Latest Property News from Ted Hanson

Friday 30 April 2010 The Story of the Butterfly A man found a cocoon of a butterfly. One day a small opening appeared. He sat and watched the butterfly for several hours as it struggled to squeeze its body through the tiny hole. Then it stopped, as if it couldn't go further. So the man decided to help the butterfly. He took a pair of scissors and snipped off the remaining bits of cocoon. The butterfly emerged easily but it had a swollen body and shriveled wings. The man continued to watch it, expecting that any minute the wings would enlarge and expand enough to support the body, Neither happened! In fact the butterfly spent the rest of its life crawling around. It was never able to fly. What the man in his kindness and haste did not understand: The restricting cocoon and the struggle required by the butterfly to get through the opening was a way of forcing the fluid from the body into the wings so that it would be ready for flight once that was achieved. Sometimes struggles are exactly what we need in our lives. Going through life with no obstacles would cripple us. We will not be as strong as we could have been and we would never fly ... 1. Foreign investment in real estate gets tougher The Assistant Treasurer, Senator Nick Sherry, this week announced a major tightening of the foreign investment rules as they relate to residential real estate and a package of tough new civil penalty, compliance, monitoring and enforcement measures. The new rules will mean that foreign non-residents can only invest in Australian real estate if that investment adds to the housing stock, and that investments by temporary residents in established properties are only for their use whilst they live in Australia. "The new provisions ... will mean that anyone trying to flout Australia's strict foreign investment rules will face tough new penalties that will be fully enforced", Senator Sherry said. All temporary residents seeking to purchase an existing property in Australia will now be brought within the Foreign Investment Review Board (FIRB) notification, screening and approval process. These changes ensure that temporary residents are subject to the same process required of foreign non-residents. In addition, temporary residents who are approved will now have to: * compulsorily sell the established property they have bought when they depart Australia; and * be required, where undeveloped land has been purchased, to commence construction on that land within 24-months or have the land compulsorily sold. "International investment that boosts the numbers of houses available for people to rent is a good thing and temporary residents living here should, within very strict rules, have the opportunity to buy a home - that's how it's always been under Governments of both persuasions", Senator Sherry said. "But the rules have to be tough enough to make sure the system works in that way, and that's what we're delivering." It is expected that the reimposition of compulsory notification, screening and approval at the front end, and the forced sale of properties when temporary residents leave Australia, will ensure that investment is in Australia's interests, and in line with community expectations. "These changes will also be strictly applied to temporary residents who are here on foreign student visas", Senator Sherry noted. Australia's foreign investment regime relies on a combination of legislation, primarily the Foreign Acquisitions and Takeovers Act 1975(FATA), its related regulations, the Foreign Acquisitions and Takeovers Regulations 1989 (Regulations) and an accompanying Government Policy (Policy). Each of these is administered by the Foreign Investment Review Board (FIRB). 2. Brokers on the mend The mortgage broking industry is starting to regain the confidence of homebuyers, research revealed this week. The latest Bankwest/Mortgage and Finance Association Home Finance (MFAA) Index shows the preference for mortgage brokers by first time buyers has increased from 30.8 per cent in the last survey to 32.7 per cent. Satisfaction with mortgage brokers has also increased to 7.5 out of 10 from 7.0 a year ago - widening the lead over the banks. Aaron Milburn, Bankwest Head of Broker Sales said that while the majority of consumers are still selecting banks as their preferred loan source, there is visible improvement in the broker market. "Interestingly, the research shows it's the 30 to 39 year olds who will mostly likely use a broker, with just over a third (38.8 per cent) saying they'd go straight to a professional when seeking out a home loan", Milburn said. The main reasons for choosing brokers included knowledge of personal circumstances, having a reliable contact point and keeping rate increases to a minimum. Other perceived benefits included undertaking the groundwork (76.4 per cent), offering a wide loan range (72.4 per cent) and expertise in a range of mortgages from numerous lenders (72.0 per cent). 3. Where have all the tradies gone? Have you been having trouble finding a plumber lately? The reason may have been because the number of skilled tradespeople in the residential sector dropped in the first quarter of 2010, according to new figures released this week. The latest Housing Industry Association-Austral Bricks Trades Report shows a widespread shortage of skilled labour in the residential sector across trades and regions. The HIA-Austral Bricks Trade Availability Index fell to -0.11 in the March 2010 quarter, from -0.08 in the December quarter last year, meaning tradespeople were defined as being in moderate under-supply. This is its lowest level since September 2008. There was a shortage of labour in ten out of thirteen skilled trades in the March 2010 quarter. The biggest drop was in the number of plumbers available, followed by electricians, bricklayers, carpenters and landscapers. Trade rates, on the other hand, are beginning to rise again. The report shows that the HIA-Austral Bricks Trade Prices Index increased by 1.1 per cent in the March 2010 quarter. 4. One green toe over the line South Australia has thrown down the green gauntlet to the larger states, with its recent announcement that all new housing in SA must be six-star energy rated from September onwards. SA Urban Development and Planning Minister Paul Holloway told ABC News that developers will be required to design homes that make the most of natural light and efficient energy resources. "The use of efficient light globes and appliances, for example, can also help contribute to reductions in power consumption so we're hopeful that this should be able to be met with minimal disruption and of course it means that the owners of these new homes should benefit thereafter by having reduced energy bills," he said. Mr Holloway predicted that homeowners could expect to save about $340 per year in energy costs. The six-star push emerged from a decision taken at a Council of Australian Governments' (COAG) meeting last year. South Australia says it is one of the first states to comply. 5. Sleeping beneath the trees During the colder months we seem to do a lot more nesting, opting to stay in the comfort of our homes rather than venture out as much. US designer Shawn Lovell has created the Tree Bed, with four brown metal trees as the posts, whose nearly bare branches meet above the bed in a central point. The bed blends magical imaginative elements with beautiful yet simple functionality and as a plus, the leaves are stuck in place, so you won't have to sweep them under the bed as winter approaches. 6. What is positive gearing? We've all heard the real estate term `negative gearing', but what is `positive gearing'? Positive gearing is when the rental income being received from an investment property is greater than mortgage interest payments and expenses (rates, levies, etc) being paid on the property. For example if a property is being rented for $1,200 a month, but the mortgage repayments and outgoings are only $1,000 per month, then the property is said to be `positively geared'.