NEWSLETTER – JULY 2008

(CONSISTING OF VARIOUS ARTICLES)

 

MRD – MARCH 2008

 

“The Times” are considered uncertain (for some) right now; but funding a comfortable retirement should not “freak you out”; it is so do-able!

“America sneezes and the world catches a cold” is a slide in my Power Point presentation and for years now, I have been warning of the difficulties ahead for those who do nothing. Retiring comfortable, with some level of financial dignity will only be the experience of those who:

1. Have a workable plan and
2. Work their plan

When I turn on the news and hear all the pessimism I think….   “I so hope that people are not taking their financial advice…  or making financial decisions that WILL impact them for years to come…   based on the media”

1. I predict that the reserve bank will hike up interest rates again possibly twice this year…before they start to come down in 2009

 

Nick Lockhart

 

 

 

GOLD COAST BULLETIN – APRIL 2008

 

MAGNET CITY JUST KEEPS PULLING

It is official – the Gold Coast and Tweed is the fastest growing district in Australia.

More than 18,400 people flocked to the region in the 2006-2007 financial year boosting the city’s growth by 3.3 per cent.

Upper Coomera is leading the growth spike with an increase of 2,700 residents in the past financial year, followed by Ormeau-Yatala and Varsity Lakes, which grew by 1,400 and 1,300 respectively.

Of the Coast’s 40 Gold Coast statistical local areas, 36 recorded strong population growth, with seven areas increasing by more than 1,000 people.

The latest Australian Bureau of Statistics figures show the Gold Coast now has a population of more than 524,000 while the Tweed population has moved up to more than 84,000.

Ipswich boasted the second largest growth in South East Queensalnd .

In other surrounding areas, Beaudesert increased 2.6 per cent to almost 67,000, Boonah by 1.7 per cent to 9,300 and Logan by 1.1 per cent to 180,000.

The estimated resident population of Queensland increased by 90,500 in the year 2006-2007 financial year to reach 4.18 million people at a growth rate of 2.2 per cent, the fastest growing state behind Western Australia.

The Gold Coast growth is on par with national figures showing capital cities were growing faster than at any time in the past two decades.

Darwin was the fastest growing city last financial year.

A difference between the Melbourne and Sydney growth rates has demographers suggesting the southern city could become the most populous capital in the country within decades.

 

Leah Fineran & Julian Drape

 

 

 

 

STOCKLAND LIFE – MAY 2008

 

PROPERTY BOOM EMERGES ON THE HORIZON

Gold Coast property buyers thinking it would be prudent to lay off buying a home while interest rates are uncertain, should think again.

According to one of Queensland’s most respected property analysts the Coast is on the verge of another boom in real estate prices, and now may be the best time to buy.

In the most recent edition of his authorative Prodap Report, analyst Bill Morris said the Coast appeared to be on the tail of the real estate cycle and was due to enter into a boom.

Mr Morris was backed up in his predictions by respected property research group Australian Property Monitors.

According to APM the median annual price growth of Gold Coast housing is once again on the rise.

House price growth, which had dropped to as little as five per cent a year over the last couple of years, grew to ten per cent last year.

While yet to reach the boom levels of 2003, when homes increased in value by a whopping twenty-five per cent, the trend indicates that buyers can expect a healthy growth in the value of their properties over the coming years.

Mr Morris said aggregate sales of Gold Coast house and land packages in the September quarter fell to 637, the lowest figure since 1994.

He attributed the low sales figures to record low levels of stock, down to pre-2003 boom levels at 803.

However he said the apathetic sales could be a pointer to something bigger down the track.

“This is typical of the latter part of the property cycle when sales are sluggish.” The report said.

“Vacant land stock is only at 500 lots, or a tight three month’s supply. The Gold Coast has now entered the final stage of the seven-year property cycle.”

“Low sales and stock are typical prior to a boom as was seen in 2001-02.”

“The stock count is not expected to significantly increase until early 2008, which will put more pressure on prices.”

According to the report, this lack of stock would mean the production of housing will fall behind schedule, placing additional pressure on home prices.

Mr Morris said these were all the ingredients for property prices to start heading up, most likely in 2009-10.

In his online blog, Mr Morris also argued that migration into Queensland, another driver of land prices, was set to pass 100,000 a year by 2015 creating an underlying demand for 40,000 new dwellings a year, more than any other state.

Mr Morris said while net interstate migration to Queensland had dropped in recent years, this merely reflected the cyclical nature of migration.

Net migration for 2006-07 was 29,500 compared with 45,000 in 2002-03 and 50,000 in 1994-95.

He said interstate migration to Queensland was closely tied to booms within the Sydney property market, and that the state was in between cyclical peaks.

 

 

MRD – MAY 2008

 

THE FUNDAMENTALS THAT SUPPORT LONG TERM CAPITAL GROWTH

When researching an area in which to invest, the fundamentals that support its long term capacity to grow; and by grow I mean double in value every 7-10 years at least, is vital when making a well informed low risk investment decision.

Population growth is one of those factors that underlie and sustain an area’s price growth potential. Supply and demand will always be the major determining factor for price movement. So what we want to see is a place people want to live and are moving in droves creating a problem for councils and governments!! New planning needs to take place, infrastructure spending is required and managing the growth in relation to urban development, transport, environment etc is critical.  

 

 

MRD – JUNE 2008

 

MAN WAS BORN TO BE RICH

“Man was born to be rich, or grow rich by use of his faculties, by the union of thought with nature. Property is an intellectual production. The game requires coolness, right reasoning, promptness, and patience in the players.”

(Ralph Waldo Emerson – philosopher: 1803 to 1882)

 

Yes; the “game” requires coolness and right reasoning. Several months ago I had someone tell me that they would not consider an investment property in the Cairns or Townsville area, “because it was too hot and sticky”. Understandably, my response was “but you are not going to live in it, and there are thousands of people moving into the area who will want to live there!”

It is too easy for investors to allow their emotions, likes and dislikes to affect an investment decision. My opinion, however, is that I’m looking for the best opportunity for capital growth. With this focus in mind, I concentrate on those areas showing fundamental reasons for increasing, ongoing demand (population growth); yet with a limited supply of available land.

 

 

RP DATA – PROPERTY PULSE – JUNE 2008

 

PROPERTIES CURRENTLY LISTED FOR SALE

The number of new residential properties being added to the market has been below the twelve month average for five weeks now. Last week there were 13,660 new listings added to the market, around 650 fewer than the twelve month average. In turn, the total number of properties listed for sale in the Australian market place has leveled at about 130,000 residential properties for sale.

There is still an above average level of stock in the market place, largely due to the lack of buyers willing or able to purchase. Market activity has been slow due to the fact that potential buyers prefer to sit on their hands until more certainty returns to the economy. It is unlikely stock levels will start to fall until there is a larger presence of motivated buyers in the market place – phenomenon that may be some months off yet.

 

 

AUSTRALIAN PROPERTY REVIEW – JUNE 2008

 

AUSTRALIA – THE LARGEST RESORT ISLAND IN THE WORLD

Australia’s love affair with the coast is still alive and well. Australia is the world’s largest inhabited island and the smallest continent.

 

GOLD COAST MILLION DOLLAR AND HIGH RISE APARTMENTS

This report is based on a study of all high rise apartment buildings on the Gold Coast. The report analysis 1,491 settled sales which have occurred at one million dollars and above and includes original developer stock plus all subsequent resales between January 1997 and the end of 2007.

 

GOLD COAST CITYSCOPE

The latest research from Cityscope regarding sales in the Gold Coast’s major commercial centres during the period from March 28, 2008, to June 18, 2008, shows a slump in the market after the recovery witnessed in the previous quarter.

 

SUNSHINE COAST COMMERCIAL RESEARCH REPORT – COLLIERS INT.

The Sunshine Coast’s median commercial/industrial property price is $900,000. Net rental returns remain strong depending on quality and location, hovering between 7.5% and 8.25%.

 

 

AUSTRALIAN PROPERTY REVIEW – JULY 2008

 

STRONG GROWTH IN RURAL VICTORIA

Helped by strong growth in the rural sector, Victoria’s building industry is continuing to record high levels of building permit activity, according to the Building Commission.

 

NATIONAL PROPERTY INDICES REPORT – RP DATA/RISMARK

The national residential property value indices report released today by RP Data & Rismark International revealed that Australia’s residential property market has defied speculation of a downturn with national dwelling values holding steady during the first five months of 2008. By comparison, the S&P/ASX 200 has fallen by 10.8% during the same period.

 

QUEENSLAND BUILDING APPROVALS DOWN

Building approvals fell in May, the third fall in the five months worth of updates for 2008 according to the Housing Industry Association.

 

MORE SALES FOR COOMERA WATERS

The latest release of residential land at Coomera Waters on the Gold Coast, Queensland has been successful, with 60% of the lots being secured within three weeks of their launch.

 

 

RP DATA – PROPERTY PULSE – JULY 2008

 

PROPERTIES CURRENTLY LISTED FOR SALE

The number of new residential properties being added to the market has been below the twelve month average for six weeks now. However, last week there were 16,362 new listings added to the market, 1,915 more listings than the twelve month average. In the face of this, the total number of properties listed for sale in the Australian market place has increased again during the last week due largely to the increase in new listings as well as a jump in re-listings, with about 150,000 residential properties for sale.

The above average level of stock remains in the market place, largely due to the lack of buyers willing or able to purchase. Market activity continues to slow whilst this week saw a significant injection of new listings meanwhile, potential buyers continue to sit on their hands until more certainty returns to the economy. It is unlikely stock levels will start to fall until there is a larger presence of motivated buyers in the market place – a phenomenon which appears unlikely to occur in the short term.

 

 

HOME PRICES TO EXPLODE, ANZ BANK PREDICTS

 

HERALD SUN – JULY 2008

The ANZ Bank says the growing housing shortage is setting Australia up for the “mother of all” housing booms.

New home building figures showing slumping building approvals have sparked fear of a price and rent explosion that will price even more prospective buyers out of the market.

The ANZ’s senior economist, Paul Braddick, said yesterday Australia faced a critical and potentially chronic shortage of housing.

“A growing housing shortage is setting the scene for the mother of all housing booms,” Mr Braddick said.

“Demand has accelerated and rising immigration, both permanent and temporary, shows no sign of abating. Meanwhile, rising interest rates continue to stymie any building recovery.”

“Underlying housing demand is already outstripping new supply, and the gap is set to widen sharply, pent-up housing demands to record levels,” he said.

The Australian Bureau of Statistics said yesterday new apartment approvals fell 18.2 per cent in May and were down 4.2 per cent over the past 12 months.

New house approvals fell 1.2 per cent and were down 1.7 per cent over the year. In Victoria total building approvals were up 2.8 per cent.

Commonwealth Securities chief equities economist Craig James said buyers had fled the property market because of high interest rates.

“With population growing at the fastest rate in 18 years, we simply should be building more homes, not less,” he said.

“Interest rate hikes have spooked investors and budding owner-occupiers.”

“Investors are putting their money in the bank and people are staying in the rental market longer. But the situation is unsustainable.”

Mr James said rents and house prices would be forced up because of the tight conditions, which would eventually attract more investors and lead to more building.

“The latest slump in new dwelling approvals is clearly bad news for those renting,” he said.

“The supply of apartments isn’t rising but the number of people wanting to rent certainly is.”

Victorian rents are at record highs and housing affordability is close to record lows.

The Commonwealth Bank’s senior economist, Michael Workman, said interest rates would need to start falling and buyers would need to believe prices were rising before they would re-enter the market.

The building approval slump has cut the odds of another interest rate increase from the Reserve Bank.

 

By Craig Binnie