Property News Australia.com.au

It’s a case of supersize me, and it’s not about food.

New research shows that Australia has overtaken the United States to have the largest homes in the world.

While average US home sizes have shrunk for the first time in a decade due to global recession, the average floor space of new Australian homes hit a record high of 214.6 square metres in 2008/09 financial year, according to official data.

The Australian Bureau of Statistics (ABS) data commissioned by CommSec also showed the average floor area of new free-standing houses was also at a record high - 245.3sqm.

By contrast, the average size of new homes started in the US in the September quarter stood at 201.5sqm.

CommSec chief economist Craig James said the latest figures helped to explain how Australians were dealing with the shortage of housing - by making greater use of bigger homes.

“It is commonly believed that there is a housing shortage in Australia, we aren’t building enough homes to accommodate our growing population,” Mr James said in a statement.

“In fact, industry bodies believe that we are under-building by 50,000 homes a year. But the figures on home size and housing utilisation raise doubts about the extent of under-building in Australia.”

ABS data showed that the average size of Australian households rose in the year to June 2008, from 2.51 people per home to 2.56 people.

“At face value, the increase in household size … may not seem remarkable, but it appears to be the first increase in at least a century and perhaps the first since European settlement,” Mr James said.

“It makes sense. Population is rising, as is the cost of housing and the cost of moving house, so we are making greater use of what we’ve got.

“Children are living at home longer with parents and more people are opting for shared accommodation.”

The research showed homes in other parts of the world are far smaller.

Data from Europe shows that Denmark has the biggest homes (houses and flats) with an average floor area of 137 sqm, followed by Greece (126 sqm), and the Netherlands (115.5 sqm).

Homes in the UK are the smallest in Europe, at 76 sqm on average.

Source : http://au.news.yahoo.com/a/-/newshome/6529133

Up - better - brighter… at least in the Australian Property Front.  Spring has sprung, will Summer heat things up?

Here are some high points gleaned from various sources -

“Investors are coming back to the Australia and New Zealand Property market” according to Harcourts International’s Managing Director, Mike Green.

“Home Prices Rose in the September quarter” according to Australian Property Monitors

“Rents Are Rising across the country” says Chris Zappone of The Age

“Residential Property prices in Australia are at a six year high” Property Wire report to its readers.

Source - Property Wire

The Australian property market is showing signs of recovery, according to the latest figures for the September quarter.

Nationally property prices declined by just 0.5%, according to the RP Data-Rismark National Property Values Indices. And in the nine months to September the 30, Australian property values have been largely resilient, tapering only 1.4%.

RP Data-Rismark International managing director Christopher Joye said the disconnect between housing demand and supply will positively impact house prices in the future.

‘Looking ahead we need to produce 190,000 homes annually but the supply-side is only currently delivering about 145,000 homes per annum,’ he said.

‘Some economists are forecasting that the supply shortage will grow to 200,000 properties by 2010. This means that Australian house prices will almost certainly rise over the medium to long-term,’ he added.

Mr Joye said if valuations increase in line with nominal gross domestic product (GDP), property values will be around 80 to 90% higher in a decade and housing affordability is also set to improve significantly in the near-term.

Interest rate cuts combined with the Government’s $10.4 billion worth of fiscal stimulus is expected see household disposable incomes after interest costs rise robustly over the next year.

The RP Data’s subscriber base, which includes around 70% of real estate agencies across the country, is already reporting an increase in enquiries, particularly in the lower-priced segments of the market.

City by city, Adelaide remains the strongest performer with property values up 3% this year and 7.8% over the 12 months to September 30. It is regarded as the most affordable mainland capital city.

Darwin continues to record the highest gross rental yields of any capital city, with houses returning an average of 6.42% and units returning 6.56%.

Perth remains the worst performer with poor dwelling values and rental yields, but the city’s units are still the most expensive of any capital city while Sydney is the only market to have recorded an increase in dwelling values during the September quarter and rental yields are also strong.

In Brisbane and Canberra dwelling values are lower, while in Melbourne residential markets have remained virtually flat.

The Top 10 Mistakes to Avoid When Buying Property

Buying a good home or investment property can be a fantastic financial asset for you and your family. Patrick Bright shows you how you can avoid making costly mistakes when buying your property

1. Lack of research
Before you can decide whether you’re getting a good deal or not you need to do some detailed research to work out the market value of the property. The process is called comparative market analysis and it’s extremely powerful when you’re trying to negotiate the best possible price.

You need to select a maximum of three suburbs and see as many properties as you can in preferably a 6-12 week time frame as 2-3 months is a long time in real estate and prices can move quite substantially. As a general rule I would advise you to inspect at least one hundred properties within that time frame and document all relevant features.

If you’re serious about getting a good deal and saving yourself thousands if not tens of thousands of dollars then you will be prepared to invest the time. If not, then the selling agent will certainly have the upper hand when negotiating the price with you!

2. Thinking Selling Agents are there to help you, the ‘buyer’
To put it bluntly, the Selling Agents are NOT there to help you get a good deal. They are working for the seller, NOT the buyer. Selling Agents will tell you what they want you to know about the property and they can be very persuasive especially when they’re using negotiation and influencing tactics. If you want to really know important details about the property, then you need to ask the right questions and do your own research.

Some good questions to ask when doing your research are:
* How did you come to the asking price?
* Are there any recent sales in the street or surrounding streets that are comparable to this home? If yes, make sure the selling agent can show you the evidence of this.
* What are the offers so far on the property?
* How long has it been on the market?

These questions will assist you in gathering important information when trying to establish a property’s market value and the vendor’s likely flexibility on price.

3. Searching without finance approval
Another common mistake is searching without finance approval. The last thing you want to do is to watch the home of your dreams slip through your fingers while someone else is exchanging contracts, especially while you’re trying to arrange an interview with a mortgage broker or your local bank. It can be a very emotionally draining experience. Don’t waste your time and put yourself on an emotional roller coaster ride. Make sure you know how much you can borrow before you start your search.

4. Overstretching your finances
We’re currently seeing the heartache of thousands of people across Australia who have financially committed well beyond their means. Don’t repeat their mistakes.

I have two rules that if you follow you shouldn’t get yourself into trouble.
1. Despite what the bank says, make sure your repayments are no more than 25% of your total household net income.
2. Don’t borrow more than 80% of the property’s value. That way, you avoid paying mortgage insurance and you actually have some equity in your property in case there is a down turn in the market.

These days, you can obtain loans for 90, 95 or even 100% of the purchase price. Why would you want to put this sort of financial pressure on you and your family? I believe that if you don’t have a 20% deposit, then you can’t afford to buy that property. Remember, it is much better to be able to sleep well at night in a smaller house, than to be at the mercy of a bank and constantly worried about having your home sold from under you.

5. Ignoring inspections
Termite infestations, dodgy wiring, sub-standard renovations… there are many potential problems with any home that you’re not likely to pick up yourself. Most solicitors I speak with tell me that only about 30 - 40% of their clients obtain all the appropriate inspections.

For your peace of mind just get the inspections done. I have seen first hand many homes that are riddled with termites. It’s simply not worth the risk!

6. Not factoring in running costs
Unfortunately the price you pay for your home or investment property is only the first in a series of home ownership expenses. Before you rush off and make an offer on a property you should determine whether you can afford the running costs on top of the mortgage such as council rates, water rates, land tax etc.

If you’re buying an apartment, find out how much the strata fees are and how much money is in the sinking fund. Strata fees typically range from $500 to $2,500 a quarter, sometimes more.

7. Being influenced by rental guarantees
Personally I would steer well clear of anything that comes with a rental guarantee. In my opinion a good property doesn’t need one. From my experience often properties marketed with rental guarantees won’t achieve the rental figure that is being guaranteed in today’s market. In addition, the inflated rental figure pushes the return on investment up against the yield (the ROI / Yield) and allows the seller to put a higher price on the property and still maintaining a yield of say 5%. A rental guarantee is a form of insurance and you always pay a premium for insurance. As the saying goes - anything that’s too good to be true probably is!

8. Buying property sight unseen
Buying property sight unseen is a recipe for disaster. Sure you can do virtual tours on the web etc but how many times have you read the ad, looked at the photos, the virtual tour and then upon physical inspection the property looks nothing like your expectations. It may look out over a car park, into a brick wall, face a busy road etc. This goes for buying off the plan as well.

Unless you do a site inspection yourself or have an exclusive Buyer’s Agent acting for you, who knows exactly what you want, then I would suggest you are being foolish. You’re parting with hundreds of thousands of dollars - surely you can take the time to inspect it.

9. Limiting your selection choice
A lot of people come to me for help with buying a property but they don’t want to go through the auction experience. They perceive it as too stressful, emotional and out of their control. The problem with this perception is that they are significantly reducing their property selection pool and automatically cutting out potentially good buys because they are not comfortable with the method of sale.

My advice is to again do your research. Go to a number of auctions and see how it works. Do your research so that you know the value of the property. Set yourself an auction plan including a maximum bid price and stick to it.

Be honest with yourself. If you know you are likely to get carried away in the auction hype, then hire yourself an expert to bid for you. Auctions are growing in popularity as the sales method of choice nationally. You can no longer ignore them if you want access to the entire market.

10. Listening to too many people

Everyone’s an expert when it comes to real estate. Family, friends, work colleagues will all offer you advice - some with strings attached and some without. The only way that you will know whether you have secured a good property at a good price is if you put in the necessary hours and do the research. If you don’t have time, then I recommend that you find a Buyer’s Agent to do the work for you, a good one will save you thousands.

Article courtesy of
Your Mortgage Magazine

With housing affordability improving across Australia, a Commonwealth Bank report has found it’s cheaper to buy then rent in 94 suburbs around the nation.

But property experts are warning that it’s the quick or the left-behind at this stage of the cycle, as first home buyers start pushing up the prices of cheaper suburbs and make prices rise.

The Commonwealth Bank report found that the number of suburbs in which it has become cheaper to service a monthly mortgage payment than a rental bill had increased from 74 to 94 in the six months to July, a rise of 27 per cent.

“The case to buy is looking stronger,” the report says. “Property values fell through most of 2008 however, the market has recovered virtually all those losses through the first five months of 2009, interest rats have fallen to a 49-year low and weekly rents have recorded several years of dramatic growth.”

The affordability figures improve further after factoring in the $14,000 first home buyer’s grant, with the number of suburbs where it was cheaper to buy than rent more than doubling to 203.

The report based its methodology on borrowing 85 per cent of a home’s median value at the current variable interest rate of 5.74 per cent per annum over a 30-year term. The buying cost was compared with monthly rental payments based on the median advertised rental for the suburb.

“Within the metro areas, almost without exception, it is units rather than houses that are more affordable to buy than rent,” the Commonwealth report says.

On a state-by-state basis, the report finds that the majority of suburbs identified as being cheaper to buy in than rent were located in Queensland, accounting for 26 of the 94 suburbs. NSW had the second-highest number of suburbs where it was more affordable to buy than rent.

Source

onthehouse.yahoo.com.au

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Small Farm Consulting is hosting a 2 day workshop on 1 & 2 December 2007 in Wollongong.  The Pre-Purchase Education Workshop is designed for people contemplating buying a rural property.
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Housing affordability in Australia has emerged as a major election issue, after the First Home Buyer Affordability Index, compiled by the Housing Industry Association and the Commonwealth Bank, fell to its lowest level.
Prime Minister Howard says he understands there is a problem with housing affordability.

“You won’t solve it by releasing for housing the high court or the parliament, which are two buildings included in the leader of the opposition’s six billion dollars,” he said.

Kevin Rudd announced Labor’s polices which includes freeing up surplus commonwealth land and a $500 million fund to cut the cost of infrastructure on new housing developments.

Mr Howard says that prices have risen due to low interest rates allowing people to borrow more and buy more expensive homes.
The Housing Institute of Australia-Commonwealth Bank quarterly review found that housing affordability had fallen to a record low after interest rates hit their highest level in nearly a decade after nine successive rises.

The findings come amid mounting speculation that rates will rise again next month if inflation for the September quarter is high.

But the question needs to be asked what will happen to the housing market if America’s Federal Reserve System is abolished?

 This is the policy of a Congressman Ron Paul, a top-tier Republican GOP American Presidential candidate, who opposes the Federal Reserve, and supports a dollar backed by real money gold and silver, as the U.S Constitution mandates, instead of prosperity-wrecking fiat money.

It seems the monetary policy issue is being overlooked in the housing afford ability debate.
Releasing more land effectively dilutes the value of the housing market just like printing fiat money dilutes the value of the dollar.