An article I read lately talked about the Australian real estate in very bright terms. It said how various factors would together contribute towards a seller’s market.
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Call to demolish home grants
I read an article over the property niche recently that talked about scrapping the home grants for first home buyers. Mr Andrew Wilson, the economist proposing this idea, argued that such money should instead be used for building infrastructure, health and transport facilities for new neighborhoods. He also felt that the housing estates must be made friendly towards the environment and must possess sound neighborhood character too. Presently, those who are willing to buy a home for the first time will look for established properties, thus overlooking grants anyways.
Rents are getting steeper as rental properties become lesser in numbers in NSW. This may drive many towards purchasing a new home. However, no grant can properly compensate high and inefficient property taxes. Stamp Duty and Sales Tax together add up to about 40% of money used to buy a house-and-land package. This pricing structure proves to be a very difficult hurdle for a first time home buyer.
Sydney Auction Clearance Rate Reaches Boom Time High
Sydney’s auction clearance for this Saturday has brought back memories of ‘boom’ time. Standing at 76.3%, the clearance rate has been the highest recorded in last few years. Inner West Sydney has been the winner with 83% clearance. A few believe that such an activity on the Prestige Market is the result of optimism in the stock market. Others are talking about the mortgage rate cuts as the prime reason for buyer response. Six Chinese buyers fighting over a Vaucluse property and bidding in excess of $5 million is a hearty sight. The prestige market has not been moving for some time now and 8 properties selling at more than $2 million each looks like a worthy change.
Derby Street auctioneers held five auctions including the Vaucluse property. Of them, two sold even before the auction and remaining went over the reserve bid. This fresh energy in buyers may also be because of visa changes. The changes aim to provide quicker entry to the foreign nationals holding property worth $5 million in Australia.
You can read the full article here.
Do you think the Prestige Market will rally even further?
Safer windows needed for children
Children may fall from windows that do not have a strong flyscreen or can be locked open beyond 12.5 centimetres. Fifty or more reports of such falls every year has not changed our approach. The new rules in place ensure that the properties built after May must have reinforced meshes or window locks in place. However, no one is discussing about the older properties. Much like the swimming pools and balcony railings, children should also be protected from window openings. Parents will agree that children are often too fast for them and do not have any idea of the risk associated with falling.
In cases when the apartment seller is not willing to take up the issue, parents must themselves go to the nearest hardware store and fetch steady window locks. Risks can be minimized by using modern-day reinforced meshes or flyscreens (Retrofitting). An average of $130 for an effective window screen is not too big an amount to pay for your child’s safety. Also, it may be a poor idea to promote window locks for only the bedrooms as about 20% accidents happen in other habitable rooms.
Read the full article here.
How far can you compromise your child’s safety?
Generation Rent in Sydney?
Lately, I came across an article which talks about the rising tendency of Australian youth towards renting/leasing property rather than buying it. You can read it here.
The article shows how there is a complete shift in ideology- while the past generations believed in buying properties, youth today looks towards the ‘rent’ option. Actually, with career becoming a lot more important, our youths want to live close to their workplaces. In these times when jobs change so quickly, it becomes a big problem to be tied up to a home that may be many miles away from your new workplace. Also, moving through traffic mess and missing out on the inner-city (CBD) community culture is not acceptable to them.
Because interest rates are higher than rent, today’s generation wants to skip that extra charge. They feel that “Interest paid to the bank is as dead as any rent money.” Statistically, Switzerland, one of the most buoyant economies, has least number of homeowners. The new generation argues that sometimes, high number of home ownership is just a camouflage for poor economic growth.
I am willing to agree with most parts of the article. I also think that high deposit cost is among the big reasons why the new generation looks the ‘rent way’. With Superannuation set to be 12%, those in their 20s and 30s will have a lot of money to buy homes upfront when they get old.
Also, homes come with a fair probability of Foreclosure or Short Sales. Why take that extra emotional burden along?
There is another point worth noting- With rising demands in rental property near CBD, investors can also have a field day in my opinion. Good for buyer-seller dynamics!
I invite your views on the topic.
Fewer homes selling at a loss
The latest housing data shows a positive trend for Australian homes – fewer properties are selling at a loss.
It is an interesting upward trend especially after a dubious quarter (July 2012-Sep 2012) where 13.5% of homes sold at a loss while only 30.9 % of homes sold at prices two times more than the purchase price. Over the last quarter, the number of homes selling at a loss has come down to 12.5% while those sold at more than double the purchase price has appreciated to 32.1%. The trend is visible across all of Australia.
Properties on or near coastal areas have suffered the most while those close to resource and mining sectors have seen minimal losses. It is also worth noting that the financial crisis is not the only reason why homes are being sold at a loss. Many people are doing so because it allows them to buy another property (where appreciation can be very high in the near future) at a throwaway price.
Read the full article here.
Are you planning to invest in a property this quarter?
