Property Investment
Merry Christmas and a prosperous New Year.
Hi everyone and welcome to 2011, this year promises to be full of opportunity for both Australian Property Investment and offshore Property Investment.
This year will see Sovereign Property Melbourne launching Sovereign Property USA as well as introducing some exiting innovations to the local investment market.
The time is ripe to starting/continuing your Property Investment portfolio with the sound investment options and principals that we shortly be introducing to the Australian public by way of large well conducted free information seminars in all our capital cities and major regional centres.
As they say in the movies, WATCH THIS SPACE!
Property Investment
Monday, January 10, 2011
Tuesday, December 21, 2010
Where is the Australian property market headed.
Property Investment
Over the last three decades Australian house prices have recorded periods of extreme growth contrasted with periods of weakness. The Australian property market moves in cycles which are influenced by a wide range of factors including unemployment, interest rates, consumer confidence and of course previous rates of growth that impact on rental yields and levels of affordability.
Over that 30 year period, Australian house prices have increased at the average annual rate of 8.4%. That’s a pretty decent rate of growth when you consider that prices double every ten years based on an annual compounding rate of 7.2%. In comparison, the rate of inflation has averaged about 4.6% over the last 30 years and 3.2% over the last 10 years. Of course, there have been some periods where growth rates have been well above the rate of inflation rate and periods where growth rates have very much underperformed.
As an example of one of the weakest periods for Australian house prices, over the five years from 1990 to 1995 the median house price across Australia increased by just 2.8% per annum. The soft market conditions came at a time when Australia was entering the “the recession we had to have” and unemployment raced upwards from 5.8% in January 1990 to peak at 10.9% in December 1992. Mortgage rates during this five year period averaged 11.75% and peaked at 17%.
At the other end of the spectrum, the most spectacular five year run was recorded during the “boom” which ran from 2001-03 around most areas of Australia. Despite a slowing in growth rates between 2004/05, the five year period ending July 2005 saw average house price growth of 13.9% per annum.
Currently the residential housing market is transitioning out of a strong growth phase, however economically the country is just starting to ramp up. Gross domestic product figures show the economy is once again growing at about 3.2%, unemployment is trending downwards, consumer confidence remains high and rental yields are showing the first signs of improvement after being eroded by value growth and lower rental rates during 2009. In contrast to the broad market drivers outlined above, we can expect there also to be factors that will dampen market demand. Interest rates are likely to increase at least once over the coming 6 months after increasing by 150 basis points since October last year.
Population growth appears to have peaked and will most likely fall further as the proposed cuts to migration are implemented and housing affordability is likely to become more of an issue in the larger metropolitan markets around Australia. For prospective buyers it is worthwhile considering the long term trends in the market. The average length of tenure for Australian home owners is about 7.3 years; a time frame that is likely to smooth out the peaks and troughs of price growth encountered through the cycles.
However, when you take into account the national shortfall of 190,000 dwellings which will widen to 466,000 by 2020 amid expectations of a rapidly growing population, according to the predictions of the Housing Industry Association (HIA), and under the further expectation that it will take years to turn the shortage around, “based on current and forecast building projects over that period”, that’s fundamentally what’s going to continue to drive the market.”
The overall economic and demographic foundations of the market remain solid which suggests that we are likely to see ongoing improvements in Australian house prices, albeit at a much more modest rate that what was seen between 2009 and the first quarter of 2010.
Sources RP Data and AAP
Property Investment
Friday, December 10, 2010
Sovereign Property Melbourne
Higher density living gaining popularity in Australia
Keen to get a foot on the Australian property ladder? If you're looking to invest, it might pay to check out the apartment listings instead of houses, with experts predicting that units could deliver the best profits in the coming years.
One of the biggest investing misconceptions is that a house and land is automatically a better investment than units, but it actually comes down to which type of property is in demand.
Recent changes in population growth and demographics mean that over two million Australians currently live on their own, so demand for units will increase moving forward. Consequently, investors should consider parking their money in apartments, where the demand is strongest.
Fifteen years ago only 25% of capital city home sales were for units and apartments. Today, medium and high density housing accounts for about 35% of home sales. More buyers are choosing to live in higher density housing, particularly in inner city areas of capital cities. Since 2005, coming out of the last significant property boom, the proportion of unit and apartment sales had been moving lower until the trend was disrupted in 2009. The boost to the First Home Owners Grant and the sharp drop in interest rates saw first home buyers flow back into the market resulting in a rebound in demand for detached houses. With the highest level of housing affordability since 2002, it was no real surprise to see first time buyers targeting detached homes. The jump in the proportion of houses being sold during 2009 can also be partly attributed to the longer settlement time large apartment developments involve. There may be some revisions to the proportion of sales as these larger projects settle.
Based on RP Data’s modeled volumes for the month of August 2010, there were 36,305 dwelling sales during the month and of these, 70% were house sales and 30% were units. A decade ago, houses accounted for 73% of all sales with the remaining 27% unit sales. The results highlight that whilst the unit market continues to emerge, the improving levels of affordability in recent times has seen purchasers revert to detached homes rather than higher density forms of housing. The proportion of house sales within the combined capital cities is, as you would expect, lower than that across the nation. As at August of this year, house sales across the combined capitals accounted for 65% of sales compared to the 70% nationally. Across the capital cities there has been a significantly greater increase in the proportion of house sales coming out of the GFC as many buyers utilised the First Home Owner’s Grant Boost and/or low interest rates as a way of purchasing a house. Plus, property values had fallen during 2008 also contributing to increased affordability.
In the two most populous markets, Sydney and Melbourne, there are a significantly greater proportion of unit sales. During August, unit sales in Sydney accounted for 43% of all dwelling sales and in Melbourne, the figure was recorded at 37%.
During the last decade, Melbourne has recorded the greatest increase in the proportion of unit sales, up by 6.1% (despite the increasing demand for houses in recent years). With the introduction of significant amounts of new unit development in areas such as Docklands and Southbank it is probably no surprise to see that units have increased in prominence over the period.
Another factor that is driving more unit sales is changing lifestyle preference. Empty nesters are downsizing to apartments for the lower levels of maintenance involved in apartment living and also what are often better locations, being closer to work and social precincts.
Looking towards the future, we expect that medium and high density living will continue to become increasingly prominent. Australia’s most mature residential market, Sydney, is already showing close to 50% of all home sales as units. The drivers are going to be affordability, increasing densification of the inner city and major transport spines, and changing lifestyle preferences. Over the last five years we have already started to see units outperforming houses in terms of capital growth (7.3% annual gain for units vs 7.0% for houses). With demand likely remain high in the unit, apartment and town home markets these higher capital gains may continue.
Source:- RP Data & Property Pulse
To see the latest offers and specials on the Melbourne property market go to:-
http://www.sovereignpropertymelbourne.com.au
Keen to get a foot on the Australian property ladder? If you're looking to invest, it might pay to check out the apartment listings instead of houses, with experts predicting that units could deliver the best profits in the coming years.
One of the biggest investing misconceptions is that a house and land is automatically a better investment than units, but it actually comes down to which type of property is in demand.
Recent changes in population growth and demographics mean that over two million Australians currently live on their own, so demand for units will increase moving forward. Consequently, investors should consider parking their money in apartments, where the demand is strongest.
Fifteen years ago only 25% of capital city home sales were for units and apartments. Today, medium and high density housing accounts for about 35% of home sales. More buyers are choosing to live in higher density housing, particularly in inner city areas of capital cities. Since 2005, coming out of the last significant property boom, the proportion of unit and apartment sales had been moving lower until the trend was disrupted in 2009. The boost to the First Home Owners Grant and the sharp drop in interest rates saw first home buyers flow back into the market resulting in a rebound in demand for detached houses. With the highest level of housing affordability since 2002, it was no real surprise to see first time buyers targeting detached homes. The jump in the proportion of houses being sold during 2009 can also be partly attributed to the longer settlement time large apartment developments involve. There may be some revisions to the proportion of sales as these larger projects settle.
Based on RP Data’s modeled volumes for the month of August 2010, there were 36,305 dwelling sales during the month and of these, 70% were house sales and 30% were units. A decade ago, houses accounted for 73% of all sales with the remaining 27% unit sales. The results highlight that whilst the unit market continues to emerge, the improving levels of affordability in recent times has seen purchasers revert to detached homes rather than higher density forms of housing. The proportion of house sales within the combined capital cities is, as you would expect, lower than that across the nation. As at August of this year, house sales across the combined capitals accounted for 65% of sales compared to the 70% nationally. Across the capital cities there has been a significantly greater increase in the proportion of house sales coming out of the GFC as many buyers utilised the First Home Owner’s Grant Boost and/or low interest rates as a way of purchasing a house. Plus, property values had fallen during 2008 also contributing to increased affordability.
In the two most populous markets, Sydney and Melbourne, there are a significantly greater proportion of unit sales. During August, unit sales in Sydney accounted for 43% of all dwelling sales and in Melbourne, the figure was recorded at 37%.
During the last decade, Melbourne has recorded the greatest increase in the proportion of unit sales, up by 6.1% (despite the increasing demand for houses in recent years). With the introduction of significant amounts of new unit development in areas such as Docklands and Southbank it is probably no surprise to see that units have increased in prominence over the period.
Another factor that is driving more unit sales is changing lifestyle preference. Empty nesters are downsizing to apartments for the lower levels of maintenance involved in apartment living and also what are often better locations, being closer to work and social precincts.
Looking towards the future, we expect that medium and high density living will continue to become increasingly prominent. Australia’s most mature residential market, Sydney, is already showing close to 50% of all home sales as units. The drivers are going to be affordability, increasing densification of the inner city and major transport spines, and changing lifestyle preferences. Over the last five years we have already started to see units outperforming houses in terms of capital growth (7.3% annual gain for units vs 7.0% for houses). With demand likely remain high in the unit, apartment and town home markets these higher capital gains may continue.
Source:- RP Data & Property Pulse
To see the latest offers and specials on the Melbourne property market go to:-
http://www.sovereignpropertymelbourne.com.au
Property Investing
Property Investing
Whether you are first home buyer, just looking at property investing or are a seasoned property investor, Sovereign Property Melbourne has the answers for you. http://www.sovereignpropertymelbourne.com.au/
We take the worry and headaches out of property investing by doing all the legwork for you. We put you in front of licenced financial planners, licenced mortgage brokers and experienced well trained real estate agents to give you all the advise, planning and strategies of wise property inveting to ensure you own your home much faster than traditional bank methods. We will teach you how to aquire multiple investment properties in the shortest time period possible and how to maximize the use of other peoples money to help you do it.
Using all the resources at our disposal we do the research, find the hotspots and take the time to explain exactly why this area, this type of loan facility and offer a coprehensive property investment plan to all of our customers.
When it comes to property investing made easy, we make it as easy and painless a procedure as possible, with turnkey house & land packages, turnkey townhouses and apartments from off the plan to completed, it easy to see why so many people have chosen the simple path to property investing.
http://www.sovereignpropertymelbourne.com.au/
Property Investing
Whether you are first home buyer, just looking at property investing or are a seasoned property investor, Sovereign Property Melbourne has the answers for you. http://www.sovereignpropertymelbourne.com.au/
We take the worry and headaches out of property investing by doing all the legwork for you. We put you in front of licenced financial planners, licenced mortgage brokers and experienced well trained real estate agents to give you all the advise, planning and strategies of wise property inveting to ensure you own your home much faster than traditional bank methods. We will teach you how to aquire multiple investment properties in the shortest time period possible and how to maximize the use of other peoples money to help you do it.
Using all the resources at our disposal we do the research, find the hotspots and take the time to explain exactly why this area, this type of loan facility and offer a coprehensive property investment plan to all of our customers.
When it comes to property investing made easy, we make it as easy and painless a procedure as possible, with turnkey house & land packages, turnkey townhouses and apartments from off the plan to completed, it easy to see why so many people have chosen the simple path to property investing.
http://www.sovereignpropertymelbourne.com.au/
Property Investing
Property Investment
Welcome to Sovereign Property Melbourne's property investment blog. Here you will be kept up to date on property investment news and the property investment hotspots in and around Melbourne.
Whether you are a seasoned investor or first time investor looking for the right property investment, gaining all the current market information and conditions is vitally important to your personal property investment portfolio. http://www.sovereignpropertymelbourne.com.au/
Whether you are a seasoned investor or first time investor looking for the right property investment, gaining all the current market information and conditions is vitally important to your personal property investment portfolio. http://www.sovereignpropertymelbourne.com.au/
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