Viewing by month: November 2013

EBM’s 10 tips for avoiding underinsurance


For investors and homeowners alike, insurance can provide cover for losses and damage due to unforseen events, however, insurance can be worthless if you don’t insure for an adequate amount.


In light of this, we would like to share an article from this month’s Property Investor smartbook, detailing EBM insurance broker’s 10 tips for avoiding underinsurance.


Even the best insurance policies can leave property investors exposed if they don’t insure for an adequate amount. The General Manager of RentCover landlord insurance, Sharon Fox-Slater, describes underinsurance as “rife” in Australia’s property market.


“Study after study shows that Australians tend to underinsure. Every time there’s a major disaster, such as the recent New South Wales bushfires, we hear about more cases,” said Ms Fox-Slater.


“If you insure an investment property for $200,000 and the actual rebuild costs $400,000, you risk being caught severely short.


“Most investors don’t deliberately underinsure but it’s not easy to accurately estimate the costs of rebuilding.


“It’s often more expensive to start again than to build from scratch because there’s demolition to consider, and construction costs rise over time.”


Ms Fox-Slater offers the following tips to avoid being underinsured:


- The most accurate method of estimating rebuilding costs is to approach a quantity surveyor for a written replacement cost estimate – other professionals who can help include architects and builders.


- If you use online calculators, choose ones which ask detailed questions, such as whether your home is on a slope. Compare the answers from at least three, then add a margin for safety – and ask a builder for an opinion on the final figure you come up with.


- Increase your sum insured every year to keep up with construction costs. According to the Australian Bureau of Statistics, the cost of building a new home raised an average of 7.7 per cent each year in the decade to 2008. 


- Remember to include supplementary costs associated with rebuilding, such as demolition, professional fees, council fees, gardening costs, and the cost of meeting modern building standards.


- Keep the big picture in mind – deliberately underinsuring your property might save you a few hundred dollars in premium, but lose you tens or hundreds of thousands of dollars if you need to claim.


- Do your homework and try to avoid becoming one of the many people who only read their policy document after a loss.


- Shop around when renewing your insurance but remember to look for “value” and features not just the cheapest price.


- If you’re not in a strong enough financial position to cope without rent for six months to a year or more without rent while a rebuild occurs, take out landlord insurance.


- Keep your sums insured up to date, accounting for improvements, renovations and new possessions you acquire.

- Take photos of your investment property to help you remember what fixtures and fittings are in place should you need to claim.

0 comments | Posted by Charles Tarbey on 27/11/2013 at 12:00 AM | Categories:

Tax on foreign property purchases unlikely to slow price growth


Century 21 believes any additional tax on property purchases by foreign investors is unlikely to significantly quell activity in the Australian property market.

“An additional tax on property is unlikely to take the heat out of the market as domestic demand has by and large been responsible for driving recent growth in prices,” said Chairman and Owner of Century 21 Australasia, Charles Tarbey.

According to the Foreign Investment Review Board (FIRB), proposed foreign investment residential real estate fell slightly in 2011-12 to $19.7 billion from $20.9 billion in 2010-11. More recent figures are due out late December in the FIRB’s annual report.

“Century 21 has seen an imbalance of supply and demand in several local markets lately, another important driver of this price growth,” continued Charles Tarbey.

“While discussions around foreign investment are healthy for a developed economy, additional tax measures could have the effect of deterring foreign buyers completely.

“If we take action to deter foreign buyers from investing in Australia today, when we need them to support our economy in the future, they won’t be interested,” concluded Charles Tarbey.

0 comments | Posted by Charles Tarbey on 26/11/2013 at 12:00 AM | Categories:

Sydney leads with strong house price growth


Figures released today by the Australian Bureau of Statistics (ABS) confirm the sustained growth in Sydney house prices and a general increase across the eight capital city weighted average.

The ABS established house price index for Sydney rose 3.6 per cent, the largest capital city rise in the September 2013 quarter, and the eight capital city weighted average increased 1.9 across the same period, for a total rise of 7.6 per cent over the last year.

Other increases were in Melbourne (plus 1.9 per cent), Brisbane (plus 1.2 per cent), Perth (plus 0.2 per cent), Hobart (plus 1.4 per cent) and Darwin (plus 0.4 per cent), while Canberra (down 1.2 per cent) and Adelaide (down 0.6 per cent) fell.

"This is the first time since 2010 that the capital city average has shown four consecutive quarters of growth year on year," said Robin Ashburn from the ABS.

"Sydney's rises were broad based in the September quarter, with most areas going up, but prices were mixed in Melbourne, with some areas showing rises and others falls.”

0 comments | Posted by Charles Tarbey on 19/11/2013 at 12:00 AM | Categories:

Building approvals hit highest level in over three years


Residential building approvals have hit their highest level since early 2010, according to the Housing Industry Association (HIA).

“Total residential building approvals in September 2013 increased by 14.4 per cent compared with August on a seasonally adjusted basis,” said HIA Senior Economist, Shane Garrett.

“This brought total approvals to 16,318 during the month. We have not seen a figure higher than this since March 2010.”

According to the HIA, building approvals have been running at an annual rate of around 180,000 over the last three months.

“Growth was driven by the multi-unit segment of the market where approvals increased by 31.8 per cent compared with the previous month. Detached house approvals rose by only 1.9 per cent over the same period. This demonstrates that the recovery is not yet as broad-based as we would like,” continued Shane Garrett.

“The main message from today’s figures is that the RBA’s interest rate cuts over the past two years are helping to support activity on the ground. However, it is worth remembering that the growth in approvals is dominated by multi-units rather than houses. It would be a welcome development to see greater momentum emerge for detached housing,” concluded Shane Garrett.

In September 2013, total seasonally adjusted building approvals growth was strongest in New South Wales (+25.2 per cent), followed by Victoria (+18.0 per cent) and Western Australia (+12.3 per cent). Approvals also increased in Queensland (+3.8 per cent) and South Australia (+0.8 per cent). In trend terms, total building approvals were flat in the Northern Territory and declined by 4.3 per cent in the ACT during September. Tasmania also saw approvals fall during September (-10.3 per cent).

0 comments | Posted by Charles Tarbey on 18/11/2013 at 12:00 AM | Categories:

Sydney drives capital growth


Australian capital city dwelling values increased by 1.3 per cent in October, largely the result of significant price gains in the Sydney housing market as well as strong growth in Melbourne and Brisbane.


The RP Data-Rismark International October housing market results confirmed a 1.3 per cent rise across the combined capital cities index over the month with the rolling 12 month combined capital cities index growing at its fastest pace in three years.


RP Data's Senior Research Analyst Cameron Kusher noted that the latest data also emphasises the strong housing market conditions in Australia's two largest cities, Sydney and Melbourne, which is having a strong influence on capital growth across the combined capital cities.


“Sydney home values increased by 2.4 per cent in October and increased by 5.5 per cent over the past three months while in Melbourne, home values increased by 1.2 per cent in October and recorded an increase of 3.8 per cent over the past three months. For the first 10 months of this year, Sydney and Melbourne house values have performed very strongly achieving growth of 13.4 per cent and 8.7 per cent, respectively,” Mr Kusher said.


Elsewhere, the results confirmed that dwelling values rose over the month in Adelaide (0.3%) and Darwin (1.6%) while they fell in Perth (-0.2%), Hobart (-2.3%) and Canberra (-1.5%).


Outside of home value growth, most other indicators are pointing to an ongoing improvement in overall housing conditions. Over the three months to August 2013, RP Data estimated that capital city home sales were 20.1 per cent higher than the same time in 2012. The number of capital city properties listed for sale is 12.0 per cent lower than it was a year ago.


There have also been marked improvements in the time it takes to sell a home and decreases in the level of discounting by vendors. Capital city homes are currently selling after 44 days compared to 56 days a year ago and discounting levels have reduced from 6.8 per cent a year ago to 5.7 per cent currently.

0 comments | Posted by Charles Tarbey on 11/11/2013 at 12:00 AM | Categories:

Cup day rate hold will support housing market


Century 21, the largest real estate sales organisation in the Asia Pacific region, believes that the decision by the Reserve Bank of Australia to keep interest rates on hold at 2.5 per cent will continue to support the recovery in the Australian real estate market.


“The Reserve Bank’s rate cuts this year have clearly had a strong effect on the market, with auction clearance rates and property values reaching record levels in October,” said Chairman and Owner of Century 21 Australasia, Charles Tarbey.


“Century 21 continues to see strong buyer interest, however, home owners continue to be hesitant to list their properties which is creating a supply and demand imbalance in some areas,” concluded Charles Tarbey.


The Reserve Bank’s decision follows the recent release of RP Data-Rismark’s Hedonic Home Value Index results, which saw capital city dwelling values increase by 1.3 per cent in October, driven by large gains in Sydney, Melbourne and Brisbane.


As part of its decision, the Reserve Bank reasoned that it was prudent to leave the cash rate unchanged in light of the high Australian dollar, inflation being consistent with target levels and a strengthening residential housing market.


0 comments | Posted by Charles Tarbey on 08/11/2013 at 12:00 AM | Categories:

When is the right time to list your property?


It is important for vendors to be strategic when listing their property, and with two years of continuous growth in the Australian property market, many Australians are being tempted to step off the sidelines and list their properties. In light of this, we have decided to share the following story by CENTURY 21 Australasia’s Chairman and Owner, Charles Tarbey, which is currently appearing in the October edition of CENTURY 21’s Property Investor. In this article, Charles shares his thoughts on the strength of the Australian property market, and whether you should list your property this spring.


With growing buyer levels, and recovering property values in many Australian markets, some homeowners may be tempted to step off the sidelines this spring and list their properties for sale in order to realise potential capital gains.

I would encourage homeowners to list their property this spring for one reason - that is, if you're selling to buy - the next level up, or in the location you would prefer to live in.

This is because if you sell your property right now and don't buy at the same time, you're likely to lose out on further capital gains.

I believe that any well-located area in a city should experience at least some price growth over the next twelve months.

I also expect to see the mid-to-high range of the marketplace experience significant positive price growth over the next year which is another reason why I suggest buying the next level up.


I don't believe that there is necessarily an issue with paying a little more for a property, so long as the price you pay is reasonable in relation to the current market.

If you can get a great bargain, well done; if you end up paying a little bit more, this shouldn't matter a great deal. The Australian market will likely continue to see ups and downs, but it will always grow over the long term - and the long term is what it is all about in the real estate cycle.

The country's proximity, or lack thereof, to the rest of the world, means it is somewhat isolated from some of the negative pressures that other parts of the world can face from time-to-time. This again bodes well for continued strength in the property market.

In addition, the majority of Australia's population lives in capital cities along the coast. This trend is unlikely to change, and the projected shortage of housing stock in Australia means that prices in these areas are likely to see reasonable growth for the foreseeable future.

Australians tend to live in larger houses compared to other people around the world, elect (interesting) but stable Governments, and occupy a safe and secure part of the world. In combination, these factors may make it attractive for people to pay more to live in Australia.


I believe there are other reasons for the strength of Australian property prices, which is why I suggest keeping your capital in property.

Many of these reasons have little to do with the dollar, interest rates or the economy. Rather, they concern the emotional side of property.

Firstly, as soon as someone buys a property, they tend to think it is worth more than what they purchased it for. This is a remarkable phenomenon, which ensures that confidence in property values is usually strong in Australia.

Secondly, I've never known of anyone to sell a home for less than what they paid for it - unless they were pursuing a better opportunity, or being forced to sell.

Finally, in all my years in business, I've never had an employee come into my office and say, "I'd like a pay reduction." Australians, by and large, tend to want to get paid more, and this generally translates into an ability to borrow more. And once people's borrowing powers start to increase, property prices tend to start moving.


Historically low interest rates mean that many property owners currently have the opportunity to fix their loan at an attractive price.

I would encourage homeowners and investors to take advantage of the borrowing environment at present, as any loan containing an interest rate with the number four or five in front of it should help a buyer over the next five to six years.

Low interest rates often provide an incentive for owners to hold onto their properties; however, with a large number of buyers looking for good quality stock, many of these owners may be tempted to trade up and potentially realise even greater capital gains.


With properties moving at higher prices than three years ago, coupled with an environment of  low interest rates, many Australians are concerned about the prospect of a property bubble.

I would caution both homeowners and investors to remember that there will always be some level of negative sentiment around the property market and the economy in general.

The Reserve Bank began lowering interest rates over two years ago, and any property bubble that resulted from these actions would have likely manifested at least a year ago - but hasn't as of yet.


I would again encourage homeowners and investors to carefully consider their motivations for selling - if you're selling to buy something else, go ahead and do so; don't be scared.

If you're selling to raise capital, reduce debt, or realise an asset for no other reason than to have cash in the bank, my firm belief is that you should hold off.

Many real estate agents will tell vendors and buyers that now is the right time to both buy and sell, regardless of the of market conditions. These agents are often too preoccupied with what they get out of it, rather than what's best for everybody involved.

For now, the focus for homeowners and investors should be on the potential growth in value of their property, or their next property if they trade up - not necessarily the amount of buyer interest in the market.

Century 21 encourages all parties interested in buying or selling property to consult appropriate advisors or experts before doing so.

0 comments | Posted by Charles Tarbey on 05/11/2013 at 12:00 AM | Categories:

Land sales shine brighter light on new home building


The latest HIA-RP Data Residential Land Report indicates the potential for further upward momentum in detached house construction in 2013/14, with the volume of residential land sales posting strong growth of 18.2 per cent in the June 2013 quarter.

“This is the highest quarterly volume achieved since the March quarter of 2010,” said HIA Chief Economist, Harley Dale. “The recovery in residential land sales is impressive, but from a very low base.”

“There is a close (lagged) relationship between RP Data-HIA land sales and the number of detached house starts,” noted Harley Dale. “Land sales volumes highlight the prospect of further growth in detached house starts in 2013/14 following a modest lift of 3.7 per cent in 2012/13. That would be a very positive outcome for both the new home sector and the wider economy.”

“The level of sales in 2012/13 was 56,782. Sales are therefore now back to a level equivalent to the GFC trough but no higher - the level is still 21 per cent below the historical average,” remarked Harley Dale.

“In terms of residential land prices, growth has generally been modest. A flat June 2013 quarter for the weighted median residential land value saw an increase of only 1.7 per cent over the year, less than general inflation,” added Harley Dale. ,

According to RP Data’s research director Tim Lawless, the improved vacant land market conditions are in line with improvements across the broader housing market.

“The housing market has been back in growth since mid-2012 with both the rate of capital gains and transaction volumes gathering some momentum during 2013. It should come as no surprise that the Sydney housing market, which remains well undersupplied relative to the rate of population growth and is recording the highest rate of capital gain currently, is one of the primary drivers behind the lift in national vacant land sales,” said Mr Lawless.

“While Sydney has posted a solid improvement in land sales, we are also seeing a substantial increase in the number of blocks sold in Melbourne, Brisbane and Adelaide over the June quarter,” Mr Lawless concluded.


0 comments | Posted by Charles Tarbey on 04/11/2013 at 12:00 AM | Categories: