes will be never-ending. It’s a reasonable concern in today’s economy, which is why the best builders in Perth have come up with the innovative solution of turnkey homes. Sometimes people will employ a builder to construct a house, but take care of the finishing touches themselves; from landscaping to the letterbox. In fact, some builders don’t even include flooring or painting. With turnkey new homes, everything is included in the set price, removing concerns about extra costs (and stress) along the way!

Myth #3: “It’s Cheaper To Rent”

If you’re comparing a weekly mortgage payment to rent payment – sure. But this price comparison isn’t reflective of an overall long-term budget. Spending less on rent week-to-week doesn’t mean you’ll be better off in the long run. When you own a home, its value is going up. If you rent, your rent payments could increase over the years and in the long-term, you don’t have anything to show for it. So it’s well worth speaking to a mortgage broker for advice on new homes (Perth) for sale.

Find Your New Home Now – Fact!

At the end of the day, owning a home of your own isn’t just a financial decision. Home ownership offers security and stability. It’s a place there you raise your family and create life-long memories.

It’s no myth: Summit Homes 

Summit Homes have an extensive selection of single and double storey new home designs (Perth) to suit all block types, budgets and lifestyles. Their exciting selection of new homes in Perth and the South West can be found here .

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The prices of mansions have collapsed in the tropical north Queensland resort town of Port Douglas
One of the worst examples was the fall in the asking price of futuristic Alkira, owned by stamp collector Rod Perry and his wife Marider. Sprawling out over its own man-made lake and designed by noted architect Charles Wright, the property was listed for $14 million throughout the second half of 2014. It now has an asking price of $8.8.million.

Kalimna, the nine-pavilion mansion of Just Jeans founders Craig and Connie Kimberley, was listed at just under $9 million in late 2013. The asking price has been cut back to $6.5 million.

Port Douglas has not recovered fully from the global financial crisis.
Before the GFC, it was not uncommon to see 54 houses being sold up there.
According to Core Logic RP Data, there were just seven sales in the first three months of the year

Mark Flinn of Ray White Port Douglas says sales at the top end of the market are limited to one or two a year.
He told the Australian Financial Review that sales at the top end were a “complete niche market.”
“There’s been a three-year upward trend in Port Douglas since the market bottomed out following the GFC. There’s good growth again and plenty of activity in the $1 million to $3 million range,” Mr Flinn said.
“We get a lot of buyers from Sydney and Melbourne, but don’t see a lot of overseas interest.”

The post Prices Crash appeared first on Bridge Street Journal.

Home extensions and second storey additions gain popularity in Perth as homeowners find better ways to spend their money.

The rise in property prices has had a side effect that many in the home market haven’t considered: as home prices have risen, stamp tax duty has risen proportionately. In Perth, a $540,000 home, which is “average” in some market segments, would cost nearly $20,000 in stamp duty. In Sydney, where the “average” price in many areas is $1 million, stamp duty would be nearly $41,000 on an “average” home.

Consequently, many homeowners, in Perth and across Australia, have decided to take a serious look at a home renovation, such as a home extension or a second storey addition, as a way to expand their living space. There is no stamp duty on a home renovation. This makes it possible for homeowners to save the money they would put into stamp duty and put it into their homes instead.

Craig Johns is the Director of Next Level Extensions in Perth. According to Mr Johns:

“It costs a lot of money to sell your old home, buy a new home and move. It takes a lot of time and effort, as well. If you are trying to figure out whether to buy up or renovate, take a look at the costs and see what works best. The formula is simple. Get an estimate of how much it will cost to have a second storey addition or a home extension built. Then, figure out how much it will cost to buy, sell and move, including fees going to lenders, real estate commissions, council fees and stamp duty.”

Mr Johns continued, “For most people, it will cost less to add on to their current home than it does to move up in the market. In addition, the value of their current home rises due to the renovations and additions, especially if they keep the home for a longer period of time.”

Homeowners who renovate instead of moving are finding many more benefits in renovation. When people look for another home, many tend to look for their “dream home.” Most established properties fall short in at least one facet for those looking for a “dream home.”

When a homeowner decides to renovate with a second storey addition or a home extension, they have carte blanche when it comes to design. They can literally turn their current home into their dream home, especially if they do the addition first and then renovate the original portion of their home to reflect what they want in a dream home.

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On the way to becoming Australia’s largest hotel operator, Meriton Serviced Apartments Mascot has opened its doors as the newest all-suite hotel at Sydney Airport today.

Expanding its collection of first class Serviced Apartments across Australia, Meriton on Jackson Drive at Mascot features 386 self-contained suites and direct train links to both the domestic and international terminals, only 1 and 2 stops away respectively.

“We are excited to open our doors and offer a five-star apartment hotel near Sydney Airport,” said Matthew Thomas, General Manager of Meriton Serviced Apartments and Director of Meriton Group. “Mascot is an integral part of our brand’s development and expansion. It’s the first of four new full-service, all-suite apartment hotels we are opening this year. No other hotel chain can design, build, furnish, open and successfully operate like we do. We do it all in-house, with a fantastic team of dedicated hospitality professionals.”

Now open as the first hotel in the area to have a fully operational Arrivals Lounge for the early, red-eye flights, Meriton Serviced Apartments Mascot positions travellers in the perfect location for the next take-off or landing.

Thomas said, “Our guests at Mascot will enjoy a new level of hotel comfort and space. Before departure, on arrival and whenever in the local area on business or leisure. The arrival lounge and free Wi-Fi for all throughout the hotel comes standard.”

Every suite has its own full kitchen including a coffee machine with complimentary coffee pods as well as a selection of four different teas. Also unique to Meriton is the fact that each suite has a full sized laundry with a washer and clothes dryer.

Set above the recently opened Mascot Central Retail Precinct, this new hotel will have easy access to an onsite Woolworths Supermarket, BWS bottle shop, Priceline Pharmacy, Coffee Club as well as an array of trendy restaurants and cafes.

Tailored to the frequent flyer, Meriton also offers ‘Park, Sleep and Fly’ packages, where guests of the hotel can leave their car at the property while away. Included in the package are return shuttle bus transfers to either terminal, a service available to all guests.

“Sydney Airport, the country’s busiest, sees over 39 million passengers a year pass through it,” Thomas said. “Many of those demand quality accommodation in the immediate area to facilitate their travel needs. Meriton Serviced Apartments Mascot will meet those demands, adding 386 suites to the local accommodation market.”

Plane spotters can take comfort in the hotel’s premium Aero Suites, which parade views of the terminal tarmacs or make the most of the exclusive outdoor garden and roof top observation deck. Guests can stay connected with friends and family or stay on top of their work through complimentary Wi-Fi throughout the hotel or log on at the built-in Internet hub, fitted with Apple iMacs and business facilities.

Launching an exclusive range of METIS skin and haircare bathroom amenities, guests will feel pampered when they stay. The hotel also presents a fully-equipped 24-hour gymnasium and resort style, indoor lap pool, spa and steam room for added comfort.

Thomas said, “Our brand is leading the industry in social media engagement and outperforming larger international brands on popular review sites. All our hotels are often number 1 on TripAdvisor in their respective areas. I’m sure that our new Mascot hotel will be no exception moving to number one in just a few weeks’ time. We are looking forward to opening next month a new Southport hotel and a second Parramatta hotel, both being the tallest and newest buildings in each city. Followed in October by North Sydney, which will offer stunning Harbour view apartment-hotel accommodation north of the bridge.”

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