Thursday, February 24, 2011

Latest Property News from Ted Hanson

Friday 25 February 2011
Please be seated

Even though this style never goes out of living room fashion, it is always evolving. There is at present an overlap of looks under the one umbrella - a little Palm Beach swank mixed with Hamptons country club and a dash of Southern Highlands grandeur are all part of the mix.

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New homes to rebound

The current drop in demand for new houses should begin to turn around in the middle of this year, industry analyst and economic forecaster BIS Shrapnel announced this week.

BIS Shrapnel's latest Building Industry Prospects report shows the total number of new dwelling approvals is expected to rise eight per cent to 177,000 in 20011/12 - the highest level since 2003 3/04.

New house approvals in the same period are forecast to rise 10 per cent nationally.

The increase in first-home buyer demand from the Federal Government's First Home Owner's Grant
Boost Scheme, together with various State Government incentives for new dwellings, resulted in new house approvals rising by 22 per cent in 2009/110.

Angie Zigomanis, Senior Manager, Building and Construction, BIS Shrapnel noted however that these incentives only served to pull forward existing demand, with first-home buyers who would have otherwise been in the market in 2010 entering the market in 2009 to take advantage of the increased incentives before they expired.

"As a result, there was a drop off in first-home buyers in 2010, which has been evident by the decline in new house approvals through the second half of last year", Mr Zigomanis said.

The number of loans approved for first-home buyers nationally by the middle of 2010 was nearly 60 per cent below the same (albeit elevated) period in 2009. With first-home buyer demand well down, upgrader demand for new dwellings also eased as fewer potential buyers were in the market for their existing properties.

As a result, BIS Shrapnel is forecasting new house approvals to record a decline of 11 per cent in 2010/11. However, strong investor demand is driving further growth of 26 per cent in other dwelling approvals (private medium and high density dwellings).

Meanwhile, public sector dwelling approvals will decline by 51 per cent to only 7,500 over 2010/11 as the government stimulus comes to an end. Overall, total dwelling approvals are forecast to fall by four per cent to164, 000.

"With the lower level of construction since the Global Financial Crisis, supply has fallen further behind underlying demand, and there is a rising deficiency of dwelling stock," said Zigomanis.

"At the same time, there is evidence that the drop off of first-home buyers has now bottomed out.

"The latest data for the month of December 2010 indicates that the number of first-home buyers improved to a decline of 29 per cent on the previous year, while the actual number of loans given to first-home buyers was also the highest level since December 2009", he added.

BIS Shrapnel says the improvement in first-home buyer activity should continue through 2011 as the post-Boost Scheme decline in first-home buyers is played out and numbers slowly recover back to long term levels by the second half of the year.

Together with the pent up demand from the deficiency of dwelling stock, and an environment where economic growth is picking up and interest rates are stable over the next six months, demand for new houses will subsequently increase as upgraders also take advantage of the stronger demand for their existing dwellings and trade up to a new house.

Home on the free range

Fancy some delicious fresh eggs produced by chooks that live in your backyard and cleaned up your vegetable scraps from yesterday's meal?

No longer is it necessary to live on a farm in the country to know where some of your food comes from, with the advent of chook-hiring businesses such as Rent-a-Chook and City Chicks.

As long as you have a backyard, all you need is the coop and chickens, which the firms will supply for rent or to buy. If you rent, they will also replace any hen that has stopped laying with a `layer'.

Apart from the obvious benefit of being able to collect your `farm-fresh' eggs every day, you will soon find that the chickens eat all your kitchen scraps and leftover take-away dinners, remove weeds from your garden and regularly turn over the compost heap for you.

Rent-a-Chook and City Chicks are based in Sydney and Brisbane respectively, but Rent-a-Chook will deliver the coop in a flat-pack to anywhere in Australia and help you find a local supplier of chickens and feed.

Fixed rate demand steadies

Concerns about rising interest rates seem to have settled, according to new data showing the demand for fixed rate home loans slowed again in January.

The figures, released this week by mortgage broker Mortgage Choice, show that 15.3 per cent of the home loans approved for its customers in January had a fixed interest rate.

This is on a par with the December 2010 figures (15.2 per cent) after three consecutive rises in the previous months (11.2 per cent in November, 7.7 per cent in October and 3.7 per cent in September).

Uptake increased for the fourth consecutive month in the majority of states, by an average of 2.2 percentage points, but dropped in QLD and WA, by 2.9 and 2.8 percentage points respectively.

Mortgage Choice company spokesperson Kristy Sheppard remarked that Australians' appetite for fixed rate home loans has risen consistently over the past six months, but that pace slowed right down in January.

"One has to question whether the demand for this more conservative loan type has steadied now it looks likely that the next cash rate rise has been pushed back to mid-year or later", Ms Sheppard said.

"Of all the mortgage types, ongoing discount loans - where the interest rate is discounted over the entire loan term usually in return for an annual fee - experienced the biggest increase in demand.

"They accounted for 25.3 per cent of our January approvals, having risen 8.4 percentage points in the last two months."

Notwithstanding this trend standard variable rate home loans continue to be the favourite, at 30.7 per cent of approvals, followed by the ongoing discount loan category, which overtook basic variable loans at 23.6 per cent of approvals to hit second spot.

Demand for line of credit home loans (often popular with investors) dropped a little to 4.8 per cent of approvals from 5.4 per cent the month prior while introductory rate home loans accounted for only 0.2 per cent.

Renovate for reward

Renovating a property to increase its value can backfire if the renovation is poorly planned or executed, Archicentre said this week.

The warning comes at a time when the $20 billion renovation industry is set to play an extended role in the Australian building industry, with people choosing to invest the $50,000 to $60,000 it costs to move in renovating their homes and staying put.

Edward Lukac, spokesperson for Archicentre South Australia said that many people invest in property to secure their financial future without a planned strategy or any idea of the cost of renovating their home or investment property.

Lukac cited the example of baby boomers purchasing homes to renovate and live in with a view to gaining capital on their resale when they move to smaller or assisted accommodation in their later years.

"For this group of renovators the success of the renovation can have a major impact on their financial future", he said.

"People actually devalue their investments with poorly conceived designs or inappropriate materials, providing a negative cash flow for the investments and poor re-selling options."

Some of the worst examples Archicentre consultants have reported include:

- period houses with poorly-designed flat roof extensions
- houses painted in garish colours
- money poured into expensive bathroom and kitchen fittings at the expense of light and space.

Lukac said that another costly mistake is to inadvertently change the house from one market segment to another.

"For example converting the third bedroom of a three-bedroom house into a walk-in robe and ensuite will change the house from a three bedroom house to a two bedroom one with a drop in value of possibly $100,000 after spending perhaps $40,000 on the project", he said.

"The renovation decisions people make today will certainly impact on the resale value of their property and the extent of their retirement funds in the future".

"The basics of planning and costing the renovation to work within an available budget, combined with a clear understanding of how to tender the work out and manage the renovation project, is fundamental to the success of any renovation."

Mr. Lukac said that a well planned and executed renovation or extension could see the owners recoup their investment and a greatly enhanced lifestyle while concurrently enjoying the benefits of a greatly improved home for a long-term future.

Some tips for renovating a property for maximum return include:

# Purchasing a property that is structurally sound.
# Assessing the financial potential with a design and cost analysis before purchase.
# Ensuring a well-designed, accurately costed Feasibility Study is prepared before committing to the project
# Checking the planning regulations to avoid costly planning appeals.
# Ensuring the design, finishes and fittings do not over-capitalise the property.
# Utilising design to deliver lifestyle requirements in demand by the market.
# Creating a design where additions are compatible with the existing structure.
# Obtaining competitive building or sub contract prices

A free Cost Guide for Renovators is available for download from the Archicentre website.

San Andreas vault

Building anything around a fault line is risky business. While the potential of a shift that consumes your home isn't by any means appealing, the same basic concept has still found its way into homes.

Made from oak wood, the San Andreas Coffee Table was inspired by the 1100km long crack in the Earth's crust in California. A visible crack line in the centre of the table allows the two ends to pull apart, revealing a hidden storage space inside.

Take your best shot

One of first things a prospective buyer will see of your house is photos, so it is a good idea to take the time and effort to ensure it is shown off to best advantage. They should be clear, well-presented and make your house look instantly attractive.

Good photos need a little preparation, so first take a walk around the house and choose the right angle to present its best features. Clear away any clutter and add a few accessories such as a vase of flowers (or a bowl of fruit in the kitchen).

If there is a view from one of the windows, or a garden area beyond glass doors, include it as part of the room, if possible. Frame it using the fittings (open the curtains wide) and by angling the furniture so that the eye is led beyond the room. Have a professional take the photos and be prepared to repeat the exercise a few times before you get them right.

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