That’s just 7 per cent (or $15 billion) less than the 2007/08 market peak.

The three main buyer types are owner residents buying for the second or subsequent time, investors and first-time buyers.

Owner-residents were the largest buyer segment last year at 44 per cent; followed by investors at 42 per cent; and first-timers at just 14 per cent of the market.

All up, just under one million homes were traded.

Investing in property has always been on the radar for many Australians as a way to gain wealth and financial security.

And throughout 2012, Aussie investors were in hot pursuit of those goals, borrowing $84 billion to purchase around 425,000 properties.

This is in spite of the negative commentary and pall of gloom that had been cast over our residential market by some observers. 

Investors appear to be cautiously returning to the market and the signs are there that this group is set to expand.

So just who are Australian investors? Interestingly, most investors, according to ASIC, do not see themselves as investors at all; and only a minority seek professional advice as a first step.

A recent survey has found that the majority of Australian residential property investors are in their 20s, 30s, and 40s.

For the most part, they are married professionals who own around two properties and live in the same geographic region as their investment properties.

A combination of falling interest rates and strong rental returns is playing a significant role in luring these folk back into the market.

That same combination is also now attracting younger, single investors, who understand that the caveats requiring two incomes to service a mortgage have been eased.

Simply, with variable interest rates below 6 per cent and the prospect of strong rental returns, more singles are able to invest comfortably in property.

If the right investment property is purchased in a good growth area, in many cases the mortgage can be comfortably supported by income from the rental.

For new or almost new property, there are, of course, attractive depreciation advantages to be claimed.

Agents are also reporting a growing trend in Gen Y investors, who choose to rent in their living location of choice – such as the CBD, close to a cafe precinct, or perhaps at the beach – and who purchase investment properties to rent out in more affordable areas.

There is also a growing movement, of people using their self-managed super funds to purchase property.

And more, with word that Canberra is planning a superannuation tax – the federal government is vicariously encouraging people to exit super and use the tax benefits of housing via the residential home or negative gearing.

The News Limited shadow Reserve Bank has voted to keep the cash rate on ice today, but three members think at least one major bank will slash its standard variable rate by 5 basis points anyway.

Research fellow at the Centre for Independent Studies, Stephen Kirchner, is tipping a 5 basis point cut by one of the big four will spark a discounting war.

“I think there is scope for further out-of-cycle cuts in at least some lending rates, if not the standard variable rate,” Dr Kirchner said.

However, any out-of-cycle cut would be taken into account when the Reserve Bank next came to consider cuts.

Fellow shadow board member and Airport Economist, Tim Harcourt, also expects an out-of-cycle cut.

“If the RBA leaves rates unchanged, I think at least one of the big four banks will try to get first mover advantage and cut mortgage rates by 5 basis points or so,” he said.

Managing director of Market Economics, Stephen Koukoulas, has also argued lower funding costs will open the door to voluntary cuts.

Bank of America Merrill Lynch chief economist Saul Eslake said that at the very least, home borrowers could expect to pocket any further rate cut in full.

In addition, “the banks appear to have been more willing to ‘discount’ their mortgage rates in order to capture business in recent months,” Mr Eslake said.

The Shadow RBA is split on the future for the official cash rate. Two members, HSBC Australia’s chief economist Paul Bloxham and Eureka Report’s Adam Carr, are tipping rate hikes within the year.

Mr Bloxham said: “This month brought further signs that already low interest rates are getting some traction: consumer sentiment bounced, the housing market improved and the Australian share market rose to a new four-and-a-half year high.”

But, the majority of the board – five out of nine – expect further rate cuts this year will be needed to ensure a smooth transition after the end of the mining investment boom.

“It’s becoming a life-style choice, rather than a first step towards your dream home,” said Karen Stiles, executive officer of the Owners Corporation Network, set up to help strata owners through the complexities of communal living.

“It’s affordable, compared to your quarter-acre block,” Ms Stiles said.

But affordability is just one factor attracting Australians to the skies.

Newer developments promise community, security and often unbeatable locations in terms of access to the city or the beach, she said.

As many Sydney suburbs become medium-density, apartments are attracting a new generation of owners: well-off retirees, young families and time-poor professionals keen to “lock-up and leave”.

Historically, couples have upgraded to houses when they have their first child, but for Sue Macintosh-Dixon and her husband Gordon Dixon, the arrival of son Jonathon wasn’t going to end their love affair with apartment living.

The couple simply purchased a bigger apartment in the Wentworth Point development they had bought into months earlier.

“We love how low maintenance it is! Gordon and I are both busy with juggling work and family life, we don’t have the time to clean a massive house,” Ms Macintosh-Dixon said.

Sue Alexander surprised herself when she purchased into the new Setai at Narrabeen complex.

“I always said I’d never buy an apartment. But we walked into this one, and it had everything we wanted. We decided to buy it.”

The former tennis great paid $2.3 million with her husband for a three-bedroom unit opposite the beach

“We were going to build a new house, but it got so complex, we thought we’d left it a little late for our age.”

While the benefits of apartment living are obvious, there are plenty of pitfalls if you don’t do your research, Ms Stiles said.

“In other words, don’t be distracted by beautiful brochures. Communal living is not something that Australians are used to,” she said. “It’s not just a smaller house a bit higher up.”

When buying new, it’s better to pay a premium for a property by a reputable developer than be saddled with a defective building, she said.

In older buildings, a simple strata report can warn you of ongoing issues. For example, concrete cancer in older buildings by the beach can result in special levies for residents in the tens of thousands of dollars, she warned.

Ms Stiles believes Australia is “catching up” to societies like New York or France.

“I think Australians will start to understand that their home is not their castle.”

But does spending money help you boost up the sale price or do you only make back as much extra as it cost to do the work?

Ian Agnew of Archicentre says that depends on what you spend your money on.

He says you can add value to your home with little things, but the best money spent is on giving people an idea of what can be achieved with the home, without having to do the work yourself.

“One of the things we have done is concept plans for people who are selling,” he says. “You can add value to the house by showing the potential and having it costed as well.”

Mr Agnew says $2000 to $3000 spent on having plans drawn up that can show how to extend or change a home can be money well spent.

In terms of doing the work yourself to add value, Mr Agnew says the best renovations to increase the value are an extra bedroom, a renovated kitchen and sustainability measures.

He says a new bedroom is probably the least costly addition to a house, but it can substantially lift the value of a home and increase the number of potential buyers prepared to look at it.

“The moment you have created an extra bedroom, you have more appeal (to buyers) and can go up to a higher price range,” he says.

Doing up a kitchen can also add value, Mr Agnew says, although he warns it can be expensive.

“If you are renovating to sell it is probably best to not do anything with the kitchen but just show what could be done with it.”

Adding sustainable features such as solar panels and water tanks is another way to add value.

“It is something that people will see value in,” he says.

Michael Sultan and his wife Tuyet Pham decided when it came time to sell their Corinda home they would spend a bit of effort and money on it to add value.

“We replaced stainless steel wire balustrades on the main deck with glass. We had some walls professionally repainted to remove any scuff marks. We had the wooden floors and decks repolished. The front door was stripped back and repolished,” Mr Sultan said.

Mr Sultan believes the work they have done to add value will help buyers appreciate the beauty of their home quickly.

“If the home is cluttered, furnished with non-matching items from previous homes, walls covered with family portraits and gardens unkept, then it takes longer for the buyer to form a positive opinion of the home. By spending the money upfront on improvements and decorating, logically, it should attract buyers more quickly.”

Brad Robson, of Brisbane Real Estate, who is marketing the property, said spending money can add value beyond the costs when selling. In some circumstances, he says, it can be just about finding a buyer and increasing demand by lifting the desirability of the home.

On the other hand, depending on the location and type of home you start with, you can do things which can add value substantially.

“For some properties, doing up the kitchen, for example, will certainly add more value.” For example, you could spend $100,000 on a paint job and modern kitchen for a 1900s Queenslander on a 1500sq m block and you would see significantly more than a $100,000 return.

“A smaller 1950s workers cottage on a 400sq m block just down the road from that big Queenslander, if you spend $7000 on an IKEA kitchen in it, you would more than likely only get that $7000 back, but it would improve the desirability of it,” Robson says.

“All of a sudden you open your door to a wider demographic of buyers.”

Or worse, signs that those dreaded tiny wood eating creatures are treating your home like the a la carte menu of the finest restaurant.

Perhaps you live in a unit, or townhouse and you are positive the home of a dear neighbour is the cause of that wet patch that appears every time it rains from the east; but you cannot prove it. This is not uncommon. Houses, like humans, can suffer ailments, but they are not the easiest to diagnose.

These are more akin to the severely sore back, or aches and pains that have no obvious cause yet cause so much pain – so it is with a sick house.

The sickly house looks fine, until you look very closely in certain places. The moment the rain starts, your anxiety and stress levels increase as much as the damp grows in size.

I recently was speaking to a building inspector who had been asked to investigate the source of water. It could not be traced and eventually he discovered the guttering had a tiny hole where a rivet should be.

This allowed water to soak into the top of a wall through a minute hairline surface crack and stay there.

During long periods of rain, water would disperse into the cavity, staying there for months and travel as far as it could to totally confuse any investigation. The evidence of moisture damage in the home was approximately 18m from the source. That’s two levels up and nearly the length of the whole house across.

As we all know, these tiny issues can grow without treatment into very costly and generally uninsured repairs.

This happens in new homes, old homes, renovators and the show home; many homes at some point will suffer a little illness. In most cases we see something we ignore or start the very tiresome, confusing and down right annoying process of investigation. Or should I say diagnosis?

But help is at hand, certainly for any water or damp related issue, or even sourcing the entry point of those hungry little insects. The technology has been around for quite a few years, but the quality and availability of this equipment is constantly improving and can be invaluable in sourcing any issues as the equipment searches for the problem without stripping the walls back to the frame.

Remember if you could literally peel any wall or floor back you could easily see what was happening. Infrared cameras can help with sourcing moisture, insect infestation, electrical circuit performance, even pinpointing holes or where air is getting into a cavity. This technology can give you images, print outs, everything you need to source a problem and a serious hint on how to solve the issue.

But as amazing as it is, the operators need to know what they are doing. Although it is a point and shoot piece of technology, the readings can be heavily influenced by ambient temperatures and the surface material, so it’s vital the operator has both the skills and the training to interpret correctly what he, or she, is discovering behind the sheeting.

The good news is there is help out there, but like all contractors, please check out the background of operators, check references and get proper quotes and comparisons.

According to the latest data on bedroom configurations, three-bedroom properties are in demand, chalking up the highest number of sales in the three months to August.

Just over 38 per cent of sales nationally were of three-bedroom homes or units during the period. In Brisbane, three-bedroom homes accounted for more than 33 per cent of sales.

Nationally, four-bedroom houses were close behind, chalking up a quarter of sales, while two-bedroom units accounted for 13.2 per cent of sales.

While many developers are producing one-bedroom units because they are affordable, research from RP Data found they were the least popular configuration to sell as well as houses with five or more bedrooms.

RP Data analyst Cameron Kusher, says the figures also show there is a preference for detached houses as opposed to units as house sales still account for the majority of sales each year.

“Of course the number of transactions only provides part of the insight as to why certain types of properties are selling,” he says.

“The difference in selling price between two and three-bedroom houses is $5000 or 1.4 per cent.

“Very few new two-bedroom houses are built nowadays and many of the two-bedroom houses could be characterised as inner-city cottages or terraces.”

Three-bedroom houses are the most popular house sold in Brisbane and the median is $380,000.

The median sale price for a two-bedroom house in Brisbane is $25,000 more. Kusher says this also reflects typically where these smaller homes are located.

Developer Ausbuild has already noticed an upsurge in demand for three-bedroom houses. Joint managing director Matthew Bell says lot sizes are getting smaller and demand for a large number of bedrooms was decreasing.

“People are not just defaulting (any more) to four bedrooms and a double lock-up garage,” he says.

Bell says there are a lot of 400sq m and 500sq m blocks of land around and many owners are building 200sq m houses on those and trying to make the best use of space.

He says first-home buyers and empty nesters buying new homes don’t need so many bedrooms.

He says they prefer three spacious bedrooms and larger living areas.

“A house that we have designed of late which we have on display at Rochedale does that. It is a fairly big home with only three bedrooms and large open plan living,” he says.

Bell says dedicated media rooms are not so much in demand now but some homes include a multi-purpose room or a study which is smaller than a bedroom. More popular still is a study nook or somewhere for a computer rather than a whole room.

“It is not something that people are as focused on as much,” he says.

He says it is often families with two kids that buy three-bedroom homes.

The bank yesterday left the door open for another round of rate cuts after pausing in its cycle that has seen the cash rate plummet 1.25 per cent in the past nine months.

Most economists are tipping the RBA will lower the cash rate from its current setting of 3 per cent at least once more, with some penciling in a move to a record low of 2.5 per cent by mid-year.

But the narrowing of the trade deficit to $427 million in December, seasonally adjusted, down from a $2.78 billion deficit in November, may give the central bankers reason to pause again.

The improvement was driven largely by a slump in imports and a rise in the price of mining and other resource exports.

In a statement accompanying the decision, RBA governor Glenn Stevens said it was “prudent” to leave rates steady this month but expressed a clear bias towards cutting rates further.

He cited the stronger property market, a growth in consumer spending and an increased bias towards riskier assets such as shares as a sign the economy was improving.

Ahead of the RBA announcement, official data showed house prices ended 2012 on a high, with prices in Australia’s capital cities up 2.1 per cent for the year.

But Mr Stevens warned that while “the downside risks appear to have abated, for the moment at least” with the benign inflation outlook, there was scope to ease rates again should the economy require it. “Financial markets remain vulnerable to setbacks,” he said.

But economists are divided over the RBA’s next move.

The ANZ is tipping at least two more cuts by the end of the year as the unemployment outlook weakens with the jobless rate tipped to peak at close to 6 per cent.

But HSBC chief economist Paul Bloxham is much more bullish, forecasting that China will lift growth strongly in 2013.

With much of the coast of Queensland and Brisbane being battered by the remnants of Cyclone Oswald it will be interesting to see what effect if any it will have on the property market and particularly the rental market in the coming months.

Demand and therefore competition for rental properties is always high at this time of year.

People move to start the new year in new jobs and want to position themselves close to the schools their children will attend.

New students arrive from throughout the state to attend universities and suburbs surrounding big institutions see a flurry of new leases signed.

After the massive floods that hit the state in 2011, rental vacancy rates plummeted, as those whose homes were inundated sought out temporary accommodation, signing leases for between six months and a year.

In some cases rents soared and stories emerged of extraordinarily high rents being asked or offered.

While it appears that fortunately not as many homes have been affected by flooding locally this time around, it may still put a little extra pressure on the rental market, which is traditionally under pressure at this time of year anyway

By Michelle Hele
From: The Courier-Mail

For a Fair Go – Go Gecko

The RP Data-Rismark January Home Value Index, released today, revealed that median prices rose in every capital city except Darwin in the first month of 2013.

Brisbane, Sydney and Perth are leading the housing recovery among the major capital cities, with median increases of 2 per cent, 1.8 per cent and 1.7 per cent respectively.

National values rose 1.2 per cent for the month, according to an aggregate of the eight capital cities.

Additional data released this week from the Housing Institute of Australia and Australian Property Monitors also suggests a nationwide housing improvement.

RP Data National Research Director Tim Lawless believes the results reflect a strong start to 2013, which should culminate in a full housing market recovery.

The January results have almost completely made up for a negative end to 2012, with national growth now at 1 per cent for the quarter.

Sydney’s growth of 1.8 per cent sees the median dwelling price move to $576,500, the highest in the country.

Hobart has the lowest median of $315,000, but performed the strongest of all the capitals in January, with growth of 4.5 per cent.

Year on year results have moved firmly into positive territory with values in capital cities up 1.8 per cent since this time last year. Melbourne is the only city to not record positive growth in this time, with a slide of 0.4 per cent.

“The typical capital city house took 55 days to sell in December last year, a vast improvement from the recent high of 76 days recorded in February last year,” Mr Lawless said.

“Vendors are now discounting their initial asking prices by an average of 6.6 per cent compared with 7.3 per cent a year ago.

“Buyers are losing some of their negotiation power and homes are selling faster,” he said.

The report came in the wake of a release from Australian Property Monitors claiming that all capital cities recorded house price rises over the December quarter for the first time since March 2010, with Sydney recording a record median of $656,415.

Analysts believe that the stronger market conditions may signify an end to RBA interest rate cuts.

“Rates should remain steady for the year, with values improving, consumer confidence heading in the right direction from a low base and other indicators up,” said Mr Lawless.

“The wildcard is unemployment. If unemployment gets up near 5.5 to 6 per cent, we may see rates dropped by a further 25 basis points.”

Source: The Daily Telegraph -

• By Tim McIntyre
• News Limited Network
• February 01, 201311:35AM

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