News Room : Archived News
Our population just keeps growing
12th Jun, 2004
New data from the Australian Bureau of Statistics (ABS) shows Australia’s population reached 20,008,700 people at December 2003, a 1.3% or 250,800 increase on the number of people living in Australia at December 2002
The population growth can be attributed to two factors, natural population growth, that is the total number of births minus the total number of deaths in any given period, and net overseas migration, which is net permanent immigration less any permanent migration out of the country.
Since Federation, Australia has grown predominately as a result of natural population growth, but for the year ended December 2003, net overseas migration was actually the greatest contributor to our population growth.
Natural population growth accounted for a 2.6% or 31,400 person increase in the population during the December quarter 2003, while on an annual basis, natural population growth accounted for a 2.6% or 118,400 person increase on the 2002 December quarter.
Net overseas migration increased by 2.0% or 36,500 people during the December 2003 quarter.
Around the states…
As at December 2003, the population of our states and territories were, New South Wales 6,716,300 people; Victoria 4,948,000 people; Queensland 3,840,100 people; South Australia 1,531,400 people; Western Australia 1,969,000 people; Tasmania 480,000 people; Northern Territory 198,700 people and the Australian Capital Territory 322,600 people.
During the December quarter, all states and territories experienced positive population growth with Queensland recording the strongest level of growth, up 0.6%, followed by Western Australia (up 0.4%), Tasmania, Victoria and New South Wales (each up 0.3%), South Australia (up 0.2%) and the Northern Territory (up 0.1%). The Australian Capital Territory’s population remained relatively unchanged showing only a marginal growth from the previous quarter.
The rising population is likely to place increasing pressure on both state and federal governments to provide affordability housing solutions both now and in the future.
Australia & NZ top world house price growth
11th Jun, 2004
US based magazine “The Economist” has released a chart of average house price increases in the world’s developed countries during the first quarter of 2004. The house price indicators are back dated to 1975 and are based on data provided by real estate agents, mortgage providers and government sources. According to the latest chart, Australian and New Zealand house prices have experienced the greatest increase of any other country on the list.
Of the sixteen countries on the list, New Zealand ranked number one with a house price growth rate of 22% during the first quarter of 2004. Australia came in second place with a growth rate of 17.9%, followed by Spain with a growth rate of 17.3% and Ireland with a growth rate of 12.9%.
British house prices were ranked in seventh place with a growth rate of 7.8% during the first quarter of 2004, while the United States, Canada and Switzerland ranked in respective 8, 10 and 13th place with growth rates of 7.7%, 6.3% and 3.4%.
The only two countries on the list not to show an increase in house prices were Germany, where prices were reportedly down by 1.7%, and Japan who experienced a 5.7% fall in house prices during the first three months of 2004.
Home ownership or lifestyle
3rd Jun, 2004
Newspapers and financial journals throughout Australasia continue to print intellectual arguments which prove that we are better to rent rather than buy our principal place of residence. They tell us about the better lifestyle and consumer goods we can accrue with our extra disposable income.
Such arguments fail to take into account several factors. Most consumer goods and services (cars, overseas holidays etc.) depreciate or leave the consumer with nothing to show for them at the end of the day. Furthermore, rents go up faster than the CPI, so the same proportion of income will buy proportionately less rental accommodation over a ten year period. The home owner, on the other hand ends up with a property that has most often doubled in value.
It\'s certainly true that saving a deposit to buy a home requires individuals to make sacrifices in the short term in order to be better off in the future. And it\'s not surprising that fewer and fewer people understand or value the advantages of deferred gratification. The psychological pressure of advertising makes individuals less able to say no to the lifestyle of the moment. Many young people have cars, mobile phones and credit cards that leave no income left for saving deposits or paying off mortgages.
The trouble is, at the same time as incomes fail to keep pace with inflation, consumers become psychologically more dependant on the style they have become accustomed to . The paradox of the lifestyle of the moment is that it becomes less attainable the more we depend on it.
It is only natural that people investing in their own home develop a greater sense of pride in their property. As their equity in the home increases, they have the option of using it as security to borrow money to buy a business, holiday home or to fund investments. Owning the roof over one\'s head provides a focus for creative self improvement and offers the kind of stability that enables people to plan their lives with a greater degree of certainty.
Worth the wait? That depends on one\'s ability to imagine a life beyond the moment.
Are all properties equal?
2nd Jun, 2004
When you borrow to buy property, whether for home or investment purposes, you\'re probably aware of the fact that most banks or mortgage providers will happily lend you up to 90 or 95% of the value of the property as long as you have mortgage insurance. What you might not know is that mortgage insurers can be reluctant to lend on certain types of property.
Mortgage insurance is an insurance provided to the lender (usually the bank) to protect them in the event that the borrower (you) defaults or cannot pay back the loan. Mortgage insurance is usually required where the amount of the loan exceeds 80% of the value of the property.
If a mortgage insurer perceived a particular type of property as a greater risk, they may not give the bank insurance and you, as the borrower, may either not be granted the loan or be forced to find a greater cash deposit.
Of course there are no hard and fast rules as to what type of property a mortgage insurer may perceive as risky, but there are several types of property that have been known to raise the red flag. These include:
? Apartments in areas where there is a perceived oversupply or where valuations are questionable.
? Apartments smaller than 50 square metres.
? Warehouses converted to apartments where the appeal of the property is limited.
? Serviced apartments.
? Any property of more than five acres, whether rural or residential.
? Vacant land, particularly land purchased by an owner/builder.
While 90% of all borrowers who require mortgage insurance have no problems securing a loan, there are always instances where it?s not a simple process.
So, before you lodge your loan application and rather than risk an application rejection (especially if you?re relying on the approval of mortgage insurance) it is wise to check with your bank if the type of property you?re buying runs in to the ?red flag? category.
Property Market Cracks
13th May, 2004
Signs are ominous for the property market. Average house and unit prices fell sharply in the March quarter, auction clearance rates in Sydney and Melbourne plunged, and distressed sales of apartments in over-supplied inner-city areas spiked. Some prominent real-estate agents and property developers - who usually always try to talk the market up - admit that prices are down and buyers are fleeing.
Is this the start of a property crash? The truth is that nobody - not even the Reserve Bank of Australia - knows how this property downturn will unfold. The wild card is household debt: it is so high that even a small rise in interest rates could hurt investors and home-owners who borrowed too much to buy their properties.
As in all bubble situations, many who bought late in the boom will be the first to sell in the bust - sending prices in some property markets sharply lower.
The evidence suggests that the property market will deflate gradually rather than spiral out of control. But much depends on interest rates and unemployment. Falling house prices and home lending mean the RBA is in no hurry to lift interest rates, and can cut them if the property market does tank. Household finances, despite two rate rises last year, are still sound and unemployment is falling. It would take a sharp rise in interest rates and a sharp fall in employment to damage the property market badly. That is unlikely.
It is worth remembering, too, that there are many diverse segments within the property market. As BRW property writer John Stensholt notes in this Cover Story, the fallout from the slump in inner-city apartments in Sydney and Melbourne is getting uglier by the day. But prices for established homes in those cities are still robust; although they might have fallen 5-10% in some suburbs, the losses are small compared with the huge gains over the past five years. Prices for established homes in other markets, such as Brisbane and Perth, are still holding up well.
For now, it appears the property market\'s landing will be soft rather than hard. The Federal Government will no doubt hope it stays that way in an election year.
Tony Featherstone
Managing editor
Buying a rental property
28th Apr, 2004
Too many investors buy from their heart rather than with their calculator. Property investment and building wealth are all about dollars and cents, not colours of curtains. If you have assessed the property as an excellent investment, bar the purple curtains and the vicious dog next door, go with the figures. If you are buying property for the long?term, most of these things won\'t be around after a few years.
To be more specific, below is a description of two of our properties to give you an indication of the variation that still works.
House A. Currently valued at around $200,000, this low?set weatherboard house on timber stumps is an older style worker\'s cottage that\'s now 70 years old. It\'s on 1000sqm of very desirable land in a quiet street near the seaside.
A double carport was added soon after purchase. The kitchen is an older style with removable cupboards. None of the three bedrooms had built?ins, so four free?standing wardrobes were added. The bathroom is small and in the same condition as when the house was first built. Rent is $150pw and long?term I expect that the property will continue to have capital growth greater than the norm, primarily because of the larger land content and good position.
However, this anticipated higher growth will be offset by higher maintenance and lower yields. The house has already had expensive termite treatment costing around $2 000, but I consider this to be quite insignificant in view of its great capital growth and its potential in the future.
House B: This suburban brick unit, in a quiet street, is currently valued at around $120 000. The building is worth about two thirds of the property. It is modem, being only three years old, but small ? a very basic 10sq unit with built?in wardrobes. Rent is now $170pw and I anticipate average capital growth but good yields as the property will need minimal maintenance.
Which type is better? Both! The difference between the two properties lies in the fact that Unit B provides more net income with average capital growth, while the older, House A, provides less net income in return for potentially greater capital gains. In the long?term, both will have produced pretty much the same overall rates of return, exceeding 20% per year depending on financing.
To be perfectly candid, I doubt any property we own stands head and shoulders above the rest. What has worked best for us is simply time. We were prepared to sit back and wait and we did very little apart from keeping up the maintenance and organising the finance. Value adding has not been our style, but obviously it works very well for many people.
Trading has not been our style either, but again many successful long term property investors trade profitably along the way.
The message is that the basic recipe for building wealth can be varied to suit. Providing you finish up with a bunch of properties that allows you to retire on the rent, it doesn\'t really matter how you get there. There is no right or wrong property; there are only different ones.
Dont wait to buy, just jump in
15th Mar, 2004
While it can be important to have a substantial deposit to buy your first property, waiting a year to accumulate a few thousands dollars instead of jumping in to the market as soon as possible can be put you at a disadvantage. By waiting a year you may find the same house you could afford to buy a year ago has gone up by more than you were able to save.
That’s why it can be prudent to buy whatever type of property you can comfortably afford today.
Take advantage of low interest rates, find a home you’ll be able to live in for a few years, move in and try to pay off your home loan as soon as possible so you can start building up some equity.
Then you can think about buying your dream home and, when you find the perfect place, you’ll have a property that’s more than likely risen in value to ‘trade in’.
Building Approvals Remain Steady
13th Mar, 2004
The Australian Bureau of Statistics reports that building approvals fell overall by 1.5% in December 2003, the third consecutive fall. Approvals rose by 25.5% in South Australia, by 15.2% in the ACT, by 7.8% in New South Wales and by 0.4% in Western Australia. Approvals fell by 21.9% in Tasmania, by 11% in Victoria, 10% in the Northern Territory and 6% in Queensland.
Housing contributes to economic growth
12th Mar, 2004
Housing contributes to economic growth
National accounts’ figures released this week showed the Australian economy grew by a strong 4 per cent over the 2003 year. The housing sector contributed to around 22 per cent of this growth.
Many economic forecasters believe property will continue to contribute strongly to the economy over the next twelve months, a view that is echoed by the Housing Industry Association.
Mr Harley Dale, Senior Economist for the Housing Industry Association, has predicted the 2003 strong housing market will continue in to 2004.
Mr Dale said, “a significant amount of work still in the pipeline will see the housing sector make further strong contributions to Australia’s economic growth in the first half of 2004”.
Supply & Demand of Units
11th Mar, 2004
Latest figures on the Gold Coast unit market shows that based on current demand for high, medium and low rise apartments
the Gold Coast has an overall supply level of 6.6 months. This supply level is broken down to 7.5 months for highrise, 4.4 months for medium rise and 6.9 months for low rise.
Surfers Paradise was the star performer for the December quarter as it was in the previous two quarters. The supply level in Surfers Paradise has dropped from 18.6 months in the June 2003 quarter to the current 8.7 months supply based on the current selling rate.
There were 165 sales in Surfers Paradise during the December quarter, this is up from 156 in the September quarter and 127 in the June quarter and with 178 in the March quarter this makes a total of 626 sales for the calendar year to December 2003.