Melbourne NRAS Apartments – Cash Flow Positive
We have just completed a cash flow for our brand new off plan Melbourne NRAS property and for those looking for a very positive cash flow it’s a real stunner, borrow 100% and you are still cash flow positive by $3,876.
I just want to preface my cash flow comments with the following:
NRAS is an excellent opportunity to take a property (the lower the price the better it works) from a negative cash flow to a postive cash flow. So, as you will see below, it can take away the holding costs all together. BUT, and here’s the BIG BUT, you are still buying the property for long term capital gain. Many of the NRAS opportunities that we have looked at are “B” grade properties in “B” grade locations. So NRAS or no NRAS you still need to ensure a well priced, quality property in a good location, a property that suits the demographic of the area and a location that is close to schools, shops, employment etc. Our preference is a location close to the CBD, such as our current NRAS project in Melbourne’s Brunswick East. Sorry about the long rant, but at the end of the day it’s still the usual attributes of a property that we always talk about that you require, the NRAS is just a cash flow benefit.
Now, the cash flow: Click Here To Read More
New NRAS apartments in Melbourne
As many of our investors are aware, when the NRAS (National Rental Affordability Scheme) was initially launched we stayed well clear. Whilst the scheme had many investor benefits it also had a number of disadvantages which we felt outweighed the benefits.
The NRAS scheme has now had some positive changes making it far more flexible and in turn making an NRAS property (so long as it is still the right location with a quality product at the right price) an excellent investment opportunity. Why not let the government pay you $100,000 tax free over the next 10 years!
You may like to look at our What Is NRAS page and typical NRAS cash flow for more details.
We are very pleased to announce that we will shortly have a very well located NRAS opportunity in Melbourne’s inner city suburb of Brunswick. It will be off plan with a 2014 completion. Prices will be from the low $300,000’s and with the NRAS incentives these apartments will change from a negative cash flow to a positive cash flow for many investors. Stock will be limited so if it is of interest please contact us for more details.
New Release Apartments
We have just released a brand new Brisbane investment property to our investors. It’s an extremely well located boutique projects in one of Brisbane’s prime inner city suburbs and it’s already creating huge interest. As we have gained such early access, well prior to the public launch the developer will not allow us to list the project on our website.
This is fairly common practice these days as vendors like to get some initial pre-sales away before they release the project publicly that way, Click Here To Read More
Australia’s Mortgage Arrears Decreasing
Another positive indicator for the Australian property market. Global ratings agency, Fitch Ratings just released the latest mortgage arrears figures. They cover the quarter to September 30, 2011. So these results are prior to the impact of the recent RBA rate cuts in November & December.
As we have reported previously our mortgage arrears rates are fairly low anyway, certainly in comparison to countries such as the U.S.A. Fitch reports that the latest September figures show a fall in mortgage arrears (for loans that are more than 30 days past due) by 17 basis points, down to 1.52%.
There are two important aspects of the current figure:
Firstly it’s a very low figure to begin with, 1.52% of all home loans are in arrears by over 30 days.
Secondly, these figures were prior to our two latest rate cuts. These rate cuts will most certainly lead to a further fall in Australia’s mortgage arrears figures over the coming quarters.
I am often reading reports that the Australian property market will fall as we have seen in the U.K. & U.S.A. I think it sells more papers whenever you read a headline like this. But if you look at the fundamentals of our property market it’s in a fairly healthy position at the moment and this is just another indicator to support the current health of our market. Now is a good time to be considering a Sydney Investment Property
Home Loan Approvals support Property Growth
According to the latest figures, the number of home loans rose by 0.7 per cent to 51,981 in October. This was up on what economists had predicted, they had been expecting similar figures to the previous month.
It’s the seventh straight monthly increase in home loan lending.
As the latest figures are for the month of October, these figures do not take in to account the positive effect of the last two interest rate drops that we have now seen in November & December.
These latest figures are yet another indication as to the strength of our property market.
Now is an ideal time to secure an off plan investment property in Sydney, Melbourne or Brisbane. What we are seeing now is the same predictable cycle that we have seen in the past. We are seeing rents increasing, this means that for many it is more economically viable to buy a home than rent a home. With the latest interest rate decreases this trend will be accelerated. As more first home buyers enter the market this then allows those who are looking to upgrade to sell their first homes and move up. Click Here To Read More
If history is any indication, property prices will go up!
I sent an email out to our Priority database last week regarding the strong correlation between interest rates and property prices. As of Tuesday the RBA has dropped the official cash rate by 25 basis points, down to 4.25 percent. This is the second rate drop in as many months and the financial markets are factoring up to a further 6 cuts by the end of the financial year.
Whilst Australia’s big four banks have sat on their hands for the last few days, ANZ has just announced that it will pass on the full cut and this will put further pressure on the other banks to do likewise.
From a property investment point of view the real issue is, what will this mean to property prices and as I mentioned in my email out to our Priority Investors last week, what this is likely to mean is an increase in property prices.
Rates are heading down due largely to uncertainty in other parts of the world. Whilst this is likely to have a very negative effect on our share market, if history is anything to go by, it will in fact be a very positive influence on property prices.
In 2007/2008 we had the credit crunch and shares tumbled. In 2001 we had the Tech wreck and shares took a beating. In 1987 we had the Stock Market Crash and again shares lost value. But as for property, it increased or held it’s value on each of these occasions.
So in the past we have had a direct correlation between interest rates decreasing and property prices increasing. We have also experienced in the past that when there is major global turmoil and the stock market suffers, property prices (in Australia) have held their value and increased.
The Australian economy is in very good shape, the latest economic growth figures actually showed growth slightly higher than expected, our unemployment rate is low, around 5%.
Interest rates have just dropped for the second consecutive month, we expect that, as has been the case in the past, we will likely see good property growth in 2012 and beyond and now is the time to capitalise on the current situation. Check out our latest investment property options
Low Sydney Vacancy Rates to Push Rents and Prices Up
As regards Sydney rental property, if you’re a tenant then the news is not so great, but if you’re a landlord and have a Sydney Investment property then it is happy days for the foreseeable future.
Sydney is in the midst of a rental crises and there is no solution in sight.
Real Estate Institute of NSW (REINSW) president Wayne Stewart said in a statement yesterday:
“Despite increases in some areas, the overall rental vacancy outlook in NSW remains depressed….There will be no relief for tenants until we see interventionist action to encourage private investment as well as slashing planning red tape which is slowing new residential development.”
Data released by the Institute showed October’s rental vacancy rate remained unchanged at 1.4 per cent for the second consecutive month. Click Here To Read More
Interest Rate Cuts lead to Property Price Increases
Looking at property prices over the last 20 years in Australian there is a clear correlation between property prices and interest rates. Every time rates decreased over the last 20 years, property prices, with a slight time lag followed suit by increasing.
Nows the time to break ahead of the pack as all the indications are that rates will continue going down.
When the Reserve Bank met earlier this month they moved to lower rates by 0.25% and most economists are now suggesting that this will be the first of many rate cuts over the next 12 months. In fact the financial market is factoring up to 6 more rate cuts by mid 2012. Just today ING announced reductions in their fixed rates, with a 3 year fixed rate now at 6.19%. Variable rates are mostly around 6.9% to low 7% but are available from as low as 6.39% (UBank). The cut to fixed rates is the banks suggesting that they believe that over the next 3 years rates will be lower than they are now. And if the banks are right (and often they are in these matters) then you can bet that the variable rates will be significantlly lower over the next 3 years than the current 3 year fixed rate that they are offerring. Click Here To Read More
Interest Rates Fall, Property Prices Rise!
Yesterday the Reserve Bank of Australia cut the official cash rate by 0.25% bringing it down from 4.75% to 4.5%. Two of the 4 major banks Westpac and CBA have already passed on the rate cut in full and it is expected the other two majors NAB & ANZ will follow suit.
It was unclear from the RBA’s statement yesterday whether they expect to make further rate cuts but the futures market is pricing in an 80% probability of a further rate cut next month. Whether it comes next month or not, the market has factored in further rate cuts next year.
We are in the process of preparing a full market update which will be out soon. But in a nutshell, if we look at the history of the last 20 years,
every time we have had a rate cut the property market goes up, so now is a great time to consider an investment property
Our other factors are all fairly positive, a relatively healthy economy, relatively low unemployment, relatively low vacancy rates, an overall housing shortage relative to our population growth, housing affordability back to where it was in 2003 (and that was before the current drop in rates) but the most important factor to look at as a property investor in the current market Click Here To Read More
Sydney Off Plan Waterfront Investment Property
We have just released our latest Sydney off plan investment property. It’s located in Little Bay at the site of the old Prince Henry Hospital site. It’s got all of the boxes ticked, a fabulous location by the water with a unique heritage aspect, just a few hundred metres from Little Bay beach and just 20 minutes to the CBD.
We are increasing our focus on Sydney as we feel that Sydney has a lot of upside with pent up demand and a general under supply, putting pressure on both prices and rents and we are not the only ones.
Capital Growth:
As reported in our previous blog, in the just recently released QBE LMI Housing Outlook 2011-2014, prepared by BIS Shrapnel, Managing Director Robert Mellor suggests that Sydney prices will rise by 19% over the next 3 years. The report said house price gains in the nation’s state capitals would be supported by a shortage of residential buildings, a strong Australian economy and stable interest rates.
Rental Growth: Click Here To Read More