The government has once again decided to slug property buyers with another tax that they hope is going to raise them $90million a year. The newly conceived Sales Tax is to start on 1 July and is going to be calculated on all sales of residential property over $500,000. Any residential property sold between $500,000 and $1 million will attract a tax rate of 0.2 per cent, while above $1 million, the tax rate increases to .25 per cent for that portion of the property sale price.

So with the median property price in Sydney at $600,000, the tax that would be payable is going to be $200, while those homes at $1.2 million will be hit $1,500.

When we look at the actual numbers involved in an isolated manner they are small relative to the purchase amount but we still have to remember the whopping amount of stamp duty we are paying each time we purchase a property. A $600,000 property will incur a $22,490 stamp duty tax, a transfer fee of $190 and a mortgage registration fee of $95. So there has already been a fee for transfer and now it has more than doubled for the average NSW home buyers ($190 + $200).

We also have to remember when buying a property there many other costs associated with it which could include insurance, council rates, strata fees, solicitor fees, mortgage fees, valuation fees, Building inspection fees, depreciation schedule costs, defect inspection costs and lenders mortgage insurance. Buying a property is not a cheap exercise and adding any additional costs to the purchase process is only going to continue to defer some home buyers which is disastrous for them and the economy.

Buying a home or investment property in Australia has been a great way to build wealth and many Australians have done so over the years… Now the government just wants to take advantage again and slug those that have been the main contributors to society with another tax to bring them down. Home ownership, whether it be for owner occupied use or as a property investor, is critical to the NSW and national economy and to stop people buying by continuing to slug extra taxes and expenses on them is only going to hurt the NSW state in the long term.

The big question is… What if they raise the Sales Tax in the future!

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NSW Landlords are under threat from new changes that were brought to their attention in late 2009. At this stage these changes to the Residential Tenancy Act are just proposed and are yet to be introduced into the NSW Parliment. This is scheduled to occur in 2010 so if NSW landlords don’t like what they are about to read, then it is important that they make this know to their local members as well as the Real Estate Institute of NSW.

Some of the most significant changes that have been raised in the Residential Tenancies Bill 2009 include:

Fixed term tenancies – end of certainty of tenure for landlords and tenants. Section 98 of the Bill will enable tenants to break a lease, during the fixed term, without any special grounds, by giving 14 days notice to the landlord. This break clause will be subject only to the payment of a ‘break fee’, which will not exceed 6 weeks rent. Details of the maximum amount of ‘break fees’ for long-term leases (over 3 years) have not been released. What is the point of a landlord entering into a fixed term tenancy that will be unable to be enforced?

Periodic tenancies – ‘no grounds’ termination notices. Section 85 of the Bill increases the notice period required to be given by landlords to tenants (who are out of fixed term) from 60 to 90 days. While the section provides that the CTTT must now make a termination order if the notice has been validly drawn and served, the Bill still gives the CTTT jurisdiction to determine when vacant possession is to occur, if a tenant challenges the landlord’s termination notice. The Bill does not set a maximum time limit between the date the CTTT makes a termination order and the date it nominates that vacant possession is to be given up by the tenant. Once served with a 90-day termination notice by the landlord, a tenant can give vacant possession at any time. Section 110(2) of the Bill provides that a tenant will only be liable to pay rent until the date they give vacant possession.

Frustration of repossessions by tenants. Section 89(2) of the Bill provides a mechanism whereby tenants who are already (or habitually) in arrears, can further frustrate a landlord’s attempt to regain possession of their property. The effect of the section is that orders for possession and warrants for possession issued by the CTTT, will cease to have effect if the tenant pays their arrears at any time prior to vacant possession being given, or the warrant enforced. The tenant will not have to apply to the CTTT seeking the suspension of an order for possession or warrant. The section also makes no provision for the recoupment by the landlord of the costs incurred in obtaining the order for possession or warrant.

Cosmetic changes. Section 66 of the Bill provides that landlords must not unreasonably withhold consent “to a fixture, or to an alteration, addition or renovation that is of a minor or cosmetic nature”. While the section provides that the costs of installation are to be met by the tenant, no definition of what “a minor or cosmetic nature” is contained in the Bill. This section is backed by another provision (section 68), that a tenant may apply to the CTTT for an order that the tenant may install a fixture or make a renovation, alteration or addition to the residential premises without the consent of the landlord. While the Bill contains provisions concerning the removal, rectification and cost of repairs for such matters at the end of a tenancy, the potential for default or significant disputes concerning this area alone is enormous. Disputes will occur both at the beginning and the end of tenancies and landlords risk being considerably out of pocket as a result of these changes.

Partial transfers of tenancies or sub-letting. A landlord’s right to decide who inhabits a property will be able to be challenged. Section 75(5) of the Bill will enable a tenant to apply to the CTTT to review a landlord’s refusal of consent to a partial transfer or sub-letting to an additional tenant, or tenants, that the landlord would not otherwise accept as a tenant. The CTTT will be able to permit the partial transfer or sub-letting if the landlord’s failure to consent was unreasonable (the word unreasonable, is not defined). The scope for dispute here is obvious.

Rent control. Section 44 of the Bill does not, unfortunately, clarify some of the past uncertainty (and case law) relating to what matters the CTTT must, or may, take into account when hearing an application by a tenant that rent, or a rent increase, is excessive. For example, there is no compulsion in the Bill for the CTTT to take the market rent of the premises into consideration when making a determination.

I for one am against giving tenants this much control of your property. Make the fight today to ensure that these changes and others don’t impact on your investment properties in NSW.

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Australian Property Outlook for 2010

I hope everyone had a fantastic break over the festive season. We at Find Investment Property wish everyone all the best for 2010.

In the first week of the year, the Australian Financial Review had a summary of each of the property markets across Australia. Below is a brief summary from each of the stories that appeared in the paper from the 4th January through to the 8th January 2010. The articles cover the Melbourne Property Market, Sydney Property Market, Queensland Property Market, Western Australian Property Market, Tasmanian and the Adelaide Property Markets.

In each of these articles, the journalist has interviewed a few people in the relevant states property industry that may have some bias towards each state, thus all pushing a positive sentiment for their respective property markets.

Having said this I do think they all have good arguments for why buying in each area should see capital growth occur in 2010.

Melbourne Property Outlook 2010

Comments below are from Cameron Anderson, a Director at Red C and Canopi Homes. He previously was in a senior management position at Stockland.

• 2009 property market was fuelled by federal government grants and Melbourne’s appetite for new homes (Due to Stamp Duty Savings)
• Cautious outlook for 2010 – median growth expected to be 3% before the market picks up steam in 2011.
• RP Data stated Melbourne’s median price grew 15% for the first 9 months of the year
• Little supply of apartments in the pipeline at the moment
• Rental pressure in Melbourne and it’s growing because the banks have been reluctant to lend money to high-rise developers
• Big drivers for property prices include supply constraints and population growth

Other comments on the Melbourne property market from Angie Zigomanis at BIS Shrapnel and Tim Lawless at RP Data Research

• Expected to have solid growth through the year as upgraders and investors take over from first home buyers
• Higher interest rates will slow growth down from the highs of 2009
• Late recovery in 2009 may show that first home buyers are less sensitive to rising interest rates
• New development in Melbourne is falling short of Melbourne’s migrant-driven population growth
• 2009 price growth was helped by cashed up Chinese buyers which is expected to continue into 2010

Sydney Property Outlook 2010

Comments below are from Brian Haratsis from MacroPlan Australia and Rob Ellis from Property Insights

• Population boom to lift prices
• People that can afford to buy now will stand to benefit the most
• Sydney expected to see the fastest population growth in 15 years
• Climbing prices in South-East Queensland have slowed migration from NSW to QLD
• Same levels of international migration plus high birth rate levels
• Employment generated population growth – young brains from around the world will come to work in Sydney-based financial services, IT and Business services
• Apartment market is being starved of stock owing to tight lending practices that restrict developers by loan to value ratios plus high levels of pre-sales
• Rents poised to soar even higher due to the shortage of rental accommodation, especially with rising interest rates deterring some people from buying
• Prestige property to remain flat for the next 24 months before a potential boom in the high end market
  10% price growth for 2010 wouldn’t be a surprise

Comments below are from Louis Christopher of SQM Research and Jason Anderson from BIS Shrapnel

• 6 – 8% price growth expected in the next 12 months
• Nothing to indicate buying trend will stop or slow
• Price growth in 2009 was 11.6% but affordability was its lowest level since 2002 because interest rates were so low
• Prestige prices (those over $2m) to rise by 12 to 15% in 2010
• Sydney will face an ‘extreme’ shortage of rental properties, worse than any other state
• Rental demand would boost demand for properties in outer suburbs which could result in price growth of 10%

Perth Property Outlook 2010

Comments below are from Nigel Satterley from Satterley Property Group, Western Australia’s largest private residential property developer.

• Perth property prices poised for a decade of strong growth
• 6% expected in 2010 with increases of 7 – 10% over the next 7 to 8 years
• Perth property prices fell by as much as 25% during the downturn
• Population growth and growing confidence affecting the market
• Demand is increasing for premium property
• Medium house price in Perth in September 09 was $462,000
• Prior to 2008, Perth’s property prices doubled in 4 years as demand outstripped supply
• Bank funding for property developments will remain constrained

Adelaide Property Outlook 2010

Comments below are from Michael Brock, Managing Director of Brock Real Estate and president of Real Estate Institute of South Australia.

• Enormous untapped potential in the real estate market
• Adelaide soon to assert itself as one of the most attractive investment destinations in the country
• 2009 saw house prices jump 5% and growth is predicted to double in 2010
• Adelaide’s median house price in September 09 was $421,765
• Property investors now taking the place of first home buyers
• Population Growth expected from skilled migrants and those serving the defence and mining industries
• Adelaide vacancy rate is 1.2% while North Adelaide is only 0.2%
• Many new apartment projects on hold due to finance obligations which can’t be met by Developers

Tasmania Property Outlook 2010

Comments below are from Tim Lawless, Research Director at RP Data

• Could perform well in 2010 due to lifestyle buyers entering the market
• Houses in Hobart are $140,000 cheaper than the national capital city average with an average price of $330,000
• Units average $270,000, $120,000 cheaper than the capital city average
• Tasmania does not have strong population growth or a large economic base
• Rental returns in Tasmania are above 5% with vacancy rates below 2%
• Population growth is just over 1% driven by migrants, retirees and younger families seeking affordable housing

Queensland Property Outlook 2010

Comments below are from Wayne Rex, President of The Property Council in Queensland

• Brisbane property prices increased 6.9% in the first 11 months of 2009
• South East Queensland has seen a stabilisation of prices and turnover
• Building Approval levels have dropped to low levels not seen since the 1980’s
• Many house and land packages still available in South East Queensland for under $425,000
• Release rate of new stock and lack of competition is affecting prices
• Queensland property market will be steady for the first 6 months of the year as people will still remain cautious
• Funding still difficult to attain along with substantial pre-sales

Other comments from Bill Morris, Rod Cornish (Macquarie Capital Advisors) and Lachlan Walker (Colliers International)

• Still not enough homes being built in Queensland
• South East Queensland saw a population increase of 75,000 in 2008-09 with a need for 30,000 homes, yet only 17,000 were built
• Interstate migration has dropped in Queensland (Victoria now leading the way), there is still a high number of people coming from overseas
• Developers still finding it difficult to attain finance
• Developers can’t buy land at the right price meaning they can produce a home at affordable levels (under $500,000)
• QLD suffering from a shortage but Sydney supply shortage is more severe

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Sydney Home Buyer Show (Pre-Show Guide)

Don’t miss the largest event in Australia dedicated to educating home buyers & property investors of all levels.

Buying a home or investment property is one of most important financial transactions you will ever make.
So if you’re looking to buy property but keen to make the right decisions and avoid costly mistakes – then you simply can’t afford to miss the Sydney Home Buyer Show being held at the Sydney Exhibition Centre from Saturday 31 October to Sunday 1 November.

It’s the smart way to buy property and the largest event in Australia dedicated to helping people finance, find and buy their next home or investment property. We’ll help you get on the right path to the right property with over 30 free seminars and workshops on offer each day – delivered only by impartial experts from government and industry associations that you can trust including free seminars from John Symond, Aussie; Mark Bouris, Channel 9’s The Apprentice and Effie Zahos, Channel 9’s Money for Jam.

A major exhibition will showcase over 120 leading companies with everything the home buyer or investor needs under one roof, including new and established homes, apartments, townhouses, units, builders, house & land packages, holiday houses, land estates, home loans, real estate agents, property investment advice companies and much more.

Heaps of New Products and Show Specials will also be on offer plus there’s dedicated Zones for Apartment Buyers and Property Investors.

For further information including the comprehensive educational seminar program and full exhibitor list visit: http://www.homebuyershow.com.au/home/sydney

As part of a special promotion we are pleased to offer all our Blog Readers, family and friends FREE TICKETS to the Sydney Home Buyer Show which are normally $15. Simply visit the website www.homebuyershow.com.au and quote the special promotional code FINDIP when purchasing your tickets.

Visitors to can also attend the Trading & Investing Seminars & Expo next for free – tickets are normally $15. For full details visit the Trading & Investing Seminars & Expo website: www.tradingandinvestingexpo.com.au

Event details:
Sydney Convention & Exhibition Centre
Saturday 31 October to Sunday 1 November 2009
Opening Hours: 10am to 5pm daily

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Why can’t the NSW State Government get their act together and start making some decisions that are going to benefit the people of Sydney rather than cause more chaos? They just can’t seem to get their transport agenda right. First let’s look at the new CBD Metro which they wish to build under the city… they bring in the experts and they make recommendations and then our Government doesn’t seem to follow them. Does this Government have any idea? They want to spend a small $5.3 billion (now rumoured to be over $7 billion) but don’t get it right the first time and they don’t listen to the real experts on the job to determine the best solution for Sydney’s crippling transport problems.
Transport around Sydney (and any other major city for that matter) is one of the city’s most important elements and has a direct impact on the value of property in surrounding and outlying areas.

Before we look at the Sydney CBD Metro, let’s understand exactly what a “metro” is. A ‘metro’ is a fast single deck passenger train with more doors than traditional heavy rail (CityRail). They are lighter than modern double-deck trains and can accelerate faster and handle steeper gradients. As they have more doors they can also load and unload passengers at a faster rate. Therefore, they can move more passengers than traditional heavy trains as they can provide a more frequent service and thus a more efficient people-mover solution over the short-medium distances. This, however, only really works for distances of 10km or less and the city needs to have a highly dense inner city population. This isn’t something that Sydney really has compared to most other major cities around the world that use the ‘Metro’ style transport system. For example, London’s population is close to 8m, New York have a population of 19.5m and Paris with a population of almost 2.5m, although the density of Paris is about 5 times higher than Sydney.

So what is the CBD Metro…

…it is expensive, it covers a short distance and only a few people will actually use it. This all sounds bad… but what’s even worse is the impact it will have on any vital CityRail expansion plans… IT WILL BLOCK THEM. CityRail has the ability to increase capacity by up to 50% meaning more services to the 250 stations currently in the network. They can do this by using a vital corridor under Pitt Street, however the new proposed metro will block the partial use of this tunnel in the future.

It seems everyone is against the development of the CBD Metro except the NSW government… so why won’t they listen? They didn’t listen when they built the Cross City Tunnel, which is hardly used, very expensive and has cost the state millions of dollars.

The most recent transport debacle has just occurred with the introduction of the new CityRail timetable on the 11th October 09. The NSW State Government has identified the Ku-ring-gai region as a major population growth corridor pushing for population growth of 25 -33% with an increase in housing density, which explains the number of new developments that are occurring in the area. Thousands more people have now moved into the newly completed developments and were all looking forward to extra transport
services… but the Government did the complete opposite by cutting 10% of the train services to the very suburbs where they were planning big population growth. I’m not sure if I am missing something in not understanding the lack of logic.

The new timetable – introduced to accommodate the Epping to Chatswood line – means more trains to the lower north shore, but fewer services from Waitara to Roseville, where up to 18,000 new homes are planned.

I really think the NSW State Government needs to sort themselves out and start looking out for all of us that live in the state and are subjected (on a daily basis) to their poor management of what is already a basket case situation. Instead, it seems their focus is more on their political positions.

I look forward to the time where our state infrastructure is capable and efficient enough to cope with the with the increasing population.

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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 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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It has come to our attention that the new apartment development located at Sydney Olympic Park will be made available to the public very shortly. This landmark project is one of the most exciting and unique projects in Sydney and is the first in the Sydney Olympic Park precinct.

Sydney Olympic Park is going to become a master planned community that will fully be completed by 2030. Since 2000, more than $1.1billion of new developments has been secured at Olympic Park, while over the past 2 years over $276 million worth of projects has been approved. There are 6,000 new dwellings being planned to accomodate 14,000 residents along with a new private hospital which is due for comepltion in 2010. A 90-place child care facility has also been approved for development, along with a 100,000sqm education campus which has been planned for the park. There are also a number of corporations that are relcoating to the Sydney Olympic Park bringing 28,500 jobs.

We will release more details about this amazing landmark development of new apartments in Sydney Olympic Park once we have approval from the developer.

You will be able to find these new apartments on the Find Investment Property portal.

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It has been announced that NSW is the hot spot for first home buyers at the moment with a 50% increase in purchases by First Home buyers from February to March this year. There were 6084 First Home Buyers in NSW.

The total number of home buyers across the country rose from 12,664 in February to 17,265 in March. This is assisting with the recovery with the housing minister stating that there shuold be a flow on effect from next year.

The boost has been of great assitance, but dropping Sydney property prices plus increased rents has almost forced First Home Buyers to make the decision to buy instead of rent. Sydney median rents are now up at $390/week as of March 2009.

So if you are looking to buy a property, then make sure you have done your research, can attain a loan and when bidding, make sure you don’t allow your emotions to take control.

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It looks like the boosted First Home Owners Government Grant has done more for the Australian economy than anyone expected with a huge 42% increase in the number of First Home Buyers in NSW according to BIS Shrapnel. Although recent reports indicate that property prices have fallen, futher research tells us that a number of suburbs in Sydney have actually increased in value over the last 12 months. The more affordable property in Sydney property market is definetly on the way up with a rush from FHB. The upper end of town is feeling the effects of the economic down turn the worst with suburbs like Double Bay and Mosman falling more than 8% over the last 12 months and expected to fall further. Once again these drops are attributed to the higher priced properties in the area which may have been selling at $3.5m 12 months ago but in some instances the same proeprties are now worth a few hundred thousand dollars less. Properties in these regions that are sub $1,000,000 are still selling very well. After walking into 2 properties in Rose Bay over the weekend, both agents indicated a stong demand for properties at this price range with both properties having over 30 groups through on the weekend open house.

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