After arriving in Melbourne last Sunday Night I have thoroughly enjoyed my time in Melbourne. It is not the first time I have been in the city and certainly won’t be the last… as a Sydneysider it is always difficult to make comments about Melbourne being better than Sydney in anything, but I can say Melbourne is a fantastic city that has a vibe like no other in Australia. The city itself is amazing with the most fascinating buildings from grand old heritage churches and museums to funky designed modern office and residential buildings. It really does have a life of its own.

Our first day in Melbourne, we met with developers that crossed the inner city regions. We first went to Collingwood to meet with Caydon, across to busy Richmond to meet with Cubo and then over to Port Melbourne where we met with Salta. The evening was spent in Brunswick. Each one of these places is so different and offers a fantastic lifestyle to anyone that lives or visits the areas.

Collingwood is one of Melbourne’s oldest suburbs with many old heritage buildings. Richmond is going through a period of gentrification with a mix of the ultra modern and tired old buildings that are waiting for a little attention. The three main streets in Richmond that are going through the current gentrification include Victoria, Swan and Bridge Streets. Port Melbourne is a suburb largely dominated by industrial sites at present along the shores through to open parklands, bayside beaches, exclusive apartments and Bay Street’s restaurants and cafes.

Tuesday we explored other suburbs including Prahran, St Kilda and the City. Through the day we met Hamton, Bensons Property Group, Brady Property Group and FKP. A lot of new apartment developments are occurring in these suburbs. Each of these suburbs is all well established.

Wednesday was another day on the road meeting with developments. We met with PDG in the City, Deal Corporation in Toorak, Birner Property Group in Armadale and Ninety Four Feet in North Caulfield. We spent the afternoon exploring some of the suburbs in eastern Melbourne out to Oakleigh.

The suburb Toorak is the glitz and glamour of Melbourne. Definitely the most upmarket strip shops I have visited during the week and very clean. Looking in the window of the local real estate agent, prices are high. Toorak is not only viewed as one of the best (thus also most expensive) suburbs in Melbourne, but also in Australia.

Thursday we met with FDG (Salvo Property Group), Extension Marketing, Fridcorp in South Yarra, Hickory in Richmond and Map Concepts just north of the city in Fitzroy.

Overall the visit was a huge success. Getting feedback from the developers has been positive and we look forward to bring you more new projects from these developers plus many more that we are currently talking to.

It is easy to see why Melbourne has been such a popular market for property investors over the last few years…. it is a great place to live!

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With a recent review of surveys and media articles in the press over the last 2 months, it seems that everyone agrees on one thing at the moment… Property investors are starting to come out of hiding.

So the first question we have to ask is what scared them away, especially with interest rates so low and rents continuing to increase. The answer is the Government. How? …The introduction of the Boosted First Home Buyers Grants. These boosted grants have caused a flurry of home and apartment purchases by first time property owners. Many have been renting and with the opportunity to switch to ownership without a large difference in monthly outlay, due to interest rates currently being so low, the step from tenant to home owner has been a fairly simple one…especially when the Government has been so generous with their First Home Buyer handouts. These boosted grants have caused too much competition in the current market and property investors are waiting until fewer home buyers are competing with them.

The boosted grants were meant to have ended on the 30 June 2009, however the Government took it upon themself to extend it to the end of December 2009, with a reduction in the increase from the end of September 2009. The slowdown in home buyers is expected and the increase in property investors will most likely occur.

Mortgage Choice recently ran a survey that found 3 out of 4 Australians that are planning to buy an investment property in the next 2 years were waiting for the FHOB to expire. Mortgage Choice claims that many of their clients that are looking at purchasing an investment property now are doing their homework and determining how much they can borrow, so when 2010 arrives, they will be ready to act.

Other results from the survey included:

• 37% of property investors rated their level of confidence in their states housing market as “high”, 57% rated it “moderate”, 6% low and 1% very low. Queensland respondents were most confident about their state’s housing market, followed closely by Victoria.
• 75% of respondents saw property investment as a better than investing in the share market
• 49% were looking to own two to three properties
• 47% said they were intending to keep it for 10 years or longer while 41% were planning on five to ten years

When purchasing their investment property, the features respondents considered most important in order of preference were:

• price;
• locality – convenience to amenities and transport;
• number and/or size of rooms;
• locality – prestige;
• features – such as driveway access, garage, swimming pool, backyard, fireplace and so on;
• aesthetic appeal;
• age of the property; and
• green/environmental aspects or initiatives.

There are a lot of positive factors at investors’ fingertips – historically low interest rates alongside historically low rental vacancy rates, greater demand than supply, a number of extensive infrastructure programs around the country, increasing rents, healthy migration levels and relatively stable housing prices… so I tend to agree with the outcome of the survey… it will be interesting to see what happens over the next 6-12 months.

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Australia Housing Outlook 2009 (ANZ Summary)

The outlook for the global economy has stabilised however the recovery is expected to be slow. The Australian economy has fared one of the best of the global economies and has thus far avoided a technical recession, although I believe the pain is still very real here. Economic growth in 2009 is likely to be slow; however the ongoing government stimulus along with the improving Chinese demand will help stimulate the economy moving forward. It is important to note that the report does not mention that Australia’s economy would continue to fall… they are expecting growth, albeit very small for the 2009 year.

The Australia housing market has performed significantly better than other developed economies around the world. According to Residex it has softened by 1.2% to the month of May 2009, while RP Data suggests that there has been no change to house prices. After interest rate cuts and government assistance with the first home buyers boosted grants, there are even signs of price movement upwards.

ANZ suggest that the Australian housing market will be tested over the medium term on a number of factors. These include:

• Housing Affordability to test record highs because of government stimulus at both federal and state level as well as low interest rates, which may even be cut further. The market will be tested by home ‘upgraders’ (those that are buying their 2nd or 3rd property) and property investors.
• Population growth is at its highest levels in 4 decades. This high population growth is creating a high demand on dwellings which has consequently been proved by very low vacancy rates.
• Housing Supply – There has been a slow down in the development of new housing due to a subdued market, financing difficulties, and higher development costs
• Labour market – the uncertainty of the labour market and where unemployment may fall to is leading some market commentators to think that there may be a lack of confidence in the housing market as home buyers don’t wish to commit to large mortgages when they have uncertainty in their employment, thus reducing demand on housing and housing prices. ANZ state this is probably a second-order influence on housing market outcomes.

ANZ state, “We expect dwelling prices to edge higher for much of the remainder of 2009 with upside risk presenting from intensification of strong fundamentals, a shift in price expectations and a restoration in market confidence.

ANZ Market Balance - June 2009

ANZ Rental Vacancy Rate June 2009

ANZ Affordability June 2009

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The NSW Government has surprised the market with a NSW stamp duty cut for  property investors and home buyers. The NSW Government has announced in the budget today that home buyers (not first home buyers) and investors will be entitled to a 50% discount on NSW Stamp Duty costs for new property purchasers under $600,000. It is interesting to note that about 80% of NSW properties for sale are sold under $600,000. First Home Buyers don’t pay stamp duty for homes under $500,000 and there is a sliding scale up to $600,000 where the full rate is applicable.

The discount provided by the Reese Government is only available to 31st December 2009 and only for brand new homes including new apartments, new townhouses & new house and land packages. It is also available for those properties that have never been occupied or sold previously as well as for off the plan NSW purchases – the short time frame hoping to encourage home buyers and investors to move into the property market before the end of the year.

According to the NSW Treasury, 90% of First Home Buyers have been buying established property, so the additional boost is to help developers with the new stock that is currently being marketed.

First home buyers will now also receive an extra $3,000 for the purchase of newly-constructed homes until June 30 in 2010. First Home Buyers can now receive a total of $41,990 in grants and stamp duty cuts!

The downside I see to this stimulus is that it ends at the same time as the boosted First Home Buyers Grant, at the end of December 2009. What this means is that the market may become over stimulated during the next 6 months and take a hard fall when both stimulus packages are removed at the same time. It would have been smarter for the NSW Government to have an overlap of at least 6 months allowing the stimulus to carry us through to mid next year and encouraging further development which is so desperately needed in NSW.

It will be interesting to see how the cut to the NSW stamp duty plays out in the media and the markets over the next 6 months.

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The May edition of the Midwood Queensland Investment Report has suggested that Queensland house prices will hit bottom by the end of this year and return to a peak at the end of 2011.  Back in November 2008, the Midwood report predicted a 20% fall for the Queensland housing market. With the Gold Coast already falling 16% since the peak in December 2007 and Brisbane falling 10%, it looks like the bottom is near.

Bill Morris, author of the Midwood report suggests that the Gold Coast and Brisbane markets will lead the sector to a recovery followed closly by Townsville and Cairns.

It sounds like Mr Morris is banking on interest rates staying low and more developers pulling out of new developments as financing becomes more difficult. Unit purchases in the Gold Coast in the month of May have been encouraging with 79 sales in the month. It is the best figure over the last 9 months.

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Home Buyers Show Brisbane

Brisbane Property Expo on 13th and 14th June 2009 at the Brisbane Exhibition Centre. Perfect for property investors and home buyers.

Find Investment Property is excited to announce that we will be participating at the upcoming Home Buyer Show at the Brisbane Exhibition Centre on Saturday 13 and Sunday 13 June. It is the only major event in Australia dedicated to helping people actually buy or sell a new or established home or apartment whether as a primary residence or investment property.

The dream of home ownership is alive and well in Australia, and with interest rates at record lows, property prices cooling, substantial Government grants still available and a strong rental market, home buyers and property investors are returning to the market in large numbers.

Now more than ever, home buyers and investors need to do their research, understand market conditions, and have access to all the right independent advice from reliable sources to make informed buying decisions to enable them to get on the right path to the right property.

The Home Buyer Show will provide first, second and third time property buyers with all the information they need to help discover the smart way to finance, find and buy a home or investment property – direct from the experts.

Some of the major show highlights include:

• Free seminars from Australia’s leading property and finance experts in government and industry associations
• Master Builders Zone – Master Builders members, Queensland’s leading building services companies, will be showcasing a wide range of new homes, display villages and house & land packages.
• Property Investor Zone (sponsored by Find Investment Property)- educating property investors of all levels including all the latest investment properties for sale on the market today with loads of experts on hand to provide independent, impartial advice.
• Apartment Living Zone – showcasing some of the latest apartment, unit and townhouse developments in SE Queensland

As part of a special promotion, we are pleased to offer all of our clients, partners and friends unlimited $5 tickets to the Home Buyer Show which are normally $15. Simply visit the website www.homebuyershow.com.au and when purchasing tickets quote the special promotional code FIP.

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New homes take the lead from new apartments when it comes to pushing the properrty market up. First home buyers have helped with an increase in detached new home sales by 1.1% in April according to the HIA. The number of detached new home sales was 3% higher than that of April 2008. Harley Dale, chief economist at HIA has suggested that the leading indicators point to housing as emerging bright spot int he economy.

HIA has forcast that 6,900 extra starts of new homes will occur in the second half of 2009.

Other figures released by the HIA suggested property investors were still a little hesitiant coming back into the market with new apartment and unit sales falling by 5.6% in April.

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The Australian property market has seen a glut in new build properties over the last few years as high interest rates, slow paced property markets and more recently stricter lending policies by the banks, have forced the industry into a dramatic shortage of new properties. This is all about to end according to the Housing Industry of Australia… and its about to end as soon as this year. Recent statistics released by the HIA states that the HIA forecasts the total number of completed homes in Australia will rise from 129,500 in 2009 to 139,200 homes in 2010. According to the HIA there were 141,000 completed homes before the onset of the global recession slowed construction and lending to the sector. Chief Economist of the HIA, Harly Dale says “The effect of the First Home Owners Grant boost, along with 49-year-low interest rates, will cause the housing sector to “grind out” a recovery in the middle of the year”.

Having stated that construction will rise, they still confirm that Australia will have a mass shortage of housing for many years to come. Harley Dale, said “Given the outlook for a modest rather than significant recovery in new home building, the shortfall between dwelling completions and underlying demand will exceed 50,000 dwellings per annum for some years to come.”

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The Sydney property market has been through a tough time over the last few years with slow or no growth. There has even been some negative growth over a couple of periods. On the other hand other states had previously been pushing up the charts with some amazing property returns. All that has changed over the last 12 months as most of the property markets around Australia have fallen. Now with a rebalancing act occuring, the light looks bright for property accross Australia with the suggestion that the best placed property market is Sydney. Residex is predicting that Sydney units will increase by 5.95%pa over the next 3 years and Sydney houses to increase by 8.59% pa over the next 3 years.  The prediction looking further ahead suggests that  median Sydney House price in 2012 would be more than $700,000., up from the current median Sydney house price of $556,500.  

Residex go on further to predict that post 31 December when the First Home buyers grant expires, rents are likley to rise even higher. This is great for property investors that make the move now into property, however i still feel that this is not the desired outcome. Greater development needs to occur so that property continues to provide a stable predictable return for property investors and not the get rich quick style investments which property investing is certainly not!

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Developers in Victoria are concerned that demand for new property up until 30 June 09 may drop as more first home buyers wait for the new grants to be available from 1st July 2009. Currently new home buyers will recieve a total of $26,000, however from the 1st July this is going to increase to $32,000. The 6 week gap of subdued activity may force developers to offer their own “subsidies”, which is exactly what Devine Property has done. They weren’t going to wait around for the next 6 weeks for the Governments announcmenet to take effect. Instead they have taken the innititave to offer the incentives immiedietly out of their own profits ensuring that there wouldnt be a drop off in demand for their developments.

Luke Hartman, Devine’s Victorian General Manager has said that the current times have been the best they have seen for first home buyers. Devine is targeting buyers aged 25 to 39 who had double incomes. With a 50% increase in sales since October 08 when the boosted grant was immplemented, it looks like Devine are oncourse for another successful year.

In April 09, Victoria saw almost 4,500 first home buyers come into the market with about 75% of those looking to buy established property. Victoria has the most generous boosted grant scheme compared to the other states.

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