Very Interesting

Official interest rates stayed level at 2% again this week and look like staying low for some time (or even falling further). This is indeed very interesting if you own an investment property.

Interest rate percentage

Interest rates stay low

Many people think the property market is controlled by interest rates but recently we have seen Sydney post negative growth while Brisbane is going ahead steadily. There is clearly more going on here.

Supply and demand ultimately control any market and property is no different. Sure, things like interest rates, employment, business growth and even politics all affect the market but it’s not one factor alone.

The Sydney market has topped and pulled back in recent months so southern buyers are increasingly looking at SE Qld. Properties around Brisbane and the Sunshine Coast are relatively cheap with good rental returns and continuing capital growth. At Investment Property HQ we have some dual occupancy houses in strong growth areas of Brisbane with over 6.5% rental return so this pays the mortgage and then some!

Want to know if you can grab an investment property and let the tenants pay if off for you? Find out now. We’ll let you know what you can borrow and afford to buy. Then make an informed decision.

Pim Stort has well over 20 years experience as a professional investment adviser. Now he’s available at to help you determine what you can do to improve your financial standing. No cost and no obligation at all. Take advantage of this offer now and give Pim a call on 0412 542 316 anytime 7 days or contact us at iphq.com.au. Take the step because no one else will take it for you!

House

Property Fact Vs Fiction

News of change in the property market fills newspapers constantly. You hear contradictory stories and it just leaves you confused. Are you reading property fact or is it opinion? What’s going on?

Remember that most mainstream commentary comes out of Sydney and Melbourne and is written by journalists who may need to knock something up in 20 minutes. They look for sensationalism and may even just regurgitate their fellow journalists views. As each property exists only in one suburb, there is usually little relation to what’s going on in another town, city or state. In fact, the Australian property market cannot be thought of as one market. It consists of hundreds or even thousands of markets driven by very different fundamentals. Things like employment, schools, shops, transport, hospitals, lifestyle, migration, demographics and much more.

Statistics can also confuse. It’s easy to see why when you’re told Sydney’s average home value has risen by 15.9% over the past year but actually fallen by 0.2% over the last week to 25 Oct 2015. Your conclusions will depend on which figure you’re shown.

Acting on a headline written by a distant journalist is the worst possible way to buy or sell property.
It’s essential to talk to an expert who lives and breathes property every day. At Investment Property HQ we’ve got our finger on the pulse and are happy to share our expertise, knowledge and experience at no charge.

I know handing over the job requires a leap of faith but with today’s busy lifestyle, its essential. You already do it with your doctor, dentist, lawyer, accountant and other professional advisers so go with it for your property investing too. Your financial security is serious so don’t treat it like a hobby. It’s a big deal and now is the best time to take action. SE Qld is strong and filled with awesome property opportunities. With Qld’s high rental yields, you’d be surprised what you can own.

Investment Property HQ is Sunshine Coast based and has thousands of quality properties as well as decades of advisory experience. We deal in property fact. Find us at www.iphq.com.au or call me direct on 0412 542 316 and find out what’s possible for you. We’re here to help.

Pim Stort

Do The New Lending Rules Affect You?

You may have heard that banks and other lenders have been required to implement new lending rules to reduce their lending to property investors. What’s the real story and has this changed how much you can borrow?

The Australian Prudential Regulation Authority (APRA) is our financial watchdog and keeps our financial system secure by overseeing all it’s participants. With the serious increase in investment borrowing in Sydney and Melbourne, APRA had concerns people would extend themselves too far.

New Lending Rules Affect Loans

New Lending Rules Affect Loans

Future economic changes could affect any over-extended investors and the broader housing market if many were pressured into forced sales. This would be most likely to happen due to financial hardship caused by unemployment or rising interest rates.

To put the brakes on this lending, APRA has restricted the number of loans banks can advance. It has been up to the banks how they will reduce lending, so most have stopped discounting investment loans or increased the deposit required. Both measures will weed out marginal borrowers but most investors will be fine to proceed.

With the large number of lenders available through a good finance broker, there is usually a solution for every borrower and many times our clients find they can borrow more easily than they thought. This is because rental income is so high in Qld that the tenant’s rent (and depreciation allowances) cover the loan repayments in most cases.

Our trusted finance broking partner is Finance Options. They always ensure our property buyers can service their loans by reviewing their living expenses, allowing for interest rate rises and leaving a cash buffer where possible.

If you’re thinking of buying or refinancing, talk to us first.  Just call us on 1800 767 332 or go to iphq.com.au. We’re always happy to help.

July 2015

Interest Rates – Steady As She Goes

On 7 July 2015, Australia’s Reserve Bank again decided to leave official interest rates unchanged at 2.0%. Great news for home owners who can expect relatively steady interest rates of around 4% for the rest of this year. The last changes were drops of 0.25% on 6 May and 4 Feb this year. Before that the cash rate was steady for 18 months at 2.5%.Percent arrow

Against such a stable and low rate, Australians have taken to investment property in great numbers. The east coast has seen strong demand driving capital growth but much of this was a backlog after basically a decade of stagnant prices. The cities of Melbourne and Sydney have enjoyed significant price rises and now we see this spreading to Brisbane and regional centres like Toowoomba and the Sunshine Coast.

It’s time to enjoy a little smooth sailing but if you’re considering a property purchase, talk to us about the right regions. Previous high gains is not a good reason to buy in those areas. We also recommend borrowers allow for a 3% rate rise in their calculations to allow for future increases. This is $875 per month on a $350,000 interest only loan so it can be a considerable extra expense all responsible investors should allow for.

Thinking of buying an investment property? Talk to us first on 1800 767 332 or see iphq.com.au

Property deductions before 30 June

You could see 30 June coming all year and here we are with only one day to go. I know you probably still haven’t taken simple actions which can save you lots of money off your tax.

There is a tax advantage in moving deductible expenses into the year you expect to have a higher income. Even if your income will be about the same, wouldn’t you rather have the deduction now than waiting a year. Of course you would.

Time's Up

Time’s Up

Pay tax deductible bills, buy business equipment or pay super contributions today and claim it in this financial year.

If you’re a property owner you can probably prepay a year’s interest (if you have the cash). Pay rates, insurance etc. before 30 June to maximise your claims this year. It’s real money back in your pocket sooner!

Always ask your accountant or financial planner for advice first so give them a call. Even if you’re not sure, just ring and ask what you can do before 30 June to get extra tax deductions. Hop to it right now and while you’re there, commit to taking action and making the next 12 months your best yet. Property investment in SE Qld is hot, hot, hot so talk to us and see if and how you can best get on-board. Go on, call me right now on 1800 767 332 or email me on pim@iphq.com.au. Visit our website here.

Retirees Turning To Property

With low interest rates here to stay for quite a while, those with home and other loans are rejoicing in being able to pay off their debt faster. For the borrower maintaining their previous repayments, this also produces a buffer, should things go pear-shaped in the future. It can also substantially reduce the time (and total cost) of repaying the loan. For the banks it means less defaults in payments from those customers when rates do eventually rise again. New borrowers would be well advised to make an allowance for future rate rises and maintain access to a cash or credit buffer. At Investment Property HQ we build this safety buffer into our clients’ property strategies from the  beginning.

But spare a thought for the retiree. They have endured far higher interest rates over past decades and just as they get to relax and live off their savings, they are dealt a cruel blow. Most are lucky to be receiving 3% return on their term deposits. With inflation currently at 1.3% (and 2.35% for underlying inflation) there is precious little left to meet living expenses.

Enjoy your retirement

Enjoy your retirement

The result – retirees are living on their capital.

This is clearly a temporary solution as it erodes their capital and results in a dangerous situation. Retirees have less and less capital to generate the cash they need to live on and our social security system will have an increasing burden of age pensions to pay out in future years.

Although retirees prefer risk free investments, most will have little choice but to consider higher returning alternatives. It’s no surprise they lean towards the perceived safety and security of property. Property is understandable, tangible and fairly predictable which suits their conservative investment style.

Rental yields are generally in the 3% to 5% range but higher yields are available in certain areas. Currently, many parts of Queensland boast yields over 5% on rental properties.  Southern states are showing reduced yields, not because rents there have fallen but because property prices have risen. As SE Qld property continues it’s increase the same will occur, producing capital gains for those astute investors who have bought in SE Qld.

Retirees with enough cash to buy a rental property outright should seriously consider their alternatives. At Investment Property HQ we have noticed an increased enquiry rate from retirees and have identified appropriate properties with excellent monthly returns as well as capital gain prospects. If this sounds sensible enough to discuss further for yourself (or your parents), then contact me directly on 1800 767 332 or pim@iphq.com.au

Pim Stort

Director

Investment Property HQ

iphq.com.au

Mobile: 0412 542 316

The Reserve Bank

Is The Property Boom Coming To Qld?

Today I have read a variety of articles about predictions about the Australian residential property market. It’s a circus with everyone putting their 2 cents worth in. As a result I thought I would try to make sense of it for the unfortunate average property buyer who doesn’t know, understand or even care about economic indicators or anything economists or the Reserve Bank are saying.

APRA (our regulator of financial things) says everything is fine. They’re not worried about property. It has the powers to make banks change their lending policies to slow down property investment but hasn’t had to used them. Simply looking over the banks’ shoulder has encouraged them to set their own tighter lending policies so Big Brother doesn’t have to force it upon them.

Our treasurer Joe Hockey is not concerned by property prices and actually makes sense in saying that a fall in property prices can only happen when there is an oversupply. Australia is a long, long way from an oversupply of property and he is actually encouraging building of new homes because there’s so much demand (and it provides jobs).

Tony Abbott owns property in Sydney so he said, “I do hope our housing prices are increasing.” He later added , “….modestly increasing.”

With Sydney up 39.3% and Melbourne up 22.4% in the last 3 years, something will change as that is not sustainable. Remember there were many years of flat prices running up to 2012 so the Sydney property boom includes a lot of catch up.

The OECD, which a world economic body based in Paris, yesterday said it thinks Australia’s property market is about to collapse. However, most of the world has a very different view of property to Australians. We hold it very dear to our hearts and if money gets tight we will generally stop eating so we can pay the mortgage. Others don’t see it this way so I always take very little notice of what the rest of the world thinks on this topic. What works for us here may not work overseas but that’s the way it is. They don’t get us. After all – we’re Aussies!


The Reserve Bank thinks Sydney and parts of the Melbourne market are overheated and “resembling a feeding frenzy”. As a result they do not want to drop interest rates below the current 2%. I tend to agree and can recall the same situation in 1989 when a property boom was in full swing. It now seems likely that we will have low interest rates for the next 1 to 2 years before they start to rise back up to a more normal level of about 5%. Make sure you can afford a 3% rate increase when you’re buying property. That’s an extra $750 per month on a $300,000 loan (tax deductions aside). Rental increases will help but it’s always a good idea to have a safety buffer of at least $10,000 up your sleeve. We discuss that with all our buyers at Investment Property HQ as it gives you security and peace of mind.

A Darwin agent says Darwin property prices have fallen as far as they’re going to (up to 10 or 12% over the past year) while a leading data company’s figures suggest only a 2% fall has occurred. In any case Darwin is very quiet. We’re watching to see any sign or recovery.

John McGrath says of the Sydney market, “I hope it’s topped out or else we are all going to have issues.” He added at this week’s Australasia Real Estate Conference, “SE Qld is my top pick of everywhere to buy in Australasia…”  He’s making sense. Experience tells me the wave of price growth hits Brisbane 2 years after Sydney and then the Sunshine Coast another 6 months later. That’s now!

House and unit prices are just on the rise in SE Qld and if ever there was an opportunity to buy in at the right time, it is right now!

Contact us today to see how you can get involved and to find the right property for you. Call 1800 767 332 or email us on admin@iphq.com.au

Bubble Schmubble

Is There a Property Bubble?

Is There a Property Bubble?

There has been some recent talk of a property bubble by a few property commentators (and journalists).

Firstly, many of these commentators live in Sydney which has experienced strong property price growth. The word “bubble” is more likely being used to create sensationalism to sell newspapers and magazines. There most certainly is no bubble but lets look at the facts.

Sydney had come off a prolonged flat period so was playing catch up. It also has a strong economy and actually has a shortage of housing for it’s growing population. Certainly low interest rates help promote demand and therefore price growth, but this factor is the same across Australia.

What the word “bubble” is referring to in this instance, is the normal situation in an expansionary phase of the property cycle where prices rise strongly and then usually pull back slightly when the upswing is over.  Sydney has had nearly 14% median price growth over the past year and about 39% since it’s low in 2012. This is great if you own property and looks to be continuing but at a slower pace for another year or two. You should expect to see a 5% or even 10% pull back in prices when interest rates start to increase again. Hardly a bubble bursting but a necessary evil.

For example, Darwin enjoyed over 17% price growth since mid 2012 but has fallen 0.8% in the past year to March 2015. We’ve also seen Perth and Hobart fall but by less than half a percent. This is simply the nature of all markets driven by supply and demand.

The idea is not to buy in at the very end of the upturn as you might have to wait quite a few years before the next recovery begins. At Investment Property HQ we look into where a region is currently placed on the property cycle to determine if it should be considered for investment. It’s one of the many factors we research to determine which are good properties to suggest to our investors. If you’d like to benefit from our experience then contact us using the form at right or at iphq.com.au or give us a call anytime on 1800 767 332.