Hass is senior partner of Investors Advisors Australia, who is himself a keen property investor. He is passionate about building outstanding client relationships based on trust and value. His role is to ensure that our professional team deliver an outstanding and positive experience to all our clients. Hass is a businessperson with a wealth of experiences both locally and internationally. He has held senior management positions, such as Director in the strategic marketing group E-professionals Sydney.
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‘Rivers of gold’ dry up: Chinese New Year likely to be flat for property

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This Chinese New Year is expected to pass with a fizz rather than a bang for Australian property, with experts warning that “rivers of gold” have all but dried up.

It would continue a string of lacklustre golden weeks, where Chinese investment interest has fallen well below its peak in the 2015-16 financial year.

Chinese activity on the international investment portal Investorist has been low, which is abnormal for the lead-up to the Chinese New Year, the site’s founder Jon Ellis said.

“Typically what we see with Chinese New Year is a few weeks before there’s a big spike in activity on our platform. This year it’s been flat,” he said.

Mr Ellis put the slump down to the departure of Chinese speculative investors from the Australian market, due to tight capital controls imposed by the Chinese government and a raft of Australian taxes on offshore buyers.

Rivers of Gold |Chinese New Year to be Flat for Property - Investors Advisors
Agents say there’s still Chinese money getting about in Australia, but it’s just more under the radar. Photo: iStock

“The trend we’ve noticed is there are no longer speculative Chinese buyers coming in,” he said. “There are still Chinese people buying property if they have migration plans, if they have education plans. The straight investor is gone.”

Carrie Law, the chief executive of Juwai.com, another Chinese-focused investment portal, said deteriorating US-China relations were helping the Australian market but demand was likely to hold steady rather than pick up.

“You could see investors at the airport in Shanghai getting out of the line for the flight to LA and getting in line for the flight to Sydney,” she said.

“Because of its deep market and long-term stability, Australia is a natural alternative for a certain class of property buyer, who would have been seeking those same benefits in the USA.”

The Australian dollar was down about 5 per cent on the yuan, which was helping Chinese buyers justify purchases, Ms Law said.

“If it falls another 2 or 3 per cent, that completely erases the cost of the foreign buyer stamp duty, which tops out at 7 to 8 per cent, depending on the state.”

But despite this, the outlook continued to be less than ideal.

“Some people in the industry feel that 2018 could be the year that Chinese demand stops falling and starts to recover,” said Ms Law. “Our conservative forecast is for flat demand, which is an improvement over last year’s decline.”

Interest from high net worth Chinese investors has been increasing in the commercial property sector instead of housing, and demand was steady in the very top end of the residential market, Black Diamondz Property director Monika Tu said.

“It looks like it’s a growing portion of Chinese investors [looking at commercial property],” Ms Tu said.

“These are newcomers, first-timers.”

Kay & Burton’s Jamie Mi agreed buyers were concentrating on the top end of the market, taking demand away from investment-grade properties.

“The activity in terms of volume won’t be a significant as before but now [they’re] talking about the top end of the market,” she said.

“It just seems more under the radar these days.”

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/rivers-of-gold-dry-up-chinese-new-year-likely-to-be-flat-for-property/

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For sale: Australia’s best off-grid properties

No bills, a low carbon footprint and plenty of serenity — it might sound like a pipe dream to many city slickers, but a sustainable lifestyle is possible with the right property.

Across Australia, it is estimated that over half a million homes are “off-grid” when it comes to water supply and more than 11 million solar panels have been installed on rooftops around the country.

But while a growing number of homeowners in urban areas are looking for ways to make their metropolitan properties more sustainable, there are loads of homes in rural (and not so rural) regions that are completely off the grid — and that means you can say goodbye to nasty bills.

These eco-friendly houses can be big bold and beautiful with million dollar plus price tags, or affordable cabin style retreats with heaps of potential.

Here are 10 of the best off-grid homes on the market right now that are ideal for a calming tree change lifestyle, or even a getaway with the scope to starting a side hustle through short term rentals.

NSW

Australia’s Off-Grid Properties for Sale -Investors Advisors

71ha of natural beauty with 500 year old grass trees.

Address: 
Congewai, NSW

Price: $1.27 million to $1.35 million

Sitting between the Watagans National Park and the Corrabare State Forest, this wonderland is 71ha of natural beauty with 500-year old grass trees, gums, fruit trees, hibiscus and orchids. There is a four-bedroom, two bathroom barn style home on site that offers a low carbon lifestyle with solar power that includes a four-day battery storage system, two large water tanks and grey water irrigation.

TASMANIA

Australia’s Off-Grid Properties for Sale -Investors Advisors

This Lune River home is a great summer escape.

Address: 
Lune River, Tasmania

Price: More than $150,000

Cheap as chips, but great for the environment. This summer escape includes a one-bedroom cabin on 3611sq m. The completely off-grid property does have access to town power and the phone at the boundary if desired, but to be fully disconnected from the hum drum the place also has a wood stove for heating and cooking as well as productive gardens, a dam, chicken coops and a nearby river for fishing.

NSW

Australia’s Off-Grid Properties for Sale -Investors Advisors

The 40ha estate is known as Flatrock Forest Farm.



Address: 
Milton, NSW

Price: $1.175 million

At this country retreat it is as simple as turning up and switching off. The 40ha estate known as Flatrock Forest Farm is an off-grid sustainable property with a three-bedroom timber cottage featuring a stone fireplace, a saltwater pool and spa plus a guest cottage. On site there is an orchard, a solar power system and when it comes to water you are spoiled for choice with a dam, four tanks and a creek.

SOUTH AUSTRALIA

Australia’s Off-Grid Properties for Sale -Investors Advisors

Built with Kangaroo Island stone.


Address: Kangaroo Island, South Australia

Price: On application

Overlooking the peaceful Pelican Lagoon, this 7.68ha sustainable property is secluded but brimming with wildlife. Built with Kangaroo Island stone, the designer home has created to blend the inside with the local environment. In addition to all the mod cons inside, the property has passive solar with battery storage, a back up generator, wind turbine and four huge water tanks.

VICTORIA

Australia’s Off-Grid Properties for Sale -Investors Advisors

This island home is surrounded by 16ha of usable land.


Address: 
French Island, Victoria

Price: On application

An island home surrounded by 16ha of usable land, this hideaway features a three-bedroom house with wood heater, solar hot water, off-grid power which includes a wind turbine, and there is a battery bank to store electricity. Live even more sustainably with your own water supply, veggie patch and cattle yards.

TASMANIA

Australia’s Off-Grid Properties for Sale -Investors Advisors


Address:
Nubeena, Tasmania

Price: More than $1.4 million

It may be on Roaring Beach Rd, but this secluded spot is far from the sounds of the city. There are two properties selling at the same time totalling 5.75ha. Wingrove House is a rustic homestead built by the craftsman owner and is hidden in its own forest with a few modern comforts such as a tennis court, workshops and a sauna. The adjoining land is a 4.5ha block surrounded by bushland close to the beach.

WESTERN AUSTRALIA

Australia’s Off-Grid Properties for Sale -Investors Advisors

Chance to reduce your footprint.



Address:
Hilton, Western Australia

Price: Mid $300,000s

Reduce your footprint with this solar sustainable home 22km from the centre of Perth. The one-bedroom cabin style house is powered by an off grid solar system with storage batteries and an underwater rain storage system. Made from recycled materials, it has high cathedral ceilings, great cross flow ventilation and sits on its own 300sq m survey-strata lot with no fees.

NSW

Australia’s Off-Grid Properties for Sale -Investors Advisors

In the same family for more than 50 years.


Address: 
Mangrove Mountain, NSW

Price: On application

So off the grid, this property has its own private road. It has been in the same family for more than 50 years and while there is a charming settler’s cottage on site it does come with DA approved plans to build a four-bedroom homestead. There are established orchards, cottage gardens, grazing land, a large catchment dam and a bushland backdrop all on 74ha.

NSW

Australia’s Off-Grid Properties for Sale -Investors Advisors

This off-grid two-bedroom has a battery-powered solar system.


Address: Wingham, NSW

Price: $425,000

This handcrafted home on 163ha in the Manning Valley was built with timber from the actual property and stone from a nearby quarry. The off-grid two-bedroom, two bathroom property has a battery-powered solar system with gas cooking and hot water and views over the natural bushland and mountains.

WESTERN AUSTRALIA

Australia’s Off-Grid Properties for Sale -Investors Advisors
 A solar passive home with valley views.

A solar passive home with valley views.


Address: 
Lower Chittering, Western Australia

Price: $749,000

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Tucked away beyond fields of wildflowers and tall timber, this 35ha estate is a sustainable home in the heart of the Chittering Valley. It is a solar passive home with valley views and is made from straw bale and timber, double glazed windows, a waterless composting toilet, wood fire hot water system, three water tanks, vegetable beds, fruit trees and a chicken run.

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/for-sale-australias-best-offgrid-properties/

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When was the best buying in Australia’s capital cities?

You may have heard that the key to gaining capital growth from your investments is about “time in the market”, not “timing the market”.

This wisdom suggests that the long-term trend in housing and stock markets tends to be up. Therefore, holding on to your investments for a long period will help you weather short-term fluctuations.

But to use another cliche; hindsight is 20/20. The release of the December 2018 Domain House Price Report reveals that time in the market has not served buyers equally in every city.   

The following graphs show how much money would be made from selling the median value house or unit in each city at December 2018, based on when it was purchased over the past 15 years.

Although the Domain price series goes back more than 25 years for most cities, the past 15 years have seen some of the largest structural disruptions to parts of the Australian economy. These include the onset of the global financial crisis, a record low cash rate, the mining boom and the east-coast housing boom.

Historic values were adjusted for inflation so both the buying and selling points are represented in 2018 dollars. Therefore, the gains and losses reflect “real” returns, taking into account the effect of inflation.  

Admittedly, without the aid of a time machine, this data crunch may not seem actionable. Many weren’t in a position to enter the market over the past 15 years (whether that’s because you didn’t have the money, or you were 11 years old).

And of course, capital gains are not everything. Buying at the bottom of the market might have meant paying higher mortgage rates. Looking only at capital gains also does not take into account other benefits of owning property – such as rental return, or getting to live in it.

But there are important lessons from looking at the past.

This data provides insight into the unique economic drivers of each state and territory that have led to different patterns in returns over time. It shows us that recognising structural shifts can be just as important as holding onto assets.

It potentially foreshadows future peaks and troughs in our cities, by highlighting what areas are starting to provide stronger returns.

Sydney

When it comes to capital gains in Sydney, those who bought 10 years ago might actually be better off than those who bought 15 years ago.

But those buyers had to be bold enough to purchase in the midst of the global financial crisis. 

Despite recent declines in the Sydney housing market, the real gain in the median house price between September 2008 and December 2018 is $398,000. For units, the real gains are $238,000.

In the lead-up to the GFC, the NSW economy under-performed relative to other states and territories. In September 2008, the economy faltered further with the onset of the GFC.

Demand for goods and services within NSW contracted in the September 2008 quarter. In this climate, the nominal median Sydney house price sank to $540,000, while the median unit was down to $377,000.

But by 2011, there was a turnaround in economic performance. Growth in Gross State Product (the state and territory equivalent of GDP) rebounded to 2.4 per cent, up from 1.1 per cent in 2009.

Property prices boomed as inflation stayed low across Australia. From 2009, the rate of inflation has been 2.1 per cent a year, as opposed to a long-term historical average of 5.1 per cent.

This means buyers who picked up a Sydney property at the height of the GFC have not only seen high value increases, but inflation has not eroded these gains as significantly.

Those who bought more recently have not been as lucky, with prices returning to 2016 levels. Since the market peak in June 2017, the median sale price for Sydney houses declined $173,000 in real terms.

Melbourne

Those who bought houses in September 2004 are the best placed to sell in the current market, with a $364,000 capital gain on a typical priced house. For units the best buying was December 2005 with values up $110,000.

High returns hold fairly steady for the median house purchase before September 2006. Domain data suggests purchases before this point yields real increases above $350,000.  

However, by June 2010, the gains more than halve to $159,000.

This is because 2010 brought a significant surge in house prices off the back of strong economic performance in Victoria, and six cash rate cuts between September 2008 and April 2009.

The unit market in particular performed so well during this period, that those who purchased the median Melbourne unit during 2010 would likely not realise real gains if they sold today.

As the Melbourne property market experienced another surge from September 2012, the return on both houses and units purchased after this point depleted rapidly.

Melbourne units purchased at the market peak  (March 2018), have seen the sharpest real decline in value, down $36,000. For houses bought at the market peak in December 2017, the median sale price is down by about $92,000.

Brisbane

Unlike Sydney, Brisbane property has seen real declines since the GFC. The median Brisbane unit sale price has seen declines relative to every quarter since December 2006.

Those who purchased a house in September 2005 would be best placed to sell today, with the median sale price up $124,000.

The best time to buy a Brisbane unit was all the way back in March 2004, with gains of $56,000 in the median price.

But it was not time in the market that benefited buyers, which is evidenced by the losses incurred by purchasers just four years later. It was buying just before a once-in-a-lifetime mining boom.

Queensland annual growth in ABS gross state product averaged 4.5 per cent a year, driven by a mining boom through the expansion of the Chinese economy.

ABS export figures suggest the value of coal exports from Australia more than doubled from 2007 to 2008, to $46.6 billion.

Queensland’s mining sector expanded, and property prices responded, providing rapid capital gains for those who bought beforehand.

The end of the mining boom in Queensland saw the rapid slowdown of migration and investment into Queensland between 2010 and 2014.

This in turn created subdued performance in the Brisbane property market. However, the graph above represents a turnaround in the market, as price declines become less severe over time.

Perth

As with Brisbane, the Perth property market has been heavily impacted by the wider resource-based economy of the state.

Through the mining boom and bust, prices have settled to levels last seen in December 2005.

The median Perth house price has increased most since March 2004, up $133,000. However, those who purchased at the median level just four years later in December 2007 saw the largest real declines – down $162,000.

Interestingly, while the declines are large, they are not as large as the declines seen in the Sydney market from the June 2017 peak.  

In units, the real return based on the median sale price ranges from $90,000 at June 2004, to a loss of $102,000 from a purchase at June 2014.

Now that the Perth economy and housing market is showing signs of a recovery, houses purchased today may start seeing gains in value.

The real change in median house price purchases between the September and December quarters of 2018 was a relatively small decline of just $3000.


Darwin

Perth and Darwin dwellings show similar patterns in changes to the median house and unit returns over time. However, the depths of decline over the last 15 years have been more severe in Darwin.

This is because the NT more broadly attracts a more mobile workforce, creating high fluctuations in population. As a result, property demand and prices see fluctuations.

The mining-induced peak of the Darwin house market was in March 2011. When taking inflation into account, the median house price rose to $744,000.

Since the March 2011 quarter, the median house price fell $229,000 – the most severe fall of the capital city markets.

The same is true of units, which have declined $197,000 since the peak in March 2015.

For both houses and units, the peak return based on median price data stems from purchases well before the mining boom, in March 2004.

Adelaide

When it comes to houses in Adelaide it is very much a ‘time in market’ investment. The highest gains come from purchases at March 2004 for both houses ($144,000) and units ($64,000).

Adelaide houses have largely seen slow and steady capital growth. The housing market has not been as attractive to investors, with ABS census data suggesting approximately 80 per cent of the house market is owner-occupied.

Therefore, a home owner who entered the housing market at any point in the past 15 years has generally seen a real gain in value from a sale in the current market environment.

The exception is 2018, where growth in the Adelaide house market has not kept up with inflation.

The biggest loss on Adelaide houses was relatively small, with a decline of $4000 from June 2010 to December 2018.

The recent slowdown in growth of the Adelaide housing market may be attributed to the generally subdued lending environment, and continued uncertainty of job creation in the SA economy.

The unit market has not been as steady over time, with real value declines of $40,000 for those who purchased in June 2010. It may be that in an affordable, low-density market, unit stock may not have been as desirable as houses over time.

Employment growth, particularly full-time employment growth, has been fairly strong in 2018 across SA, peaking at an annual growth rate of 2.5 per cent at April 2018.

Employment growth may flow into stronger demand for Adelaide property as jobs and wages lift. Adelaide units have seen modest increases over 2018.

Canberra

Canberra has had the most remarkable divergence in returns between house and unit stock.

The median Canberra house price from anywhere between 2004 and 2017 would yield an increase if sold in the current market.

The highest increase is from a purchase at June 2005, where the real increase in price is $204,000.

The median unit price over the past 15 years has largely seen declines to December 2018.

The largest of these price falls would be from a purchase date of December 2010, when unit prices peaked in real terms at $501,000.

Since this time, a relatively high supply of unit stock may have contributed to declines in unit prices, which sat at $413,000 in December 2018.

ABS building activity data shows that unit completions largely out-paced house completions in the ACT from 2011. Unit completions have since averaged approximately 2800 a year, compared with an average 1485 house completions.

The most a Canberra unit has made from the past 15 years if sold today is just $11,000 from September 2004.

Part of the increase in the median Canberra house price over time was possibly due to the demolition of housing stock contaminated with asbestos from 2014. The initiative saw more than 1000 houses demolished, and rebuilt at a premium.

Those purchasing houses between September 2014 and December 2017 did so in a rising market, before prices plateaued over 2018. Therefore, house purchases in 2018 have not seen median house prices outpace inflation.

Hobart

Selling the typical house in Hobart today would likely leave the seller better off, no matter when they purchased the property over the past 15 years.  

From a humble house price of $214,000 in March 2004, the median Hobart sale price is now approximately $480,000. Taking inflation into account, the gains on this holding period are $175,000.

Units also have maximum returns from a property acquired at March 2004, which would see real returns of $85,000 if sold today.

Hobart was not always a desirable market. In September 2012, prices approached a trough off the back of weak tourism, public spending and construction.

This was partly related to the peak of the mining boom, which saw construction projects winding down, and a high Australian dollar deterring international tourism.

Domain’s median price series suggests a house purchased at this trough has since increased by $137,000.

Between September 2016 and December 2018, the median Hobart house price increased 34 per cent, while units increased 33 per cent.

In recent years, there have been no shortage of factors cited as causing growth in the Hobart market, from tourism to rising temperatures on the mainland.

In addition to demand factors, the city is geographically constrained and, in recent years, the supply of property has not kept up with population increases.

However, growth in Hobart dwelling prices is starting to ease, as tighterlending conditions and subdued demand will likely see the Hobart prices stagnate over 2019.

Units have already seen a fall in values over 2018. Those who purchased at June 2018 have already seen a real decline of $23,000.

Ultimately, there will be many variations on the capital gains of an individual property. But median price analysis suggest for most cities, economic structural shifts in the last 15 years have challenged the time in the market rule.

The global financial crisis, a once-in-a-lifetime mining boom and record-low interest rates have created different experiences of loss and opportunity from city to city.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/when-you-should-have-bought-in-australias-capital-cities-797932/

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Buyers in the box seat as Brisbane home values start to fall

THE housing slump led by Sydney and Melbourne could be a windfall for Brisbane buyers, with home values in the Queensland capital dropping for a second straight month.

The CoreLogic January home value index found dwelling values in the river city fell 0.2 per cent in the first 29 days of the month to a median of $493,500.

It follows a drop of 0.2 per cent in December.

CoreLogic head of research Tim Lawless said the silver lining for Brisbane was that buyers were in now in the box seat, with homes more affordable and stock levels higher than they were a year ago.

“We’ll probably be looking at Brisbane having a flat year, with no growth at all in dwelling values, which in some ways is positive with the market in a downturn,” Mr Lawless said.

“There’s plenty of stock to choose from and buyers are looking at relatively affordable housing compared to Sydney and Melbourne, and because there’s lots of stock to choose from, there’s no urgency — buyers can negotiate quite hard.”

The slowdown is being led by heavier price falls in the nation’s two biggest housing markets.

in the month to date.

Mr Lawless said the results showed the housing market slowdown was not just restricted to price corrections in Sydney and Melbourne.

“The first month of the new year has seen housing market conditions continue along the weak trajectory seen throughout 2018,” Mr Lawless said.

“The falls continue to be led by Sydney and Melbourne, while the early indications were also pointing towards a monthly fall in dwelling values across Adelaide, Perth and Brisbane.”

National dwelling values fell 1.1 per cent over the first 29 days of January, while Sydney values dropped 1.3 per cent and Melbourne values slid 1.6 per cent.

Home values across the five major capital cities declined 7.2 per cent over the past year.

Mr Lawless said tight credit conditions remained the key factor in slowing the housing market, while other factors such as a softening in consumer sentiment, higher supply and less investment were also having an impact.

The full set of CoreLogic index results will be released today.

CORELOGIC HEDONIC HOME VALUE INDEX

Sydney Jan. -1.3%; Qtr -4.4%; Year -9.6%

Melbourne Jan. -1.6%; Qtr -4%; Year -8.2%

Brisbane Jan. -0.2%; Qtr -0.3%; Year 0%

Adelaide Jan. 0.4%; Qtr -0.1%; Year 0.9%

Perth Jan. -0.9%; Qtr -2.6%; Year -5.5%

Combined 5 capitals Jan. -1.1%; Qtr -3.4%; Year -7.2%

(Source: CoreLogic, based on first 29 days of January 2019)

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/buyers-in-the-box-seat-as-brisbane-home-values-start-to-fall/

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Would you take out a loan to pay the rent?

The tech industry’s ability to disrupt exisiting markets is well documented, with major players like Uber and Airbnb making their presence felt abroad and closer to home. When it comes to the rental market, rent-bidding apps such as Silicon Valley-based Rentberry and Live Offer have also been feted for an Australian launch.

Now, another start-up has established itself in the US, offering tenants using its platform the ability to borrow money in the form of a one-off loan to help them cover the rent.

Based in Santa Monica, Domuso has been offering the service for two years in Southern California and has recently expanded to the north of the state.

The company operates an online rental payment platform, working with companies that manage large residential complexes, with revenue coming from payment processing fees.

The tenants in those properties pay through Domuso, and have the option of applying for a Domuso Instalment Loan to cover a rental instalment they can’t manage rather than incur late fees and potentially risk eviction. There is also financing available to cover security deposits, or rental bonds.

The loans are available for six to 12 months and are reported to have an average annual interest rate of 27 per cent, which has triggered some concerns from financial experts. However, Domuso co-founder Michael Lightfoot argued that some residents were already paying their rent on credit, and Domuso was a safer digital alternative.

He said the company had “no intent of going down a path of payday lending, or anything in that regard”.

“We provide one loan at a time for any one-time payment that is due [one month’s rent, move-in and deposit, move-out, etc]. Renters must pay off their current loan before taking a new loan,” explained chief executive Damian Langere in a L.A. Biz interview.

He said the service would be beneficial for gig-economy workers facing strict rental payment deadlines, or renters grappling with unexpected financial emergencies, such as medical bills or losing their jobs.

The company had, as of early 2018, raised a total of $US5.8 million in investment and had around 30,000 properties in their system, with plans to expand by attracting new property management companies. Two years ago, around 4000 of the then-20,000 tenants using Domusohad made a payment using the credit option.

Figures released in 2017 by CareerBuilder, a job-hunting site, suggest that as many as 80 per cent of the Americans live pay cheque to pay cheque – and California is ranked as the second-least affordable state to live in. Much of the new housing built around the Bay Area and Los Angeles is only affordable to workers earning over $US100,000 ($138,700) a year.

Both San Francisco and Los Angeles were ranked in the top 10 least affordable housing markets worldwide by Demographia in 2018, as well as being in the top 5 least affordable cities for renters.

While the platform is not available in Australia, other forms of credit such as short-term loans may be used by tenants struggling to make ends meet.

The managing editor of comparison platform Finder.com.au, Kate Browne, said using credit to pay the rent was a dangerous situation to get into.

“Payday lenders have been on the rise in Australia for a long time,” she said, noting the casualisation of the labour market and the situation of low-income earners. Rental stress remains high in Sydney and Melbourne, despite Sydney’s recent rent falls.

“Another reason we are seeing this is the rise of online access – you don’t even need to get off the couch, and you can get a loan in as little as 30 minutes,” she added.

“In terms of an alternative – the very first one is to try to negotiate with your landlord or agent. There are also financial counsellors that offer free independent advice, that’s a really sensible port of call.”

For those still needing to borrow money, it was worth comparing options, she said, with low-interest loans available to those on low incomes.

“We are always reticent to suggest people get into debt,” Ms Browne said.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/would-you-take-out-a-loan-to-pay-the-rent-797525/

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Geography, incomes and perceived prestige: Australia’s cities ranked by housing market inequality

Sydney’s sparkling harbour and stunning beaches make it one of the world’s most desirable cities in which to live. But the huge price gap between a house with harbour views or near a beach and a typical house in a Sydney suburb contributes to Sydney’s property market being Australia’s most unequal.

The same applies to apartments in the harbour city, with a much wider gap between top-end apartments and cheap options than in other capital cities. Melbourne has the second-most unequal property market. Somewhat surprisingly, Hobart also has an unequal unit market.

In contrast to the vast property price gap in Sydney, Canberra is Australia’s most egalitarian housing market, with the difference between expensive and cheaper homes much smaller than all other capitals.

The equality of Australia’s capital city property markets, and why some markets are more unequal than others, can be explained by geography, incomes and perceived prestige.

Sydney’s position as Australia’s most unequal capital city housing market is shown in the table below by the price percentile ratios being much higher than all other capital cities (the table shows the ratio of house and unit prices at different price ‘percentiles’ in 2018). For example, a house in Sydney at the 90th price percentile costs almost four times what a house at the 10th percentile costs (the ’90th/10th’ ratio). 

The graphs below show that Sydney has been the most unequal capital city for houses over the past 15 years, except for a brief period in 2003-04 when cheaper Sydney homes saw rapid price growth, and in 2015 when strong price growth at the top-end of the Melbourne market saw Melbourne equal Sydney briefly as the most unequal property market.

Sydney is Australia’s most unequal capital city housing marketRatio of property price percentiles for Australian capital cities, 2018
SydneyMelbourneBrisbanePerthAdelaideCanberraHobartDarwin
Houses
95th/10th5.24.23.64.34.03.03.73.4
95th/50th3.22.82.32.62.42.12.12.0
90th/10th3.93.22.83.33.02.43.12.7
90th/50th2.42.21.82.01.81.61.81.6
75th/25th2.11.81.71.81.81.51.81.6
Units
95th/10th3.83.43.13.83.02.84.0
95th/50th2.52.12.12.31.91.92.3
90th/10th3.02.62.53.12.42.33.4
90th/50th1.91.71.71.81.61.61.9
75th/25th1.61.61.61.71.61.51.7
Note: Darker blue indicates a more unequal property market in each row, lighter green indicates a more equal property market in each row. A price percentile refers to a point on the ranking of properties from cheapest to most expensive over a certain period. For example, the 90th price percentile refers to the price of a sold property where 90 per cent of sales were at a lower price. A higher ratio indicates that a market is more unequal, i.e. that more expensive houses/units cost a lot more than a typical or a cheap house/unit. Figures for Hobart and Darwin should be interpreted with caution due to small sample sizes. Darwin units excluded due to small sample size.Source: Domain Group

Sydney is also one of Australia’s most unequal property markets for units. Sydney had the highest 95th/50th ratio and second-highest 95th/10th ratio for units in 2018. ‘Cheap’ Sydney units are much more expensive than cheap options in other cities. In December 2018, a Sydney unit at the 10th price percentile sold for $460,000, compared to $325,000 in Melbourne and below $300,000 in other capital cities. Top-end apartments are also much more expensive in Sydney.

So why is Sydney Australia’s most unequal property market? Sydney’s unique geography is a major factor. Proximity to beaches and the harbour makes Sydney’s top-end property astronomically expensive as people are willing to pay a large premium to live near the coast and the harbour. Homes close to the CBD, where a growing share of high-paying jobs is located, also command a premium. Another factor in Sydney’s status as a ‘superstar city’, with Sydney accounting for one-quarter of Australia’s GDP. But although average incomes are higher in Sydney than in other parts of Australia, Sydney also has the most unequal incomes of all Australia’s capital cities, resulting in a wide gap between what type of home people can afford.

Sydney is Australia’s most unequal capital city housing marketProperty values at different price percentiles for Australian capital cities, 2018
SydneyMelbourneBrisbanePerthAdelaideCanberraHobartDarwin
Houses
10th$559,000$491,000$349,000$300,000$290,000$470,000$265,000$305,000
25th$682,000$580,000$422,000$380,750$370,000$575,000$346,000$415,000
50th$930,000$727,000$550,000$495,000$487,000$695,000$455,000$505,000
75th$1,425,000$1,032,000$725,000$689,259$655,000$864,000$600,000$615,000
90th$2,180,000$1,512,000$952,500$954,437$910,000$1,150,000$782,000$740,000
95th$2,900,000$1,980,000$1,250,000$1,250,000$1,180,000$1,400,000$930,000$950,000
Units
10th$460,000$324,900$273,000$205,000$220,000$300,000$205,000
25th$580,000$400,000$330,000$262,000$275,000$366,500$278,000
50th$730,000$520,000$402,500$359,000$340,000$430,000$360,000
75th$970,000$655,000$525,000$481,000$425,000$541,000$459,875
90th$1,395,000$850,000$685,000$680,000$538,000$678,000$710,000
95th$1,800,000$1,057,000$850,000$825,000$655,000$835,000$800,000
Notes: the 50th price percentile is the raw median, not the stratified median that is used in Domain’s House Price Reports. Figures for Hobart and Darwin should be interpreted with caution due to small sample sizes. Darwin units excluded due to small sample size.Source: Domain Group

On the flip side, Canberra is currently Australia’s most equal capital city property market. But Canberra’s property market isn’t relatively equal because the top end is affordable, it’s because the cheaper houses and units are actually pretty pricey. A cheap Canberra house at the 10th price percentile sold for $470,000 in December 2018, which was much more expensive than a house at the same price percentile in Brisbane, Perth and Adelaide. Canberra and Darwin have vied for the title of the most equal house market since 2004.

Three main factors are the likely reasons Canberra’s property market is Australia’s most equal. First, Canberra is the only capital city not situated on a natural river, harbour or ocean, so there are no properties near a beach or with an ocean view that are highly desirable for which people are willing to pay a premium. Second, Canberra is Australia’s most spread out city with jobs scattered around the city that are (mostly) easily accessible by car. In contrast, Sydney and Melbourne are more monocentric cities, with greater congestion, which makes proximity to the city very valuable. And finally, the ACT has the second most equal income distribution of all Australia’s capital cities (Darwin is the most equal), with the high proportion of public sector jobs in the ACT contributing to this relative income equality.

Melbourne’s property market has been the second or third most unequal of all the capital cities for the past 15 years. Melbourne surpassed Sydney for houses on some price ratio measures briefly in late 2015. But due to strong price growth at the lower end of the Melbourne market in 2017 and more expensive homes falling in price over 2018, Melbourne’s housing market became more equal over the past two years to sit on par with or just above most other capitals.

A major reason why Melbourne’s property market is more equal than Sydney’s is that there are not the same spectacular locations as in Sydney. While the prestigious suburbs of Toorak and Brighton are very nice places to live, they are not as naturally beautiful as Vaucluse, Bronte and Mosman. And the Yarra River is no Sydney Harbour. Melbourne is more unequal than other smaller capitals as proximity to the city is more valuable in a large city, particularly as jobs growth has been faster in the CBDs of Melbourne and Sydney than in the suburbs and congestion has worsened. Melbourne also has the third-highest income inequality of all capital cities, which means some people can afford to pay more for expensive properties in more desirable locations.

Hobart has consistently been the most or second-most unequal unit market since 2010, and it has become more unequal over the past few years. Hobart’s inequality is due to the cheapest Hobart units being very cheap – a unit at the 10th percentile in Hobart is cheaper than in most other capital cities. There are also relatively expensive Hobart units that might have River Derwent views or are near a beach. At odds with the unit market, Hobart’s house market is quite egalitarian.

Perth’s housing market has generally been around the middle of the pack but has become a bit more unequal in recent years due to prices for cheaper houses falling by more than they have for expensive houses. Perth’s unit market is one of the most unequal unit markets and has become more unequal over the past few years as unit prices have fallen by more at the lower price points.

And Brisbane and Adelaide? They’ve consistently been middle of the pack since 2004 for houses, but Adelaide’s unit market is almost as equal as Canberra’s unit market on most measures.

Many of the factors that influence the equality of a city’s housing market, such as geography, size, congestion, job dispersion and income inequality, have combined to make Sydney’s property market much more unequal than other Australian capital cities. 

Some inequality in property prices is not surprising, particularly in Australia’s coastal cities where some properties command a large premium due to their location. But it’s well-documented that property market inequality contributes to wealth inequality and may also be a sign of a divided city, with some citizens missing out on the opportunities cities can provide. Given that, governments and policymakers should not ignore housing market inequality as part of any future efforts to address income and wealth inequality.

This article was first published in www.domain.com.au. Here is the link to the original article: https://www.domain.com.au/news/harbour-views-to-the-suburbs-sydney-is-australias-most-unequal-housing-market-795241/

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Are you living in a buyer’s or seller’s market?

After 12 months of house price declines, it’s officially a buyer’s market across most of the country. 

“Right now, Sydney, Melbourne, Brisbane and Perth would all be considered buyers markets,” says Nerida Conisbee, Chief Economist at realestate.com.au.

“Elsewhere around Australia it is far more variable. In Hobart, the strongest market in Australia, it is definitely still a seller’s market.”

If your city or suburb has recently changed sides, it’s important to know how these conditions can affect you and your plans.

Enter the buyer’s market

“In the simplest terms, it’s a seller’s market when prices are going up, and a buyer’s market when prices are going down,” says Conisbee.

“Apart from this, seeing far fewer people looking to buy when you go to an auction or an open day is another indicator of a buyer’s market.”

Another way to determine what kind of market it is, is to look at the clearance rates. In a buyer’s market you can expect to see low clearance rates, around 60% or less, with homes sitting on the market for longer, sometimes passing in without sale.

While it’s far from ideal for owners and investors, it’s encouraging news for many first home buyers.

“Less competition for housing makes it far easier to get into the market. You are able to take your time when purchasing a property, and there is also the possibility of being able to negotiate a better price,” says Conisbee.

Seller’s markets still exist

Hobart, as well as other pockets around the country, are standing firm in seller territory. In these conditions, the demand for housing has outstripped supply, leading to fierce competition to secure a property.

This demand pushes prices up, with properties spending less time on the market and selling for more, often above reserve. In a seller’s market, clearance rates are high, usually 75% or more.

“At these times, you’re less likely to be able to negotiate on price,” Conisbee says.

You’ll also have less time to make a decision and buyers will need to be ready to pull the trigger at any moment.

While your city or suburb may currently be considered a buyer’s or seller’s market now, it’s important to note that these conditions can change quickly and sometimes without warning.

“Cities move from being buyer’s to seller’s markets and back again regularly, although very popular suburbs can be seller’s markets almost all the time.”

The best time to buy

Buying at the right time is a concern for many would-be home owners who want to break into the market before prices start to rise, but not so soon that they miss out on a bargain.

If you are currently experiencing a buyer’s market, like much of the nation, now is a great time to buy, Conisbee says.

While it is best to buy at the very bottom of the market, determining when that will be can be extremely difficult predict – even for professional analysts, and waiting too long can see you miss out on a great opportunity.

“Although prices might be going backwards, if you find the right home, it is worth buying as markets can switch from a buyer’s to seller’s market relatively quickly.”

Be sure to research what options are available, so that when the time comes to buy, you know what you want.

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/are-you-living-in-a-buyers-or-sellers-market/


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Brisbane’s best performing suburbs in 2018

If you live at Sandgate, Hemmant, Kenmore or Paddington, you can breathe easy with all this talk about a flat property market, because house prices in your suburb are some of the best performings in the city.

While Brisbane’s overall house price growth was minimal in 2018, new data from the Domain House Price Report has revealed there were suburbs that bucked the trend, showing strong growth and skyrocketing in value.

The No.1 suburb was Sandgate, the coastal village in Moreton Bay north of Brisbane’s CBD, where house prices grew by a whopping 18.8 per cent.

It was followed by North Ipswich, which rose by 17.3 per cent, then Hemmant, in Brisbane’s eastern suburbs, which grew by 12.5 per cent.

Kenmore and Graceville rounded out the top five, both up by 11.8 per cent, but other suburbs like Paddington, Bardon, Burpengary East, Carseldine and Brookfield also made the top 10.

Top 10 suburbs for houses in 2018

SuburbMedian priceYoY increase
Sandgate$750,00018.8%
North Ipswich$366,50017.3%
Hemmant$540,00012.5%
Kenmore$738,00011.8%
Graceville$952,00011.8%
Paddington$1,105,00010.7%
Bardon$990,50010.1%
Burpengary East$580,0009.4%
Carseldine$621,0008.9%
Brookfield$1,110,0008.8%
Source: Domain House Price Report, Dec quarter, 2018.

Kristy Kelly of local Sandgate real estate agency Kindred said the secret was well and truly out when it came to Sandgate.

“As the years go by, Sandgate just keeps getting better and better and it’s where everyone aims to be up here. There are some really good prices coming out that don’t just house with water views,” she said.

“We’re seeing houses sell for $1.1 million away from the water. They will have city or mountain views but it used to be that anything with that pricetag had to have a water view … not any more.”

Inner-city favourite Paddington continued its run of success in recent years, showing strong growth as the momentum of its evolving landscape held strong.

Builder Rob Gray, who runs Graya Constructions together with his brother Andrew, has six high-end building projects on the go at Paddington and said it was his favourite suburb because it “ticks all the boxes”.

“Geographically to me it makes sense but the biggest standout to me is that there’s so much building going on — every second street there’s a build happening, and they’re not small builds.

“I saw it happen at New Farm and Teneriffe and I saw it happen at Camp Hill a couple of years ago. There’s this real air of confidence in the suburb,” he said.

In Brisbane’s sought-after western suburbs, Kenmore, Graceville and Brookfield recorded excellent growth, soaring by nearly 12 per cent and 9 per cent respectively.

It came as no surprise to Jason Adcock of Adcock Prestige, who sold a $1.8 million acreage property at Brookfield under the hammer — two days before Christmas.

“I thought no one would be there, it being the 23rd of December and basically Christmas. It’s the latest auction I’ve ever done in 25 years of real estate,” he said.

“But I couldn’t believe it, we had 50 people there on the day and a neighbour bought it under the hammer.

“There’s certainly something going on in Brookfield.”

Edging closer to the million-dollar suburb club with a median of $952,000, Graceville has always been in high demand with families, beloved for its wide, tree-lined streets with large block sizes and Queenslander houses.

But Mr Adcock said the recent proliferation of new cafes, restaurants and shops had elevated its desirability to a whole new level.

“It offers an incredible amount of facilities and it’s now got that amazing village vibe about it,” he said.

“People walk out their front door to go out for the night or weekend. You should see it on a Friday night on Honour Avenue or down on Oxley Road, it’s just fantastic.”

If you’ve never heard of Hemmant, which recorded the third-highest rate of house price growth in 2018 at a huge 12.5 per cent, you’re not alone. East along the Brisbane River from Murrarie and 10 minutes from Bulimba, it’s been largely industrial — but that’s rapidly changing.

The land is now being converted to residential lots and brand new houses are being built at a cracking pace. The median house price is now $540,000.

Serena Carter of Ray White Tingalpa said in the next 18 months to two years there would be 1800 new homes built at Hemmant.

“A  lot of people still have that stigma and say ‘I wouldn’t live there but it’s only 10 kilometres from the CBD, there’s a train line and it has excellent access to the city,” she said.

“In fact, I’ve got a lot of buyers coming here from Bulimba and Morningside and buying because they can’t believe the value. They come here and see they can save themselves $400,000 to $500,000 and they’re so happy.”

She said the suburb’s value would continue to grow this year as more new housing was built.

“The people who bought land here in stage one have already seen massive growth on their property values,” she said.

“The people who got the bigger lots are sitting on a goldmine. This suburb is really moving.”

This article was first published in www.domain.com.au. Here’s the link to the original article: https://www.domain.com.au/news/brisbanes-best-performing-suburbs-in-2018/

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Make your move to Melbourne’s growth suburbs

Recent headlines have been filled with doom and gloom about Melbourne’s falling home prices – but you need to read between the headlines to understand what’s really happening in the property market.

Dig a little deeper and you’ll realise the picture for home buyers in Melbourne and elsewhere in Victoria is not as bleak as it would seem. In fact, if you’re about to make your first move into home ownership, or if you’re upgrading to make room for a growing family, there’s plenty of evidence that building a place of your own now is as good a time as any.

Recent research from realestate.com.au has found Melbourne’s year-on-year growth has fallen, but only by 1.9 per cent. Regionally, Victoria is outshining the rest of the country with the former gold rush town of Ballarat enjoying Australia’s strongest regional price growth in median house price – a buoyant 6.4 per cent.

Regional cities like Geelong and hubs in the Gippsland area are also ideal destinations for anyone wanting to take a first step onto the property ladder.

These areas not only offer home affordability but the kind of day-to-day living most Aussies aspire to: a strong sense of community and the chance to enjoy the great outdoors.

The essentials are also covered, such as well-equipped schools, shopping centres and medical facilities, and the relaxing latte lifestyle. So, where are new homeowners choosing to settle?

Melbourne’s highest growth suburb

Research from realestate.com.au found that Clyde North in Melbourne’s south-east was the city’s highest growth suburb for 2018, based on median house price. Only 55km from the CBD, it has a rich past as a gardening and dairy farming area, and it retains much of its rural appeal for those wanting a quieter lifestyle.

Developments such as Edgebrook are bringing quality homes, schools, shopping, childcare, community centres, playgrounds, barbecue areas and parks to the area. A magnet for young families and first home buyers, the latest masterplanned estates ensure everything is within easy walking distance or, at the most, a short drive away.

Melbourne’s north-west

In the north-west, families are heading for the hills – the rolling hills and fields within sight of the picturesque Macedon Ranges, renowned for its award-winning gardens, forests, artisan food and wines.

More and more Melburnians are discovering the beauty of the area and the benefits of living within an hour of such stunning natural beauty. As a result, first home buyers and young families are looking to build in estates with easy access to the Macedon area as well as Melbourne CBD.

The Highlands community in Craigieburn is the ideal place for such buyers, with schools, shopping centres, and more than 20 parks as well as world class sporting facilities and easy transport to the CBD.

According to data from realestate.com.au, Craigieburn recorded an 8.9 per cent growth in median house price in 2018, showing that despite a difficult market, buyers remain attracted to affordable areas that offer a sense of community.

So, don’t be deterred by those daily headlines. Do your own research, find the lifestyle and location that suits you and your loved ones, and make your move.

This article was first published in www.realestate.com.au. Here is the link to the original article: https://www.realestate.com.au/news/make-your-move-to-melbournes-growth-suburbs/

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Aussies remain optimistic on property market, despite falling prices

fFalling property prices are making headlines across the country, but some Australians are still expecting prices to skyrocket, a new survey shows.

Despite the national median house price dropping 6.5 per cent last year, according to the latest Domain House Price Report, about two in five people are still expecting price rises.

A survey of almost 2100 people, commissioned by comparison site Canstar, found 5 per cent of Australians expect prices to skyrocket, with an additional 33 per cent expecting steady growth, while a quarter predict prices will remain stable.

“It’s a bit optimistic,” said Steve Mickenbecker, Canstar’s group executive of financial services. “All the data and the last 12 months … suggest that we’d see a further fall particularly in Sydney and Melbourne.”

“It could be wishful thinking,” he added. “But I think [those expecting growth] aren’t people who follow the market that closely … they’re thinking we’ve always had steady growth in property in Australia, why wouldn’t we continue to have it.”

It was in Brisbane, where house prices have been broadly steady, and Tasmania, where they are up 8.8 per cent, that people were most optimistic. About one in two people in both areas expected prices to rise.

However about a third of survey respondents in the weakening markets of Sydney and Melbourne, where house prices fell 9.9 per cent and 8.4 per cent last year respectively, also expected price growth. More than 5 per cent even expected prices to skyrocket, while 9 per cent of Brisbane residents thought the same.

The findings come after a NAB survey of more than 2000 consumers last week found 5 per cent expected prices to rise at least 10 per cent in the next year — with a total of 25 per cent expecting price growth.

On average consumers tipped national prices to fall 2.1 per cent. However, when asked their plans for the year ahead, most consumers wanted to sit tight, said NAB chief economist Alan Oster.

“They’re not going to buy, they’re not going to sell, but [about 20 per cent] are going to renovate,” Mr Oster said.

The bank expects house price drops of 7 per cent and 5.6 per cent in Melbourne and Sydney, respectively, and is forecasting a peak-to-trough fall of around 15 per cent for both cities.

Meanwhile AMP Capital’s chief economist Shane Oliver expects prices in both cities to fall another 15 per cent, after revising down his peak-to-trough forecast to a 25 per cent fall last week.

Credit Suisse is predicting a similar drop for Sydney and CoreLogic’s head of research Tim Lawless has revised his forecast to an 18 to 20 per cent drop for Sydney and Melbourne.

Mr Oster said: “The chances of [prices] skyrocketing are very slim, I would be more in the camp that say they’re going sideways at best.”

Mr Mickenbecker said Canstar’s findings suggested there would be continued demand from buyers in the months ahead, but warned first-home buyers — 12 per cent of whom are expecting prices to skyrocket — to take their time.

“A percentage of first-home buyers could be in panic mode and doing anything to try get into the property market. They shouldn’t be thinking that way,” Mr Mickenbecker said.

The outlook of younger generations was significantly more bullish, noted Mr Mickenbecker, with 21 per cent of Generation Z expecting prices to skyrocket, and 7 per cent of Generation Y expecting the same. Almost half of first-home buyers expected prices to grow, compared to 36 per cent of existing home owners.

He warned existing home owners not to be overly concerned by price falls, as they would reverse in time.

“Don’t get too hung up about [price falls] … if you’re in the market the best thing you can do is make sure you’re budgeting right and getting ahead on the loan if you possibly can.”

This article was first published in www.domain.com.au. Here’s the link to the original article: https://www.domain.com.au/news/wishful-thinking-aussies-remain-optimistic-on-property-market-despite-falling-prices/