We regularly hear from the Pollies that they have a plan to create affordable housing to bring to reality the great Australian dream of home ownership.                                    
 
Of course not much happens and for a variety of reasons including non performance of election promises. 
 
How about this for an idea?     
 
The Governments talk to each other to change the Planning Laws to allow housing [flats,townhouses,units] onGovernment controlled land close to the City.This land often has such features as proximity to the City,transport and parks .What about a rezone to allow a developer to enter into a PPP[Private Public Partnership] to build affordable and other more expensive housing on the Jolimont railway yards, the Preston tram depot,the West Melbourne railway yards,The Camberwell tram depot…………. the list could go on for pages.                   
 
And more….what about the rezone of our major shopping centres e.g. Highpoint,Chadstone,etc., to allow for housing to be built over their carparks?                              
 
Sounds simple but will it ever happen???????????       

“The pass in rate is up…..the pass in rate is down”. So what does that really mean? The weekly announcement from the newspapers is useful but often can send negative or positive messages to the public.However there is no method to disseminate the results. For example when the rate moves one week to the next it does not necessarily mean that prices have gone up or down nor does  it say that the pass in rate in the outer suburbs [where Auction is not as common as in the inner suburbs] is higher or lower and vice versa.                                              
 
Therefore do not think that auction results are in any way a reflection of the state of the market and remember that not all auction or private sales are reported to the media.                         
 
This weekend past 63% of properties auctioned sold .Last year the rate was 85%.                                             
 
Call Brian if you feel you need more explanation.0439004889

AUSTRALIA is set to experience the slowest economic growth in seven years which would make the case for a 50 basis point interest rate cut in September, a survey shows.

The Westpac-Melbourne Institute leading index, which predicts the likely pace of economic growth three to nine months into the future, showed an annualised growth pace of 2 per cent in June.

The reading was at the lowest point since July 2001.

The leading index has been below the long-term average of 3.9 per cent since February.

Westpac chief economist Bill Evans said global factors were largely responsible for the likely slowdown in economic growth.

“The slowdown in the growth rate of the index can be mainly attributed to the sharp fall in the share market; tighter liquidity as represented by money supply; weak dwelling approvals and softer data for US industrial production,” he said.

 Mr Evans said high borrowing costs would make a 50 basis point official interest rate cut in September more likely.

“With rates well into the contractionary zone and global liquidity conditions deteriorating there is a strong case for a larger first cut of 0.5 per cent,” he said.

“That seems a more effective strategy than current market expectations of two consecutive 0.25 per cent moves.”

The Reserve Bank left interest rates on hold at 7.25 per cent in August for the fifth month in a row.

The minutes of that August 5 board meeting, released yesterday, suggested the RBA expected economic growth to have slowed down in the June quarter, with low growth also possible in the September quarter.

The RBA last cut interest rates in December 2001.

Source: news.com.au

SYDNEY: With Australia expected to cut interest rates, beleaguered property trusts could see their rental yields become more attractive, but the bad news that has battered the sector may rumble on.

Australia’s highly leveraged real estate investment trusts, or REITs, have suffered as the global credit crunch lifted borrowing rates and raised questions about a practice of using nonrental income to increase dividend payments.

GPT Group, Mirvac Group and Babcock & Brown - which have listed REITs - have issued profit warnings and seen their share prices dive.

Centro Properties Group set off the bearish mood when concerns about debt refinancing emerged early this year.

The S&P/ASX 200 REIT index has lost 42 percent since a peak last October, but has picked up more than 20 percent since mid-July.

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 Some analysts say the sector is still 20 percent undervalued, and rate cuts would ease pressure on the securities, which pay most of their rent to investors as dividends.

After more than a decade of expansion backed by a commodities boom as the nation sold iron ore and copper to China, the Australian economy is now seeing signs of weakness, with consumer spending sapped by rising fuel and mortgage costs.

The Reserve Bank of Australia said that it would not wait for inflation to fall before lowering interest rates, giving the clearest indication that it would ease monetary policy next month.

“As the RBA begins the easing cycle, this will make REITs more attractive from a yield perspective,” said a Merrill Lynch analyst, John  Kim.

The weighted average dividend yield for Australian REITs is 7.8 percent, slightly above the central bank’s cash target rate of 7.25 percent and compared with a 10-year government bond yield of 5.8 percent.

“The large cap A-REITs will benefit the most, as equity and global property investors revisit the sector, now that one of the major headwinds against the industry appears to be headed for a reversal,” Kim added.

During the last two periods of falling interest rates, in 1996 to 1998 and in 2001, REIT prices rose 6.7 percent in the following 12 months, according to UBS.

UBS said that groups active in residential development, or which have large domestic floating debt exposure, should benefit most, pointing to Stockland Group and Mirvac as examples.

Affordability has become an issue for Australia’s residential market of nearly 3 trillion Australian dollars. Home prices have jumped fivefold in 20 years, while household income has only doubled, so lower borrowing costs should offer homebuyers some relief.

But even if the central bank cuts its policy rate, lenders could still be reluctant to adjust their views of risk for property trusts, said Clement Chong, vice president and senior analyst for Moody’s Investors Service.

In May, Moody’s said it maintained a stable outlook on the ratings of Australian REITs over the next 12 months, but warned that a challenging credit environment and softening property fundamentals in some overseas markets were risks.

Dugald Higgins, associate director for Property Investment Research, said that a deteriorating global economy could hurt REIT earnings, as commercial property values and rents suffered in Australia and the United States, where many Australian trusts own shopping malls, offices and warehouses.

“It will only take a piece of bad news to hit the market, and I imagine we will see a lot of people jump ship again,” Higgins said. “Valuations, fundamentals are still pretty much out the window and have been in the last six months and I don’t see that changing a lot throughout the rest of this year.”

Babcock & Brown, which has listed real estate vehicles, has seen its share prices tumble after a profit warning due partly to revaluation of real estate assets. Babcock & Brown shares have sunk to below 4 Australian dollars, or $3.47, from almost 35 dollars in June 2007.

Office vacancy rates in Australia crept higher in July, prompting property executives to predict the global credit crunch would take its toll on rents and the value of buildings.

As the market braces for earnings announcements from REITs, investors will watch property valuations to see whether the trusts apply mark-to-market accounting.

The practice, which has gained ground in Britain, relies on indexes rather than appraisals of individual buildings, and allows companies to adjust their asset valuations faster.

“Typically in Australia, we’ve still got six monthly valuations,” said Tim Nation, director of international investment at DTZ. “It just inherently slows down the ability for asset values to reflect where the market thinks the pricing should be.”

Source:International Herald Tribune by Reuters,  By Eriko Amaha ReutersPublished: August 20, 2008

The REIV supports the recent calls by the Federal Treasurer for the private banks and other financial institutions to immediately pass on future reductions in interest rates by the Reserve Bank to mortgage holders.

Over the past six years the Reserve Bank has lifted the official interest rate a total of twelve times taking the rate from 4.25 per cent in April 2002 to the current rate of 7.25 per cent. In recent times the private banks have also increased interest rates in addition to the RBA increases.

As a result of the increases the standard comparison rate is now between 9 and 10 per cent - double the rate of six years ago.

The interest rate increases have required many borrowers to make changes to household budgets and spending patterns. These rising payments have also coincided with fluctuating petrol prices and rising grocery prices. These factors combined have contributed to a softening of the housing market with a reduction in the number of sales and a stabilisation of price throughout the first half of 2008.

Many economic indicators, including the REIV’s June Quarter data show that the Reserve Bank’s monetary policy decisions are taking into affect, the result being an economic slowdown.

A reduction in the official cash rate, if passed on to mortgage holders by private banks and other financial institutions , would help alleviate some of the financial stress households are experiencing and provide mortgage holders and future first home buyers with some respite.

A lower interest rate would also help stimulate investment in the private rental market. This would then help to provide prospective tenants with more choice and also stabilise rents

Source: REIV

Analysis of the REIV June quarterly median prices shows that the Melbourne property market is strongest in the inner and middle suburbs.

The REIV classifies the inner city as those suburbs within 10km of the CBD and the middle those between 10km and 20km from the CBD.

Comparing the number of sales in the inner, middle and outer suburbs between the March and June quarters shows that the largest increase in homes sold was in the inner suburbs. In the June quarter there were 5,374 homes sold, a 21 per cent increase on the 4,456 sold in the March quarter.

The middle suburbs recorded a more moderate increase in sales with an increase of 11 per cent from 4,481 to 4,989.

A clear sign of the impact of interest rates, broader economic uncertainty, increases in the price of petrol and groceries can be seen in the fact that the number of sales dropped in the outer suburbs, by 9 per cent between the March and June quarters from 3,617 to 3,288.

Over the June quarter there was a subtle change in sales method being used to take property to market. The number of properties sold at auction during the June quarter increased by 17 per cent from the March quarter whilst the number of properties sold via private sale has increased 4 per cent, however this likely to be a statistical anomaly as there are almost no auctions conducted in the metropolitan areas during January. However if the comparison is made with the June quarter of 2007 it shows that the number of homes sold by private sales and auctions dropped by an equal amount of 22 per cent.

This shows that whilst the more moderate market conditions have not changed the method of sale, there has clearly been a substantial dampening of demand in the outer suburb and consolidation of demand for homes in the inner and middle suburbs.

Source: REIV

Scott Patterson of Jellis Craig tonight won the REIV Senior Auctioneer Competition.

REIV CEO Enzo Raimondo congratulated Mr Patterson remarking that not only did he display a high degree of technical proficiency but ran an entertaining auction as well.

“Victoria is the residential auction capital of Australia and people expect not only an interesting auction but one that gets the best return possible result.

“The standard of all competitors was outstanding and we wish Scott Patterson and runner up Paul English of Philip Webb the very best in representing Victoria at the Australasian Auctioneer competition in Darwin on the 2nd of September.

Each year the REIV conducts a competition to find the best novice and senior auctioneer in Victoria. The purpose of this competition encourages auctioneers to develop and improve skills and allows the profession to highlight the qualities needed to conduct a successful auction.

“Entrants are judged on their understanding of the laws and regulations relating to auctions along with their ability to professionally run the auction and present the property,” Mr Raimondo concluded.

This year’s finalists were Paul English of Philip Webb, Matt Leonard of Tweed Sutherland First National, Andrew Morello of GA Thomson & Co (Essendon), Scott Patterson of Jellis Craig and Mark Staples of Hocking Stuart (Carnegie).

Source: REIV

Most buyers are lulled into a false sense of security when dealing with an Agent representing  a Vendor.         
 
In most instances Agents are highly skilled negotiators trained to achieve the highest price for their client.Even if they are not, you can bet your bottom dollar that their Principal is.Therefore, it is necessary to acknowledge the fact and be careful in all dealings. A basic tactic is for the Agent to become a friend ,gain a Buyers confidence and then get the top price from YOU.                                
 
Therefore obtain expert advice from a number of sources to ensure you do not pay too much for a property.
 
Even at auctions we see Agents employing tactics to encourage a buyer to pay the highest price.They are doing their job and well, if they succeed.     
 
It is not all that easy when buying a property.
 
Call us if you need assistance.The cost  of a call could save you 000’s.

Q How much can I borrow?

This depends on a range of factors including your personal circumstances, the price of the property and any valuation that may be required (a bank valuation may not be the same as the purchase price). Depending on the lender, they may be prepared to lend up to 95% of valuation, depending on your ability to repay. It’s worth noting that loans of more than 80% valuation often require mortgage insurance, which the borrower pays for.

Q What is the difference between fixed and variable rates?

Fixed interest rates are locked in for a period of time and don’t fluctuate, so payments remain constant for that period whereas variable interest rates vary according to market conditions. Variable loans will increase or decrease over time which will directly affect your payments.

Q What is a split loan account?

Split loans give you the flexibility to structure a home loan in a way that best suits your situation. You can fix a portion of your home loan so that you have certainty with your repayments and have the other portion on a variable rate.

Q What is an offset account and how does it work?

It’s an everyday account connected to your home loan that lets you get money out of an ATM, pay bills or write cheques. Being linked to your home loan it assists in getting the Principal down and ultimately saving you interest. With interest calculated daily, every cent you have in an offset account works to pay off your home loan faster.

Q What’s a redraw facility?

This is when you withdraw extra money that you’ve paid into your variable rate home loan. The amount simply gets added to the amount you owe. You can redraw as you need, as long as you have available funds in the loan.

Q Can I make extra payments or pay a lump sum?

Yes, most loans have this facility allowing you to reduce the original amount borrowed so you pay less interest over the long haul.

Q Can I Switch Loans?

Making the decision to change loans or refinance, is difficult as there are hundreds of loans available from hundreds of lenders. On top of that, there are other factors to consider such as how long do you want your loan period to be or how much you can afford each month? Some loans have early pay out penalties and other costs you will need to consider. Sometimes re- financing is not the answer and not the right option for you.

Q Am I eligible for the First Home Owner’s Grant Scheme of $7000?

You will be eligible to apply if you:
are buying your first home
are an Australian citizen or permanent resident
intend to make the home your principal residence, and
start living in the home within a reasonable time. The payment will be the same regardless of your income.

Q What is Lenders Mortgage insurance (LMI)?

LMI protects lenders against loss should a borrower default on their loan.

Q What is the difference between a Principal and Interest Home Loan and an Interest-only Home Loan?

A Principal and Interest Home Loan is where the principal and the interest are repaid together for the term of the loan. An Interest-Only Loan allows you to pay only the interest on the loan. Property investors are suited to Interest-Only because it maximises the investor’s tax deductions.

Q How can I reduce my mortgage?

The secret to financial security is making your money work for you.
Here are some tips to obtain financial security:
Evaluate – review your current financial position comparing your total income against all outgoings.
Budget – recording your day to day expenses is the key to financial control. By using your cash flow more effectively you can reduce your current commitments.
Plan – set your future personal and financial goals. This will give you an incentive to succeed.
Select – choose a loan that offers features and benefits that match your individual lending needs, not just now but into the future. This will assist you to repay your loan sooner.

Q Should I refinance?

Decide whether your existing financial arrangements still suit your current circumstances. If your current loans or credit card debts are not providing you with the desired results and you are paying too much, consider refinancing or consolidating your debts to achieve a financial benefit. These days, there are a wide range of finance products from many different lenders available. Finding the right loan may greatly reduce your loan term, interest payments or repayments enabling you to obtain greater financial security.

Q What tools can I use to help me select the right loan?

This can often be a daunting task. For those that like to do research before meeting with a broker or lender, there are many websites that have very basic information such as interest rates. Unfortunately there are many variables that come into play when selecting a home loan. Ratesonline provides very comprehensive information on over 700 home loan products that is updated daily.
You are able to research many loans and submit an enquiry or application and will be contacted by either a broker or lender.

Source: www.ratesonline.com.au

Source: www.ameinfo.com

Danial Schon, Vice President of Schon Properties, talks to AME Info about the Dubai real estate market, which sectors investors should be looking into for the biggest returns and why he thinks that prices across the city can only keep increasing.

Schon Properties is well established in Dubai’s property market.

The company already has four projects under development.

Its flagship residential projects are the Dubai Lagoon development and Schon Suites and the latest launch, the Signet project in Jebel Ali.

The Signet is a mixed-use development that will allow people to make use of one space for their business and residential needs.

This, Schon believes, will prove popular in the face of ever-increasing commercial rental costs.

‘This project was made keeping small businesses in mind.

‘The biggest problem for these people when they move to Dubai is that, because of the rising costs of rent they can never find a place.’

Recent reports that home owners would not be automatically eligible for residency visas have added further questions for investors from outside the GCC.

‘I think that everybody is still seeking clarification on that,’ says Schon.

‘But I know that the government of Dubai is so pro-business, and the policies are for the benefit of the economy, buyers, end users and so on, that the final decision will work in everybody’s favour. I don’t think that it will be a case of ‘we were promised this but didn’t get it’.

‘But we do tell our buyers that the residency visas will be subject to approvals at that time. We don’t know what they might be, laws change all over the world, so we don’t say that you’re guaranteed a visa.’

Most profitable branch of Dubai’s real estate market

Of the various projects springing up across the city, all are designed to attract investors.

But though prices are spiralling in the residential, commercial and hospitality sectors, Schon believes that, for individuals, the latter will bring the best returns.

‘Serviced hotel apartments are definitely the most profitable, because Dubai is built on tourism. You see the campaigns all around the world.

‘We launched a project called Schon Suites about three months ago. The concept is that all the rent goes into a pool, then an independent auditor distributes the rent equally according to your percentage ownership of the building.

‘It’s for people who can’t build hotels themselves. And it’s a very good return, the projected yields come up to 20% per year - that’s on 10 year historical information from the Department of tourism and Commerce Marketing, the inflation rate and so on. We’ve done extensive research on this and the numbers are phenomenal.’

Dubai property prices to increase

Almost all developments have shown these increases.

Most of the projects in Dubai have posited double-digit growth over a 12-month period.

This growth, driven in part by speculation and supply shortages, will not slow down as more properties come online, Schon believes. The root cause of the price escalation is down to the construction component.

‘I think prices have a long way to go yet,’ he says. ‘Mainly due to the rising cost of construction, which is detrimental to the industry as a whole.’

Global factors, such as China’s decision to increase payments for steel imports by 40% above market rate, are continuing to have a local consequence.

‘Things like that have a huge effect. The minute you’ve purchased your steel it’s already going up 1.5% per month, that’s the rate that we calculate construction inflation at for our contingencies.

‘What this does is that it drives prices up, because it controls supply but the demand is still high. So, prices have a long way to go. People ask me why property is so expensive - the most important thing in development is not hype, it’s not marketing or sales, it’s delivery. If developers don’t price at the risk of tomorrow’s costs, then they will lose money. And, if that happens, the quality suffers.’

Increased regulation helps property market

‘The creation of Rera [Real Estate Regulatory Authority] will ensure that it never gets to the point where the credibility of Dubai is affected, because they will step in,’ Schon notes.

Rera is a prime example of how Dubai’s property landscape has changed, partly in response to concerns over the lack of transparency in the market. Government legislation has enforced a set standard of regulation among the city’s developers and agents.

‘Every transaction is regulated, everything is transparent. You have to set up an escrow account before anything is sold now,’ he agrees. ‘We also have green building guidelines to follow.’

Thanks to initiatives like these, Schon is convinced that the upward trend is certain to continue, and that investors should take advantage of the opportunities on offer.

‘We were offered plots in 2002 that we didn’t go for, because analysts were saying ‘the bubble’s about to burst’. These are the same reports that are still going around now. Anyone who says that is not looking at the whole picture.

‘Dubai is the centre of the region for property, there are also investors from Iran, Pakistan, India. Even Chinese groups have started investing here. Everybody wants to be involved.’