Real Estate Institute of Queensland chief executive Anton Kardash said the rental property market in the past 12 months had been the tightest since 2007, with agents receiving an average of five applications per rental listing.

"Higher rents are, of course, driven by more demand than supply," Mr Kardash said.

"However, the lower interest-rate environment means rent increases in Brisbane have not been out of step with the current economic conditions."

He said the start of each year was traditionally the busiest time for the Brisbane rental market due to tertiary enrolments and job transfers.

Mr Kardash said the high demand could also be attributed to potential first-home buyers and investors sticking to the sidelines.

Statewide co-ordinator at the Tenants’ Union of Queensland Penny Carr agreed but also said that input costs rarely factored into rent prices.

"The reason people are finding it hard to rent is because the market is not expanding at a fast enough rate to accommodate the growing numbers of people looking," she said.

"We’re seeing a lot of people sharing when they probably would rather not because of rent prices."

Residential Tenancies Authority median rent data shows prices of units, houses and townhouses have increased by at least $90 in the past five years.

Three-bedroom units have jumped $160 to $480 a week from December 2006 to December 2011 and four-bedroom houses $125 to $475 a week in the same period. Property categories where rent has risen least include one-bedroom units with a $90 increase to $300 a week, and three-bedroom houses and two-bedroom townhouses, where there has been a $95 increase to $395 and $360 a week, respectively.

The RTA’s 2010 annual report found that more than 30 per cent of Queensland properties were rented, ranking it second in the country behind the Northern Territory.

Almost half of those properties are in Brisbane.

Houses in inner Brisbane and units in the remainder of the city also had the lowest vacancy rates last year, according to data published by the Queensland Government’s Office of Economic and Statistical Research.

Both were down 0.3 per cent to 2.7 per cent and 3 per cent, respectively.

"However, activity from both these types of buyers is beginning to strengthen, which will increase the supply of rental properties to the market," Mr Kardash said.

www.couriermail.com.au

By Oliver Stier

Each year starts off with typically none (or very few) properties being auctioned. This is because most real estate agents like to run four-week auction marketing campaigns in the lead-up to the auction itself. However, by mid to late February, there will be a flurry of auctions as sellers and agents try to get off the mark quickly for the year. 

Auctions are nerve-racking for sellers and prospective buyers alike. In anticipation of the auction season going into full swing later this month, here are some useful tips for  buyers: 

1. Make sure that you have thoroughly reviewed the contract for sale and understand your legal obligations should you be the winner of the auction. Any amendments you wish to have made to the contract (such as the amount of deposit, settlement period, inclusions, etc.) need to be agreed between both parties’ legal representatives prior to the commencement of the auction. These changes need not apply other bidders, so various bidders may actually be bidding on differing terms. 
2. Make sure that your financing is in order and that you are comfortable that your maximum purchase price is in line with the market. The auction sale is unconditional and you will be contractually obligated to come up with the full purchase price even if your lender withdraws financing or comes in with a valuation lower than the auction sale price. 
3. Fully understand the rules of auction. Do you know the difference between a reserve and a vendor bid? Do you know who, when and how the reserve is decided? Are you aware that a reserve can be changed at any point in time during the course of the auction so long as instructions are given to the auctioneer in writing (or even in some cases verbally)? These are just some of the very basic auction procedures that many buyers are not aware of. 
4. This may sound basic, but have a personal cheque book ready if you intend to bid. If you win an auction, you will be expected to pay the deposit immediately. Many people these days don’t have cheque books and it can be quite time consuming and costly to arrange for a bank cheque each time you want to bid at an auction. In addition, you will not know the amount required for the deposit (usually 10% of sales price) prior to the conclusion of the auction, and most banks will be closed evening and Saturdays (when most auctions are held). 
5. Having watched just a couple of auctions is not sufficient to become an expert on the auction process. As no two auctions (or auctioneers/selling agents) are ever alike, you need to really watch at least 15 to 20 auctions in your target area in order to be fully exposed to the workings of the different “actors” and possible scenarios that can unfold during an auction. 
6. If you have observed many different auctions, you will become familiar with the style of the various auctioneers. This will enable you to better gauge how they like to control an auction and how serious they are when they say “first call” or “second call”, for example. 
7. Although it may sound obvious, it is vital that every prospective buyer pre-determines the maximum price they would be willing to pay for the property. This price should be set the night before the auction and should be entirely independent of the likely level of competition on auction day or what other buyers may possibly bid. These are things which you have no control over and should not influence the price you are prepared to pay.  The maximum price should only be linked to the market or appraised value of the property. 
8. The maximum price you set should be the price that you would not regret, even if you were to lose the property for just $1,000, for example. This is your “walk away” price. 
9. Once you have set your maximum price, don’t hesitate to bid. Many bidders try to play coy and shake their heads vigorously when they should actually be bidding confidently with each bid. If there are several other registered bidders you are likely to get the best outcome through the transparency of the auction bidding process, rather than behind closed doors and having to rely on the selling agent’s representations about the competition in the hours or days following auction. Note, however, that if there are few genuine parties registered, it may still be in your interest to let the auction fail to lower the vendor’s expectations. 
10. Don’t go into an auction by treating the auctioneer as an adversary. He or she represents the seller and it is their job to extract the maximum bids. By all means stand your ground, but there is never any need to be rude during an auction. 
11. Have an action plan in mind should the property be passed in. Many properties sell shortly after the auction behind closed doors, and this process is far less transparent. 
12. Don’t be afraid of auctions. It is not as daunting as it seems if you understand how it can work in your favour as well. If the pace is going too fast for you, you can always try to slow it down so that it does not overwhelm you. While auctions always seem like it favours the vendors, this is not always the case. An auction can also be a good way to send a signal to the vendor that their price is unrealistic relative to the level of demand or to ensure transparency amongst the prospective purchasers.

As always, if in doubt, you can always seek expert advice and guidance. Experienced buyers’ agents attend and bid at auctions on a weekly basis and their knowledge and experience is far superior to the average bidder. They understand the rules of the game and how to best maximise the likely outcome of the auction on your behalf, no matter the scenario.

Oliver Stier is the director of OH Property Group, a Sydney-based buyers agency. In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation. You can follow Oliver on Twitter at www.twitter.com/ohproperty

By Michael Matusik
Wednesday, 15 February 2012

Yes, there is some good news out there.  It isn’t making the headlines, but it is out there nevertheless.

Here are seven positive points to help you make it through your real estate day.

1. The vacancy rate is tight.  In most capitals and major regional markets it remains under 3% and is much lower in Brisbane, Sydney, Perth, Canberra and central Queensland.  Rents growth is starting to accelerate, and we know of numerous examples where more than 30 rental submissions are being received for vacant rental dwellings across Brisbane.
2. Sales have improved since mid-year, and those vendors who meet the market are selling – and now, often quickly.  It is still a buyer’s market – with the high supply of stock for resale – ensuring that you need to realistically price and market your property well in order to make a sale.  Investors are starting to take their properties off the market and are renting them out again, as they are attracting good rental yields.
3. Last year’s interest rate drop is having some impact – with the number of owner-occupier loans up 2% in December.  Housing investment loans rose 7.5% in December, after a 2.7% rise in November.  First-home buying activity is currently at a two-year high. Generic prices might be still falling, but there are signs that the housing sector is starting to turn the corner.  The latest housing finance data provides a degree of encouragement.  Home loans have now increased for nine consecutive months, and the investor market is doing the bulk of the heavy lifting.   We have been saying for some time that it is the investors who will get the housing market back on its feet.
4. Hamilton Harbour – one of the first major Queensland apartment projects to face settlement since the GFC – is settling well.  No, that isn’t strong enough – it is going great guns!  I nearly said gangbusters, but that might be taking it a bit too far. At the time of writing, 89% of the 435 apartments sold since early 2009 have settled, with an overall 95% success rate likely by the end of this month.  We originally wrote about Hamilton Harbour in July last year, stating that it should be on the industry’s “must-watch” list; it was a litmus test for the Brisbane market – a beachhead, if you will.  Sadly, few seem to be watching, and the media are not writing about it. This is big news for Brisbane-town. Other, lesser projects (if you ask me), also appear to be settling well. The average price of a settled apartment in Hamilton Harbour is $526,000, with just over $200 million worth of property settled so far.  Over 220 apartments have been leased in both the towers since late November last year.  The average gross rental yield – based on evidence to date and being rented out for 50 weeks per annum – is 5.3% across the investment stock.  The one-bedroom and one-bedroom with study units are achieving the higher yields.
5. The Melbourne Institute-Westpac confidence survey shows that late last year, price pessimists in Brisbane dominated (-10%) versus this month’s positive result of 27% (percentage of those expecting a rise minus percentage expecting a fall) – a 180-degree turn in just three months.  The Good Time to Buy a Dwelling Index is up in Queensland and also in Western Australia.  Queensland’s pending state and local elections will hopefully lift confidence higher.
6. While we don’t need to build as many new homes as we once did, outside of Melbourne, Adelaide, Canberra, Cairns and the Gold Coast, the new housing markets aren’t oversupplied. There is a lot of nonsense written about supply – published often by young’uns who can count (well, sometimes just) but have little understanding about how the new housing market actually works.  At present, for example, there is a lot of commentary (and press) about a pending oversupply of new apartments across inner Brisbane.  Now, whilst there is lots of new mooted apartment development – approved in council – the fact remains that not enough new product is actually being built. Over the last five years for example, 13,000 new dwellings were required to accommodate the population growth, yet – based on the official statistics – just 8,017 new dwellings were approved.  Last year, just 1,902 new dwellings were approved, against an annual average demand for 2,650 new housing starts.  At present there is a serious short-fall.
7. To finish, everything cycles, including the property market. The Brisbane market, for mine, is at six o’clock on the property clock or at the bottom of its cycle.  Many investors try to pick the bottom of the market.

Yet, the direction in which property values travel is only partially dependent on the broader market conditions.  Recent studies show that about 40% of growth (or otherwise) can be explained by trends in the overall market.  The all-important 60% comes down to more individual factors such as location, the style of housing, its design and inclusions, and the income/demographics of the area.

However, a 40% swing in your favour shouldn’t be sneezed at, especially after what the Brisbane market has been through of late.

Michael Matusik is the director of independent property advisory Matusik Property Insights. Matusik has helped over 500 new residential developments come to fruition and writes the weekly  Matusik’s Missive.

Queesland property investors are waking from their slumber and making renewed moves to enter the property market, according to the state’s real estate body.

With ABS housing finance figures for November showing a 16% increase in the number of investors buying in Queensland over the month, the REIQ has claimed that attractive property prices, strong demand from tenants and improving confidence in the real estate sector are encouraging more investors to enter the property market.

“After being in hibernation for most of 2011, investors are starting to return to the market, with REIQ accredited agencies also reporting a more buoyant mood since about November,” said REIQ CEO Anton Kardash.

“These tentative signs of recovery, however, can only be sustained if confidence levels continue to improve. The key to this is having an interest rate regime that reflects and supports the economic reality of the majority of businesses in Australia.”      

While the interest rate situation may be a cause for concern, confidence in the Brisbane market will be buoyed by its steady vacancy rate figures. According to the latest REIQ Residential Rental Survey, Brisbane City’s vacancy rate held firm at 2.3% in December.

The city’s inner ring (0-5km from the CBD) eased slightly, with its vacancy rate rising from 1.4% to 1.9%, while the outer ring’s vacancy rate dropped from 2.8% to 2.6%.

Noting that a vacancy rate of 3% is generally considered to be the balance point between supply and demand, the REIQ reported that agents are recording an average vacancy period of around one to two weeks – with up to five applicants competing for each vacant property.

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New rules allowing Self Managed Super Funds to borrow has revolutionised the investment opportunities available to Super Funds, particularly in regards to Real Estate investment opportunities. But the best news is that the cost of setting the necessary structures up is now much cheaper and user friendly!

Until recently Self Managed Superannuation Funds (SMSFs) have not been allowed to borrow money to purchase assets. This has severely restricted the Funds ability to grow its asset base. Of course SMSFs have always been able to invest in property, but with property values as they are, this option was limited due to insufficient money in the Fund and the inability to borrow.

Outside of Super, Australians have typically used property ownership as a key plank in their wealth accumulation plans. Generally, this has involved borrowing money and in most cases undertaking what is referred to as “negative gearing”.

Now, those same opportunities are available to SMSFs.

WHY USE SUPERANNUATION?

Superannuation was created as a vehicle to accumulate wealth to provide for the retirement of members. The government actively encourages this form of retirement saving by providing significant tax concessions for superannuation. Indeed, Super is one of the last remaining tax minimisation strategies available to Australian taxpayers. Receiving a tax deduction for contributing to Super and then having the earnings on those contributions taxed at a concessional rate has been a boon for those able to maximise their contributions.

However, the rules governing the activities of a superannuation fund are quite restrictive, especially regarding what you can invest in and the ability of a fund to borrow to buy assets. The purpose of these governing rules was to ensure that superannuation was used to save for retirement. Any activities that were viewed as putting the assets of the fund at risk were discouraged, and that included borrowing.

In 2007 the government decided to clarify the rules and amended the law to allow superannuation funds to borrow within strict guidelines. The reality of these changes however was much broader than initially expected, resulting in the opportunities available today.

NEWSFLASH

The news gets better and better. A recent draft ruling by the Australian Tax Office, effectively allows a SMSF to not only borrow, but also to invest in “off the plan” property purchases.

BUT WAIT…….THERE’S MORE!

The tax advantages of owning assets in superannuation can be unparalleled. In addition to being able to obtain similar negative gearing benefits to owning the property in your own name any earnings or profit that the superannuation fund makes will only be taxed at 15%.

With proper planning and in the right circumstances, it is possible to pay no tax on any super fund earnings including no capital gains tax upon the sale of the property. In the context of investment properties it is difficult to find this tax concession in any other tax structure.

Whilst the concept an SMSF borrowing to invest in property may sound complex, once it is up and running they are relatively straight forward.

If you require any further information on Self Managed Superannuation Funds or these borrowing arrangements please contact Stephen Hodgkinson of Gold Group Consulting on 07 5532 2855 or stephen.hodgkinson@gold-group.com.au

Disclaimer

This article is for use of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific professional advice. No responsibility for loss occasioned to any persons or organisations acting on or refraining from action as a result of any information or material in this article will be accepted. Please ensure you contact us to discuss your particular circumstances and how the information provided applies to your situation

We are proud to announce we won the REIQ Awards for Excellence 2012 – Community Service Award. We are so honoured to receive this award and we would like to thank all of our clients for their continued support.

At Calibre Real Estate Red Hill, we help people to buy and sell properties, but that’s not all. We also nurture community growth and development by generously ‘giving back’ to the communities in which we do business.

Our community service activities have not only benefited the groups we’ve donated to, they have served to raise our profile in our local community. The activities have also provided people with the opportunity to meet our team and quickly learn we’re far from the stereotyped real estate agent people expect us to be – Calibre really does care.

A billion dollar Abu Dhabi development designed by Queensland architects DBI Design has trumped major projects in cities like Paris, Hong Kong and London to be named ‘World’s Leading New Hotel’ in the World Travel Awards. The Jumeirah at Etihad Towers was chosen ahead of Mandarin Oriental Paris, The Ritz Carlton Hong Kong, The Park Hyderabad, Hotel Missoni Edinburgh and W Hotel London to take out the coveted title at the awards, held in Qatar recently.

DBI Design is behind some of Brisbane’s most iconic buildings and some of the most cutting-edge new ones, including FKP’s $210 million The Milton, which is set to be the city’s first major integrated Transit Oriented Development (TOD). DBI Design managing director Warren Coyle said the award was recognition of the skill that existed in Queensland.

“The development’s design went up against some of the world’s best and won. With the vast majority of our architectural design and engineering work done right here in Brisbane, it really does show the talent we have in Queensland,” says Coyle.

Mr Coyle said the company had been awarded the commission to design, engineer and fit-out the five tower development, worth US$1 billion, after an international competition. A representative for one of the major UAE developers had purchased an apartment in Ultra in Broadbeach, a development that we designed, and was so impressed with the project that he invited us to take part in the competition.

A representative for one of the major UAE developers had purchased an apartment in Ultra in Broadbeach, a development the company designed, and was so impressed with the project that he invited DBI Design to take part in the competition.

“We went up against six major firms, including some of the world’s largest architectural firms from, USA, United Kingdom and Singapore,” says Coyle.

Construction started in 2006 and the five towers, which included the 400 room Jumeirah hotel and 200 serviced apartments, was finished in November 2011. The three residential buildings, housing roughly 800 apartments, a commercial office tower, and convention centre and retail space were also completed in November 2011.

Source – the homepage

General investors and superannuation contributors did not do well over 2011.

The Australian share market lost about 15% of its value, and SuperRatings reports that even conservative “balanced” super funds went backwards by 1.9%.

House values in Australia’s capital cities dropped by around 3% to 4% during 2011.

So what should people be investing in this year?

I suggest a serious look at investing in property and renting it out to tenants.

There are several reasons for this outlook, including soft house prices, strong rental demand and the prospect of solid total returns.

You ideally want to buy the property at a time when real estate is in the downturn phase of its cycle, you want to rent it out when rental demand is high, and these two factors should come together to produce a total return that not only beats inflation but also compares favourably with alternative investments.

One of the first rules of buying property is that you must not overpay. This is important for two reasons: firstly, you don’t want your income from the property being overshadowed by high mortgage repayments; and secondly, capital growth in the property is as important as the monthly cashflow from rental income, and you will enjoy greater capital gains when you buy the property for a lower price.

With property prices having been flat or going backwards for two years, it seems like a good time to buy.

Property can also be looked at in terms of affordability, and affordability is attractive for investors right now. Disposable household incomes grew about 6% in the year to September 2011 while dwelling values declined by a total of 3.3% since May 2010, according to RP Data-Rismark research.

Rismark says disposable incomes per household have risen about 15% further than capital city dwelling values since the end of 2003.

When many people buy investment properties, they simply want to buy the cheapest place they can find and rent it for the highest rent they can charge. I advise potential landlords to hold out for a property that is in a sought-after area, close to shops, transport and schools.

There is no point having a rental property that you can afford when no one wants to pay you to live in it.

Then you have to look at rental demand because when you buy an investment property, you are going into business as a landlord.

On this score, there’s some good news for property investors. Weekly rents across the capital cities rose 1% over the December 2011 quarter and are 6.3% higher than at the same time last year.

This suggests rental demand is exceeding supply, which is good for landlords. Anecdotally, you hear stories of people queuing to see the good properties and offering to pay more rent than advertised to secure the property.

While this is a good result financially, it’s also a benefit in terms of tenant management. One of the biggest headaches for a landlord is a bad tenant, but when demand is strong you don’t have to take the first applicant. You can pick the tenant who is best suited to your property and who has the best record.

If you feel you can buy cheaply in the current property market and you can take advantage of the strong rental demand, then you have to think about your total return.

The total gross return enjoyed by property investors around Australia has averaged 1% per cent over 2011, much better than the 15% losses experienced in Aussie shares.

The average capital city apartment is now offering a gross rental return of 5.1%.

This is looking like a strong scenario for investors wanting to buy property, and if the current financial market pricing for further interest rate cuts comes to pass, the outlook for housing in 2012 looks positive for not only owner-occupiers, but landlords too.

As a final hint to first time property investors, I would urge you to take professional advice before entering into this: consult a solicitor or accountant about your tax position as a landlord, use an insurance broker to get the right insurances, and spend some time finding the right property management company.

It’s a good time to be a landlord, but only if you do it properly.

Mark Bouris is executive chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting and tax, and insurance.

This article originally appeared in News Ltd. papers.

THE Reserve Bank today kept the interest rate on hold for February, defying expectations that a third consecutive cut would be ordered.

At its first meeting of 2012, Australia’s central bank board voted in Sydney to keep the official cash rate on hold at 4.25 per cent.

Financial markets had judged there was an 80 per cent prospect of a 25-basis-point cut.

The RBA decision comes despite ongoing volatility in the global economy and international financial markets as a result of the European sovereign debt crisis.

The likelihood is also growing in Australia that the unemployment rate will start to climb from its current rate of 5.2 per cent.

The major Australian banks are all shedding jobs; Macquarie Group revealed today it had cut at least 1000 jobs in the past few months. A subdued retailing sector is also forecast to begin widespread job cutting after a 0.1 per cent fall in retail sales for December 2011.

In a statement, Reserve Bank governor Glenn Stevens said inflation and economic growth was close to average after the two interest rate cuts ordered late last year.

“The board noted that interest rates have declined to be close to their medium term average as a result of the actions at the board’s previous two meetings,” Mr Stevens said.

“With growth expected to be close to trend and inflation close to target the budget judged that the setting of monetary policy was appropriate for the moment. Should demand conditions weaken materially the inflation outlook would provide scope for easier monetary policy. The board will continue to monitor information on economic and financial conditions and adjust the cash rate as necessary to foster sustainable growth.”

The decision prompted the Australian dollar to soar by 1 US cent to $US1.0789, the highest point since August. A cut would have weakened the US dollar given that Australia’s interest rate differential with the rest of the world would have declined.

However, Australian equities turned to negative territory on the RBA news.

The RBA’s move ramps up the pressure on the retail banks which are forecast to change their standard variable rates. It was expected the top four banks would not pass on all the likely cut that was expected to be ordered today. The ANZ could be the first to move with its independent review of lending rates scheduled for Friday.