Why you should ignore the property headline ‘noise’ 

Why you should ignore the property headline ‘noise’ 

Guy Williams have spent over 20 years in a remarkable investment journey and has since maintained a 37-strong property portfolio. Aside from good education and correct strategy, he attributes his success to his ability to “ignore the noise”.  WHAT NOISE?  Guy told Smart Property Investment: “I just kept doing it and ignored the noise. I ignored the noise. I had a buy and hold strategy, but while I was doing that last year, people were saying, ‘Are they going to remove negative gearing?’ That’s a little bit of noise.   But over a 20, 30, 40-year time frame, it doesn’t really matter. I’ve seen huge interest rates, I’ve seen low interest rates. You see all these things happen, but over that length of time it doesn’t really matter. I think the noise gets in the way of people doing things.”  WHY?  While it is important to keep yourself up-to-date regarding movements in the property markets, it is equally vital to know which headlines are not worth mulling over, according to Guy.  You read a newspaper, they’re looking for headlines, they’re looking for stories so they want something like, ‘Interest rates are about to shoot up!’ or ‘They’re going to go ballistic in 2017’. So you’re going to think, ‘I’d better not invest. I’ve missed the boat’. Or maybe there’s a price bubble and so property prices are going to crash, so you say, ‘Oh, thankfully I’m not in it’. There’s all this noise and it comes out on a daily, weekly, monthly … It’s mainly just ignoring that,” he said.  WHAT TO DO?  Instead of worrying himself over “doom and gloom” headlines, Guy...
Will Mortgage Brokers survive the technology boom?

Will Mortgage Brokers survive the technology boom?

With the unprecedented rise of artificial intelligence and other technology advancements, is human interaction set to be obsolete in the future of mortgage brokering?  What do brokers do? Mortgage brokers are among the most important members of a property investor’s financial team. Aside from helping investors make sound financial decisions, mortgage brokers also assist banks by being an effective channel to connect them with clients who are looking to secure finance. While some banks have a direct channel, the fact that more than 53 per cent of mortgage loans are secured through brokers make these professionals indispensable.  However, many are starting to ask the question: For how long will mortgage brokers be relevant in the field of property investment? The past few years saw the rise of artificial intelligence and other remarkable innovations. Technology is definitely changing the landscape of the wealth-creation business.  Despite changes, the mortgage broker believes that the “human touch” will always have a place in the property market, especially considering the added complexity brought by new guidelines from administrative bodies such as the Australian Prudential Regulation Authority (APRA). Mortgage brokers, as well as other property professionals, will remain an integral part of the vast property investment landscape for years to come.  A growing industry  The APRA has recently altered guidelines on lending and interest rates in order to avoid having investment books grow too fast. The changes implemented not only widened the disparity between interest-only rate and principal interest rate but also added more variables to consider when securing finance, making it more complex for property investors.  Before, you had fixed and variable rates. Now, we’ve got fixed interest-only, fixed...
Will my property drop in value?

Will my property drop in value?

There is an Australian property crash coming. That’s what several economists and property experts would have you believe — but what would this really mean for your property portfolio?   Every few weeks another report is released about a property bubble in Australia and the inevitable market crash it will bring when it bursts. But are these predictions correct and should investors be worried about their portfolios? How do you handle a drop in property value — is it best to cut your losses and run or should you ride it out and hope your investment returns to form?      Will Australian property values fall?    Much like you can find a million stories on the next property hotspot, you can find a million stories on the Australian property bubble. The bubble, whether it exists and if it’s going to burst soon, is the topic of much contention between economists, property experts and investors. But is it as big, and as realistic, as the big doomsday predictions would have you believe? There can be no denying that some areas in Australian capital cities appear to be reaching oversaturation. Sky high prices and large developments nearing completion in Sydney and Melbourne have been the catalyst for these debates since 2016. But in terms of a crash which would send all Australian property prices plummeting, that’s harder to believe. Rather than a property bubble bursting, the result would more accurately be a correction of inflated prices which have grown at an unsustainable rate and would only affect those with property directly in these peak zones. But even outside a possible bubble pop,...
Why are property sales volumes declining?

Why are property sales volumes declining?

Property transaction volumes are reportedly declining in Sydney, and nationally. There are about 9.75 million residential dwellings in Australia, but despite a record construction boom stock turnover has fallen to well below 3 per cent, and way below the historical averages. Auction results are telling us this. There could be any number of reasons for this… Staying put! We know that the ridiculous cost of stamp duty (and selling fees) is a discouraging factor for people wanting to move house in Sydney. Stamp duty receipts in New South Wales have more than doubled since June 2013 to $8.63 billion. In June 2013 the buyer of a median priced house in Sydney paid about $27,000 in stamp duty, mortgage fees, and transfer duties. Today, they’ll pay nearly $45,000. That’s a lot of capital growth required to justify the costs of moving house, so we’ll arguably see a shift towards renovating and staying put (or buying cheap and renovating) just as we did at Sydney’s previous cyclical peak in early 2004. A buy & hold strategy A structural change over the medium term has been the “asset lock in” associated with property investors, with the prevailing tax legislation more or less compelling investors to use interest only loans and play a longer term capital growth strategy.  Since the latest round of monetary easing from 2012 investors have become a more substantial force in the larger capitals. There has been a 300 per cent increase in outstanding investor credit since 2003. Buy, hold, and compound the capital gains. Offshore investors In Australia non-residents are generally restricted to the purchase of new dwellings, thereby encouraging new construction,...
What should you believe about real estate prices?

What should you believe about real estate prices?

I keep a lot of real estate information, especially about real estate prices. This is a not so old article that tells a very common story. It is sad but true. At a recent seminar when Australia’s price data mess was talked about many in the audience were incredulous. Some had believed that if a national newspaper told them Sydney prices had risen 10 percent, based on figures from a well-known research entity, then that was a fact to be relied upon. If a research report portrayed a 10 percent decline in Darwin apartment prices that was information you could take to the bank. The reality is different. With scary regularity, figures about prices from one source are commonly contradicted by data from others. The problem is, no one in Australian media seems to have noticed. If journalists are aware, they’ve decided to ignore that reality because it makes life complicated. So this week media dined out on the latest price figures from Core Logic. Here’s a sampling of the headlines:- Sydney house prices cement return to double-digit growth (AFR) Sydney, Melbourne, Canberra house prices galloping ahead (New Daily) Strong early spring for Melbourne home prices as values rise again (Herald Sun) There were many other similar ones. Those headlines and the articles that followed showed a blind acceptance of the figures from that one source as absolute fact. But they’re nothing of the sort. They’re just one version of the truth, which can change dramatically depending on who you’re listening to. Sydney house prices were stated by CoreLogic to have risen 10.9 percent in the past year. But...
The majority of Aussies are still upbeat about house prices

The majority of Aussies are still upbeat about house prices

Record high house prices in Australia doesn’t seem to deter buyer sentiment, while sellers think 2017 is a good time to sell, says a new survey. Two in three (62 percent) Aussie home owners believe this year is a good time to buy, while a further 73 percent believe it is a good time to sell, according to the findings of the survey commissioned by free real estate agent search service, Local Agent Finder. The survey was conducted from a nationally representative, independent panel of 1001 Australian adults. How do we know? Local Agent Finder allows vendors to compare property sales agents in their local area, in conjunction with Pureprofile, a data and insights company. Local Agent Finder CEO Matt McCann said it was interesting to see two-thirds of Australians believe property is a good buy this year, given the double-digit percentage increases, talk of interest rates rises, and possible changes to property investment legislation. “Many of us are talking about Sydney and Melbourne’s strong property market, but that is not really being seen outside of the Eastern Seaboard. In fact, the value of property in Brisbane, Adelaide, Perth and Hobart were lower in 2016 than they were eight years ago,” he said. The Figures Sydney and Melbourne recorded the highest dwelling value increases from 2015 to 2016, at 15.5 percent and 13.7 percent respectively. Other cities had lower increases, with Canberra dwellings increasing by 9.3 percent, Brisbane by 3.6 percent and Adelaide by 4.2 percent, while Perth decreased by -4.3 percent. A majority of home owners surveyed in New South Wales, 81 percent, believe it is a good...