Latest Property News from Ted Hanson

How poor we are One day a father, of a very wealthy family, took his son on a trip to the country with the firm purpose of showing his son how poor people can be. They spent a couple of days and nights on the farm of what would be considered a very poor family. On their return from the trip, the father asked his son,"How was the trip?" "It was great Dad!" "Did you see how poor people can be?" the father asked. "Oh yeah," said the son. "So what did you learn from the trip?" asked the father. The son answered, " I saw we have one dog and they have four. We have a pool that reaches to the middle of our garden and they have a creek that has no end. We have imported lanterns in our garden and they have the stars at night. Our patio reaches to the front yard and they have the whole horizon. We have a small piece of land to live on and they have fields that go beyond our sight. We have servants who serve us, but they serve others. We buy our food, but they grow theirs. We have walls around our property to protect us, they have friends to protect them." With this the boy's father was speechless. Then his son added, "Thanks Dad for showing me how poor we are." 1. Housing to lead recovery Property investors driving a demand for housing construction will lead Australia away from recession into a solid economic recovery over the coming years, according to a new report released this week by economic forecaster and industry analyst, BIS Shrapnel. The short-term forecast, however, is that Australian households should brace themselves for a run of bad economic news in coming months. Read More... Property investors driving a demand for housing construction will lead Australia away from recession into a solid economic recovery over the coming years, according to a new report released this week by economic forecaster and industry analyst, BIS Shrapnel. The short-term forecast, however, is that Australian households should brace themselves for a run of bad economic news in coming months. BIS Shrapnel's Long Term Forecasts, 2009 - 2024 report says the Australian economy's most difficult phase will occur over the next year. The company is forecasting a substantial decline in business investment, falling household incomes and weak consumer spending, which will result in a fall in employment. Nevertheless, BIS Shrapnel does not expect a recession this financial year. "Positive net exports, a turnaround in the stock cycle, housing construction and government spending will combine to prevent a contraction in the economy," says BIS Shrapnel report author and senior economist, Richard Robinson. Beyond 2010 BIS Shrapnel is forecasting a solid recovery, led by housing construction. Economic growth will strengthen over 2011/12 as consumer demand recovers and subsequently, business investment and employment regain momentum. "A lack of synchronisation in Australia's investment cycles had proved fortuitous for the economy, allowing the investment boom to run uninterrupted for eight years," says Robinson. "And now housing construction, which has been constrained by a lack of affordability since the cycle turned down in 2003/04, is poised for a strong upswing once economic conditions have sufficiently stabilised." BIS Shrapnel says strong pent-up demand in combination with low interest rates, high rents and high rental yields is set to drive a strong phase of construction from 2010/11, which will strengthen over 2011/12 and 2012/13. Top 2. ASIC thaws out frozen funds Frozen mortgage funds will be subject to more `thawing out' after the announcement this week by the Australian Securities and Investments Commission (ASIC) of changes to hardship withdrawals. Mortgage funds froze redemptions in October 2008 to prevent withdrawals from destabilising the funds. Read More... Frozen mortgage funds will be subject to more `thawing out' after the announcement this week by the Australian Securities and Investments Commission (ASIC) of changes to hardship withdrawals. Mortgage funds froze redemptions in October 2008 to prevent withdrawals from destabilising the funds. According to ASIC, a freeze means that for a period the operators have decided to delay redemptions until liquidity improves. A freeze does not necessarily mean that there has been a loss of asset value, and it does not necessarily mean that investors will not get their money back. The changes, which expand the circumstances in which operators are able to make payments to fund members who demonstrate the need to access funds on hardship grounds include: The changes to the existing hardship relief provisions include: The cap on hardship withdrawals for each member is raised to $100,000 each calendar year, from $20,000 plus 50 per cent of the member's interest; An investor can make up to four hardship withdrawals a calendar year, instead of a once-only withdrawal (subject to the overall cap of $100,000); and Hardship grounds are extended: (a) To cover a beneficiary of a deceased estate of a member where the beneficiary is suffering hardship; and (b) To make it clear a person unemployed for at least three months without other means may apply for hardship relief. ASIC first announced hardship relief measures in October 2008. Since then ASIC has provided existing hardship relief to 22 operators for 76 frozen funds. These funds hold approximately $25 billion of funds under management. Based on responses from 46 funds, these funds have paid out $38M under hardship relief to-date. 1452 withdrawal payments have been made with an average withdrawal of $25,024. ASIC Commissioner Greg Medcraft said that the hardship relief has been expanded to pick up special situations where the industry considers that further discretion for relief is needed. Responsible entities of funds will need to apply to ASIC for a variation to their existing hardship relief. Existing hardship grounds Existing hardship relief (which continues in operation) applies where the member is able to satisfy the operator that they meet one of the following criteria: Where the member is unable to meet reasonable and immediate family living expenses. On compassionate grounds (e.g. medical costs for serious illness, funeral expenses or to prevent foreclosure); and In the case of permanent incapacity. Top 3. Raising the dead to pay the mortgage Here's a novel method of raising mortgage payments that will have the dead rolling over in their graves. An American widow is selling her husband's burial spot directly above film legend Marilyn Monroe so that she can pay off her mortgage, Reuters reported recently. Using eBay to auction off the tomb, the listing offers a once in a lifetime opportunity to spend your eternal days directly above Marilyn Monroe, adding in fact that the person occupying the address right now is looking face down on her. The widow said she would move her husband's remains over one spot and be cremated instead when the time came, as she is more concerned with raising the money to pay off her AU$1.95M mortgage to leave it free and clear for her kids. By last Sunday the bids had reached over $3M. Top 4. Round table for green building The Federal Government took steps this week to support the efforts of sustainable building groups with the convening of a Built Environment Sustainability Roundtable. Speaking at the recent Built Environment Meets Parliament Summit, the Minister for the Environment, Heritage and the Arts Peter Garrett said that the roundtable would provide built environment industries, advocates and practitioners with a structured and direct opportunity to bring forward issues and ideas in the area of building sustainability. Read More... The Federal Government took steps this week to support the efforts of sustainable building groups with the convening of a Built Environment Sustainability Roundtable. Speaking at the recent Built Environment Meets Parliament Summit, the Minister for the Environment, Heritage and the Arts Peter Garrett said that the roundtable would provide built environment industries, advocates and practitioners with a structured and direct opportunity to bring forward issues and ideas in the area of building sustainability. "The first Built Environment Sustainability Roundtable will take place in the coming months, and I anticipate -- subject to demand -- twice yearly after that", Peter Garrett said. "In the meantime, we are working within the existing arrangements under the Building Code to take important steps forward." He pointed out that on the residential front, new homes built in Australia will have to be constructed to a six-star energy efficiency standard or equivalent by May 2011. "Of course, buildings don't exist in isolation -- they sit alongside other buildings within neighbourhoods, within suburbs and cities", he said. "Just as the structures we build now will be with us for 50 or even 100 years, the precincts and neighbourhoods we plan and redevelop and the infrastructure that services them will define our environmental impact for decades." The Minister applauded the strong leadership and creative thinking demonstrated by Australia's built environment sector on the issue of tackling climate change. "Your sector has true champions of sustainability -- in the Green Building Council of Australia, the Australian Sustainable Built Environment Council and the recently formed Energy Efficiency Council to name but three -- recognising that not only is climate change an urgent challenge, but one that presents vast opportunities for growing new industries, for sustainable innovation and for getting ahead of the curve", Peter Garrett said. Top 5. Take advantage now Unique economic factors are offering Australians a rare opportunity to gain a stronger footing on the property ladder, according to mortgage broker Mortgage Choice. Decades-low interest rates, increased household wealth and improved affordability are helping potential buyers find it easier to enter the market while putting extra funds into the hands of property owners. Read More... Unique economic factors are offering Australians a rare opportunity to gain a stronger footing on the property ladder, according to mortgage broker Mortgage Choice. Decades-low interest rates, increased household wealth and improved affordability are helping potential buyers find it easier to enter the market while putting extra funds into the hands of property owners. Property enthusiasts are being urged to take advantage of the current economic situation by cutting time off their loan term and money off their loan debt. Mortgage Choice senior corporate affairs manager, Kristy Sheppard suggests borrowers should think of the economic downturn as an opportunity to get ahead with their mortgage. "Interest rates this low won't last forever", Ms Sheppard says. "By increasing the amount paid into a loan, borrowers can benefit from a reduced loan term and less interest paid over its lifetime. "Contributing extra lump sums will achieve the same result." Ms Sheppard suggests that repaying a mortgage at a level higher than necessary will create a financial buffer and help ensure borrowers are prepared for when interest rates inevitably rise, potentially reducing the risk of mortgage repayment arrears. "If you're saving towards property ownership or already maintaining a home loan, making extra contributions throughout the year is a great to way own your property sooner." Mortgage Choice recommends the following top tips to improve your mortgage progress: Lump everything you can into your loan Making a lump sum payment (big or small) into a loan can make a substantial difference. Take a loan of $300,000 at a standard variable rate of 5.85% over 30 years. If a borrower contributed $500 from their 2009 tax return into the above-mentioned loan, it would reduce the overall term by one month and the total repayments by approximately $2,375.05. Imagine the difference that doing this every year or with a higher amount would make! More frequent repayments help Depending on the loan type and lender, a property owner may save thousands of dollars in interest by paying a loan every fortnight or week rather than monthly. For example, a borrower with monthly repayments of $2,000 will pay $24,000 off their loan by year-end (12 x $2,000). If they paid fortnightly, by splitting their monthly repayment in half and making repayments of $1,000, they will pay $26,000 (26 x $1,000) as there are 26 fortnights in a year. So, paying fortnightly allows borrowers to squeeze in the equivalent of one extra monthly repayment each year, helping to reduce the overall loan term and total repayments. Off-set your savings against the loan Loans with 100% off-set accounts enable borrowers to link a savings account with their home loan account and `off-set' or use that amount to reduce the interest accumulated on their mortgage. For example, if a borrower has $5,000 savings deposited in a full offset account, then on the previously mentioned loan the term would be reduced by one year and they would save approximately $22,787. Note that some lenders offer partial offset only. Round up your repayments Borrowers should consider rounding up their loan repayment amount to the nearest $10, $50 or $100. If a borrower with the above mentioned loan rounded up monthly repayments of $1,770 to $1,800, the loan will be repaid approximately 14 months earlier and they will save approximately $17,400. Top 6. Swinging in vines There's something romantically nostalgic about a swing seat wrapped in vines, although it can take years for it to occur naturally. Either that or find yourself a Swing With the Plants seat by designer Marcel Wanders. The seat of the swing can be filled with soil and seeds planted inside so the vines grow up the ropes, creating a poetic resting place in either your garden or your room.