Although rental yields are expected to fall in 2010, this is actually positive for property investors as growth of property prices are expected to exceed that of the rental market.

We need to look at the whole picture to understand what is currently happening in the market.

Many First Home Buyers were sucked into the market last year due to the Government incentives. Those that were on the edge of buying would have bought and those thinking about it would have rushed to take advantage of the grants made available. This has been the case and supported by the reported record number of first home buyers in the market through 2009. Towards the end of 2009 we saw the rate of First Home buyer lending fall as they moved out of the market as grants started to disappear and interest rates started to rise.

Rising interest rates are another major factor that is going to keep first home buyers out the market now. With affordability becoming an issue for home buyers, property investors will take their place as they are able to take advantage of negative gearing tax benefits.

Property Investors are all focused on property that is high in demand. This includes the 1 and 2 bedroom new apartments, townhouses and house and land packages. They are all affordable and demand for rental of these property types is going to grow as First home buyers stay clear of buying. It is also important to remember the high migration levels to Australia and those from interstate are putting pressure on the states property markets.

The property market is expected to move up substantially this year, possible even more so that last year which means that although property prices will grow, and rental prices will increases, the growth or property prices will exceed the growth in rentals thus reducing the investors yield.

How to ensure you get the best of both worlds… Buy sooner and hold for longer.

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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 Find Investment Property team is currently exhibiting at the Home Buyers Show in Brisbane. Its been a fantastic event as many attendees have discovered who we are and they have all asked many questions. We will provide you with some more information about the event at a later date. For some they were able to get cheap tickets by using our special promotional code so if you intend to visit either the Sydney or Melbourne Home Buyers Shows, please check back with us to find out what our special promotion code is to get cheap tickets.

Thank you to those that visited us at thoe property expo and we look forward to seeing you on our main site: www.findinvestmentproperty.com.au

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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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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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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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“First home buyers who qualify for the First Home Owner Grant (the grant) may also be eligible for an additional payment known as the First Home Bonus. To be eligible to receive the bonus, the value of the property must not exceed $500,000. ” (SRO)

So from the 1st July 2009 through to the 30 June 2010, the Victorian State Government will provide an additional $2,000 for FHB of established property and $11,000 for FHB of new homes. This is on top of the Federal Government First Home Buyers Grants.

In addition to the above, the state Government is also encouraging First Home Buyers to purchase in regional Victoria. There is an additional $4,500 on offer for those that buy in Regoinal Victoria. Here is a link of all the municipalities that comply with the additional Regional Boost: http://www.sro.vic.gov.au/sro/srowebsite.nsf/taxes_firsthome_bonus_regional.htm 

This is a very proactive step by the Victorian State Government and really encourages more people to buy, it helps spread the interest to new growth corridors and encourage developers to continue to bring new product to the market. All in all a great result for the residents of Victoria.

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The federal budget was announced tonight with an announcement that First Home buyers will have another 6 months of boosted grants. 3 months at the full rate and 3 months at a halved rate. The boosted grant will end 31 December 2009.

I really don’t understand where the Rudd Government is going with this… the extension should have been alot longer and been more focused on new property. Treasurer Wayne Swan said that the initial boost was a success but wasn’t prepared to continue the boost to help support the Australian economy for more than 3 months at the full rate.

I understand the boosted grant can’t continue forever, however the major impact to the overall economy is far greater than the cost to the government in the short term.

So far, according to Wayne Swan, the first home owners boost had already helped 59,000 people achieve the great Australian dream. One would now assume that some panic would be removed from the first home buyers market while first home buyers have a little more time up their sleeve to find the right property for them.

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Some First Home Buyers in Victoria are jumping for joy as new plans are announced for the states First Home Buyers Grant. The grant has been extended by 12 months with some modifications. It is now  focused heavily on new home buyers. The state bonus that was $5,000 has now been increased to $11,000 from the 1st July 2009. Further incentives have also been put in place to encourage home ownership outside of Melbourne in regional Victoria. Where First home buyers were once getting $3,000 for a purchase in regional Victoria, they will now be receiving $4,500 from 1 July 2009. The First Home Buyer state bonus will be avaiable for those purchasing under $600,000.

“Premier John Brumby said today the new package was aimed at helping Victorian families into their own homes sooner by offering $22,500 for first home buyers purchasing a new home in regional Victoria, $18,000 for a new home in metro Melbourne and $9000 for an existing home as of 1 July this year.”

This is a big commitment by the State Government, however the positive effects on this should be well worth it. Further to this, this statement also reduces the pressure of the Federal Government to continue their First Home Buyer Bonus. The focus on the Federal Budget tomorrow night will give us an inidication of where the Rudd Government sees the place of the Australian property and construction industry in the recovery from the current economic turmoil that Australia and the rest of the world are in.

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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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