Dear fellow investors,
Welcome to the monthly May 2015 edition of the Investors Prime Real Estate newsletter!
I am very excited about the tremendous growth that we have been experiencing at Investors Prime Real Estate since its inception, with so many clients choosing our services to gain access to some of the best investment locations that Melbourne has to offer.
In this newsletter I’ve decided to feature some insightful articles detailing exactly what it takes to become a successful property investor.
- The 7 essential characteristics of successful property investors, by yours truly (Konrad Bobilak),
- Stephen McClatchie, managing directors of Loans Australia discusses some classic Mortgage Blunders and how to avoid them.
- Brad Beer from BMT Quantity Surveying talks about the importance of property investors maximizing their tax deductions on investment properties via depreciation schedules.
- Angelo Panagopoulos from Wilson Pateras Accounting firm discusses the advantages and disadvantages of buying investment properties in your personal name and via trusts, and finally,
- Cameron Fisher from Changing Places Real Estate discusses the top 6 questions that you need to ask your property manager, prior to engaging their services.
MARKET WRAP UP
The beginning of 2015 signified great news for property investors and variable mortgage owners, which represent 80 per cent of the market, when in February 2015 the Reserve Bank of Australia cut official interest rates by twenty five basis points to take the overnight cash rate down to 2.25 per cent; the first rate cut since August 2013. The most recent fall in the cash rate takes the average variable mortgage rate to its lowest reading recorded since 1968.
So let me demonstrate how very cool this is… with variable interest rates hovering just above 4% and a new 3 year fixed loans as low as 3.99% means that most inner city blue chip properties with rental yields at 4 and 4.25% are cash-flow neutral or slightly positive. (Without taking into account depreciation and tax)….
And despite the media hype about a perpetually overheated property market crashing, informed property investors and industry experts know otherwise.
CoreLogic RP Data head of research Tim Lawless said, “Although value growth has started 2015 on a strong note, the annual rate of growth has moderated back to 7.4 per cent, which is the slowest annual growth rate since September 2013.”
Sydney remains the standout capital growth performer, with values rising by 3.0 per cent over the month, 5.8 per cent over the quarter and 13.9 per cent over the year. With stronger housing market conditions over the first three months of the year, annual home value growth across the Sydney market has rebounded after slowing to 12.4 per cent in December 2014.
Sydney is the only housing market where dwelling value growth remains in double digits, with the next strongest performer, Melbourne, showing a much lower rate of annual capital gain at just 5.6 per cent.
Each of the remaining capital cities have recorded an annual rate of growth which is less than three per cent, with values having declined across Perth, Darwin and Hobart over the year.
Since home values began their current growth phase in June 2012, dwelling values across the combined capital cities have increased by 24.3 per cent. “Most of this growth is emanating from Sydney,” Mr Lawless said.
“Over the current growth phase, Sydney dwelling values have increased by 38.8 per cent with Melbourne second strongest at 23.6 per cent. On the other hand, total dwelling value growth over the current cycle has been less than 10 per cent in Adelaide, Hobart and Canberra.
“Combined capital city home values have increased by 3.0 per cent over the first quarter of 2015. While that rate of growth is strong it is important to note that it is lower than the 3.5 per cent increase in home values over the first quarter of 2014,” he said.
Bottom line, the property market in the major capital cities is doing exactly what it should be doing…and what it has done over the last decade.
One of the most fundamental principles of investing in property in Australia is to appreciate that the market moves in distinct cycles. These are characterized by periods of strong capital growth and demand for properties, through to periods of a flat-lining market, followed by periods of falling median prices and lower demand for properties, resulting in a decline in property prices. The money is made by both the timing of the market, and of time in the market.
Hence, my advice right now to investors is ‘not to wait to buy property, rather, buy property and wait’.
FEATURED PROJECT – ASPENDALE TOWNHOUSES
Here is a boutique development in the Suburb of Aspendale, which is going through a boom right now.
The great aspect about this development is that it was priced in early 2014, so well below current prices, as can be seen in the valuations which are higher than the contract prices; this is very rare in the current Bayside property market.
Located 27 km south-east of Melbourne’s Central Business District (CBD), and bordering with Mordialloc and Edithvale, this architecturally designed boutique apartment development consists of 4 townhouses.
These boutique residences, consisting of two and three bedrooms, and 2.5 bathrooms, are conveniently located less than 100 metres walking distance from the beach, Mordialloc shopping precinct, and Aspendale train station.
With high local demand both from baby-boomers who are downsizing in the area as well as astute younger professionals, these townhouses are priced at $645,000 for the two bedroom, and $720,000 for the three bedroom, 2.5 bathroom.
Townhouse 1 – $720,000.00 inc GST (Purchase Price $15,000 Below current valuation of – $735,000)
Townhouse 2 – $645,000.00 inc GST (Purchase Price $40,000 Below current valuation of – $685,000)
Townhouse 3 – $645,000.00 inc GST (Purchase Price $40,000 Below current valuation of – $685,000)
Townhouse 4 – $725,000.00 inc GST (Purchase Price $10,000 Below current valuation of – $735,000)
This development, due to start construction mid 2015 and be completed in late 2017/early 2018, allows buyers to take advantage of stamp duty savings and over two years in potential capital growth.
Remember that money in real estate is made by both ‘timing of the market’, as well as ‘time in the market’.
For more information with regards to this project CLICK HERE or contact Konrad Bobilak on 0499 55 899 or Konrad@investorsprime.com.au