Latest Property News from Ted Hanson

Friday 11 June 2010 It's all about Attitude........ When your determination changes, everything will begin to move in the direction you desire. The moment you resolve to be victorious, every nerve and fiber in your being will immediately orient itself toward your success. 1. First Home Buyer awards Being a first home buyer is about breaking free and finally owning your own home. But it can be a stressful time, so it's important to know what you should expect when applying for your first home loan. Canstar Cannex has this week announced the results of its First Home Buyer Awards, which should give borrowers a good idea of the options available and tailored specifically to their needs. For this year's award, Cannex examined loans from over 60 lenders before selecting ANZ as the winner for the "outstanding service it offers first home owners". The judges found that ANZ offers a full range of educational support, product features, flexibility of offerings and ease of access to its home loan people. The full report, including state awards for non-bank lenders, is available on the Cannex website. 2. New housing down but economy up Expenditure on new housing fell 4.3 per cent in the March quarter of 2010 to be 5.5 per cent lower than 12 months ago, the Housing Industry Association observed this week following the release by the Australian Bureau of Statistics of the latest Australian National Accounts. HIA Senior Economist Ben Phillips said that the result indicated that healthy leading indicators late in 2009, such as building approvals and housing loans were yet to feed into activity on the ground. "On a more positive note, the strength of the general economy and a return to positive sentiment towards property pushed expenditure on renovations up by 2.4 per cent in March to be 9.7 per cent higher than 12 months ago," said Ben Phillips. Gross Domestic Product grew a moderate 0.5 per cent in March to be 2.7 per cent up on 12 months ago. "This solid result was driven heavily by public sector investment which was up 11.6 per cent while the private sector declined by 0.6 per cent", said Ben Phillips. He added that the pipeline of activity should translate into stronger construction activity later in 2010. 3. Construction builds in May The construction industry remained in the black for the third consecutive month in May, although the pace of growth eased slightly, according the Australian Industry Group (AIG). The latest seasonally adjusted AIG/Housing Industry Association Performance of Construction Index (Australian PCI®) was 53.2 in May, down 2.6 points but still above the 50 point level indicating an expansion in activity. House building experienced the strongest conditions, with a lift in new orders and increased investor activity raising its sub-sector index to 57.7 in May. This was in stark contrast to the apartment building sub-sector, which recorded a sharp decline in May, taking its related index down 16.8 points to 42.0. Australian Industry Group Director Public Policy, Dr Peter Burn, said that the continued expansion of the construction sector as a whole and the ongoing growth of new orders in housing, engineering construction and commercial construction are positive signs that the recovery in the sector is gaining traction following the difficulties of the past couple of years. "The increased pace of input deliveries and the growth of employment suggest that businesses are taking a more positive near-term outlook", Dr Burn said. He noted a need for caution with regards to the volatile apartment sub-sector, which has shown weakness in new orders since January. "Activity in apartment and engineering construction slumped in May and the pace of growth in commercial construction activity that we saw in April was not maintained", he said. 4. Trips and traps for owner builders The thought of saving money by building or renovating your home is always attractive, however the gains can be quickly lost once the project begins, advisory service Archicentre warned this week. Archicentre, which helps owner builders in preparing initial design concepts and provides a guiding professional hand by giving advice on design, materials and costs estimates of the projects, says cost blow outs are the major threats for owner builders. Victorian State Manager David Hallett said as many as 25 per cent of the Building Permits issued in Victoria are issued to owner builders. Mr Hallett said being an owner builder starts with a preliminary agreement and or/ design, planning or permit applications with the local Council providing a clear scope of the works involved. It can be a rewarding experience providing careful planning, costing and building contracts are in place including commencement and finish dates agreed. "The planning for the owner builder should commence at the design concept where the design is settled on and then properly costed so accurate quotes can be obtained. "Whilst tendering provides a good guide to the cost of the project choosing the cheapest quote may not necessarily the right decision", Hallett advises. "Tendering is not rocket science, it is carefully documenting and specifying the entire project so everything can be costed accurately and planned. For the builder the provision of tender documents including the type of contract to be used and the specification of fittings and finishes provides an opportunity to provide an accurate costing. "It is also vital that the contract builders' credentials are checked out to ensure they are registered, have appropriate insurance, are able to show examples of their work and importantly are able to complete the project on time. "A building contract also includes dispute resolution processes and is a major step in limiting the legal disputes which can arise if there is not accurate paperwork," Mr Hallett said. "Some renovators are paying between to 50 per cent to 60 per cent more for their renovations because they are failing to tender the projects properly." Archicentre has found about one in three requests it receives for assistance is related to renovations, design and cost blow out issues for renovators once projects started making it more expensive to correct. "One of the biggest mistakes owner builders make is that they get a quote only on the structural part of the renovation failing to recognize that around 50 per cent of the cost is to be found after lock up in fittings and finishing", Hallett says. "This can leave people financially exposed and unprepared for the potential cost blow out and disruption caused when half way through the renovation they require more funds to complete the project." Owner builders should check the building contract provisions for variations, including delays, extensions and GST. A lack of good planning will ultimately lead to confusion between the owner builder and the subcontractors if the project and contracts (including prices) have not been properly documented in the beginning. "This can lead to a stalled project, breakdown in communication with builders required to finish the job and often an impasse that can develop into a lengthy legal dispute", Hallett warns. From experience with owner builders around Australia, Archicentre has found the owner builder who works through their design carefully, has it accurately costed and uses a number independent quality inspections and reports at milestones such a foundation, framing, lock up and hand over usually has a satisfactory outcome. However, in instances where proper planning and management of a renovation program is not carried out carefully a property can be devalued and the owner left with an expensive course to fix the original renovation. A sample Renovation Design Report is available for download from the Archicentre website. 5. Barking up the wrong tree In the past, fur rugs from rare animals were used for exclusive floor coverings, but with forests slowly going the way of the buffalo are we seeing trees being `prized' the same way? Floor to Heaven have developed ornamental wood-look carpets, including one resembling a petrified cross-section of a tree, complete with faux bark around the edges and ring markings suggesting a significant age. 6. New homes for old homes A good home was left looking for a good home after a NSW family couldn't bear to see it demolished recently. The house, located near Wagga, was advertised on yours2take.com.au - a council run website aimed at diverting waste from landfill - and piqued interest on the same day, local news The Daily Advertiser reported recently. After building another home on the same block, the owners discovered they were only entitled to have one residence on their property, but felt the structure too good to tear down. With wide walls, art-deco style fittings, large living area and a big kitchen, the solid house is a steal for anyone with the means to move it.