Viewing by month: May 2011

NSW abandons affordable housing policy

In an interesting move for the state of housing in New South Wales, Planning Minister Brad Hazzard recently abolished the previous Labor Government’s (somewhat controversial) Affordable Rental Housing Policy. 

The policy which was designed to increase the supply of affordable housing for low-and middle-income earners in NSW, allowed private developers to circumvent local planning regulations if 20 per cent of the resulting development was reserved to be leased at below market rents.  Consequently, “the policy imposed inappropriate development on suburbs,” Mr Hazard said in a statement. 

As a result of Mr Hazzard’s decision no new development applications will be accepted under the old scheme as of 20 May 2011, while existing applications will be reviewed to ensure compliance with local planning laws and that developments are built in accordance with the existing character and landscape of neighbourhoods. 

An Affordable Housing Taskforce will also be established to examine and suggest alternative ways to improve housing in NSW. 

In announcing the decision to overturn the policy, Mr Hazzard acknowledged that the delivery of affordable housing was critical, but criticised the Labor planning laws as “just a backdoor deal for small-time developers to make a fast buck.”

The decision looks to be supported by many in the NSW housing industry.  In an article in the Sydney Morning Herald, ‘Affordable housing policy dumped’ (May 20), the President of the Local Government Association, Keith Rhoades, welcomed the decision and said that the previous policy had been of concern to councils across NSW as it was circumventing local planning rules.  He also said that it was important to “make sure the housing mix is right”. 

In an article in the Herald Sun, ‘Calls for better affordable housing policy in New South Wales’ (May 20), the CEO of the Urban Taskforce Australia, Aaron Gadiel, was also positive about the move, saying that Labor’s policy was an incomplete solution to a big challenge facing Sydney. 

Mr Gadiel went on to say that if the result of the decision was a new comprehensive policy that tackles the core issues for affordable housing in Sydney and NSW, then it would be a better outcome. 

From my perspective, a positive I can glean from the Planning Minister’s decision is that the Government is looking to address the state of housing supply and affordability in NSW fairly quickly after its election.  While there will be much work needed to address NSW development and planning laws, it seems that the process has started by way of decisive action. 

While I imagine this process will take some time, I look forward to learning of Mr Hazzard’s proposed initiatives to tackle the issue. 

0 comments | Posted by Charles Tarbey on 30/05/2011 at 2:02 PM | Categories:

National Urban Policy a move in the right direction for housing

The Federal Government recently launched its National Urban Policy – Our Cities, Our Futures: a national urban policy for a productive, sustainable, liveable future. The document set out a strategy for the planning and infrastructure priorities of Australian cities, both in the short and medium to long term future. 

From a property perspective, essentially the policy is a positive step towards defining a long-term, national vision for affordable housing in Australian cities, in that it goes some way in recognising that there are fundamental issues concerning housing supply and affordability.  

The policy takes a top down approach to enhancing Australia’s long-term productivity, sustainability and liveability, and amongst a variety of other projects relevant to planning in Australia’s cities, identifies a series of short-term and medium to long-term Government initiatives to improve the supply of appropriate mixed income housing. 

Such actions include progressing reforms to deliver greater housing supply and affordability and superior zoning and planning approvals processes.  Additionally, the policy supports the priority approval and construction of aged care housing, with a focus on integrating such housing with urban areas. 

While, the policy looks to outline some positive, much needed objectives to address the state of housing in Australia, an aspect of concern is that there is not a huge amount of detail explaining the practical actions that will be required to achieve the desired outcomes.  I will certainly be watching out for further news from the Government about the tasks they will be carrying out to implement this vision.

Having said all of this, in any debate about housing, there needs to be recognition that the property situation in some locations does not necessarily apply everywhere.  While Australia as a whole does have a housing shortage (this was estimated to be approximately 200,000 dwellings by the Federal Government’s Housing Supply Council report in 2010), there are other areas that are already overweighed with affordable housing, where the benefits intended by this policy may not be as applicable.
I hope that the Government’s top-down approach, where it effectively will weigh in on the planning functions of cities, is not to the detriment of certain such areas. 

In any case, in the words of our Chairman and Owner Charles Tarbey, I hope that the Government is serious about implementing the vision as set out in the National Urban Policy, as the ability of many Australians to afford housing may eventually depend upon it. 

0 comments | Posted by Charles Tarbey on 30/05/2011 at 2:02 PM | Categories:

Insurance to Protect Your Investment Property

When you buy a property for investment purposes, you leave yourself open to the risks that arise when the property is rented out to tenants.  It is therefore pleasing to know that there are various types of insurance policies to protect investors. 

The different insurance policies that are available for investors cover possible rental problems to varying degrees.  Hence it is a worthwhile exercise for property investors to seriously research the different options available and consider how much money you are prepared to spend to protect your property. 

This decision will usually depend on factors such as the type of property you own, the quality of tenants likely to be living in it and the area in which it is located. 

The variety of situations that the different types of landlord insurance can cover include circumstances caused by your tenants that are out of your control.  Your policy may cover you for:

• Protection of your rental income, for example in the case of tenants leaving your property untenantable due to damage, or defaulting on payments. 

• Cover for the physical building and its contents, for example in the case of your tenants and/or their visitors causing malicious and accidental damage or stealing. 

• Your legal liability as a landlord in the case of, for example, the death or injury of a tenant.

• Additional costs if your property related tax return is investigated and/or audited. 

The options and conditions for landlord insurance policies vary considerably and you should ensure that you have fully read the product disclosure statement associated with the policy you decide upon.  In some instances, insurance companies will only insure an investment property if it is managed by a professional property manager.  Additionally, the exact cover of the policy may differ according to when it was taken out, and whether or not tenants had yet moved in. 

For property owners with more than one property, some companies offer discounts when multiple insurance policies are combined – simply ask your insurance company when establishing a policy. 

While the concept of insurance can be daunting, it is good to know that you can protect yourself from issues that may come about with your investment property which are beyond your control.  By conducting research and talking to other property owners you should be well on the way to determining the best insurance policy for your investment property. 

3 comments | Posted by Charles Tarbey on 23/05/2011 at 9:05 AM | Categories:

Reasons Why Your Property May Not be Selling

When selling a property there can be nothing more frustrating than watching it sit on the market for an extended period of time.  As most properties are the closest to being sold just after they have been listed when buyer interest is high, it is definitely worth looking into the situation if yours has been languishing for awhile. 

There are a variety of factors that can affect whether a home sells, including how it is priced, how it looks and the way it has been advertised, as well as general market conditions. 

Price is arguably the most important factor when it comes to selling a property.  In the words of CENTURY 21 Australia Chairman and Owner, Charles Tarbey, if you can’t sell a listing today, then realistically it’s just a home on display.  And to sell a home today, it needs to have a reasonable and saleable price. 

If you are asking too much for your property, you risk immediately losing the interest of prospective buyers who are willing to pay what might actually be more of a reasonable pricing expectation.  Too high a price also puts your property in competition with others on the market that are actually worth more, as opposed to competing with similar properties. 

Many people feel uncomfortable about spending large sums on marketing and advertising a property in print publications and online.  However when it comes down to it, no matter how fantastic a buying opportunity your home is, nobody can purchase it if they don’t know it is for sale. 

Experienced real estate agents will know how much and what forms of marketing are needed to achieve a good property sale. 

In many cases, buying a property is a highly emotionally driven purchase – some buyers like to be able to see themselves living in a home.  A property that is well-presented makes this emotional connection much easier for prospective buyers to achieve.  All this often takes is a good decluttering and clean, and perhaps a fresh coat of paint.  

Market conditions
When a market is slow and properties aren’t selling quickly, buyers often have an advantage as they are not under strict time pressures and can wait for advantageous purchase opportunities.  In this instance it is very important for your home to be in high demand, which will create a sense of urgency for buyers.  To ensure this demand, the property needs to be well priced and presented. 

It is definitely not ideal for a property to sit on the market for an extended period.  If this has been the case for your home, try to identify why this has occurred and develop a strategy to overcome it. 

If you wish to speak to an experienced real estate agent about why your property isn’t selling, please feel free to stop in at any of the CENTURY 21 offices around Australia. 

0 comments | Posted by Charles Tarbey on 23/05/2011 at 9:03 AM | Categories:

It’s a Good Time for Buyers

I think it’s fair to say that the past six to 12 months have been a trying time for the residential property market.  After several years of prosperity, the conditions we are currently seeing such as rising interest rates and issues with housing supply and affordability, seem to have somewhat instilled a sense of trepidation in people when it comes to entering the housing market. 

The interesting thing about this situation is that the current state of the market has actually resulted in quite an attractive environment for prospective property buyers. 

Levels of buyer demand are generally lower than what we have seen in awhile, reported auction clearance rates are at historic lows, and there is a fairly large amount of stock on the market.  Thus, for prospective purchasers, this is quite a practical time to be out there looking to buy. 

According to Australian Property Monitors, recent auction results are showing surprisingly low national clearance rates, with 56 per cent of properties selling at auction in the last week of April.  Additionally, the recently released RPData Rismark Hedonic Index found that national capital city home values noticeably decreased over the March quarter, dropping 2.1 per cent (seasonally adjusted). 

So what does this suggest for home buyers and investors? Combined with the current oversupply in the market, essentially it means that those looking to purchase are in the enviable position of having the time required to conduct the research necessary to make a wise buying decision.  Try not to ever purchase a property without assessing comparable data on other sales in the area – inexpensive reports from sources such as RPData can be purchased to do so. 

These conditions also afford buyers stronger opportunities to achieve a discount on a property’s asking price.  The reduced auction clearance rates we are seeing don’t necessarily mean that properties aren’t selling, rather that they are being passed in at auction – they could very well go on to be sold by means of buyers submitting offers.  I would encourage purchasers to take the time to submit offers on suitable properties, taking advantage of the discounts that may be attained.  

Remember – property markets go through cycles and at the moment the environment looks to hold some advantageous opportunities for those looking to purchase.  However, before buying, it is definitely worth taking stock of your personal finances and the goals of your purchase, to ensure you make an investment within your means and strategy. 

0 comments | Posted by Charles Tarbey on 17/05/2011 at 9:44 AM | Categories:

The Federal Budget 2011 – 12 – What does it mean for Real Estate?

The Federal Budget handed down by Treasurer Wayne Swan last week contained mixed news for the residential property market.  As a general review and I think many of my colleagues in the real estate industry would be in agreement, I would say that the budget somewhat ignored real estate and the industry issues that continue to need addressing. 

Referring to what I feel to be good news first, at least for property investors, the vendor tax and cuts to negative gearing on investment properties that were rumoured to be budget inclusions never eventuated.  This was a positive outcome, as if the Government had made it harder/less appealing for people to invest in property we could have had a situation where investors quickly sold, resulting in a significant reduction in the availability and affordability of rental housing.   

In terms of some of the key issues that Australia’s real estate industry currently faces including housing supply and affordability, the budget largely failed to implement any initiatives that would offer potential solutions for the industry – a disappointing result.   

In the budget papers, the Government acknowledged that they expect demand for housing in the medium term to be “supported by low unemployment, solid growth in household incomes, and past strength in population growth.” However, “ongoing supply constraints associated with planning and approval processes and land release restrictions are expected to continue to weigh on dwelling investment growth.”

Thus, the Government recognises that there are a series of issues that exist in the housing industry, however have not taken the budget as an opportunity to implement any practical solutions. 

According to CENTURY 21 Australia’s Chairman and Owner, Charles Tarbey whose response to the budget was featured in the Australian Financial Review last week, this budget brings no joy, particularly to low and middle income earners buying properties.   From his point of view, the Government is focusing too much on trying to achieve a surplus, and with house prices increasing, people in these earning brackets are not going to be able to afford housing. 

In last week’s media, Charles seems to have been joined by the majority of our industry colleagues who all appear to agree that the budget provides no incentive for the construction of affordable housing and that the removal of supply side obstacles and a reduction in property taxation are necessary measures just to begin to address the problem – none of which appear to have been directly addressed.   

So all in all, while containing some good news for investors, the budget was largely disappointing for the state of housing in Australia. Moving forward, I hope that the Government heeds the reactions of real estate industry leaders, and at least starts the process of instigating housing reform in the near term. 

0 comments | Posted by Charles Tarbey on 17/05/2011 at 9:42 AM | Categories:

Stability For The South Australian Property Market

You can be forgiven for thinking that much of the recent data and subsequent media coverage regarding the national housing market has been generally negative in tone. 

For example, the end of April saw the release of the RP Data-Rismark Home Value Index, which showed that capital city dwelling values were flat in the month of March, and over the March quarter had displayed a conspicuous decline. 

There is also much talk in the public domain about the effect of rising interest rates, a long-term housing shortage, poor housing affordability and the various taxes buyers must pay, which I daresay are not contributing a great deal to positive sentiment in the market.   

It was therefore refreshing for me to recently become aware of the latest happenings in the South Australian residential market, which saw the strengthening of both metropolitan and country house prices over the March quarter. 

According to the Real Estate Institute of South Australia (REISA), Adelaide house prices rose 0.49% over the quarter to $410,000, with a 1.23 per cent increase over the past 12 months, continuing the trend seen in the last quarter of 2010. 

The President of REISA, Greg Nybo, said that the results were positive, given that there was an interest rate rise in November and with the abundance of stock present in the marketplace.  He feels that the sales figures from the first quarter of 2011 indicate Adelaide’s stability and that despite the figures being down somewhat from the last quarter of 2010, house prices look to be holding. 

Furthermore, values in country South Australian also showed a moderate strengthening over the quarter, with the median house price rising 3.15 per cent from the fourth quarter of 2010.  Greg Nybo said that such stability is reassuring for regional residential housing over the long term. 

With these figures in mind, and with predictions that South Australia may be on the cusp of another mining boom, the state is definitely one to watch, both from an investment and home buyer perspective.  Greg Nybo has said that the coupling of the RBA’s decision to keep interest rates on hold for another month with South Australia’s comparative affordability in both rural and metro areas should continue to keep interested buyers and investors returning to the South Australian market. 

If you have any queries about real estate in South Australia, or in any location, please feel free to drop into one of the hundreds of CENTURY 21 offices around the country and talk to an agent today.

0 comments | Posted by Charles Tarbey on 09/05/2011 at 10:34 AM | Categories:

Rates On Hold For Now, But An Increase Expected Soon

Last week at its monthly meeting the Reserve Bank of Australia decided to keep the official cash rate on hold at 4.75 per cent.  This decision is good news for the residential property market as it means that mortgage holders have at least another month without an increase to their repayments.  Having said this, I do feel that buyers and home owners are going to need to prepare for a rate rise in the coming months. 

In his statement following the rate hold announcement, the Governor of the RBA, Glenn Stevens, said that the RBA Board felt the current mildly restrictive stance of monetary policy remained appropriate, but that in future meetings the Board would continue to carefully assess the evolving outlook for Australia’s growth and inflation.

In terms of the global economy, the RBA felt despite other countries moving to tighten their monetary policy settings, financial conditions continue to remain accommodative.  There has been some interpretation in the media post decision however that the RBA also recognises that the strong Australian dollar poses some risk to our economy. 

An important consideration for the RBA has always been levels of inflation.  The recent official inflation data for the first quarter released by the Australian Bureau of Statistics saw a surprise jump of 1.6 per cent in the CPI over the March quarter, which is the largest quarterly rise seen in the CPI in five years. 

The RBA’s statement showed that it recognised the issue of increasing inflation.  While the RBA expects inflation will be close to its target levels over the year ahead, Governor Stevens acknowledged that recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course.  He said that over the longer term inflation can be expected to increase somewhat if economic conditions evolve as broadly as expected.  We need to recognise that such an increase would strengthen the possibility of a rate rise.  

Getting back to property, as a result of this rate hold CENTURY 21 continues to believe that the residential market is an attractive environment for property buyers, given the amount of stock that is currently available and the low clearance rates that we are seeing. 

In approaching a property decision, buyers need to recognise the possibility of a rate rise and obtain an understanding about how this outcome could affect the viability of their purchase.  Current owners with mortgages also need to practically prepare for the increased repayments that an interest rate rise would result in, and use this month’s rate rest to budget accordingly. 

And so, for the sixth month in a row we wait to see what the next RBA decision will bring.  While we cannot be sure when a rate increase will come, we can recognise that current economic indicators point to its eventual arrival.  It is my view that the best action that residential property owners and purchasers can take is to prepare adequately.

0 comments | Posted by Charles Tarbey on 09/05/2011 at 10:33 AM | Categories:

The real estate institute of victoria presents its budget submission to the victorian government

In preparation for the forthcoming release of the Victorian Government’s 2011-12 Budget, the Real Estate Institute of Victoria has presented its submission to the Government, which calls for a reduction in property taxes, increased assistance for first home buyers and improvements to land tax.

The REIV states that Victorian residential property taxes are higher than they have ever been before, and are higher than in every other state around the country.  Victorian property buyers pay the largest amount of stamp duty, property investors can face double taxation and businesses investing in property leave themselves open to being charged stamp duty on the GST they must pay – essentially paying tax on tax. 

According to the REIV’s submission for the 2011-12 State Budget, its key priorities are:

• Provide first home buyers with a discount on stamp duty;
• Increase the supply of housing to ease cost pressures on owner-occupiers and renters;
• Provide first home buyers with up to $2,000 for use on professional services and incidental expenses incurred in a residential property purchase;
• Cut the stamp duty rate and implement indexation;
• Cease charging stamp duty on GST;
• Assist the rental market by ceasing opportunistic property taxes on investors;
• Ensure land tax rates are competitive and promote investment in Victoria.

The REIV’s submission comes at a pivotal time for the residential housing market in Victoria.  According to the REIV’s quarterly figures for March, the Melbourne median house price has dropped by six per cent from the December quarter.  REIV CEO Enzo Raimondo has said that the Melbourne and Victorian residential markets have entered a phase of lower transaction numbers and reduced price growth, mainly due to affordability constraints and recent interest rate increases. 

The REIV’s recently released Housing Affordability Report has shown that Victoria is the second-most expensive state in Australia in which to afford a home.  According to the REIV, such reduced affordability in the state can be seen in the significantly reduced number of home loans that have recently been taken out, as well as a decline in general market activity.  As with some other states around Australia, Victoria is suffering from a declining first home buyer market, which can be attributed in part to such reduced housing affordability.     

It will be interesting to see how the Victorian Government incorporates the REIV’s priorities into its 2011-12 Budget.  It was clear in the recent New South Wales election that residential housing is an issue that is of great importance to voters – clearly this is also the case in Victoria.  I hope that the Government takes the submission seriously, and acknowledges that making the purchase of housing more achievable for residents should provide benefit to the state itself. 

1 comments | Posted by Charles Tarbey on 02/05/2011 at 1:06 PM | Categories:

The impact of recent natural disasters on the property market

In many cases property is one of the worst casualties of a natural disaster, following loss to human life.  Damage is done very quickly and with little warning, and people can be left homeless or even in situations where the destruction is so bad that rebuilding is an almost impossible feat. 

Although we are only in May, 2011 has already seen a multitude of natural disasters hit the globe, with the Southern Hemisphere suffering particularly badly.  In Australia, both Queensland and Victoria have seen flooding, with Queensland suffering a double hit from Cyclone Yasi.  Our easterly neighbours in Christchurch were also dealt a blow when the city was hit by a magnitude 6.3 earthquake in February, which destroyed homes, heritage buildings and office blocks.

So what impact can we expect such disasters to have on property markets over the longer term? As well affecting physical property, natural disasters can have wide reaching effects on markets both specific to the area affected, as well as generally.   

In an article entitled ‘Nature calls the shots’ which appeared in the March 2011 issue of the magazine Smart Property Investment, the chief economist of AMP, Shane Oliver, predicted that the combined impact of the Queensland floods and Cyclone Yasi will add to inflation across the March and June quarters.  He also wrote that the Federal Government’s response of sourcing rebuilding funds from a temporary levy on taxpayers will not help consumer spending.

Such conflicting results will have an impact on the Reserve Bank of Australia’s interest rate decisions over the next couple of months.  These decisions will affect all mortgage holders around Australia, regardless of whether they are in flood/cyclone affected areas or not. 

The same issue of the magazine sees CENTURY 21’s own Chairman, Charles Tarbey, comment on the future of the Queensland property market following the floods.  Charles believes that transaction levels in Queensland will remain low initially, as sellers repair the damage to their properties and hold off from entering the market until they feel they can achieve their desired price.  He went on to say that he anticipates a mini-boom in the Queensland property market once the rebuilding and cleaning efforts start to make substantial progress.

Moving across to Christchurch, the changes that will take place in the property market as a result of the devastation that the earthquake has caused should change the landscape of the city forever.  New Zealand Prime Minister John Key said in March that about 10,000 houses would have to be demolished, with a number of parts of the city abandoned all together, as some areas of land damage cannot be remediated.  Thus, as a result, I suspect we could see rebuilding efforts begin in other locations – with entirely new communities emerging, quite possibly along with different, adapted building styles.  
From what has already occurred this year, I can only hope that we have seen the worst of natural disasters for 2011 and in fact for many years to come.  I wish all disaster affected areas in both the Southern Hemisphere as well as around the world a speedy and efficient recovery process. 

0 comments | Posted by Charles Tarbey on 02/05/2011 at 1:04 PM | Categories: