Archive for the ‘Buying Real Estate’ Category
Yes, on a scale of one to ten, residential real estate scores below average for thrills.
“If you want an investment that keeps the adrenalin running its not residential real estate,” Monika Bonet, Principal of Raine & Horne Glenelg said. “The stock market, for example, is more volatile and much more likely to keep you on the edge of your seat… but the very reason it’s more exciting is that the risk is greater. The highs and lows of the stock market are more dependent on the vagaries of global economics … and predicting with any certainty where the gains are to be made requires a lot of time and expertise.”
Ms. Bonet said that residential real estate on the other hand doubles in value every seven to ten years.
“Records show that in Australia for the past one hundred and twenty years, and in England for nine hundred years show that real estate trends are consistent over the macro time scale,” Ms. Bonet said.
“While it is true that at the micro level there are times of negligible or even negative growth (in the 1930′s depression, and for example in the the current cycle post the GFC) however the years that follow usually show huge growth so that the average remains constant at ten percent and values double in the seven to ten year time frame.
Real estate is predictable over the long term…even boring.
Ms. Bonet said that more and more investors are deciding that they can get their kicks from something other than their investments.
“Property Investors prefer to start their investment portfolio by doing their homework and making a prudent buy… then they sit back and wait for the long haul. Not as exciting, perhaps, as rushing to buy stockmarket orders, but a lot less time consuming and much more secure,” Ms. Bonet concluded.
So if you’re looking at your Superannuation funds and thinking is real estate a good investment? Then you only have to look at the previous trends and ask yourself if our real estate market can remain at slow to stagnant growth for much longer?
See the latest RP DATA Market Update to get an indication of what is happening in the market?
This blog post is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Mangement Experts.
After a challenging 2012, Australian house prices are set to enjoy a relatively healthy 2013, according to Angus Raine, CEO Raine & Horne.
The prediction, by Mr Raine, is grounded in some part on the assumption that the Reserve Bank of Australia will dish up more interest rate cuts in 2013, “which should aid more home sales and push up property values.”
“Throw in for good measure the chronic shortage of new residential property, coupled with net population growth, and the fundamentals are in place for property market growth,” said Mr Raine.
Yet there will continue to be some global challenges, according to Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital. “The main risks going forwards relate to the US budget and debt problems, a relapse in Europe, slow growth in Australia and a sharp back-up in bond yields if investors get more confident,” said Dr Oliver. However the AMP economist added that China looks like it’s on track with growth around 7.5%, “while Asia, Brazil and India should also stabilise and begin to improve.”
As for Australian house prices in 2013, Dr Oliver is tipping a modest bounce of 4-5% on the back of lower mortgage rates, while Mr Raine believes that those ‘battlefield suburbs’, where first home buyers shape up to investors, will prove the star turns. “In other words, suburbs in Sydney such as St Marys, Adelaide’s Semaphore, as well as North Melbourne, Ascot Vale, Brunswick and Footscray in Melbourne are set to benefit as investors compete with first timers for quality homes,” said Mr Raine. Across the continent, Mr Raine is tipping that the ‘forgotten suburbs’ of inner Perth, such as Embleton and Ashfield, will enjoy some growth as investors and first time buyers muscle up.
While the battle lines between investors and first home buyers will be intriguing this year, Mr Raine said that upgraders and downsizers will also play a part in generating more real estate transactions and “do their bit to force up real estate values across most price points in our major capital cities and regional towns.” He added, “It’s also fair to expect to see continued growth in the values of apartments, units and townhouses in 2013, across our major east coast capital cities, as well as Perth and Darwin. This is a result of growing demand for higher density housing close to excellent amenities in capital cities.”
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This real estate market update is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Management Experts
The South Australian parliament has introduced new laws that aim to make the process of buying a new home at auction more transparent for prospective buyers.
The Statutes Amendment (Real Estate Reform Review and Other Matters) Bill 2012 addresses the issue of “bait pricing”, a tactic used by some real estate agents to unfairly draw in prospective home buyers.
If enacted, any reserve price set for an auction cannot exceed ten per cent of any advertised price, and importantly cannot be revised upwards at any time throughout the course of the auction marketing campaign.
Similarly, no vendor bids can be made in excess of any resulting reserve price. Further, the new laws will require comparative sales data to be included in the Sales Agency Agreement with the Vendor.
Deputy Premier and Minister for Business Services and Consumers John Rau said:
“The government believes that the most effective way of eliminating the practice of bait pricing is to create a nexus between the price sought by, or acceptable to, the vendor and marketing a property based on that price.”
Mr Rau added: “The expectations of the purchaser will be realistically met when the auction of a property is based on advertising that reflects the genuine selling price of the vendor.”
The Minister also rejected the notion that the laws might be unfair to home sellers.
“Market forces will always determine the price of a property. These laws are about making the rules transparent for everyone.” Mr Rau concluded.
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Watch Raine & Horne SA CEO; Kevin Magee’s latest video of South Australian residential housing figures for August.
See what happened to property values in South Australia last month…
This video is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Mangement Experts.
Adelaide property sales and rental growth is lagging in the last quarter, watch this video to see the national trends;
This post is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Management Experts.
“Historically property cycles in Australia take five to ten years to run full cycle,” Monika Bonet, Principal of Raine & Horne Glenelg said.
“This means planning your investment purchases to take place within this time frame. The key to long term success is knowing when the time is right.”
According to Ms Bonet there are five key indicators that will assist in predicting capital growth movement and market activity.
“The first is long term value trends,” Ms Bonet said. “The longer the median price of residential property remains static or only marginally positive, the closer the market is getting to active conditions.”
According to Ms Bonet interest rates are another key indicator – lower interest rates make property more affordable for more people, thereby increasing demand.
“Another area to keep an eye on is new building construction,” Ms Bonet said. “Low activity in the new dwelling sector affects supply and has an eventual positive impact on the price of existing dwellings.”
Ms Bonet said that rental vacancy rates also put pressure on the housing market. The further vacancies fall below the three percent accepted balance between supply and demand the greater the number of people opting to buy rather than rent.”
“When vacancy rates are down, rents increase to reflect pent up demand and low supply,” Ms Bonet said. “This also leads more people to enter the housing market.”
Ms Bonet said that analysis of the current status of the key indicators shows that in most parts of Australia the market has plateaued and bottomed out, and is showing signs of an upturn. “What’s more, the last time the market exhibited these signs was in 1986,” Ms Bonet said. “However, in 1986 the most common housing loan variable interest rate was 15.5% – now it’s below 8.00% and trending down.”
“The key indicators all point to the fact that there has not been a better time to invest in income producing rental property since 1986 and arguably since the early 1960′s,” Ms Bonet concluded.
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This funniest real estate video is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agents and Glenelg Property Management Experts.
Non Conforming Loans: Also called ‘Sub-Prime Lending’. Non-conforming loans cater for people who do not meet the standard criteria mainstream lenders use for ordinary borrowers. Examples include people who are self-employed, have a poor credit record or who have recently arrived in Australia. Non-conforming loans usually incur higher interest rates.
Portable Loans: A portable loan allows you to sell your house and move to a new one without having to re-finance. This saves application and legal fees, but the loan amount usually has to be the same or lower than the one for your current property.
Redraw Facility: A redraw facility allows you to make additional repayments on your mortgage.
Reverse Mortgage: These loans are good for people who later in their life find themselves to be asset-rich in that they own their own home but income-poor, requiring cash for living costs, travel, etc. A reverse mortgage allows such a person to borrow against the value of their home and access the equity without having to sell the property. No repayments are required during the life of the loan, with the total interest, fees and charges being recuperated from the value of the estate at the borrower’s death.
Service Fee: Usually a monthly fee covering bank cost of administering and maintaining a loan account.
Switching Fee: The lender may impose a switching fee where an existing borrower changes from one loan product to another with the same lender.
Uniform Consumer Credit Code (UCCC): The Uniform Consumer Credit Code legislation regulates credit provided to customers and strata corporations and provides uniform standards for all forms of customer lending in all states and territories of Australia. The UCCC consists of a set of rules regulating the conduct of the lender throughout the duration of the loan. It enforces the Truth in Lending principle, so that borrowers are provided with clear and factual information to assist them in choosing a home loan product.
This blog post is brought to you by Raine & Horne Glenelg, your Glenelg Real Estate Agent and Glenelg Property Management Expert.