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Welcome to our April newsletter
A lack of buyers has not stopped home owners from listing their property for sale.
While the number of properties for sale continues to climb in markets across Australia, homebuyer activity remains relatively subdued.
According to housing finance data from the Australian Bureau of Statistics, weakness persists in the housing sector, with the total number of owner occupier housing finance commitments falling by 4.5 per cent in January.
Once refinances are removed from these figures, housing finance volumes were down 6.5 per cent for the month.
In comparison to January 2010, total owner occupier commitments are now 2.2 per cent lower, and when refinances are removed, finance commitments are 10.7 per cent lower.
The poor housing data can be largely attributed to the dramatic drop-off in first home buyer activity as well as increasing property prices.
Property prices have increased by as much as 20 per cent in the last two years.
Despite the sharp increase in average property prices, consumers are still more optimistic than pessimistic.
Westpac and the Melbourne Institute released their monthly Consumer Sentiment Survey results last month to show consumer sentiment had fallen by 2.4 per cent in February to 104.1 points. This is still slightly above the 100 point mark, which represents the balance between consumer optimism and pessimism.
This optimism is reflected in the numbers of property listings. According to RP Data findings, total advertised listings are now 24.2 per cent higher than they were at the same time last year. Within capital cities, listings are 29.1 per cent higher than last year.
Mr Kusher said there is a clear disconnect between the number of properties being brought to the market and activity amongst buyers, with recent data showing sales volumes were 20 per cent below 10-year average levels during 2010.
“The issue is there is not enough active first home buyer or investors in the market currently to allow them to sell their property,” Mr Kusher said.
Give us a call today if you'd like to discuss your selling or buying options or for an insight into our local market.
Sincerely,
The team at TouchPoint
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The power of team work
Successful property investment means surrounding yourself with a team of qualified professionals.
Property investment, like scuba diving, shouldn’t be undertaken alone. While many property buyers might like to think they can do it by themselves – and yes, some can – there are several experts every investor should consider enlisting.
Some may be indispensible; others should at least be given serious thought. But ask any experienced property investor and nine out of ten will tell you the same thing: a team of professional advisers will boost your chances of getting your investment right.
Expert support, however, is still often considered a luxury rather than a necessity. Many property buyers decide to forge ahead with their investment ‘strategy’ alone, seeking little or no guidance along the way.
But between finding a property, securing the right finance and then getting to grips with the broader financial and legal issues that inevitably arise, the process can prove to be extremely complex – hence the wisdom of seeking out some support.
One of the most important professionals you should consider enlisting is a mortgage broker.
From doing the shopping around and wading through the array of mortgage products available, to finding the best loan and lender, to assisting you with completion and approval of your application, a broker is one of the best assets a property buyer can have.
What’s more, their services are usually free of charge, paid for via the commission they receive from your lender.
Another professional you might want to consider is a buyer’s agent, who can help you locate the perfect property as well as negotiate with the vendor and seal the final deal. Agent’s fees vary with the level of service you request and the final property price as well as from agent to agent.
A conveyancer is one professional you really can’t do without on your team. They are experts on the legal aspects of buying and selling property and it is worth seeking their advice before signing any sale contract.
While there are do-it-yourself conveyancing kits available online, hiring a good conveyancer will always be money well spent.
If your purchase is a complicated one, such as a joint venture or a property with right of way issues or easements, you will need specialist legal advice so you’ll have to engage a lawyer rather than a conveyancer.
Lastly, property buyers should consider bringing on board an accountant – especially if you’re buying your second property or planning to build a portfolio. An accountant will be able to handle your tax planning, property ownership structures, asset protection and succession planning.
Getting your team together will cost you at the outset, but in the long-term, you may look back on it as one of the best investments you have ever made.
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Counting the cost of late payments
Just one small forgotten bill can negatively impact your creditworthiness. And when you’re looking to borrow money to finance a property purchase – whether it’s your first home on an investment property – your credit history is of utmost importance.
Phone bills, electricity bills and any other bills should not be scoffed at – they can really influence your ability to secure credit.
Home buyers and investors should make sure they incorporate all bills into their budgets – and more importantly, make sure they are paid on time.
In order to keep on top of your bills, there are several options and different systems will work for different people. The main point is that you really have to have some sort of system in place.
One option is to set up direct debit for your bills, which means you don’t need to worry about remembering when they’re due. If you do decide to go down this route remember to keep tabs on your account balance – you’ll need to ensure you have enough cash in the selected account to cover the bills.
Your other option is to set up a filing system for all of your bills and monitor them at least once a week. Make Monday night, for example, the night you check your bills. And if you need to, set up an alert in your mobile phone, diary, or inbox a couple of days before a bill is due to ensure it gets paid.
While one late bill notice is unlikely to blemish your credit file, unpaid bills will.
Furthermore, missing due dates usually comes at a cost and you may waste your precious cash forking out late fees.
Lastly, don’t forget to keep a copy of all paid bills and receipts in a filing system, so if any queries do come up, as to your payment, you can easily locate the necessary proof.
Remember, in assessing your eligibility for a home loan, mortgage lenders will be looking to determine if you’re a responsible candidate and a strong history of bills paid on time will always add weight to your candidacy.
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Possession before settlement
Many buyers opt to move into a home before settlement formerly takes place, but is it a wise thing to do?
As you inspect a home that could is soon to be yours, you may notice a few things you’d like to change.
Perhaps you detest the shagpile carpet and have plans to rip it up to showcase the beautiful rosewood timber floorboards beneath.
Or maybe the place needs a good lick of paint, and you’d like to get cracking before you ship in your furniture and belongings.
In these instances, it’s not uncommon to ask the seller if you can have possession of the property before settlement, so you can get a head start on giving the place a spruce up.
Possession enables you to legally enter the premises, subject to the terms and conditions of the agreed sale contract.
That purpose may be to carry out renovations, repairs, or even to have a place to stay between signing the contract and settlement – great if you’re temporarily homeless and balking at the idea of renting somewhere new or moving back in with your folks.
Possession can be beneficial for the seller too. By allowing you to enter the premises before settlement, the seller can receive a financial benefit.
But one point needs to be clearly noted, and that is possession is not ownership.
Therefore, complications can arise where the buyer invests too much into a property they do not own, or when something happens to the property while the buyer is in occupation.
In those cases, it is essentially to have buyer protection.
It’s in the contract
The sale contract should contain a section with specially devised, non-standard conditions that set out the terms of the possession or occupancy.
This should be negotiated and drafted carefully – preferably by a lawyer – and include points like who will take possession (if not the buyer themselves but an agent, contractor or representative), for how long, for what purpose, and for what benefit.
Double up on cover
The other thing you should think about is taking out your own insurance over the property. You should do this even if you’re not talking possession before settlement – it’s just a prudent consideration.
And while some may think this is doubling up on insurance – two policies are better than none.
A number of things can go awry between signing and settlement, and you can’t necessarily rely on the seller’s insurance cover.
Talk to your lawyer about why you want to take possession, and what you want to achieve during that time. Also ask your lawyer to explain how things like disputes will be resolved and how money will be adjusted on settlement.
And be mindful that until settlement actually occurs, you are a merely guest on the property – not the owner – and treat the property with respect, keeping it in materially the same condition as on first inspection.
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Wine review
Tinja 2010 Preservative-Free Merlot
One of only a few preservative-free wines on the market, this vibrant young red brings a rich texture with aromas of blood plums, star anise and a spicy full palate. Only for immediate enjoyment, this wine will not mature past 18 months so drink before mid-2011.
RRP: $20.00
www.lowewine.com.au
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Book review
The Future of Money
Oliver Chittenden’s The Future of Money dissects an issue that affects everyone: the global economy. A wise and engaging book that incorporates the views and opinions of industry pundits – from Noble Prize-winning economists to world leaders – it represents an economic ‘page-turner’. One for analysts and more general readers alike.
RRP: $32.99
Author: Oliver Chitenden
Publisher: Random House, March 2011 |
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