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This is a must read if you own a property or plan to buy one

property growth

1) Inflation: Though we are in the lowest inflation rate in the last 17 years, Australia’s unemployment rate is at a stable level and the economy is ticking along well, even though both company profits and wages are down. #Inflation #HomeOwners #HomeBuyer
2) Buyers Mix: APRA's cap on annual investor credit growth at 10% has worked well to a point as rental returns have dropped. However, the property market, remains buoyant even after several years of high price growth in cities like Sydney and Melbourne. Total housing credit has been up this year (at least for owner-occupiers) and this usually means there are plenty of property buyers out and about and wanting to borrow money. #HomeLoan #Mortgage #Sydney #Melbourne #FirstHomeBuyer#FHOG #FirstHome
3) Supply – Demand: Affordable and desirable suburbs and accommodation type are always limited causing a high demand- low supply situation. One reason high demand for property is the relatively cheap cost of home loans in recent years. #InterestRate #CheapLoan
4) Affordability – Wages- Rates: RBA’s concerns about low inflation, boosted by rate cuts are part of a broader view to ward off inflationary pressure. The housing market boom is a by-product of this.#RealEstate #PropertyMarket
5) Historical and Projected Capital Growth: Over the past 20 years, general property inflation has been low and stable, consistent with the inflation target. However the property price growth in the recent times, that it has outstripped the rate of inflation in other parts of the economy, including inflation in the cost of new dwellings.

To make the most of the current property boom and for the best interest rates for you, contact Madhu on 0425 341 086 or like us on Facebook for regular updates.

A tale of five prices for a single property

elephant

Have you ever wondered why a home can be listed for one price, valued at another, lender-valued at yet another price and then sold for a figure that leaves everyone scratching their heads?

This scenario is like the tale of the 6 blind men and the elephant. Each touched a part of the elephant and decides the whole big picture without any input from the others.

The bank value

If your home is mortgaged, your lender will definitely value it. This gives the lender confidence your asset offers ample security against the borrowed amount if, for some reason, you cannot pay your mortgage and the lender must sell the property to recoup its debt.

It is therefore unsurprising that a bank valuation will usually be conservative, sometimes 10%-20% less than the current selling prices of comparable homes.

The selling agent’s price appraisal

Real estate agents are commonly asked to assess the market value of your property. This will often help a vendor decide who to engage to sell their home.

An agent will  inspect the home and research comparable sales in the local suburb or town before producing written feedback with a sale price estimation such as “between $X and $X” or “from $X”. This price guide is used when advertising the house.

The sale price

The price the successful buyer is prepared to pay, and the vendor is willing to accept, on the day the contract is signed is the property’s legally binding sale price.

Hot markets, high demand in certain areas and a big turnout on auction day can all have an effect on the final sale price for a property.

The local council’s valuation

The annual local municipal rates bill shows the notice a Capital Improved Value (CIV), site value, net annual value (NAV) and/or gross rental value (GRV).

These figures are calculated using varied methodology including comparable sales data and the bi-annual figures from the State Valuer-General’s offices.

Councils, and water and fire authorities, use these figures to work out how much homeowners owe them for using their infrastructure and services.

The homeowners’ price

Every property owner will have a ‘dream price’ in their minds when they come to sell. It includes the memories, convenience factor and any add-ons made to the property.

In the end the market will usually decide a property’s value by what a buyer is willing to pay for it at auction or through private sale. What are your views? Are you looking for a valuation on your property? We can help you. Contact us today.

 

 

How negative gearing is expected to perform?

negative-gearing-968x731

How Negative Gearing works?

BIS Shrapnel has said the rate of property price growth in Sydney and Melbourne has slowed in 2015-16.

The report noted that national population growth in 2014/15 was at its second lowest level since 2005-06, with net overseas migration falling from 229,400 persons in 2011/12, to 176,500 persons in 2014-15.

The majority of net overseas migrations have been “long-term overseas visitors” that is, temporary but not permanent arrivals – this reduction is likely to be impact mainly the rental, and therefore apartment sector.

“As investor expectations of capital gains are reduced, investor demand is expected to weaken further, creating additional downward pressure on property prices,” he said.

BIS Shrapnel says all markets are forecast to experience falls in prices in real terms by June 2019.

Further weakness is forecast in the Perth, Darwin and Adelaide markets, with the report predicting that the Perth and Darwin markets will continue to be impacted by falling resource sector investment, weak population growth and excess supply.

Meanwhile, Adelaide is expected to continue to face economic headwinds and the closure of car manufacturing in 2017 will be a further drag on the local economy and in turn on prices.

“The real decline is forecast to be minimal at one per cent in Brisbane and Hobart, and as high as 12 per cent in Adelaide,” according to the report.

“Across the unit market, all capital cities are expected to experience greater real declines in unit prices ranging from eight per cent to 15 per cent over the three years to June 2019. With overseas buyers only able to purchase new apartments, the resale market will be more limited, being confined to local buyers.”

BIS Shrapnel forecasts the best prospects for median house price growth over the next three years are forecast to be in the Brisbane and Hobart markets, followed by Canberra.

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