Viewing by month: January 2011

Land Sales Volumes Down, Prices Rise

Those who have read this blog before will know that the continuing issue of housing affordability in Australia, and my concerns/frustrations in response, are not foreign concepts. 

Last year there were numerous publications considering the situation;  September saw the release of the Real Estate Institute of Australia’s Deposit Power Housing Affordability Report, which recorded the sixth consecutive quarterly decline in housing affordability in Australia.  Prior to that, the Housing Industry Association and the Commonwealth Bank jointly released their Housing Affordability Report in August, which found that housing affordabilities were at record lows around Australia. 

Following the release of both of these reports, I commented on the necessity of government action to develop a strategy to at least make some inroads into the situation. 

And with the recent release of the September 2010 Quarterly Land Report by HIA and RP Data, I find myself writing about the issue again.  The report found that land sales volumes were at their lowest point in a decade, while land values had increased. 

These figures don’t really surprise me – it takes a lot to build a property.  With the costs of the land itself, your legal requirements, council approvals, designing your home, and the supplies and labour needed to construct it, starting from scratch can be a tremendously expensive exercise.  And if land prices rise, this may not be a viable option for many potential home owners. 

So they are then left with the option of buying an established property, thereby adding to the housing shortage we already face, as opposed to lessening the pressure. 

With Australia already looking at a substantial housing shortage (JP Morgan estimated the shortage to be around 180,000 homes in its Economic Research and Global Data Watch 2010 report, while the Federal Government’s Housing Supply Council 2010 Report suggested the shortage was closer to around 200,000 houses), it is imperative that sufficient land is released to address the growing demand for housing. 

Essentially, governments at all levels need to recognise the growing housing affordability crisis facing Australians and formulate solutions to take action.  For example, the rezoning of more areas to increase medium density housing may be a way to help overcome the shortage. 

Unfortunately, when it comes down to it, it will be Australians that suffer from this housing situation, especially first home buyers.  If land is too expensive, sadly it will usually just lead to more expensive homes for consumers. 


0 comments | Posted by Charles Tarbey on 31/01/2011 at 9:57 AM | Categories: Property Management - Investors -

Smart new painting technology

As opposed to going away on holiday, people often take some time off over summer simply to stay at home, perhaps enjoying local attractions or just relaxing.  This extended time in the house over daytime hours sometimes sees people consider their homes in a different light – perhaps noticing an overgrown garden or an ageing interior theme. 

It is therefore common during this time for new renovating projects or decorating ideas to spring to life.  Many of these are started immediately and completed over summer, while others are placed on a to-do list and revisited every year. 

It is with this summer decorating mood in mind that I thought I would share with you an article that I came across the other week from the Paint Quality Institute that considers new painting technology and how it can benefit your home. 

Cool down
For starters, many readily purchasable exterior paints are now formulated to reflect the heat of the sun and reduce the surface temperature by up to 5?C.  Not only will this help to keep your home cool, it will help you to reduce the energy you consume through air conditioning, fans and other temperature reducing equipment. 

Environmentally friendly
You are now able to paint your home with the reassurance that you are not having a negative impact on the environment.  According to the PQI, over ninety per cent of paint sold in Australia and New Zealand is water-based acrylic paint, which has less of a detrimental impact on the environment than solvent-based paints. 

Aesthetics
New technology is allowing paint to improve and maintain the way your home looks over time.  PQI says that as well as being a UV blockout and a mould and mildew inhibitor, some new technology exterior paints are formulated to resist the dirt and pollution that works its way into the paint surface, breaking it down over time. 

Additionally, paints are performing well and for longer, which means that while painting your home may seem like a large task and an investment now, you can be assured that if you choose paint with a long-term performance guarantee, it will most likely be a worthwhile exercise. 

So if you find yourself embarking on a painting project this summer, I suggest you spent a bit of time in your local paint store discovering the new technologies that may be available to you and how these can benefit your home. 


4 comments | Posted by Charles Tarbey on 31/01/2011 at 9:55 AM | Categories: Renovating - Around the house - Building -

Finance figures suggest real estate off to a positive start in 2011

The real estate industry had what looked to be some positive news last week with the release of housing finance figures from the Australian Bureau of Statistics.  The figures considered the level of finance commitments in November 2010, taking into account the different classes of borrowers as well as the varying purposes for seeking finance (e.g. purchase of a new home, construction of a home, etc). 

In what was a positive sign for the Australian real estate market, the figures showed a 2.5 per cent increase in the number of mortgages obtained by owner-occupiers in November 2010.  This was the largest monthly increase seen in the figures since May 2010. 

My colleagues and I at CENTURY 21 Australia are hopeful that such an increase may suggest that Australian home buyers are regaining confidence in the property market.  Last week, our Chairman and Owner, Charles Tarbey, said that the figures were pleasing and represent a gradual recovery in the housing market from the lows in issued mortgages that were seen in mid-2010.

In further good news, the ABS data also showed that finance for the construction of new dwellings rose 2.7 per cent, while new owner-occupied home finance grew by 9.7 per cent over the period.   

Understanding the true meaning of the figures may prove to be somewhat tricky due to the fact that the Reserve Bank raised interest rates in November, of which the total impact remains to be seen.  However, the data is still encouraging news for the housing industry and may indicate a strengthening demand amongst buyers. 

The only concerning aspect of the figures is the fact that there was only a slight increase in the number of first home buyer finance commitments (as a proportion of the total housing finance market) – rising from 15.4 per cent in October 2010 to 15.6 per cent in November 2010. 

It is becoming fairly clear that first-time property purchasers are feeling the impact of the rise in interest rates that we saw last year, along with the climbing prices of homes.    It may be time for governments throughout Australia to go back to the drawing board and consider the best ways to incentivise and encourage our citizens to purchase their first properties. 

With the exception of the first-home buyer figures, the ABS data represented some good news for real estate and its outlook for the coming year.  As I mentioned, we are mindful that the full impact of the November rate rise may yet to be realised, and as such will await the December 2010 data to get a better picture of what is likely to be in store for the year.   

 


2 comments | Posted by Charles Tarbey on 24/01/2011 at 2:44 PM | Categories: Finance -

Ensure your holiday home pays its way all year round

I always find summer time, especially the Christmas and New Year period (in the Southern Hemisphere), to be quite an interesting time for real estate.  Many people take time off work and while some go on extended overseas trips, lots simply spend a week or two in a rented house near a beach or other location away from home. 

The pairing of good weather (hopefully) and beautiful scenery with some much needed relaxation can often see holidayers start to contemplate the idea of owning a holiday home themselves.  

So what do prospective purchasers need to look for in a property intended primarily for vacation use, and how do you ensure you get the most from your investment outside the summer months? I read a great article the other week on the Domain website by David Adams entitled ‘Maximum pay-off for minimum outlay’ which I thought summarised very well the aspects of holiday properties that are important in determining rental returns and what investors should consider. 

A big part of the success of a holiday home in the rental market is the number of people that the property can easily sleep.  The installation of bunk beds, beds with trundle beds, and queen beds can ensure that a house is both couple-friendly while sleeping a large number of guests.  With some smart configuring, a house with as little as three bedrooms can then become attractive to families or groups of friends who wish to go on holidays together, who are then able to save on accommodation costs by hiring one house. 

Outdoor entertaining areas were also flagged by the article as an aspect that can increase the rental income from a holiday home, both in summer and during the colder winter months as well.  The inclusion of a barbecue, large outdoor setting and potentially even outdoor heaters can help to heighten your property’s attractiveness to holiday renters. 

If purchasing a holiday home that requires renovation, or even just a little bit of a sprucing up, remember that this is not your primary residence and you don’t necessarily have to spend a fortune on it. 

There are definitely ways to give a property a make-over without having to go overboard.  According to the article, a fresh coat of paint and a carpet cleaning can often be enough to substantially improve the presentation of your holiday home.  When painting, remember that large groups of people may be staying in your house – the use of lighter and more neutral colours can help to increase the property’s feeling of space, often making for a more enjoyable experience for renters. 

So if you think you may be in the market for a holiday home, remember that this is not your main residence and you may need to consider different requirements than you would with a normal home.  Such contemplation will help to ensure that as well as a holiday home, you will have a viable investment option both within and outside of the summer months. 


4 comments | Posted by Charles Tarbey on 24/01/2011 at 2:43 PM | Categories: Property Management - CENTURY 21 Solutions -

Things to keep in mind when purchasing property overseas

There seems to be an unprecedented number of Australians choosing to invest in property overseas at the moment.  And who can blame these buyers? With the current strength of the Australian dollar, as well as the relatively low prices of some international real estate, I can definitely understand how offshore property may look attractive. 

Purchasing a property overseas however can definitely be a complex process and there are a few things that investors should keep in mind, in order to make the experience as stress-free, and profitable, as possible. 

It may seem obvious, but you would be amazed at how many people quickly buy into an area without a good deal of research first.  If you are looking for an investment property then you need to ensure that the location of your intended purchase is a popular spot for renters and has displayed a good rental return in the past.  Areas containing universities and a generally young population are often good places to start your search.  You may also wish to avoid locales that have historically experienced inclement weather conditions with some frequency.  Such environments could increase the repairs needed to your property. 

Taxation is an important point for consideration when buying overseas.  If possible, look for countries that have tax agreements with Australia, as the existence of such a relationship should make it easier for you to facilitate your ownership of the property, both during the buying process and into the future.    

If you decide to go through an international buying agent, take care to make substantial enquiries to ensure legitimacy before transferring large sums of money to an offshore party.  There are some horror stories out there about unsuspecting buyers purchasing hugely inflated properties from such people, or just simply being ripped off, and having no legal recourse.  I’m not saying that such players are not of use – they are often hugely helpful and can help to make your purchase an easy process.  Just be careful and try to choose an agent who is accredited and comes recommended. 

Before buying a property overseas, make sure you consider all the additional charges that will be associated with doing so.  These can include travelling offshore to view properties, legal advice both in Australia and abroad, the costs of a buyers’ agent if using one, and the actual transactional costs related to the purchase.  These costs can often add up, sometimes substantially reducing the return on the property from what your initial feasibilities had indicated. 

Lastly, check to see if the country of your choice has online information sources with advice for overseas investors.  Such websites can be hugely helpful and inexpensive to access and are an ideal place to begin your search for an international destination in which to invest. 

Making an investment in overseas property has the potential to be an extremely profitable venture.  Just take care to consider all the steps involved to make sure your purchase is a viable and stress-free one.


0 comments | Posted by Charles Tarbey on 18/01/2011 at 11:13 AM | Categories: Buying -

Queensland Floods

By Charles Tarbey

I, along with my colleagues at CENTURY 21 Australia and the majority of Australians, spent last week watching the Queensland floods unfold, shocked by the appalling devastation caused by the floods.

There is no way that I can even begin to imagine the terror, uncertainty and loss that those affected by the horrendous conditions in Queensland have experienced over the past few weeks.  Yet in an exhibition of true Australian spirit it has also been a time when we have seen the very best in people as they pull together to help each other through this incredibly difficult time. 

I felt very proud and privileged last week as I heard about the great work that our flood affected franchisees carried out in Queensland and the support they received from their fellow franchisees around Australia.

One of many examples is how the staff at CENTURY 21 Vision Emerald were flooded out of their office, yet worked around the clock to make sure their tenants were safe, relocating fifty families to flood free properties.  Our office in Toowoomba, CENTURY 21 Marsden Realty have also been working hard to arrange repairs for rental properties. 

Our support and thoughts are with all those affected by the Queensland flood disaster now and into the future as the cleanup begins.     

I urge everyone to donate to the Premier’s Flood Relief Appeal by going to http://www.qld.gov.au/floods/donate.html or by phoning 1800 219 028. 


0 comments | Posted by Charles Tarbey on 18/01/2011 at 11:12 AM | Categories:

Property Marketing - The different ways to find a new home

I often find that reading through the property lift out of a newspaper can be quite an enjoyable way to look at what properties are available for sale.  The beautifully laid out advertisements take on an almost picture-book like feel and in combination with my morning coffee make a great way to start the day!

However there is no doubt that my slow browsing is not the preferred method of the majority of home-hunters in the market.  The advent of the internet has seen online real estate search sites take off, with people able to isolate the exact properties that fit their criteria in a number of seconds with a few clicks of the mouse. 

But even the way real estate agents are using the internet to market their properties is changing.  And it most certainly pays to keep up with these shifting methods to ensure that you find out about your dream property the moment it is placed on the market. 

It is becoming increasingly common for agencies, as well as individual agents themselves, to operate Facebook pages.  Through this avenue they may disseminate information via status updates and posted links regarding new properties that have been listed with them.  Facebook’s photo sharing function also allows agencies to post images of individual properties, enabling viewers to get a better idea of the house or unit than they would have had from the two or three photos available in the paper or from online advertising. 

In synchronicity with Facebook, we are also seeing agencies creating Twitter profiles.  ‘Tweets’ are used to publicise new properties with links provided to either the online listing, or back to a Facebook page or other online photo album containing further information. 

To make sure that you take full advantage of the Facebook and Twitter updates given by different agencies, it could be a wise move to make a list of all the real estate agencies that operate in the locations in which you are interested.  Armed with this list you can visit their individual websites, Facebook pages, Twitter pages and the like, subscribing or ‘becoming friends’, to make sure that you start to receive a continuous flow of current information relating to possible buying opportunities in the areas you like. 

With knowledge of individual agencies, you can also ask to sign up to their database.  This will ensure that you receive all electronic communication sent out by the office which again will keep you updated about their property offerings. 

It is also worth noting the various internal innovations that real estate companies provide as search tools.  CENTURY 21 Australia, for instance, offers Smart Book, a unique search function that creates an online magazine filled with all the properties that fit your search criteria.  This tool uses dynamic data, so as soon as any information regarding a property is changed, or a new listing that fits your criteria is added to our system, your Smart Book will update itself instantaneously – meaning that you will always have the most current information and set of property options at your fingertips, without having to search again. 

With the property shortage that Australia is predicted to see in future years, it will certainly pay to develop novel ways to search for property purchase opportunities.  I have no doubt that the internet will continue to offer many unique avenues and I will strive to keep you informed about these developments.  


1 comments | Posted by Charles Tarbey on 10/01/2011 at 10:00 AM | Categories: Buying - CENTURY 21 Solutions -

Using Property Data to your Advantage

And we’re off! I hope everyone enjoyed their Christmas and New Years and for those people who took time off work – had a nice, relaxing break.  2010 has now officially passed, and the team at CENTURY 21 Australia are gearing up for what we believe will be a very busy year for real estate in 2011. 

For one reason or another, people often find themselves making ‘life’ decisions around New Years.   I think it ties into the idea of resolution-making - the start of another year represents a watershed and people are determined to finally go after what they may have been planning for awhile. 

Selling a property and moving into a new type of home (e.g. downsizing from a house to an apartment) or different area (e.g. leaving the suburbs and relocating to an inner city setting) quite often arise as some of these resolutions. 

With the thought that many people may be thinking of moving at the moment, I thought I would use this blog to talk about how both buyers and sellers can make the various types of property data work to their advantage. 

In my view property data is a significantly underused tool; when employed it can give people delving into the property market some great insights into timing, locations and other important notions.  I have a feeling that many people don’t quite know how to find nor decipher the available data and thus shy away from it, not realising the benefits that it could afford them. 

The first step is to know what types of data are available – and realise that it’s not all just about sale prices.  Bodies such as the Australian Bureau of Statistics, as well as specific property data companies such as RP Data, release information covering many topics, such as the number of listings at the moment at one time, the level of housing finance being sought after and granted, the number of houses selling at auction, just to name a few.  

The trick to being smart about using data is to develop an understanding of how the relationships work between different variables.  For instance, if auction clearance rates are down but sales rates are constant, this doesn’t mean that properties are not selling but it may indicate that properties are being passed in at auction with a sale privately negotiated after the fact. 

Both buyers and sellers can then take this information to uncover opportunities.  For sellers – if you can see that the market is not supporting auctions at a particular time, perhaps make plans to prepare for private sales negotiations.  For buyers – take advantage of the lower competition at the auction and be immediately ready to begin discussions with the vendor and agent as soon as the property is passed in. 

Other types of property data such as median price and growth rates will give you an indication as to how much you should be looking to sell for, or pay, as well as which areas are either heating up or slowing down. 

 If you are interested in using property data to your advantage, then I think it definitely pays to stay abreast of the news over a substantial period leading up to when you are looking to buy or sell.  Many property journalists will take straight statistics and figures and highlight the greater meaning – reading such stories will help you to develop an understanding about what the figures indicate and how this can help you with your property plans.   


0 comments | Posted by Charles Tarbey on 10/01/2011 at 9:56 AM | Categories: Buying - Property Management - Investors -