Latest Property News from Ted Hanson

Friday 12 March 2010 Quote of the Week There may be times when others seem enviable. But others are others and you are you. Rather than comparing your joys and sorrows to those of others, you should aim to surpass your limits in the situation you are in right now. Those who can do this are the true victors in life. Buddhist Philosopher Daisaku Ikeda 1. Construction expands again The national construction industry expanded for a second consecutive month in February to maintain an improving trend in industry conditions, according to the latest Australian Industry Group/Housing Industry Association Performance of Construction Index (Australian PCI®). While an easing in demand and employment saw the seasonally adjusted index slip 4.9 points to 52.8 in February, it remained above the 50-point level indicating an expansion in activity. Fewer new contracts and in some cases, the completion of existing work, together with a contraction in the apartment sector, was behind the slower pace of growth. However, customer enquiries and buyer confidence remained resilient in the month. Australian Industry Group Director of Public Policy, Dr Peter Burn said that the survey results further reinforce the improving trend that has been evident over much of the period since the low point of February last year. "While activity contracted in the volatile apartment sector, the engineering, commercial and house building sectors all reported another month of growth", Dr Burn said. "The house building sector, in particular, experienced solid conditions, in line with official data showing a continued increase in approvals for detached houses. "The survey points to housing activity holding up over coming months with firms reporting a further improvement in their order books and the emerging signs of an increase in investor activity", he added. Apartment building dropped 16.4 points to 42.7 in February, but new orders in the house building sector rose for the sixth consecutive month, lifting the sub index reaching 61.7. Customer enquiries and buyer confidence remained resilient in the month. 2. Act green now, Cities If there was one message to be taken from the Green Cities 2010 Conference held in Melbourne recently, it was "act now", Green Building Council Australia CEO, Romilly Madew reported this week. "The conference confirmed how far our industry has travelled in such a short time", Ms Madew said. "Since Green Cities 2009, the conversation has shifted from how we green our individual buildings to how we should shape our precincts, our communities and our cities." Some of the outcomes and announcements from the conference include: Green Star and NABERS MoU: a new memorandum of understanding between the Green Star and NABERS rating systems was announced, with the intention of improving technical consistency and sharing information on rating tool development, calculators, benchmarks and methodologies. Green Star Communities framework: The GBCA launched its new national framework for sustainable communities. The framework outlines five key principles - liveability, economic prosperity, environmental quality, place making and urban governance - which will inform the development of the Green star Communities rating tool later this year. ASBEC Cities for the future report: The Australian Sustainable Built Environment Council's report points to a bleak future where transport-related greenhouse gas emissions (GHG) increases by almost 50 per cent and travel times increase by a quarter. ASBEC is calling for swift, decisive action from all levels of government to deliver better transport systems in Australia's cities. Continuing Professional Development program: the GBCA announced a new program that will help Green Star Accredited Professionals maintain their knowledge of Green Star and stay in touch with latest trends and technologies in green building. The program will commence in June. Green handbook: The Road to 'Green Property' has been published by global construction consultants Davis Langdon to help developers, property owners and builders come to grips with the overwhelming mass of information and requirements surrounding energy efficiency and sustainability in the property sector. The e-book sets out the complex procedures involved in establishing the greenhouse gas content and emissions across the entire range of property development. 3. Go slow but safe after storms With continuing heavy rain this past week across the Eastern States and changes in weather patterns towards increased severity of storms and heavy rainfall, ongoing maintenance of homes is vital, especially since leaking roofs and guttering can allow water to come into contact with electrical wiring or cause ceiling collapses. Angus Kell, ACT & NSW State Manager of Archicentre said water damage in homes can be quite extensive requiring all particle board cupboards, doors and plaster work to be totally replaced, especially where water penetrates the house and insulation becomes water logged. "It is also important to recognise flood-damaged buildings could take months to dry out and the natural tendency for people to renovate and redecorate as quickly as possible can lead to mould growth and the work having to be repeated", Kell advises. "Home owners should involve professional tradespersons to undertake roof repairs because of the dangers of falling off slippery damaged roofs." While recognising the natural tendency to get in and immediately fix immediate problems such as damaged roofs, Kell suggests it is a matter of safety to wait for professional tradespersons to undertake roof repairs. Likewise, powerpoints and switches can collect mud and impurities in a flood, so it is best to ensure a licensed electrician checks these before reconnecting the power. Following floods, large pools typically form under the house. Kell suggests these areas need to be re-graded to prevent long-term structural damage like rotted floor framing. 4. First home buyers remain confident Two in three first home buyers will not be deterred by higher interest rates, according to results from the 2010 Mortgage Choice First Homebuyers Survey. Furthermore, close to one in three (29 per cent) will have a deposit of 20 per cent or more to contribute towards their first home purchase. Tighter lending criteria is forcing all borrowers, not just first homebuyers, to meet tougher requirements such as providing evidence of genuine savings over consecutive months. The majority of first homebuyers-to-be are taking this advice on board and saving good-sized deposits before purchasing. Despite this, a significant number (78 per cent) were planning to make lifestyle sacrifices in order to purchase, an increase on the 71 per cent in the 2009 survey. First homebuyers' main motivation to purchase property in the next two years was that they wanted to set themselves up financially for the future (72 per cent of respondents). 58 per cent said that they were keen to get their foot in the property market door and 31 per cent saw more benefit in investments such as property than in the share market. Mortgage Choice Senior Corporate Affairs Manager, Kristy Sheppard said that it is good to see that up-and-coming first homebuyers acknowledge the long-term benefits property investment has to offer. "Importantly, the majority understand that good savings and making lifestyle sacrifices get them into good habits and get them through the door sooner", she said. The survey results also highlight a lack of consumer awareness regarding changes to lending criteria that now restrict property buyers from borrowing without a deposit. "Eight per cent of our respondents intended to borrow the full purchase price." Ms Sheppard advises that before committing themselves, potential first homebuyers looking to take advantage of market opportunities should health test their budget, review their savings history, speak to a mortgage professional and prepare themselves for the total cost of property ownership. "It's not just about making loan repayments but the day-to-day expenses of living in your own home as well as lifestyle costs", she said. Key findings include: 65 per cent will purchase their first property with a partner, friend or family member/s in a co-ownership agreement. 52 per cent will purchase an established home. 51 per cent have `some idea' about the purchase process; only 12 per cent said they were well informed. 53 per cent said their largest concern was the time it takes to pay off the loan and own outright. The most common sacrifices being made in order to buy were: cut back on spending (96 per cent), miss out on a holiday (60 per cent), purchase a less expensive property (31 per cent) and take on an additional job (26 per cent). The most popular predicted mortgage size range for these first time buyers is between $300,001 and $400,000, as indicated by 33 per cent of respondents. The most popular first point of contact for mortgage advice was a mortgage broker at 24 per cent, then parents (22 per cent). In 2009, brokers ranked first at 29 per cent with the internet second at 18 per cent. 5. Lifting the lid on bins and chips In the land of fish and chips, you would probably expect to find some chips in the rubbish bin - but privacy campaigners in the UK are up in arms this week about local councils installing microchips in their wheelie bins. The BBC reports that councils say the chips simply identify to which house a bin belongs and may be used to offer incentives - not fines. The Big Brother Watch group, however, thinks there is a more dastardly plot being played out and has compiled a report called Lifting the Lid. "Councils are waiting until the public aren't watching to begin surveillance on our waste habits, intruding into people's private lives and introducing punitive taxes on what we throw away," Big Brother Watch director Alex Deane told reporters. 6. Real Estate Glossary - Mortgage, Mortgagee, Mortgagor You have no doubt heard the terms 'mortgage', 'mortgagee' or 'mortgagor' when dealing with property, but what exactly do these terms mean? A mortgage is an amount of money borrowed against any real estate for security. In other words if you borrow money to buy a home and if you do not pay back the money you borrowed (the mortgage) you may be forced to hand over the property instead. A mortgagee is the lender of the money - the bank or other financial provider, while the mortgagor is the person borrowing the money - the borrower or purchaser of the home.