Homeless for the Day Follow Up

Rather than post another article in its entirety I'll just give you guys a link instead, as this one contains a video and a whole heap of pictures for you to peruse. Just like last week, this article is about the Homeless for the Day event that I took part in.

And now, without further ado, here's the link for you.

Today Tonight - Homeless Bosses

Hi guys! In my spare time I like to do a bit of charity work, and one of the charities that I do work with as a board member is St. Bartholomew's House, which is an organisation dedicated to giving the homeless a helping hand in life. Recently they ran a little campaign of sorts where the general manager of St. Bart's along with a bunch of businessmen and women (Including me!) donned some humble clothes and lived a day in the life of someone less fortunate than themselves. The 5 influential men and women who took part in this pleaded with strangers on the streets for money, and all of the funds they raised ($116.50 over the course of two hours) went to St. Bart's.
Here's a report on the event by Today Tonight for those of you who want to know more about this amazing organisation and what they do.





Here are links to their website and Facebook page for your convenience.

"Selling Property by Auction - The Pros & Cons"

When selling your property, there are three main real estate selling strategies that your real estate agent will recommend.

The following factors will come into consideration when choosing which method is best for you:

•   The kind of property that you own
•   Where the property is located
•   The Real Estate Agent that you choose
•   The current real estate market conditions in your area
•   The timeframe in which you wish to sell your property
•   Your personal beliefs

Collectively, these factors can all influence the potential sale price of your property.

If you are thinking of selling, why not use our free online service at sellmycastle.com.au to compare real estate agents in your local area.

What are my options?

There are three main strategies are as follows:

1.   Auction
2.   Tender (Expressions of Interest)
3.   Private sale

Sale by Auction

In Australia, auctions are becoming increasingly popular.  They are a very effective way to sell your home, as the buying community knows you are committed to making an immediate sale.  Almost all property types can and are being sold via auction and auction houses.  The old belief that auctions are for sellers in desperate need of a sale has long since passed.

The main component of an auction is that there is a time limit on selling negotiations.  This can create more impetus and urgency from prospective buyers if there is a good chance the property is in high demand, which may be a great means of driving up the price.  However, the opposite is also true if there are only a few people interested in the home.  Sellers are also free to consider incoming offers before the auction takes place (with the exception of some mortgagee & deceased estate auctions).

How does an auction work?

•   The auction is conducted by an auctioneer either directly hired by the vendor, or by their chosen real estate agency. 
•   The home is advertised at a specific place (usually at the residence in question) with the date and time of the auction displayed. 
•   Potential buyers (bidders) compete against each other, hearing their competitor’s offer and countering with a higher bid of their own.
•   The house is then sold to the highest bidder. 

This is provided the reserve price has been exceeded or reached (the price that the vendor has specified as being the minimum they will accept), or when the vendor concedes to a lower price than they originally hoped for. 

If the home doesn’t reach the vendor’s reserve price, the property is ‘passed in’ and the current highest bidder then has the right of first refusal to any further offers.

Advantages of selling by auction

•   In an auction scenario, it’s harder for the buying public to determine true market value because it’s difficult to compare other properties when they are not fully aware of the vendor’s sale price expectations
•   People bidding are buying with terms and conditions determined by the vendor.
•   Vendors are protected by the reserve price.  They set the reserve together with the real estate agent after assessing the most probably bidding strength of the potential purchasers.  This would be helped by information collated during the open houses.
•   The vendor controls how much is spent on the marketing plan by choosing to what extent the auction is to be advertised.
•   If the property doesn’t sell at the auction, the vendor is commonly put in direct contact with the most likely buyer to enter into further negotiations
•   The property is usually exclusively held by one real estate agent/auction house for a fixed period of time (normally 4-6 weeks).  Marketing is usually intense over this short period of time, with either no price or a possible price range advertised.
•   An early sale can occur when a buyer feels ‘pushed’ to make an offer to buy the home before the auction day.
•   The contract upon sale is usually deemed as ‘unconditional’, meaning the sale will conclude on settlement day, rather than waiting for the buyer to receiving finance or carry out further building inspections.
•   Homes with unique features often do well at auctions, as they may attract more competition between bidders.
•   If more than one person wants to buy the property (creating a situation of multiple bidders), the competitive nature of an auction can cause people to bid higher than they originally wanted to spend.  This can result in large profits for the vendor.

Disadvantages of selling by auction

•   Sometimes, property’s are “passed in” on auction day, despite the owner still intending to sell in the coming weeks. This can upset some buyers.
•   Bidding can be a fickle process and if for whatever reason, it begins with low bids, this can send an incorrect message of the true value of the home.
•   Some potential buyers don’t like the competitive nature and immediacy of the auction process and won’t even bid.
•   Now that auctions are highly regulated, many states require that buyers must formally register.  Some potential buyers may not like this process and will not sign up.
•   Marketing and advertising campaigns for auctions can be quite intense, which can be expensive for the vendor. 
•   If you are in a hurry to sell, an auction offers the best chance of selling by a specific date, but there is no guarantee the home will sell or that you will receive the price you desire.
•   Auctions don’t always necessarily offer you the best sale price, as the winning person only needs to bid marginally higher than t heir competitors.  You will never be sure that they offered the maximum amount they were willing to pay.
•   Most real estate agent contracts for an auction provide the agency with sole selling rights up until the auction, and then for a period of time afterwards.  This then locks the vendor in with one agency for a defined period of time.  In the event your property does get ‘passed in’, it’s a good idea to prepare for this by only giving the agency a specific period of time to retain exclusive selling rights after the auction (eg. one month).

This article was sourced from sellmycastle.com.au.

If you're interested in selling your home at an auction, don't hesitate to give me a call or send me an email!

"Owners, tenants stuck in GST mire"

    A Federal Court decision on the payment of the GST on commercial rents has crated widespread confusion among landlords and tenants.
    The decision, MBI Properties v the Commissioner of Taxation, was handed down last month.
    The full Federal Court unanimously found that the purchaser of a residential property subject to an existing lease did not have to pay GST n the rental income after the purchase.
     The argument was that the "supply" on which the GST was based had been made by the previous owner, so the new owner was not liable.
    The GST partner at DLA Piper Australia, Matthew Cridland, said the decision was contrary to current practice and existing rulings from the Australian Taxation Office.
    Proper to the decision, the purchaser of such a property automatically became the lessor and GST taxpayer.
    Mr Cridland said that although the case concerned a residential lease, the decision could have significant implications for purchasers of non-residential premises sch as offices, warehouses, and retail properties after the property has changed hands.
    For landlords the decision raises several questions.
    Should incoming owners continue to forward to the ATO the GST on leases, and outgoings, entered into by the former owner? Or, in a situation one lawyer described as "absurd", might past owners continue to be liable for those payments?
    And can owners continue to sell leased premises as "going concern"?
    The questions have a sharp focus because owners need to complete their latest GST returns by November 21.
    For tenants, the key questions are whether they should continue to pay GST on rent and outgoings and whether they are due money back for past GST payments.
    The issues raise the potential for many disputes between landlords and tenants and for a many refund claims to the ATO for past GST payments.
    A spokesman for the Property Council said the group was "working with government to resolve the confusion quickly and bring back certainty to the industry".
    Mr Cridland said the ATO had until November 15 to appeal the decision to the High Court.

This article was sourced from The Australian Financial Review and was written by Robert Harley.

"Termite damage holds power over home contracts"

Source: publicdomainpictures.net

They may only be tiny but termites hold huge power over home contracts with nearly three quarters of Australians saying they would immediately disregard a property if they were found.

A June survey for pest control company Rentokil showed 74 per cent of respondents would definitely cross a home off their list if it had termites and a further 16 per cent would probably do so.

Rentokil national technical manager Simon Lean said he was surprised by the strong reaction.

"It might only be a little nibble here and there, not structurally damaging, but people get very worried about it," he said.

He was less surprised, however, by the perceived drop in value for termite-affected homes.

Fifty-four per cent of survey respondents believed homes with termites would lose at least 25 per cent of their value.

"Serious problems, where suddenly you're losing $100,000-plus off the property, that's where the current owners haven't had an annual termite inspection," Mr Lean said.

He said buyers who didn't have a pre-purchase inspection were making a big mistake.

"You could be buying a hell of a lot of problems that you just wouldn't be aware of," he said.

Compass Building and Pest Inspections manager Peter Ranchow said Queensland homebuyers had become increasingly pest-savvy in the past decade.

"There are more properties now being sold with an inspection than 10 years ago," he said.

"Whether that's driven by the lending societies or solicitors, it appears 99 out of 100 are getting them done now."

But he said the vendors, as much as the buyers, should be on top of the issue.

"I suggest the seller gets a pre-sale report, knows the condition of the home, then can market it accordingly," he said.

"It gives them a chance to address the issues before they put the property to market."

He said a pest inspection, which costs about $500 combined with a building inspection, might also save them the heartache and lost time of a contract falling through down the track.

Homebuyer Ricky Michaels said he would recommend a pest inspection to everybody after recently pulling out of a contract in Middle Park when termites were found.

"I was going to purchase it and they found it was pretty bad with white ants. They recommended for me not to buy it and after that I just pulled out," he said.

"When you're investing in a home, that's the biggest asset a person has.

"You wouldn't buy a car that only has two wheels."

Mr Lean said Queensland was particularly susceptible to termite problems because of its warm climate, high rainfall and the popularity of slab-on-ground housing.

"They can be active in Queensland all year round simply because it never gets that cold," he said.

Termite damage is not covered by home insurance. [Real Estate Insight note: Check with your insurance agency to make sure that termite damage isn't covered by your plan.]

This article was sourced from News.com.au and was written by Melanie Burgess.

"The good, the bad, and the ugly of Perth according to the experts"

An artists impression of the "game changing" Perth City Link (City Square, Wellington Street) Source:The Sunday Times

FAD housing trends of the past are being phased out and buyers are increasingly conscious of architecturally designed spaces, architects say.

And while good design does not necessarily have to be reflected in building costs, it will add to the sale price.

Australian Institute of Architects WA president David Karotkin said an Australian architectural identity had emerged.

Drawn from the modernist movement of the 20th century – a period of minimalist design with strong lines – the style had evolved to suit the Aussie love of outdoor living and the provision of protection from the harsh environment, Mr Karotkin said.

Any style that did not respond appropriately to Perth’s climate and lifestyle needed to be phased out, he said.

‘‘Thankfully oversized Tuscan villas with no shading and limited outdoor lifestyle features seem to be going out of fashion,’’ Mr Karotkin said.

Iredale Pedersen Hook director Adrian Iredale, jointly up for several national architecture awards this year for the West Kimberley Regional Prison, said home styles such as Tuscan, Corsican or Greek Islands, devalued the original architecture and contributed to an identity crisis for some suburbs.

The architects said well-designed spaces added value to homes

‘‘Good architecture creates healthy living and working spaces with lots of natural light, intelligent planning of spaces, passive-solar principles, healthy material selections and the like,’’ Gresley Abas Architects co-director Philip Gresley said.

‘‘People like living and working in pleasant spaces and are therefore willing to pay a higher price.

‘‘In saying this, good architecture should not necessarily cost more.

‘‘Simply arranging spaces on the block to control the ingress of sun and breezes can make a massive difference at no additional cost.’’

Mr Gresley said younger people were more design conscious and wanted developments that were different and contemporary, while being functional and ‘‘liveable’’.

‘‘These qualities are becoming more desirable and commanding a higher price,’’ he said.

Mr Karotkin said a well-designed home would last for the life of the building and result in lower maintenance or renovation costs, as well as increased resale value.

‘‘While lifestyles and fashion will continue to change, really good design has qualities that are timeless and will add value for many years.’’

The Good, the Bad and The Ugly, according to Perth architects:

Philip Gresley, co-director Gresley Abas Architects

AREAS TO WATCH

"Northbridge - it brings lots of activities within a short walk from home – an increasingly desirable commodity not available in outer suburbs. 

"East Perth, Leederville, North Perth, and Inglewood are also areas to watch."

PERTH NEEDS MORE

"Designs that provide quality spaces rather than a quantity of spaces are vital, and adopting passive solar design principles is now generally a no-brainer."

GOOD PUBLIC SPACES

"Central Park, the Cultural Centre revitalisation and Brookfield place."

NEED A FACELIFT

"The question is how to unlock all the empty upper-level spaces in heritage buildings.

"There is so much opportunity for creative solutions, but the city is stuck behind inappropriate building and planning controls.

"Perth also needs to deliver a diverse range of development. 

"We are in danger of creating an overly shiny retail-based city."

FUTURE VIEW

"The city is about to become a very vibrant, inhabited, and highly walkable environment."

Adrian Iredale, director of Iredale Pedersen Hook

AREAS THAT WORK

"Coolbinia contains a large number of 1950s modernist houses designed to embrace Perth’s climate.
 
"The suburb’s part-circular arrangement creates numerous fragments of land that are occupied by surrounding residents in often innovative ways. 

"Floreat, City Beach and Dianella also contain numerous 1950s and ’60s homes and a concentration of Iwan Iwanoff homes."

AREAS TO WATCH

"The more interesting areas are generally small, inner-city sites or city and coastal fringes.

"Warehouse conversions and strata properties are attracting the adventurous."

NEEDS A FACELIFT

"Northbridge requires some love and care. 

"One should look to Beaufort St and Vincent St for inspiration, or the recent restoration and development of the buildings next to the State Theatre."

PERTH’S BEST

"QV1 and 140 William Street, for their engagement to the street and surrounding buildings, and sustainable design principles; Council House and the Perth Concert Hall for their civic power; and the State Theatre and Perth Arena for giving Perth two valid and  completely contrasting forms of architecture."

PERTH’S WORST

"The private developer-driven apartment towers along the east end of the city. 

"They continue one line of monotony.

"Overall, we have progressed from the ‘toddler’ stage of design and are now entering our teenage years. 

"The only question is when will we reach maturity?"

David Karotkin, Australian Institute of Architects WA president

AREAS THATWORK

"Garden suburbs developed in the ’50s, such as parts of City Beach, Floreat and Coolbinia. 

"What appeals to me is the network of landscaped parks and streetscapes, plus the modernist houses, many of which have similar materials, palettes and design elements.

"The result is a consistency that is missing in many of Perth’s suburbs where house designs often seem to compete for attention."

AREAS TO WATCH

"Anywhere around transport hubs, including established areas around existing train stations, such as Maylands."

FUTURE VIEW

"Fremantle is a wonderful city that has suffered from stagnation over the past 10-15 years. 

"There are signs this is changing, with the local council determined to create a planning environment that encourages investment. 

"The proposed Kings Square redevelopment project will be a major stimulant for the city centre."

PERTH’S BEST

"We still have many excellent examples of Victorian architecture, such as the Perth Town Hall, mid-century modernist buildings like Council House and the Perth Concert Hall, as well as world class contemporary buildings – the State Theatre Centre, Perth Arena and Brookfield Place."

PERTH’S WORST

"There are several large buildings in the city from the ’80s and ’90s that do not provide amenity for the public at ground level."

Kelly Rattigan, Formworks Architecture managing director

AREAS TO WATCH

"North Fremantle, South Fremantle, Northbridge and the surrounding areas."

LESS, PLEASE

"Large, single dwellings that hug the block. 

"For single residential, we should move towards a smaller building footprint with bigger outdoor areas, move our back gardens to the front and create livelier streets."

MORE, PLEASE

"Smaller single or grouped housing, well-designed multi-residential units with good access to daylight and shared courtyards, and facilities close to transport and adjacent to, or above, retail areas such as in the Claremont Quarter."

PERTH’S BEST

"The Perth Cultural Centre. It provides activities for all ages as well as a great venue for different types of ‘pop-up’ events."

NEEDS A FACELIFT

"Fremantle, Fremantle, Fremantle!"

PERTH’S BEST

"Perth Arena, the Art Gallery of WA and Central Park."

This article was sourced from PerthNow and was written by Claire Bickers

"Prices down, rents down; Perth's trend of decline continues"

"Initial analysis by the Real Estate Institute of Western Australia for the September quarter indicates that the declining trend in Perth’s median house price as reported over the past two months has continued.

Median price

Real-time sales data by REIWA members is showing a 2.8% fall in the metropolitan median with Perth now showing a median of around $508,000 for September, down from the revised June quarter median of $522,500.

The data is not surprising given strong first home buyer activity at the more affordable end of the market pulling down the median. However, with first home buyer activity starting to slow I expect the decline to turn around in the December quarter.

Sales turnover

We reported 2001 sales in the month of September and even though that figure is up by 13% on the same time last year, it’s a drop of 4% in sales since August.

The south-east part of metropolitan Perth is the only area with significant sales movement where more affordable homes in Gosnells and Armadale are attractive to buyers. Turnover jumped by 8 and 12% respectively.

We also saw a modest lift in turnover in the western suburbs, northern Joondalup and the north eastern part of Wanneroo, however, this was based on small sales volumes.

Areas with weaker sales turnover included the northwest area of Wanneroo (down 21%), Bassendean and Bayswater (down 19%), and the cities of Swan and Canning, both down 9%.

Listings

There were 8,693 properties listed in September, down by 6% on August and down 16% on last year.

Of the properties for sale 7,527 were dwellings and showed a drop of 5% on August, while 1,166 were blocks of land, down by 6% on August.

Rental market

REIWA data also show that the rental system is cooling with median rents dropping by around 1% as the metropolitan vacancy rate rests at a normal 3.1% of available properties.

We now have around 3,843 rental listings in the market place which is down by about 6% over the last three months but still well above the same time last year at 81%.

Within this context the median rent has dropped back to $470 per week, or around $475 for a house – down by $5 on the June quarter and $450 for a flat, unit, apartment or villa – down by $10. REIWA data is now highlighting the expected fall in rents anticipated in several sub-markets.

As REIWA has previously predicted, the rise in the vacancy rate is now seeing a softening in rents in a number of areas.

Rents coming down

Median rents have come down by $10 per week in Bayswater and Bassendean, $15 in Fremantle, $22 in Melville, $30 in the City of Perth, $25 in South Perth and Victoria Park, $20 in Vincent, $25 in the western suburbs, $23 in Mundaring, $20 in north-west Wanneroo, $10 through northeast and southern Wanneroo, $10 in Cockburn and also $10 in Rockingham.

Vacancy rates

Around 65% of vacant rental properties are broadly within a 10km radius of the CBD and that this central sub-region witnessed a decrease in listings during the September quarter.

However, some sub-markets such as Bassendean-Bayswater, Belmont and South Perth-Victoria Park saw increases in listings of between 5 and 16% for the quarter.

In the eastern part of the City of Stirling, places like Joondanna, Yokine and Tuart Hill saw an increase in listings of around 5%."

This article was written by David Airey, president of the Real Estate Institute of Western Australia. This article was sourced from REIWA.

"The top five killer features your home should have"

"

Property experts say extra bedrooms offer flexible lifestyle options.Picture source: Wikimedia Commons, by Todtanis

"HOMEBUYERS and renters value a good neighbourhood above any other property feature, a new survey has found.

Nearly 70 per cent of respondents made this selection in a recent Aussie Home Loans questionnaire.

The results were generally in line with what professional valuers consider to be the property features which add most value to a home.

A modern kitchen was the third most sought-after feature, appealing to 63.4 per cent of respondents.

This was pipped by that man haven and all-round storage space, the garage (63.7 per cent).

More than half said they were on the lookout for big bedrooms, airconditioning and a modern bathroom.

Lifestyle features such as a swimming pool (11.3 per cent) or a home cinema (3.9 per cent) were a long way down the wish list.

The main factors that deterred buyers were tobacco odour (67 per cent), a busy street location (65.8 per cent), a dirty interior (61.6 per cent) and noisy neighbours (60 per cent).

Herron Todd White Perth managing director Brendon Ptolomey said location was the biggest factor in determining a property's value.

For example, a 4x2 in Peppermint Grove was not going to be the same value as a 4x2 in a new estate.

After location, valuers would rank modern kitchens, modern bathrooms, parking spaces, alfresco areas and extra bedrooms as the biggest value add-ons for a home, Mr Ptolomey said.

"There is a massive emphasis on kitchens from the market place," he said.

"People are much more aware of what's in there, and they're aware of features like the size of the oven or finishes like stone benchtops."

Extra features added to a kitchen's value, but storage was a bigger factor.

Valuers would rank a garage further down the list, but in newer suburbs an enclosed garage could add between $20,000 and $30,000 to a property, Mr Ptolomey said.

The number of bathrooms also added value. He said valuers were seeing more homeowners put in a third bathroom.

"It could be a powder room with a shower, or a laundry with a shower," he said.

"People tend to want to shove teenagers down the end of the house."

A second bathroom added more value than a third, however.

A second bathroom is almost essential in today's market, according to experts.
Picture source: Wikimedia Commons, by Lavanda Green.

"A second bathroom is almost essential in today's market," Mr Ptolomey said.

Parking space could also increase the value of a property.

"The closer you get to the city and the more difficult it is to park, then it can add anything from $20,000 to $50,000,'' Mr Ptolomey said.

"We certainly see a difference in value between one and two-bay apartments in the city."

A patio upgrade could virtually be relied on to lift the value, provided the job was well done.

"There are not too many homes without an alfresco it's pretty important to the market," Mr Ptolomey said.

"It can be a massive selling point."

Valuers said it was difficult to judge the dollar benefit of an extra bedroom.

"There's no perfect formula - you can't say a fourth bedroom will add $10,000 to a property," Mr Ptolomey said.

"But they always get used as a bedroom or a study, or most often as the junk room."

But he said living area was vital and the space taken up by a fourth bedroom might be at the expense of a lounge room.

Curtin University property studies professor Andrea Constable said bedrooms were also subject to the "law of diminishing returns'' - a fourth bedroom would be likely to add value but a ninth bedroom probably would not.

REIWA president David Airey said storage was an underrated influence on value.

"We are living in smaller households but accumulating more possessions," Mr Airey said.

"Homes with plenty of storage space are likely to be more valued."

But extra features, such as swimming pools or outdoor kitchens, were likely to be an overcapitalisation.

Mr Ptolomey said a swimming pool could cost $30,000 to put in and add only $15,000 to the property's value.

Top 5 killer features

Well designed kitchens with quality features are an increasing priority for home buyers.

1) Kitchen 
"A well-designed, functional and spacious kitchen with quality draws and cupboards, benchtops and appliances is an increasing priority for home buyers.'' - David Airey

2) Bathrooms 
"The market values a second bathroom and toilet or ensuites very highly due to the convenience and privacy they offer.'' - David Airey

3) Parking
"The closer you get to the city and the more difficult it is to park then it can add anything from $20,000 to $50,000.'' - Brendon Ptolomey

A good undercover al fresco area is one of the top priortities for buyers and can add real value to a home.

4) Undercover al fresco area
"We see everything from a BBQ shoved under a patio to an extensive outdoor kitchen, under patios with high ceiling fans. It can be a massive selling point.'' - Brendon Ptolomey 

5) Bedrooms 
"Many homes today are occupied only by one or two people. Regardless of this shrinking household size the desire for larger homes remains strong and the market tends to put higher values on four-bedroom houses and three-bedroom apartments. Extra bedrooms offer flexible lifestyle options such as a home office or guest room.'' - David Airey"

This article was sourced from PerthNow and was written by Claire Bickers.

"Nero fiddles in the US while the Reserve Bank does a balancing act at home"

"Well, the shutdown continues in the US, though as it is the middle of the night there, no further news yet. The markets seem to believe that this will only last a few days before some temporary resolution appears, but having got this far the Republicans seem determined to extract some political benefit, and the trigger could be the threat of a US default by October 17. This was referred to by Paul Ryan, who said “we think the debt limit is the forcing mechanism, that’s what we think will bring the 2 parties together.” Well at least there is talk of bringing the parties together.
Meanwhile the US dollar has started rising as investors start moving liquid funds in anticipation of higher interest rates in the US, which has seen our dollar fall half a cent in the last day.
Apart from the fact that nearly a million people are effectively out of a job, little else is happening, and the nation has turned to humour to pass the time.
One Republican joke, taking a dig at Obama, goes “Rumor has it that a pile of toys has been found on the White House lawn, believed to have been thrown from a pram”.
While the Democrats respond with “got to love Team America”.
Donald Trump said “It is crucial for Republicans to remain united during this shutdown”. Oh wait, that wasn’t a joke.

Picture SOURCE: SCMP.COM

Meanwhile, back in Australia we are digesting the latest update by the Reserve Bank, in the light of housing price trends. While the headlines in the news is of increases in house prices, this is really only true of Sydney and Melbourne, which both saw increases of about 2.5% in the past month.
Elsewhere, with the possible exception of Adelaide, prices actually fell during September, a month which is normally one of the strongest in the year.
Feedback from our valuers, in Sydney in particular, paints a picture of a boom market, particularly at the lower end, and perhaps the need for higher interest rates to curtail the price increases.
However, in other markets the picture still seems to be one of weakness.
The market for residential land and new houses is a case in point. Residential building approvals actually decreased 4.7% in August and the trend in dwelling approvals growth remains weak. This does vary from state to state. New South Wales was the only state to record actual growth in dwelling approvals in August, while Victoria posted negative monthly growth for the 13th month in a row.
Growth in most states has been offset by declines in Victoria and Tasmania. While demand may increase in most states, an eventual cyclical upturn is expected to be weaker than in previous cycles. The poor outlook for high density housing construction in Victoria is expected to weigh on that market in particular.
Somehow, the Reserve Bank is supposed to make sense of all this and fix a level of interest rates that slows down New South Wales while stimulating growth elsewhere, but the interest rates tool is too blunt to fine tune like that. So this explains why interest rates are unchanged at the present time, since they are okay on average, even if some markets are too hot and others too cold."

This article was sourced from propell.com.au

"New data signals interest rate rise in 2014"

 

Source: PerthNow

 "HOUSEHOLDS should get ready for interest rates to increase as early as next year, with new data signalling some relief for savers but bad news for mortgage holders.
An analysis by financial comparison website, RateCity, has found the gap between fixed and variable rates is narrowing – a strong indication that lenders think rates are close to bottoming out.

Alex Parsons, CEO of RateCity, said fixed interest rates were one indicator used to gauge market sentiment as fixed rates typically moved one step ahead of the cash rate and therefore variable rates.

“Since before the first round of rate cuts in November 2011, fixed rates have been consistently tracking at around 1 percentage point below standard variable rates,” Mr Parsons said.
“When banks ‘price’ fixed rates significantly below variable rates, it suggests they expect rates to fall further. This month, though, the gap has narrowed to 0.79 percentage points, indicating that the chance of further rate cuts is less likely.

“We know that most people are on discounted variable rates with the major banks, which are usually around 0.70 percentage points lower than advertised rates, meaning fixed and variable rates are almost on par – in other words the gap is closing.

“Our data suggests there is one more cash rate cut on the horizon this year and we’re betting on a Melbourne Cup day cut in November.”

Mr Parsons said that with interest rates at all-time lows, it was inevitable that rates will start to rise and while it is too early to call when this will happen, it is not inconceivable that this could happen as early as 2014.

“We know fixed rates usually start rising well before variable rates, and borrowers often miss the lowest point. After all, the banks have a far better chance of predicting future rate movements than the average punter,” he said.

“Based on this logic, borrowers who are interested in fixing should keep a close eye on rates over the coming months and be ready to act on signs of fixed rates increases. Fixed rates are available from as low as 3.99 percent for 1 year terms, while variable rates start at 4.49 percent.”

Mr Parsons warned borrowers against overstretching their budget and urged people to prepare financially for the possibility of higher costs of servicing a loan.

“Interest rates are at record lows and for many young Australians the prospect of buying their first home is suddenly a reality,” he said.

“But borrowers should prepare for the eventuality of higher interest rates in the future and make sure they could comfortably afford to service the loan if rates increased to the historical average of around 7 per cent or even higher.

“We typically suggest borrowers commit no more than one third of their income to repaying the mortgage, any more than that and they could find themselves in mortgage stress.

“It’s really important that borrowers don’t overstretch the budget because this can only lead to tough times when rates eventually do increase.”"

This article was sourced from PerthNow and was written by Mara Fox.

"Spring brings termites"

"Over the next few months homeowners should be on the lookout for termite activity because early spring is when these insects start their colonising flights.

With plenty of moisture in the air and daily temperatures rising slowly as summer approaches, conditions are ideal for termites as they scout for food and search for new places to live.

Each year termites cause in excess of $900 million damage to Australian homes and not always to older homes in established areas which is a common misperception.

A competent pest controller can provide you with a report on possibly termite activity in your home or yard and precautionary actions to prevent infestations. These actions can involve inspecting the dwelling, including the roof void, below the floor if applicable and areas up to 50 meters from the main building.

In Western Australia it is common for homebuyers to obtain a pre-purchase timber pest inspection as a condition of the property sale.

 

These inspections should be carried out in accordance with Australian Standards which reports on termites, borers, fungal decay, moisture, chemical delignification (where timber deteriorates due to salty ocean air or excessive car fumes from busy roads), and other items related to conducive conditions.

These inspections are normally a visual inspection only, although more invasive inspections can be requested or recommended. The purchaser should understand the limitations of the inspection and a pre-engagement document may be offered.

REIWA has drafted a standard clause for timber pests and recommends that buyers ask the selling agent to include this standard clause as an annexure to the Offer and Acceptance Form as a condition of the sale.

It then becomes a condition of the contract that a report is obtained from a licensed pest control operator at the purchaser’s expense within a given time period. Usually this is not more than five business days before settlement.

The timber pest clause requires certification that all structural improvements to the residential house are free from termite and other timber pest activity on the date of inspection and whether there was any previous damage.

If the report uncovers any termite or any other timber pest activity or damage to the structural improvements, the seller will be required to remedy the situation at the seller’s expense. If the seller declines to take appropriate action then the purchaser can cancel the contract.

Equally, a purchaser can choose not to have any pest inspection form part of the contract if it is felt unnecessary, such as with a newly built home or one made entirely of bricks and concrete."

This article was sourced from REIWA.

"Inquiry rates for granny flats soar in WA"

"INQUIRY rates for granny flats have soared this year and they're not all planned as a home for older relatives.

Specialist builders say there has been “a substantial increase” in the number of people asking about ancillary accommodation or “granny flats’’ since the State Government announced in March it would change legislation to allow the flats to be rented to non-relatives.

Investment experts said the legislation changes, gazetted on August 2, would be a “game changer’’ for Perth.

Granny flat builders, including Granny Flats WA, Granny Flat Innovations, Concept Steel Constructions and Factory Direct, have all noted the “dramatic increase” in inquiries.

Granny Flat Innovations general manager Chris Johnston said the hits on the firm’s web page had tripled since the Government’s announcement.

And Granny Flats WA managing director Mike Nicholls said the interest was coming from homeowners and investors.

“Most interest is from people 55 to 75 looking to rent out their larger house,” Mr Nicholls said.

“But the rental market is bringing in the younger demographic who want to put granny flats on their investment properties and double their income.

“There have been a lot of inquiries from FIFO workers.”

Sales, however, had yet to pick up.

Factory Direct general manager Trevor Massey said the market was still in the “research phase”.

“It’s like building a house. The first step is research,” said Mr Massey, who predicted an increase in sales in the coming months.

Hegney Property Group chief executive Gavin Hegney said the new legislation would be a “game changer” that would increase housing densities in Perth suburbs built in the ‘60s, ‘70s and ‘80s.

“The knock-on effect of more people in those suburbs would mean the local businesses would grow,” he said.

“Where previously those suburbs may not have been able to support a cafe, they might be able to with increased density.”

Mr Hegney said that if the trend developed as expected, blocks of more than 450sq m would become increasingly popular.

Momentum Wealth managing director Damian Collins, who held a sold-out investment seminar last Tuesday featuring the new granny flat laws, predicted the accommodation would be popular with investors chasing higher yields.

He tipped properties with granny flats in “decent areas” to attract yields of 7 per cent.

“You won’t have to go into risky areas, like mining towns, to get those yields,” Mr Collins said.

A new granny flat as an investment property would also have tax depreciation benefits, he said.

Mr Hegney said there would be significant financial gains for investors, with an estimated 14 per cent return on the costs of establishing a granny flat.

“It can turn a negatively, or neutrally geared property, into a positively geared property,” Mr Hegney said.

Granny flats could be a wise long-term investment, helping to pay the mortgage initially, before being used as crash pad for teenagers, and then for extra retirement income in later years.

But he warned that if even a portion of the family home was used to provide an income, it would affect the property’s capital gains tax-free status.

“People will need to look at their own financial circumstances and decide what’s right for them,” Mr Hegney said.

Real Estate Institute of WA president David Airey said people would also get tax exemptions for maintenance on that part of their property, as they would for any investment.

But he said homeowners should do their homework because they were not likely to get the same investment return on a granny flat as they would on a property on a separate strata title.


CORNERING THE INVESTMENT MARKET

A CORNER block with a three-bedroom, two-bathroom house would be the ideal investment property to add a granny flat to, according to Hegney Property Group boss Gavin Hegney.

“Some properties are better suited than others,” Mr Hegney said.

“It’s pretty hard to go past a three-bedroom, two-bathroom with a 1x1 granny flat.

“The value of that property would stand on its own right.

“A corner site would be best, because both could have a street frontage.”

Mr Hegney warned investors to be aware that the cost of a granny flat would not always be equal to the value it added to the property.

A two-bedroom, one-bathroom granny flat added to a four-bedroom, two-bathroom home may not equal a six-bedroom, three-bathroom home, Mr Hegney said.

Momentum Wealth managing director Damian Collins said investors would also have to consider an area’s demographics and planning codes to determine whether a granny flat suited their property.

“You need to think who the prospective clients are,” Mr Collins said.

“If it’s a 4x2 and in a family area, the renters might really value that backyard,” he said.

“If it’s an older three-bedroom, one-bathroom shared by a couple or three adults, they may not.”


A RING OF POTENTIAL

THE best areas for granny flats are in Perth’s “middle-belt”, where many homes were built in the 1960s and 1970s, Hegney Property Group chief executive Gavin Hegney said.

He said these areas had big blocks, good tenant demand, and rental returns that could soon cover the initial cost outlay.

“If you drew a ring around the city, it would be areas like Melville, Bull Creek, Leeming, Kardinya, Queens Park, Belmont, Bassendean, Morley, Dianella, parts of Maylands, Balcatta and Osborne Park,” Mr Hegney said.

Momentum Wealth managing director Damian Collins said granny flats would not work as well in higher priced areas, such as the Western suburbs, where they would probably devalue the property.

“There will be demand for this kind of housing in a lot of areas – people are happy to live in smaller homes these days,” Mr Collins said.

“But you need to understand who the target market is.

“They’ll be popular with fly-in, fly-out workers who want lock-up-and-leave properties, or in student areas, such as around Curtin (university) and ECU.”"

This article was sourced from PerthNow and was written by Claire Bickers.