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Town home prices get $875,000 wipeout in Australia’s weakest real estate market

Sydney and Melbourne prices may have begun to plummet but they would have to fall considerably further to be anywhere close to the largest in the country.

Sales data from the past five years has revealed Australia’s biggest real estate money pits remain concentrated in regional areas and are thousands of kilometres from the nation’s capitals.

Western Australian resource towns had the biggest drops in home values since 2013, with prices falling by up to $875,000 in some areas.

The towns with the biggest price drops included Newman in the iron ore rich Pilbara region in the northwest of WA and Derby in the Kimberley region.

Median house prices in these areas more than halved over the five-year period, shrinking from over $600,000 to under $200,000, the CoreLogic data showed.

Home Prices get $875,000 in Australia’s Real Estate Market
Homes in WA mining towns were affected by the end of the mining boom. Picture: AFP Photo/BHP Billiton

Even bigger losses were recorded in the WA coastal hub of Port Hedland and sister town South Hedland.

The typical value of a home in the port 1523km north of Perth was $1.27 million in 2013 but has since shrank to about $395,000.

South Hedland houses had a median price of $865,000 in 2013. Now the median is $195,000.

By contrast, house prices in Sydney’s worst performing suburb — inner west suburb Annandale — fell 2.9 per cent over the five years, with the median unit price shifting from $770,000 to $747,500.

Home Prices get $875,000 in Australia’s Real Estate Market

Port Hedland is about 1500km north of Perth.

International shifts in demand for iron ore were partly behind the falling values in resource towns, but a growing trend of fly-in, fly-out workers also depleted demand for the local homes.

Property prices and rents were further impacted by the rise of mining camps for local workers that bypassed the local housing markets of some mining communities.

Many of the camps were constructed by mining companies precisely because local rents and home prices had been skyrocketing, making the usually high cost of construction worth the investment.

Falling home values have dealt a particularly devastating blow to property investors who bought into resource towns during the height of the mining boom.

The owners of a four-bedroom house on Port Hedland’s Styles Rd have been trying to offload their property since 2013, but even after slashing more than $500,000 off the price have still been unable to sell.

They bought the property for $1.08 million in 2008. If they sold for their current listing price of $749,000 they would still lose $331,000.

Home Prices get $875,000 in Australia’s Real Estate Market

Selling properties in northwest WA has become a challenge.

The tense sales environment has evaporated real estate empires seemingly overnight.

Property investor Ryan Crawford had amassed 40 properties spread mostly across the Pilbara region by 2013, which he reported at the time as having a combined value of $32 million-plus.

Much of his property portfolio has since been foreclosed by banks, according to the West Australian. Part of the Crawford property empire was sold at a fraction of the buying prices, with documents filed in the Supreme Court in 2017 showing the proceeds fell short of what was owed.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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What I wish the previous tenants told me before I moved in

What I Wish the Previous Tenants Told me Before I Moved In

Since moving back to Sydney two years ago, I’ve moved three times with my partner, and in that time there are a few things we wished previous tenants could have told us before we chose our rentals.

I like to think of it as crowdsourcing info, if you will, because as a tenant you have a measly 15-minute window to figure out if it’s the place you want to live in for the next six to 12 months among a sea of other properties that you are racing around the city to get to on the same day.

There’s only so much you can assess in that short-time span and it’s usually the plainly obvious — trying your best to measure up if the place is big enough to fit in your furniture from the last rental and whether the property’s condition is up to scratch to live in, because up until recently minimum standards in rentals were not a thing.

A rental review would go some way in helping pick up the inconspicuous problems.

In our first rental, we moved into a new build and, as you’d expect, everything was brand spanking new. It also had lots of extras included from a dryer to a dishwasher to ducted airconditioning, so we couldn’t really fault anything at first sight.

It wasn’t until we moved in that the shine wore off really quickly. While our apartment was finished, the thousands of others in neighbouring blocks weren’t and we were basically living on a construction site for six days of the week. Constant noise and dust was part and parcel of our six-month lease.

What I Wish the Previous Tenants Told me Before I Moved In
It’s easy to pick up the obvious during rental inspections but there’s plenty you discover only after you move in. Photo: Paul Rovere

New builds are also notorious for squishing a lot into not a lot of space. They’re often described as shoebox apartments but we preferred to describe it as more of a dungeon with only one opening in the entire apartment, which looked onto hundreds of neighbouring balconies.

The lack of windows in the kitchen, bathroom and laundry dimmed our spirits and it was only when we moved into our next two rentals did we realise the importance of direct sunlight and a natural breeze.

Which brings me to our second rental. It was by far the best we’ve ever had but hindsight is 20/20, right? It was a huge upgrade from our first in every way.

We were on the top floor of a red double-brick block of nine apartments and it felt like we were sitting among all the surrounding gorgeous gum trees.

We had a window in every single room — a bizarre luxury after our first place — meaning we could heat and cool down the apartment without the need for aircon for almost the entirety of summer because of the amazing cross-ventilation.

I could go on, but there were a few things we would have appreciated knowing even in this place. Parking was an absolute nightmare both in our garage and on the street, something that hadn’t crossed our mind until moving day.

We also quickly found out we had rowdy, chain-smoking neighbours, whose balcony was adjacent to ours with a nice, clear view into our home and who had a penchant for partying throughout the week. But I guess you can’t have everything.

What I Wish the Previous Tenants Told me Before I Moved In
Most size up a rental but it’s the inconspicuous problems like noise or water pressure that are hard to pick up during inspections. Photo: Ben Rushton

Our third rental has also had its fair share of surprises. The first and most noticeable issue is the outrageously loud traffic, which dies down considerably on a weekend – incidentally, when you normally check out a rental. You can’t hear over your Netflix at nighttime and the noise causes a murmuring through the windows in what should be the dead of night.

The other peculiar thing about this rental is the weak water pressure, which doesn’t allow two taps to run at once because it turns into little more than a trickle. It has left us coordinating when we take showers and do the laundry or washing up in the kitchen.

Funnily enough, we did remember to test the kitchen tap on inspection day and thought it ran well enough. But we didn’t get to running two taps from two different rooms at once because the apartment was packed with other prospective tenants and we were in a rush to get to our umpteenth back-to-back inspection of that day.

But I’m sure the previous tenants would have experienced the same water pressure issue. I wish they’d been able to tell us and I plan to tell whoever succeeds us in living at our current place.

This article was first published in www.domain.com.au. Here is the link to the original article.

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Which party wins the property election?

Property is shaping up to be a key federal election issue, with negative gearing and capital gains tax concessions standout differentiators between the ALP and the Coalition.

Which party wins the property election? Image of Parliament House with reflection in water

Property is set to be a big issue at the federal election.

It would be business as usual under a Coalition government – prices would stabilise and rental levels would stay close to what they are now.

However, under the ALP, prices would drop and rents rise. Ultimately, the best party will depend on where you are in your property journey.

Investors

The ALP’s proposal to change negative gearing would be generally bad news for “mum and dad” investors, particularly those looking for their first investment property. Although existing negatively geared properties can remain so, from 1 January, the ALP would allow only new properties to be negatively geared.

The challenge for many investors is that they rely heavily on negative gearing to make a low yielding investment attractive. Many investors are also not keen on new homes, preferring to invest in existing properties.

For investors who already own large portfolios, the ALP changes could be good news, provided they are not wanting to use negative gearing to expand their portfolios further. With rental levels rising, they could make higher returns on their investment. The challenge is if they want to sell – the pool of potential buyers for second hand properties will be smaller under the ALP.Nerida Conisbee’s Federal Budget wrap

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Read more: Reserve Bank keeps rates on hold as 2019 election looms

Renters

With fewer people investing in property, the number of rental properties will drop under the ALP. Although some people will be able to move from being a renter to buyer due to a drop in prices, most will not. This means rents will increase. And, given renters tend to be younger, poorer and more likely in housing stress, even small increases can be problematic.

The other challenge for renters is that over time they will be pushed to areas where a lot of new housing is being developed. This is because the ALP policy encourages investors to buy new. Most new housing in Australia is either apartments in the inner city or new homes on the urban fringe. Finding a rental in middle ring suburbs will become more difficult.

Which party wins the property election?

Renters could experience challenges if investment activity dropped under negative gearing reforms. Picture: James Ross

First home buyers

First home buyers will be the main beneficiaries of an ALP government, whose proposed policy is reflective of the challenges this market was having at the time it was announced. First home buyers and investors tend to target similar sorts of properties in similar locations. A slow market also appears to make them more active, perhaps because it gives them more time to make decisions.

We have already seen how much first home buyers have benefited from investors pulling back – they are now at their most active level in more than six years. The ALP changes will continue to help them.Nerida’s 2019 property predictions

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Upgraders and downsizers

Contrary to what is often reported, price falls aren’t particularly bad for upgraders and downsizers. Price falls mean they often achieve a lower price for their existing home, but they similarly buy at a lower price. As such, an ALP or Coalition government are pretty similar for people in this category.

Developers

One of the aims of the ALP policy changes is to stimulate development of new houses. If investors do switch from buying existing homes to buying new, then it will be good news for developers.

Build-to-rent apartment complexes provide a lot of rental housing overseas but barely exists in Australia. A proposed cut by the ALP in the managed investment trust tax rate from 30% to 15% would assist more developers, and large property companies, in developing rental housing.

There will be winners and losers from either the ALP or the Coalition policies on housing. A Coalition win will largely mean it is business as usual, but an ALP victory will lead to significant changes in our housing markets.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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Population growth outstripping jobs: Major challenge for Melbourne’s fringe suburbs

Melbourne Population Growth Outstrip Jobs: Major Challenge

As Melbourne’s population swells, an urgent push to create a network of 20-minute cities on the urban fringe is facing significant challenges.

The growth of local jobs, though outstripping the national average, is not enough to keep pace with the growing population forcing many of those living on Melbourne’s outer edge into cars to spend hours on congested roads getting to work.

Councils, including the City of Casey in the outer south-east and City of Melton in the outer-west, are working feverishly to set aside land to attract big business to the areas and help people to live closer to where they work.

Melbourne Population Growth Outstrip Jobs: Major Challenge
Those living in the outer suburbs are being caught in traffic congestion. Photo: Paul Rovere

Although there are some success stories, proper infrastructure is needed to attract businesses to fringe suburbs, National Growth Areas Alliance executive officer Bronwen Clark said.

“The main barrier [to businesses setting up] is the lack of supporting infrastructure,” Ms Clark said.

“While there are traffic jams and lack of access to freight terminals and ports there’s no advantage to them being there.”

The Victorian Planning Authority is working closely with local councils to plan for the use of land for both housing and employment opportunities. It wants one job created for each home built in growth corridors, chief executive Stuart Moseley said.

This meant using the land efficiently for a variety of housing types as well as business opportunities such as incubators that help local businesses establish and grow.

Between 2011-2016 in Casey, 15,000 more houses were built. Over the same time, 16,000 local jobs were created. In Melton between 2011-2016, 8000 homes were built and 8000 jobs created.

“The biggest growing jobs were in healthcare, retail and education,” Mr Moseley said.

The Casey area has more than 50 activity centres (a mix of commercial, retail and residential land) that provide jobs. The council wants major employers to move to the region to help local businesses grow. That need is about to get more urgent.

In just over 20 years, the population is expected to hit nearly 550,000, but the area lacks proper public transport to the city and within the area.

“Although Casey has over 83,000 jobs, 92,000 residents leave the municipality to travel to work,” said the council’s director of city planning and infrastructure Peter Fitchett. 

“Casey has the highest car ownership rate per household in Victoria where over 60 per cent of households own two or more cars and households average 10 trips per day, with 83 per cent of trips made by car,” he said.

 Melbourne Population Growth Outstrip Jobs: Major Challenge- Berwick Waters Estate
Berwick Waters Estate. Photo: Eddie Jim

The council has campaigned for better public transport and with other south-eastern councils including neighbouring Cardinia, is pushing for major projects of regional importance. They include a tri-government approach to jobs hubs in the suburbs.

“Casey has a number of activity centres … that are home to thousands of jobs, but without adequate transport connectivity and a clear jobs strategy, support for these activity centres is hindered,” Mr Fitchett said.

A lack of connected public transport is also a big problem in the outer west of Melbourne, particularly in Melton where the council also wants significant improvements to public transport. It covers the booming growth suburbs of Caroline Springs, Plumpton, Rockbank and part of Truganina.

It has pushed for the electrification and duplication of the V/Line service through Melton to allow for more frequent trains. It also wants to become part of the planned suburban rail loop. 

The council wants a local hospital to serve the growing area and to offer jobs locally. By 2051, the Melton area is expected to be home to just under 480,000.

Melbourne Population Growth Outstrip Jobs: Major Challenge
An aerial shot of Plumpton in Melbourne’s outer west which is one of Melton’s booming suburbs. Photo: Lensaloft Photography

“We have a very young population, so the challenge for us, moving forward, is to keep young people here instead of them moving to places like Ballarat, Geelong and Bendigo,” said council’s city design, strategy and environment manager, Laura-Jo Mellan.

Long travel distances to university or jobs mean a move to the regional cities, where the commute is shorter, is becoming attractive to young people.

As in many fringe areas, Melton has more working residents than there are local jobs, with 73 per cent (or 43,814 residents) travelling outside the area for work.

Ms Mellan said one of the biggest challenges for Melton and other city-fringe councils was having to compete for infrastructure and larger businesses to offer jobs closer to home.

This article first appeared in www.domain.com.au. Here is the link to the original article.

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Booming west best in Australia for population growth: HIA report

Booming West best in Australia for Population Growth: HIA report

Melbourne’s outer suburbs are Australia’s fastest growing regions.

Suburbs in the Victorian capital dominate the Housing Industry Association’s building and population hotspots, led by Rockbank in the outer northwest.

HIA chief economist Tim Reardon said 12 of the top 20 national hotspots, based on residential building work approvals and population growth, were in Melbourne.

Booming West best in Australia for Population Growth: HIA report

The same part of Rockbank seen above, as it was in December 2014. Picture: Nearmap

“The majority of the growth is in the fringe of Melbourne as the city expands, although inner city suburbs such as Southbank and Docklands are also enjoying strong growth as they change to accommodate higher density living,” added Mr Reardon.

“This is not surprising given the significant investment in infrastructure and the region’s growing professional services sector.”

The Rockbank-Mt Cottrell area in the City of Melton had 59.4 per cent population growth during 2017/18 and $224.2 million in building approvals.

“Major infrastructure projects including upgrades to the train station and train lines as well as a new six-lane arterial road connecting the area are expected to maintain the momentum to keep the area as a hotspot next year,” Mr Reardon said.

Booming West best in Australia for Population Growth: HIA report

Construction is booming on Melbourne’s fringes. Photo: Paula ShearerDifferences between building in new or established estates

“Last year’s number one hotspot, Mickleham-Yuroke (in Melbourne’s outer north), has slipped to second place and Pimpama in Queensland’s Gold Coast dropped into third place.”

Cranbourne East in Melbourne’s outer southeast, Wollert in the northeast and Beaconsfield-Officer also in the southeast were also in the top 10 HIA hotspots for growth.

Point Cook, Southbank, Truganina, Tarneit, Docklands, Cranbourne South and Werribee were the other Melbourne areas in the top 20.

For the purposes of the report, a ‘hotspot’ was a locality, technically a Statistical Area Level 2 — or “SA2” — which satisfied two conditions: with in excess of $150 million in residential building work approved in 2017/18 and with an annual population growth rate in excess of the national rate of 1.6 per cent.

Booming West best in Australia for Population Growth: HIA report

New homes are being built at a rapid rate in the outer suburbs.

The Rockbank and Mickleham regions had far greater population growth than anywhere else, at 59.4 per cent and 52.2 per cent respectively, while Cranbourne had 21.2 per cent.

The rest of the Melbourne areas had growth below 20 per cent, down to Werribee at No. 20 with growth of 9 per cent.

This article was first published in www.realestate.com.au. Here is the link to the original article.

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Properties in Melbourne’s inner city, outer fringe risk lower valuations than buyers paid

Properties In Melbourne Inner City [Lower Valuations]

Home buyers in Melbourne’s inner city and outer fringes risk paying too much for their properties as the housing market weakens, experts say.

But the risk is lower for buyers looking at suburbs in between, or the prestige market, as both purchasers and vendors adjust to the market’s new normal.

Residential property valuers focus on recent similar sales when estimating the worth of a home in a falling market.

But purchases made off the plan can take two years to be built, leaving brand-new properties worth less than the buyer agreed to pay.

“Off-the-plan apartment sales are quite often problematic,” Herron Todd White Melbourne managing director Tony Kelly told Domain.

“You’re agreeing to buy something today at a price that you’re not going to be able to get your hands on for two years.

“At the moment there’s been instances, and it’s been that way for a while, where it’s worth a little bit less than what they agreed to 12 or 18 months ago.”

A drop of 10 per cent was not uncommon, while other units could be worth up to 20 per cent less, but higher-end or better-known buildings were more likely to hold their value, he said.

Properties In Melbourne Inner City [Lower Valuations]
Melbourne's changing skyline around the corner of Lonsdale and LaTrobe streets. Apartments are going up everywhere amid concerns of a property bubble. Photo: Penny Stephens. The Age. 23RD JUNE 2015
Some new apartment valuations have been lower than their contract prices. Photo: Penny Stephens

House-and-land packages on the urban fringe also risk being worth less than buyers paid, he said.

He noticed builders advertising incentives such as $50,000 in upgrades for $10,000, or developers offering cash back for land purchasers, to make sales without discounting the sticker price or devaluing the neighbours’ new homes.

But in middle suburbs valuations were stacking up, compared to the prices buyers paid.

A “reasonably quick” fall in the market, when compared to the GFC, helped vendors and buyers adjust expectations so properties were trading at the new lower level, he said.

Some city-edge suburbs escaped any ripple effect from the CBD apartment boom.

Properties In Melbourne Inner City [Lower Valuations]
Values for houses on the CBD fringe in Richmond and East Melbourne have escaped the issues with apartments in the nearby CBD. Photo: Josh Robenstone

WBP Group valuer Steve Demchinsky, who focuses on the inner ring of Melbourne, has seen valuations for houses in East Melbourne and Richmond matching up to the prices paid as buyers seek land close to the city.

Even within the CBD, owner-occupier grade product performed better than investor-style units.

“There have been some instances of a softening of demand, particularly for compact apartments,” he said.

But older, larger two-bedroom apartments are “ticking up in value”, while new three-bedroom units “have experienced quite an increase in demand, and are often supported [by their valuation],” he said.

In the eastern suburbs prestige market, AVA Property director Trevor Crittle said, valuations were closer to prices paid now than around the market’s peak.

“The ultra-top end, the $10 million-plus, there’s probably a shortage of good quality stock so there is a bit of a premium paid sometimes for those properties,” he said.

“But they tend to generally stack up on a valuation point of view.

“They’re actually more stacking up in our end now than 18 months ago when the market was crazy … especially Chinese buyers [who] were paying really big dollars.”

Even as land prices fall, buyers are paying a slight premium for brand new luxury houses with large basements and high-end fit-outs because construction costs were rising during a two-year build timeframe, he said.

This article was first published in www.domain.com. Here is the link to the original article.

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Taller residential buildings more likely as market slows

Lebanese Developments tall residential buildings

DEVELOPERS are showing a reluctance to start new apartment projects with latest figures showing the largest quarterly decline in the commencement of construction in 45 years.

Research analyst Cameron Kusher from CoreLogic RP Data said a report released by the Australian Bureau of Statistics reveals significant slowing down in new dwellings.

According to the quarterly Building Activity data the number of new houses starting construction fell by 7.6 per cent to 27,088 — the lowest level since March 2017.

tall residential buildings
 Barangaroo Today

Construction underway in Sydney

Apartment commencement dropped by almost 27 per cent to 19,134 and the fewest over a quarter since September 2013.

Mr Kusher said it is the largest quarterly decline since September 1974 when the number of unit projects dropped by 32 per cent.

Despite the falls both house and unit commencements remain above their long-term average.

“As the housing market has turned and values have started to fall, we can see there is reduced preparedness of developers to commence new projects,” Mr Kusher said.

“We would expect that commencements, particularly for units, are likely to continue to trend lower over the coming quarters as housing values continue to record value falls, finance remains tight and both domestic and foreign investors remain light on the ground.”

tall residential buildings

Future projects are more likely to be high-rise developments

The latest Building Activity data shows the commencement of units with one to three storeys has remained relatively steady. The demand/supply ratio of medium density dwellings anecdotally is much healthier relative to high density projects.

While there have been significant increases in taller buildings over recent years, commencements is now beginning to ease.

The trend towards high density living has been driven by Australia’s three most populous capital cities — Sydney, Melbourne and Brisbane. Over the past five years, every State and Territory, however, has seen unit commencement reach historic high levels while detached housing construction has also climbed during this period.

tall residential buildings
 The Carl development at Carlingford

Unit commencement has reached historic high levels over the past five years but is now easing

Mr Kusher expects developers will still continue to opt for high-rise projects to recoup acquisition costs and maximise profits.

“With dwelling commencements is expected to continue to fall, the decline doesn’t negate the fact that many developers have paid high prices to acquire sites,” he said.

“As a result, we would expect that despite an expectation of fewer commencements going forward, those projects that do commence will largely be taller apartment projects.”

This article was first published in www.realestate.com.au. Here is the link to the original article.

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What the rental market tells us about property prices

What is going to happen next to Australia’s troubled housing market?

Will the whole country keep crashing? There is a difference in the housing crashes around Australia, hidden beneath the headlines, that might provide a clue.

You’re familiar with the price falls — Australia’s capital city average house price is down around 7 per cent.

The total fall is much worse in Perth (down 18 per cent from the peak), and has been especially sharp in Sydney, where prices are down 14 per cent.

Melbourne is not far behind, down 10 per cent.

Adelaide and Brisbane are fairly steady while Hobart is up, its peak is right now.

Regional Australia is down 2.5 per cent, especially regional WA, where home prices are down 32 per cent.

But there’s another way to look at the housing market. Renters. And the renting numbers tell a fascinating story.

In Melbourne, while house prices fall, rental vacancy rates are falling.

It’s easy to find a tenant and rents are rising.

That suggests there is continuing strong demand for housing.

There may, it seems, be a limit to falling prices in Melbourne.

But in Sydney rental vacancy rates are going up. That does make sense, with house prices falling so fast.

Both of those facts suggest people don’t want Sydney housing so much any more.

Demand for housing is Sydney is weak no matter how you look at it

You can see the rental vacancy rates in Sydney and Melbourne in the graphic below, as well as the rental vacancy rates in several other markets.

Rental vacancy rates in Sydney and Melbourne as well as the rental vacancy rates in several other markets.

Renting numbers offer an insight into the real estate market. Source: RBA Statement on Monetary Policy February 2019

Overall, the income Australian landlords are getting from rental properties is growing more slowly. Advertised rents are getting more expensive in Melbourne, but cheaper in Sydney.

Understanding the strength of the rental market is important for seeing the future of the housing market.

Sydney, Melbourne and Brisbane are all set to have a large number of apartments released onto the market in the next few years.

Many tall towers that had their foundations concreted in the boom time will get their final coat of paint amid the bust. Such is the cyclic nature of property development — by trying to meet peak demand, they create an oversupply that fuels the bust. What looks like a rational course of action for one developer might not be rational if every developer does the same thing at once.

Releasing those newly-built properties onto the market could have negative effects on both property prices and rents. The big question is: Who will live in all those properties?

In Melbourne, that question is not such a concern. With vacancy rates falling and strong population growth, there is apparently a willing market for those new homes.

The difference between population growth rates in Australia’s major cities is notable.

The lowest growth is in Adelaide, where its at 0.8 per cent per year and the fastest is Melbourne, which is growing at a very rapid 2.5 per cent a year.

But in Sydney and Brisbane?

The risk is a flood of new properties will struggle to find anyone to live in them — whether owner-occupier or tenant. That would push prices down further.

This is especially the case for the many Sydney apartments being built in the outer suburbs where apartments have not traditionally been built.

What the rental market tells us about property prices

Apartment buildings started during the boom are now coming onto the market. Picture: AAP Image/Brendan Esposito

NEGATIVE GEARING

The future of Australia’s rental market is also affected by the future of negative gearing.

But this is less about demand for rental housing, and much more about supply of it.

Negative gearing is a tax rule that allows owners of investment properties to deduct any losses they make from their total taxable income.

If for example they have a $2000 shortfall between the rent they collect and their total costs of ownership, they can subtract that from their salary or wage income.

In our example, their taxable income would then be $2000 lower.

For a person paying 45 per cent tax on the marginal dollar of income, that would save them $900 a year.

In this way, negative gearing makes losing money on owning a rental property less painful, and operates as a kind of subsidy that encourages people to invest in property.

The Labor Party is promising to get rid of negative gearing for buyers of existing property starting on January 1 next year.

If they win the election and change the law, this could cause interesting changes in the property market. It is likely fewer investors will want to buy existing homes any more. That should mean existing homes slowly move out of the hands of investors and into the hands of owner-occupiers.

If fewer rental properties are available, rents might go up. But at the same time, with fewer investors trying to buy investment properties, the price of buying an existing home might come down.

It could be a great time for a renter to become a first home buyer.

This article first appeared in www.realestate.com.au. Here is the link to the original article.

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Geelong’s optimism after a surge in house price and population growth tempered by population anxiety

Geelong House Prices & Population Growth-Investors Advisors

Catching the train from Geelong and into Melbourne should be a dream commute. It takes just over an hour and all the while golden fields, native brush and choked highways whip by the windows.

But in the past five years, the city and its surrounding regions have had a growth spurt. Its population has grown nearly 13 per cent and house prices have jumped 44 per cent.

An exodus of Melburnians hoping to escape a cramped lifestyle have fled to the bayside city, and the first signs of a burgeoning congestion issue have followed them.

The migration was driven by Geelong’s comparatively low property prices, perceived quiet lifestyle and connectivity to the Melbourne CBD.

Anxiety about the city’s growth is permeating the general atmosphere of optimism that followed the transfer of the Traffic Accident Commission, WorkSafe and National Disability Insurance Scheme into Geelong in recent years.

For some time it seemed like the Melbourne’s runaway property market would also take Geelong’s prices to an unattainable level too.

Geelong house prices
QUARTERHOUSES: YOY GROWTH %UNITS: YOY GROWTH %
Mar-144.75.8
Sep-143.57.2
Mar-152.68.6
Sep-154.40.2
Mar-165.9-3.5
Sep-165-4.4
Mar-177.6-2.6
Sep-17139.6
Mar-1815.313.2
Sep-1811.712.5
Mar-195.29
Source: Domain

In the past 18 months, Geelong had three quarters with double-digit house price growth, and during most of last year clearance rates were a good 10 to 20 per cent higher than Melbourne’s, which went through an uncharacteristic auction slump due to credit tightening.

Earlier this week, the nearby Bellarine Peninsula recorded its highest yet sale price, $6.5 million for a beachside mansion.

But the market is yet to run away from the average buyer. Growth has slowed to 5 per cent for the March quarter, and clearance rates are down to 50 per cent, just above Melbourne’s.

Auction volumes have halved since this time last year, which threatens to cause a spike in prices. But an increase in days on market shows properties aren’t flying off the shelves.

With the property market unlikely to run away from middle-income earners and first-home buyers, trains have become the focal point of Geelong’s population anxiety.

Geelong House Prices & Population Growth-Investors Advisors
Outside of peak hours, the train line is a bit more manageable. Photo: Luis Enrique Ascui

As a consequence of the rapid growth, what should be a pleasant commute into the city on the train is instead nicknamed the “sardine express” by many.

“It’s running at 140 per cent [capacity]. It’s the busiest rail line in Australia,” Greater Geelong mayor Bruce Harwood said. “Do yourself a favour, just catch it one day. Catch a peak-hour train.

“It’s standing room only by Geelong, just about. You get just out of Geelong, and it’s busy.

“You get to Tarneit and it’s chockablock. You get into Wyndham Vale, you’re pressed in shoulder to shoulder.

“That’s every day,” he concluded, exasperated.

Geelong House Prices & Population Growth-Investors Advisors
Blue-collar jobs have quickly been replace by white-collar, government jobs. Photo: Luis Enrique Ascui

The Geelong Regional Alliance’s chief executive Elaine Carbines says of the 21,000 people that commute from Geelong into the big city, one-third of them get the train. So the Geelong line’s lack of space is a pretty hot-button issue in town.

Geelong CBD office worker Simone Grace said the packed trains were a major concern for her as a new mother, and her elderly mother. “She complains that she never gets a seat,” she said. “We certainly need a lot more infrastructure. It is developing a lot. Our public transport is a real issue.”

Student Connor Ahpene shares her concern. “I’d definitely say [Geelong’s] getting busier. Hopefully they do improve the speed of the trains.”

As well as adding hundreds of new residents, the arrival of several government agencies and bodies has seen a change in demographics across the city.

National Hotel publican James Ramia said it was a great boost for the city following the decimation of Ford, Alcoa and Shell, and changed the type of guests he thought he’d be catering to when re-opening the pub in 2015.

Geelong House Prices & Population Growth-Investors Advisors
Residents say the Geelong CBD is also in need of more public transport options. Photo: Luis Enrique Ascui

“It’s changed … the majority of the clientele we get now is definitely your office workers,” he said. “There’s a huge public sector presence … so there’s a lot of white-collar workers around town now.”

The comparatively colossal government buildings now dominate the landscape, a symbol of the change foisted upon the unprepared city.

Kaye Rees and husband Greg moved there recently because of his job with one of the departments.

Ms Rees still works in Melbourne and the pair have trialled living in both cities. But escaping the Melbourne crowds was more attractive in the end.

“Even little things like taking a dog for a haircut [in Melbourne], I have to book in six weeks in advance,” Ms Rees said. “Anything you need to get done in Geelong there’s a two-week wait – at best. We were a bit tired of all the traffic and not being able to do things so easily.

“If you want to do something you can actually do it in Geelong, and it’s not far.”

Average days on market for Geelong houses
Mar-1790
Jun-1777
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Mar-1968

But recent arrivals and long-time locals fear a lack of infrastructure spending and improvement will rob them of the quiet and easy lifestyle they now enjoy.

Cr Harwood has lobbied hard for more frequent train services on the Geelong line, a line duplication and of course the big-ticket $4 billion newly budgeted fast rail – announced in the recent federal budget but panned by the state government, which said the project could cost three times as much.

The mayor sees the improvements as a necessary step, along with further infrastructure investment, to save the city from suffering Melbourne’s fate.

“It’s not do-or-die but if we don’t do it now we’re playing catch up. It’s going to be ugly,” Cr Harwood warned.

“If we don’t move our population … we’ll be clogged. It’ll be hard to visit your family and friends, it will be hard to take your kids to school or sport or get down to the beach, it’ll be worse and worse.

“Population growth can’t be slowed. We’re at 2.8 per cent and soon it’ll be 3 per cent. It’s not sustainable.”

Geelong clearance rates
Feb-1876%
Mar-1873%
Apr-1869%
May-1871%
Jun-1867%
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Aug-1858%
Sep-1861%
Oct-1854%
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Dec-1836%
Jan-19N/A
Feb-1944%
Mar-1950%

If it’s done right, McGrath Geelong principal David Cortous said, the property market would surge. A fast-rail link that takes just over 30 minutes would revolutionise the city.

“I think it’s what Geelong needs, to be connected to Melbourne with something like that,” he said. “I think you’ll find the gap between Melbourne and Geelong real estate prices will close.”

Ms Carbines said the growth would be welcomed by the locals, but they wanted to be heard by state and federal governments.

“The key issue with people in this region is planning for growth. People here are happy for growth but if it’s planned for,” she said. “We already have outpaced our infrastructure. Over the past two to three years it’s been a population boom here so now we have an infrastructure deficit.”

This article was first published in www.domain.com.au. Here is the link to the original article.

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Only $1 a week: houses in rural communities for grabs at rock bottom rents

The Baldwin family-Houses for Rent in Rural Communities [1$]-Investors Advisors

Sydneysiders Nigel and Lisa Baldwin and their seven kids moved to a $1 rental in the town of Cumnock. Picture: Kacie Herd

Farmers are offering families homes to rent for as little as $1 a week to help keep their towns alive — all that is required in return is for the children to enrol in local schools.

With the drought spurring an exodus of residents from rural NSW, schools are struggling to attract enough students and funding to remain open.

By offering spare houses on their properties at reduced rents, the farmers hope to boost student numbers, avoiding the need to send their own children to schools in more populated areas more than 100km away.

Other farmers are counting on new families to fill critical skill shortages in their region and help rejuvenate the local community.

Many of the houses, up to five bedrooms, are on substantial blocks near the outback towns of Orange, Wellington and Parkes, more than 350km west of Sydney.

Houses for Rent in Rural Communities [1$]-Investors Advisors

Baldry farmhouse in the Orange area was available for $1 rent.

One advertisement for a $1 farmhouse in Wellington specifies the preferred tenant would have “building” experience.

Another $1 listing in Cumnock, 60km west of Orange, states preferred applicants should be willing to volunteer for squash and tennis competitions and junior athletics and swim programs.

Rentafarmhouse.com.au founder Christine Weston, who sits on the Board of Regional Development Australia, said the prolonged drought was bleeding rural communities of vital workers.

Houses for Rent in Rural Communities [1$]-Investors Advisors

This three-bedroom farmhouse located 30km west of Cumnock is available for $1 a week.

The exodus has opened up a raft of houses available for rent at virtually nothing.

“We now have heaps of empty houses,” Ms Weston said. “We need people to come back and there is an opportunity for families who live in the outer suburbs of big cities to come here and create a new life.

“Many of the homes need some TLC but would suit someone running an online business or working a job from home.”

Rural communities are in particular need of tradies, along with nurses and doctors who might want to avoid the “mortgage trap” of living in an expensive Sydney suburb, Ms Weston said.

Houses for Rent in Rural Communities [1$]-Investors Advisors

This five-bedroom farmhouse in Cumnock is available for $1 per week.

The low rental offers have proved enticing enough to attract some Sydney families.

Nigel and Lisa Baldwin recently moved out of their home in McGraths Hill in northwest Sydney to a $1 rental in Cumnock.

Mr Baldwin had been working two jobs to help support the couple’s seven children and said the dramatically reduced living costs allowed the family to take a step back.

He now uses the rental income from their old McGraths Hill home to fund their lifestyle and they recently bought a pub in their local town.Tips to keep ahead of the property market

“The move was totally worth it,” Mr Baldwin said. “We were living in a three-bedroom house in a densely populated area. Out here we get so much more space and we love the community.”

Mr Baldwin added that having prior renovation experience helped.

“We got the home for basically nothing but there were a lot of things we needed to fix up … but for us that was part of the experience. We wanted an adventure.”

This article was first published in www.realestate.com.au. Here is the link to the original article.