Viewing by month: May 2012

ABS releases Housing Finance data for March 2012

The Australian Bureau of Statistics recently released its Housing Finance data for March 2012, which showed that the total value of dwelling commitments for the month of March, excluding alterations and additions, fell 0.2 per cent (trend) compared with February 2012.    The seasonally adjusted series fell 0.5 per cent in March 2012. 

According to the ABS, the total value of owner occupied housing commitments (trend) fell 0.5 per cent in March, following a fall of 0.4 per cent in February 2012.  Falls were seen in commitments for the purchase of established dwellings (down 0.6 per cent) and commitments for the purchase of new dwellings (down 1.7 per cent), while commitments for the construction of dwellings rose (up 0.5 per cent).  March 2012 saw the seasonally adjusted series for the total value of owner occupied housing commitments fall 0.3 per cent. 

The total value of investment housing commitments (trend) also rose in March – by 0.4 per cent.  The seasonally adjusted series fell 1.0 per cent over the month. 

In terms of the number of owner occupied housing commitments (trend) seen between March 2012 and February 2012, on a state by state basis falls were seen in New South Wales (down 2.2 per cent), Tasmania (down 1.7 per cent), South Australia (down 0.1 per cent), and the Australian Capital Territory (down 0.2 per cent).  Meanwhile, rises were seen in Western Australia (up 1.8 per cent), Queensland (up 1.1 per cent), Victoria (up 0.4 per cent) and the Northern Territory (up 2.6 per cent). 

The seasonally adjusted number of owner occupied housing commitments saw increases in Western Australia (up 3.5 per cent), Queensland (up 2.0 per cent), the Northern Territory (up 23.0 per cent) and New South Wales (up 0.1 per cent), while falls were seen in Victoria (down 0.6 per cent), Tasmania (down 4.5 per cent), the Australian Capital Territory (down 2.6 per cent) and South Australia (down 0.4 per cent). 

For more information about this data, as well as advice regarding your property purchase plans, please feel free to stop by your local CENTURY 21 real estate office to speak to an experienced and informed professional. 

0 comments | Posted by Charles Tarbey on 29/05/2012 at 10:30 AM | Categories:

Maximise the capital growth and yields of your investments

For some investors it can prove difficult to think with your head and not your heart when considering a property purchase, particularly if you become emotionally attached to a particular dwelling.  However, there are a number of factors that must be considered with a clear, unaffected mind if your investment is to be a financially successful one.  Chris Gray is a well known property expert and has nearly 20 years’ experience in property investing and education.  His top ten tips to maximise capital growth and yield were recently featured in the April 2012 issue of CENTURY 21 Wentworth’s Property Investor, and I also share them with you now.   

1. Do your research
Look at as many properties as possible to get an idea about prices in your area, what adds value, which types appreciate faster, how to get a good deal (getting properties at much lower than market value), and what are the pitfalls of a too-good-to-be-true deal.

2. Get the property valued before you buy
Even if you've done sufficient research buyers can still pay overinflated prices for properties. I always pay for an independent valuation every time I buy.

3. Get the property valued before you renovate
One of the biggest misconceptions investors have is that the more capital they spent on a property, the more profit they will make. This isn't always the case. A valuer can tell you what your property is worth now, what it will be worth after planned renovations, and whether your new $30,000 kitchen will actually add $30,000 to your property's value.

4. Get a good property manager
This is the best way to maximise your rental income and to ensure that it rises with the market. Most self-managed properties are under-rented as owners are often hesitant of upsetting tenants. The property manager will also be able to keep on top of maintenance and other issues to do with the property.

5. Location, location, location
Look for areas with potential for high growth and yields. Important things to look for are proximity to public transport, leisure activities (parks, beaches and lakes), work and schools. Pay for some independent research which will tell you what the highest-rated suburbs are - it's worth it!

6. Buy "better" properties
Physical factors to look for when researching properties are good-sized bedrooms, off-street parking, good positioning and a uniqueness that sets the property apart from others in the street. These will ensure the property grows in value and desirability.

7. Buy blue chip
Cheap properties are often cheap because they are not in great demand and there's plenty to choose from. It's often worth paying market value for a better property in a top suburb than it is to get a discount for something that no one else really wants.

8. Buy at, or below, market value
There are ways to acquire good properties below market price.  In a flatter market, for instance, clearance rates are around 50 per cent, making properties harder to sell. Here, buyers have greater bargaining power. Unrenovated properties in good areas can fetch lower prices and provide good yields post-renovation.  Another way is to buy in an emergency sale situation such as when vendors need to sell to finance a recent buy or relocation and are hard-pressed to do so.

9. Get a good mortgage broker
As an investor a good broker should be one of the most important professionals on your team. If I can borrow 80 per cent of a property's value rather than 70 per cent, it means my limited deposits go 50 per cent further as I only need to put 20 per cent down rather than 30 per cent. It's not always about getting the cheapest rate, and the more legwork the broker does for me the more time I can spend finding a better property.

10. Stick to your strategy
Work out what works for you. Once you find the strategy, stick to it, while also remaining aware of other opportunities and taking on good advice. A good strategy doesn't have to be complicated - it's often the simple things that work best.

To speak to an experienced property professional in your area about your property investment plans, please feel free to stop by your local CENTURY 21 office. 

0 comments | Posted by Charles Tarbey on 29/05/2012 at 10:29 AM | Categories:

Do you have adequate insurance for your investment property?

As an investor, it is important to understand your options when it comes to protecting your investment and its contents.  To this end, I’d like to share with you the following piece provided by EBM Insurance Brokers, which appeared in the April 2012 issue of CENTURY 21 Wentworth’s Property Investor.

Underinsurance under the microscope

If your home was damaged or your possessions stolen, would the amount they are insured for completely cover your loss?

If you hesitated in answering, chances are you’re caught in the underinsurance trap – a situation facing thousands of individuals and businesses who have neglected to keep their insurance policies up-to-date. 

Underinsurance is becoming increasingly prevalent in Australia and around the world.  It describes a situation where the amount an individual or business is covered for is less than the true replacement cost of their home, business or contents. 

All too often it is in moments of tragedy – be it a house fire or burglary – when people make the discovery they are underinsured.  By this time of course, it is far too late. 

For many, underinsurance is a consequence of making simple “guesstimations” of the value of their home and contents – and guessing wrong.  Failing to take into account the appreciation of assets is a prime example of how households can under-appreciate their possessions. 

Even issues like currency fluctuations can play a part – if the Australian dollar falls the replacement cost of imported goods becomes much dearer. 

Underinsurance can also affect the value of your most valuable possession – your home. 

Construction costs have increased considerably in most states over the past five years so the replacement cost of the family home can be significantly more than when it was first built. 

For example, in recent years the cost of building new homes has increased by five per cent in Queensland over a single year, and by 16 per cent in Western Australia.  Similar increases have been reported throughout the rest of Australia. 

EBM Insurance Brokers General Manager Sharon Fox-Slater said that these increases in construction costs, many of which are passed on to the consumer, can create a significant gap between sums insured and rebuilding costs. 

“For home owners, establishing an insurance policy is something they can budget for and can give them a clear idea of what insurable events are covered and what are not,” said Ms Fox-Slater. 

“But should a home owner not adequately insure their property and something happens, that’s a risk that they cannot escape.  This applies even more so to landlords when insuring their rental properties.  Many investors place greater importance on insuring their own home yet less on insuring their rental property.

“The impact of underinsuring (or not insuring) a rental property can be devastating when there continues to be a mortgage to pay, yet no rental income and lack of funds to rebuild,” concluded Ms Fox-Slater. 

For more information about EMB’s range of landlord insurance products please visit or call 1800 661 662. 

For this and other valuable stories regarding your investment, we invite you to read the April edition of CENTURY 21 Wentworth’s Property Investor. 

0 comments | Posted by Charles Tarbey on 22/05/2012 at 2:19 PM | Categories:

Save energy at home this winter

As winter approaches and with it often some very cold days and nights, it can certainly be tempting to rely on appliances such as heaters to stay warm.  Unfortunately, such increased use will likely also result in larger costs over the period. 

Having said this, CENTURY 21 Australia believes that both property owners and tenants can successfully mitigate potential increases to energy costs at home this winter through the implementation of simple energy saving measures. 

“Many Australians are already seeing their cost of energy go up as a result of rising regulated energy prices.  Add to this the increased consumption that is often seen in colder months, and many people might find themselves facing unexpected financial burdens this season,” said Chairman of Century 21 Australasia, Charles Tarbey. 

“Having said this, there are many simple ways for households to reduce their energy use, often involving an adjustment in mindset and behaviours.”

One such modification could be in the way that Australians use the standby settings on various gadgets around the home. 

According to a study released in December 2011 by the Australian, State and Territory, and New Zealand Governments, entitled ‘Third Survey of Residential Power Consumption of Australian Homes – 2010’, “while newer individual products on average are using less standby power, many individual products continue to use more power in low power modes than is required to perform the desired function.”

As such, CENTURY 21 encourages home owners and renters alike to try to avoid the use of standby power options on appliances and home entertainment and office equipment, including televisions, game consoles and computers, as a means of lessening energy consumption this winter. 

“With cold weather fast approaching, the results of this study are particularly relevant as many households may experience a peak in their energy usage with increased reliance on heaters, clothes dryers, electric blankets and the like,” continued Charles Tarbey. 

“By simply making a conscious effort to turn off appliances and gadgets as opposed to leaving them on standby, as well as other measures such as switching off unnecessary lights, there may be an opportunity to achieve significant savings on your energy bills,” concluded Charles Tarbey. 

For further information about energy savings in the home, or for other general queries about residential real estate in your area, please drop by your local CENTURY 21 Real Estate office to speak with an experienced property professional. 

1 comments | Posted by Charles Tarbey on 22/05/2012 at 2:06 PM | Categories:

Soft home value results over April

According to the recently released RP Data-Rismark May 2012 Home Value Index, capital city dwelling values were down -0.8 per cent in the month of April following the stability witnessed over the first quarter of 2012, leaving national home values down -0.7 per cent year to date. 

Property values across the combined capital cities of Australia showed renewed softness in the latter half of April with dwelling values falling by -0.8 per cent after a stable first quarter.  Over the three months ending April 30 the RP Data-Rismark Index has seen values rise by 0.3 per cent.  On a year to date basis, dwelling values are now down -0.7 per cent. 

Values were down across five of the eight capital cities over the month of April, with Hobart (-2.9 per cent), Melbourne (-1.7 per cent) and Brisbane (-1.3 per cent) recording the largest falls. 

According to RP Data’s research director, Tim Lawless, the housing market gains seen throughout February and March, which delivered a flat first quarter result, have now been mostly offset by the -0.8 per cent fall over the month of April. 

Tim Lawless went on to say that segmenting the housing market performance by price point shows that the premium housing market remains the weakest across broad price brackets. 

However while April saw values reduce across most capital cities, rents continued to show modest improvements.  According to Tim Lawless, at the combined capital city level, the weekly rent on a detached house is up by 4.1 per cent over the year to April and unit rents are up by 3.7 per cent. 

For more detailed information about dwelling values and rents in your suburbs of interest, please feel free to contact your local CENTURY 21 real estate office to speak to a property professional for expert, clear advice.  

0 comments | Posted by Charles Tarbey on 14/05/2012 at 2:33 PM | Categories:

Have you considered a property manager for your investment?

With reductions to interest rates, subdued value growth and an array of attractive residential real estate purchase opportunities available, current conditions are certainly looking favourable for property investors.  What many investors may not understand however is that the investment process doesn’t necessarily stop once a purchase is made – a property must be effectively tenanted and maintained for your return to be maximised. 

For many busy investors, the most cost effective and time efficient way to manage a property is to use a professional property manager.  An expert manager will be able to manage all aspects of your investment – from ensuring it is occupied by high quality tenants to property maintenance and making sure that you and your property abide by legal requirements. 

Securing good tenants is important for investors.  A property manager will have the ability to find appropriate tenants and then determine whether or not they are suitable through proven screening systems and personal experience.  It is important to get tenanting right - high tenant turnover and vacant days tend to be expensive and can reduce your return on investment. 

Setting a market appropriate rental price is also a very important aspect of maximising your investment returns.  Property managers have the experience and market data necessary to manage the increase process – without driving tenants away. 

Another element for investors to consider is that investment properties require tenant inspections and the management of ongoing property maintenance issues as they arise.  Not only can these activities be time-consuming if you decide to take them on yourself, they can also be expensive.  Property managers have networks of contacts with which relationships have been established over time, the same as you will have in your own profession.  These contractors will often charge the manager less for repairs needed than if you as an owner were to select them out of the phone book.    

The process of renting out a property comes with a vast array of evolving legal requirements, covering subjects ranging from when rent is considered overdue to the use of double sided deadbolts on doors and smoke alarms.  These laws can be quite complex and are often followed by inconvenient (and potentially expensive) consequences if not followed properly.  As property managers deal with rental properties every day, they are well-versed with the legal requirements and can assure you remain abreast of your obligations. 

 As can be seen, renting out and managing a property can be a fairly complex process, particularly if it is not your field of expertise.  As such, many investors often find that the value of using an experienced professional property manager can outweigh the costs of doing so. 

For any further information regarding property management services or for attractive investment properties available for sale in your area, please don’t hesitate to contact your local CENTURY 21 office. 

1 comments | Posted by Charles Tarbey on 14/05/2012 at 2:32 PM | Categories:

Claiming depreciation deductions on your own home

In difficult economic times, many property owners with spare rooms in their homes may be able to generate additional income by renting these unneeded rooms out to tenants (where appropriate), including family members and friends.  

For those readers to whom this option might be of interest, I thought I would share the following piece provided by BMT Tax Depreciation.  It is an excerpt of an article which appeared in the April 2012 issue of CENTURY 21’s Property Investor.  

In the current economic climate, more and more home owners are renting out rooms within their properties to generate extra cash.  This strategy can be quite lucrative, especially when considering the extra tax deductions that become available.  Even when family members pay rent, by declaring the rental income in a tax return, a portion of the expenses and depreciation may be claimed as a deduction.  BMT Tax Depreciation is dedicated to helping home owners maximise their property depreciation deductions and improving their cash return.

The Australian Taxation Office (ATO) has a preferred method of calculating the proportion of expenses that can be claimed as a deduction under the Taxation Ruling Number IT 2167.  This ruling sets out the ATO’s general approach of apportionment based upon floor areas.  The ruling states that it is appropriate to add the floor area where the tenant has sole occupancy of up to 50 per cent to the general living area the tenant shares equally with the owner/occupier.  It is necessary to only include general living areas the tenant has access to.  

A portion of relevant property deductions can be claimed by the owner including property depreciation, which is a deduction available for the wear and tear on the fixtures, fittings and structure of a building.  A portion of other expenses such as insurance, rates and the interest payments made on the mortgage of a property may also be claimed.  

(Please visit the original article in Property Investor for an example of an owner-occupied house with two bedrooms generating income for the owner, showing the tax deductions available and the resulting improvements to the owner’s cash flow.)  

When renting a room out in an owner-occupied property, it is important to obtain a property depreciation report from a specialist Quantity Surveyor such as BMT Tax Depreciation.  This will ensure the tax deductions are maximised.  It is also important to discuss the options available with an accountant.  When a home is changed into a partial investment property, some Capital Gains Tax (CGT) may be triggered if the property is later sold.  However, there are scenarios which may reduce or create a total CGT exemption depending on the property’s first use, how long the property was lived in, how long it is income producing and if the owner purchases another home.  

For more information on BMT Tax Depreciation’s Australia-wide services, please contact 1300 728 726.

0 comments | Posted by Charles Tarbey on 08/05/2012 at 1:01 PM | Categories:

Lower interest rates may spur property market

At its monthly meeting last week, the Reserve Bank of Australia elected to reduce the official cash rate by fifty basis points to 3.75 per cent.  This decision was welcomed by CENTURY 21 and we expect that it will help to encourage growth in the national property market. 

Charles Tarbey, Chairman of CENTURY 21 Australasia, said of the decision, “Should the banks pass on the rate cut, this decision should be an excellent shot in the arm for a relatively quiet property market and the economy at large.”

“I believe the decision is the right one when considering the state of the Australian economy and could potentially be the first of a number of cuts.”

The Reserve Bank’s decision came after the release of lower than expected inflation figures, ongoing economic turbulence in Europe and disappointing research from the Housing Industry Association showing that new home sales fell to their lowest levels in over a decade in March 2012. 

In his statement following the meeting, RBA Governor Glenn Stevens commented that the decision was “based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.”

Mr Stevens noted that national output growth was somewhat below trend over the past year and had been affected in part by temporary factors, but also by the persistently high exchange rate.  He also referenced that interest rates for borrowers have been close to their medium-term averages over recent months, “albeit tending to increase as lenders passed on the higher costs of funding their books.”

“With a relatively gloomy global economic outlook in the short term, now more than ever the RBA needs to encourage investment and consumer confidence to spur economic activity,” concluded Charles Tarbey.  

The RBA will no doubt be watching closely to see the response of the major banks to its move.  Since the decision was made, NAB, Commonwealth Bank and Westpac have announced that they will each lower their standard variable interest rates by 32 basis points, 40 basis points and 37 basis points respectively, with a decision from ANZ due to be announced this Friday.  

For more information about the residential property market in your areas of interest, please feel free to stop by your local CENTURY 21 Real Estate office for expert, clear advice.  Additionally, if you would like to speak to a mortgage professional about the impact of this rate cut on your mortgage, or to find out more about suitable loan packages for your circumstances, please contact CENTURY 21 Home Loans.  

0 comments | Posted by Charles Tarbey on 08/05/2012 at 12:58 PM | Categories: