When buying an investment property, it’s a good idea to get a building and pest inspection before you buy, to flush out any hidden nasty surprises.

You may decide to engage the services of a professional to do this. Andrew Mackie-Smith, a YIP award-winning building and pest inspector from BuildingPro, says when choosing an inspector, make sure they are licensed and insured as required in your state.

“It’s also a good idea to check Google reviews. It’s tough to claim on an inspector’s indemnity insurance as they have so many disclaimers and exclusions, so it’s best to get an inspector with a lot of experience and a great reputation. Don’t select an inspector based on price; the $100 you save today may cost you tens of thousands later on,” he says.

Inspectors check a property to standards AS4349.1 and AS4349.3 for major building defects, safety hazards and Timber pests. They will inspect all reasonably accessible areas.

However, Mackie-Smith shares that inspectors don’t have to include comment on compliance, un-authorised building work, concealed plumbing, electrical, appliances, cable internet, asbestos, lead paint and concealed defects.

“For example, if the interior of a property has peeling paint, there are two car bodies in the backyard, the garage door opening device is broken, the air-conditioning system doesn’t work, the house is under a flight path, there is no cable connection and there is a gas leak, none of this will be covered by the standard building inspection,” he says.

This could add up to costing many thousands of dollars to rectify or may not be fixable at all. This is why you need to use your own checklist and look at the property yourself.

If you can be present at the building inspection, ask the agent if it’s ok for you to check the appliances work, especially essentials such as the air-conditioning and cooktop. If you can’t be there, ask your buyer’s agent or property manager to check these things for you.

Source: Your Property Investment 22nd Feb 2019 https://www.yourinvestmentpropertymag.com.au/news/what-property-inspections-dont-cover--so-you-should-259918.aspx?utm_source=GA&utm_medium=20190221&utm_campaign=YIP-Newsletter-Opener&utm_content=FB30EBA4-A343-4537-A961-B966FABA4B8F&tu=FB30EBA4-A343-4537-A961-B966FABA4B8F

The median value of Adelaide properties has soared to a record high, defying declining markets across Australia’s capital cities.

The Valuer-General’s figures for the December quarter show the city's median property value climbed 2.13 per cent and was up 4.01 per cent on the same period in 2017 to a record high of $480,000.

The statewide median house price also lifted - up 1.9 per cent for the quarter and 2.38 per cent for the year to $430,000.

Real Estate Institute of South Australia (REISA) president Brett Roenfeldt told WILLIAMS MEDIA the results prove Adelaide continues to be a resilient market.

"It just goes to show that people are willing to pay good dollar for premium properties that are accurately and realistically priced. Adelaide is truly a wonderful place to live and invest in. Our lifestyle, affordability and commitment to major development and infrastructure will always make us a consistent player in the real estate market.

"While the last quarter usually does see a pickup in the volume of sales, it is great to see significant upswings not only across metropolitan Adelaide but the entire state,” Mr Roenfeldt said.

Largs Bay, Stirling and Torrens Park saw the largest growth. Other big movers included Myrtle Bank, Somerton Park and Greenwith.

Morphett Vale, Parafield Gardens and Aldinga Beach were named as the top-selling suburbs.

“Affordability, investment opportunity and lifestyle location will always be the key drivers for sales. When affordability is right, the market remains confident and optimistic and sales and growth reflect that market sentiment” Mr Roenfeldt said.

Ouwens Casserly real estate agent Dale Gray told WILLIAMS MEDIA families are the dominant buyers, but she's noticing downsizers and people relocating have started to become more active in the market.

Source: The Real Estate Conversation 8th Feb 2019 https://www.therealestateconversation.com.au/news/2019/02/08/adelaide-median-value-soars-record-highs-defying-downturn/1549590693

If you bought property in most parts of Sydney or Melbourne half a decade ago, you will have made a pretty penny. It was almost impossible to lose money in these markets in 2015 and 2016; the gains just kept coming, and coming, and coming.

Six-figure profits abounded for investors during this time. And while those boom conditions are over, there are still plenty of opportunities to profit from real estate in the current market conditions.

The reality is that even within each city there are micro markets that operate at different paces. Nerida Conisbee, chief economist at REA Group, says that even in Melbourne and Sydney – which are admittedly “seeing the biggest declines in prices at the moment” – there are some suburbs that continue to outperform.

There is also an international appetite to consider, with overseas buyers favouring different aspects of the market to those chosen by local investors and homeowners.

“With overseas investors, particularly when we look at people from Asian countries, they are very focused on education, in Melbourne and Brisbane in particular. So when we look at the top purchases out of Asia, it’s places like Carlton and Clayton in Melbourne and St Lucia in Brisbane,” Conisbee says.

The foreign appetite for property is just one of many factors that long-term investors need to consider. Unfortunately, as investors we don’t have a crystal ball to show us exactly where to invest to make the biggest profits in 2019 – but this is the next best thing.

Thanks to our respected panel of experts, and the latest data-rich resources from CoreLogic, we present Your Investment Property’s Annual Suburbs Guide – an in-depth ranking of the Top 100 property markets for 2019.

How were the suburbs selected? Your Investment Property’s Annual Top 100 Suburbs list is the pre-eminent guide to property investment markets in Australia.

We have turned to the experts to gather and analyse data on thousands of suburbs across Australia in an effort to find the neighbourhoods that show the best promise for growth in 2019. The suburbs included in the list have been chosen for a number of reasons:

Affordability: In the wake of the recent boom in Sydney and Melbourne, affordability in these markets has been limited. Although not all of the suburbs in this list are considered ‘affordable’ – there are some seven-figure locations featured – we aimed to find suburbs with competitive prices, either for the base of people they appeal to or compared with neighbouring areas with similar offerings.

Demand: Each suburb had to pass the criterion of being a desirable place to live – an area where a large and diverse tenant base would create long-term demand for accommodation.

Demographics: Suburbs with a growing population moved to the top of our list, as these ensure increasing and continuing demand that underpins the housing market. We also paid attention to suburbs where the average household income of residents was increasing.

Economy: Property markets backed by sound economics generally have the best price and rent growth potential, so we looked for regions with growing economies that support wages growth and relatively high disposable incomes.

Growth prospects: Those areas with the most potential to grow in the short and long term were highly ranked. We took into account past property cycles, current buyer sentiment, supply and demand issues and the strength of the local economy.

Improvements: Markets made the cut if there were a number of changes planned, underway or recently completed, which would encourage more people into the area and drive demand. These include new infrastructure, gentrification and urban renewal.

What didn’t make the cut?

As always, the suburbs that we excluded are just as important as the suburbs that made the cut in our Top 100. Those markets where investors are likely to only make short-term gains over a period of less than five years, with a risky long-term future, were not ranked. This means the following markets were not prioritised:

Holiday havens: It is almost impossible to forecast the areas that will be in vogue for the next generation of holiday-home buyers, and these areas can be volatile.

One-industry towns: These are small, isolated regional communities that rely on only one major industry to sustain their economies.

Retirement locations: They may be beautiful places to retire to, but a swell of interest from those no longer employed doesn’t create a strong foundation for growth.

Speculator markets: These are suburbs that may benefit from a development, proposed infrastructure or investment, but it has not yet been confirmed.

Are these suburbs a sure bet? As much as we would love to say that they are, we can’t promise that. While our suburbs guide offers the top picks from the industry’s most experienced data experts and analysts, showcasing areas with strong growth prospects in the year ahead, there is unfortunately no such thing as a ‘sure bet’. A suburb’s inclusion in this list therefore does not guarantee profits or returns.

Instead, we suggest you consider this list as a starting point – a point from which to launch your own due diligence.

Some of the suburbs in our Annual Top 100 may be the perfect addition to your portfolio, delivering the exact return you’re seeking. Others may be less suitable – it’s only once you’ve done extensive research of your own, in consultation with your own advisors, that you should make an investing decision.

Your Investment Property recommends: * conducting thorough due diligence on any property you’re considering – never buy anything based on someone else’s word without researching it yourself * getting an independent valuation or price guide from an unrelated party to the sale before you make an offer on a property * being strategic with your investment decisions: invest in a suburb and property that will meet your specific risk appetite, needs and budget

Source: Your Property Investment 14th Feb 2019 https://www.yourinvestmentpropertymag.com.au/strategy/annual-top-100-suburbs-260294.aspx?utm_source=GA&utm_medium=20190224&utm_campaign=YIP-Newsletter-Opener&utm_content=FB30EBA4-A343-4537-A961-B966FABA4B8F&tu=FB30EBA4-A343-4537-A961-B966FABA4B8F

In the world of property investing, and the finance that comes along with it, one of the most challenging aspects is ensuring you get the best possible figure when valuations are completed on your holdings.

Experienced investors might think they’ve heard it all before, but when it comes to getting maximum dollars in a valuation report, I have an approach that’s proven successful time and again.

Why it matters

There are a number of reasons why it pays to see your valuation come in at the upper reaches of your property’s value range.

Property valuations are a line-in-the-sand for lenders. Valuations define the equity pool against which a financier can comfortably lend you money.

First and foremost, a higher assessment provides you with more options. It means increased equity, which is ultimately attractive to lenders. This sort of position might even give you a little more bargaining power when it comes to financing.

In addition, a higher valuation means a lower loan-to-value ratio (LVR) when borrowing. Ask anyone whose LVR flipped into ‘mortgage insurance territory’ because their LVR went over 80 per cent. All it did was increase the costs and the stress.

So, when it comes to preparing your property to meet its peak figure, what are some practical steps?

1 – Don’t be a smart alec

Valuers are experienced, well-drilled professionals who know what they’re doing. They know when a borrower is providing a screamingly unrealistic estimate of value.

Make certain you’re keeping your estimate realistically arguable. By that, I mean rely on all available evidence to support your estimated figure.

If you do this, the valuer will take your expectations into account and double check their assessment. The psychology may even persuade them to come up and meet your estimate if they were close to your figure in the first place.

If you are too ambitious, a valuer will totally ignore your thoughts and plough on with their own findings. You want to have some say in the outcome – don’t blow it by being too outrageous in your expectations.

2 – Make a great first impression

I don’t care what they say about ‘ignoring superficial factors’, valuers will pay attention to how a property is presented.

A holding that’s in excellent condition demonstrates pride in place which communicates things like repairs and maintenance are being kept in check.

After all, you don’t get a second chance to make a great first impression.

Ask the managing agent to ensure the property is immaculate before the valuer arrives. Make sure the grass is mowed, the bins are away, cars are off the lawn, the house smells nice, all clothes are off the floor, it’s vacuumed, kitchen and bathroom are clean, there are no dishes in the sink and all the lights are on.

3 – Prepare a Valuer’s Pack

There’s every chance you won’t be present at the valuation inspection of your investment.

Regardless, you must put together a Valuer’s Pack that puts forward an argument on why your property is worth the best possible price. Prior to compiling the pack, get hold of an old valuation report and see what it includes. This will guide you on what to research.

The pack must include:

An opening statement of what you think the property is worth right from the get go. And it must be realistic – as I’ve already mentioned, don’t go insupportably high.A comprehensive list of all recent sales that prove your figure. These should be collated from a variety of sources – SQM Research, Pricefinder, Realestate.com.au and CoreLogic. Also, ensure you’re comparing ‘apples with apples’. Don’t use four-bedroom sales as comparisons for a three-bedroom house. It looks desperate and wrong.Recent unreported sales. Seek any sales you can from local agents and via your managing agents. Some won’t have registered on the different data collection sources yet. Up to date sales are the foundation of improving your outcome, particularly in a market that’s rising.Renovation photos and numbers. This is absolutely essential if you only recently bought the property and are now seeking a post-renovation assessment. Use photos – lots of photos – to show what work you’ve completed. If the property looked dodgy and overgrown from the street when you bought it, show that. Your ‘after’ photos should look absolutely stellar too. In addition, include a comprehensive list of costs for the work completed. You must demonstrate just how wide-ranging the work you completed was and how different the home now looks, so the valuer won’t rely on your pre-renovation purchase price as a guide to current market value.Market appraisals from three local agents on their letterhead. This shows you’ve sort a wide range of opinion from other local professionals. Also, by using their letterhead the valuer has a reference for giving the agency a call and checking on how they came to their assessed value. It’s like having your own panel of experts helping do the work too.My final Valuer’s Pack tip? Present it as a professional document – don’t just pop the papers in a shoe box.Bind it into a decent quality folder and have your property manager deliver to the valuer at the inspection. This again demonstrates you’re a serious investor who is staying on top of your property’s important elements.

Put simply, try and remove any doubt about your own appraisal of value.

Maximising your valuation is a low-cost way of improving your equity position. Don’t leave it to chance. Be a pro-active investor and help guide the valuer toward the right outcome, so you can reap all the rewards and build upon your successes.

Source: https://www.therealestateconversation.com.au/blog/steve-waters/practical-guide-maximising-your-valuation-figure/how-maximise-valuation-figure

BMT Tax Depreciation answers your most commonly asked depreciation questions.

BMT Tax Depreciation answers all your depreciation questions.

1. What is depreciation?

As a building gets older and items within it wear out, they depreciate in value. The Australian Taxation Office (ATO) allows property investors to claim a deduction relating to the building and fixtures it contains. Depreciation can be claimed by any owner of an income producing property. This deduction essentially reduces the investment property owner’s taxable income.

2. What is a depreciation schedule?

A depreciation schedule is a comprehensive report that outlines the depreciation deductions claimable by investment property owners on the property’s building structure and its fixtures and fittings within it.

A depreciation schedule, prepared by a specialist Quantity Surveying firm, such as BMT Tax Depreciation is one of the best ways that you can maximise the cash return from your investment property each financial year.

3. If a residential property was built before 1987 is it too old?

No, investment properties do not have to be new. Both new and old properties will attract some depreciation deductions. It is a common myth that older properties will attract no claim.

Previous year’s tax returns can also be adjusted. If a property owner has not maximised their depreciation deductions, the ATO allows investors to adjust the previous two financial years tax returns.

4. How does BMT calculate a building’s age?

The age of the building can be determined by obtaining council documents with dates pertaining to the original application approval date or the occupancy certificate date and final inspection date.

Your BMT Quantity Surveyor will conduct the relevant searches to accurately determine the age of a building. This includes historical council searches regarding lodged development applications, as well as occupancy certificates and certified final inspections.

5. What is the difference between plant and equipment and capital works?

Plant and equipment (division 40) assets are items that can be ‘easily’ removed from the property, as opposed to items that are permanently fixed to the structure of the building. Plant and equipment assets also include electronically or mechanically operated items, even though they may be fixed to the structure of the building.

Plant and equipment assets include, but are not limited to:

Image supplied by BMT

Capital works (division 43) is based on the historical construction costs of the building and includes such items as bricks, mortar, walls, flooring and wiring.

6. Why does the depreciation schedule last forty years?

The ATO has determined that any building eligible to claim the building write-off allowance has a maximum effective life of forty years from the date construction was completed. The owner can generally claim up to forty years depreciation on a brand new building, whereas the balance of the forty year period is claimable on an older property.

7. Can the building owner claim renovations that were completed by the previous owner?

Yes. Anything in the property that is part of a previous renovation will be estimated by our Quantity Surveyors and deductions calculated accordingly. This includes items which may not be so obvious, for example, new plumbing, waterproofing and electrical wiring.

For capital works improvements to qualify for the division 43 building write-off, they must have commenced construction within the qualifying dates.

8. How long will it take to get my schedule?

Once BMT Tax Depreciation has collected all of the details they need, it usually takes between five - seven days for their team to prepare your property’s BMT Tax Depreciation Schedule.

9. Do you inspect properties?

BMT inspects properties that a tax depreciation schedule is to be completed on. This ensures that BMT Tax Depreciation identify all assets and maximise the depreciation deductions available. This also ensures BMT's schedules are fully compliant with the guidelines set out by the Australian Institute of Quantity Surveyors (AIQS), the Royal Institute of Chartered Surveyors (RCIS) and that are required by the ATO.

10. Doesn’t my accountant take care of this?

BMT works with your Accountant to ensure that your depreciation claim is maximised each financial year for your investment property. The ATO states that Quantity Surveyors are one of the only recognised professions with the appropriate construction costing skills to estimate construction costs for depreciation purposes.

11. Who is qualified to estimate construction costs for depreciation purposes?

Quantity Surveyors are qualified under the tax legislation TR97/25 to estimate construction costs for depreciation purposes and are one of a few select professionals who specialise in providing depreciation schedules. Ensure a depreciation specialist like BMT is used to prepare a depreciation schedule.

12. Why is BMT Tax Depreciation my best choice for my depreciation schedule needs?

BMT use our own staff Australia-wide, many firms use contractors. If an audit takes place and the ATO questions anything in the depreciation schedule, you will have peace of mind knowing BMT’s trained staff will be answering any queriesBMT provide a fee guarantee: if we can’t find double our fee worth of deductions in the first full financial year, we don’t charge for our servicesBMT have one fee across the whole of Australia - we don’t charge extra for regional areas and travel costsBMT’s Tax Depreciation Schedule is structured to allow you to recoup missed deductions for up to two years if you have not been maximising your deductionsIf you make additions to the property after you receive your depreciation schedule, BMT can update your depreciation schedule free of charge for the first additionBMT work with your Accountant and Property Manager to simplify the process for youBMT provide ongoing support. If you have questions, please contact one of our expert staff on 1300 728 726 or visit our website www.bmtqs.com.au

Article provided by BMT Tax Depreciation. Tax Depreciation

Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia wide service.

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

A property research firm has predicted that as long as banks return to “more reasonable lending standards”, five of the capital cities are on track for solid property price growth in 2019.

Hobart has been named as the city leading the way for growth in the next year, followed by Perth, Brisbane, Adelaide and Canberra.

Propertyology’s head of research, Simon Pressley, also said a number of major regional areas would experience price growth as well.

He added that a combination of market and economic factors meant locations could see double-digit price growth, but that number would increase if banks stopped “playing God with solid borrowers’ financial futures”.

The researcher looked at three possible scenarios: no change to credit conditions, a return to sensible credit policy in the first quarter and a return to sensible credit policy in the second quarter.

According to the research, with no change to policy Sydney house prices could drop by as much as 10% and in Melbourne by 8%. With a change in policy in the first quarter, the drop would be much slower, potentially levelling out Melbourne prices at a 0% move.

Cities like Brisbane, which is expecting a price increase of up to 3%, could see that figure rise to up to 6% if policy were to change in this first quarter. However, a change in policy in the second quarter would see this figure at 4%.

Hobart would reach double digits, with a possible 10% increase in prices with a policy change, compared to the 4% - 7% expected now.

Pressley said, “Hobart is again a no-brainer as the capital city expected to perform the strongest in 2019.

“The Tasmanian economy is a remarkable success story that has now spread right across the state. Launceston has the potential to be Australia’s property premiers in 2019 while Burnie and Devonport also will perform strongly.”

Pressley said that Perth could well be Australia’s best performing capital city in two to three years’ time.

“Don’t be fooled by the 2018 price fall of 2% in Perth because a large proportion of its former oversupply has been absorbed, vacancy rates have reduced from 6.9% to 3.3% over the last two years, and expectations for new job creation is now high,” he said.

“On a national level, our economy is looking better than it has for years with unemployment at 5.1%, the Federal Budget set to be in surplus for the first time in a decade, the economy growing, and our population set to increase by more than 350,000 again year,” he added.

“Interest rates aren’t expected to rise until 2020 at the earliest, plus the international student, tourism and mining sectors are all strengthening and creating even more jobs.

“There is a long list of big-picture, positive stuff, which collectively paints a very bright future.

“Believe the doom and gloom reporting if you wish, but I’m telling you that there will be locations that experience a property boom over the next few years.”

Source: Australian Broker 8th Jan 2019 https://www.brokernews.com.au/news/breaking-news/property-group-predicts-price-growth-258977.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

It may be difficult to get finance in the current environment, and consumer sentiment about property price growth is in the doldrums – but that won’t stand in the way of investors who are keen to build wealth through property.

More than half of respondents in a recent survey reported that they believe now is a good time to invest, despite the fact that the vast majority of respondents (84%) believe that property prices will fall or remain flat over the next year.

Over 1,800 Australians took part in this year’s Property Investor Sentiment Survey, run by Your Investment Property magazine in conjunction with Michael Yardney’s Property Update and onthehouse.com.au.

When asked, “Do you believe now is good time to invest in residential property?”, 52.6% said “yes”, 24.6% said “no”, and 22.8% responded that they were “unsure”.

“It’s encouraging to see that despite the current uncertain economic environment, which includes the trifecta of limited property price growth, negative gearing changes on the table, and mortgages becoming harder to get, that people are still positive about the potential of property as a whole,” said Sarah Megginson, editor, Your Investment Property magazine.

“The majority of respondents to the survey are existing property investors – more than 82% of them are already in the market – so there’s a good chance that these investors have lived through challenging market conditions before. We rebounded after the GFC, and after the mining bust; we’ll rebound again.”

Around 51.5% of respondents confirmed that they invest for long-term capital growth, adopting a long-term view of property as a high growth asset, rather than expecting cash flow from their properties.

Just 14.3% said they invested for positive cashflow in the current market.

As Australia’s longest-running and largest survey of Australian property investor sentiment, the Property Investor Sentiment Survey showcases insights from property investors and would-be investors across the country. Running since 2011, it offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.

Source: Your Investment Property 27 December 2017 https://www.yourinvestmentpropertymag.com.au/news/52-of-investors-say-now-is-the-time-to-buy-258886.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

While there has been a softening housing market in 2018, commercial property has seen overall growth over the year.

Looking at the individual states across Australia, property consultancy Knight Frank has offered insight into some of the trends it has seen and what it expects to see in 2019.

Tyler Talbot, partner, institutional sales, Sydney Metro, NSW, said, “2018 has seen strong demand for North Shore and metropolitan assets, with offshore buyers being the dominant purchaser group. In North Sydney alone, they accounted for around 80% of all deals.

“Strong demand is likely to continue in 2019 from both local and offshore purchasers with a large weight of capital still looking for a home, yields therefore are predicted to remain firm with solid rental growth still coming through in most markets.”

Scott Timbrell, partner, head of Western Sydney, NSW, said, “Knight Frank Western Sydney has had one of its biggest years selling five out of 11 assets in Parramatta CBD in 2018, with an end value above $379 million. The interest in commercial assets in Western Sydney has been strong with an even stronger purchaser pool to draw upon for all on- and off-market transactions that have completed in 2018.

“With a state and national election looming next year, we will generally see the market slow as purchasers take extra caution on larger transactions. This may minimise transactions and new sales campaigns for the first part of next year, however we are expecting the market to bounce back into action towards the end of 2019.”

Sean North, partner, head of Canberra & institutional sales, said, “While sales volumes are down in 2018, a flurry of activity in the fourth quarter of 2018 will reaffirm the positive market sentiment for both passive and multi tenanted investments.

“Demand for value-add propositions remains particularly firm in core locations and these favourable market conditions are expected to continue into 2019.”

Justin Bond, partner, head of institutional sales, Queensland, said, “The maturity of the Brisbane investment market is becoming more defined, as many investors are drawn to Brisbane due to the infrastructure committed by the State Government and private sector.

“The Cross River Rail, Queens Wharf development, Brisbane Live project and the expansion of the Brisbane Airport are some of the projects boosting the confidence of investors considering Brisbane as a destination for investment.”

Guy Bennett, partner, head of institutional sales, Victoria and South Australia, said, “Melbourne’s strong underlying economic fundamentals have resulted in historically low vacancy rates, high levels of net absorption, strong face rental growth and receding incentives, this is expected to continue through 2019, then slowing following the supply influx into 2020.

“Domestic and offshore investors continue to have strong appetite for the tightly held Melbourne CBD stock and as such 2018 has seen further downward pressure on yields and returns.

“There remains a high level of unsatisfied investor appetite and the scramble for CBD sites suitable for large office development continues, with many permitted residential sites being converted to alternate uses.”

Lukas Weeks, director, head of agency, South Australia, said, “A firming leasing market underpinned by long-term white-collar employment linked to major defence contracts will continue to buoy capital investments in to Adelaide through 2019. The Adelaide market is poised for strong capital growth in the next 12 months.”

Todd Schaffer, partner, head of commercial & institutional Sales, Western Australia, said, “2018 has seen a near-record transactional year with around $900 million of fringe and CBD office buildings either under contract or sold. This represents an increase of 28% on the 2017 calendar year.

“In the first half of 2018 the majority of transactions were value-add properties to off-shore groups, with sales in the latter part of the year being long WALE assets to Australian groups. Recent sales have shown yield compression which should continue into 2019, however supply levels will most likely be down.”

Paul Roberts and Ben Schubert, partners, joint heads of institutional sales, Australia, said, “The overall strength of the Australian economy bodes well for commercial real estate markets throughout 2019. However, the gradual tightening of global credit conditions could result in higher borrowing costs in Australia and weigh on the market, ending the recent pattern of broad-based yield compression.

“We are continuing to see strong appetite for Australian real estate from offshore capital groups. There is particularly strong interest from these groups in Hong Kong, Singapore and Europe who are seeking core assets with fundamental stability. Local wholesale funds and superannuation groups also remain just as competitive.”

Source: Australian Broker, 3rd Jan 2019, https://www.brokernews.com.au/news/breaking-news/market-overview-and-predictions-258735.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

A depreciation schedule prepared by BMT Tax Depreciation helps to maximise the cash return from your investment property each financial year.

To ensure that you claim the maximum depreciation deductions, a BMT Tax Depreciation Schedule lasts for the life of the property or forty years as specified by the Australian Taxation Office (ATO).

A BMT Tax Depreciation Schedule also provides you with a breakdown of the deductions for the two depreciable elements found in the property as explained below:

Capital works deductions (division 43)

Known as building write-off, this refers to the tax deductions available for the structural elements of a building. Examples include the foundations, walls, roof, doors, windows, sinks and tiles. In a residential property built after 15 September 1987, capital works deductions can be claimed at 2.5 per cent per year for a maximum of forty years.

For commercial and other types of non-residential properties, the capital works deductions vary based on the property type, the building’s use and date of construction commencement.

Plant and equipment (division 40)

Plant and equipment assets are considered to be easily removable or mechanical in nature. These assets are identified through ATO legislation as assets which have a limited effective life and can reasonably be expected to decline in value or depreciate over the time they’re used. Depreciation for plant and equipment is calculated based on an individual effective life as allocated by the tax commissioner and updated regularly through tax rulings.

Depreciation benefits vary depending on the type of building, its age, its use and its fit out.

Owners of commercial, industrial and residential investment properties can all claim depreciation. You can choose between the diminishing value or prime cost methods of depreciation when claiming depreciation for plant and equipment assets. An accountant can provide advice on the method which best suits your individual investment strategy.

Ensuring that your depreciation claim is maximised for any building requires a combination of construction costing skills and thorough knowledge of current tax depreciation and capital works deduction legislation.

For this reason, it is recommended that you speak with a specialist Quantity Surveyor before you lodge your tax return.

Completing capital allowance and tax depreciation schedules for income producing properties is a specialist field of quantity surveying and it is one in which BMT Tax Depreciation has many years of experience.

As members of the Australian Institute of Quantity Surveyors (AIQS), the Royal Institute of Chartered Surveyors, The Property Investment Professionals of Australia, the Auctioneers & Valuers Association and the Urban Development Institute of Australia as well as being registered Tax Agents with the Tax Practitioners Board (TPB), BMT remain up to date with the latest research and information to ensure deductions are maximised for all types of properties including residential, commercial, industrial, manufacturing, agricultural and more.

A BMT Tax Depreciation Schedule includes:

A summary for both methods of depreciation to help you decide which method is best for your investment strategy A detailed forty-year forecast, illustrating the deductions available using both the prime cost and diminishing value methodsA glossary of terms to help you understand the terminology used The backing of a BMT guarantee: if we can’t find double our fee in deductions in the first full financial year claim there will be no charge for our services

In addition:

Low-value and low-cost pooling legislation is used to accelerate deductions under the diminishing value method for all plant and equipment assetsYour schedule is pro-rata calculated for the first year of ownership to ensure you can claim even partial year deductions and don’t miss out on returnsYour schedule includes a breakdown of common areas and common assets which can be depreciated in applicable property types, e.g. apartments, units and townhousesSplit reports are available if your property is co-owned – discover how split reports maximise deductions The schedule can be provided in print, MS Excel and CSV (residential only) – just let us know what format you would prefer when you order your schedule

How do I organise a schedule?

Engaging BMT Tax Depreciation to complete a capital allowance and tax depreciation schedule for your investment property couldn’t be easier.

Request a quote for your tax depreciation scheduleBMT will collect property details, then contact your Property Manager or tenant to complete a property inspectionYour schedule will be available within 5-7 days of all information being gathered. BMT Tax Depreciation can even forward your schedule to your Accountant directly, saving you timeAlternatively, you can register and request a tax depreciation schedule via, MyBMT. BMT's handy online portal allows you to view, update and download schedules, follow the process of your schedule’s completion, to upload relevant files, photos and receipts and to share your schedule with members of your investment team

BMT Tax Depreciation also provide a free, easy to use tax depreciation calculator, which can provide you with an estimate of available deductions for any property you are considering purchasing.

Article provided by BMT Tax Depreciation. This is a sponsored post.

Source: The Real Estate Conversation 6th December 2018 https://www.therealestateconversation.com.au/news/2018/12/06/what-included-depreciation-schedule/1544054839

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

One-third of first home buyers are choosing to purchase an investment property rather than a first home to move into, new research from the Property Investment Professionals of Australia has revealed.

The 2018 Property Investment Professionals of Australia (PIPA) Investor Sentiment Survey found 36 per cent of first home buyers have chosen to invest in property and continue renting, rather than buying a home to live in over the last 12 months.

PIPA Chairman, Peter Koulizos told WILLIAMS MEDIA the research suggests 'rentvesting' as an investment strategy has been a trend for some time.

63 per cent of survey respondents said they would consider 'rentvesting' as a property investment strategy.

"First-time property buyers generally have probably been more active over recent years than official statistics originally recorded,” he said.

“The Australian Bureau of Statistics (ABS) publicly admitted issues with first home buyer statistics from 2012 to 2016, in part due to some lenders only reporting loans to first home buyers who received a First Home Owner Grant. Of course, most grants were restricted to first-timers buying a new property as their home not as an investment many years ago.”

According to the latest ABS statistics, about 18 per cent of properties financed in Australia in September was to first home buyers.

Mr Koulizos said revisions to the official data meant that first-time investors were now being counted, but issues could reportedly still persist in the statistics according to the ABS.

“There’s no doubt that the softer market conditions are making it easier for first-time buyers when it comes to purchasing prices, however, lending restrictions are conversely making it more difficult for them to secure finance,” he said.

“On top of this, it appears that recent political assertions that first-time buyers are only one in seven purchases – or 14 per cent – is factually incorrect.

"It seems that the dream of property ownership has remained alive and well for some time, with many first-timers opting to improve their financial futures by investing in more affordable locations while renting elsewhere.”

The survey also found the vast majority of first-time buyers had opted to buy an existing property, even with State Government grants available to purchase a new dwelling.

“About 83 per cent of first-timers purchased existing property with only 14 per cent buying new or off-the-plan."

“This is partly due to affordability considerations with established properties generally available for lower prices points than new, plus the majority of all investors always prefer existing properties.”

Mr Koulizos said this was yet another reason why proposals to change negative gearing policy to supposedly increase supply were ill-conceived as most investors buy established property and pay little regard to new property.

“Established property has greater capital growth and any tax benefits associated with new property generally doesn't make up for comparably poorer price performance over the long-term,” he said.

Source: The Real Estate Conversation 6th December 2018 https://www.therealestateconversation.com.au/news/2018/12/06/third-first-home-buyers-opting-investment-property-over-first-home-report-reveals

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

We all do it – getting caught up in the Christmas vibe is fun after all, and it’s much more fun to be Santa than the Scrooge right?

The problem is making sure your Christmas cheer doesn’t become New Year pain when you get your credit card bill.

In todays “buy-now-pay-later” society, it’s so easy to lose control of your spending, especially at this time of year.

Many of us run to the mall and walk around aimlessly looking for things to buy, often with money we don’t have. The reality of this often only sets in when we receive a credit card statement with a few too many zeros. Ho Ho Ho quickly becomes Why Why Why?!

One thing’s for sure, by the end of January Christmas is going to feel like a distant memory. So let’s look at a few ways you can act like Santa and still remain jolly in 2019.

Like Santa, make a list and check it twice Before you go shopping, sit down, maybe with a beer or glass of wine, and make a list of the people you want to buy for, noting down how much you want to spend on them. Once you have this list, you can start thinking of things they would like that fit the budget you’ve set. If you do nothing else, do this. Not only will it stop you having to visit the mall a hundred times, but you’ll be amazed how much this can save you in both money and stress.

Look for deals Even though it’s not typically the time for sales, there are still deals to be had. When you drive past a sale sign in a shop window or receive a sale catalogue in the mail, take a few minutes to have a look. Even small discounts can really add up, not to mention you might be able to cross off a few names on your list in one go.

Don’t go to the mall Okay, you can still go the mall. But don’t forget to check out your local shops. Other than supporting small business, independent retailers are often very competitive and sometimes even cheaper that the big shopping centres. Even if it’s only a few dollars it all adds up and it goes to a good cause, you!

Have a pre-Christmas eBay session You’ve been looking at it all year, the hordes of stuff you have that’s in great condition that you never use and don’t really want. One man’s trash is definitely another man’s treasure. Take a few hours and gather up everything you can bear to live without – it’s the perfect time to whack it on eBay or any other sales platform. Not only will this save you from tripping over stuff in the middle of the night, but you might just make a little cash that you use for Christmas.

Christmas is for kids I’m sure there are a few big kids that you want to buy something special for and that’s fine, but we often just end up exchanging things with our friends and family that, let’s be honest, we’re not really all that excited about. You give a candle and receive a bowl, know what I mean? While it might take a little courage, I’m sure that most adults would be happy to save the money and just enjoy a nice lunch or dinner together and let the kids enjoy the presents. In many cases, if just one of the adults said to their group “hey guys, let’s pass on the presents this year” I think many would welcome this and thank you for being the one to bring it up. Imagine the cost and stress this would save.

Gift cards are cool While they have the reputation of being the “can’t think of what to buy you” gift, the good old gift card carries lots a bang for the buck. Everything’s expensive before Christmas, but what about afterwards – let’s talk sales. A $50.00 gift card might have the buying power of $100.00 in the post-Christmas sales, maybe more. Don’t discount the humble gift card as it can be as way of buying someone a better present than you can afford.

You don’t need to do all of these things, but even one or two will have an impact.

If you do a little planning and don’t lose sight of what you’re spending you can have a great Christmas, spoil the people close to you, and still keep your finances in check. It’s about being a smart Santa.

All right, off you go and spread some Christmas cheer. Merry Christmas!

Source: MPA Magazine 7th December 2018 https://www.mpamagazine.com.au/sections/columns/dont-let-christmas-cheer-become-new-year-pain-258340.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

I think we ladies can sometimes have an unconscious presumption that our knight in shining armour will come and take care of us – but there is a whole new Fairy Tale out there and in this one, Cinderella starts a cleaning business and buys the castle of the Prince when he goes into foreclosure.

No – it's not really gender related but if you are younger than 30 and don’t have decent savings or a property, its time to start to get conscious and think ahead.

So let's give it a year, just for starters. Whether you want to buy a house and need money for a deposit or are thinking long-term for your retirement, for your future well-being, you have to start today. TODAY. All you need is some awareness, a chunk of decent commitment and a little patience. Put on your big girl pants and start acting like an adult.

Work out the numbers Work out a number you are aiming for, then break it down to weeks or even days. If you could find about $27 a day you would have a $50,000 down payment in less than 5 years. That’s excluding any interest you might earn. Why don't you just commit for this year? Just be thrifty and squirrel it away, just for the year.

I get it. $200 is a lot to save in a week, but if you are currently buying a coffee a day, drinking a bottle of bought water, and eating out every lunchtime that’s almost $100 a week you should be saving. Make a coffee in the office. Or drink free tap water. Plan your meals in advance to incorporate tomorrows lunch. Next, share a car ride and split petrol, don't buy that pair of shoes, or skip that last glass of wine at the pub. There's your $200.

Where do you live now?

If you are renting, round up your rent (from $180 to $210 for instance) and put that extra $30 into savings. If you think of it as rent, it's easier to save it. Out of sight, out of mind. Could you sublet or rent out one of the rooms for a while and put that money into savings? Or, can you just go home and live for a year, and explain to your family you are saving for your own house.

If you are already living with your parents and not contributing you should work out what reasonable rents are in your area and put at least that away every week. You aren't paying for electricity either. No excuses. (And by the way, you should help out more around the house to pay off your parents! The reason they are helping you is so you can get ahead, not drink more lattes.)

And speaking of lattes.

A little adds up to a lot

Budget baby. Write a budget. Where are you frittering away all your money? Give up spontaneity- plan your week, your lunches, your outings, your allowable coffees. Don’t set ridiculous targets and deprive yourself of everything fun or you won't accomplish your goal.

Just consider if that pair of shoes, expensive mascara, cappuccino is worth NOT owning a house in five years.

Lots of available apps to follow a budget or just make a spreadsheet, but know where your money goes. Every penny. It’s a bit like losing weight but in reverse – more in, less out.

Get yourself to ALDI or Kmart for cosmetics and workout clothes. You don't need Lorna Jane and MAC to look good. (And frankly, you have enough workout clothes already). Give up the designer mascara for Maybelline, just for a year.

It becomes a bit of a game, and once you start playing you will find it quite addictive. Don't go to the mall for recreation either. Just stay away from shops.

Lengthen the time between your treats: tans, or manicure, massages or highlights.

If you stretch out your hair appointment from 12 weeks to 15 weeks, for instance, you would save the cost of one appointment per year. Put it in your bank, not theirs.

I'll help you, you help me.

This year- cancel the gym membership. Instead, find two friends and motivate each other to do mini workouts together, take walks or go for a run, HELP each other stay fit and strong and kick goals. Take turns to be the trainer and make it fun, while being accountable. Think about it. There would not be so many gyms if they were not making a LOT of money from underused paid memberships. Walking is free.

Swap clothes with a like-sized friend who works elsewhere. No one pays as much attention to what you are wearing as you do. Do you have a friend you can borrow from for that specific work event or cousins wedding? Don't buy a dress to wear once then store in your closet.

You can even buy in bulk and split between the three of you – loo rolls, basmati rice, shampoo. Buy the cheaper giant version and split the cost.

You don't need all that.

Depending on where you work, you only need a couple of good basic skirts in a neutral colour – maybe one in black, one in cream or taupe and one in navy blue. then five tops and two cardigans or jackets. If you rotate that you have a full month of clothes. Check out the men?... Did you notice that he is wearing the same pants three days in a row? No? I thought not. If you own reasonably priced decent quality (think Target) it should last you years. Go classic, not trendy.

Never, ever, ever, ever buy full price. Sales events are practically monthly. Just wait, and if you really absolutely must spend money, at least buy it at a discount. Sell it. If you have clothes you are not wearing, get yourself on eBay and make a few bucks. Add $50 to your savings account every now and then. Any unused, unloved ornaments? DVDs. Sell them.

Hard cold CASH

Save all gold coins in a jar or tin – for instance, an empty coke bottle can fit $880 in $2 coins.

Use cash and not your credit card. It's easy to pay 'n' wave and ignore the consequences but if you have to physically peel off notes it makes you more aware. No online shopping. I don't care if the shipping is free. You don't need it. Not this year anyway.

If you have a current credit card debt or car loan, take a look to see if there is any way of transferring the balance to a lower interest card. Take a look at all the interest you paid to the bank last year. If that doesn't motivate you to pay cash for everything I don't know what will.

Where else can you find some cash? Find a babysitting gig. Money for jam. Dog walking? Even Uber. Could you do some cleaning or take on one shift at a café? Yes, I KNOW that’s hard and not what you want to do your whole life, but we are trying to set UP your whole life with a short amount of hard work. You wouldn't be the first person in the world to hold down a second job for a while. Suck it up, Princess. Only two ways to save more money: earn more and spend less.

Finally, remember you alone are responsible for this. If you cheat and buy that swimsuit / new iPhone / expensive foundation no one cares but you. You are only cheating yourself. But the sense of accomplishment you will get when you check out the balance in your savings account after six months and see that YOU have made a difference will have you walking on air. Start today.

In five years' time, give me a call and we will start looking for your property.

Source: The Real Estate Conversation 27th November 2018 https://www.therealestateconversation.com.au/blog/carol-jennings/how-save-down-payment-house-5-years-or-less/how-save-down-payment/save-house

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

While it might be easy to just jump in and invest as soon as you have the ability and resources, gaining strong returns from property investment require hard work, proper knowledge, commitment and good timing. Even experts in the field experience hiccups from time to time, so imagine how hard this can be for everyone else, especially younger people who are still in the process of settling down.

In an interview with Bryce Holdaway and Ben Kingsley, authors of a new book entitled Make Money Simple Again, Your Investment Property (YIP) narrowed down the discussion and focused on basic factors that need to be considered particularly by younger couples before they finally decide to pay down home loans to invest.

Holdaway and Kingsley suggested that general rules and basic knowledge must be kept in mind by anyone trying to invest.

First, the authors noted that it is important to organize your expenses, in order to increase their savings.

“Too often [younger couples] are tempted to ‘have now’, rather than ‘sacrificing now to enjoy later.’ If they can organize their money management to trap more surplus savings, they will build a good deposit and get on the property ladder before their friends do.”

It was also pointed out that changes to circumstances will impact cashflow and, ultimately, the ability to maintain the investment loan.

“Property is a long-term investment, not a short term speculation event. Ensuring you can hold the property both today and tomorrow will give you the best chance of climbing the property ladder,” the authors said.

More importantly, younger couples should acknowledge that not all properties perform the same. Being able to pick the best location, as well as an investment grade asset, rather than an investment stock asset, can make all the difference in the overall investment returns they will take home.

Lastly, Kingsley and Holloway emphasised the importance of conducting proper research about the market.

“Spending time on real estate portals just looking at nice property isn’t going to yield you a great return. Understanding what owner occupier appeal is and how demand and supply influences property values is a far better use of your precious time before making a purchasing decision,” they said.

If these points are successfully grasped by younger couples, Ben and Bryce believed that pleasant possibilities await them.

“There are amazing opportunities all over Australia currently, and in some cases they may not be in their own city. Investing is about getting a great long term return, so don’t be afraid to be a borderless investor,” they concluded.

Source: Your Investment Property Mag 8th November 2018 https://www.yourinvestmentpropertymag.com.au/news/advice-for-young-couples-who-invest-together-257262.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

When you were searching for your current home, were you definite about what style of home you wanted?

Were you looking for a brand new or an established property? Or if you're currently on the hunt for a new residence, what age of property do you have in mind? An older more established home or a brand new contemporary house?

Is it better to buy brand-new? Or do houses with age and character make for a more sound investment? There is, of course, no one-size-fits-all answer, but there are distinct pros and cons to each purchase.

When you buy a brand new home, you can generally walk straight in without a care and with no more money to spend. The appliances will be brand new, the paint fresh, the carpet unstained and the fixtures and fittings up to date. Modern conveniences are the norm, with many items as standard like built-in dishwashers, refrigerators, microwaves, and wine coolers. New homes can feature master suites as well as workout and media rooms. They may even come complete with wiring systems that are networked with home automated devices.

Energy efficiency is a very important factor, particularly when we are all working toward a more eco-friendly and more economical environment. Many new homes are built with solar panels, walls, ceilings, and floors are insulated, dual pane windows retain more heat in winter and keep the home cooler in summer, and new appliances use less energy. And as building code regulations change all the time, consumer safety issues are continually addressed in new constructions. Maintenance will be minimal, and you will live relatively worry-free for several years (as long as you have done your research and that the home was built by a reputable company with builder's insurance).

If you're seeking a life with fewer hassles, or don't have money in reserve for emergency repairs and unexpected expenses, a new home may be the way to go. Luxuries such as swimming pools, ensuite bathrooms and theatre rooms are often included, which can be costly to add into an existing property. When buying new it comes down to doing your homework. And let's face it, there's nothing like owning something that's brand new and has never been used.

If the new home is not custom, it's likely to cost much less per square metre than an older home in an urban area. Many millennials are flocking to suburban areas for precisely this reason. However, with this comes a 'cookie-cutter architectural style that can be bland and ‘suburban' and lacking in character and individuality. Gardens and landscaping are often immature and it can take some time for growth to take hold and from dirt to grow into lawns.If you prefer period features like cornicing, special architraves, open fireplaces and real hardwood floors, an older style home is definitely more your style. You may also be keen to renovate and update and add your own identity, which is much easier to do in an older property.

Older homes have stood for decades and weathered many storms. Some were built by hand by genuine craftsman with meticulous attention to detail. They have often been built on a larger block, which means a bigger garden. Interesting architectural features are abundant in these homes with arches, hand-carved decorative appointments or stained-glass windows.However, you will often have to sacrifice more modern features like built-in robes, double garages and spacious open plan living.

Classic and vintage homes generally cost more because of the location, meaning they are closer to conveniences such as schools, public transport, shopping, and urban amenities. With the exception of expensive estate homes, many older homes are smaller in size, even though family sizes were larger when they were built.

Older homes are also quite often in established neighbourhoods where zoning changes are unlikely. You'll also enjoy more established gardens - it's not uncommon to see 50 to 100-year-old trees providing canopies and well-manicured hedges acting as borders and fences. Fruit trees rose bushes and European trees are much more prevalent in these areas too.Not only do older areas tend to be located closer to the city, often residents can walk to local cafes, shops and restaurants. If you do have a preference for an older, more established home, one with a history to it and a warm and cosy feel, it's especially important to have a thorough home inspection conducted prior to purchase.

Doing so won't just help you negotiate down the price if works need to be done, it will also give you an idea of all the problems that need to be fixed.With older properties, things tend to go wrong periodically, and there's always something to fix. Chimneys and stone foundations require tuckpointing, floors may slope and require restumping.

If a home was built before sewer systems council may require that you update the facilities or tree roots may break up sewer pipes. Galvanized pipes are rust-prone and aged electrical networks may require expensive rewiring.

Of course, buying a home isn't just about shelter, and about creating a space for your family, it's a financial investment. With an older home, you can see on paper just how much the property has appreciated over the years. That doesn't guarantee future trends but it does give you something to go on.As for a new home? With no history to look back on, this purchase can be considered more of a gamble. Not only could the area increase or decrease in value, but the modern architectural styles can also quickly become dated and out of favour.

Many established homes have stood the test of time structurally and aesthetically, and period homes have a large following from buyers, renters, and investors.At the end of the day, a property purchase is dependent on so many factors, the most important of which is choice. And choice is a very individual thing.

Source: The Real Estate Conversation 14th November 2018 https://www.therealestateconversation.com.au/blog/sam-danckert/new-home-or-established-home/sam-danckert-auctioneer/sam-danckert-real-estate

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

The third quarter in South Australia recorded a decline in property sales, but industry body the Real Estate Institute of South Australia (REISA) is "optimistic" about the market.

REISA President Mr Brett Roenfeldt said the latest figures revealed a median price that had remained at record levels this quarter and demonstrated a fantastic growth of 4.33 per cent since the same quarter last year.

Over the September quarter, 3,876 houses settled across the Adelaide metropolitan area which is down from the previous quarter and only slightly down from the same quarter last year. Sales across the entire state were also down from the last quarter.

“It is always disappointing to see figures that show a decline in the volume of sales but it is to always be expected in the third quarter of real estate activity. The third quarter is always a slow period for sales and we always see results like this every year.

Pictured: 1 Oakdene Road, Springfield. For sale by Stephanie Williams and John Williams of Harcourts. As seen on Luxury List

"The cold winter months always bring in less activity with the premium properties waiting for the warmer months to sell. I have enormous confidence that sales will pick up considerably in the months ahead," Mr Roenfeldt said.

“What is fantastic news is that the median has remained at its record level since the last quarter. It shows people are still willing to pay good dollar for premium properties that are transparently and accurately priced.

“As the new REISA President, I am also looking forward to REIA continuing its dialogue with the State Government on the need to abolish the monster stamp duty tax, the desirability of bringing in compulsory professional development and a review of the real estate legislation in South Australia,” Mr Roenfeldt said.

Suburbs to see the biggest growth over a 12 month period were Oaklands Park, Parkside and Tea Tree Gully. Other big movers included Glen Osmond, Kilburn and Gawler South.

The top-selling suburbs were the perennial Number 1 Morphett Vale, Mawson Lakes and Paralowie.

“Affordability, investment opportunity and infrastructure will always be the key drivers for sales and growth. When affordability is right, the market remains confident and buoyant. It is no surprise then that the top sales suburbs remain very constant throughout the year,” Mr Roenfeldt told WILLIAMS MEDIA.

The September quarter statistics showed the growth in the South Australian median price was 0.30 per cent up from the previous quarter and a robust and sustainable 3.11 per cent up from the same quarter last year.

The unit and apartment market showed a decrease in the median price compared to the previous quarter and the same quarter last year. Sales were also down from the previous quarter and the same quarter last year.

“It is always tricky to comment on the third quarter every year as inevitably we see a decline in the volume of sales. I emphasise, however, that the results in the third quarter can never be taken as a sign of bad times to come or that the real estate market is not moving in the right direction.

"The median price has remained unchanged from the last quarter and is still sitting at a record level. Sales will bounce back next quarter as they do every year and will reinforce the fact that South Australia is one of the best places in the world to live, work, invest and play” Mr Roenfeldt said.

Regional South Australia bucking the trend

The regional housing market recorded a median house value of $270,000, representing a solid 0.93 per cent increase from the last quarter and a robust 1.89 per cent increase from the same period last year.

Sales were slightly down from the last quarter and the same quarter last year.

“Given that the third quarter in every year shows a slowing down of the housing market, it is fantastic that regional South Australia has somewhat bucked this trend.

"Sales are only marginally down and the median price continues to rise to very sustainable and healthy levels. I am delighted that the regional housing market continues to show resilience and underlying strength.

Suburbs which have seen the largest growth over a 12 month period are Barmera, Port Lincoln and Murray Bridge with increases of 19.43 per cent, 10.08 per cent and 9.18 per cent respectively.

The top-selling suburbs were Victor Harbor, Mount Gambier and Murray Bridge.

Source: The Real Estate Conversation 12th November 2018 https://www.therealestateconversation.com.au/news/2018/11/12/optimistic-outlook-south-australian-property-market/1541980646

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Independent property valuation and advisory company Herron Todd White recently released its November issue of Month In Review, which showed that Adelaide is regarded as a rising market in terms of houses but in the bottom when it comes to units.

Looking at the report’s National Property Clock, it was found that both houses and units are starting to decline in Melbourne, while in Sydney, both categories are already declining. One of the most remarkable conditions, though, was observed in Adelaide, which saw opposing trends for houses and units.

What influenced this result? The report found that the behaviour of retiring Baby Boomers drove the results – Aussies in this age group prefer a property in the same suburb they have lived in that provides enough living space and yard to allow their grandkids to run or play. Additionally, they want a ready-made low maintenance properties and properties they can put their own spin on: features usually found in houses. As such, this could be one of the reasons why the house market is improving, while unit market is slowing down.

Supporting this claim further, the report highlighted that there has been a shift in the design of multilevel developments within the Central Business District (CBD) and inner eastern suburbs due to boomers. Developers catering to this market are providing larger living spaces, substantial balconies, multiple secure car parks and on-site services.

While a suburban dwelling or CBD apartment with these attributes can range from the $700,000s to the low $2million in price, boomers remain unfazed. They are less price sensitive but more meticulous in terms of location.

Booming spots in the city are from the major retail and dining precincts within suburban Adelaide. These include: O’Connell and Melbourne Street, North Adelaide; Walkerville Terrace, Walkerville; The Parade, Norwood; King William Road, Hyde Park; Jetty Road, Glenelg; and the east end of the Adelaide CBD. Locations that provide the medical and social services are in demand, too.

Exciting times ahead Generally, Adelaide’s market is expected to show signs of life moving forward. Boomers have seen the recent price growth within the Adelaide metropolitan market as an opportunity to sell up as the market performs well. As the boomers move out, opportunities arise for those planning to move in. Within the tightly held inner ring, young professionals are looking for older character homes.

“Within this segment we are seeing uplift in renovations and extensions with older homes being given a new lease on life,” the report noted. Again, this solidifies why house market in the city is tracking higher than the unit segment.

Within the middle ring, relaxed zoning constraints have seen developers move in. The development plan changes then have seen sharp increases in prices being paid for original properties with sites in excess of 600 square metres. As boomers typically lack the enthusiasm to go through the development process, they are riding the wave of the spiking prices and opting to sell up making younger generation go through the development process.

Brisbane and Darwin had similar trends with Adelaide. The house market of Brisbane was seen to be rising but its unit market is approaching the bottom. Meanwhile, Darwin saw its house market starting to recover but unit figures are declining.

Source: Your Investment Property 7 November 2018 https://www.yourinvestmentpropertymag.com.au/news/adelaide-buyers-prefer-houses-over-units-257061.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

This well-known catchphrase expresses the fundamental idea that the area or location of a property is the most important factor in determining its worth.

However, there are many additional variables that will determine how a location becomes valuable and whether it will remain so.

Some desirable location factors are constant, for example – proximity to infrastructures such as beach, river, schools, shops and transport. Others are transient, such as proximity to work and leisure facilities. Many people desire to live close to the CBD and to varying degrees, the value of inner-city suburbs can change quite dramatically depending on whether they have been gentrified or not.

It is a worthwhile investment of time to investigate the future planning for the suburb or area in which you are looking to buy or sell. Some suburbs have a poor reputation, but a generally appealing aesthetic and a positive economic outlook may change this perspective.

Suburbs that may not have the greatest reputation can often benefit from a “facelift”, Fremantle is one impressive example of this. If the street itself looks aesthetically appealing with freshly maintained houses and properties this can create a good first impression for a buyer, which in turn will increase the potential value of your home.

Furthermore, if people desire to live in a newly renovated neighbourhood and there are fewer properties available that can be supplied (increase in supply & demand), then prices will increase thereby causing an increase in the property market performance for that area.

The general economic outlook can also influence the value of your property. If there is a positive outlook with increased employment opportunities and strong economic growth, people are more likely to be optimistic about obtaining a mortgage, this is especially true if the interest rates are reasonable.

The Reserve Bank determines the official cash rate, which the lending institutions pass on via the rate of interest on home loans. If the rate is raised, then the mortgage repayments will increase and as an effect, if people do not think they can afford to borrow money there will be less demand for houses and thus the prices will fall in the real estate market.

Property values can also fluctuate depending on who may want to live in a certain area. For example, many large homes may be built to accommodate families, but with time those situations change and people look to downsize to smaller apartments or houses.

The houses age and lose their original value and the area may become less popular.

The opposite can occur in areas with higher density that may attract single people or couples with no children.

Source: The Real Estate Conversatiom November 6 2018 https://www.therealestateconversation.com.au/blog/jonathan-bahen/location-location-location/jon-bahen-abel-mcgrath/jonathan-bahen-abel-mcgrath

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Buyers are showing more confidence in Adelaide, but the economy needs to do more to spur growth

Adelaide has spent many years putting in a middling performance in Australia’s property market, and recent plant closures have had a significant effect on the economy. However, confidence seems to be creeping back into this state.

“The June 2018 quarter matched the record-breaking median posted last quarter and shows no signs of going anywhere but upward. When we hear that the eastern states have come off the boil and into cool water, Adelaide is defying the trend,” says Alex Ouwens, president of the Real Estate Institute of SA.

“Now is a great time for first home buyers and investors to enter the real estate market, and the results show that they are on board. Business sentiment is at its highest in many years too.”

The growth has been supported by a boost in sales, although there are concerns that the taxes imposed on overseas investors could curb interest.

“On one hand, we are welcoming foreign investment with the submarines and space exploration. But on the other hand we are closed for business with the hefty 11% foreigners’ tax on new property purchases,” Ouwens explains. “

The resolution of these issues would enhance the real estate experience and growth of opportunities for young people in SA.”

Job creation needs to step up

Suburbs that have seen a tremendous upswing over the 12 months to June 2018 include Henley Beach, Smithfield, Athelstone and Norwood. Meanwhile, Morphett Vale, Mawson Lakes and Parafield Gardens are on the list of top sellers.

“Affordability coupled with infrastructure and investment opportunities will always deliver suburbs that do well for first home owners and investors,” Ouwens says.

Ultimately, however, it comes down to Adelaide’s ability to stabilise its economy. Real Estate Institute of Australia president Malcolm Gunning emphasises how important this is.

“What has driven the decline in Adelaide is jobs. After a five-year period of decline, Adelaide is now starting to stabilise. But until there is more work in Adelaide we don’t see any major growth in prices,” he says.

“One of the biggest industries in Adelaide now is education. Adelaide University is a major income producer, and you’ve got wine and tourist industries as well, although tourism hasn’t been as popular.”

SUBURB TO WATCHCLARENCE PARK: Units offer affordability and growth

A remarkably strong performer in Adelaide’s fragmented market, Clarence Park continued a five-year long streak of positivity in the 12 months to July 2018.

House prices grew by over 16%, pushing the median value to $734,400. While the median price of units rose by 6.3%, they remained quite affordable at under $350,000. Unit rents increased by 1.8%; by contrast, house rents decreased by 4.4%.

Clarence Park is bordered by the suburbs of Black Forest, Millswood and Kings Park, among others. The local community centre serves as a base for clubs and is situated near the Clarence Park Biodiversity Garden. On Parker Terrace, Clarence Park Community Kindergarten caters to young families.

Growth: House values soared by 16.3%, while units saw 6.3% growth

Affordability: Units in Clarence Park are priced quite low, at a median of $337,120

Can you afford to buy in this suburb? Find out how much you can borrow

Suburbs near you : Heidelberg , Templestowe , Heidelberg Heights , Templestowe Lower , Heidelberg West

Source: Your Investment Property Mag 1 November 2018 https://www.yourinvestmentpropertymag.com.au/market-report/sa/sa-excerpt-from-the-2018-november-market-report-256414.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

The Real Estate Institute of Australia (REIA) says the latest CPI figures brings good news for renters and home buyers, as interest rates remain stable.

The September 2018 quarter CPI figure released yesterday continues to be good news for home buyers and renters, according to industry body, the Real Estate Institute of Australia (REIA).

The All Groups CPI increased by 0.4 per cent in the September quarter, the same as for the previous two quarters, leading to an annual increase of 1.9 per cent.

REIA President Malcolm Gunning says this suggests "official interest rates will remain historically low for some time yet".

The Housing Group increased by 0.4 per cent for the September quarter, and 1.6 per cent for the year to September 2018. Major increases for the year were gas and other household fuels (up 3 per cent), and maintenance and repairs (up 2.4 per cent).

Pictured: The Reserve Bank of Australia. Image via WikiCommons.

The cost of rent also increased by 0.4 per cent over the September quarter and only 0.6 per cent for the year.

"For the last eleven quarters, the average annual change has been less than 1.0 per cent," Mr Gunning said.

“The latest CPI figures show that the increased investment in housing has kept growth in rents lower than they have been historically and is clear testament that the current taxation arrangements benefit renters and that any change in the treatment of negative gearing and capital gains tax would see an increase in rents," he told WILLIAMS MEDIA.

“For home buyers, the latest inflation data together with a cooling in the housing market would suggest that the RBA will hold official interest rates stable for some time yet.

“With the RBA meeting next week, the latest inflation data together with a cooling in the housing market suggests that home buyers can be comfortable in this knowledge," Mr Gunning told WILLIAMS MEDIA.

Interest rates "unlikely" to increase

Mr Gunning says the only thing that will lead to a hike in interest rates is rising levels of inflation.

"While we have a strong economy, inflation is under control. That is a big factor, as are the APRA regulations around residential and investment lending particularly, is doing the job to cool the property market. Previously the RBA used to use interest rates, but what they've done is impose a good old-fashioned credit squeeze," he told WILLIAMS MEDIA.

Acting Principal Economist for the Housing Industry Association, Geordan Murray agrees.

"It is unlikely that the RBA will make any changes to the official cash rate any time soon, given the subdued rate of inflation and underutilised capacity within labour force," he told WILLIAMS MEDIA.

What about borrowing costs?

Mr Gunning doesn't think borrowing costs will go up, but the criteria for loan eligibility will get tougher.

"The criteria required is much stronger. It's very difficult now for investment properties, where a 20 per cent deposit is required.

"First home buyers probably are the easiest to qualify, the APRA has set it up that way it encourages investors. There is no more fixed interest loans for upgraders or downsizers.

"So borrowing costs won't go up, but eligibility will be harder," Mr Gunning told WILLIAMS MEDIA.

But Mr Murray says rising borrowing costs shouldn't be ruled out.

"While the official cash rate is likely to remain on hold, rising borrowing costs should not be ruled out as lenders will pass on any increase in their funding costs," Mr Murray told WILLIAMS MEDIA.

Propertyology Head of Research, Simon Pressley says banks may pass these funding costs on to customers.

“There’s a bit of a cocktail of influences for interest rates to borrowers. On one hand, there’s potential for funding costs to rise and banks passing them on to customers. On the other hand, loan volumes have reduced, so banks are offering discounts to attract a bigger slice of a smaller pie," Mr Pressley told WILLIAMS MEDIA.

“Generally speaking, rents are likely to soften a bit in Sydney and Melbourne. Rents are likely to rise in Hobart, Canberra and large parts of regional Australia.”

“Every Australian wants wage growth. Record volumes of national job growth are starting to place pressure on labour supply which, if it continues, will eventually lead to wage growth. APRA’s over the top intervention may bring this undone," Mr Pressley continued.

How much of the RBA's cautious approach is tied to the pending fallout of the Financial Services Royal Commission?

Mr Gunning believes the banks are retaliating.

"The banks are having difficulty sourcing offshore funds, which they use to lend back out again to heighten interest rates. A lot of it has gone back to America because the bond rate is quite high.

"Personally, I think there is a bit of retaliation. I think the banks are retaliating as far as the Banking Royal Commission, and they're really just cutting the borrowing. I don't think they're flipping them the bird so to speak, but they are focusing more on their own structure until the findings of the Banking Royal Commission have been released," Mr Gunning told WILLIAMS MEDIA.

Mr Murray says there are many bridges to cross before we know the full outcome of the Royal Commission.

"The Royal Commission is yet to make recommendations and then we don’t know which of the recommendations the government will adopt or how any changes will be implemented. There may be major changes or there may be minor changes and the RBA will be assessing a range of potential scenarios.

"At the moment, the RBA will be assessing the extent to which the process of the Royal Commission itself has had an impact on lending activity. In their recent communications, the RBA has noted a tightening of credit conditions," Mr Murray told WILLIAMS MEDIA.

Mr Pressley says this recent tightening was unnecessary.

“Propertyology’s view is that recent tightening if credit policy was unnecessary. First home buyers, upgraders, downsizers, renovators and investors are now finding it harder to implement important life decisions. And the resultant less money circulating through Australia’s economy benefits no one," Mr Pressley said.

Source: November 1 2018 The Real Estate Conversation https://www.therealestateconversation.com.au/news/2018/11/01/latest-cpi-figures-spells-good-news-home-buyers-and-renters-says-industry-body

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

When it comes to buying an investment property, there are a number of considerations that you should take into account.

And whilst some of the rules that apply to purchasing your own home are still relevant, there’s a different set of criteria if the property is purely an investment. We all know about the three key words: location, location and location. And most experts agree that position is one of the most important factors when choosing a property, for an investment or for yourself. Perhaps even more so from an investor’s perspective because it’s one of the key attributes that will drive capital growth over the long term – whereas when you buy a property for yourself there are emotional, lifestyle and family considerations that come into play. Another point that is subject to debate is whether you should buy a property that you’d be happy to live in yourself. Think about differentiating between your own home and your investment to avoid becoming overly involved; remember it is the home of your tenant and not your own. Location is the key consideration for an investment property particularly if you are looking to rent it out, and positively gear. You have to keep in mind who the target market is, what their lifestyles are like and what they will be looking for. If you are considering renting out to tertiary students, proximity to universities, colleges and TAFEs and easy access to public transport are a must. Whereas if you consider young families to be your ideal renters, then access to good local schools, parks and playgrounds are important factors. Retired couples will want to be within walking distance of local shops and close to hospitals. Checklist:

School zonesParks and recreation facilitiesShops, cafes and restaurantsDoctors surgeries and hospitalsPublic transportAccess to main road arteries

The key strategy for buying an investment property is to find the right area and then the right properties within that area. And don’t only focus on past performance as that could often be misleading and not necessarily an indicator of future price growth. An important consideration is the level of amenities and infrastructure in an area. If there is a new rail link, a new motorway planned or upgrade scheduled, it is going to help the property market because it creates economic activity and jobs along the way. Be aware that announcement stage isn’t always a guarantee, so be cautious and wait until contracts have been awarded and physical works happening. There’s no such thing as too much research, so do your homework. Be flexible - if your chosen suburb is too expensive, look at neighbouring suburbs with a cheaper price point, a smaller property in your preferred area, or a place in need of renovation. House and land packages in outer suburbs can also be more affordable. Look for financial breaks in certain areas, like initiatives that remove stamp duty for homes under a certain value or, if you're eligible, a first home buyer’s grant. Developing a successful portfolio of properties takes a lot of time and careful consideration. There’s very seldom a quick buck to be made, unless you're extremely lucky of course, or you’re a skilled renovator and plan to flip a property quickly. Your main focus should be on buying safe, solid assets that will go up in value if you hold onto them for 10, 20, or 30 years. TOP TIPS:

Set goals: Organise your finances and work out exactly how much money you have to work with and exactly what you want to achieve through your portfolio (capital growth or rental income).Do your research: You may have to look at 50 or more properties before you find the right one that ticks all the investment property boxes.Seek professional advice: The value of property experts should not be underestimated when investing in a property. These experts can save you a wealth of time and prevent a poor property investment.Look for properties within the median price range: You want properties that are going to be easy to rent because as a property investor, that’s what pays your mortgage. Look for properties that are within 10 per cent to 20 per cent of the median price for the area as that means 80 per cent of the population can afford to rent them.Choose the right property at the right price: Investing in real estate is all about capital growth, so choose a property that is more likely to increase in value. Buying at the right price is absolutely critical.If you’re renting out the property, get a good property manager: A property manager is usually a licensed real estate agent who is a professional in their field, and their job is to keep things in order for you and your tenant. Choose the right mortgage: Interest on an investment property loan is generally tax deductible. Structuring your loan correctly is critical and this should be done with the help of a trusted financial advisor. Most investment loans should be set up as Interest Only (rather than Principal and Interest) as this increases the tax effectiveness of your investment.Use the equity from another property: Leveraging equity in your home, or equity from another property investment, can be an effective way to buy an investment property.Check the age and condition of the property and facilities: Even with negative gearing, updating a property can result in over-capitalisation and can damage your cash flow. Engage a professional building inspector before you purchase to find any potential problems.Make the property attractive to renters: Update the property with neutral tones and keep the kitchen and bathroom in good condition so you attract a good quality tenant.Take a long-term view and manage your risks: Remember that property is a long-term investment and you should not rely on property prices rising straight away. The longer you can afford to commit to a property the better so you can build up equity.Remember, you can always renovate or extend a home, but you can’t change its location. And keep in mind that it’s not quick and simple to sell a property if you urgently need funds. So be cautious. Most importantly, find the right balance between financial stability and still being able to enjoy life.

Source: October 12th 2018 The Real Estate Conversation https://www.therealestateconversation.com.au/blog/sam-danckert/looking-purchase-investment-property/danckert-real-estate/buying-investment

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Prospective purchasers of strata-titled apartments or townhouses should carefully examine the costs of levies connected with maintaining the property, according to Archers the Strata Professionals.

If the levies for the property seem too good to be true, then they probably are,” said Archers the Strata Professionals partner Grant Mifsud.

Mr Mifsud said unit owners in strata schemes are required to pay levies to cover financial commitments including building maintenance, insurance, common area facility running costs such as lifts, swimming pools or gymnasiums and sinking fund costs. Levies are generally payable quarterly and a notice is issued by the body corporate treasurer or the strata manager on their behalf.

“Buyers, particularly if it is a new property, should consider if the levy cost disclosed to maintain facilities and put aside for long term sinking fund costs are realistic,” he said.

“It’s worth comparing disclosed levies to a property that has similar services, build type and age then scale to the one you are looking to purchase to get a realistic comparison about the levies connected to the property.”

Mr Mifsud said sinking fund costs can be a particular area that can often be underestimated to keep levies low in the short term.

“This fund is essential for future capital cost planning and pays for long-term capital upkeep such as repainting, lift refurbishments, carpet replacement or road resurfacing. While these costs can vary over time, the sinking fund is expected to have enough money put aside to cover them. If not, a special levy must be raised to cover the cost in addition to regular levies.

”Mr Mifsud said a quantity surveyor can be engaged to provide an expert report forecasting these long terms costs including allowances for inflation which the body corporate can then stand by as reasonable sinking fund levies.

“For new buildings, body corporate legislation does not require the sinking fund report to be provided until the first annual general meeting which can be up to six months from registration,” he said.“This means that there may not be a full report prepared by a quantity surveyor when the original levies are disclosed and can lead to levy increases once the report is prepared in order to reasonable budget for future capital expenses.”

Mr Mifsud said “the budget” is the lifeblood for bodies corporate and under-budgeting the administrative or sinking fund levies for a strata scheme can have severe financial repercussions for current and future owners, particularly if there are known major costs for the building without future planning for adequate funding.

“A solid program of maintenance planning, good recordkeeping, reporting and realistic sinking fund forecasting are all important tools for maintaining adequate levies,” he said.

Source: The Real Estate Conversation October 15th 2018 ttps://www.therealestateconversation.com.au/blog/grant-mifsud/when-the-levy-breaks/archers-the-strata-professionals/strata-title-townhouse-0

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Bradley Beer of BMT Tax Depreciation discusses why Investors who are looking to purchase a new property often look at buying off-the plan and the significant depreciation deductions available to the owner of a property purchased off-the-plan.

Investors who are looking to purchase a new property often look at buying off-the plan.

Buying off-the-plan essentially means you are entering into a contract to purchase a property prior to, or during the construction phase of a property or a development.

One big benefit of purchasing off-the-plan that investors often fail to consider is the property depreciation benefits available.

There are significant depreciation deductions available to the owner of a property purchased off-the-plan. It is important to note however that the property must be completed and be generating an income to claim depreciation deductions.

A completed property purchased off-the-plan will typically attract between $8,000 and $14,000 in depreciation deductions in the first full financial year, so it is fair to say that the new owner can make significant savings and increase their available cash flow by claiming depreciation for the property once it is income producing.

Newly built properties constructed off-the-plan will contain new fixtures and fittings*.

Therefore the depreciable value of these items will be higher. The owners are also eligible to claim the maximum capital works deductions for the building structure, which means more deductions are available to claim over the life of the property (forty years).

When it comes to the fixtures and fittings in an off-the-plan property, investors should be aware that not all assets are created equal. In most cases, those assets with a higher starting cost will generate higher depreciation deductions.

For this reason, investors may want to consider the brand and price range of assets in an off-the-plan property.

Focusing on a kitchen in an off-the-plan property, the below table illustrates how the depreciation deductions available will vary depending on the model or price range.

Source: BMT INSIDER 18 Jun 2018 https://www.bmtqs.com.au/bmt-insider/depreciation-and-off-the-plan-properties/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

With the media constantly reminding us we’re now in the downturn phase of the property cycle, what lessons are there to learn from past property downturns to help navigate the times ahead?

Michael Yardney, leading property commentator and author of “How to grow a multi million dollar property portfolio in your spare time” has some reassuring news.

While property values are likely to fall further in some locations, there is no sign of a general market collapse.In fact, that’s also the message from our new treasurer, Josh Frydenberg, who after consulting with the RBA and APRA has concluded that we're in for an "orderly" soft landing in the Sydney and Melbourne markets.

While the current tight lending criteria and subdued consumer confidence will continue to weigh on the market, there are some signs the property markets could stabilise by year end.Michael Yardney, who has invested in property for over 40 years has 10 lessons he’s learned from past property downturns:

1. Booms don’t last forever - The trick is to be prepared for the downturn when it comes and be ready to make the most of softer market conditions.

2. Stick to your strategy - Don’t change your long term strategy because of short term factors. Look for what’s always worked, rather than what’s working now.

3. Get rich quick = get poor quick. Successful property investment takes time. Be wary because there’s a new breed of spruiker out there looking to lure the uneducated into parting with their money by offering them a short cut to riches.

4. Take a long-term perspective. The secret is to keep your eye on the long term horizon and not worry about any short-term vagaries of the market, because they will pass.

5. Property investment is a game of finance with some houses thrown in the middle - Strategic investors don’t only buy real estate – they buy themselves time by having the correct finance structures in place including cash flow buffers to ride through the cycle.

6. Invest in locations with a future, not a past. Since the bulk of your property’s performance will be determined by its location, rather than looking for somewhere cheap to buy, find a location where local economic growth will lead to jobs growth, wages growth and population growth.

7. You know less than you think you know. A healthy ego can be a good signal of future success. However, an over-inflated one will usually mean you end up worse off than when you started.

8. Don’t mistake money for wealth. The truly wealthy not only have a capital growth portfolio behind them, they have learned that money is not wealth.

9. The sky isn’t falling. Sophisticated investors ignore the white noise because they are concentrating on the long-term, where the view is calm and clear.

10. Opportunity is knocking. When opportunity arises, strike.

Remember Warren Buffet’s words: “Be fearful when others are greedy and greedy when others are fearful.”Sure it’s difficult to take action when others around you are talking doom and gloom, but it is during downturns that life time wealth is made.

The Bottom Line:Strategic investors don't really care too much about market phases. Instead they concentrate on growing their portfolios and investing in the right type of properties, whenever it suits their finance, their strategy and their long-term goals.

Source: The Real Estate Conversation 9th October 2018 https://www.therealestateconversation.com.au/blog/michael-yardney/what-can-home-owners-and-property-investors-learn-the-last-property-downturn

Yet another new Prime Minister in Canberra. Does this mean it’s time to check our smoke alarms?

It’d be comical if it wasn’t so concerning With the frequent changes in leadership and constant mud-slinging through the media, many people tune out of daily political news.

As prices fall in markets across the country, tuning out of politics is simply not an option for the astute property owner with much at stake in the coming election.Ignoring Canberra and its politics can be a costly mistake as the various proposed policy changes from both the Australian Labor Party (ALP) and The Liberal Party of Australia (Liberal) camps will make a huge impact on our property landscape – affecting home-owners and investors.

The ALP unleashed a media storm when it burst out of the policy box and promised to abolish negative gearing for all properties except new housing – with a tidal wave of opposition among the investment community.

Any property owner should be very concerned about this proposal and its impact on prices.

There has been considerably less attention to other significant property-related policies that ALP has tabled such as increasing capital gains tax – which could have a monumental impact on all property sales.Liberal’s policies have been deemed more investor-friendly – particularly keeping negative gearing in its current form and just removing travel expenses as a deduction.A policy already implemented. So what is best for property investors – ALP or Liberal policy?

There is no blanket solution and what is best will vary depending on each individual investor’s age, retirement plans and financial position.One thing is clear – if Labor implements its new negative gearing regime – the winner will be the new housing market as any investor wanting to minimise their tax burden will snap up to new developments - new houses and new apartments.

Conversely investment in existing properties will take a nosedive as it will be far less appealing with no negative gearing benefits.

Prime Minister Scott Morrison has recently foreshadowed a “housing market crash” as a likely result of Labor’s property policies including abolishing negative gearing and halving the 50 per cent capital gains tax discount.With an election due by the end of May next year property investors will have greater certainty about any changes to the market.

In the meantime it’s important to continue to monitor what is coming out of Canberra to ensure investors are best placed to protect and grow their portfolio.Keeping up-to-date with the proposed changes is a minefield but is best summarised in this table.

Image Source: Patrick Leo

Source: The Real Estate Conversation October 5th 2018 https://www.therealestateconversation.com.au/blog/james-nihill/the-politics-property-what-does-it-all-mean-property-owners/james-nihill-patrick

As spring property season approaches, Mozo property expert Steve Jovcevski gazes into his crystal ball and casts his predictions on property growth and decline over the busiest property sale period of the year.

Expect the major housing markets of Sydney and Melbourne to take a sizable dip and continue a downward trend, Canberra and Adelaide to enjoy slow and steady growth and Hobart to outshine its neighbours with continued stellar growth.

Sydney: Property market decrease of -5 per cent

Sydney is currently in the grip of an orderly correction after a long boom which saw property prices increase by 85 per cent since 2013.

The downturn is the result of multiple factors and these include lower clearance rates and a sizeable increase in the supply of available housing, especially apartments, which in turn is contributing to falling rent in most areas.

As a result, investors yields are very low and without capital growth, most investors will not be tempted to buy another property.

Tougher lending criteria introduced by APRA and the Royal Commission are also having an indirect impact on the market with prospective buyers facing greater challenges obtaining a home loan.

The only area that is performing well is the first home buyers segment where demand has risen significantly.

Headship, which equals the number of households divided by the adult population, is on the increase after being at its lowest for many years.

The surge in prospective first home buyers should keep a lid on dramatic property value decline, however a further fall to the tune of five per cent is expected as the Sydney market bottoms out by the end of the year.

Savvy and cashed up investors will seize this period as a good buying opportunity for the longer term, with market looking to stabilise again in 2019.

Melbourne: Property market decrease of -6 per cent

Melbourne is following the trajectory of Sydney; however, it is sitting much earlier in the correction cycle.

Prices have remained stagnant for much of the year, but the market has experienced a more pronounced drop in the last quarter.

With a sizeable first home buyer’s market and booming population growth, to date Melbourne has weathered the price correction storm better than Sydney.

That said, with the same stringent lending criteria applying nationwide and an 11 per cent increase in listings from July 2017 to July 2018, it is expected that prices will finally drop by around six per cent, bottoming out at the end of the year.

Melbourne will experience a much smaller correction compared to Sydney and will return to growth much sooner.

Perth: Property market increase 1.5 per cent

Perth has been in a protracted downturn for many years, linked to the end of the commodity boom.

A slower stream of new migrants coming to the city as well as locals leaving due to limited job prospects has resulted in the housing market spiralling downwards.

The market appears to have finally bottomed out with only a slight decline, year on year.

A complete bottoming out by the end of spring is expected, followed by a slow resurgence of growth towards the end of 2018.

There won't be any major property growth spurts in value to the Perth market for at least a couple of years.

Brisbane: Property market increase of 2 per cent

Brisbane has experienced slow growth over the last 12 months.

This is expected to continue until the end of the 2018, increasing by a further two per cent.

There will be no price correction as there has been in the other eastern seaboard capital cities.

That said, growth will be constrained due to stringent lending conditions affecting the rest of Australian borrowers as well as an oversupply of units in some pockets of inner city Brisbane.

Good interstate migration from its southern neighbours should help keep prices in the positive.

Adelaide: Property market increase of 2 per cent

Adelaide is certainly a ‘steady as she goes’ market without the high drama and major growth and decline of the Sydney and Melbourne property market.

It is expected that prices will increase by a further 2 per cent until the end of the year as listings stay around the same number as last year.

Slow and steady growth is good news for Adelaide home owners as house prices continue to increase and the market outlook remains positive.

Hobart: Property market increase of 5 per cent

Hobart has been something of the star performer amongst capital cities in Australia.

With prices growing just shy of 12 per cent in the last year, the standout growth does reflect major changes for the Tasmanian property market.

While price increases will continue, the heat will go out of the market by early next year.

Prices are expected to grow by another five per cent from now until the end of the year still keeping that high year on year rate of growth.

With vacancy rates in the city under one per cent and listings dropping nearly 25 per cent from July 2017 compared to July 2018 the underlying demand is still there for now.

Canberra: Property market increase of 3.5 per cent

With Canberra enjoying the benefit of being a relatively affordable housing market compared to Sydney and Melbourne as well as holding a large proportion of high income earners, house prices have continued to increase solidly this year.

Low vacancy rates and a stable demand for good rental accommodation due to transient government employees has created a perfect investors market.

In the next six months prices are expected to rise by 3.5 per cent which will result in an overall solid year for this consistent market despite headwinds from a difficult lending environment.

Darwin: Property market decrease of -3 per cent

Darwin is still bottoming out from the large falls seen after the end of the commodities boom.

With an oversupply of units yet to work their way through the system and be mopped up by prospective purchasers, it is expected that prices will continue to decline until the end of 2018, but at a slower pace.

A slow and slight upwards property turn is expected by mid 2019.

Source: The Real Estate Conversation September 21st 2018 https://www.therealestateconversation.com.au/blog/steve-jovcevski/what-expect-this-spring-property-season/steve-jovcevski-mozo/mozo

Bradley Beer of BMT Tax Depreciation discusses why deductions and assets are missed, and what the solution is.

Depreciation is a complex area, so unless you’re a specialist quantity surveyor or a qualified tax accountant, it can be hard to wrap your head around it.

As such, investors miss deductions all the time, meaning they could be losing out on thousands of dollars.

Research shows that 80 per cent of property investors are failing to maximise the deductions claimed from property depreciation.

So why are so many investors missing out and what deductions commonly go missed?

Why are deductions missed?

There are a few reasons why deductions may be missed or not maximised:

The first is that many investors remain unaware of depreciation and that it’s even a valid claim. This is possibly because it is a non-cash deduction, meaning the investor does not need to spend any money in order to make a claim. Furthermore, they may not realise the significant deductions available and may falsely consider it a minor claim not worth their time.They may not be getting a specialist to prepare a tax depreciation schedule. Quantity surveyors are one of a few professionals recognised by legislation (Tax Ruling 97/25) to have the appropriate construction costing skills to calculate building costs for capital allowance claims. You should ensure you seek the services of a quantity surveyor who specialises in property depreciation to ensure claims are maximised. A specialist will have up to date knowledge of legalisation and the tools and tricks available to maximise deductions in a legally compliant manner. They will also ensure that no asset goes unaccounted for.Many investors are unaware that they can make a claim for renovations completed by a previous owner. So long as they fall within the qualifying date for capital works, these previously completed renovations are a valid claim and can provide significant deductions for current owners.Unusual or small items often go overlooked. Even if they’re aware of depreciation, many investors don’t realise that things as simple as door stoppers, shower curtains and spa bath pumps can attract a depreciation claim. While they may seem small, these items can really add up in a depreciation claim.

What assets are commonly missed?

Renovations made by previous owners are commonly missed.

Speaking of renovations, if an investor is currently completing a renovation, they may be eligible to scrap any assets they’re getting rid of in the renovation.

This means they can claim the remaining depreciable value for certain assets.

This can be commonly missed if a specialist quantity surveyor has not provided assistance.

Furthermore, a quantity surveyor will know how to make use of different strategies and tools to maximise deductions sooner, such as the low value pool.

If this is overlooked, it can result in valuable deductions going unclaimed.

Finally, small or unusual items are often overlooked, deemed too insignificant by investors to warrant making a claim.

Some examples include:

Garbage binsDoor closersRugsSmoke alarmsExhaust fansElectric clocksFreestanding bathroom accessoriesShower curtainsSpa bath pumpsGarbage disposal unitsTennis court netsAutomatic window shuttersFreestanding garden shedsIntercom systemElectric water filtersCeiling fansSolar garden lightsCCTV systemsWater feature pumps; just to name a few

These deductions may seem small, but they do add up for property investors and should not be overlooked.

What’s the solution?

When it comes to property depreciation, it’s always best to employ the services of a quantity surveyor that specialises in tax depreciation, such as BMT, to prepare a tax depreciation schedule for your investment property.

This will not only ensure that these deductions are not missed, but that deductions for all qualifying assets are maximised and compliant with ATO legislation.

This schedule will cover the life of the property, can be easily used by your accountant when preparing your tax returns, and will ensure that these commonly missed deductions will not go unnoticed.

Source: September 20 2018 Article provided by BMT Tax Depreciation. https://www.therealestateconversation.com.au/2018/09/20/commonly-missed-tax-deductions/1537400495

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Stronger new home building, off the back of strong population growth, is continuing to drive the improvement in economic conditions in Australia,” stated Tim Reardon, HIA’s Principal Economist.

Last week's national accounts figures indicate that GDP rose by a solid 0.9 per cent during the June 2018 quarter.GDP in the full 2017/18 year was 2.9 per cent higher than in the previous year.

“The 3.6 per cent expansion of new home building was a major contributor to the improvement in GDP throughout 2017/18,” added Mr Reardon.

“Australia’s 28 years of growth has been built on the back of a series of booms in different economic sectors. The current phase of growth driven by the boom in new home building that has been underway since 2015.

“The boom in new home building is, in part, due to strong population growth over the past decade.“More recent data shows us that the housing market is now cooling for a number of reasons including a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments and falling house prices.

“For these reasons, the housing market is not likely to continue to deliver the same contribution to economic growth in 2018/19.“Irrespective of these emerging factors, the volume of approvals for new detached houses have been tracking around their strongest levels in 15 years and the industry remains buoyed by the task of completing the large volume of new homes which are still in the pipeline,” concluded Mr Reardon.

Source: The Real Estate Conversation September 10th 2018 https://www.therealestateconversation.com.au/blog/tim-reardon/home-building-continues-grow-economy/tim-reardon-hia/hia

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

When an investor starts claiming depreciation, they can reduce their tax liability.

This is because depreciation essentially lowers their taxable income, meaning they may be able to put more money back in their pocket at tax time.

For many investors, the additional savings depreciation provides them can help them to reduce their loans faster, add more funds into an offset account, to put money towards a new car or a holiday or to assist them with everyday expenses involved in holding the property.

As an investor, there are smarter ways to use the extra cash you will make from depreciation.

Here are just a few:

Pay off your debts

First things first, if you have any major outstanding debts, this may be a good chance to reduce or eliminate them. While a Financial Advisor can advise which debts you should be paying off first according to your own financial institution, things like credit card debts (which often have very high levels of interest) or personal loans could be a good thing to pay off or reduce.

Diversify your portfolio

Most Financial Advisors will tell you that diversifying is a great way to minimise risk and is important for long-term financial success. When you have a diverse portfolio, these different investments are likely to react differently to the same event. This means that if one area suffers, you still have a stake in another area that is growing. Ideally, this will offset significant financial losses.

For example, a residential investor might look to invest in shares, bonds or even venture into the world of commercial property.

Grow your portfolio

Most investors will stop at one property but if you have the means, you can experience greater returns by growing your property portfolio.

Carefully consider whether this works for your financial situation and fits in with your investment goals.

As always, do some proper research to ensure you’re investing in the right area and the right property to maximise capital growth and rental returns.

Boost your super

It’s never too early to plan for your retirement. If you’d like a similar standard of living once you retire, it’s likely you’re going to need to make some voluntary payments on top of what your employer pays.

This money is concessionally taxed, will generally be locked away until you retire and you’ll benefit from compounding returns over time.

Do some renovations on your investment properties

Is your investment property a bit run down, in need of some better appliances or just crying out for a fresh coat of paint? Well this is your chance to change that.

Using the extra cash from depreciation to improve your current property is a great idea, provided you don’t overcapitalise.

This could potentially boost rental returns and increase the overall value of the property.

Expand your business

If you’re a commercial property investor or running a business as the tenant, extra cash never goes astray.

Depending on how the business is performing you could use this extra cash to expand or invest in other parts of your business. For example, this may give you the funds to upgrade your business equipment or start expanding into a new area.

Consult with an Advisor

Please note that these examples are general in nature and do not take into account your personal situation. As always, you should consult with your Financial Advisor when making such financial decisions to determine the best course of action for your individual circumstances.

Article provided by BMT Tax Depreciation. Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Bradley joined BMT in 1998 and as such he has substantial knowledge about property investment supported by expertise in property depreciation and the construction industry. Bradley is a regular keynote speaker and presenter covering depreciation services on television, radio, at conferences and exhibitions Australia-wide. Please contact 1300 728 726 or visit www.bmtqs.com.au/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Malcolm Gunning, President of the Real Estate Institute of Australia (REIA), and Leonard Teplin, Director of Marshall White debate the potential implications the most recent leadership spill could have for the residential property market.

It feels like we've had more leadership spills than seasons of The Bachelor, and some industry leaders are worried that Australia's reputation for changing Prime Ministers at the drop of a hat is having negative consequences across the property market.

Director of Marshall White, Leonard Teplin says the constant change of leadership in Australia is driving residential buyer sentiment to an all-time low, and it's the Australian public who are left to sit back and watch the fallout, again and again.

"There are no real winners, only losers. The Australian public must once again sit and watch while the effects ripple across our economy and property market," Mr Teplin said.

"It's no secret that every time there is an election, market sentiment drops, people delay purchases and put off big decisions until the new leader has been decided, and election promises turn into policies.

"In real estate, this sentiment is reflected in weaker conditions as buyers cautiously await the inevitable policy changes and market overcorrections that are sure to follow suit.

"As Scott Morrison gets set to take over as the nation’s leader, property purchasers both locally and abroad will be questioning what this change in direction will mean for them and their investments," Mr Teplin told WILLIAMS MEDIA.

But Malcolm Gunning, President of the Real Estate Institute of Australia (REIA) doesn't believe the leadership spill will have a drastic impact on the property market.

"I don't think there will be any change because Scott Morrison was really the architect of the current economic policy," Mr Gunning told WILLIAMS MEDIA.

"Tougher lending criteria introduced by the APRA, and the banking royal commission is what's really having the biggest influence on the market at the moment."

Jock Kreitals, CEO of the REIA agrees.

"In terms of the recent changes of Prime Ministers and Ministers, I do not see any impact on the market attributable to this. The policy of the Coalition regarding negative gearing and CGT remains unchanged.

"The PM as the previous Treasurer has reiterated the position a number of times. Further, the PM well understands the impact of changes in policy having worked in a policy role in the property sector," Mr Kreitals told WILLIAMS MEDIA.

Real Estate Institute of New South Wales (REINSW) CEO, Tim McKibbin says the new Prime Minister should put good fiscal policy ahead of economically damaging, populist politics.

“Those advocating for removing the deductibility of expenses incurred in earning assessable income in the residential property market are damaging people’s ability to acquire a home,” Mr McKibbin told WILLIAMS MEDIA.

“This is adversely impacting the property industry – Australia’s biggest employer – and playing petty politics in the misguided belief it will promote their personal brand."

Potential implications for foreign investment revenue

Mr Teplin believes the latest leadership spill could impact international investment revenue.

"A stable government is a pillar of optimised liveability and one of the main reasons Australia has enjoyed a consistent influx of foreign investment into the real estate market, in turn driving the delivery of new infrastructure and economic progress," Mr Teplin said.

This recent setback could be detrimental for Australia’s international investment revenue, "which serves a much-needed portion of the market that drives new residential supply and delivers stock to the rental market," Mr Teplin continued.

Mr Gunning told WILLIAMS MEDIA the message the government is sending to overseas investors is what worries him the most.

"Our government seems to be very stable - and I'm not talking about leadership changes - but both parties are reasonably well aligned in policy. What sends the discouraging message is the tightened immigration and the taxing of foreign investors," Mr Gunning said.

"Chinese investment into Australia's residential property market has stopped, and I can say with conviction that the message this sends back to China is that they're not welcome. So it's more about the message it sends by the government rather than the changes in leadership."

"It will take investors out of the market"

If Labor were to win the next election, as it appears they will, Mr Gunning says the rental market will suffer.

"Labor is absolutely rusted on to negative gearing. They are of the opinion that it will help affordability, which is completely incorrect. What it will do is drive up rents because there will be fewer people buying investment property," Mr Gunning said.

"There has been 13 per cent growth in rent over the last five years, which is historically low and below inflation. If Labor gets in, it will take investors out of the market which will hinder supply - up goes the demand and the cost of rent."

Mr Kreitals told WILLIAMS MEDIA that if Labor were to be elected, the current market falls would be "exacerbated".

"Labor has on many occasions, including recently, reiterated the position that it took to the 2016 election to change negative gearing and CGT arrangements. In the lead up to the 2016 election, a number of studies were undertaken to examine the impact of such changes. In short, housing prices will fall and rents will go up.

"SQM Research, for example, forecast that in the first year of the policy, prices would fall by up to 3 per cent, and by up to 8 per cent and 4 per cent in the following two years.

"It needs to be remembered that at the time of the 2016 election, property prices were rising. Introduction of Labor’s measures would exacerbate the current market falls and flow on to the construction industry and economic growth," Mr Kreitals said.

And if stability is the cornerstone of sound investment, Mr Teplin says buyers will look to take their money elsewhere for more predictable returns in safer markets.

"As sentiment plummets and the population continues to grow faster than new stock can be delivered to meet the market, now more than ever we need a strong, stable, united government to help rebuild the real estate market and deliver stock to where it is most needed," Mr Teplin said.

"Political in-fighting isn’t just bad for business on a global scale - its effects are felt right across the property market long after party room vengeance has been executed."

Affordability improving for renters, first home buyers

The June quarter 2018 edition of the Adelaide Bank/REIA Housing Affordability Report found that affordability has improved for renters and the number of first home buyers increased during the second quarter of 2018.

The number of first home buyers increased to 28,401 - an increase of 7.3 per cent during the quarter and an increase of 20.6 per cent in the June quarter of 2017.

First home buyers now make up 17.8 per cent of the owner-occupier market, compared with 14.3 per cent at this time last year.

Rental affordability improved in New South Wales, Victoria, Queensland, South Australia and Tasmania, remained steady in Western Australia and declined in the Northern Territory and the Australian Capital Territory.

New South Wales remains the least affordable state for renters, where the proportion of income required to meet rent repayments is 28.8 per cent - 4.7 percentage points higher than the national level.

Related reading: Affordable housing in, negative gearing stays, says Treasurer

Scott Morrison admitted last year that Australia has a housing affordability problem and announced a number of measures in the May budget.

"There are no silver bullets to make housing more affordable. But by adopting a comprehensive approach, by working together, by understanding the spectrum of housing needs, we can make a difference," Mr Morrison said at the time.

Mr Kreitals told WILLIAMS MEDIA it's worth considering the importance of property to the economy, highlighted by the latest GDP figures.

"For the quarter, the economy grew by 0.9 per cent and 3.4 per cent for the year, which is the fastest rate of growth since the September quarter 2012.

"The property industry is continuing to drive the Australian economy with investment in new dwellings increasing 3.6 per cent for the quarter. The construction industry grew by 1.9 per cent for the quarter and 5.5 per cent over the year," Mr Kreitals said.

Source: The Economy September 10th 2018 https://www.therealestateconversation.com.au/news/2018/09/10/what-effect-does-political-change-have-the-property-market/1536540062

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

As much as banks need to be more responsible in their lending practices, borrowers also need to practice prudence when it comes to loans and spending.

In a webcast by The Adviser, Australian Mortgage Marketplace co-founder and COO Kym Dalton said there is a growing need for home buyers to be more financially literate.

"Seemingly, every time we have a commission or a report, there's a general clamour for increased financial literacy... That's quite often like a faith-based mission or a conscience sale because it's my opinion that generalised financial literacy really doesn't have much impact," Dalton said during the webcast.

In his view, these borrowers need to be able to analyse potential risks on their own before applying for a loan.

"People actually apply for loans [with] the expectation that things won't go wrong or things will get better. I think it's behoven upon lenders and brokers to actually just be aware of the optimism bias and encourage people to actually borrow responsibly," he said.

His sentiments are closely linked to a previous ME Bank poll, which indicated that more than half of borrowers do not fully grasp and understand the basics of property buying.

Resolve Finance managing director Don Crellin said it is alarming that first home buyers feel confident about purchasing a property without having a deep understanding of the housing market.

"They could be signing off on financial decisions that are inappropriate for their circumstances, ones which will really cost them in the long run," he said.

Source: https://www.yourmortgage.com.au/mortgage-news/aussie-borrowers-need-to-be-more-responsible/254370/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Tim Reardon of the Housing Industry Association and Tony Collidge of the Real Estate Institute of Tasmania discuss what people should know when considering purchasing an investment property.

Purchasing an investment property can be slightly daunting, especially if it is your first one.

WILLIAMS MEDIA spoke to two industry experts about everything to know when considering buying an investment property.

Tim Reardon, principal economist at the Housing Industry Association said it doesn’t matter what type of property you purchase and where in Australia, as there has been such strong house price growth in the whole country with all property types.

However, “going ahead there will be a slower rate of house price growth over the coming decades compared to what we have seen in past decades”.

“There will still be opportunities for greater than average rates of return by investing in property but it will require more shrewd investment decisions than what have been needed over the last couple of decades.”

Mr Reardon said the type of house you purchase should depend on the location.

“If you are looking in mining towns in Western Australia the type will be different from buying a unit across the road from a hospital in a metropolitan city.

“Be location specific and also look at the type of tenant you want to occupy the dwelling, to determine the type of housing to suit.”

Mr Reardon told WILLIAMS MEDIA there is still very strong population growth in Melbourne at 2.3 per cent and Sydney at 1.6 per cent, at least double what the average is in the Organisation for Economic Co-operation and Development member countries.

“While we are still seeing house price declines it will be relatively short lived with such strong population growth.

“Those house price declines will turn around fairly quickly, and we will see more sustainable house price growth in the future.

“People should be looking at population growth as an indicator of house prices.

“A good indicator of strong population growth is areas that have economic growth and employment opportunities over the course of the coming decade,” Mr Reardon continued.

“This includes expenditure by government through schools, hospitals, new industrial developments.”

Tony Collidge, president of the Real Estate Institute of Tasmania said it is important to do your homework, and location is critical.

“A rental property in a really good location close to services, schools and bus routes is a lot better than something out of the way," Mr Collidge told WILLIAMS MEDIA.

“Also look at the condition of the property and make sure that everything is OK."

Mr Collidge said sometimes it's beneficial to have a lower yield in a better area than a higher yield in a more risky area.

“I would suspect quite often in areas where you get higher yield there is more risk and turnover, and also potential for more expenses like maintenance and running costs.

“In Hobart for example you can get returns above eight per cent in some of the lower socio economic areas but often the properties are always being damaged, there is constant turnover, and the level of maintenance and administration required to keep on top of everything is a lot harder than having a property in a better residential area.”

Source: https://www.therealestateconversation.com.au/2018/09/04/what-know-when-purchasing-investment-property/1536028809

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Director of Beller Group, Andrew Fawell has spent 28 years as a real estate agent and assuredly says the fast approaching spring property season is in transition.

“Stock is approximately 25 per cent down in both houses and apartments compared to where the market was this time last year, there is a definite shortage of stock out there,” says Andrew Fawell.

Combine this shortage with the opposing forces of tight lending criteria from banks and a softening of price valuations due to a fluctuating of the market, and buyers are presented with two real hurdles to jump prior to a property purchase.

“We expect the coming spring property season will test the mettle of both buyer and vendor alike. Despite this affected condition, I believe that with pragmatic common sense and planning, this problematic market can offer real opportunity.”

Know your lending criteria

There is no doubt that the new bank lending criteria has changed and is changing every couple of months.

I recommend that all purchasers seek a pre-approval and ensure that this is ‘stamped up’ every couple of months, as the lending environment is volatile and changing quickly.

However, the good news is that the banks will bend over backward for good borrowers.

A good borrower is defined as having a sustained track record for servicing all debts, longevity in the workplace and has a solid deposit!

Remember, banks look for ‘low risk’ borrowers.

Secure a correct valuation

Because prices have softened, so have valuations.

Yesterday’s value may not be the value of today.

As prices and therefore valuations are on a downward trajectory, purchaser’s need to be especially prudent with price expectations so that they do not have to make up the shortfall.

Essentially these are the two hoops that purchases need to jump through in this transitioning market, ‘pre-approval’ and ‘valuation’.

Andrew Fawell advises:

Look to secure finance with a second-tier lender as second tier lenders are quite accommodating at the moment. Don’t rely purely on the first-tier lenders, it pays to shop around and much like a medical practitioner, get a second opinion.

Align yourself with a good mortgage broker who knows how to get a deal through in a tricky market! Typically, these are people who have survived a couple of property cycles and know the tactics of navigation and negotiation. Ensure that you align yourself with a good broker who will advise you on what you can, and what you cannot afford.

Align yourself with a real estate agent you can trust, who is honest and can tell you truthfully about market conditions, not just what you want to hear.

Don’t get too clever and try and pick the bottom of a market, the market can, and does turn very quickly, it is more important to buy and sell in the same market.

Get cashed up and get pre-approval! There is a ray of sunshine amongst these spring showers and there are good deals to be done for the bargain savvy shopper.

For example, now is the time to look to scale up to a more expensive property through a property exchange.

Say for example you would sell a $750,000 property for $700,000, losing $50,000 but saving $100,000 on a $1.1 million property and buy it for $1 million.

The net position in the change over including some stamp duty savings on the purchase of $55,000 pays for the stamp duty on the change over.

There are economies of scale now buying in the top end of the market.

Look around, as now is the time to buy the property that you always wanted, but thought you could not afford.

In summary, the spring market is a transitioning market and will offer lots of opportunities for those who are prepared, have researched, and have the right relationships in place.

Lastly, remember, that banks are in the business of "lending money" and this transition will settle down at some point and the banks will eventually open up their purse strings again.

Source: https://www.therealestateconversation.com.au/blog/andrew-fawell/heres-how-navigate-the-spring-property-market/andrew-fawell-beller/spring

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

If you’re looking at getting into property investment, you’d probably love to secure one that has a tenant in place already.

After all, that means no vacancy rates and you can just hit the ground running.

But, is buying a tenanted property really all that it seems?

You might be surprised to learn that several adverse effects can come from purchasing property with an existing tenant.

There are three red flags to look out for to make sure what you see, really is what you get:

1. Special lease conditions

Imagine being half-way through settlement, and suddenly the tenant leaves.

The immediate income you’ve been banking on has vanished, so you need to reassess and do a complete 180 on your strategy.

Tenants are within their rights to break a lease in the event of the property being put up for sale – if their tenancy agreement includes special conditions that allow for this.

That’s why you need to read their tenancy agreement carefully to ensure they will, in fact, be staying on for the term that you’re expecting.

2. Are existing tenants pay current market rent?

You would be surprised how many rental properties are actually under rented right now in the market.

And if they’re under-rented, it can be tough to get that existing tenant to pay the actual market rent once you take over.

Sometimes, you might have to resort to getting them out of the property. And that can be more headache than it’s worth.

3. If there is a current lease in place

You would be surprised to learn how many people lease their properties to family, friends, or others without having a formal agreement in place.

So, you definitely can’t take it for granted that just because a property has a tenant, there is a formal lease. And when there isn’t one, you could face the tenants leaving unexpectedly before the property settles.

With the place a mess, and no bond, there’s no contingency for you to make claims against.

So, if you’re looking to invest in a property, don’t let the presence of a tenant sway you towards thinking it’s a better investment long-term.

Things can and will change, so make sure you tick off those boxes and protect your investment.

Source: https://www.therealestateconversation.com.au/blog/josh-masters/what-look-out-when-buying-tenanted-investment-property/buying-property-that

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Foreign residents were recently banned from buying homes in New Zealand, in order to impede housing inflation and rising vacancy rates. With similar problems in Australia, there have been discussions on whether the country should follow suit or not.

In her interview with SBS News, Property and Housing Management Researcher at the University of Tasmania Dr. Erika Altmann shared her insights regarding the proposed idea.

She said that unless one looks at it in a very specific point of view, curbing foreign investment even further will not necessarily solve Australia’s affordability crisis.

“Where more regulations might have some impact is in individual areas that have high concentrations of foreign investors, which are locations typically close to cities and close to public transport.

“But if you’re looking at the housing affordability landscape as a whole, it’s not going to have a major effect. This is a structural, historical problem. We can’t solve it just by taking out a small player out of the market, which is what foreign investors are,” she noted.

Dr. Altmann highlighted the need for a dedicated federal housing minster so that every issue furthering the problem can be discussed.

Those who think of the idea positively cannot be blamed. In fact, a lot of studies indicate that many Aussies put foreign investors at fault for the condition of the housing market.

According to SBS News, there was a 2017 survey, which showed only 18 % of respondents believed that foreign investors should be permitted to acquire residential houses in Sydney. A very small number of people (17%) expressed that the government is regulating foreign housing investment effectively.

To gauge the situation more, academics were asked about the effect of foreign investors in the Australian market. Program Director of the Master of Urbanism at the University of Sydney Dallas Rogers said that with the limited data at present, “[he doesn’t] really know yet.”

“Foreign investors make up a relatively small amount of money in the grand scheme of things, the overall housing market.

“But what we don’t know is what the inflationary impact is at the level of neighbourhood level. We don’t know what the inflationary level is at those micro scales, but at the macro level we know that it’s actually not that great,” he said.

Data from last year’s ANZ Bank Study showed that foreign buyers make up 13% of property transactions in known areas between 2015- 2016.

However, in the 2018 Foreign Investment Review Board’s (FIRB) report on the housing market, it was found that foreign investment dropped by two-thirds during the 2016-17 financial year.

Following the same trend, Chinese investment declined by around 50%.

Altmann had the same view and emphasised that there is a need to better monitor the market.

“The government’s reporting requirements need to be more transparent and regular. At the moment we’re relying on annual reports,” she said.

“Until we get a much better and regular look at the numbers, it’s going to be hard to get truly up to date figures.”

Thus, it is evident that a drastic step, such as foreign investment banning, to solve the problems of the home market would need a more careful and advanced study.

Source: https://www.yourinvestmentpropertymag.com.au/news/banning-foreign-investors-is-it-a-good-idea-253806.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

At the end of advertisements for investment schemes, you’ll hear the catch-all disclaimer, ‘past performance is no guarantee of future performance.’

It’s a fair enough statement to make, because professional advisors are cautious about the crystal-ball business.

While it’s a challenge to pick the peaks and troughs of a financial rollercoaster, history shows cycles are a well-established feature of real estate markets.

In my opinion, this means even those with the most basic understanding of property are aware that what goes up is likely to come down and vice versa.

This year, we’ve seen the effect amplified as home prices in our nation’s biggest property market, Sydney, begin to falter.

It begs the question for those that continued to plough on borrowing to their limits and buying with expectations the good times would last forever – what were they thinking?

The new normal

Human nature is a funny thing. After multiple property cycles I’ve seen it time and again where buyers get comfortable with ‘the new normal’ – whatever they believe that to be.

First time investors are particularly prone because the most recent cycle is all they’ll ever have known.

Imagine if you were one of the fortunate ones who managed to buy a moderately affordable Sydney near-CBD unit in 2012.

You have been enjoying extraordinary annual value growth and rental gains for the past six years.

If this was your first purchase then it must feel like the treadmill of real estate investing is a breeze.

This is not, and has never been however, how bricks-and-mortar works.

Interest rates can rise, rental returns can drop, days on market can blow out and, yes, property values can fall.

It’s for this reason I believe the current market retraction in our harbour city is not a bust, but a return to more normal market conditions of average annual single-digit growth over the long term with sustainable, but unambitious, rent rises once the market resets.

What’s different in 2018?

There’s one element this time around that’s throwing a spanner in the works.

We’re undergoing a perfect storm in finance making it increasingly more difficult to lock down a loan.

Moves in 2017 by the Australian Prudential Regulation Authority (APRA) designed to slow investor activity have been very successful.

They’ve, in fact, helped drive growth in investor lending well below the 10 per cent target the regulations were meant to achieve.

In addition, the current banking enquiry is causing a lot of nerves among the big institutions.

While at this stage, there have been no official recommendations from the enquiry, many lenders are applying rules that make it difficult for borrowers to get a loan approval.

Guidelines have become rigorous and while our clients are, for the most part, able to act due to strategic preparation, anyone flying solo right now will be doing it tough.

Is there an upside?

We are now in an environment where those who prepared for the downturn are ready to take advantage.

The very smartest are primed for the tighter lending guidelines.

It will be these investors who are set to profit from the next upswing.

If, however, you weren’t ready this time around, there are important lessons to be learned.

We have seen cycles before and they will happen again, so let experience be your teacher.

1. Keep liquid

It’s essential for anyone investing in property to remain ready for the inevitable.

I believe having ‘liquid equity’ is key. This is a case where you are not overleveraged and can access funds to take advantage of opportunities as they appear.

Why? Because over the coming few years, some of the best buying opportunities of the last decade will rise, and if you’re able to execute a deal, then lucky you.

2. Build in buffers

I don’t mean just having cash at the ready but allowing for changes in the financial environment.

For example, you must ensure you have a cash flow tolerance for an increase in interest rates approaching 7 per cent.

I’m not predicting this will happen in the near future, however rises will inevitably come.

If you haven’t already factored this into your planning then there could be difficulties ahead.

3. Keep impeccable financial records

There are situations now where the bank won’t just ‘take your word for it’ about household expenditure.

Loan applicants are being asked to front up with bank statements, and then need to justify their expenditure estimates and home budget.

Keep your records impeccably so you can show, without question, why you should be approved for a loan.

4. Stay on top of the numbers

As I’ve said before – lazy investors lose money! Stay on top of the figures to ensure you’ve got your rents at the right level, you’re taking steps to avoid vacancies in your portfolio and you’re getting the most from your financier.

Property is not a passive investment, and the current stage of the cycle will sort out those who’ve rested on their laurels.

5. Diversification

We are a nation of multiple property markets driven by various economic influences all playing their own tune.

The best way to ensure you aren’t stung is to diversify across a broad range of locations.

Sure, Sydney is slowing, but I can name plenty of other areas where the fundamentals are right for making a purchase now that will pay dividends in the future.

Seek expert advice and look beyond your region of comfort to ensure you have a well-balanced portfolio.

Being diligent might seem like hard work, but when a cycle turns, you find out why it’s so important.

If you need some expert assistance dealing with the current cycle, then call and let us show you what we can do.

Source: https://www.therealestateconversation.com.au/blog/steve-waters/lessons-falling-market/real-estate-market/real-estate-market-analysis

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Any good business person will tell you that having a large sum of money in your savings account is futile, especially while interest rates are at record lows.

They’ll say you should go out and invest your cash, so you can make a profit in the long term.

It sounds great in theory but with so many options out there, where do you turn?

Do you head for the ASX or invest in bitcoin? Do you put money behind a start-up business that’s set to soar, or do you purchase an inner-city apartment and put it up for rent?

If you do invest in property, do you buy local or head to a holiday town?

While it’s tough to know what your next move will be, putting your hard-earned pennies in bricks and mortar is one of the safest options for budding investors.

Here are four tips for finding the right investment property for you:

Decide on your objective:

Buying an investment property is a major financial decision so the first thing you should consider is whether you are looking for immediate rental returns, a property that can be negatively geared for your tax return or eventual capital growth.

Do you want to buy a fixer-upper, renovate it and sell it for a quick profit or would you rather get a tenant in and sit on the property until the market booms?

Remember, real estate is a longer-term proposition so knowing what you want to get from your property will help you to frame your search so that you’ll get the best returns.

Decide on the property type:

With inner city apartments, country acreages and seaside bungalows on the market, investors are spoiled for choice when it comes to real estate.

In general, independent houses offer better capital growth while apartments boast better rental yields.

Saying that, apartments often have extra levies to consider and independent homes can require hefty maintenance costs.

Each property type has its unique pros and cons so make a list to determine which one will help you achieve your personal finance objectives.

Consider the location of the property:

A property’s location should complement the dwelling type and objective you have chosen.

If you want to profit from an apartment, you should consider buying close to the CBD and if you want capital gains from a free-standing home, it might be worth looking into regional Victoria where house prices are beginning to boom.

You should also lookout for planned infrastructure improvements that may affect the house price trajectory of the property.

As a rule of thumb, stay close to local amenities and public transport services if you want to lock in a long-term tenant and ensure your home holds its value.

Seek advice from the professionals:

At the end of the day, buying an investment property can be a great way to build your portfolio and create wealth.

What works for one investor, may not work for another so it’s important to give some thought to your individual goals before putting down a deposit.

Property investment can be tricky so don’t be afraid to ask a financial advisor or a hockingstuart property manager about your next steps.

They dedicate their whole lives to helping buyers make a return from their investment which means their guidance could help you profit in the long term.

When in doubt, your hockingstuart real estate agent will help you to find the right investment property for your long term goals.

Source: https://www.therealestateconversation.com.au/blog/toby-parker/how-decide-what-type-investment-property-right-you/investment-property-australia

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Reaching the 25 million population milestone should be the catalyst for the creation of productive, vibrant and liveable cities that will underpin Australia’s future prosperity.

“Australia’s future rests overwhelmingly with our cities and their ability to become high amenity, high liveability engines of our economy,” said Ken Morrison, Chief Executive of the Property Council of Australia.

“Our population is growing strongly and most of that growth is occurring in our cities. We need to redouble our focus on policies that support investment, planning and collaboration to create the great Australian cities of the future.

“Population targets, decentralisation policies or adjusting immigration rates can’t allow us to take our eyes off the main game which must be our ability to create great cities for current and future generations of Australians.

“The growth of our cities is part of an international trend for cities to be a magnet for people, business, investment and economic and cultural activity.

“We’re not alone in needing to plan, invest and manage for change as the worldwide trends towards urbanisation gathers pace in this ‘metropolitan century’,” Mr Morrison said.

The drivers of urban growth were set out in the ‘Creating Great Australian Cities’ research published by the Property Council earlier this year.

It highlighted the growing economic importance of cities around the world, and set out a series of principles and recommendations based on the experience of other fast growing cities of similar size to Australia’s. These cities are capturing an expanding share of business, immigration, visitors, talent and capital flow.

The report found that Australian cities had strengths, including their economic performance investment attraction, higher education and natural environment but they were performing poorly in several key areas critical to success in the metropolitan century, including issues such as transport congestion, fragmented systems of governance, infrastructure investment and limited institutions at a metropolitan scale to manage growth.

“Our cities are at the heart of Australia’s economic, social and cultural life, attracting people, investment and services that drive innovation, creativity and enterprise,” Mr Morrison said.

“Any population policy that doesn’t strengthen Australia’s ability to create great cities of the future is completely missing the mark.

“Our cities are already a great competitive advantage for Australia, bringing together the people, services and infrastructure to drive our economic competitiveness.

“We need to keep investing in the right infrastructure, plan for a growing future and put in place smarter systems of metropolitan governance to capture the full potential of the metropolitan century while sustaining the quality of life and access to services that Australians value.

“We need to take on both the challenges and opportunities of the ‘metropolitan century’ and not run away from the reality that growing cities can be successful cities and great places for people to live and work.

“With the right planning, policies and ambition, we can create truly great cities for a growing Australia,” Mr Morrison said.

Source: https://www.therealestateconversation.com.au/blog/ken-morrison/our-cities-are-the-future-the-metropolitan-century/australian-population-growth

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

When it comes to claiming depreciation deductions for qualifying plant and equipment assets*, property owners should be aware of certain tactics which can increase their deductions sooner.

This will increase their annual cash flow and allow them to realise the benefits from their investment property sooner.

One of the simplest ways to do this is to claim immediate write-off or to place low-value or low-cost assets into a low-value pool.

Certain assets may qualify for either an immediate write-off or the low-value pool, depending on the value of the asset at purchase.

For example, if an asset is valued at $300 or less, the owner will be entitled to write-off the full amount in the first year.

If the asset is valued at $1,000 or less, increased rates of depreciation can be applied through the low-value pool.

Low-value pooling

Low-value pooling legislation allows owners to group qualifying depreciable assets in a pool which will depreciate at an accelerated rate. Assets normally depreciate at a pre-determined rate set by the ATO, which varies between assets. Property investors who acquire low cost assets and choose to place them in the low-value pool can claim them at a rate of 18.75 per cent in the year of purchase, regardless of how long the property has been owned and rented. From the second year onwards the remaining balance of the item can be claimed at a rate of 37.5 per cent per year.

Low-cost assets

A low-cost asset is a depreciable asset that has an opening value of less than $1,000 in the year of acquisition. This can include things like cooktops, range-hoods, exhaust fans and blinds.

Low-value assets

A low-value asset is a depreciable asset that has a written down value of less than $1,000. That is, the value of the asset is greater than $1,000 in the year of acquisition. However, the residual value after previous years’ depreciation is less than $1,000. Assets meeting this classification are placed in an itemised, low-value pool. An example could include a hot water system acquired with a value of $1,100. In the second financial year of ownership, the asset would have depreciated to a written down value less than $1,000, which would make it eligible to be placed in the low-value pool.

* Under new legislation outlined in the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017 passed by Parliament on 15th November 2017, investors who exchange contracts on a second-hand residential property after 7:30pm on 9th May 2017 will no longer be able to claim depreciation on previously used plant and equipment assets. Investors can claim deductions on plant and equipment assets they purchase and directly incur the expense for. Investors who purchased prior to this date and those who purchase a brand-new property will still be able to claim depreciation as they were previously. To learn more visit www.bmtqs.com.au/budget-2017 or read BMT’s comprehensive White Paper document at www.bmtqs.com.au/2017-budget-whitepaper.

Article provided by BMT Tax Depreciation.Bradley Beer (B. Con. Mgt, AAIQS, MRICS, AVAA) is the Chief Executive Officer of BMT Tax Depreciation. Please contact 1300 728 726 or visit www.bmtqs.com.au for an Australia-wide service.

For many debt-ridden households on the precipice of retirement, downsizing is the only way to go.

In a statement, BIS Oxford Economics residential property senior manager Angie Zigomanis said while the growth in the number of downsizing retirees has been slow, increasing mortgage pressure would likely boost this rate over the next years.

In fact, the proportion of households nearing retirement who still have mortgages increased from 20% in 1996 to 42% in 2016.

"This would suggest that households will increasingly still have a mortgage once the occupants reach retirement age," Zigomanis said.

She argued that unless the homeowners choose to remain in the labour force, there will be a many who are likely to sell their homes to move into a lower priced – typically smaller – dwelling, or move somewhere else entirely, to reduce their debt.

A separate study by State Street Global said current retirees are not downsizing to save money. The study found that while around 30% of the Australian working population is mulling over using downsizing or equity release instruments to make up savings shortfalls in retirement, only 3% of actual retirees have done so.

“In reality, retirees are not tapping into their home equity at the rate that younger generations expect. For one thing, smaller is not necessarily cheaper. Moving to a smaller home near an urban centre may not actually reduce costs given increased real estate and cost of living expenses,” the study said, as quoted by Nestegg.com.au.

Source: https://www.yourmortgage.com.au/mortgage-news/downsizing-is-fast-becoming-the-only-option-for-debtridden-retirees/253421/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

It is without a doubt that the market is spiralling down as prices continue to decline particularly in Sydney and Melbourne. While the expectation of a market crash is unlikely, industry watcher Tristan Harrison said in a think piece on The Motley Fool Australia that there are triggers that could send prices hitting unexpected lows.

One factor is the stricter assessment of borrower expenses. Harrison said banks are being more conservative in how they use the household expenditure measure (HEM) to assess basic living expenses. This could result in borrowing capacity to shrink by 10% to 20% if banks started factoring in higher living expenses.

"The Australian Prudential Regulation Authority (APRA) has sought to reduce the amount of loans that are lent at debt-to-income levels of more than six times," Harrison said, noting that the current Sydney housing market has an average of nine times debt-to-income and Melbourne eight times.

In fact, a third of loans have actually been given out at more than six times debt-to-income. As a result, Harrison argued that borrowers would not be able to buy homes above a certain price if banks adhere to this new ratio.

Access to finance will be stricter once new credit reporting applies. While banks rely on borrowers to disclose their debt, they new rules compel them to get the full debt profile of potential clients.

"Not only may mortgages become harder to get, but all other forms of debt could be harder too. This may stop a lot of people who borrow to fund the deposit," he said.

Meanwhile, interest-only borrowers face the risks of higher repayments as their loans turn into principal and interest.

Lastly, the foreign segment has not been performing quite well as of lately. Foreign buyers in the past represented roughly 20% of new housing purchases, but with Chinese nationals finding it hard to get money out of China and regulators tightening investor lending screws, demand has been dismal.

With all these factors, Harrison stressed price falls are not hypothetical.

He said: "I don’t think we’ll see a 20% fall in prices in one year, but the next two or three years could see numerous months where prices fall in Sydney and Melbourne by more than 0.5%. I wouldn’t be surprised to see prices another 10% lower in two years compared to today,"

Source: https://www.yourmortgage.com.au/mortgage-news/what-could-trigger-a-housing-market-crash-in-australia/253246/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Property investment is becoming increasingly challenging for first-time investors wanting to enter the market.

Property investment is becoming increasingly challenging for first-time investors wanting to enter the market. With house prices still high despite a downturn in some parts of Australia, it begs the question: how can first-time property investors get a head start on the property ladder?

As property investing is largely about securing high-capital-growth assets, first-time investors are best to consider multiple factors that will increase their capital growth – avoiding main roads and ensuring there’s off-street parking, for instance. It’s also important to view multiple properties and research the market. While investing in a property for the first time is daunting, with the right strategy and focus, and some patience, you can achieve your dream of building a property portfolio and make some smart moves to increase your chances of getting that return on investment that you’ve always wanted.

Chris Gray’s 7 tips for first-time property investors

Know what you’re looking for

Establish which suburb and type of property you would like to invest in early on, as this will save time. Consult property data and real estate listing websites to get an idea of which suburbs have the best growth prospects. Similarly, centre your search on properties that prospective tenants would find appealing, such as those with at least two bedrooms, easily accessible parking and plenty of nearby amenities. After all, a tenanted property means a reliable income stream.

Concentrate on the numbers

Many first-time investors fall into the trap of making an emotional purchase decision, leading them to pay more than a property’s true worth. While a property’s appearance and lifestyle benefits are important, it is essential to concentrate primarily on what the numbers say. If you’re unsure, consult an independent valuer. They should have a good understanding of the typical prices in your area and will be able to provide you with an unbiased assessment of a property’s true value.

Establish a savings strategy

As the current housing market presents a considerable challenge for young people, first-time investors should determine a savings goal well in advance. That way, they can develop healthy savings habits early on. These can take time to develop, regardless of whether funds are being borrowed from family or the bank. However, the sooner the habit of setting aside money from wages each month is established, the better. When developing a savings plan toward a future investment, make sure you take into account rising property prices – by the time you save a deposit, a property could easily be $50,000-100,000 or more.

Educate yourself about the sales process

Navigating auctions and private treaty purchases can be a daunting prospect, especially if you have never purchased a property before. To ensure you’ve bought well, it’s important to get familiar with different sales methods, as this will give you greater confidence when it comes to making an offer. If you have the time, it’s also worth attending a couple of auctions in advance to observe different styles of bidding. When auction day comes around, stick to your budget, maintain a level head, and remember there will always be another property.

Have your finances pre-approved

Time is of the essence when negotiating a property sale. You can often secure a lower purchase price by having a signed contract a few hours before someone else. Many buyers spend large amounts of time looking for a property only to have their mortgage application rejected. Having pre-approved finance gives you the ability to move quickly and lock in a purchase when you find a good property.

Consult the professionals

Getting advice from a team of professionals such as a buyer’s agent, professional valuer and building inspector will help you find the perfect investment faster. While these experts come at an added cost, they can be well worth the investment. For instance, a buyers’ agent can manage the property search and sales negotiation process on your behalf and will often have access to properties before they hit the market, giving you an edge over other buyers. It’s also worth taking the time to build a relationship with a real estate agent. Even if you don’t end up buying the property they are showing you at present, they have a thorough understanding of the market and the property supply and demand in a given area.

Consider a second-hand investment

Remember, your investment will not be your home. Do not worry if not everything about the property is 100 per cent perfect – a place that’s liveable enough to rent out straight away is often the most realistic and affordable option for new investors. If you have an eye for improvements, investing in a place that needs some renovations presents a real opportunity for equity.

However, when purchasing a property to ‘flip’, beginners should start off with small improvements rather than a complete structural renovation. That way, not only can you take your time saving and planning for a complete renovation but seeing the difference between the property’s actual worth and what you can make it worth enables you to fall in love with your first investment (from a numbers perspective), as you envision its full potential.

Residential property is a great investment option, so first-time property investors should rest assured that any medium-term pain involved in saving for an investment is worth the financial benefits down the track.

Source: https://www.yourinvestmentpropertymag.com.au/news/how-to-own-a-property-during-an-affordability-crisis-252897.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

The Real Estate Institute of South Australia (REISA) on Wednesday announced that South Australia was able to carry over its record breaking median price from last quarter to June quarter this year, as well as register an increase in both capital growth and sales.

Recent statistics showed that the South Australian median price increased 1.19% over the previous quarter, and saw a robust 2.41%, increase from the same quarter last year.

The unit and apartment market, meanwhile, saw a slight drop in the median price compared to the previous quarter and the same quarter in 2017.

With the release of the Valuer-General’s median house price data for the 2018 June quarter and the impressive 3.87% increase in capital growth in 2017 across Adelaide, REISA President Alex Ouwens said that it appeared buyer confidence was well and truly back in the capital’s real estate market.

“When we hear that the eastern States have come off the boil and into cool water, Adelaide is defying the trend. We are by far the most affordable and liveable city in Australia and these results clearly attest to that,” he said.

Ouwens also highlighted the significance of the sales hike in the property market over the last quarter. In the June quarter, 4, 223 houses settled across the Adelaide metropolitan area, up from the previous quarter and only slightly down from the same quarter last year. Sales across the entire State also climbed from the last quarter.

“The sales figures are solid and represent the continuing resilience of the South Australian real estate market,” Ouwens said.

Among the suburbs, the largest growth over the year belonged to Henley Beach South, Smithfield and Henley Beach. Other significant growers included Athelstone, Norwood and Craigburn Farm.

Perennial Number 1 Morphett Vale, Mawson Lakes and Parafield Gardens were also identified as top selling suburbs in terms of recorded sales over the March quarter.

These top performers in sales and growth exemplified two key drivers of any purchaser’s decision – location and affordability.

Ouwens noted that REISA is open to discussing compulsory professional development, and the next steps in making South Australia the most competitive State to buy property with the State Government. He also said the real estate group was welcoming foreign investment with the submarines and space exploration, but faced difficulties in this area owing to the 11% tax on new property purchases by foreigners.

Source: Your Investment Property, 13/08/2018, https://www.yourinvestmentpropertymag.com.au/news/why-should-you-invest-in-south-australia-253166.aspx

Much has been said about Australia’s housing affordability crisis, but the basic idea doesn’t sit well with property investor Bushy Martin, who argues that the real problem lies within accessibility and consumer expectation, as reported by news.com.au.

In his interview with the news website, Martin acknowledged that some properties are really unaffordable for most, especially in Sydney or inner Melbourne. However, he emphasised that people focus too much on the “symptoms rather than the cause,” adding that “it’s more of an accessibility and expectations issue than an affordability issue” that the country is facing.

“It’s a dynamic multifaceted issue where isolated reactive and ill-conceived interventions for the few are likely to have unknown and unintended far-reaching consequences for the many.

“So do we really have a housing affordability issue? Nah,” he said.

Martin implied that those who are having a difficulty in purchasing their houses are first time home buyers, and he said that the current system should not adjust to them. Instead, they should start to manage their short-term expectations, save, and, at the same time, consider rentvesting. This is given the fact that these first time home buyers only account for one in seven property purchasers.

“Should we be turning housing policy on its head to cater for the few by meddling with the market that could potentially have significant impacts on the many?” he asked.

While there maybe affordability issues in some areas that are in demand, investors and homebuyers alike must be reminded that these properties can be bought if one works hard for them.

As an example of how to manage the current market conditions, Martin shared how he and his wife were able to complete an international portfolio of 12 properties.

They achieved it by rentvesting — the act of investing in an affordable property elsewhere while renting in their ideal location.

“We made a conscious decision to rent in the location of our choice at a fraction of what we’d have paid in a mortgage, and we started putting all our energy into investing our income into assets — we bought property in affordable, fringe areas on the outskirts of Adelaide.”

Martin stresses on the significance of putting value on what one can afford. A lot of Aussie must learn to “separate access from ownership” and understand that one doesn’t need to have the best house, or any kind of property, in the best suburb in order to be “living the dream”.

Source: https://www.yourinvestmentpropertymag.com.au/news/how-to-own-a-property-during-an-affordability-crisis-252897.aspx

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

The first impression of a property can be make or break - here's how to give your property the best chance of selling.

When it comes to selling, homeowners naturally reach for the paint brush or tool kit in the hope of making their home more profitable when it goes to market.

However, with first impressions a crucial element in the purchase journey, it is the styling of a room that can make or break a prospective buyer’s opinion of the home, and even add thousands onto the final sale price in the process.

In order to make an impactful statement and create a space that is visually appealing, we have compiled a guide to preparing your home for sale.

1. If you can, hire a property stylist

A property stylist is qualified to assist with maximising the visual appeal of your home, and in turn, can help in achieving a higher purchase price.

We recommend working with your agent first to see how your home competes in the primary market. This then provides an understanding of the level of styling that is expected when selling in your neighbourhood.

It is important to remember that in a competitive market, every impression counts. A property stylist is able to cut through the clutter, creating a ‘wow’ factor, and eliminating any opportunity for doubt from prospective buyers through incorrect furniture choices and styling.

2. Analyse your space

If you can’t afford to invest in a property stylist, it is important to begin the preparing process by analysing your home. Inspect the interior finishes, natural light vs. artificial light, is the space large or is it on the smaller side, how high are the ceilings and so on.

These factors will become your palette allowing you to highlight architectural features of the home, whilst creating visual harmony.

It is vital that when selecting furnishings you consider colour and material as these can affect how the room feels when complete.

3. Remove personal items

If you are living in your home throughout the sale campaign, it’s important to depersonalise and declutter your home so when prospective home buyers inspect the space, you want them to be able to clearly imagine themselves living there, not visiting a friend.

Remove personal items such as photos and accessories, and instead inject personality through the use of carefully selected furniture, artwork and cushions.

4. Adopt interior trends to bring a fresh look to the space

In order to bring a fresh feel to a space, look to utilise current interior trends to boost a room’s appeal. Currently we are seeing the revival of 60s and 70s colour trends and finishes; think burnt orange and green, along with the introduction of velvet sofas, ottomans and feature chairs.

Combine these with the ever-popular indoor plant for a homely feel.

Scandinavian design is here to stay, so if the above is a little too bold for you, we are certainly seeing tonal value from light timbers and black accents.

5. Avoid making common mistakes

In the rush to get your property ready to go on market, it is easy to make avoidable errors. Here are the top three common mistakes that are critical to steer clear of:

1. Cluttering a space with too much furniture

2. Presenting each room in the home with a different style of furniture

3. Not cleaning the interior and exterior

Hiring a stylist or purchasing new interior items can seem like a costly up front exercise, but time and time again, houses that are styled properly generally achieve a higher sale price - some have experienced 10 per cent higher - so the proof really is in the pudding!

Source: https://www.therealestateconversation.com.au/blog/donna-dpaul/how-maximise-your-homes-selling-potential/kontrast-interiors-donna-dpaul/present

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Here's why lazy investors are doomed to lose money.

I believe one of the great misnomers in property investment is the idea real estate is a passive vehicle that doesn’t require the owner to raise a finger in effort beyond lifting a pen and signing the purchase contract.

Set-and-forget is a view that’s long been sold as the secret to riches through bricks and mortar. Well, I’m here to burst your bubble because in my experience, lazy investors eventually lose money.

Why the myth sells

It’s easy to see why there’s so much appeal for the fiction of set-and-forget investment.

What could be easier? You purchase a holding that’s effectively paying for itself. You then sit back and wait, feet up with a good book or podcast and let a market cycle or two do their work until it comes time to offload the portfolio for a massive profit. It’s easy money because your real estate works to build wealth even while you sleep.

The problem, however, lies in one simple truth. Property markets and the influencers that drive them are dynamic and if you let go of the wheel, you’re bound to crash the vehicle.

What could possibly go wrong

One of the most common ways we see lazy investors lose out relates to cash flow drying up.

Cash flow must be monitored. It’s a dangerous path to tread if you just buy the property, collect the rent and pay the mortgage.

Your investment’s cash flow is dependent on many elements and high among them is maintaining market rent. Keeping up to date with the rental market takes effort and if you fail to stay well informed, you will lose money.

If your holding is in a sector and/or area dominated by rising vacancies and falling tenant demand, for example, you might find yourself with a vacant property and little idea of why. It’s tough to jag a tenant when everyone else is pricing more competitively.

Remember this too – it takes a long time to catch up on a week’s lost rent, even if you do somehow achieve a premium.

If you eventually get $350 a week when everyone else is getting $330, but you sat vacant for just two-weeks longer to find that tenant, it will take 17-and-a-half weeks for that $20 premium to make up the difference. That’s about four months of constant tenancy. With rentals, a bird in the hand is worth about 10 in the bush.

Conversely, if you fail to keep up with appropriate rent rises, you’ll be locked out of maximising your return – particularly if your tenant is on a long lease. Start tracking local rents at least two-to-three months before the lease expires.

Keep your interest

I say it time and again – property investment is a finance game.

When interest rates move (and they inevitably will) you need to be right across your current arrangements with the lender to ensure you’re maximising your position.

Those who rest on their laurels and don’t check on competitive finance terms are missing the chance to take advantage. Get onto your financier or broker and request a reduction because if you don’t ask, you don’t get. In today’s finance environment, it may be a different example.

Something as simple as monitoring when an interest only 5-year term expires and rolls over to Principal and Interest may effectively add 75 per cent more to your mortgage repayments.

Know your tenants

It’s imperative to keep an eye on the macro economy of your investment suburb. See what sorts of tenants are driving demand the hardest and cater to their requirements.

Are there plans to establish a new university nearby? Maybe you need to increase the number of bedrooms and bathrooms in your holding.

Is your tenant demographic changing from blue-collar to white-collar workers? Perhaps now is the time to refresh your home and attract a high-income earner.

Is a major employer bringing more transient workers to town? Consider furnishing your rental for top dollar.

Different property, new challenge

Some consider units to be more set-and-forget than houses, but I think both need attention. It’s just the challenges are different.

While units may seem less taxing in terms of maintenance, there’s the machinations of strata ownership to deal with. If you’re not a member of your body corporate or strata committee, if you’re not reading the minutes from the AGM and if you’re not voting on resolutions, you’re foolish.

Ninety eight per cent of investors don’t get involved and as the old saying goes, decisions aren’t made by the smartest people, they’re made by those who turn up.

In a body corporate, motions will be passed and these could be improvements or repairs set to cost you thousands, so have your say.

Be a business owner

The key to success is treating your multi-property portfolio like a collection of small businesses.

Imagine if business owners created a cash flow and then said, “That’s me! I’m done! Now to just sit back and wait for this business to grow and flourish all by itself!” It’d be a sure path to a financial crisis.

Focus on the profit and loss rather than the balance sheet. What this means is focus on the day to day cash flow of your portfolio rather than the day to day change in the value of your portfolio. The increase in value to the portfolio will come if you’ve got the asset selection right, however, if you’re not in touch with the cash flow, all the equity in the world will mean nothing if you can’t service the debt.

If you don’t constantly work on your portfolio, you’ll eventually leave money on the table or see equity and cash flow ripped from under you.

If you’re a hopelessly lazy investor, then I’ll be brutal – property investing isn’t for you so go buy shares.

If you need to get some motivation, I suggest periodically remembering how much money you’ve got on the line. That should instantly awaken you to the importance of being involved in your holdings because a million dollars’ worth of debt is serious.

Finally, have someone outside of your circle review your situation. Even I have my business partner regularly run a fine-toothed comb over my portfolio, because it’s smart to be active.

Remember, speculation and inactivity are the mothers of all evil when leveraging debt!!

Source: https://www.therealestateconversation.com.au/blog/steve-waters/the-easiest-way-lose-money-property/tips-investors/advice-investors

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

People buying strata-titled apartments or townhouses have been warned to do their homework before purchase to ensure they fully understand the financial position and personalities within the property.

“You’re not just buying the residence, you’re also buying into a body corporate with shared common property and other owners,” Archers the Strata Professionals partner Grant Mifsud said.

“People are buying strata-titled properties every day in Australia but often they don’t fully understand what a body corporate is all about and whether the scheme has any problems that may be of concern.”

Mr Mifsud said while most strata schemes were well managed and maintained communities, there could also be financial, legal, administrative and emotional challenges for buyers whether they be owner-occupiers or investors.

Buyers should investigate the Body Corporate records to determine whether they are financially and emotionally stable and well managed, he said, while buyers may engage a professional body corporate record search agent trained to prepare a report on any potential problems.

Mr Mifsud said the five key areas where bodies corporate experience problems include their finances, common property defects, legislative compliance, body corporate management and disputes.

“A problem in one of these areas can easily lead to problems in other areas,” he said.

Mr Mifsud said “the budget” is the lifeblood for bodies corporate and under-budgeting the administrative or sinking fund levies for the strata scheme can have repercussions for several years, particularly if there are issues for the building such as water ingress or structural damage.

“A solid program of maintenance, good recordkeeping, reporting and a healthy sinking fund are all important tools for maintaining common property,” he said.

“A body corporate also needs good leadership to avoid stagnation and disputes. It is possible for a building to become derelict or invaded by toxic personalities and shockingly quickly. Since apathy usually goes hand in hand with stagnation of action, the longer it continues the larger the cost both financially and emotionally to eventually get the building back on track.”

Mr Mifsud said external and internal disputes affecting bodies corporate cause major problems all too often usually due to the lack of knowledge or personal agendas making life particularly stressful for the committees charged with decision making responsibilities.

“But knowledge is power. Knowing what issue might arise and how to spot them, can help committees, owners and buyers alike navigate the often complex world of shared investing and community living.”

Source: https://www.therealestateconversation.com.au/blog/grant-mifsud/be-prepared-when-buying-strata-scheme/grant-mifsud-archers-strata-professionals

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

With tax time well and truly upon us, here's how to prepare your investment property.

Tax time is upon us and many Australians are once again finding themselves unprepared. If you have an investment property, then your accountant is relying on you to provide them with a slew of accurate information to help them maximise your returns. Whether you’re new to owning an investment property or simply know you’ve been a little lax in past years, this guide will help you to be prepared for this next financial year and into the future.

The documents you should have at the ready

To help you make the most of your investment property, you’ll need to keep detailed records of all your expenses. When you’re preparing to head in for your appointment with your accountant, be sure to bring along your loan documents. If your property is new, you’ll need to take along the records from your sale, including your contracts, conveyancing documents, borrowing expenses, title deed, depreciation schedule (if you have one) and a record of any additional costs that went into buying the property.

If you’ve been putting your investment property to work in the rental market in the past year, then there are additional documents you’ll need. To begin with you’ll need proof of earned rental income and detailed records of all your expenses. You’ll also need to provide evidence of any periods where your property was used privately or was your primary residence. If you were unsuccessfully trying to rent it out at any time, then proof of your efforts can help with your deductions.

Deductions you can claim for

For new investors, knowing what deductions you can claim is often the biggest concern at tax time. For your initial tax periods you can claim for things such as:

loan interestrates and taxes (including council and water rates and land tax)property management feesinsurancebody corporate feesgardeningcleaningand repairs and maintenance relating to periods where the property is occupied by a tenant.

If you’ve been operating an investment property for several years, you can also claim deductions for capital works (also known as building costs) and borrowing costs.

It’s important to note that you only claim deductions for the periods where the home is occupied by a tenant, which is why it is so important to keep thorough records of your tenant history and rental income. Incorrectly lodging an investment property tax return can result in fines and penalties.

How to be prepared for next year

Feel like tax time got away from you this year? Ensure you are ready for next year by creating your own record keeping systems. For physical documents, such as contracts and conveyancing documents, get a document filing system that will allow you to group them by date or document type so you can easily find exactly what you’re looking for.

Track all your rental payments and expenses using a spreadsheet or even professional software. You should also get into the habit of scanning all your receipts so you don’t have to start a manic search on June 30 each year.

Source: https://www.therealestateconversation.com.au/blog/josie-galati/how-prepare-your-investment-property-now-that-tax-time-here/property-investment

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Five top tips to avoid the downsides of buying property with your family.

With property prices nationwide still making ownership unattainable to many, families are looking into alternative methods to get onto the proverbial ladder.

One such method that is on the rise, particularly for young professionals, is co-owning with their parents. Children being helped out by the ‘bank of mum and dad’ is far from a new concept, but in this modern world has had a new lease of life for families searching for a smarter way to purchase property.

When surveyed, 37 per cent of Australians said that they would consider co-owning with a family member or friend, if it would make purchasing property more affordable.*

However, going into property with family carries its own set of risks. Despite a close bond, there are many pitfalls to purchasing with siblings or parents, ones that can be avoided by taking careful steps to ensure you have a formal co-ownership agreement in place to protect all parties.

Founder and CEO of Kohab, the world’s first digital platform, community and marketplace for co-ownership, and expert in the space David Dawson says, “Buying property alongside family is a great way for younger Australians to purchase property in an environment where they might not be able to do it alone.”

Here, David offers his 5 tips to families wanting to purchase property together:

Decide who can afford what

As with families, no co-ownership agreement looks the same. You may decide that it will be a 50-50 split between the two parties or 70-30 or three parties on title at 40-30-30. Parents may require their children to pay rent on the portion of the property owned by the parents, in order for them to service their part of the loan. What is key is making sure that this is all documented in a legal manner and understood by all, should there be any unforeseen hiccups further down the track.

Document your roles and expectations

Whilst in a dream world we would all have the same views on everything, that’s not always the case. I can’t stress enough how important it is to be clear and agree on your roles and expectations of co-ownership to avoid any disappointment down the line and to ensure that all parties have a smooth and beneficial experience of co-ownership.

Have an exit strategy in place

How parties exit a co-ownership purchase is one of the main questions I encounter from families. Make sure that exit options are clearly defined. It could be that the parties agree on first right of refusal to purchase the exiting parties share, or another co-owner is introduced by the leaving party or the property is simply sold on the open market and the sales proceeds split according to the per centage of ownership. This will ensure that leaving doesn’t impact negatively on the parties who want to stay. Co-ownership isn’t necessarily a forever arrangement, people’s circumstances change.

Be Mortgage aware

It's critical to obtain the right mortgage. Look for a mortgage that allows multiple parties to borrow against the one title. There are loans in the market place where serviceability can be split according to your individual percentage of ownership. For example, if a $800,000 property is purchased between two co-owners at 50-50 each, the co-borrowers should look for a lender that assesses their serviceability based on their income of their portion of the loan only. This means that if both parties combined have a $600K loan on a $800K asset, they need to be able to service $300K each and not $600K each.

Make sure you have a co-ownership agreement

As you can see, there’s many ways that this process can become a negative experience, but that really doesn’t need to be the case providing you have a co-ownership agreement in place, outlining all of these scenarios. Co-owning with family may seem like a no-brainer, but it’s always important to have legal agreements in place to protect you all.

David continues, “With 70 per cent of people surveyed by Kohab* saying that they wouldn’t be able to afford property in their chosen area, co-ownership allows families to overcome this hurdle and purchase property in their preferred location. In this day and age, co-ownership will undoubtedly be the way forward for many people, so taking these actions will ensure the experience is positive and beneficial to all parties involved.”

* Independent research was commissioned and analysed by Kohab. The data is based on the analysis of over 1,000 Australians over the age of 18 in February 2018.

Source: https://www.therealestateconversation.com.au/blog/david-dawson/avoid-the-pitfalls-buying-property-with-family/co-ownership-property/buying

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

It’s a common mistake made by many first-time investors – delaying an acquisition due to a cooling market.

It’s a common mistake made by many first-time investors – delaying an acquisition due to a cooling market. So why can it be wise to buy in a downturn?

It’s widely known that property markets are cyclical and will experience ebbs and flows. However, when any given market experiences a slowdown, many investors, particularly novice investors, will defer buying a property because they’re deterred by the widespread negative sentiment. Acquiring an investment property in a cooler market can be highly beneficial, though.

Here are 4 reasons to purchase an investment property when the market is idling.

1. Fewer buyers. You’ll face less competition because many investors will wait to make an acquisition until the next upswing in the market. Unfortunately, many investors will wait too long and miss out on the capital growth in the next upswing.

2. Wider choice. Typically, there will be a significant increase in housing stock on the market during a cooler period. Subsequently, buyers will have a wider choice.

3. Value for money. With less buyers and more sales stock, sellers are forced to price their properties more competitively meaning investors can secure a better deal.

4. More control. With fewer buyers in the market, investors can have more control over contract negotiations to ensure clauses and terms of sale are weighed in their favour.

Some of the smartest investors follow the well-known saying “buy straw hats in winter” and the same applies to property – buy great properties when no one else is buying.

Source: https://www.therealestateconversation.com.au/blog/damian-collins/4-reasons-buy-cool-market/damian-collins-momentum-wealth/first-time-investor

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

As banks tighten their lending criteria for would-be homebuyers, the market is seeing longer listing times and stagnant property prices, particularly on the east coast.

Real Estate Institute of Australia president Malcolm Gunning said this phenomenon is quite apparent in Sydney, where homes were taking more time to sell. Citing recent data from CoreLogic, Gunning said homes in the capital were selling in 43 days on average, compared to the 31 day average from the same time last year.

Hobart remained the fastest selling capital city, with properties only taking 30 days to find a buyer. Meanwhile, Darwin has the slowest turnover with properties staying on the market for around 93 days.

Gunning noted that under current market conditions, technology and skilled professionals are most sought after by vendors as trusted advisers.

“Selling real estate is not a walk in the park. Gone are the days of the boom market where agents were able to quickly sell properties with limited marketing. We are already seeing that the current conditions are putting a strain on [the] low-cost models which rose to prominence at the height of the market," Gunning said.

The Australian property market is currently witnessing a rationalisation of agents due to tighter lending criteria. Gunning said this process would result in an environment where more experienced agents take over the market.

"This will encourage an environment where those agents that are better qualified, more skilled, from respected established agencies with strong local community involvement, will begin to dominate,” he said.

Source: https://www.yourmortgage.com.au/mortgage-news/stricter-lending-rules-are-making-it-hard-to-sell-properties/252199/

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.