Australia's Federal Budget 2010/11 - Making Sense of it


The Federal Budget is hardly the most riveting document you are ever likely to read. Sure you know it’s important, but the problem is that it’s a huge document with countless facts, figures and tables. And when it comes to analysis, economists seem to be writing for other economists; and accountants writing for other accountants.

It’s always important to remember that it is just a budget, the same that any household or company would prepare. Assumptions are made; forecasts are taken. And sometimes they can go awry – remember last year Treasury thought we were headed for recession, while unemployment was expected to hit 8.5 per cent. We didn’t experience a recession and unemployment peaked at 5.8 per cent.

At the end of the day most people want to know what’s in it for them. It doesn’t matter whether you are a student, pensioner or CEO of a major company.

So we have decided to make this analysis different.

Sure, there are the usual tables, graphs, facts and figures. But we reckon that there are only three questions most people want answered and that’s where we will be concentrating:
• Did the Government get it right?
• What does it mean for Australia?
• Who are the winners and losers?

First things first
• This year (2009/10) the budget deficit is tipped to hit $57.1 billion (4.4 per cent of our economy or GDP). Last November, a deficit of $57.7 billion was expected.
• Next year (2010/11) the deficit is tipped to be $40.8 billion (2.9 per cent of GDP), better than the $46.6 billion deficit forecast six months ago.
• The budget is expected to return to surplus three years early in 2012/13.
• Most of the measures have been previously announced: Health fund reform; company tax cut; resources super profits tax; increase in super fund levy and personal tax cuts.

Did the Government get it right?
• The Government believes that a no-frills, no-nonsense budget is required. We beg to differ. Australia was successful in avoiding recession last year and, unlike other advanced nations, is not weighed down by huge deficits and debits. We should be building on that success. Spending should be cut, not curbed, so that the Reserve Bank – and home-buyers – don’t have to shoulder the burden.
• But policy decisions since November last year increase the deficit by $3 billion. The Budget deficit is tipped to improve by over $16 billion next year, but none of the improvement is due to Government efforts. The deficit is expected to improve by over $31 billion in 2011/12 and only $600 million of that is due to Government.
• The Henry Tax Review has been handed down but the Government has only opted for only a handful of the 138 recommendations. But where the Government deserves credit is to show some discipline on spending. (Effectively it’s promised a lot, but nothing happens any time soon). So we give the Budget a mark of: 13/20.
• Of course, we have to take a moment to focus on the budget setting. Last year the budget was set against the background of the global financial crisis. One by one, major economies were slipping into recession, and while our government tried to protect our economy as much as possible, policy-makers seemed resigned to the fact that we would probably go down the same path.
• The Government spent freely by way of cash hand-outs; tax breaks for businesses; home insulation schemes; spending on schools; and building social housing. As a result the budget moved from a surplus of almost $20 billion to a deficit of just over $47 billion. The Reserve Bank slashed interest rates from 7.25 per cent to 3.00 per cent. And it worked – Australia avoided recession.
• Of course the fact that we did so well then caused some to argue that we spent too much and cut rates too far. Hindsight is a marvellous thing. But it seemed like the right idea at the time. Of course not all the money was well spent, but that’s another story.
• This year the budget has been set against the background of a domestic economy now doing perhaps a little too well. The Reserve Bank has been active in winding back the stimulus, lifting cash rates 1.5 percentage points in just eight months. There have been concerns that we are witnessing Mk II of the commodity boom, with consequences for economic growth and inflation in Australia.
• But in the last few weeks, the positive sentiment has been dented by the European debt crisis (EDC). Could this be the second act of last year’s financial crisis, leading to ‘W’-shaped economies? That is, many countries recorded ‘V-shaped’ recoveries, but are they now headed south again?
• We would argue that our economy remains in strong shape; that China will continue to expand strongly; that Greece won’t de-rail the global economy; and that the US economy is on the path to recovery. On that basis, the Government should be winding back stimulus to the economy.
• The Government has given a commitment not to increase spending by more than 2 per cent in real terms until the budget surplus is more than 1 per cent of GDP.
• But while the government is to be applauded for its commitment to restrain spending growth, it has been lazy in other areas of fiscal (budget) policy.

What does it mean for Australia?
• Managing the economy is very much a balancing act. The Reserve Bank has a role by setting interest rates (monetary policy). And the Government has a role in deciding what to spend, where to spend and how to pay for it (fiscal policy).
• You can’t have one arm of policy moving one way, and the other arm of policy moving the other way. But that is very much that situation. The Reserve Bank has been winding back stimulus and now arguably monetary policy is neutral – not boosting or slowing down the economy.
• Given that monetary policy alone is controlling our economy, we believe the cash rate will have to rise further over the coming year to around 6 per cent by the end of next year.
• Over the coming year, the budget deficit is expected to improve by around $16 billion or just over 1 per cent of GDP. But all of that will come by natural means or the “automatic stabilisers” – more employment, so less unemployment benefits and more taxes; and higher company profits, so again more taxes. But the government isn’t doing anything to improve the bottom line. That is, there is little in the way of discretionary measures to cut spending or boost revenues.
• Still, it is an election year. To what extent could we reasonably expect the Government to slash and burn in this environment?

Who are the winners & losers?
• Low-income earners: There is another round of tax cuts. But even for those on $50,000 a year it works out at just an extra $5.77 a week. Tax simplification and less tax on bank deposits – but you’ll have to wait. Workers under $37,000 get extra $500 in super.
• Middle-income earners: Someone on $100,000 a year gets an extra $9.62 a week from July 1 via tax cuts.
• High-income earners: Those on $150,000 a year get a tax cut of $19.23 a week.
• Pensioners: No change. Cheaper medications from health fund reforms.
• Investors: Most investors hope for a satisfactory negotiation between the Government and miners on the super profits tax.
• Companies: Nothing in the short-term. Small business gets a tax cut from July 2012.

Source Craig James, Chief Economist, CommSec

Latest Property News from Ted Hanson

Friday 07 May 2010 Quote of the week 24 golden hours "Every morning you are handed 24 golden hours. They are one of the few things in this world that you get free of charge. If you had all the money in the world, you couldn't buy an extra hour. What will you do with this priceless treasure? Remember, you must use it, as it is given only once. Once wasted you cannot get it back." - Author Unknown - 1. Wanted: 3.2 million homes Australia is going to need 3.2 million more homes over the next 20 years, according to the National Housing Supply Council's (NHSC) 2nd State of Supply Report. This will require over 180,000 new dwellings being built each year, which the Council acknowledges may be a problem given the shortfalls over the past few years. The report shows that the gap between demand and supply increased from 99,500 dwellings at June 2008 to 178,400 dwellings at June 2009. The Housing Industry Association (HIA) says this gap, between the number of homes being supplied and the number needed, increased by 78,800 dwellings during last financial year alone and is projected to exceed 300,000 dwellings by 2014. The NHSC recommends that "increased housing supply (including within existing urban areas) would be assisted by reform of planning governance, clarity and consistency in the basis for developer charges and mechanisms to ensure the implementation of urban strategic plans, including the delivery of infrastructure." HIA Chief Executive, Association, Graham Wolfe, said that the Council's projections were close to those recently developed by the HIA and reiterated the report's suggestion that these numbers should represent a call to action for all levels of government. But it is not just about planning and governance. Australia's ageing population is also affecting housing demand, the report found. Households with residents aged over 65 years are projected to double from 1.6 million to 3.2 million households over the next two decades, indicating the increased demand for dwelling types better suited to the needs of older people. 2. House prices rise 20 per cent House prices have risen five per cent in the first quarter of 2010 and twenty per cent over the past year, according to figures released this week by the Australian Bureau of Statistics. This is the largest annual increase since the series began in the March quarter of 2002. The highest jump was recorded by Melbourne, where quarterly prices rose by 6.7 per cent and annual prices by 27.7 per cent. Sydney followed close behind, recording 5.3 per cent quarterly growth and 21 per cent over the year. The strongest growth in these two cities came from established houses with relatively high prices. There were also positive contributions over the March 2010 quarter from Perth (up by 3.5 per cent), Brisbane (up 2.0 per cent), Adelaide (2.7 per cent), Canberra (5.4 per cent), Hobart (4.2 per cent) and Darwin (3.6 per cent). Annually, house prices rose by more than 10 per cent in all other capitals. Canberra recorded a jump of 20.6 per cent, Darwin 17.5 per cent, Perth 15 per cent, Hobart 14.1 per cent, Brisbane 12.1 per cent and Adelaide 10.8 per cent. 3. Third Strike At its meeting this week, the Reserve Bank decided to again raise the official cash rate (OCR) by 25 basis points, taking it to 4.5 per cent - its highest level since the end of 2008. There is now speculation that there will be no further increases in the near future, as this move brings the OCR to about its average level. Reserve Bank governor Glenn Stevens said in his statement announcing the decision that inflation has not fallen as far as earlier forecast, and now appears likely to be in the upper half of the target zone over the coming year. "With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more", Governor Stevens said. "The Board expects that, as a result of today's decision, rates for most borrowers will be around average levels. "This represents a significant adjustment from the very expansionary settings reached a year ago", he added. 4. Doors open on zero-emission home Designed to fit the Australian climate and the lifestyle of a typical middle-income family, Australia's first Zero Emission House (AusZEH) was officially opened last week in Melbourne. The eight-star energy-efficiency rated AusZEH showcases off-the-shelf building and renewable energy-generation technologies, and new future-ready energy management systems. Nearly 13 per cent of Australia's greenhouse gas emissions are due to home energy use. The AusZEH is designed to produce enough `zero-emission' electricity from 6kw solar panels to supply all the operating energy needs of the household so that its net total CO2 or other greenhouse gas emissions is zero. The demonstration house was designed and built by the CSIRO, in conjunction with industry partners Delfin-Lend Lease and the Henley Property Group and supported by the AusZEH consortium. The Director of CSIRO's Energy Transformed Flagship, Dr Alex Wonhas, says the uptake of zero-emission housing in Australia could have a significant impact on reducing emissions nationwide. "CSIRO scientists estimate that if all the new housing built in Australia between 2011 and 2020 were zero-emission houses, 63 million tons of greenhouse gas (GHG) emissions would be saved," Dr Wonhas said. "This would be equivalent to taking all of Australia's private cars off the road for two years and 237 days, or closing all Australia's power stations for up to 100 days." CSIRO's Energy Transformed Flagship initiated the AusZEH project to demonstrate and evaluate how low-carbon housing can be achieved in Australia to reduce GHG emissions and create a more sustainable future for the nation. For 12 months, the AusZEH demonstration house will become a home for an Australian family and a laboratory for CSIRO. The house has been fitted with a unique energy management system developed by La Trobe University in partnership with CSIRO, which tracks energy use in the house and provides feedback via customised reports to household members. This information on the performance of the `living' house will be used to identify ways to improve the design of future zero and low-emission houses. 5. Back up on the shelf Shelves seem to share the plight of tables and couches - if they aren't specifically used, they quickly become storage space for items that shouldn't be there. Inspired by the decorative appeal of a musical score and the functionality of the old computer punch cards, the Hook Wall shelving system allows you to add and remove segments of shelf at whim. But wait, there's more... The custom-made corrugated metal `wallpaper' has strips of holes that support decorative shelves, art etc, while also functioning as a sound-absorbing partition wall and controlling indoor temperature through a hidden built-in radiant heating and natural cooling system. 6. Hooked on free energy Life is worth more than a power bill, though that can be easy to forget when you're hooked into a crazy scheme. German authorities are investigating a local man who hatched a plan to steal electricity after the power company cut him off, according to the UK Metro. A serious contender for the Darwin Awards - commemorating individuals who further humanity by removing themselves from the gene pool in outrageous ways - the man attached a cable to a meat hook and threw it onto an overhead powerline, drawing power from the transmission line to his home 150 metres away. The bootleg scheme was only discovered during a routine check. An employee of the utility company issued a warning with hopes of deterring copycats from trying it, saying it could kill you.

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'.

Latest Property News from Ted Hanson

Friday 23 April 2010 This week we celebrate the Anzacs... I saw a kid marchin' with medals on his chest. He marched alongside Diggers marching six abreast. He knew that it was ANZAC Day - he walked along with pride. He did his best to keep in step with the Diggers by his side. And when the march was over the kid was rather tired. A Digger said "Whose medals, son?" to which the kid replied: "They belong to daddy, but he did not come back. He died up in New Guinea on a lonely jungle track". The kid looked rather sad then and a tear came to his eye. The Digger said "Don't cry my son and I will tell you why. Your daddy marched with us today - all the blooming way. We Diggers know that he was there - it's like that on ANZAC Day". The kid looked rather puzzled and didn't understand, But the Digger went on talking and started to wave his hand. "For this great land we live in, there's a price we have to pay For we all love fun and merriment in this country where we live. The price was that some soldier his precious life must give. For you to go to school my lad and worship God at will, Someone had to pay the price so the Diggers paid the bill. Your daddy died for us my son - for all things good and true. I wonder if you understand the things I've said to you". The kid looked up at the Digger - just for a little while And with a changed expression, said, with a lovely smile: "I know my dad marched here today - this is ANZAC Day. I know he did. I know he did, all the bloomin' way". D. Hunter (A veteran of Shaggy Ridge with the 2/12 Battalion in WW2) 1. New homes down, renos up New residential building work done fell in the December 2009 quarter according to figures released this week by the Australian Bureau of Statistics. The seasonally adjusted estimate of the value of new residential work done fell 2.5% to $8,833.5m. Work done on new houses fell 1.1% to $6,240.2m, while new other residential building fell 5.8% to $2,593.3m. Alterations and additions rose 2.6% to $1,571.1m. Housing Industry Association HIA Chief Economist, Dr Harley Dale suggested that the decline is a reminder of the importance of ensuring sufficient skilled labour is available to keep the wheels of recovery turning over the course of 2010. "The second consecutive rise in the volume of work done on major alterations and additions, reflected in growth of 2.6 per cent in the December 2009 quarter, is expected to be followed by further positive updates through 2010", Dr Dale said. "Amidst improving labour market conditions, further home price gains and less sensitivity to rising interest rates, the outlook for total renovations activity is quite bright", he added. In the December 2009 quarter seasonally adjusted new residential work done fell in every state and territory with the exception of Queensland and the Australian Capital Territory, where it increased by 1.5 per cent and 14 per cent respectively. New residential building fell by 5.3 per cent in New South Wales, 3.3 per cent in Victoria, 4.8 per cent in South Australia, 2.4 per cent in Western Australia and 1.6 per cent in Tasmania. 2. Growth will support demand First home buyers are still keen to buy but are changing their expectations, according to new research by QBE Lenders' Mortgage Insurance (QBE LMI). QBE LMI's latest lmiMortgage Update (researched by BIS Shrapnel) has found that first home buyers will not fall away to the same extent as they did following the expiration of the First Home Buyer Boost Scheme in 2002. The report anticipates loans approved to first home buyers to be relatively strong at 110,000 to 115,000 in 2010 - a healthy 27% above the low point of loans to first home buyers in 2003/04. Ian Graham, CEO of QBE LMI, said that the research by BIS Shrapnel shows strong population growth in the first home buyer age cohort (25 to 39 year-olds) totalling 3.2% over the three years to June 2012. "The solid growth in this age group will result in a bigger pool of first home buyers in the market which will support demand in the future", Mr Graham said. The research also confirms first home buyers are adjusting their expectations by turning to established or smaller dwellings, such as townhouses and apartments. Ian Graham suggests that this reflects pressure on affordability following the expiration of the FHOGBS and higher interest rates on mortgages. "Forecast rental increases will also be a factor in driving first home buyer demand", he added. "The move from renting to paying off a mortgage will continue to be an attractive option and as a result will encourage many first home buyers to enter the market in the year ahead." 3. Make your investment property work for you Industry experts are predicting that more seasoned property investors are likely to start making purchases again this year - the property market is cyclical and those who see property as a long-term investment will recognise buying opportunities. Bargains or not, making a profit on an investment property requires understanding and research and, often, a complete lack of emotion on the buyer's part. Here are some basics to consider if you are going to make the most of your second-home investment: Find the property. Take into account that the location and style of the home you are looking for must suit your target tenant - will it be a one-bedroom flat in a student area, or a family house close to schools and parks? What makes it stand out as a good place for someone else to live in? What appeals to just you may not appeal to the rental pool you may depend upon for consistent income. Then think resale: if you had to sell in a few years, what would attract the next buyer? Will its style and layout hold its appreciation over the long term? Find the neighbourhood. Even if the house is perfect, is the neighborhood one that you see your tenants enjoying? Is it safe? Is it convenient and close to amenities? If your target tenant is a student or young city dweller, chances are they would prefer to use public transport. Remember, you can always add a bedroom or convert a patio space, but the area is set. Find the cash. If you have some semblance of a deposit or equity in an existing property and can show the likelihood of rental income, you may be in better shape than you think. Contact your banker or a reputable mortgage broker to see what your options are. Find the manager. How your investment is to be managed is a major decision, and one that should be addressed early. Having tenants, short- or long-term, will require that the property be effectively managed. It's a business, and will require maintenance and improvement, as well as rent collection (and that is not always as straightforward as it should be!). Management is a cost - either you will dedicate your time to manage your property, or you will pay a professional property manager. Choosing the more cost-effective approach will affect the return on your investment - however, research has found that using a professional property manager is invariably the better alternative and management fees are tax deductible. Find the reserve. Property that will ultimately prove a good investment and yield a good rental return and capital growth over time may still occasionally present its challenges. For example, you may experience a longer than expected vacancy when your tenant moves out, occasional rental arrears or even an untimely plumbing or electrical repair. You are responsible for meeting mortgage commitments and maintaining your property regardless of whether or not it is generating income. Before you invest, create and hold a cash reserve to cover those periods when the property is not rented, when the rent is late or when the toilet needs repair. 4. The prophet to the mountain An Australian Professor of Economics has a long walk ahead of him after losing a bet that housing prices will plummet. Making a losing bet that house prices would crash last year, Steven Keen now has to walk from Parliament House in Canberra to Mount Kosciuszko in the Snowy Mountains, wearing a t-shirt with the slogan "I was hopelessly wrong on house prices, ask me how", the ABC reports. Though the drop may not have come as soon as he predicted, the economist holds true to his belief that the bottom will fall out of the market, even in the face of the task ahead. Whether or not that's an accurate assessment or stubborn pride, we'll just have to wait and see. 5. Eggciting new way to sleep When you were young, there were few places as comforting as the arms of a parent. The Lomme Bed, from designer Günther Thöny, takes sleep back further than parental arms to an almost embryonic state - with all the perks of modern life. Inspired by a 2-year study into sleep habits with an emphasis on sleep problems and correction therapies, the egg-shaped bed features an integrated massage system and light and sound therapy to reduce external noise, not unlike a womb. This one, however, includes ipod hook-up and storage compartments. 6. On your bike, it's dinner time A Danish hotel is offering a free meal for guests, though they may feel like they're being taken for a ride. In an innovative new scheme to encourage physical fitness and reducing carbon footprints, any guest who can produce electricity by using an exercise bike hooked-up to a generator inside the Copenhagen Crowne Plaza Hotel will receive a free meal, recycle.co.uk reports. Currently the hotel also relies on solar panels to generate renewable energy. Guests will be eligible for the free meal if they can produce at a minimum, 10 watt hours of electricity - around 15 minutes of cycling for a guest of average physical fitness.

Latest Property News from Ted Hanson

Friday 16 April 2010 Quote of the Week "Keep away from small people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great." ~ Mark Twain ~ 1. Home lending falters Finance for both new and existing dwellings took a tumble in February, according to figures released this week by the Australian Bureau of Statistics. Loans for the purchase of new homes were effectively flat in February 2010, while loans for established dwellings (net of refinancing) dropped by 2.8 per cent to the lowest level since September 2008. The number of loans for construction fell for a fourth consecutive month in February 2010, down by 3.1 per cent to reach the lowest level since July last year. In seasonally adjusted terms the total number of owner occupier loans fell by 5.2 per cent in New South Wales, 3.5 per cent in Queensland, 8 per cent in South Australia, 5.3 per cent in Tasmania and 1.4 per cent in the Australian Capital Territory. The total number of loans was flat in the Northern Territory and increased by 1.3 per cent in Victoria and by 3.7 per cent in Western Australia. 2. Window coverings go bare The combined threat of a global financial meltdown and environmental change has resulted in a widespread return to basics in many things, including the way we decorate our homes, it seems. US window fittings supplier Blinds Chalet announced recently it has noticed a definite trend towards simplicity and the use of natural colours and materials. "Using a clean color palette along with natural elements reduces clutter and makes rooms feel larger", said Blinds Chalet spokesman Chris Stanley. "Over the years, colours have ranged from bold print patterns, to stripes, but 2010 is the year for a back-to-basics mentality", he added. Upgrading window fittings is a quick and reasonably inexpensive way to increase property values. However, the use of bold colours and extravagant fabrics can deter potential buyers. "When a person enters a home with intent of buying, they need to be able to see themselves in that home", Chris Stanley said. "Using neutral colors and removing personal effects allows people of all different tastes to picture their new life." Blinds Chalet recommends a simple, clean palette of colors including cotton, cocoa and snow white. Honeycomb shades are gaining in popularity because they improve the home's insulation and are available in environmentally-friendly materials, creating a safe haven for children, pets and adults. Their availability in natural colors ranging from whites to creams to sandy browns inspires a welcoming atmosphere for homeowners and potential buyers alike, according to Chris Stanley. Another popular trend is the use of natural materials. Wood, bamboo and grasses all bring an organic element into homes. "The more technology people are surrounded by, the more they crave an element of the outdoors", Stanley said. "Using woven wood shades and wood blinds brings a calming atmosphere to homes and apartments." 3. Construction demand eases Following two months of growth, the national construction industry contracted slightly in March with demand weakening across the sector, according to the latest Australian Industry Group/Housing Industry Association Performance of Construction Index (Australian PCI®). Falls in new orders and activity tipped the seasonally-adjusted index below the critical 50-point level to 48.7 (readings below 50.0 indicate a contraction in activity). House building was flat in March following eight consecutive months of expansion. The apartment sub-sector contracted for the second month in a row and engineering construction also lost ground. Commercial construction continued in positive territory in March building on a gradual recovery evident since January. Australian Industry Group Public Policy Director, Dr Peter Burn, remarked that the respondent businesses attributed the decline in housing new orders to the end of the first home buyers' boost and the rise in interest rates since October. New orders contracted following growth over the first two months of the year. This was, underpinned by a marked weakening in orders received by house building firms, and higher rates of decline in the engineering and apartment building sectors. In better news, employment remained relatively stable. 4. Assurance in insulation Good quality insulation is essential to any home, especially as we head into the colder months. However, recent reports of dodgy installations have highlighted the need to have confidence that the job has been well done, especially if you are planning to sell the property. For owners, buyers and property managers, an insulation status check by a certified official can offer protection for their families, building advisory service Archicentre said this week. Angus Kell, ACT & NSW State Manager Archicentre said it was important for vendors who have had insulation installed to have their homes checked before sale, to limit any legal liability in the case of an accident. Mr Kell warned that selling a home these days without certified building or safe conditions can become expensive for vendors, real estate agents and people involved in carrying out sub standard work. "Court cases in relation to illegally built balconies, where people have been injured, have stretched back to the original builder some thirty years previous," he said. If you have any concerns, call 13 17 92 to arrange a safety inspection or visit the Australian Government Department of the Environment, Water, Heritage and the Arts website http://www.environment.gov.au/eehp/insulation/index.html. 5. Kicking back with the paper There's something comforting about sitting down with a newspaper, but does the same comfort apply to sitting on a pile of them? The 334 Bench is made of 3 parallel metal bars and 334 newspapers folded and stacked next to each other. The first in a series by UK design student Oscar Lhermitte, the bench is an exercise in recycling and building furniture without conventional screws, glues, soldering, etc. 6. Resistance is futile Some say you can class the population into three sectors - those who love Star Trek, those who love Star Wars, and those who don't care for either. In what may be the best opportunity `Trekkies' will have in coming light-years to deck out their homes, treasures such as Enterprise chairs, Quark's Bar furniture, Starfleet uniforms and large model spaceships are going on auction this weekend in the US. Straight from a dismantled Las Vegas attraction based on the famous franchise, auction house Propworx Inc. has a full list of the available items and auction details online.

Latest Property News from Ted Hanson

Friday 09 April 2010 Quote of the Week Life's challenges are not supposed to paralyze you, they're supposed to help you discover who you are. ~Bernice Johnson Reagon~ 1. OCR up to 4.25 As was widely expected, the Reserve Bank Board decided this week to raise the cash rate by 25 basis points to 4.25 per cent. In a statement announcing the decision, Reserve Bank Governor Glenn Stevens observed that global financial markets are functioning much better than they were a year ago and the extraordinary support from governments and central banks is gradually being wound back. "Credit for housing has been expanding at a solid pace", Governor Stevens said, adding that interest rates have been lower than average for most borrowers. "At this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase in the early part of 2010." "The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average", he concluded. Top 2. Fewer dwelling units approved Building Approvals figures show that the number of dwelling units approved fell 3.3 per cent in February 2010 following a fall last month, the Australian Bureau of Statistics (ABS) said this week. The number of dwellings approved fell in New South Wales by 14.6 per cent, in Victoria by 1.9 per cent and South Australia by a whopping 23.3 per cent. There was a fall in the number of approvals for private sector houses (down 0.9 per cent) this month, following increases in January 2010 and December 2009. New South Wales (down by 10.4 per cent), Victoria (down 0.5 per cent), Queensland (-0.7 per cent) and South Australia (-5.9 per cent) recorded fewer private sector houses this month, according to the ABS. The value of total building approved fell 4.5 per cent in February. The value of total residential building approvals rose 1.2 per cent while non-residential building approvals fell 13.0 per cent. 3. Hop in for a home loan approval Hot on the heels of Easter holidays, April is traditionally a prime time for potential property buyers to hop along to a number of inspections in the hunt for a suitable purchase. If this is your plan, are you prepared for the new home loan market? Mortgage broker Mortgage Choice warned this week that borrowers should be aware that sweeping changes to lending criteria over the past two years may cause many novice and experienced property buyers alike to get egg on their face with an unexpected loan rejection. Senior corporate affairs manager Kristy Sheppard said that property investment can lead to financial rewards if clever decisions are made upfront. "Along with researching thoroughly to find a profitable property, good investment decisions come from a clear strategy, meticulous preparation, careful comparison of finance options and securing a home loan tailored to your needs." "Spending a good amount of time shopping around often leads to a bargain. The key is patience, understanding of short and long-term requirements and knowing what is needed for loan approval. "In becoming more risk-adverse, lenders have tightened their policies around who they will lend to and how much. To help determine what loan options are available to suit your individual circumstances, it's a valuable exercise to visit a reputable and educated mortgage broker with knowledge of the approval criteria for a wide range of loans and lenders. "A broker helps borrowers compare lenders' interest rates, loan features, fees and service, and advises on the criteria needed to qualify for loan approval. Lenders have different benchmarks. Lender A may require a five percent deposit from genuine savings with six months evidence, while Lender B requires a 10 percent deposit. "Regardless, having a larger deposit or more equity to contribute means you borrow less and are therefore more likely to be approved. A number of lenders have now capped their loan to value ratios at 90 per cent of the purchase price for homebuyers and 80 per cent for investors. "Also be aware that reducing your other debt commitments will probably increase the amount you can borrow. For example, someone with credit card limits totalling $50k can borrow less than someone with a $5k limit, regardless of how much debt the credit card/s actually hold. "Further, small blemishes in someone's credit history can reduce the likelihood of loan approval. A default on a car loan, credit card or even a mobile phone bill can leave a borrower loan-less. Similarly, each time you apply for credit and are rejected, it is recorded on your credit file, so it's important to investigate your history in this respect before you apply for a loan. "An experienced and knowledgeable mortgage broker will also help determine if you have a strong likelihood of being pre-approved for a home loan before you apply. Why is this important? Being declined for a loan pre-approval - which many people take out before property hunting - may also count towards your credit record, depending on the lender. Mortgage Choice offers these further tips to help you gain loan approval: See if a family member can `gift' you funds to put towards the property purchase, to help build your deposit and perhaps allow you to avoid lenders mortgage insurance. Lenders will require a statutory declaration confirming the money need not be repaid. Be sure to have a solid employment record and don't expect overtime to be included if it is non-essential work (it may, but it is best not to expect so). To reduce the costs involved with purchasing property, consider sharing the commitment by buying with others you trust, eg. friends and family. Include on your loan application details of all your important assets eg. savings accounts, shares held, gifted funds. Again, be aware that there is a wide range of lenders out there. One lender may be much more likely to approve you for a loan than another. Do your research! 4. Housing report card sees challenges ahead The recovery in new home building is well underway but is still forecast to fall short of what is required to house Australia's growing population, according to the Housing Industry Association's latest National Outlook. The HIA's Chief Economist, Dr Harley Dale said that there is no doubt that a first stage new home building recovery is underway, but the challenge will be in ensuring a strong, sustainable recovery beyond this year. HIA is forecasting growth of 20 per cent in new housing starts in financial year 2009/10 to a level of nearly 157,000. "That result is testament to the success of stimulatory monetary and fiscal policies in 2009", Dale said. "Through 2009/10, the lion's share of this growth will occur in detached housing which is forecast to grow by 24 per cent, to 114,000 dwellings." The `Other dwellings' sector, which covers all non- detached housing, is expected to grow off a very low base by only 10 per cent, to 43,000 dwellings. At the same time as the new home building market has been recovering so too has the renovations market. "Total investment in renovations recovered in the second half of 2009 after falling by 4 per cent in 2008/09," said Harley Dale. "Stronger than expected labour market conditions and existing home price gains are driving a resurgence in renovation activity which is forecast to see the total worth of this sector increase by 7 per cent in 2009/10 to $33.4 billion." Renovations activity is forecast to increase by 8 per cent over 2010/11 - 2011/12, reaching over $35.9 billion. 5. There's gold in the desert Saddam Hussein may have lived like a king at the expense of his people, but now people in his hometown are seeking outside investors to turn their former loss into a profit. World news sources are reporting this week that local officials see potential in Saddam's 76 abandoned villas as a `cash cow' in terms of tourism. The village of al-Awja, outside Baghdad, is home to artificial lakes, date orchards, over a hundred buildings and a slew of villas that could potentially increase tourism in a rehabilitation project that extends the available budget. 6. Showering cats and dogs Dogs love a good bath, cats will tolerate it if necessary, but their owners rarely want to join in, especially with that vigorous shake at the end. Even those owners who have the space to use a hose may want to avoid that during winter, so what could be better than the Pet Shower Curtain, which catches every spill and shake so you can invite your furry friend to jump in the tub. The clear curtain allows you to see your pet while two full-arm `gloves' allow you to hold, wash and comfort them without getting any drops on you or the rest of the room.

Latest Property News from Ted Hanson

Friday 02 April 2010 Wishing you a very safe and happy Easter! In our special holiday issue a few handy reminders: Double Demits start midnight 31 March and end midnight Monday 5 April. Please take care on the roads. Daylight saving finishes on Sunday 4 April. So before you go to bed on Saturday night, put your clocks backwards one hour. And with winter nipping at our heels, its also a good time to change your smoke alarm battery and give it a good clean. With all that done, sit back, relax and enjoy your well deserved break! Have a wonderful Easter everyone! 1. New home sales dip After an encouraging start to the year, sales of new homes dropped in February 2010, according to a report released this week by the Housing Industry Association (HIA). HIA's latest New Home Sales report, a survey of Australia's large volume residential builders, showed a 5.2 per cent dip in sales in February. HIA Chief Economist, Dr Harley Dale, said that current residential construction activity is relatively strong reflecting the monetary and fiscal policy stimulus of last year. "This stimulus has been highly successful in driving the first stage new home building recovery", said Harley Dale. Private sector detached house sales fell by 4.7 per cent in February 2010 while multi-unit sales declined by 9.4 per cent. Detached new home sales fell by 9 per cent in New South Wales and were down by 5.8 per cent in Queensland, 7.9 per cent in South Australia, and 5.1 per cent in Western Australia. Sales increased by 16.1 per cent in Victoria. 2. Essential steps in buying a home Buying a home can be a stressful experience, especially for the first time. But with a little planning, some homework and a clear idea of the steps involved, it doesn't need to be. The guide below outlines the steps (as well as tips to help avoid some pitfalls) involved in buying a home. Finance The first and most important step in the home buying process is arranging your finance. Before you start looking for the house of your dreams, it's a good idea to have finance approved. Choosing a bank or mortgage provider can be a difficult task. A good place to start your research is the internet. Most mortgage providers have their own web site that will list available loan products as well as current interest rates. Some things to consider include, whether the interest rate is the most important aspect of your loan, how will the repayments affect your lifestyle and over what term should the loan be? Remember to take into account any additional costs such as loan establishment fees or early repayment penalties. Once you've chosen your lender, you will need to apply for a loan. Often the more information you provide the lender, the quicker your application will be approved. Your application will usually need to include proof of income, employment records, bank statements for any other loans or borrowings including car or personal loans, proof of your savings history and details of any credit cards. Remember to take into account any additional costs of home buying, such as solicitors' fees, insurance, any government duties (for example, stamp duty), inspection costs, maintenance or renovations. Once approved, your loan is usually valid for 3 months. House Hunting Once again, before you start house hunting, do your homework. Think about what you need (as opposed to what you want) in your home. Is a small home situated closer to work preferable to a larger home further away from work? Determine the number of bedrooms required, preferred construction, whether proximity to community facilities is important and other essential features. Make a list and stick to it! Next, talk to your real estate advisor. Let them know what you're looking for and ask them to let you know if any properties fitting your criteria become available. It can also be a good idea to look in local newspapers, surf the internet or attend open for inspections to get an idea of prices in the neighbourhood you're looking to buy in. Once you've found the house of your dreams, you can start negotiating to buy it. At this time, make sure you understand what is included in the sale of the property. If in doubt, ask. Legal Matters Once you and the seller have agreed on a price, you will usually be required to pay a deposit to show your commitment to the purchase. The next thing to do is consult a lawyer or property conveyancer. Your lawyer or conveyancer is normally sent a copy of the sales contract by the seller's lawyer or agent. Your lawyer or conveyancer will check the contract and make sure it contains all required documentation. The contract should include a copy of the property title, any local planning certificates, a diagram showing sewerage, copies of any documents pertaining to any easements, special conditions, inclusions and details of any existing mortgages over the property. Once your lawyer or conveyancer has checked the contract, explained it to you and any changes required have been agreed and implemented, both you and the seller will be required to sign the contract. At this time you will be required to pay a deposit, normally 10% of the property's purchase price. Settlement The final step in the home buying process is settlement. This is when the balance of the agreed purchase price is transferred from buyer to seller and in return the title deeds of the property are transferred from the seller to the buyer. Before the final settlement your lawyer should make sure rates, taxes or strata levies have been paid or adjusted on settlement so you will have clear title. Your lawyer will usually arrange the time, date and place of the closing. When settlement is complete, you or your lender will receive a copy of the property title and, of course, a set of house keys! Although the steps above are a guide only, you can see home buying doesn't have to be overly complicated. Remember to do your homework, think about what you want in your new home and find professionals with whom you are comfortable. Most importantly, if you don't understand, ask. 3. A matter of time The times are a changing, this week more than usual. While many Australians will set clocks back this weekend to move out of daylight savings, Russia's president has decided the Eurasian country has too many time zones and is removing two of them. The sprawling country, which makes up around 11 per cent of the world's landmass, previously had 11 time zones. As of last Sunday when most of Russia switched to daylight savings time, people in two regions didn't make the change and are now on the same time as Moscow. Fox World News reports the president hopes the initiative will help streamline communications and logistics. 4. Chill out on the greens Greens are an essential part of every diet, but unless you have the space to cultivate your own garden, it is not easy to always have them fresh on hand. Designer Hanna Sandstrom has put her head together with Green Fortune and Whirlpool to create a refrigerator concept that brings a grass roots approach into the kitchen. Working with herbs and greens, the fridge has a diorama-like panel that will nurture seeds into plants, along with keeping living plants growing healthily. Even doing the watering automatically, the concept is sure to take the hassle out of incorporating fresh herbs and greens into everyday life.