Sydney investment property
Australian investment property ownership rates are among the highest in the world, new research has revealed.
The BlackRock Investor Pulse Survey 2013 found 15 per cent of Australians in the survey had some sort of property portfolio, compared with the global average of 12 per cent.
Averages across the European Union and North America were noticeably lower at 10 per cent each, although Hong Kong was higher at 20 per cent.
The survey questioned 17,600 people aged between 25 and 75 across 12 countries, with 1,000 individuals polled in Australia.
"Possibly reflecting Australia's love of property and the tax advantages of negative gearing, the proportion of the Australian higher income cohort with investment properties was 35 per cent (compared to five per cent for less affluent)," the accompanying report read.
"And, not surprisingly, in retirement Australians are more interested than their global counterparts in home improvements and gardening."
Sydney investment property appears to be popular in particular, with SQM Research marketing director Louis Christopher stating that the city's real estate market is booming.
Between 2004 and 2012, the market had underperformed due to it being over-valued in the years previously, he explained.
However, the NSW capital is now experiencing around 12 per cent annualised capital growth, the expert said, which is also likely to accelerate.
The BlackRock figures showed many Australians currently list property-related concerns among their biggest financial considerations.
Just under one-quarter of more affluent households – those that earned more than $160,000 a year – cited changes to the interest rate as a worry, while 40 per cent fretted about the state of the Australian economy.
Similarly, housing costs were a burden for 26 per cent of less wealthy families in the under-$160,000 per year bracket.
"By far the most risk averse group were those aged over 64, while those aged 25-44 were the least risk averse," the report said.
Posted by Grace Neale
Chinese real estate investment in Australia has nearly doubled this year, new research has revealed.
Figures from Jones Lang LaSalle showed offshore property investment from China increased across the globe, but jumped almost 100 per cent in Australia to US$500 million.
In 2013, the Asian country's real estate investment in other nations had climbed 25 per cent year on year by the third quarter, bringing total expenditure to US$5 billion.
"While the destinations for offshore capital have remained broadly consistent, Chinese real estate investors have been most active in Europe, the US, Australia and Singapore," Jones Lang LaSalle noted.
Earlier this year, Australian Property Monitors senior economist Andrew Wilson told ABC that property investment in Sydney has been particularly popular with Chinese spenders.
The NSW capital is the gold standard for property in Australia, he argued, and perhaps the world.
Big-ticket Asian buyers are only expected to increase in number in the coming years, following the introduction of the Australian government's significant investor visa.
The document allows individuals willing to invest $5 million in the country to migrate more quickly, attracting wealthy speculators who have a track record of economic contributions.
"We think people who create business, people who risk their capital, people who go out there every day and create jobs off their own effort and off their own enterprise is what we need to see more of in this country and certainly within our immigration programme," said immigration minister Scott Morrison.
According to the Foreign Investment Review Board's 2011-12 annual report, overseas interest in real estate generated AU$59.1 billion in proposed investment, a significant rise from the $41.5 billion approved the previous year.
Property investment also proved to be the largest destination by value, beating off competition from mineral exploration and development ($51.7 billion) and manufacturing ($29.5 billion).
Posted by Grace Neale
Sydney property investment shows no signs of abating, as yet another 80 per cent clearance rate was achieved this weekend.
New figures from Australian Property Monitors (APM) revealed 80.1 per cent of dwellings were purchased over November 23 and 24, making it the 18th weekend out of 20 that clearances have surpassed 80 per cent.
The other two weekends were just below this level at 79 per cent.
Dr Andrew Wilson, APM senior economist, said the results are all the more impressive due to the fact Sydney is currently experiencing a record number of listings.
"So far over November, 3,062 properties have been listed for auction, well ahead of last year's 2,148 over the same period," he stated.
"November will clearly break the record for the highest number of auctions ever conducted over a month in Sydney – and the highest ever number of auction sales."
Dr Wilson said the NSW capital's performance is likely to continue its upswing, with Saturday November 30 and Sunday December 1 set to have over 900 properties going under the hammer.
Several suburbs are hot spots in particular, with the upper north shore boasting clearance rates of just under 90 per cent.
The inner-west and lower north were close behind, selling 87.4 per cent and 86.8 per cent of properties respectively.
APM data showed the most expensive property to be sold over the weekend was a five-bedroom home in Mosman, which fetched $6.45 million.
At the other end of the scale, a $200,000 two-bedroom townhouse in Wyoming was the most affordable home that exchanged hands.
"Sydney's weekend auction market has scaled new heights over spring with record levels of buyer and seller activity set to continue until the season closes in three weeks," Dr Wilson stated, although he admitted the market could slow down slightly.
Posted by Grace Neale
Sydney property investment could be set for a boost in the near future, should new planning laws pass through state parliament.
The Property Council of Australia has called on politicians to "seize the opportunity" presented by the legislation, which the organisation said will support jobs growth and introduce a more transparent system.
The NSW upper house began debating the issue last week, with the property council noting that the current laws have created chronic housing shortages, a lack of community confidence and "crippling" red tape.
NSW executive director for the organisation Glenn Byres said: "The existing system is universally regarded as broken."
Changes to legislation could be vital for encouraging Sydney real estate investment, with the organisation saying its critics would be resigning NSW to its substantially flawed existing system.
"The legislation is crucial to the continued rebirth of the state's economy and attracting a new wave of investment to underpin jobs and housing," the council stated.
"The property and construction industry employs over 300,000 people in NSW and generates $16.6 billion in wages for workers and their families."
According to the Property Council, there are several benefits to planning reform, including reductions in costs on projects and more timely completion of housing developments.
The organisation listed several elements of a best-practice planning system that could boost Sydney investment property.
These included allowing access to major project pathways so that commercial, retail and residential initiatives can be given the go ahead, as well as the use of model guides by all councils across the state.
If the planning bill passes through the upper house it will become law, although it will need support from cross benchers and the opposition.
"The new laws will also establish a more transparent, rational and simple system for strategic planning and project assessment," the Property Council stated.
More than $12 billion in funding was approved for Western Sydney projects in 2012-13, according to the latest official figures.
The data, unveiled in the state government's Department of Planning and Infrastructure annual report, may encourage more real estate investment in the region, which is tipped for major growth.
Planning minister Brad Hazzard said Western Sydney is the "jewel in the crown" and "pivotal to NSW's economic fortunes".
The projects approved over the last financial year confirm the state government's commitment to creating 50 per cent of all new Sydney jobs in the city's west, he added.
"Government and private sector investment in infrastructure, employment and housing puts Western Sydney in the driver's seat to making NSW number one again," Mr Hazzard said.
According to the planning department, the initiatives will generate 4,000 ongoing full-time jobs and over 21,000 direct and indirect positions during construction.
The biggest projects include $70 million to upgrade Old Wallgrove Road in the Western Sydney Employment Area, which aims to provide jobs near locations with major housing growth.
The employment area is expected to create some 57,000 positions over a 30-year period.
A further $97 million is being spent on the construction of the Toll IPEC freight warehouse and transportation facility at Huntingwood West in Blacktown.
Three major retail and development hubs will be developed at Penrith, Liverpool and Narellan following the rezoning of land in these areas – a move that will potentially create more than 4,000 jobs.
Mr Hazzard also highlighted the importance of NSW's new planning system, which will boost the construction industry and property sector.
"Housing approvals in Western Sydney during 2012-13 made up 49 per cent of all housing approvals across Sydney," he stated.
"However, there is still a shortfall in housing supply, which is why we need the new planning system – everyone gets a say and it will deliver the housing and infrastructure we need."
Posted by Grace Neale
The advantages of purchasing an investment property in Australia are no secret.
Whether it's being the boss of your own rental property, the potential for high value appreciation or the tax breaks that come with owning an investment property, there is no shortage of benefits.
However, there is more than just one way to invest in real estate.
In short, buying off-plan means investing in a property that hasn't yet been built.
The idea is that by investing at today's current prices, by the time the property is built, capital appreciation will have made it worth much more, offering investors high returns for minimal start-up capital.
When the real estate market is heating up, investing in property can be a very lucrative endeavour. However, it can also become difficult to enter the investment market when demand is so high.
For instance, buying a Sydney investment property may be a smart idea, but coming up with the money to purchase an already completed building may take a long time.
In this way, off-plan property offers savvy investors a chance to get in at the ground floor without contending with exorbitant prices.
By putting down a minimal deposit, investors can take ownership of a property that may be worth much more by the time it is completed. In comparison to investing in already completed properties in a busy market, this is a more affordable option.
Options after the fact
Once the property is completed, investors have a wealth of options. Depending on how the market has held up, the property may be worth a lot to sell.
At the same time, if demand for rental homes is high, finding tenants for the property can be a great way to guarantee extra income each month.
Just as with other types of real estate investment, off-plan investment lets individuals decide how they want to receive their returns.
Posted by Grace Neale
Those buying investment property in Australia look to be in good company, as Knight Frank reports that Sydney is the number one most popular location for residential property investment among buyers from Hong Kong.
Sydney was also the third most popular area for international property investment for Indonesians.
However, according to Knight Frank's Global Development Review 2013 report, Chinese investors are leading the way when it comes to Sydney property investment.
"Chinese buyers are the top purchasers of new-build residential property in Sydney and Hong Kong, and are also active in both Kuala Lumpur and Bangkok," the report stated.
"The global presence is fuelled in part by a strong Yuan and slowing domestic economy, both of which are encouraging Chinese investors to look further afield in an attempt to diversify their investments."
Investor demand leading to higher property values
Demand from international investors is helping to push Sydney property values higher, good news for those looking for a high return on their residential purchases.
According to Australian Property Monitors (APM) September Quarter 2013 report, Sydney led the nation for annual property price increases.
While property values rose 7.8 per cent nationwide on a year-over-year basis, Sydney prices increased 11.7 per cent during the same time period.
Unit prices were also on the rise, increasing 3.3 per cent during the September quarter. The median price for a unit in Sydney reached $515,035 during this time.
With the official cash rate left unchanged by the Reserve Bank of Australia (RBA), it's likely that demand will remain high, as interest rates remain near historic lows, making it more affordable for buyers of all stripes to enter the market.
While some looking to invest in real estate may be disappointed that the Reserve Bank of Australia (RBA) left the cash rate unchanged, the current rate of 2.5 per cent is still near record lows, meaning the opportunities for real estate investment remain high.
RBA Governor Glenn Stevens highlighted continuing analysis of the previous cash rate cut as one of the reasons for leaving the current rate unchanged in a November 5 statement.
"The easing in monetary policy that has already occurred since late 2011 has supported interest-sensitive spending and asset values," Mr Stevens said.
"The full effects of these decisions are still coming through, and will be for a while yet. The pace of borrowing has remained relatively subdued overall to date, though recently there have been signs of increased demand for finance by households."
Low interest rates offset rising house prices
The fact that the cash rate was not increased is also great news for potential investors, as current house prices continue to rise in the Sydney area.
Figures from RP Data and Rismark International show that Sydney property values increased 2.4 per cent during October on a month-over-month basis, as well as 5.5 per cent during the past three months.
In fact, throughout the first 10 months of 2013, Sydney property prices rose 13.4 per cent.
However, this too must be put in perspective, as these increases come after a prolonged period of slow growth.
“Although values are broadly rising, the strength in the market is being fuelled by Sydney where home values have only increased at an average annual rate of 2.7 per cent over the past decade," said Cameron Kusher, senior research analyst at RP Data.
Posted by Grace Neale
Demand for housing in Sydney is at a fever pitch, giving those still on the fence regarding investing in real estate the push they need to enter the market.
According to a report from Business Review Weekly, apartment developers in the Sydney area are moving fast to get their buildings to market in order to take advantage of high buyer demand.
BRW reported that two new apartment buildings will be brought to Sydney's Macquarie Park for off-the-plan sales, with interested buyers having to put down a $5,000 deposit just to be considered.
One person involved in the deal told BRW the deposits are necessary in order to prevent pandamonium, as demand is so high that otherwise there would be lines in the street.
This demand means good news for the Sydney property investment community, but it hardly comes as a surprise, as high buyer demand in the Sydney area has led to significant price increases in recent months for both houses and apartments.
"Strong buyer activity in Sydney translated into a 4.2 per cent rise over the September quarter, which rocketed the median house price over $700,000 for the first time to a new record of $722,718," said Dr Andrew Wilson, senior economist at Australian Property Monitors.
"Similarly Sydney unit prices rose by 3.3 per cent, breaking the $500,000 barrier for the first time to a record median of $515,035. The Sydney median house price is now 11.6 per cent higher than the previous cyclical price peak recorded in June 2011 and has increased by 9 per cent over the first nine months of this year – the best result of all the capitals."
Sydney took the number one spot for house price increases on an annual basis during the September quarter, according to the September Quarter 2013 house price report from Australian Property Monitors (APM).
While house prices rose 7.8 per cent nationwide on a yearly basis, a great sign for Australians investing in real estate, Sydney led the pack with a year-over-year increase of 11.7 per cent.
"Similarly, Sydney unit prices rose by 3.3 per cent, breaking the $500,000 barrier for the first time to a record median of $515,035," said Dr Andrew Wilson, senior economist at APM.
"The Sydney median house price is now 11.6 per cent higher than the previous cyclical price peak recorded in June 2011 and has increased by 9.0 per cent over the first 9 months of this year – the best result of all the capitals."
With house prices showing Sydney property investment to be a smart move, potential investors in Melbourne and Brisbane can also take heart, as the APM report also showed yearly price increases in these areas.
Melbourne posted a respectable increase of 7 per cent, while Brisbane saw a smaller rise of 2.5 per cent.
While not as high a showing as Sydney, Melbourne and Brisbane both beat out Canberra, which has the smallest yearly price increase at 0.2 per cent.