Monthly Archives: November 2012

Short Quantity Surveyor Article as at 30th November 2012 for your perusal and information – LJ Gilland Real Estate Pty Ltd

Article of Interest from MCG Property Surveyors for your perusal and information:-

October represented the first month-on-month decline in house prices since May 2012

The RP Data-Rismark Home Value Index results for October recorded the first month-on-month decline since May 2012, with the eight capital city aggregate index falling by -1.0 per cent over the month. The fall was broad-based, with falls being experienced across each of the capital cities apart from Perth and Darwin. However, it’s not fair to say that the housing recovery has stalled or that better results aren’t on the way. One interesting index which paints a positive picture is the consumer sentiment index. The confidence level among Australian consumers (as measured by the Westpac-Melbourne Institute Consumer Sentiment Index) has been on an upwards trend since April this year, and over November the index recorded a sharp rise to reach the highest level since April 2011. RP Data are showing an 85% correlation between the consumer sentiment index and the number of transactions within the housing market. They’ve found that high confidence coincides with high transaction volumes and vice versa. Evidence of this is shown in their graphic representation below:

Confidence readings are currently highest in New South Wales, Victoria and Western Australia, where the index is now tracking higher than 100. One component of the Consumer Sentiment Index is the ‘time to buy a dwelling index’, which has shown a significant improvement. The national index is now showing the highest reading since September 2009 and most of the state level indices are approaching their 2009 highs as well.
The indicators point to the fact that the Australian housing market has moved out of the down phase of the cycle, and there is mounting evidence that conditions will continue to improve. Improvements in average selling time, vendor discounting and auction clearance rates are all positive signs. Despite the October fall in the RP Data-Rismark Home Value Index, the evidence is still showing that we’re experiencing a housing recovery.

Also, here is the link to the Selling Guide website specifically set up for our sellers.

http://sellingguide.realestate.com.au/

Best regards,

Linda & Carlos Debello

http://www.ljgrealestate.com.au

http://twitter.com/GillandDebello

http://au.linkedin.com/in/lindajanedebello

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Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

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Article for friends and clients of LJ Gilland Real Estate Pty Ltd as at 27th November 2012 for your information and perusal.

Property investment proceeds not an alternative to full-time job: Australian buy-to-let landlord survey

By Larry Schlesinger
Tuesday, 27 November 2012

Only one in 20 property investors is making enough money from his or her rental portfolio to no longer have to work full time, according to a landlord survey carried out by research consultancy group BDRC Jones Donald.

Based on an online survey of 500 Australians who own one or more rental properties, it found that just 6% of respondents earn a profitable full-time living from rents paid by their tenants.

Just over a third (35%) derive income from their rental properties to supplement their full-time income, while a quarter (26%) break even on rental activity, and just under a third (32%) make a small loss.

While the report does not delve into the actual dollar earnings of the landlords who are making a living off their rental yields, it does reveal that the average property value for those making a profitable full-time living is $915,000, with these landlords holding a portfolio with an average of 4.3 properties, equating to total average value of $3.9 million.

"Of these people, the average household income is $111,000 before tax," says a spokesperson for BDRC Jones Donald.

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The most recent statistics from the Australian Tax Office (ATO) for the 2009-2010 tax year show that the majority of property investors own just one investment property, indicating that it is not a full-time occupation for most.

Of the 1.7 million individuals who reported net rental income from rental property in the 2009-2010 tax year, 73% own just one rental property.

The ATO figures also show that 63.4% of property investors with net rental income reported a taxable loss (net rental income less than zero) from their rental property.

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The results of the Australian Private Property Investor Study also suggest a degree of complacency among landlords about the performance of their investments, with more than a third (34%) being unaware of the rental yield earned on their investments.

This lack of awareness is even higher (40%) for those landlords who manage their own investments, compared with 34% of landlords who use a professional property manager.

Sentiment about property investing remains positive, though, with 77% of Australian landlords feeling very positive about their rental investment and nearly a half of respondents noting an increase in demand from tenants. Only 12% reported a decrease in demand from tenants.

Overall the survey found that landlords are better off financially if they use a property manager both in terms of rental yields achieved and profitability.

Around 20% of landlords that used a property manager earned yields of 6% or more compared with 15% of landlords that managed their properties themselves.

Similarly, 46% of landlord that used a property manager derived a positive income return from their investments compared with just 34% of landlords that that managed their properties themselves.

The findings of the survey indicate that the majority of landlords (77%) use the services of a property manager.

“In the current market, landlords are seeking advice to ensure that their investments are working hard for them,” says Roger Donbavand, managing director of BDRC Jones Donald.

“Along with real estate agent support, six out of 10 landlords would welcome receiving more information and advice from their lender.”

The survey suggests there is some appetite among landlords to increase their investment portfolios, with 21% looking to increase the number of properties they own over the next 12 to 18 months – higher than the 12% who plan to decrease the size of their portfolios.

Half of landlords (48%) don’t plan to make any acquisitions over the next 18 months, while a significant proportion (18%) remain unsure whether to buy or sell.

Donbavand says the study reveals that to get the best results Australian private property investors must consider both houses and units when looking for an investment opportunity.

The Australian Private Property Investor Study has shown that more private property investors have purchased houses over units. However, units may offer better returns in some instances,” he says.

“While Sydney, Perth, Darwin and Canberra all boast increasing unit rental returns, our in-depth research demonstrates that investors who seek real estate advice will see better financial results overall.”

According to the study, the majority of property investors are typically married, professional couples with an average of 1.9 properties in their portfolio.

The study can be purchased in full from BDRC Jones

&

First home buyers’ interest will shift from existing homes to new properties as a result of changes to the First Home Owner grants this week.

Developers will be the short-term winners as a result of the $15,000 First Home Owner Construction Grant introduced on September 11.

However, access to the $7000 First Home Owner grant for pre-existing properties will cease from October 11.

Professionals Everton Park sales agent David Crook said he expected affordable new developments in that price range in outer suburbs such as Ferny Grove and Keperra to see a rise in interest from first home buyers.

But Mr Crook did not expect long-term trends to change.

End to First Home Grant to create "frenzy"

"If people want to buy an older property, instead of applying for the grant they will just save up more,” he said.

Mr Mullaly said first home owners would now be more inclined to buy new properties.

"I’d expect to see things slow down in the market for pre-existing properties,” he said.

"Developments like Glenfern estate at Ferny Grove will increase in demand, which will have the potential to create more value for the area.”

Eatons Hill developer Nic Lulan, from NJ Properties, said the new grant had helped restore buyer confidence in the market.

He said there had been more interest from first home buyers since the new grant was announced last month.

“The housing market within Brisbane is considered to be nearing the bottom with no obvious signs of recovery.”
Brisbane property market stuck in a downswing as investors seek unit bargains: WBP Property Group

By Larry Schlesinger
Thursday, 27 September 2012

Page 1 of 2

There are some signs of a recovery in the Brisbane property market, but it still remains firmly in a downswing , with investors seeking bargains in the unit market as new apartment projects are completed, says WBP Property Group.

WBP places the Brisbane housing and unit market at five o’clock on the property clock.

  • At 12 o’clock the market is at its peak (demand exceeds supply)
  • At 3 o’clock the downswing has set in (an evenly supplied market)
  • By 6 o’clock it has bottomed out (an oversupplied market).
  • At 9 o’clock the market is rebounding (supply tightening)

“The housing market within Brisbane is considered to be nearing the bottom with no obvious signs of recovery,” says WBP.

The valuation and advisory firm says that while recent changes in state government legislation, in particular stamp duty concessions, have improved sales activity and enquiry, Brisbane market conditions will remain as they are until the end of the year.

“Potential buyers and investors are keeping an eye on the effects of the mining boom, which continues to fuel growth, and also public sector job cuts announced by the Newman state government.

WBP says future market factors to watch out for include changes in pricing within the commodities sector and cost cutting within the government.

Looking more closely at the unit market, WBP notes that there are a number of new unit developments in Brisbane that are nearing completion and due to settle.

“Many purchasers who have bought off the plan have seen prices come off from original date of contract. Investors still remain wary as to when the bottom will be and are on the lookout for a bargain buy,” says WBP

“This market trend is due to continue till the end of the year and perhaps into 2013.

“The Queensland government has introduced a $15,000 concession for first-home buyers looking to buy a new property.

“The unit market in the sub $400,000 range still continues to be strong amongst professionals looking for lifestyle, inner-city locations,” it says. End of article.

Information For Clients, Friends & Associates of LJ Gilland Real Estate Pty Ltd as follows:-

Please keep a look out for our website translated to Chinese.

Online residential listings rise 1.5% in August to 373,510, led by Melbourne, Sydney and Canberra

By Jonathan Chancellor
Wednesday, 05 September 2012

Vendors appear hopeful of better fortunes this spring selling season with the total number of residential properties listed for sale online rising 1.5% over August to reach 373,510, according to figures from SQM Research.

This contrasts starkly with the same time last year, when listings fell 3.8% from 377,213 in July 2011 to 362,740 in August 2011.

Sydney and Melbourne both recorded “substantial” 5.9% increases in monthly residential properties listed for sale, to reach 31,310 and 51,194 listings respectively.

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SQM Research managing director Louis Christopher described market conditions as a little better than this time last year, "but it doesn’t mean we are going to head into a big property boom”.

"If rates stay on hold, that will be conducive to stimulating the housing market, and we are likely to see continued market recovery, but there are many X-factors at play,” he told news.com.au.

Christopher says rising rents (up 7% annually over the past five years) are good news for investors, but they have been offset by declining house prices.

He expects there will be further seasonal rises in stock levels as the spring selling season enters full swing.

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While residential stock on market in Sydney is just 0.9% higher than a year ago at 31,310, Melbourne has the highest year-on-year increase of all the mainland capital cities, with stock up 14.1% to 51,194 in August.

In August last year there were 44,859 properties listed for sale in Melbourne.

The other notable increase was Canberra, where stock on market increased by 8.8% over the month to 3,758 online listings. This is up 13.6% up on August 2011.

“Canberra’s large monthly increase may well signify a downturn for that market as federal budget spending is cut,” noted SQM research.

Bucking the monthly trend of rising stock levels was Perth, which recorded the largest monthly decline of 1.8% to 18,053. Residential listings were down 10.7% on the same time last year when there 20,207 listings.

Residential stock levels have declined in Perth, Darwin and Brisbane – which all benefit from Australia’s mining boom

Darwin residential listings are down 23.3% over the 12 months to August to 1,282 while Brisbane listings are down 4.7% to 28,666.

“Increasingly the market is segmented. It is becoming difficult to discuss just one national housing market and in my opinion, that will be to base line story for the remainder of 2012,” said Louis Christopher, managing director of SQM Research.

While Hobart stock on market declined by 1.7% over August to 4,388 properties listed for sale, there are 24.1% more properties for sale than a year ago. At this time last year there were 3,536 listed for sale in Hobart.

Have you seen the new video explaining advertising options on realestate.com.au? It could be a great listing tool to use in your presentations?

http://sellingguide.realestate.com.au/video/why-list-online

Also, here is the link to the Selling Guide website specifically set up for our sellers.

http://sellingguide.realestate.com.au/

Best regards,

Linda & Carlos Debello

http://www.ljgrealestate.com.au

http://twitter.com/GillandDebello

http://au.linkedin.com/in/lindajanedebello

http://gillandrealestate.wordpress.com/

http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253

Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

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Time to buy?? confidence across Australia via RPDATA – LJ Gilland Real Estate Pty Ltd

Time to buy home confidence up in NSW, Victoria and WA, but Queensland, SA and Tasmania still pessimistic: Tim Lawless

By Tim Lawless
Monday, 26 November 2012

The confidence level among Australian consumers (as measured by the Westpac-Melbourne Institute Consumer Sentiment Index) has been on an upwards trend since April this year, and over November the index recorded a sharp rise to reach the highest level since April 2011. An easy way to interpret the index is when the reading is over 100, optimists are outweighing pessimists, and when the index is lower than 100 pessimists are outweighing optimists. In November 2012, the Consumer Sentiment Index was showing a value of 104.3.

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I have found measures of consumer confidence to be one of the most important indicators for the housing market, with the index showing an 85% correlation with the number of transactions in the housing market. To put it simply, when consumers are lacking in confidence, transaction volumes tend to be low, and when confidence is high, the number of home sales follows suit.

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Confidence readings aren’t the same across all of the states. In fact, Queensland, South Australia and Tasmania are continuing to record index values below the 100 mark, although each of these states has recorded an improvement in the confidence reading. The most optimistic states are New South Wales, Victoria and Western Australia, where the index is now tracking higher than 100 (note the index is not available for the territories). Interestingly, the Confidence Index has moderated in Western Australia, most likely a response to a weaker resources sector, while New South Wales and Victoria are the primary drivers of improving confidence levels.

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One of the subsets of the Consumer Sentiment Index is the "time to buy a dwelling index", which has shown a significant improvement nationally and across each of the states. The national index is now showing the highest reading since September 2009 and most of the state level indices are approaching their 2009 highs as well.

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State-by-state breakdown follows

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The indicators are further affirmation that the Australian housing market has moved out of the down phase of the cycle, and there is mounting evidence that conditions will continue to improve. Average selling time has shown an improvement, so has the level of vendor discounting, and auction clearance rates are holding firm above 50%. Additionally we have seen values on an improving trend since the beginning of June. Despite the October fall in the RP Data-Rismark Home Value Index, it is looking like the November reading will be another positive month for the capital city housing market, with values up 0.3% over the first 21 days of November.

Timis national research director of RP Data.

Best regards,

Linda J. & Carlos Debello, LJ Gilland Real Estate Pty Ltd

Tel: (07) 3263 6085 | Mobile: 0409 995 578 & 0400 833 800 http://www.ljgrealestate.com.au

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Investor Article compliments of LJ Gilland Real Estate

Inner-Brisbane apartment market dominated by investors with 20-something tenants

By Angie Zigomanis
Monday, 05 November 2012

BIS Shrapnel is currently working through its Inner Brisbane Apartments 2012 to 2019 study, a look at the demand and supply prospects for the inner-Brisbane apartment market. A detailed picture of demand is required to determine whether the current supply pipeline can be met. Following are highlights of the inner-Brisbane apartment population using the newly released 2011 census data.

Occupants in inner-Brisbane apartments are heavily skewed into the young adult age groups, being dominated by those aged 20 to 39 years old. At the youngest end, many are likely to be students at tertiary institutions, while those who are older are typically employed in Brisbane CBD or CBD fringe locations.

The age profile of the apartment population has changed little between the 2006 and 2011 census, although the most prevalent age cohort increased from 20- to 24-year-olds to 25- to 29-year-olds. This suggests that some of the younger apartment occupants are remaining living in the inner city.

Age profile of apartment occupants, Inner Brisbane, 2006 and 2011

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The inner-Brisbane apartment market is dominated by investors. At the 2011 census, 58% of apartments were owned by investors and were rented out. Some 11% were reported as unoccupied. While some of these unoccupied dwellings are vacant and available for rent or sale, or by occupants who were away on census night, the majority are likely to be “lock-up and leave” – apartments owned as a second home by an owner living elsewhere, or as a long-term speculative purchase.

Just under a third of apartments are owner-occupied (32%). The majority of these are apartments with a mortgage (being purchased) rather than fully owned.

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The age profile differs according to tenure. Renters are likely to be younger, dominated by those aged 20 to 29 years old. Those aged 25 to 29 have the greatest prevalence in being purchased (with a mortgage) apartments, while there is also a higher prevalence of all age cohorts 30 to 64 years old in being purchased apartments than occupants in inner Brisbane overall. This would suggest that there is some element of renters moving through to owner occupation. Occupiers of fully owned apartments are dominated by those aged 55 years old and over, indicating empty-nester and retiree households.

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Younger couple without children households, younger single-person households and group households comprise well over half of households in inner-Brisbane apartments. There has not been a major change in household structure between the 2006 and 2011 censuses, although only two household types have recorded an increase in their share of total households – younger couples without children and family households with children. Given the apparent propensity for the young adult population to remain in inner Brisbane, some component of the growth in share of family households with children could be coming from those forming families while living in inner-Brisbane apartments.

An analysis of the 2011 census data indicates that full-time tertiary students comprise 17% of the inner-Brisbane apartment population. Most of the media focus on students living in inner-city apartments has been on overseas students.

While overseas students comprise the majority of tertiary students living in inner-Brisbane apartments, local, Australian-born students still make up a significant 38% of the full-time student population.

While the above provides a broad “top level” analysis of occupiers of inner-Brisbane apartments, the profile of demand varies across inner-Brisbane locations. The occupier profile of the CBD, Southbank/West End, Fortitude Valley, Bowen Hills, etc, regions differs widely and product has to be tailored to that demand. The identification of this localised demand, as well as it outlook for rents, prices and new dwelling activity, is one of the aims the upcoming BIS Shrapnel Inner Brisbane Apartments 2012 to 2019 study.

A Zigomanis is senior manager of BIS Shrapnel.

Removing the hassle from Sales and Rentals.

L J Gilland Real Estate PTY LTD

Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

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Property Valuations a waste of time and money article by T. Ryder for your perusal and information only, compliments of LJ Gilland Real Estate Pty Ltd

Property valuations a waste of time and money: Terry Ryder

By Terry Ryder
Tuesday, 06 November 201 2quote

Until recently all the reports on the hotspotting.com.au website advised investors to get a valuation before buying real estate.

I have now removed that from our reports. I think valuations today are a waste of time and money.x

I’m sure there are plenty of competent valuers out there who care about accuracy and professionalism. It’s just been a long time since I encountered one who fits that description.

All my recent experiences with valuers have been frustrating,and the feedback I’m getting from consumers around Australia suggests many others are having the same disappointments.

The problem is that valuers are killing real estate deals. Whether it’s conservatism or incompetence, many valuers are under-valuing properties to a degree that’s plain ridiculous.

Real estate research has been my business for 30 years. Whenever I’m involved in any kind of transaction I do a lot of research and I consult people with good track records.

But every time this year the bank’s valuer has come in with a figure well below market value. In the latest instance, the valuer’s figure was 25% under the true value.

The valuer spent no more than five minutes at the property, took a few measurements and left. The valuation was delivered a few hours later. How can that possibly be a professional and competent job? The result showed a disregard for sales evidence of comparable properties.

Earlier this year I had a similar experience. I protested to the valuation firm and presented my research. They instantly lifted their valuation 10%. Something they considered to be worth $500,000 yesterday was suddenly worth $550,000 today.

One of the issues is that an under-valuation can mean you have to pay mortgage insurance to achieve your goal ,and this is expensive. Sometimes I think this is the lender’s objective.

Many investors are having the experience of engaging different valuers and getting wildly different estimates for the same property.

Property analyst Matusik provides this example: “One developer arranged for one of its newl completed apartments to be valued by several valuers independent of the banks. The first valuation came in at $720,000, the second at $730,000 and the third at $595,000! Why was the third valuation so low? Because the valuer had erroneously based the valuation on a distressed sale in a nearby project.”

I put my concerns about valuations out and about via Facebook last week and got a big response from people having similar frustrations.

Perth agent Bernie Kroczek said: “We recently had a sale fall over in Beldon in Perth, where the valuer put $400,000 on the property which had sold for $440,000. We resold it within days for $435,000.”

Here is some of the other feedback I received:-

“We recently had variations of 50,000 on our valuation from different lenders. Nearly killed the deal. And definitely ended up costing a lot more in LMI.”

“I had a purchase of a new house destroyed by the valuer.”

“We’ve just had a number of properties revalued and one in the inner north of Brisbane was under-valued by $50,000 easily. We know this as we are actively looking for another property in the area and have a stack of research and experience from attending auctions, etc. Getting a little frustrated.”

Inexperienced practitioners are putting too much emphasis on computer outputs instead of old-fashioned site visits and talking to people and looking at the evidence on the ground.

Whatever the reasons, I believe many valuers are not doing their jobs competently – and it’s costing people money and it’s destroying valid transactions.

T. Ryder

unquote

Removing the hassle from Sales and Rentals.

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Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

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