"Why Bid At Auction?"

I recently attended a seminar in Perth by Jason Andrew and I thought you might find the attached information sheet that he provided to be of interest....

At first glance, the prospect of bidding at an auction can seem daunting. For many buyers, it immediately brings to mind the prospect of a fast-­‐paced, high-­‐pressure scenario where the auctioneer (who sounds like he’s calling a horse race) quickly pushes the price sky high.

The reality is quite different. Far from being an uncontrolled scenario where you may end up paying too much against your will, auction is a fair and transparent forum of exchange for both buyer and seller. While the atmosphere can sometimes be charged with excitement, there is no obligation for a prospective buyer to make a bid at any time unless they choose to do so.

The benefits for both parties spring out of the fact that the contract of sale for a property sold under the hammer is immediately unconditional. The successful buyer agrees to waive any cooling off period and the purchase is not subject to any terms like the sale of another property or finance approval. It effectively makes any bid on the property a “cash” offer.

The key benefit for the vendor in this arrangement is that there is virtually no chance of the contract falling over – it’s a guaranteed sale. Just like the old adage of preferring a bird in the hand rather than one in the bush, many vendors would prefer to accept a lower price on auction day than delay the sale waiting for a conditional offer later that may or may not be for more.
Conversely, for prospective buyers, not every buyer is in a position to make an offer that is unconditional, meaning there may be less competition on auction day. For buyers who are willing to actively participate in the bidding process, it may mean that you are actually able to buy better than before or after auction day.

The danger of failing to bid in at auction on a property you would like to buy is that the playing field is no longer level after auction day. The contract post-­‐auction will include a cooling off period and may include other special conditions if the buyer and vendors agree, which can artificially inflate prices or delay an outcome.

The best way to bid at auction is to come armed with as much information as you can and have a clear bidding strategy. For more details on these topics, please contact us at any time for the subsequent information sheets.

Please contact Jason Andrew directly about the information contained in the attached flyer that he provided at the seminar.

 

Bookings: 07 3368 2077
HEAD OFFICE
14 Heussler Terrace, Milton QLD 4064
PO Box 334, Toowong QLD 4066www.jasonandrew.com.au
 



Useful Tips About FIRB Applications

Hi all. I recently received this and thought that you might find it interesting.
 

FIRB INFORMATION SHEET

 

The Board examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government's policy.

Acquisitions by individual(s)

Foreign persons are prohibited from acquiring established dwellings for investment purposes (that is, they cannot be purchased to be used as a rental or holiday property), irrespective of whether they are temporary residents in Australia or not.

However, temporary residents can apply to purchase one established dwelling to use as their residence in Australia. Approval is usually provided subject to a condition that the temporary resident sells the dwelling when it ceases to be their residence.

Acquisitions by companies

Proposals by foreign-owned companies to acquire second-hand dwellings for the purpose of providing housing for their Australian-based staff are normally approved subject to the following condition:

The company undertakes to sell or rent the property if it is expected to remain vacant for six months or more.

Residential

Residential real estate means all Australian residential land and housing other than commercial properties (such as, offices, factories, warehouses, hotels, restaurants and shops) and rural properties (that is, land that is used wholly and exclusively for carrying on a substantial business of primary production). Acquisitions of ‘hobby farms’ and ‘rural residential’ blocks by foreign interests are considered to be residential real estate.

Second–Hand (Established) Dwellings

This category includes all residential dwellings which are not new dwellings (that is, they have been previously owned and/or they have been occupied for more than 12 months).

 

Vacant Land

Proposed acquisitions of vacant land for residential development are normally approved subject to development condition(s) imposed under the FATA.

Acquisitions of single blocks of vacant land (that is, land which is zoned to permit the construction of no more than one residential dwelling per block of land) for the purpose of building a single residential dwelling on each block are normally approved subject to the following condition:

Continuous substantial construction must commence within 24 months.

Acquisitions of other vacant land (not single blocks) for the purpose of building multiple residential dwellings are normally approved subject to the following conditions:

*     Continuous substantial construction must commence within 24 months;

At least 50 per cent of the acquisition cost or the current market value of the land (whichever is higher) must be spent on development. 

Once these conditions have been fulfilled, properties acquired under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor's own use.

New Dwellings

New dwellings acquired ‘off the plan’ (before construction commences or during the construction phase) or after construction is complete are normally approved where the dwellings:

*     Have not previously been sold (that is, they are purchased from the developer); and

*     Have not been occupied for more than 12 months.

There are no restrictions on the number of such dwellings in a new development which may be sold to foreign persons, provided that the developer markets the dwellings locally as well as overseas (that is, the dwellings cannot be marketed exclusively overseas).

This category includes dwellings that are part of extensively refurbished buildings where the building's use has undergone a change from non-residential (for example, office or warehouse) to residential. It does not include established residential real estate that has been refurbished or renovated.

A property purchased under this category may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor's own use. Once the property has been purchased, it is second-hand real estate and is subject to the restrictions applying to that category.

Residential Real Estate for Redevelopment

Established dwellings may be acquired for the purpose of redevelopment (that is, to demolish the existing dwelling and build new dwellings). This does not include refurbishing or renovating the existing dwelling. Proposals for redevelopment are normally approved subject to the following conditions:

*     The proposal must provide for an increase in the housing stock, that is, an increase in the number of dwellings;

*     The existing residence cannot be rented out prior to demolition and redevelopment; and

*     The existing dwelling must be demolished and continuous substantial construction of the new dwellings must commence within 24 months.

A redevelopment proposal which does not increase the number of dwellings may be approved where it can be shown that the existing dwelling is at the end of its economic life (that is, derelict or uninhabitable), since constructing a new dwelling would effectively increase the housing stock. To demonstrate that the property is uninhabitable and must be demolished, a valuation of the existing structures by a licensed valuer and/or a builder’s report is generally required. Photographs and other forms of evidence may also be required. Approval of such proposals would be subject to the same conditions outlined above.

Once these conditions have been fulfilled, the new dwellings that have been constructed may be rented out, sold to Australian interests or other eligible purchasers, or retained for the foreign investor's own use.

Advanced Off The Plan Approval For Developers

Developers of 10 or more dwellings may have previously applied for advance approval to sell up to 50 per cent of new residences to foreign interests. If such pre-approval was granted, the developer is required to provide a copy of their pre-approval letter to each prospective purchaser and to report all sales (that is, Australian and foreign) to FIRB on a 12 monthly basis until all the dwellings in the development have been sold or occupied.

As the administrative procedures are streamlined, the current system for developers seeking advance approval to sell new dwellings to foreign persons will be discontinued. Until further notice, the pre-approval arrangements that have been operating for some time will continue to operate on a case-by-case basis.  Please contact FIRB for specific advice.

All current pre‑approvals remain valid. Where such approval has been granted, foreign purchasers should not apply for individual approval. If the developer has not been granted advance approval, then the individual investor must seek approval.

Exemptions

You do not need to submit an application for approval to acquire real estate in Australia if:

you are an Australian citizen living abroad;

*     your spouse is an Australian citizen (not a permanent resident) and you are purchasing residential real estate in both names as joint tenants (not tenants in common);

*     you are a New Zealand citizen and you are purchasing residential property;

*     you hold a permanent resident visa and you are purchasing residential property;

*     you are purchasing new dwelling(s) from the developer, where the developer has pre-approval to sell those dwellings to foreign persons;

*     you are acquiring an interest in a time share scheme which does not permit you (and any of your associates) more than 4 weeks entitlement per year;

*     you are purchasing certain residential real estate in an Integrated Tourism Resort (ITR);

*     you are acquiring an interest in developed commercial property valued below the relevant monetary thresholds;

*     you are acquiring an interest in developed commercial property where the property is to be used immediately and in its present state for industrial or non residential commercial purposes. The acquisition must be wholly incidental to the purchaser's proposed or existing business activities;

*     you are acquiring an interest by will or by operation of law (such as, a court order regarding the division of property in a divorce settlement, but not if both parties simply agree to transfer property without a court's intervention); or

*     you are purchasing property from the Government (Commonwealth, State or Territory, or local).

How to Apply

If you are applying to purchase residential real estate, you can submit an application through the online system.

For business proposals or applications for real estate other than residential, email or fax is the preferred channel - do not post originals in addition to sending an application by email or fax. Applications should only be posted to FIRB if you are unable to submit your application via email or fax. Please note that postal applications generally take longer to process. The addresses for submission of applications that cannot be submitted using the online system are:

Email:	firbrealestateapplications@treasury.gov.au - for real estate purchases; or firbbusinessapplications@treasury.gov.au - for business acquisitions (ie acquisitions of shares in a company operating an Australian business).
Fax:	02 6263 2940
Post:	The Executive Member Foreign Investment Review Board c/- The Treasury Langton Crescent PARKES ACT 2600

All applications that are received via email will be acknowledged with an automatically generated message confirming receipt. Please contact us if you do not receive an automatic message shortly after sending your application. No fees or charges apply to applications.

 

 

This information was gathered from Currie and Reeves Conveyancing Services, 191 Stirling Highway Nedlands. Some of the Directors of Acton Real Estate have a financial interest in the company. For more information please visit their website or FIRB directly.

"Point Piper tops price list"

Here's another interesting article.

Point Piper, in Sydney's leafy east, is Australia’s most expensive place to buy a home, with a median house value of $7.3 million.
With well-heeled residents like Westfield co-founder Frank Lowy, Ray White chairman Brian White and Aussie home Loans' executive chairman John Symond, and locations like Wolseley Road (often cited as Australia’s most expensive street) within its bounds, it is not surprising the harbourside suburb was a clear standout.
In an RP Data analysis of the nation’s priciest locales, Sydney dominated the top 10, with a nearby Watsons Bay placed second, thanks to its $ 6.4 million median house value, followed by Centennial Park at $5.1 million and waterfront Woolwich, 4km west of the city, at $4.6 million.
Pert’s riverside Peppermint Grove placed 5^th, with a $4.2 million median house value.
Sydney’s Darling Point, Henley, Vaucluse and Bellevue Hill, and the beachside playground of Eagle Bay in WA’s south-west, rounded out the top 10.
The top-25 suburbs were generally close to the CBD, near the water, had homes of heritage value, or were on larger plots of land, RP Data research director Tim Lawless said. Many had all of these qualities.
Melbourne’s Toorak was Victoria’s first entry at No. 12, with a median value of $2.7 million. Main Beach on the Gold Coast was Queensland’s first entry on the list at 34, with a median value of $1.8 million. The analysis used median house-value estimates, rather than sale prices, meaning that most houses in each suburb were included in the analysis.

This information was gathered from The Australian Financial Review. Article by Ainslie Chandler.

"Figures point to rents going up"

Here's an interesting read that I've found.

The vacancy rate in Perth has dropped to 1.9 per cent, which should see rents rising at an above-average rate. A vacancy rate of 3 per cent is considered an equilibrium level and our market has been below this level for less than 12 months only.

So with a tight rental market, mainly at the lower end under $750 a week, and a rent-versus-buy gap of around 10 to 20 per cent we would be turning some tenants into first-homebuyers.

This has been evidenced recently by figures from financier AFG that WA has the highest proportion of first-homebuyers in Australia has their clients for loans at a rate of 20.7 per cent of all new loans completed by them.
The upper rental market tends to be extremely fickle, as corporate take a big number of homes for professional staff moving into the State at various stages.
At times there are several tenants chasing one home, at other times there is no demand at all, which creates a market where vacancies and the rent achieved can vary greatly from month to month.
Owners are also responsive as a month’s vacancy can take a long time to make up at a higher rental, that is if it can be let at a higher rental next month.
While people move into the State, mostly chasing work, there appears to be rental demand. Often, uncertainty about the job and family adjustments to the city commits them to rent, not buy. People concerned that future values are going to fall significantly has been the case in other countries, are also committed renters.
Among all of this, we have also seen the number of properties available for sale drop by about 30 per cent over the year, to now be just over 10,000. Like the rental market this is considered to be below an equilibrium level around 13,000 and, like the rental market, this has only occurred recently, being at this level for less than six months.
So a tight rental market, a buying market with a below-average number of properties to choose from suggests a recovery in the property markets in Perth.
The wild card is the call of the end of the boom. Factual or not, it weighs on buyers and market sentiment. Given this, it may be that, in the short term, buyers may keep their money in perceived safety while trade-up buyers stay  put, not wishing to pay hard-earned after-tax dollars into stamp duty to move home. If this is the case, rents will climb and rental yields could go beyond the cost to buy, a phenomenon I have not seen in three market cycles over the last 30 years.
Something has to give from here, either rents or values rising or both.
If you believe whatever is not being measured is being guessed and that numbers and fundamentals start a market cycle and that speculation ends it, then the numbers are telling us the start, the recover, is here and easy to see.
Not everyone will feel optimistic though as cost of living pressures and disparities in earnings in different employment sectors, create a sense of more pain or potential for gain.

This information was gathered from The West Australian. Article by Gavin Hegney.

Auction Action

Auction activity is a good indicator of market improvement, and this is definitely picking up. Of the ACTON auctions held in the last month, 30 percent sold under the hammer, 29 percent sold prior, and the remaining 41 percent were passed in, to be sold soon after.

Regardless of the state of the market, auction remain the fastest way to sell a property, however the response you get is what varies.

For most of this year we found that fewer properties were sold under the hammer. Most were passed in, but offers were made soon after, and in a lot of a cases straight after the auction. This reflected buyer confidence and their ability to get finance.

To be able to bid at an auction you need to have your finance already organised as your bid (offer) must be unconditional - that is not subject to finance or sale. In a lot of cases buyers were unable to do this, either they needed to sell their own property first, which could take some time, or they were unable to secure finance from a lender in time for the auction. So they would attend the auction, hope the property was passed in and make their offer.

Now we are seeing more offers made before the property goes to auction, more attendance at the auctions and more active bidding.

Improved buyer confidence is one of the factors behind this change. People are generally feeling more positive, they know interest rates are good, they know prices are probably as low as they’ll go and if a property shows good value they’re willing to buy.

Reduced stock levels are also creating more urgency. Properties are selling faster and buyers' choices have reduced over the course of the year. They realise that if they want a property they will need to act, they just can't assume it will be passed in and still be available.

The desire not to miss out has also led to more properties selling before auction. Buyers don't want to risk being outbid by other buyers at the auction, so they make their offer beforehand.

This benefits buyers who either have to sell their own property before being able to buy, or need to secure finance. Sellers can accept an offer at any stage of the auction process and many are very happy to accept reasonable offers prior to the auction.

The recent increase in auction activity hasn't just occurred in the top end of the market, with sales under the hammer sales including a multi-million dollar property in Doubleview, a Californian Bungalow in Mount Hawthorn, extremely well-priced family homes in South Lake and Coodanup, and a waterfront apartment in Mandurah.

For more information about buying or selling at auction call Deb Brady on 0405 570 903

What do we want?

What are our ‘must haves’ when buying property?
A recent survey showed that Western Australian buyers were set on having one bedroom per family member (51 percent), being near important amenities (50 percent), and having outdoor space (47 percent). Interestingly, considering our climate, having a pool was not rated particularly highly.

The location and surrounds were the most important consideration for buyers. 57 percent of people surveyed placed this at the top of their list, with privacy and space from neighbours second (54 percent).

Most of us have our heart set on a particular area when buying and 58 percent would not look further than 15km from this ideal location. Only a tiny 7 percent said they would be willing to go further than 41km in order to secure a home.

And we don’t mind paying a little bit more for our dream home, with 61 percent of us willing to increase our debt levels to acquire our ideal property. Happily interest rates are low at the moment and the latest 0.25 percent rate cut by the Reserve Bank should make buying a new property even more affordable.

This information was gathered from: http://realestate.com.au/

"RBA Lowers Cash Rate"

Hi Followers

Came across this today and thought I'd share:

Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to lower the cash rate by 25 basis points to 3.25 per cent, effective 3 October 2012.

The outlook for growth in the world economy has softened over recent months, with estimates for global GDP being edged down, and risks to the outlook still seen to be on the downside. Economic activity in Europe is contracting, while growth in the United States remains modest. Growth in China has also slowed, and uncertainty about near-term prospects is greater than it was some months ago. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.
     
Key commodity prices for Australia remain significantly lower than earlier in the year, even though some have regained some ground in recent weeks. The terms of trade have declined by over 10 per cent since the peak last year and will probably decline further, though they are likely to remain historically high.
     
Financial markets have responded positively over the past few months to signs of progress in addressing Europe's financial problems, but expectations for further progress remain high. Low appetite for risk has seen long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Nonetheless, capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Share markets have generally risen over recent months.
     
In Australia, most indicators available for this meeting suggest that growth has been running close to trend, led by very large increases in capital spending in the resources sector. Consumption growth was quite firm in the first half of 2012, though some of that strength was temporary. Investment in dwellings has remained subdued, though there have been some tentative signs of improvement, while non-residential building investment has also remained weak. Looking ahead, the peak in resource investment is likely to occur next year, and may be at a lower level than earlier expected. As this peak approaches it will be important that the forecast strengthening in some other components of demand starts to occur.
     
Labour market data have shown moderate employment growth and the rate of unemployment has thus far remained low. The Bank's assessment, though, is that the labour market has generally softened somewhat in recent months.
      
Inflation has been low, with underlying measures near 2 per cent over the year to June, and headline CPI inflation lower than that. The introduction of the carbon price is affecting consumer prices in the current quarter, and this will continue over the next couple of quarters. Moderate labour market conditions should work to contain pressure on labour costs in sectors other than those directly affected by the current strength in resources. This and some continuing improvement in productivity performance will be needed to keep inflation low as the effects of the earlier exchange rate appreciation wane. The Bank's assessment remains, at this point, that inflation will be consistent with the target over the next one to two years.
     

Interest rates for borrowers have for some months been a little below their medium-term averages. There are tentative signs of this starting to have some of the expected effects, though the impact of monetary policy changes takes some time to work through the economy. However, credit growth has softened of late and the exchange rate has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook.

     

At today's meeting, the Board judged that, on the back of international developments, the growth outlook for next year looked a little weaker, while inflation was expected to be consistent with the target. The Board therefore decided that it was appropriate for the stance of monetary policy to be a little more accommodative.

This information was gathered from:
http://secure.manage.powerport.com.au/transmission2/web/5044d5ce-0c4f-11e2-b536-000c29ca3921/263

DEB BRADY
0405 570 903