2012 – The year of the DRAGON

The Dragon – it is said that they are charismatic, generous and so brave that even standing beside them banishes fear.

Those born in the year of the dragon are thought to be able to see new paths where others may run into a brick wall. They are also believed to be free-spirited and impulsive hard workers who are able to help others achieve their dreams.

We look forward to seeing the influence of the dragon in action during the coming year.

And we see a positive start to 2012 with the latest Australian Property Monitors house price report showing a marginal national median house price rise during the December quarter to hit $533,521.

Although slight, the increase will come as welcome news to all property owners as it signals a possible change in trend.

However, it’s thought that the market could see mixed results in 2012, with some capital cities seeing a return to growth and others remaining flat.

Property prices have been on the ropes in the past year, yet building a real estate portfolio remains such a strong ambition for many Australians. As a group we have noticed an increase in the volume of experienced investor inquiry, looking for opportunities and very aware of the cyclical nature of property.

As always, it is imperative that investors look for good locations to purchase quality residential property that ticks all of the boxes for a sound, long term investment. (see ARPP’s 20 point property selection criteria ).

There is plenty of cause for optimism as there has also been increases in demand for housing credit which has risen to a four-year high. This in turn should see an increase in housing construction in the months ahead.

Positive indications for the Australian residential property market as we head into 2012.

Bruce Watt
Australian Residential
Property Planners

According to a recently released report by the Housing Industry Association (HIA), Australia’s property market softened last year and 2012 should see a return to growth.

Australia’s property market has been predicted to return to positive territory on the back of last year’s interest rate cuts.

 “Another year has passed with portents of doom and gloom regarding residential property prices yet again proving incorrect,” says the report.

And with Australia’s median dwelling price returning to modest growth, according to RP Data-Rismark data, the HIA is hopeful that real estate will make its comeback this year.

 “The good news is that with back-to-back rate cuts in November and December 2011, there is every chance we may see a return to dwelling price growth at some stage in 2012,” says the report. 

“As interest rates retreat further prospective investors are likely to increasingly favour housing over term-deposits or shaky equity markets. Meanwhile, as the cost of repayments start to align more closely with rent payments, current tenants are also likely to look at making the leap into home-ownership,” concludes the report.

The HIA report pointed to the following underlying strengths in the Australian property market:

• Australia’s large housing shortage: The HIA’s Housing to 2020 report estimates that the national dwelling shortage stood at 229,500 dwellings as at June 2011.

• Australian borrowers remain highly able to meet home-loan repayments and consumers have been saving heavily – suggesting many potential buyers have access to a house deposit.

• Despite difficulties posed by the multi-speed economy, Australia has a healthy mining sector and business investment will remain an important driver of growth.

• Although new home lending has been disappointing, lending for existing properties has been trending upwards which augers well for buyer activity over the next nine or so months.

• Vacancy rates remain low in all the capital cities, driving up rents. Plus, lowering interest rates make buying a property more attractive – either to get out of the rental market, or as an investment.

Statistics from home-loan broker Mortgage Choice show that Australians in increasing numbers are moving towards fixed-rate home loans.

This is despite the likelihood of a further cut to the official cash rate by the Reserve Bank of Australia when it meets on February 7.

The RBA is widely tipped to cut the official cash rate for the third consecutive time.

However, as the banks showed in December when the official cash rate was cut by 25 basis points to 4.25 per cent, this doesn’t necessarily mean that the full benefit will be passed on.

Mortgage Choice announced this week that fixed-rate loans accounted for 24 per cent of all new home-loan approvals during December. This was an increase of 3 per cent over November, and was well above the 12-month average of 15 per cent.

Home buyers in Sydney’s east and inner west are out in force, with agents reporting a surprising number of early sales.

Usually January is relatively quiet for sales, but some believe the two interest rate cuts in November and December could be encouraging buyers.

Along with many of last year’s unsold properties finding buyers, there have been cases of freshly listed homes selling within a week.

The senior economist with the Fairfax-owned Australian Property Monitors, Andrew Wilson, said there was always a lag of a couple of months before the market improved after a rate cut.

”Housing affordability is at its best level for a while, with most prices flat over 2011 and interest rates down,” Dr Wilson said. ”So there is a sense of renewed optimism and confidence in the NSW economy”.

This augurs well for Australian residential property in general as we see a renewed level of interest and activity in markets around the country.

3 Keys to Keeping Tenants.

1. Minimise rent rises – keep rental increases fair and reasonable.

2. A good property manager – ensure your managing agent is a good communicator, a property manager can make regular inspections, alert you to maintenance requests, address potential issues and ensure your property is well cared for. The time and effort they save you may be well worth the money you pay for their services of rental collection and looking after your property.

3. Ensure the property is kept in A1 condition – Fix any issues and make sure the property is clean and gardens are neat and tidy. 

Protect Your Asset.

Make sure your investment is adequately covered by insurance. As well as Building and Contents insurance, you may need to be covered for public liability, loss of rent and landlord’s insurance. Review your policies annually.

You may also need to update your will and personal insurance, which should include income protection and life insurance.

As always seek and obtain the advice of a qualified professional.

 
“Patience is not the ability to wait, but the ability to keep a good attitude while waiting.” 
 - Joyce Meyer -

“An investment in knowledge always pays the best interest.”

- Benjamin Franklin -

• Comprehensive property research in all the capital cities.
• Referral to affiliated finance specialists in your area who assist you with obtaining finance to suit the individual investor.
• Free info pack on property investing.
• Australia wide property selection specialists.
• Referral accountants who specialise in investment property deductions.

Our group is popular because we represent the buyer, and offers support throughout the purchasing process and ongoing service long after the property has settled. Best of all our services are FREE to the investor!

Contact our office if you would like to find out more about investing in property.

Email: info@arpp.com.au
Freecall: 1800 889 755
Website: www.propertyinvestmentplanning.com.au