Latest Property News from Ted Hanson

Friday 09 July 2010 Quote of the Week "Kind words can be short and easy to speak, but their echoes are truly endless." ~Mother Teresa~ 1. Rates on hold Mortgage holders welcomed the Reserve Bank's decision this week to keep interest rates on hold for another month. This means that the Official Cash Rate remains at 4.5 per cent for this month and interest rates to borrowers stay at "around their average levels of the past decade", according to RBA Governor Glenn Stevens. In a statement announcing the Board's decision, Governor Stevens hinted that any further changes would depend on what happens in both the global and Australian economies in the next few months. "Pending further information about international and local conditions for demand and prices, the Board views this setting of monetary policy as appropriate", Governor Stevens said. Top 2. Dwelling approvals fall in May The total number of dwellings approved fell in May for the second month in a row, according to figures released this week by the Australian Bureau of Statistics (ABS). Building Approvals. This month's fall was due to an 18.8 per cent decrease in `private sector other' dwellings approved. According to the ABS, New South Wales (-9.8 per cent), Victoria (-3.0 per cent), Queensland (-8.6 per cent), Western Australia (-13.9 per cent) and Tasmania (-24.8 per cent) recorded less dwelling approvals this month, while South Australia recorded 30.6 per cent more dwelling approvals. Private sector houses approved rose 1.7 per cent due to a large increase in Victoria (14.5 per cent). This leap was cancelled out by falls in New South Wales (-1.2 per cent), Queensland (-8.2 per cent), South Australia (-0.3 per cent) and Western Australia (-3.6 per cent). The value of total building approved rose 2.7 per cent in May in seasonally adjusted terms. The value of total residential rose by 0.1 per cent and non-residential rose by 9.1 per cent. 3. Six steps to smarter borrowing New legislation in relation to consumer credit means that from this week, home loans, personal loans, credit cards, consumer leases, overdrafts and line of credit accounts, among other products and services, will be regulated by ASIC under a single, nationally consistent regime. As it assumes responsibility for these new laws, which are designed to better protect the interests of borrowers and improve standards across the industry, ASIC has offered borrowers some practical guidance on dealing with credit and managing debt. ASIC's Senior Executive Director Financial Literacy, Consumers and Retail Investors, Delia Rickard, said that with so many credit products on offer, some people do not get the right product that best suits their needs, some end up paying more than they need to while others borrow a lot more than they can afford to repay, particularly when it comes to home loans, and this places them at risk. `Getting into debt is easier than getting out of it", Ms Rickard said. "Our six steps to smarter borrowing highlight practical things to think about and do before consumers sign a credit contract and while they are repaying a debt. `ASIC also stresses the importance of taking action early if consumers start to experience difficulty in making repayments and explain what to do if you are experiencing financial hardship', she advised. 1. Work out if you can afford to borrow Before you borrow, use FIDO's budget planner to see exactly where your money goes now and how much you could afford in repayments. Remember to allow for interest rate rises and anything that might affect income in the future (for example, changing jobs or starting a family). 2. Shop around for the best deal If you decide to borrow, take the time to compare interest rates, product features and fees and charges. Even a small difference in the interest rate can make a big difference to what you have to repay. 3. Know who and what you're dealing with Check that the person or organisation you're dealing with is registered or licensed with ASIC. Make sure you know what you're signing up for before you go ahead (check the terms and conditions of any loan contract, including penalties for missed repayments or for paying off a loan early). 4. Keep up with your repayments Keep your repayments up-to-date and make extra payments when you can to save on interest, subject to the conditions of your loan. Try to pay off the entire amount owing on your credit card each month (or as much as possible). Check for fees or charges if you're thinking of transferring your credit balance to another card, consolidating your loans or refinancing. 5. Get help if you can't pay your debts It's important to act quickly if you're having trouble making repayments. Keep paying what you can afford. Even though it can be difficult to face the problem, ignoring it will only make things worse. Contact your credit provider without delay. There are places you can go for help like financial counselling or free legal advice. 6. Complain if things go wrong Try to resolve any problem with your credit provider or broker first. If you aren't satisfied, take your complaint to an independent dispute resolution scheme. You can also complain to ASIC online or phone ASIC's Infoline on 1300 300 630. ASIC has recently released an information pack including a new booklet, Credit, loans and debt: stay out of trouble when you borrow money and factsheets covering topics like home loans, debt management and what to do if you're in trouble, interest free deals, payday lending and other high-cost credit. It is available by phoning ASIC or on FIDO, ASIC's website for consumers and investors. 4. No more `no deposit' Borrowers now need to find larger deposits on their loans as home loan lenders tighten credit restrictions, mortgage broker AFG said this week. Loan to Value Ratios (LVRs), which express a loan as a proportion of a property value, reached a national low of 61.6 per cent in June 2010 - the lowest since the AFG Mortgage Index began in 2004. During the first half of 2009, LVRs were typically around 73 per cent. They have been in steady decline ever since. On the demand side, first home buyers, who typically have smaller deposits and therefore high LVRs, have halved as a market sector from 19.5 per cent in June 2009 to just 9.5 per cent in June 2010. On the supply side, lenders are demanding higher deposits from potential homebuyers. In addition, mortgage insurers, who provide cover to lenders for loans at higher risk of default, are increasingly insisting that buyers have deposits of around 20 per cent. LVRs were lowest in Western Australia (59.3 per cent), South Australia (60.3 per cent) and Queensland (61.4 per cent), but higher in Victoria (63.2 per cent) and New South Wales (65.5 per cent). Internal analysis at AFG showed mortgage activity shifting away from the resource states of Queensland, WA and South Australia during the past six months as fears of a super mining tax dented consumer confidence. Meantime Victoria and New South Wales have performed above expectations as investors in particular have responded to increased housing demand from a growing population. 5. Off the wallpaper Did anyone fall for that Back to the Future Day hoax this week? Turns out the photo of Marty McFly's time machine console showing the arrival date as 05/07/2010 was just a `photoshopped' image. Indeed, we may not yet be living in the future as imagined in the Back To The Future movies, but we're a lot closer to it than we were 25 years ago. In the vein of things futuristic, a collection launched this year called Off The Wall brings `old-school' 2D wallpaper into a 3D world. Offering function as well as decor, the concept consists of two elements - the wallpaper itself and the underlying 3-dimensional shapes made from acrylic sheets that form the structure of shelves and lampshades. Each shape has its own stylised accompanying wallpaper conjuring different visual effects. 6. Lockdown at a high price How can the asking price for three lock-up garages be the same as for a five-bedroom detached house currently on the market? Like it or not, location still reigns supreme in the property market, and even on the coattails of a recession the most decrepit structures are fetching top dollar based on their prime position. The rundown garage block in London has been placed on the market for just under AU$2M, making it "Britain's most expensive lock-ups", the UK Telegraph reported recently. A few notable neighbours include actor Jude Law, celebrity chef Jamie Oliver, actress Gwyneth Paltrow and singer Gwen Stefani.

Latest Property News from Ted Hanson

Friday 02 July 2010 Happiness is a journey, not a destination. We convince ourselves that life will be better after we get married, have a baby, then another. Then we are frustrated that the kids aren't old enough and we'll be more content when they are. After that, we're frustrated that we have teenagers to deal with. We will certainly be happy when they are out of that stage. We tell ourselves that our life will be complete when our spouse gets his or her act together, when we get a nicer car, when we are able to go on a nice vacation or when we retire. The truth is there's no better time to be happy than right now. If not now, when? Your life will always be filled with challenges. It's best to admit this to yourself and decide to be happy anyway. Happiness is the way. So, treasure every moment that you have and treasure it more because you shared it with someone special, special enough to spend your time with ... and remember that time waits for no one. There is no better time than right now to be happy. Happiness is a journey, not a destination. So work like you don't need the money, love like you've never been hurt and dance like no one's watching. 1. So far so good New home building has undergone a major recovery but will need to keep improving, the Housing Industry Association (HIA) said this week. The association's quarterly National Outlook Report shows that housing starts are forecast to increase by 20 per cent in 2010 to a level of 165,940, before falling back by 3 per cent in 2011. On a financial year basis, the number of housing starts is forecast to increase by 22 per cent in 2009/10 and 2 per cent in 2010/11 to reach a level of 162,600. Starts are forecast to be flat in 2011/12. HIA Chief Economist Dr Harley Dale said that Australia needs to build over 190,000 dwellings in 2010 alone to meet underlying demand. "And over the next ten years we need to build 420,000 dwellings more than we built over the last decade", Dale said. "Meanwhile the renovations sector is looking healthier with three consecutive quarters of growth through to March this year. "Total renovations hit a new quarterly record in March 2010", he added. Improving labour market conditions and existing home price gains are forecast to see the total worth of the renovations sector increase by 7 per cent in 2009/10. "Growth of 4 per cent is forecast in each of the subsequent two years, taking renovations activity to a worth of $36.4 billion in 2011/12", Dale said. "The recovery in the renovations sector includes signs of growth in major alterations and additions which encompasses structural extensions, an important component of the overall housing industry", he concluded. 2. House prices up but slowing After rising almost one-fifth in a year, house prices started to level off in growth again in the first quarter of 2010, the Real Estate Institute of Australia (REIA) said this week. The latest REIA Mortgage Choice Real Estate Market Facts publication shows that the March quarter saw the Australian weighted average median house price increase by 0.8 per cent to $518,624. This in turn means that prices have increased 18.7 per cent over the year. "This is the highest annual increase since September 2003", REIA President David Airey said. The report also shows that in the first quarter of 2010, the number of loans to first home buyers decreased dramatically, as did the total number of housing loans. According to Kristy Sheppard, Senior Corporate Affairs Manager, Mortgage Choice, the first quarter of 2010 brought with it near-record auction clearance rates but a decline in housing finance demand, which indicated that more experienced buyers with equity at their disposal were re-entering the market as first homebuyer activity slowed significantly. Median house prices recorded increases in most Australian capital cities property markets over the March quarter, with the exception of Melbourne and Canberra. Sydney, Darwin and Melbourne have the highest median house prices while the lowest are in Hobart, Adelaide and Brisbane. Adelaide house prices reported the highest increase during the quarter while Hobart set the record for the year. The median house price in Adelaide increased 4.5 per cent compared to the previous quarter while the median price for Hobart increased 20.8 per cent over the year. "We need to keep in mind that the March quarter 2010 has not shown the impact of all the recent interest rate increases, we will have to wait until the June quarter to see the full effect this has had on the property market", Mr Airey concluded. 3. Develop your urban green thumb Fresh home-grown fruit, veggies and herbs are not only good for you, but can work magic in a home cooked meal - and save money. However, if you call a suburban block or inner city apartment home, you may think you don't have the space or the right conditions - but with a little knowhow, your kitchen garden could be sprouting in no time. First, look at your space: What spare outside room is available? A corner in a yard or balcony is often enough, as your garden can be established in a long narrow trough, or in pots layered on a stand. Your space will determine how much you can have growing at any time, just as the weather conditions will determine what you can grow. Small pots will require more watering, and do not allow plants much room for putting down strong roots; try using a few big deep tubs or large pots to hold multiple plants (be sure to find out which plants live well together first). Some plants such as tomatoes and lettuces thrive against a sunny wall, whereas others such as parsley and mint can be grown in limited sunlight. If there are no naturally shady spots on your balcony, consider creating one using mesh netting or an umbrella. Secondly, consider what you'd like to grow: Thyme and chillies can add a simple unique twist to a meal and survive happily on a hot exposed deck, while bay leaves, turmeric, lemongrass and citrus trees can handle the heat but will need more attention and watering. Most garden centres offer a variety of seedlings for lettuces, baby spinach and rocket, which can be picked at random to add flavour to most meals. Add a handful of herbs and some fresh Roma or Cherry tomatoes and you have a delicious instant salad. Last, consider conditions and mulching: While most herbs, fruits and vegetables will be able to handle the heat, be sure you know how much water (and even shade) they will need, especially as the days get hotter. Most commercial potting mixes contain moisture beads, but you could add more for particularly thirsty plants (such as mint or parsley). Throw some mulch on top of the soil to prevent drying out and to shade roots from the heat. A small compost bin is a handy way to recycle non-oily scraps - throw in anything from egg-shells to bread, tea bags, fruit peels or even the lint from the dryer. If you have space outside, you may even consider a worm farm for recycling food scraps and garden waste and to provide a constant source of nutrient-rich fertiliser. A worm farm will struggle in the heat, so you'll need to keep it out of direct sunlight, in a place where the air can circulate around it. With a little planning and care, you could be eating your own produce in no time. If you are unsure what plants will suit your conditions, talk to your local nursery. 4. What puts buyers off your home? How much do you suppose a pile of crunchy dead bugs on a windowsill will affect the selling price of a $500,000 home? How about a life-size skeleton hanging in the closet, or an open coffin in the basement with a dummy vampire inside? Or an overly-ripe kitty litter box under the kitchen table? The National Association of Exclusive Buyer Agents (NAEBA) - an industry body in the United States - conducted an online survey of their members to rate the things they found most annoying when showing a home to prospective buyers. The results of the survey are revealing, surprising, and sometimes downright weird. Here are the top twelve things the agents reported as most off-putting when showing a home: * Broken door locks preventing access to the house. * Pet deposits in the back yard or dirty cat boxes. * Missing light bulbs. * Sellers that ask you to remove shoes and then have wet carpet or dirty floors. * Having loose stairs or missing banisters. * Low hanging dining room light fixtures in a vacant home. * Closet doors that fall off or are not adjusted properly. * Going into a vacant home and hearing animals in the walls. * Dangerous toys left out. * Dead cars in the driveway or yard. * Political signs. * Dead birds or animals in or around the home. Silliness aside, there is an important lesson here for home sellers to have a good look around your house to make sure that things you tend to overlook may not be a distraction or distasteful to prospective buyers. Imagine you are a stranger, or take a friend or relative for a walk through - they will often notice things you don't (such as cobwebs, pet smells, or an overgrown garden). . ATM for billionaires How is it that we can get gold leafing, yet still can't grow a gold tree in the backyard? While a money-tree and golden-egg-laying goose may be far on the mythical horizon, a real-life hole in the wall that dispenses gold bars is just beyond ours. If it were going to be anywhere, surely Abu Dhabi's Emirates Palace Hotel is the place - boasting to be the most luxurious hotel in the United Arab Emirates, the elite hotel has raised the bar by installing a gold-dispensing ATM. According to the UK Telegraph, the machine is coated with a thin layer of gold and offers customers 320 items to choose from, ranging from gold bars that can weigh up to 10 grams, to customised gold coins. A computer system updates every 10 minutes to keep the price in check with international markets. 6. Thief in the light Recent experiments by scientists in the US and Japan have opened up the possibility of using plant life as living solar cells. In response to these developments, UK inventor/designer Mike Thompson has designed Latro: an Algae Powered Lamp. Latro (latin for thief) incorporates the natural energy potential of algae and the functionality of a hanging lamp into its design. Breathing into the handle of the lamp provides the algae with CO2, whilst the side spout allows the addition of water and release of oxygen. When the lamp is placed outside in the daylight, the algae use sunlight to synthesise foods from CO2 and water. A light sensor monitors the light intensity, only permitting the leeching of electrons when the lux level passes the threshold - avoiding algae malnourishment. Energy is then stored in a battery to be used when the sun goes down. Owners of Latro are required to treat the algae like a pet - feeding and caring for the algae will reward them with light.

Will SMEs back Gillard?

While Julia Gillard's decision to challenge for the leadership of the Australian Labor Party has shocked no one, the speed at which support for Kevin Rudd evaporated was staggering.
Just a few days ago, Gillard was emphatically ruling out a try at the top job. This morning, after a lightening move from the ALP's Right faction, she is now Australia's first female Prime Minister.While questions will be asked about whether factional heavyweights should have as much power over the ALP – and for now at least, the Government – as they clearly do, it is equally obvious that the ALP had to move.Rudd simply had lost traction with the electorate. The negative momentum probably started with his decision not to proceed with the emissions trading scheme – an issue he famously described as "the greatest moral challenge of our time" – and gathered pace with the botched insulation scheme, the school buildings program and the Government's stance on asylum seekers.A $15 billion health reform didn't give Labor a boost in the opinion polls and the poorly-handled introduction of the Resources Super Profits Tax apparently sealed Rudd's fate.Of course, Rudd is now yesterday's man.The big question now is: can Julia Gillard lead Labor to a win in the Federal Election?Gillard obviously has a better chance than Rudd, and is likely to enjoy something of a honeymoon period with voters in the coming months. This will probably give Labor a good deal of momentum leading into the poll – this may also make it difficult for the Coalition to get its message through to voters.But Gillard may still find it very difficult to win over the SME community due to one key reasons – industrial relations.As the architect of the Fair Work IR regime, Gillard is perhaps the minister who has had the biggest direct impact on SMEs since the Rudd Government's election in 2007.Under this regime, we have seen the removal of unfair dismissal protections for thousands of businesses, new enterprise bargaining rules, new workplace flexibility rules for employees, and mass confusion over Gillard's Modern Awards system.The change from the Howard Government's Work Choices regime to the Fair Work regime has been complex, confusing and costly for many entrepreneurs and the worst may still be to come – many of the new Modern Awards start on July 1, as Gillard's prime ministership is just getting underway.Gillard and the Government rightly argued that Work Choices pushed the IR balance of power too far towards employers, but many entrepreneurs and employer groups believe Fair Work has pushed the pendulum back too far the other way.Gillard's stint as Prime Minister may we be very short if SMEs decide they simply cannot vote for the architect of the Fair Work regime.Source Smart Company www.smartcompany.com.au

Latest Property News from Ted Hanson

Friday 25 June 2010 Quote of the Week It is important to keep the promises made to friends. This is the true meaning of friendship. To become people who can do so, however, we must first learn to keep the promises we have made to ourselves. 1. Investors arrest slowdown Price growth for residential properties may slow down in 2010, but investors will keep interest alive in the market, according to industry analyst and economic forecaster, BIS Shrapnel. According to the company's Residential Property Prospects, 2010 to 2013 report, lending activity is already easing, with first-home buyer demand in the March quarter of 2010 down by 44 per cent on the same period last year and `upgrader' activity plateauing. This is flowing through to softer demand for residential property. BIS Shrapnel senior project manager and study author, Angie Zigomanis, says a combination of factors have caused the momentum that built up in house prices in the second half of 2009 to stall in 2010. "The strong price growth in the second half of 2009 was a rapid adjustment to housing variable interest rates that were at 40-year lows," says Zigomanis. "With interest rates quickly lifting from these `emergency' levels, and the current variable rate of 7.4 per cent now being close to long term trends, the recent levels of price growth cannot be maintained." BIS Shrapnel does not expect house prices to fall, however. Investors are beginning to return to the market and pick up some of the reduction in owner-occupier demand - loans to investors were up by an annual 26 per cent in the March quarter of this year. While rental growth did slow in 2009, part of the slowing was due to first-home buyers moving from rental to owner-occupation, as well as the lower interest rates reducing the incentive for landlords to pass on further interest rate rises. "Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying demand," says Zigomanis. "This is expected to put pressure on vacancy rates and result in stronger rental growth later in 2010. The deficiency of dwellings, and improved rental picture, will continue to maintain investor demand and assist prices. "In addition, the current round of interest rate rises is expected to have run its course, with further rises expected to be more moderate," adds Zigomanis. "Our forecast is for the cash rate to increase by 50 basis points in 2010/11, and a further 50 basis points in 2011/12. The more stable interest rate environment is expected to underpin purchaser confidence as economic conditions continue to strengthen, and should continue to push through moderate house prices rises." In effect, the surge in prices in the second half of 2009 in most cities has `front loaded' price growth in this upturn, leading to a flatter cycle in prices as the economic recovery continues. Higher interest rates will maintain price growth at a more moderate level, despite the acceleration in economic growth driven by the recovery in resources investment. "Normally price growth is moderate at the beginning of the upturn and accelerates to a peak at the end of the cycle as economic growth also peaks," explains Zigomanis. "However, the very low interest rates in 2009 initiated stronger rises, so the sharp 1.5 percentage point rise in the cash rate between October 2009 and May 2010 has already begun to strain affordability, causing future price growth to be more muted." Among the state capitals, BIS Shrapnel forecasts those starting from the lowest price base will experience the most solid price growth. Real house prices in both Sydney and Perth are still below their previous peak levels, and this should underpin stronger growth relative to the other capitals. Price levels in Adelaide are below the other mainland capitals. More moderate growth is expected in Brisbane, Hobart and Canberra due to weaker underlying demand and local economic conditions over the next three years, while the very strong price rises in Melbourne and Darwin have pushed affordability and will limit further rises. 2. Darwin tops sustainable cities index Darwin and Brisbane are better than the other capitals, but no Australian city has done well in the Australian Conservation Foundation's (ACF) first sustainable cities ranking. ACF's Sustainable Cities Index tracks the progress of Australia's 20 largest cities across 15 indicators: air quality, ecological footprint, green buildings, water, biodiversity, health, density, wellbeing, transport, employment, climate change readiness, education, food production, public participation and household debt. Darwin scored well with clean air, strong biodiversity and low levels of unemployment and household debt, but lost marks on health and preparedness for climate change. Perth came last on the list because of a very high ecological footprint per person and the amount of water supplied to houses relative to annual rainfall. While Perth's public transport system is better than many cities', it still scored poorly on transport with 641 private vehicles for every thousand people. Melbourne came seventh; Sydney was twelfth. Most cities were clustered around the middle of the scoring range. "Australia's major cities consistently rate among the most liveable, but liveability is not the same as sustainability," said ACF executive director Don Henry. "Australians use more water and energy and own more cars per person than the citizens of almost any other developed country. "Many decades of being wasteful with resources, combined with booming population growth, poor planning and a lack of infrastructure investment has come at a real cost to our economy, society and environment. "Our cities could be transformed into clean, efficient places with great public transport and happier, healthier residents. "In this federal election year it's up to our political leaders to prove they have the plans to deliver world class public transport systems, clean up Australia's vehicle fleet and make our cities truly sustainable." 3. Money for `Cool Ideas' Architects, building designers and specifiers are being asked to submit their 'Cool Idea' for a thermally-efficient workplace in a new competition that could win them a cool A$20,000. The competition was launched by BlueScope Steel at DesignEx in April in conjunction with the launch of BlueScope Steel's latest roofing product, Colorbond® Coolmax™ steel, which has been found to considerably reduce the annual cooling costs of a building. Already over 130 entries have been submitted. The 'Cool Ideas' competition runs until 30 November 2010. The judging panel comprises Justine Clark, editor of Architecture Australia; Bill Tikos, editor of The Cool Hunter and Adam Haddow, director of SJB Architects and winner of the 2009 Property Council Future Leader Award. To enter or to view submitted entries, visit www.colorbond.com/coolmax and in 25 words or less, tell BlueScope Steel your cool idea for creating a more thermally efficient building. 4. Tax time: invest in your property strategy In the lead up to a new financial year, Australia's largest independently-owned mortgage broker, Mortgage Choice reminds existing and potential property owners to make the most of their tax return. A great way for all residential market players to get ahead is to legitimately maximise any tax deductions before 30 June. Homeowners should also consider placing the resulting tax return directly into their home loan, while those looking to achieve home ownership status should contribute it into their deposit account. Investors may find a better use, depending on their goals. Mortgage Choice senior corporate affairs manager, Kristy Sheppard said that the end of the financial year presents an excellent opportunity to reassess your position and determine what strategies are available to you and how these can be used to benefit your property plans, being a time when many people consult their accountant and/or financial advisor for an annual financial health check. "Investors will be exploring tax deductions for their rental property or properties", Ms Sheppard said. "For example, you may be able to claim expenses such as outlay for travel to inspect an investment property, cost of advertising to attract a tenant, agent and/or management fees, body corporate fees, council rates, gardening, pest control, repairs and maintenance, water costs, home loan fees and loan interest. "For many, the potential tax benefits of negative gearing are the greatest lure to property investment. Negative gearing occurs when the combination of annual interest repayments plus any deductible expenses is higher than annual rent received from tenants. This allows eligible property upkeep and loan costs to be deducted from your gross income. Then you are taxed only on that reduced income. "This is especially popular with high income earners and those with larger loans, as the more money borrowed to buy a property, the more interest is owed, and therefore the bigger the possible tax deduction. For this reason and more, it is a good idea to consult a reputable tax adviser and mortgage broker before choosing a home loan and buying a property, to learn about the tax deductions available on your potential investment and what loan type suits your long-term strategy. "Moving on to prospective investors and homebuyers keen to enter the market, tax time presents a great opportunity to put a tax return to good use for the upcoming property purchase. "Firstly, lenders have tightened assessment criteria and now require borrowers to contribute higher genuine savings deposits accumulated or held over a period of three months or more. This is often 5% of the purchase price for homebuyers and up to 10% for investors. Keep in mind, equity from an existing property may be considered as genuine savings. So, it is worth considering assigning your tax return to a high interest savings account to reap the eventual benefits on your deposit amount. "Secondly, you may use your tax return to pay off other debts that feature a higher interest rate, so you have less debt when the time comes to apply for a home loan or mortgage top-up. "If you are already repaying a home mortgage, you may choose to contribute your return as a lump sum payment. Repaying your mortgage quicker speeds up the accumulation of your equity and reduces the length of the loan term and interest owed over that term. "If a borrower with a $300,000 home loan at 7% p.a. who is five years into their 30-year loan term contributes a lump sum payment of $500, they will save around $2,359 in interest plus one month off the loan term. However, if they did this every year, dividing the return by 12 and paying it each month over the entire term, they will save around $19,961 in interest plus 16 months. "Whatever your status, it is important to consult experts and ensure your decision is well thought out", she concluded. 5. Burger the candle at both ends While most fast food restaurants rely on visual images and past experience to draw people back to the counter time and time again, one savvy burger chain in the US has found a way to bring tantalising advertisements into homes via a different sense. Famous for their miniature burgers, White Castle are now offering burger-scented candles. Served up in a rectangular ceramic holder in the likeness of a box the burgers come in, it's one ad you can't avoid by changing the channel. According to NY Daily News, net proceeds will be donated to a charity for Autism. 6. Can an offer be too low? As a purchaser, you might feel a property is worth less than the asking price, based on your knowledge of past sales, available properties, condition, location, siting, design, etc. But how do you know what the seller will accept unless you make an offer? Remember, a real estate transaction is basically a business deal - you make an offer, then if it is rejected, at least it's a starting point for both parties to negotiate.

Latest Property News from Ted Hanson

Friday 18 June 2010 Quote of the week... It's only when we truly know and understand that we have a limited time on earth -- and that we have no way of knowing when our time is up -- that we will begin to live each day to the fullest, as if it was the only one we had. - Elisabeth Kubler-Ross 1. Investor loans rising Loans for investment housing continued to rise in April, according to dwelling commitments figures released this week by the Australian Bureau of Statistics. Investment loans for new housing increased 9.1 per cent over the month, assisting total investment to rise by 1.3 per cent. Loans for the purchase of new dwellings grew by 6.3 per cent in April, however the number of loans for construction fell by 4.8 per cent. Overall, loans for new housing dropped by 1.8 per cent to be 25 per cent lower than six months ago. Over the 3 months to April 2010 total housing loans dropped by 20.8 per cent compared to the same period in 2009. First home buyer loans were down by 51.4 per cent, while trade-up buyer loans fell by 8.6 per cent. In seasonally adjusted terms the total number of owner occupier loans in April 2010 fell by 0.7 per cent in Victoria, 3.1 per cent in Queensland, 1.9 per cent in Western Australia, 0.2 per cent in the ACT, and 8.6 per cent in the Northern Territory. Loans increased by 0.4 per cent in New South Wales, 3.8 per cent in South Australia, and 2.7 per cent in Tasmania. 2. Good time to buy a home We may be a little apprehensive about the way the global economy is going but are more than happy to buy a house, according to a recent survey of consumer sentiment. The Westpac-Melbourne Institute Consumer Sentiment Index fell by 5.7 per cent in June from 108.0 in May to 101.9 in June. But that's not because we're worried about rising interest rates, apparently. Westpac's Chief Economist, Bill Evans, commented that the result seems to reflect a mixture of concerns about deteriorating conditions abroad, financial market turmoil and uncertainty around the Government's proposed Resource Super Profits Tax. "The spending intentions measures in this survey have been quite resilient", Mr Evans said. "The component `whether now is a good time to buy a major household item' is only down 5.6 per cent over the last two months and in this survey other `time to buy' questions posted partial rebounds." `Time to buy a dwelling' rebounded 7.3 per cent from its 15.4 per cent slump in May and `time to buy a car' rebounded 1.6 per cent from a 6.4 per cent fall in May. Mr Evans does not expect that interest rates will rise in the near future. "The Reserve Bank Board next meets on July 6. "Clearly we are not changing our view that rates will remain on hold following that meeting", he said, adding that the next significant meeting will be on August 3, after the Board will have received an update on inflation. The survey found that consumers' short-term outlook for the economy improved in June, with expectations for `economic conditions over the next 12 months' rising 2.8 per cent. 3. Australia's building hotspots Victoria is the nation's biggest building hotspot, according to a new report from the Housing Industry Association. The Population and Residential Building Hotspots report provides a snapshot of Australia's fastest growing metropolitan and regional areas in the 2008/09 financial year. A "hotspot" is defined as a local area where population growth exceeds the national rate and the value of residential building work approved is in excess of $100 million. The nation's top local building hotspot was Whittlesea North in Victoria where residential building work approved rose to over $484 million and the population growth rate was 18.3 per cent. The national population growth rate was 2.1 per cent. Next on the list was another of Victoria's fastest-growing cities, Wyndham South, where the value of work hit almost $284 million and the population growth rate was 12.8 per cent. Griffin-Mango Hill in Brisbane, Queensland took third place with almost $150 million worth of residential building work approved and a population growth rate of 12.8 per cent. HIA Chief Economist Harley Dale remarked that the 2008/09 financial year was a very challenging one for Australia's new home builders and renovators with a sharp fall in new home starts and a moderation in renovations activity. "At the same time, Australia's population was growing at a historically fast 2.1 per cent pace", Dale said. "Meanwhile, very low interest rates and assistance to first time buyers targeted to new homes created the conditions for a first stage housing recovery in 2009/10. "Last year there were 58 local area hotspots across Australia's states and territories and these areas have experienced healthy new home building and renovations activity in 2009/10," he added. Among the Top 20 National Building and Population Hotspots are Wanneroo in WA, Ipswich, Caloundra and Inner City Brisbane in Queensland and Whyndham, Casey and Melbourne's Docklands in Victoria. The only area in NSW to make the list was Canada Bay/Concord in Sydney. 4. Wrap it up, Daddy long-legs How often do you clean up cobwebs in the house, only to find they are back again in a few days? And the culprit is almost always a Daddy-long-legs spider, isn't it? But before you get the broom out to remove the perpetrator once more to the outdoors, take a moment to consider his role in removing the other spiders which might otherwise invade your house. According to Backyard Buddies - a website initiative of the Foundation for National Parks & Wildlife - Daddy-long-legs are adept at catching, wrapping and killing the much larger Huntsman spiders, Redback spiders and Funnel-web spiders. Their not-so-secret weapon is their extremely long legs. When another spider passes by, the Daddy-long-legs can simply reach down and haul the more dangerous (but shorter-legged) spider into its web. It then wraps its prey up before it can get close enough to harm the Daddy-long-legs. Once the more deadly spider is immobilised, it is easy to bite and kill. So Backyard Buddies concludes that while their messy webs might make the Daddy-long-legs appear un-neighbourly, they might well be preventing far more undesirable spiders from taking up residence in our homes. 5. Farmers having a blast Just like Daryl Kerrigan in the iconic Australian movie The Castle, a Chinese farmer has brought in the big guns to defend his castle from encroaching developers. Since February, the 56-year-old farmer living on the outskirts of Central China has foiled two attempts by property developers to move him off his land, scaring off demolition crews using a home-made cannon to fire makeshift rockets at those looking to flatten his home, China Daily reported recently. Almost all the nearby farmland has been requisitioned for government building and although the man had been offered around AU$22,000, he is said to have demanded almost 5 times the amount and is clearly willing to fight for it. 6. Grow your own chair For centuries trees have been cut down to be made into furniture - until now. Instead of being uprooted and re-processed, the trees in Swiss designer Michel Bussien's Growing Chair evolve right before your eyes, growing into the structure of a seat with their roots in your own yard. Willow trees grow from each leg within glass chair-shaped confines, with Russian vine wrapped around the living structure for added greenery.

Confidence slides; Investors prop up property

Consumer sentiment; Housing Finance
• The Westpac/Melbourne Institute consumer confidence index fell by 5.7 per cent in June – marking the third consecutive month of falls. In annual terms confidence is up just 1.7 per cent on a year ago.
• Over the past three months confidence has fallen by 13.7 per cent - the biggest quarterly fall since the period following collapse of Bear Stearns (April 2008).
• New home loans fell for the ninth time in ten months in April, down by 1.8 per cent. The number of loans to owner occupiers fell to the lowest level in 9 years. The average home loan across Australia stood at $286,900, up 7.6 per cent on a year ago.
• The value of investment loans rose for the second consecutive month up by 1.3 per cent in April. In annual terms investor finance is up 26 per cent on a year ago.

What does it all mean?
• Aussie consumers are sharply reigning in the exuberance that was evident earlier in the year. Consumer confidence has fallen for the third straight month and is barely higher than levels recorded a year ago. The interest rate hikes have been the main driver behind the less optimistic outlook. Especially given consumers have not had the opportunity to adjust and in the short term the impact on household budgets has been significant. Also the slide in equity markets certainly hasn’t helped confidence levels. In fact over the past three months confidence has fallen by almost 14 per cent – a result that was last seen over two years ago just after Bear Stearns collapsed.
• The latest consumer confidence result was flagged in the Roy Morgan survey released last week. Investors and analysts who seek timely readings of consumer confidence will be well served by tracking the Roy Morgan series each week. Especially given that it closely tracks the higher profile, Westpac and Melbourne Institute monthly consumer sentiment survey.
• Given the uncertainty in the economic environment and the attractive term deposit rates on offer, it is hardly a surprise that consumers widely believed that the safest place for savings is in the bank. Interestingly just three months ago paying down debt featured as a close second, however that view has shifted with consumers believing real estate being the second wisest place to park savings. No doubt the strength in property prices, falling unemployment and a growing population is resulting in investors looking at property as an attractive vehicle.
• The latest housing finance figures also confirm the attractiveness of property as an investment. While the number of loans for owner occupiers continues to slide, investment loans have tracked higher. Overall investment loans have posted decent gains for the past nine months and are now up 26 per cent on a year ago. The boost in the stock of investment properties should gain traction in coming months as economic conditions improve in the latter part of 2010.
• While the signs are encouraging on the investor front the same cannot be said for the owner occupier market. The cumulative interest rate hikes are certainly taking they toll on new housing activity. Housing finance has fallen by almost two per cent in April, and over the last ten months, housing finance has slumped by exactly 30 per cent. No doubt the likelihood of further rate hikes and the substantial growth in house prices are making potential home buyers rework their sums.
• Clearly the issues in the housing sector are centred around demand and supply of housing. The rate hikes have resulted in the demand for housing sliding (though from a very high base) however it would seem the stock of housing or new listings seem to be falling at a faster pace, a result that would justify the strength in house prices. However there are early signs that property prices are consolidating, and CommSec expects this trend to gain traction, with the lift in housing supply coming through the pipeline over coming months.
• When the latest consumer confidence result is coupled with yesterday’s weak business survey, it paints a picture of an economy that is going sideways at best. The implications for interest rates are clear. And with conservatism likely to continue, retailers will have to work hard for sales in coming months with consumers not willing to spend. Confidence is clearly paramount to the recovery cementing itself, and going forward the Reserve Bank may want to tread a little more cautiously on the rate hiking pathway, given that the global recovery is still in its infancy.

What do the figures show?
Consumer sentiment
• The Westpac/Melbourne Institute index of consumer sentiment fell by 5.7 per cent in June to 101.8. The index is now only up 1.7 per cent on a year ago, compared with the period in late 2009 / early 2010 where it was up over 30 per cent on a year earlier.
• The current conditions index fell by 8.7 per cent, while the expectations index fell by 3.5 per cent.
• Just one of the five components of the index rose in June
• The estimate of family finances compared with a year ago fell 17.7 per cent;
• The estimate of family finances over the next year fell by 4.2 per cent;
• Economic conditions over the next 12 months was higher by 2.8 per cent;
• The measure of economic conditions over the next five years fell by 9.0 per cent;
• The measure on whether it was a good time to buy a major household item fell by 2.2 per cent.
• There was a sharp fall in the gauge of whether it was a good time to buy a home (down 15.8 per cent to 94.6). There was a more modest fall in the gauge of whether it was a good time to buy a car (down 1.5 per cent to 127.7)
• Aussie consumers believe that bank deposits are the wisest place for savings (29.2 per cent of respondents), closely followed by real estate (21.7 per cent), paying debt (16.7 per cent), and shares (11.0 per cent).
Housing Finance
• The number of new owner-occupier housing loans fell for the ninth time in ten months in April, down by 1.8 per cent to 47,077 new loans - a 9-year low.
• Construction loans fell by 4.8 per cent, loans for the purchase of established dwellings fell by 1.8 per cent, while loans for the purchase of newly erected dwelling rose by 6.3 per cent. Refinancing commitments fell by 5.3 per cent.
• The value of new housing commitments (owner occupier and investment) rose for the second straight month, up 0.8 per cent in April. Owner-occupier loans rose by 0.6 per cent while investment loans rose by 1.3 per cent.
• First home buyers accounted for just 16.3 per cent of all lending in April, well below the record high of 28.5 per cent set in May 2009. Fixed rate loans only accounted for 2.4 per cent of all loans in April. And the average home loan across Australia stood at $286,900, up 7.6 per cent on a year ago. • Banks financed 91.1 per cent of all home loans (by value) in April, down from 91.4 per cent in March.

What is the importance of the economic data?
• Housing Finance data is produced monthly by the Bureau of Statistics and shows commitments by lenders, such as banks, to provide finance for housing purposes. The lending figures relate to those looking to buy or build homes to live in as well as those seeking to buy or build homes for investment purposes. Generally people get their finance organised first, so the figures are regarded as a leading indicator on the housing market.
• Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.” Confident consumers may be more inclined to spend, especially on major items.

What are the implications for interest rates and investors?
• The Reserve Bank now has plenty of reasons to pause in its process of restoring rates to ‘normal’ levels. Not only is housing lending sliding, but retail spending, gauges of consumer and business confidence and activity, have all been soft in the past few months. It may prove temporary weakness of the economy, but for the Reserve Bank, it should be a case of being safe, rather than sorry.
• Looking forward, the weakness in recent housing data and increase in housing supply should result in the housing sector cooling over the next few months. It is understandable that a period of consolidation is to be expected after what has been a phenomenal run over the last year.
• Retailers would certainly be concerned that Aussie consumers are now paring back confidence levels. Especially given that despite the relatively positive attitude over the last few months, spending has remained subdued. In annual terms retail spending has recorded little growth, and that has prompted major retailers to slash prices – a trend that will remain part of the retail landscape for the next few months.

Source Craig James, Chief Economist, CommSec

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.