Getting Down under » property

Investment Property In Sydney Heats Up

Mark — Thu, 04 Feb 2010 09:36:20 +0000

It has been a busy start to the new year in the Sydney investment property market as good quality properties are being sold quickly to eager buyers – sometimes at their full asking price.

I’m not yet sure whether this strong buyer demand will be maintained throughout the year – or whether the strong results from sales early in the year will induce others to list their properties for sale – providing some increased supply to keep prices more in balance.

As I have previously reported, the Australian residential property market has fared better than several other markets internationally over the last 20 months. Several local market watchers (professional and amateur) saw this as being in part due to the government’s housing stimulus for first home buyers – and predicted that the winding back of these subsidies would have a slowing effect on property markets – particularly the first home buyer belt, which in Sydney is the A$500,000 to A$650,000 segment.

Contrary to these predictions, I have observed a lot of strength in this sector in early 2010.

I have clients I am currently helping to buy an investment property in the Sydney inner-ring suburbs (within 5km of Sydney CBD). This is a market with a lot of attraction in terms of amenity, rental demand and potential capital growth.

When I’m searching in particular areas, I spend time there, getting to know the suburb – and meeting the local selling agents – as well as inspecting loads of properties. Agents are consistently reporting high attendance at open house inspections this year – at even the most modest properties. And most of the interest is from mum and dad investors, including those looking for a ‘safe home’ (pun intended) for their retirement savings.

Anecdotally, many properties on my clients’ watch lists are selling before their scheduled auction date, sometimes within the first week of being offered for sale. Last week I attended a private inspection of a property not yet marketed – and within two business days there was offer and acceptance at the full asking price.

I don’t want to generalise and say that all Sydney property markets are on the boil – as thats not the case – but it is definitely the case in some specific areas. And in times like this it is even more important to be objective – and to ensure that the proper amount of due diligence has been done – before you sign the contract. This way you stand a better chance of avoiding over-paying and avoiding buying a lemon.

So – what should you always do?

Firstly – research your target markets. Understand the supply and demand factors for the type of property you are focused on. Know what has sold recently – and how much for. Understand the historic capital growth rates for the area – and the median and average prices and gross rental yields.

Be objective when assessing each property. Have a set of criteria – and measure each property against your wish list.

Have the contract properly reviewed by a qualified conveyancer or solicitor – preferably someone you already know and trust.

Engage a qualified building inspector to conduct a building / pest inspection. Obtain a strata inspection for any strata-titled apartment or townhouse.

It can be tempting to jump at an opportunity in a hot market – and neglect some of these prudent steps – particularly when a property looks too good to be true.

As a licenced buyers agent – a large part of the benefit I provide to my clients is my objectivity. Sure, there is often money to be saved in a well-negotiated purchase, but having someone you trust providing their expert / objective viewpoint and ensuring all the necessary legwork is done is what stands out in most buyers’ minds.

Ian Macintosh, L.R.E.A.
Searchlight Property

Australia versus the UK – Is Australia really the answer?

Mark — Fri, 27 Feb 2009 08:08:27 +0000

As the British economy hits rock bottom, thousands of skilled workers are looking abroad to start up a brighter, more stable life in a different economy.

Traditionally, Australia and New Zealand have been a favourite destination for British skilled migrants, but it seems now their economies are also feeling the rippling effects of the American and British recessions.

There has been much debate as to whether Senator Chris Evans (Minister for Immigration and Citizenship) would lower the record rates of immigration to Australia in the 2009-10 Budget in response to his country’s prospective financial troubles.

Evans has decided to keep this year’s record 133,000 skilled visas as a ceiling until the Government assesses the country’s economic situation in time for the mid-year Budget.

This means that Australia still has plenty of places for skilled workers to move to Australia, and you could be joining the thirty-odd thousand other Britons moving to Australia permanently every year through the Australian migration program.

Now we all know Australia has a better climate, nicer beaches, and the promise of a more comfortable, outdoor lifestyle than the UK, but, in this economic climate would skilled workers actually be better off by moving from the UK to Australia?

How much money can you earn in Australia compared to the UK

The following is a comparative table showing the median salaries for selected jobs in Australia and the UK, sourced from payscale.com (updated February 2009). The results are based on the person having 10-19 years experience in that job, and the Australian salaries have been converted using the curencyconverter.com tool.

A quick look at the table suggests the trend for higher salaries in Australia for skilled positions is evident, excluding the rather major difference for solicitors.

Cost of living in Australia versus the cost of living in the uk

A higher salary doesn’t mean much if you are paying higher prices for the everyday basics. The following table shows the cost of basics as supplied by the Office of National Statistics (ONS) and the Australian Bureau of Statistics (ABS) for December 2008.

The table shows Australia is not the winner in every case, and in fact, the UK is the cheapest place in the world to buy bread. Yet, although the overall picture gives the impression that the cost of living in Australia and the UK is vacillating, a closer look shows that the expensive staple items are considerably cheaper in Australia than in the UK, which would keep your wallet plumper for longer.

For example, a family of four that consumes 2kgs of beef a week could save up to £303 after migrating to Australia from the UK, and a person filling up a car with 30L of petrol every week could save up to £280 per year. These are substantial savings.

Whereas milk, bread and flour may be cheaper to buy in the UK, the items that you need to outlay more cash on a weekly basis (such as meat and petrol) are cheaper in Australia.

The Economist’s Big Mac index makes things loud and clear to understand. The famous index compares the cost of a Big Mac in hundreds of countries as a way of comparing the cost of living around the world. During February 2009, the index showed that a Big Mac was cheaper to buy in Australia than in the UK.

A cheaper cost of living coupled with a higher chance of getting a better salary in Australia means that you would have more spending power and an increased cash flow.

Australia property prices compared to the UK

In most countries, an increased cash flow means a higher standard of living and the opportunity of living in a nicer home.

Property prices across Australia have a huge variance, particularly because there is a massive difference between rural, coastal and city houses. The same can be said for the UK, where just in the city of London, house prices can be almost triple the cost of similar types of houses elsewhere in the UK.

As a result, it becomes difficult to compare accurately house prices from specific regions in Australia with regions in the UK. Yet the Reserve Bank of Australia has released a report that shows the trend in housing prices and affordability, called “Some Observations on the Cost of Housing in Australia”, written by the Head of Economic Analysis Department Anthony Richards.

The following table is extracted from this report, which shows that Australia has been better off internationally than its major competitors in terms of income and relative house prices, despite there being a low level of housing accessibility and persistently high level of average housing prices.

The Real Estate Institute of Australia (REIA) confirmed in December 2008 that the Australian average median house price reached $447,659 (£203,660) in the September quarter – a decrease of $459,795 from the June quarter – with only Sydney having a median house price above $450,000. In the Department for Communities and Local Government live tables, the average median house price in the September quarter for 2008 was sitting at £233,459.

This difference in average house prices and the trend to have better income ratios in Australia and the UK means you would have a great chance of a better lifestyle in Australia, living in a nicer home with an increased cash flow.

The Australian weather compared to the UK

It will come as no surprise that Australia gets far more sun than the UK. In fact, Australia gets around 300 days of sunshine annually, which is 70% of the year. Moreover, when the rains come rolling in from the ocean or across the desert plains, it is not something the locals complain about; the tropical storms can give hours of entertainment and can be a quick relief for stifling heat.

See below for a breakdown of how averages of temperature (degrees) compare in UK and Australian cities:

How many public holidays do you get in Australia compared to the UK?

In Australia, be prepared to put your feet up for longer. In the UK, along with the standard annual leave provided by employers, the Government provides workers eight annual public holidays. In Australia, most workplaces give the same leave entitlements as UK companies, but the Australian Government has been slightly more generous. Each state or territory has a different amount of public holidays, but all have at least 10 days off or more. For example, in Tasmania you’ll be given 21 days off every year, plus your 4 weeks annual leave.

The following shows the amount of public annual holidays in the UK and each Australian state or territory:

Sound appetising? It’s advised that you beat the Budget and submit your application before the Australian Government considers restricting its migration program, and before you know it you’ll be enjoying a beer on the beach and soaking up the Australian sun!

About this Article Produced exclusively for Getting Down Under by the guys over at Australian Visa Bureau. Australian Visa Bureau is an independent immigration advisory service providing advice, information and case management to individuals, families and businesses.

Rules Eased for the Purchase of Property by Temporary Residents of Australia

Mark — Tue, 23 Dec 2008 02:51:30 +0000

The Australian Government has announced a relaxation in its policy affecting the purchase of real estate by temporary residents living in Australia.

Currently, all temporary residents and non-residents (including businesses) must notify the Australian Government through the Foreign Investment Review Board of their intention to acquire residential real estate, and must comply with post-purchase conditions on its use, development and resale.

The Australian Government considers that:

“The current arrangements have not been updated since 1989 and are consequently poorly targeted. They restrict housing market flexibility and impose unnecessary costs and delay on around 7,500 foreign residents and businesses receiving approval each year. Residential real estate comprises more than 92 per cent of applications received each year by the Foreign Investment Review Board.

The changes will streamline notification arrangements, reducing post purchase conditions on the development of single blocks of vacant land, and aligning the definition of temporary residents with contemporary visa categories.

Restrictions aimed at encouraging the supply of new dwellings and preventing excess demand in the housing market will be retained, for example, the rule requiring nonâ€‘residents to purchases new rather than buying existing dwellings.”

More specifically:

From the 18th of December, 2008:

Temporary residents purchasing second hand dwellings

The definition of â€˜temporary resident’ includes all foreign persons living in Australia on a valid visa, irrespective of the expiry date of that visa. This includes people on bridging visas pending the outcome of a substantive visa application (eg if they have applied for permanent residency) but, for example, does not include short-term visitors such as tourists, business people and those here for a medical procedure.

Foreign students resident in Australia are no longer subject to a $300,000 limit on the value of an established dwelling purchased as their principal place of residence.

Vacant residential land

Acquisitions by foreign-owned companies, trust estates and non-resident foreign persons of single blocks of vacant residential land are required to build a dwelling within a period of 24 months (previously within 12 months and development expenditure of at least 50 per cent of land cost).

The conditions previously applied to acquisitions by temporary residents of single blocks of vacant residential land no longer apply (such acquisitions will be exempt after the Regulations are amended in early 2009).

â€˜Single blocks’ of vacant land generally refers to a block of land on which only a single dwelling could be constructed. This does not include large tracts of land (eg for the purpose of subdivision) or multiple adjacent single blocks (eg to develop a multi-dwelling apartment complex) – additional development conditions may apply to such acquisitions.

New dwellings

The existing requirement that only 50 per cent of new dwellings can be sold to foreign persons on an â€˜off the plan’ basis has been removed provided developers market locally as well as overseas. Vendors are no longer required to have concurrently developed a similar dwelling in order to be able to sell a new stand-alone dwelling to a foreign person. This will be reviewed after two years.

A â€˜new dwelling’ is currently defined as having never been occupied or sold; this now includes dwellings that have not been sold but that have been rented out for no more than 12 months.

Foreign companies purchasing second hand dwellings

Foreign-owned companies can now purchase established dwellings for the use of their Australian based staff provided that they sell or rent the dwelling if it is expected to remain vacant for more than 6 months. There is no limit to the number of established dwellings which can be purchased, where required for employee accommodation.
Redevelopment of second hand dwellings

A proposed redevelopment must increase the number of dwellings and no rental income can be obtained from the existing dwelling prior to demolition. Such redevelopments are required to demolish the existing dwelling and commence construction of the new dwellings within 24 months in line with vacant land (previously 12 months), and development expenditure must be at least 50 per cent of the purchase price of the property.

From February 2009 – Subject to Approval of Amendments to the Applicable Regulations

Temporary residents’ exemption
Temporary residents will not be required to notify proposed acquisitions of:

* an established dwelling for their own residence (not for investment purposes);
* any new dwellings; and
* single blocks of vacant residential land (other acquisitions of vacant land will require notification and will normally be approved subject to development within 24 months).

The exemption will include acquisitions of property by temporary residents via their wholly owned trust or Australian incorporated company.

The existing notification requirements will continue to apply to non-residents, who must notify all proposed acquisitions of residential real estate.

Accommodation facilities

Accommodation facilities such as resorts and hotels will be treated as commercial real estate rather than residential real estate. Acquisitions of such facilities – or individual units within them – valued below the relevant developed commercial property threshold ($5 million for heritage listed property, $50 million for non-heritage listed property or $953 million for US investors) will be exempt from the FATA and will not require notification and approval.

Streamlined administrative procedures

Streamlined administrative procedures will be established for foreign-owned companies, trust estates and non-resident foreign persons to notify and receive approval for proposed acquisitions of vacant residential land and newly constructed dwellings. New application forms and statutory notices will be introduced to facilitate the streamlined procedures.

Developers will no longer be issued advance approval for sales of new dwellings to foreign persons – all non-resident foreign purchasers must submit individual applications (although developers may submit these on behalf of the purchaser/s). Temporary residents will be exempt and not required to notify.

Weblink: http://www.firb.gov.au/content/policy.asp

News Source : http://www.gomatilda.com.au

House still on the market

Mark — Tue, 17 Oct 2006 11:13:51 +0000

Well, its been an interesting week since we were blobbed on by the buyers who decided to retract their offer due to marital issues.

We instructed the Halifax to drop the price by a couple of grand and offer a £2000 cash back as an incentive for buyers to complete within 28 days. As a result the weekend was a very busy one with 6 couples coming to view the property between Friday and Saturday (Sunday was kept for our sons 4th Birthday – a big boy now)

We had one offer £1000 short of the minimum we’d always agreed to never go below so this one was declined although I’m quietly optimistic that they may come back with a slightly larger offer as the buyers sister lives on the same estate and seemed to give our house the thumbs up when she brought her for a ‘walk by’ later on in the day.

We’ve also had an Asian chap come to look at the house who also made us a verbal offer although he didn’t want to go via the agent.

You’ve probably gathered by now that the Halifax are not at the top of my Christmas card list right now, however if we were going to be dealing with a sale whilst in Australia we were mindful that it would help if they had been involved from the start.

The chap was told that he needed to proceed via the agent. He said that he would, he also came to show his wife around on Saturday ‘before he made an offer’.

Has he made an offer. Nope!

Its amazing how many people say they are going to do something and then proceed to do nothing. Still its early days yet and we continue to get quite a few viewings through the door. The asian chap also worked during the day which doesn’t make a perfect match for the Halifax’s opening times. Especially as his wife doesn’t speak any English.

More news to follow..

House sale updates

Mark — Fri, 29 Sep 2006 15:45:40 +0000

Well, we have had our weekly update today. Ok, perhaps not an update as such just a voicemail from the Halifax (after being chased).

Hopefully, it’s just a case of no real news is good news!

The expectation from the broker was that our buyers would have paid the survey fees by now.

The news is they haven’t!

The woman who is looking after our sale (I use the term ‘looking after’ very loosely) finished at 4pm today so that’s it for the rest of the week.

I’m pretty much done with dealing with the Halifax for a while.

We’ve agreed that the missus will be taking over from next week, as I’m finding it harder to speak calmly to these guys on an ongoing basis.

If we are still dealing with the Halifax after another week I’ll make the calls again.

We also need to seriously start thinking about a contingency plan. If nothing happens we may even need to start thinking about re-marketing the property.

Would we do this with the Halifax? I’m not sure. At the end of the day, its been 6 weeks since anyone was last shown around the house so it would be very unlikely that they’d not have found somewhere else by now.

There’s also the option to take what cash we have in savings now and move to Australia before Christmas, in the hope that I could get sorted out job wise in 3 – 4 months.

If we do then we have all the time in the world to sell the house, if we don’t then we’ll need the house proceeds in order for us to have something to live off.

A very big gamble and with a four years old in tow, perhaps one not really worth thinking about until we have to.

When all appears to be going so well..

Mark — Wed, 20 Sep 2006 14:36:14 +0000

Bollocks, B*stard and Sh*T!

Had a call from the Crapifax this morning (aka Halifax estate agents) to advise us that there is a problem with the mortgage.

The buyer has lost their P60 and even though the Halifax Head Office gave the buyer the go ahead to proceed with the survey, it now seems that unless they can find their P60 the Halifax isn’t willing to lend them the cash to buy our house.

So, they have now been passed onto a mortgage broker (the same broker that the girl used who couldn’t get a mortgage) to try and identify a lender who’s criteria for lending isn’t so strict!

I am totally and utterly dumfounded. I had a bit of a go at the girl who is looking after (using the term looking after loosely) the sale of our house, explaining that I have given my notice at work on the basis that things seemed to be progressing so well, but don’t worry. When you feel your down there’s always someone at the Halifax to make you feel even….worse!

Well, I wouldn’t go booking any flights says the advisor. We recently dealt with a customer who had booked his flights to Australia and he was in a chain of four buyers. When his house was surveyed he was told that he had over valued it by £20,000 so had to drop his price by £20k in order to catch his flights.

Great! At least its unlikely that we have over valued our property, however we need to get the house surveyed again! So its going to be a number of weeks before any thing positive happens.

We’ve gone from a high to a barrel scraping low! We should know in the next couple of days if our buyers can get a mortgage with another lender but in the meantime its legs,arms,toes and fingers crossed.

We’ll probably try and phone our buyers direct tonight to see if we can get any inside news on whats really happening.

Can you sell your house? Our survey says

Mark — Tue, 12 Sep 2006 14:45:25 +0000

Well, I wondered if I should type this so soon in case I risked giving the kiss of death to recent happenings but hey, you only live once right!

Things continue to go well. The survey was completed on our property today and the house has passed the inspection with flying colours.

Surprisingly, the surveyor only took 15 minutes to give the house a good going over and a big portion of this time was spent talking to the missus about the family his in Australia.

To be honest, I wasn’t really surprised that it passed. The property is still under 10 years old and is pretty ‘new’ by previously owned house standards. Still its a comfort that we passed this survey without any hidden surprises. After all, had we been told that the property was structurally unsound and we had to spend thousands on fixing it then that could have certainly thrown an iron into the works.

In less positive news, we went to get a cash in value for our endowment policy yesterday and even though we have only been paying into it for the past 9 years, the cash in value was about three thousand pounds less then we were anticipating. Arse!

Having said that, we never really counted on the endowment, if anything it’s been one of those things you automatically contribute into directly from your salary so after 9 years you almost forget that the things there.

Although the cash in value of our endowment policy is a lot less then we were anticipating, it will still give us a big cash boost and acts as a nice little Insurance policy now that I’ve decoded to hand my notice in.

Anyway. Onwards and upwards. Were starting to work on removals now.

We have a company called Atlantis Overseas removals based in Leeds coming to visit us on Thursday to provide a quote so we’ll see how much moving our stuff out to Australia is going to cost.

We’ll probably get a few quotes and go for the one that gives us the best vibes. We won’t be taking too much but the stuff we will be taking is the kind of precious stuff that we don’t want to leave behind. Whatever happens I’ll ontinue to update our blog as we get more news.

Tara for now

Guess what – Nothings happened!

Mark — Sun, 20 Aug 2006 11:57:47 +0000

Do you know what, when we decided to emigrate to Australia, the emotions we went through when trying to gain our Visa kinda pale into insignificance when compared to those we are going through now we’re selling our house.

I guess it’s the sheer lack of structure which is the thing that gets to you.

With our visa applications we knew there would be a certain amount of ‘doing nothing’ once we had sent our visa applications off. We also knew there were hundreds, perhaps even thousands in a similar boat.

With our house sale there’s lot of unexpected ‘nothing’ happening which is enough to drive a family nuts!

The paperwork completion and surveyors instruction that was supposed to happen this Saturday didn’t happen.

Thankfully, the Mr of the buying party did go into the Halifax to complete the paperwork but the Mrs was unable to attend as she had a wedding to go to.

Now I’m not sure why she didn’t mention this when she visited us earlier this week. The same visit in which she told us that she would be going into the Halifax this Saturday to complete the paperwork.

Still, at least the Mr of the party went in.

The story from the Halifax (once we chased them) is that the Mr will get the Mrs to sign the paperwork this weekend. He will then take the completed forms into the branch on Monday where the surveyors fee’s will then be paid.

Enough info for the Halifax to mark our property as sold apparently..yay!

Still not enough for a slightly paranoid chap from West Yorkshire to feel relieved though.

Anyway, the brother-in-law comes for a two day visit today, he’s been in France for the last three weeks visiting his missus’s family before they all travel back to Sydney next week.

Perhaps his presence will be the good luck charm we need to finally get this bottomed out!

Here’s hoping eh?

I guess the key message for this entry is this. When were were applying for our Visa’s we felt better because we knew we were waiting with thousands of other wannabe Aussies. One you get your visa you’re only halfway through your journey.

Selling your house is a seriously big thing, especially from an emotional perspective and for those of you currently selling your house, be assured you are not alone. We will all get there…eventually!

Further updates on if/when the paperwork is ever completed later this week!

The joys of property sales

Mark — Thu, 17 Aug 2006 08:28:21 +0000

Ahh the delights of selling a property or should that be AHHHHHHHHHHHHHH!

The lady who was supposed to go into the Halifax yesterday to finalise the mortgage details and pay the surveyors fee’s was unable to make her appointment because she was to tired after working a night shift.

So, we’ve been shunted back to Saturday now. She did come back with her family for a second viewing last night though. They are a really nice family with a baby so our house is spot on with the pre-made nursery, fully enclosed back gardens etc.

We’ve taken the opportunity to swap numbers this time and it’s obvious that she really likes the property to!

Anyway, we’ll need to wait until Saturday now so we’ll see what this weekend brings…again!

Latest Offer looking quite good

Mark — Wed, 16 Aug 2006 08:17:25 +0000

Remember when I posted in this update that there was a second offer on the table for slightly more money from a nice couple, but they had a house to sell.

Well, as promised they went into the Halifax to see if they could take out a second mortgage to buy our property. I wasn’t particularly hopeful as they would have had to be earning a half decent salary (or have some hefty savings as a deposit) to qualify for a second mortgage.

Anyway, to cut a long story short. Yesterday we got a call from the Halifax to tell us that the mortgage application had been ‘qualified’ and they are able to purchase our property without having to put us all in a chain!

This is excellent news for us but we’re still not opening the bubbly (again) just yet. Having said this, things are looking more positive then they have for a very long time.

The wanna be buyers (who offered more then the initial offer) are going back into the Halifax today to complete the mortgage application and to pay the fees to instruct the surveyor.

As the survey costs can be quite high, its seen as the best sign that the buyer isn’t going to mess you around. On this basis, if they pay the fees when they pop into the branch this morning our house will be marked as Sold and we’ll be able to replace that damn ‘for sale’ sign in our front garden with a nice red SOLD sign.

Fingers crossed……again! This would be a great situation for us as it means that the house has gone for a decent price, and we should hopefully be able to get things moving pretty quickly!

Here’s hoping.

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