The Most Significant Interest Rate Decision of the Last Decade

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The Most Significant Interest Rate Decision of the Last Decade

05/21/13 Jarrad Mahon Comments (0)

On Tuesday 7th of May the Reserve Bank of Australia lowered their interest rates by 0.25 basis points when based on all the indicators and their own summary they should have been left on hold. Mark Bouris gave me some incredible insights as to why he believes history could show it as, “The most significant interest rate decision of the last decade”, here is why.

Interest Rate I had the opportunity of seeing Mark Bouris give a speech to over 3000 entrepreneurs and business people at the National Achievers Congress in Perth last weekend. Known for his role as host of channel 9’s Celebrity Apprentice, founder of Wizard Home Loans and Yellow Brick Road, no one could argue that he has his fingers on the financial pulse of Australia.

Mark Bouris summarised the current economic indicators as follows

• US economy is continuing to improve.
• China running at sustainable growth levels of 7-8% pa.
• Japan has introduced a stimulus, which should see their economy benefit.
• Our Gross Domestic Product (GDP) is growing on target.
• Cost of funds for banks is exceptionally low.
• Unemployment is not of concern at 5.6%.
• Price of recourses has levelled but healthy.
• Inflation is on target at lower end of targeted 2-3%pa.

So if all this adds up to the logical decision to leave rates on hold, why were they lowered?

Mark Bouris believes the RBA for the first time in recent history has taken it upon themselves to boost the property market to lead the recovery of our economy in order to weather the slowing resources boom and expected impact of a tightening federal budget on our Gross Domestic Product.

We are already in a Sellers market in Perth and this further lowering of interest rates is expecting to see many suburbs of Perth tighten to boom conditions of demand far exceeding supply.

Time will tell if the RBA continues to take the position of stimulating the property market when all indicators suggest otherwise.

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Categories : Community Update, Property Investment

Tags : interest rates, Property Market, sellers market

Achieving a Premium Sale Price for Your Perth Property in this Seller’s Market

05/21/13 Jarrad Mahon Comments (0)

If you are selling your investment property in Perth, you may have noticed that the market is becoming more active. Due to the recovery of the WA economy, there are now plenty of qualified buyers, but that doesn’t mean they all want to pay full price for a property.

Perth Property

In today’s market, buyers still want to negotiate as low a price as possible. Consequently, you need a real estate agent who can ensure that you come out on top of the negotiating process. Failure to negotiate effectively could cost you thousands of dollars when you sell your home.

Here are four essential “rules” for our agents that ensure they get the best price for our clients.

Don’t scrimp on marketing.

Sure: there are a lot of buyers. But just because there are a lot of buyers doesn’t mean that the right one is going to show up and buy your house if nobody knows about it. The agent’s job is to get your house in front of as many qualified buyers as possible, and create competition for your house.

Don’t sell to one buyer before the first home open.

We touched on this elsewhere on the blog: It’s OK to open with a low price, but the idea is to get qualified buyers competing for your house. In a seller’s market, if you take the first bid from the first potential buyer, you could be leaving thousands of dollars on the table.

Instead, make sure that a lot of people see the home, and encourage multiple buyers to make offers. Your best scenario is that you get two bidders who are emotionally invested in buying the property into a bidding war. We never guarantee numbers, but in the right situation, pitting two or more motivated buyers against each other can put as much as $10,000 to $50,000 more in your pocket than your original asking price.

Negotiate, Negotiate, Negotiate

Location is extremely important for demand, and could be the ultimate determinant of a home’s market value. However, when you are selling a home, you are not trying to get “market value.” You are trying to get as much as you can get someone to pay for the house.

The best negotiators are master communicators and rapport builders. They use their people skills to create competition among buyers, and are never afraid to ask the price they think the house can command. Most of all, they are skilled enough to accomplish this in such a manner that it doesn’t make the potential buyer walk away.

Target the ideal buyer.

Sometimes an agent can sell a property with no text in the advert and a handful of substandard photos that he took on his phone. Afterwards, that agent might even brag about getting more than the asking price. But we can guarantee that this agent left a lot of money on the table.

You need effective ad copy, and it needs to be targeted to the kind of buyer who would best suit the home. For example, a home next to a golf course would command a lot more money from a golfer than it would a non-golfer.

The best way to get the highest dollar is to figure out who your ideal buyer is, and then target advert copy directly to that buyer as though you were speaking to them. The copy must pre-sell the property and appeal to the buyer’s emotions so that they make an offer the first time they see the house.

Bonus Rule: Get the Investor’s Edge

The best way to to ensure a high price is to hire an agent who has your best interests in mind. At Investors Edge, we do investment property in Perth. From property management, to buying or selling investment properties, we specialise in helping Perth investors maximise their profits.

Basically, investment property is all we do. Whatever side of the fence we are on, whether we are helping you through buying, selling, or managing your investment property, we know how to get you the best return on your investment.

Because we have years of experience buying and selling investment properties, we know all of the tricks and strategies to help you buy for the lowest price and sell for the highest. This can add thousands of dollars to your pocket on both ends of the transaction.

Call 1300 472 427 today to get the Investors Edge team working for you. The right decision can make you a lot of money, but the wrong decision can cost you a lot of money. Make the right decision.

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Categories : Community Update, Property Investment, Property Management, Property Resources, Property Selling Resources

Tags : investment property Perth, Property Management, Real Estate Agent

Western Australia’s Growth Projected to Continue

05/20/13 Jarrad Mahon Comments (0)

We firmly believe that investment property in Perth is a good investment, and yet another report was recently released, showing that our belief is well-founded. The Chamber of Commerce and Industry WA recently released their quarterly economic outlook, and there is no end in sight to the growth that has helped WA pull out of the Global Financial Crisis much faster than most of Australia. While the mining boom has been credited with most of the “heavy lifting” for the last few years, WA is about to get a boost from another source: enhanced consumer confidence.

Projected Growth

The numbers are promising, and bode well for the future. The economy is forecast to grow by 6.5% per year for the next two years. Consumer spending has been forecast to go up 5.75% this year, and a further 5% next year. This has been credited to increased confidence on the part of the consumer. The report cited household consumption as the main factor in last year’s growth.

Meanwhile, business investment is expected to increase by 15% this year, and by another 5% the next, due to the fact that a lot of projects are scheduled for completion this year, and not as many have been started for next year.

So, what does this mean to you if you are planning property investment in Perth? According to John Nicolaou, Chief Economist for the CCI, it means that the housing market is about to become a lot more active. Nicolaou cites three factors we have mentioned here a lot lately: consumers have more money, rents are higher, and interest rates are down.

These three factors alone are almost a “perfect storm” for an exploding housing market. When you add in the fact that prices haven’t yet regained their peak levels of a few years ago, the market is heavily slanted in favour of investing in real estate. In addition, the decision to allow Australians to invest their supers in real estate have helped a lot of people, especially in Perth and surrounding areas, gain entry into the housing market.

Historically, real estate has been the most consistently solid of any of the major investment vehicles. Call 1300 472 427 today, and let us help plan your financial future.

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Categories : Property Investment, Property Resources

Tags : investment property Perth, property investment in Perth, Real Estate

Where are our Australian Housing Markets Really Heading?

05/17/13 John Lindeman Comments (0)

Property prices seem to be on the move almost everywhere, so to find out how the current growth phase is likely to play out, we asked John Lindeman, director of innovative housing market analysts, Property Power Partners to give us a summary of the current and predicted housing markets in our major capital cities – with both encouraging and surprising results.

John says: ‘Our forecasts don’t rely on a crystal ball - we use patented and proven prediction methodologies to provide highly accurate forecasts of the change potential for house and unit prices and rents at suburb level. Our research shows us that one of the main reasons for the current growth wave is the readiness of banks to lend to established home owners wishing to move and improve. Not only do these upgraders have equity and proven repayment records, but their purchasing power has grown as incomes have risen and interest rates fallen in recent years. While this ripple is likely to spread to other areas of the market, such as first home buyer suburbs as banks loosen their purse strings more, it can’t last long in the suburbs where it started.

Suburb Housing Legend

We recently analysed the current and predicted change in the house markets for all the suburbs in our state capital cities and provide the results below. The legend on the right shows you how we describe each suburb’s current and predicted house market.

Surprisingly, some suburbs will even become stressed markets within the next year and the total number of stressed and buyer suburbs where prices fall is set to rise to a quarter of the total, so investment in the right suburbs will be crucial.

MELBOURNE’S HOUSE MARKET – A PRICE RIPPLE, NOT A BOOM

Melbourne's House Market - Current and Forecast

Almost seventy per cent of Melbourne’s suburbs are currently seller markets with rising prices, which will become apparent when other data providers release their figures in a month or so. Price growth in many suburbs will lead to boom conditions in one fifth of Melbourne’s suburbs around median price range and over, but our forecast also shows that within the next year, only one quarter of Melbourne’s suburbs will be seller markets. Once the ripple has passed, more than a quarter of Melbourne’s suburbs will become buyer markets with falling prices and another ten per cent will become stressed markets.

HOBART’S HOUSE MARKET – STRESSED AND BOOM SUBURBS EMERGING

Hobart's House Market - Current and Forecast

Half of Hobart’s suburbs are currently neutral, with most of the remaining suburbs seller markets where house prices are slowly rising. Our forecast shows that over a quarter of Hobart’s suburbs will become buyer or stressed suburbs with falling house prices in the next years, while another quarter will become boom and seller suburbs where prices are rising. This effect will therefore create the impression that Hobart’s house prices are not moving at all. Our analysis shows this to be totally untrue, but care needs to be taken in this market because the number of stressed suburban house markets will be nearly as great as the number of booming suburbs.

ADELAIDE’S HOUSE MARKET – MOVING FROM NEUTRAL TO GROWTH

Adelaide's House Market - Current and Forecast

While Adelaide’s house market appears to be going nowhere, nothing could be further from the truth. Nearly a quarter of Adelaide’s suburbs are forecast to become booming house markets, while just under a quarter will be in growth over the next year.

SYDNEY’S HOUSE MARKET – BOOM SUBURBS ARE ABOUT TO RETURN

Sydney's House Market - Current and Forecast

Nearly eighty per cent of Sydney’s suburbs are currently seller markets, experiencing house price growth and there are no stressed suburbs where prices are falling and no growth is likely, but there are no boom suburbs either. This is all set to change, as our short term prediction shows that over one quarter of Sydney suburbs will experience boom house market conditions over the next year with strong price growth and another quarter predicted to become or remain seller suburbs.

BRISBANE’S HOUSE MARKET – MOVING FROM NEUTRAL TO GROWTH

Brisbane's House Market - Current and Forecast

Over half of Brisbane’s suburbs have neutral house markets, with no growth or decline in prices, but our forecast shows a fragmenting of the market, with an increase both in the number of seller and also in boom suburbs, but also in the number of buyer and stressed suburbs. Brisbane does not suffer from a severe housing shortage and price falls on the Gold Coast and Sunshine Coast have acted like a brake on the city’s housing prices. While there are increasing opportunities for growth, investors need to take care about their potential property locations.

PERTH’S HOUSE MARKET – FROM SELLER TO BOOM SUBURBS

Perth's House Market - Current and Forecast

It’s been a long time since we’ve seen a capital city with better investment prospects than Perth has right now and our predictions show that over three quarters of Perth’s suburbs will continue to have house price growth over the next year. Most of these will be boom suburbs, with strong continuing price rises. The causes are the state’s strong economic performance, a willingness of banks to lend, record population growth and an acute housing shortage. However, while growth markets can change quickly to boom suburbs, our experience shows that such boom markets usually don’t last long. High growth is a sweet but short occurrence, so, investors should take care to buy only in those suburbs which have the greatest potential for sustained growth.

John Lindeman is chief property consultant at innovative housing market analysts, Property Power Partners and a popular researcher, author and presenter on the nature and dynamics of the Australian residential property market.

For more information, visit www.understandproperty.com.au

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Categories : Community Update, Perth Property Market Updates, Property Investment

Tags : house market, Investment, John Lindeman, price prediction, Property Market

Profitable Property Investing in Six Steps

05/16/13 Jarrad Mahon Comments (2)

Property investment in Perth is a great vehicle for wealth-building, but it can be even better if you follow these six steps.

Your property must attract good tenants

Good tenants are the backbone of any long-term investment strategy. To get them, you want a clean property with ample bedrooms, plenty of off-street parking, and in a “good” neighbourhood. Usually, this means quiet and away from the main roads, but still close to amenities.
Property Investors
Your property must increase in value

Almost all property increases in value over time, but you need to choose property that is positioned to provide maximum ROI. If your property is close to public transport, schools, the CBD, attractions, or beaches, it will acquire an immunity to down markets. Buy within the median price for the area.

Don’t buy “cheap properties”

If a property’s price is “too good to be true,” it’s because it really is too good to be true. Don’t shoot yourself in the foot looking for a bargain. Real, sustainable income is made by investing in good properties in top suburbs, and putting quality tenants in them while charging rent commensurate to the neighbourhood.

Instant Equity Builders

Immediately after buying a property, you can build equity by making renovations and improvements. Some are quick and easy, such as a new carpet, a new paint job, some landscaping, or installing new fixtures such as kitchen and cupboard doors, or blinds and curtains. For every $1 you spend you should aim to get $2 back immediately on value appreciation. When this compounds over a period of years, you are making a lot of money.

Refinance for emergency cash buffer

Once you build equity, you should pull some of it out by refinancing your property. This creates a cash buffer for you, in case you go without tenants or lose your job and need money. It’s a lot easier to borrow while things are going well than when you are struggling.Spare money call also be placed in an offset account so that you can save interest but re-draw the money whenever you wish.

Maximise your income with professional property management

Our property managers specialise in Perth and surrounding areas. We keep your house rented at current rates, and protect your investment by making sure it is properly maintained and attractive.

Call 1300 472 427 today.

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Categories : Property Buying Resources, Property Investment, Property Management, Property Resources, Property Selling Resources

Tags : Perth Investment Property, property investment in Perth, property investments Perth, property managers

2013 Inflation Rates Remain Fairly Low; Good News for Property Investors

05/15/13 Jarrad Mahon Comments (0)

The Reserve Bank of Australia’s target range of annual inflation normally runs 2% to 3%, but the Australian Bureau of Statistics (ABS) last month announced that annual inflation is currently at 1.2%, according to the ABS Consumer Price Index.

According to the ABS, “The Australian Consumer Price Index (CPI) is conceptually designed to provide a general measure of price inflation for all Australian households. In practice, the index is constrained to only measure the changes in prices faced by private households living in the six State and two Territory capital cities.”

In the first quarter of 2013, figures indicate there was a 0.4% increase over the previous quarter’s measure.

Annual inflation sits currently in the lower to middle range of the Reserve Bank’s target range for inflation. Through the Consumer Price Index, the RBA measures underlying inflation, or “core” inflation, by trimmed median, or weighted, mean measures, stripping more volatile measures like fuel costs and agricultural products. From March 2012 to March of this year, underlying measures topped out at 2.2% for the trimmed mean and the weighted mean at 2.6%. Headline inflation was recorded at 2.5%.

The CPI’s housing composition provides the greatest factor to the overall CPI result. In the overall housing component, these costs have increased over the growth: electricity (17.1%), property rates and charges (5.8%), gas and other household fuels (16.8%), and utilities (13.5%). Housing costs as a whole increased by 5.1%.

For several years, the trend has been that utility rates, like electricity and gas, have been sharply increasing, rather than the expected mortgage or rent rates. Property maintenance and repair costs have increased by 2.6% annually over the last ten years, ahead of new home purchases, various housing, and rents.

Data shows that growth in regular quarterly household bills has skyrocketed in the last decade, and each year, particular costs continue to grow significantly. Relative to other housing costs, rising costs associated with house purchases and rentals are stable, even above headline inflation.

In summary, in the Australian economy, calls for interest rate hikes should dissipate, and overall, inflation remains at low levels. As home value growth slowed in April, and as commodity prices fell and mining investment should be peaking throughout this year, interest rates may need to be cut further to stimulate the housing market.

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Categories : Property Buying Resources, Property Investment, Property Management, Property Resources

Tags : housing market, Investing, investments

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