Latest Property News from Ted Hanson

Friday 14 January 2011 Property or shares? It is one of the perennial questions of investing - shares or property? Both asset classes have their positives and negatives, their supporters and detractors. Over the very long term, it seems likely that Australian shares have provided better returns than property. Read the full article 1. Dwelling approvals down again After a surprise lift the previous month, approvals for new homes dropped again in November according to data released this week by the Australian Bureau of Statistics (ABS). The figures show that the total number of dwellings approved fell 4.2 per cent in November 2010, in seasonally adjusted terms, after rising 8.3 per cent in October. Victoria (3.1 per cent), Queensland (3.3 per cent) and Western Australia (7.1 per cent) recorded more dwelling approvals this month while New South Wales (-13.4 per cent) and South Australia (-2.7 per cent) recorded fewer dwelling approvals in seasonally adjusted terms. Private sector houses approved fell 1.7 per cent with falls in New South Wales (-4.9 per cent) and Victoria (-2.8 per cent) while Queensland (4.1 per cent) and Western Australia (0.9 per cent) rose. South Australia remained steady. The value of total building approved fell 3.5 per cent in November in seasonally adjusted terms. The value of total residential building fell by 5.9 per cent while non-residential building rose by 1.4 per cent. 2. Homes could take year to dry out Flooded homes in Queensland could take up to twelve months to dry out, building advisors have warned this week. While the initial devastation is painfully clear, homeowners are being urged by Archicentre to be aware of the less-obvious effects of sustained water damage on insulation and the structural integrity of their homes. Ian Agnew, Queensland State Manager of Archicentre said that flood damage 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 in walls becomes water logged. "The size of the floods, the depth of the flood water and the time buildings could be underwater will mean home owners affected will need ongoing community and government support over a long period of time to restore their homes, businesses and community assets within townships". Mr Agnew said. "It is important to recognise that flood damaged buildings could take over a year to dry out completely 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." Mr Agnew added that the intensity of the flood will also have major structural implications for affected homes and the structural integrity of attached decks, balconies or tank stands supporting full tanks of water weighing several tons. "The underlying health issues associated with the floods and the disinfecting of homes should not only include interior surfaces but also should extend into the wall framing and sub-floor structure", Mr Agnew suggested. Archicentre has prepared the following points to consider for flood damage clean-up: 1. Start at the roof. Remove the iron or tiles to allow the sun to shine in to help the drying out process. 2. Check for vermin - there could be rats or snakes in the roof space that have come into the building to escape the flood waters. 3. Remove any insulation that is water-damaged in the walls or ceilings. 4. Plasterboard will need replacing. 5. Solid furniture should be put somewhere to dry. Particle furniture will most likely be destroyed. 6. Clean everything down with a high-pressure hose. 7. New meter boxes will need to be fitted. All other electrical equipment must be checked and replaced where necessary. 8. Put old photos in a flat container of water with some detergent. The detergent will separate them. Once all else is done, take them out and let them dry. This won't work with ink-jet produced photos. 9. Following floods, large pools typically form under the house. These areas need to be re-graded to prevent long-term structural damage like rotted floor framing. 10. Be careful of power points and switches that collect mud and impurities. Ensure a licensed electrician checks these before reconnection of power and a licensed plumber for water or any gas appliances being reconnected. 11. Debris and rotting wood left from flood waters are an ideal food source for termites long term and a termite check by a professional pest inspector is also an important element of flood recovery. 3. New homes not selling New home sales faltered in November 2010 despite a lift in the apartment sector, the Housing Industry Association (HIA) announced this week. The latest HIA/JELD-WEN New Home Sales Report, a survey of Australia's major residential builders, showed that the number of new homes sold eased by 0.2 per cent in November 2010 with detached house sales declining by 1.1 per cent. Sales of multi-units increased by 8.1 per cent last November. Over the three months to November 2010 new home sales fell by 2 per cent to be 11 per cent lower when compared to the same three-month period in 2009. Detached new house sales increased by 6.2 per cent in New South Wales and by 1.5 per cent in Western Australia in November 2010. Sales fell by 0.2 per cent in Victoria, 10.4 per cent in Queensland, and 0.8 per cent in South Australia. HIA Chief Economist, Dr Harley Dale, said that new home building conditions weakened considerably over the second half of 2010 and activity looks set to decline across all states and territories in 2011. "The risk of a sharp contraction in new home building in 2011 is exacerbated by the negative impact on households and small businesses of increases in borrowing costs and by the persistent lack of available credit for small and medium sized new home projects", Dale said. "It would be a shot in the arm for confidence and activity in the residential sector to see the New Year kicked off by a re-engagement of housing policy reform by the Federal Government to address a range of supply side constraints including the credit squeeze. "Furthermore, given that new housing is one of the most heavily and inequitably taxed industries in Australia it is essential that the upcoming taxation summit delivers bold and effective policy reform", he added. 4. Fixed rate loans gain edge Australians' demand for fixed rate home loans has increased to a 31-month high, according to loan approval figures from a leading mortgage broking firm. Mortgage Choice customer data for December 2010 shows the year ended with a bang for fixed interest rates as appetite for fixed loans increased to a level not seen since May 2008. For a third consecutive month, every state saw a lift in its uptake despite the continued rising cost of fixed rates. Company spokesperson Kristy Sheppard remarked that Australian borrowers' demand for fixed term mortgages has reached a pace unseen for over two and a half years, at 15.2 per cent of our loan approvals in December, despite the cash rate being much lower now than back then. "Fixed term loan approvals rose four percentage points over the month to more than double the six month average of 7.1 per cent and more than triple the 12-month average of 4.6 per cent", Ms Sheppard said. "Much is being written about the cautious attitude of Australians and our latest data reflects that. Many mortgage holders are locking in the interest rate on part or all of their loan so (that) they can better control their ability to meet repayments. "It's obvious that concerns about utility bills and other living cost hikes along with predicted rate rises for 2011 are having a noticeable effect on the purchase decisions of new borrowers. "Home loan commitments are no exception." However, standard variable rate loans continue to hold relatively steady as the favoured home loan type, at 32.9 per cent of approvals, followed by basic variable loans at 25.1 per cent and ongoing discount loans at 21.2 per cent. The latter type of loan - where the interest rate is discounted over the entire loan term (most of these would be `professional package' loans) - experienced a significant rise of 4.3 percentage points in December. This also reflects the growing conservatism of new mortgage holders. Line of credit home loans (often popular with investors) rose to 5.4 per cent of approvals from 3.8 per cent while introductory rate home loans accounted for only 0.3 per cent of all approvals in December. Note: Mortgage Choice currently claims to write one in 25 new home loans in Australia, equating to over $10 billion in approvals per year, allowing it to provide insight into borrower preferences. The 18-year old firm has a loan book of over $40 billion. 5. Home is where the runway is If your favourite mode of transport is the family's Lear Jet, then you'll probably want to live at a residential airpark where you can land and park close to home. There are around 500 residential airparks (also known as fly-in communities) across the United States, according to the Living With Your Plane organisation which produces a newsletter, annual directory of airparks and a library of floor plans for homes with airplane hangars. 6. A day off Eighties movie buffs take a deep breath and get ready to cut class, because the house from the movie Ferris Bueller's Day Off is on the market. The very same iconic abode housed Bueller's best friend Cameron's dad's Ferrari, up until the point that they tried to run the car in reverse to take off the Ks they'd accumulated over their adventures, and consequently watched the car plummet through the panoramic windows to the wilderness below. The 5,300 square foot residence in Illinois offers four glass-cased bedrooms, three bathrooms and floor-to-ceiling windows overlooking wilderness, the UK Daily Mail reports.