23 May May 2016
Welcome to our May newsletter
Tips on how to maximise your sale property value, 8 things to consider when purchasing an investment property and a deeper look into strata titles.
The autumn property market is proving to be very busy and full of opportunities for home buyers and investors. We expect lower interest rates will stimulate the market even further, so talk to us about getting your finance in place now!
The Reserve Bank of Australia (RBA) met for its May meeting last week and decided to cut the official cash rate by 25 basis points, bringing it to just 1.75%. The move took many forecasters by surprise and brings the official cash rate to an all-time low!
The RBA decided to make the move in response to low inflation figures and a strengthening Aussie dollar. Forecasters do not anticipate another cut in the immediate future, however the RBA is likely to reserve this option in case it feels the economy requires further stimulation moving forward.
This is great news for property owners and buyers across the country. Property markets have been performing well, with plenty of housing stock available to buyers. Auction numbers have been quite high across all states, however clearance rates are not as high as last year for most markets, except for Sydney and Melbourne where they reached 74% for the last weekend in April.
Growth in home values has been good across all cities during April, except for Hobart where home values declined by 5.33%. Sydney home values increased by 2.40%, Melbourne 1.07%, Brisbane/Gold Coast 1.81%, Adelaide 2.03%, Perth 0.47%, Darwin 2.53% and Canberra 1.21%.
Following the RBA cash rate cut last week, lenders have already started to reduce interest rates, particularly on variable interest rate products for owner-occupier purposes. However, we are also seeing rate cuts across other loan product classes, so if you are looking to refinance, fix your interest rate or invest, talk to us and we’ll shop around to find the most competitive rate for your needs.
If you already have a home loan, please remember that when rates are on the move, it’s wise to check with your mortgage broker to ensure you’re still getting the best deal available for your needs. We don’t charge for a home loan health check, so please give us a call today!
7 Tips for Maximising the Sale Value of Your Property
It’s generally a good idea to protect and improve the sale value of your property, even if you’re not intending on selling in the immediate future. Continuing to invest in and develop the property so that it remains modern and well-maintained will help to grow its value consistently over time. There are, of course, plenty of different ways to enhance its value, but at the minimum, there are a handful of key strategies that are proven to be effective.
1) Develop the facade
The first thing that visitors see of a home is its front facade, and a great deal of value can be added to the property simply by making sure that those first impressions are positive. Consider the look of the building itself, the landscaping and the overall condition of the property. For example, make sure the roof is in good repair and looks great – filthy tiles or rusting metal is simply not a good look!
2) Keep the flooring modern
Fashions in flooring change frequently, for example carpeted or even lino floors were in fashion not long ago, but these days polished floors or stone is a much more attractive look. You don’t need to tear the floors up every time the fashion changes, but consider making a refresh to the flooring a high priority.
3) Make sure everything matches inside
Even if the house is not being sold with the furniture, the furniture that fills a space makes a statement and can help to inspire the creative thoughts in a prospective buyer. Mismatching furniture within a room can make it look busy, small, and unattractive to the eye. Consistency and style will create an open, calm atmosphere, which will inspire far more confidence in a buyer.
4) Raise the roof
The desire to have space is a timeless one, and the height of the ceiling can actually have a big impact on the perception of space in a room. If your property has low ceilings and it’s possible to lift them, do so in order to maintain that open, airy atmosphere that is so in vogue at the moment.
5) Focus in on the kitchen
It’s very likely that a prospective buyer now is a fan of shows like My Kitchen Rules and MasterChef! That means they are going to want a sizable and well-resourced kitchen to host their dinner parties. What are people looking for in their kitchens? Energy-efficient appliances (taps, ovens, fridges), plenty of storage space and cabinets, and plenty of countertop space.
6) Is there the ability to add more rooms?
Properties escalate in price rapidly as more rooms – especially bedrooms – are added onto the building. So, if there is the ability to renovate and add a bedroom or two, an extra bathroom, or additional living space, be sure to consider it. Renovations might have an upfront cost, but the return from that investment generally justifies it come sale time.
7) Sustainability is so hot right now
Increasingly, people want to live sustainably, and are willing to pay a premium in order to be able to do so. In addition, savvy home buyers are realising that the more sustainable a building, the cheaper it’s going to be for them in the longer term.
Ideas to consider include: solar panels, water tanks, thermal warming systems, and great insulation is a must.
Most of these investments can be made over the medium and long term, which is why it’s worth considering well before you’ve even started to think about selling your home. That way, when you do decide to sell, you’re not going to miss any opportunities by simply running out of time to “do up” the place.
If you need assistance financing your property renovations, remember we’re here to help. There are a variety of different ways to organise finance for your projects and we can help you to access the right option for your needs, so give us a call today.
8 things to consider when making a property investment
When it’s done right, investing in property can help you to build wealth for your future. In Australia, property is currently a very popular investment and many people are enthusiastically jumping into the market to make the most of the low interest rates currently available. But it takes careful planning for your property investment to be a success. Here are ten key factors to consider before investing in property.
- What you want to achieve
First, determine what your end goal is – it might be financial freedom, to tie up some extra funds, or to live in the property yourself in years to come – and then make a plan that’ll help you reach that goal in a suitable timeframe. Review your plan on a regular basis to make sure you’re on track.
- Your preferred investment strategy
If you’re looking to maximise returns, wise investors focus on buying a property below its intrinsic value in an area with a long history of strong capital growth. Also look for a property that’s unique, special or different, and one that you can renovate or redevelop in order to produce better capital growth.
- The type of property
A good investment is a property that’ll be in continuous strong demand from both tenants and owner-occupiers. This is because tenants help pay off your mortgage, whereas owner-occupiers push up house prices. More people nowadays trade their backyards for balconies, so think about going for an apartment-style property in the inner suburbs.
- Buying old or new
Remember, you’ll often miss out on capital growth for the first few years if you buy a new or ‘off-the-plan’ apartment. This is because you’ll have to pay a premium to the developer.
Another thing to consider in purchasing a new unit as an investment property, is that many owners in the building will most likely be investors also. It’s best to buy an apartment in a building predominated by owner-occupiers, as they typically look after the building more effectively than investors. The established apartment should also be in a character-filled block that can be cosmetically refurbished, as this can help you increase your rental income and produce some capital growth.
- Where to buy
Location is very important when it comes to your investment’s long-term performance, so look for a property in a suburb that has always outperformed the averages or one that’s being renovated or redeveloped. You’ll usually find it in a lifestyle suburb in a major capital city near the CBD, amenities or water. Then narrow your choices further by choosing the best spots in the suburb.
- What you can afford
You should know how much you can afford to spend and repay before you look for a property. You can do this by talking to us about getting a pre-approved loan and setting aside some funds for acquisition and holding costs, as well as a financial buffer for an emergency or a rise in interest rates.
- Who to ask for help
In addition to us – your professional finance broker – you’ll need expert input and advice from the following people: qualified accountant, independent property strategist, smart solicitor, and if at all possible, an experienced property investor as a mentor. They can all help you ensure that your investment is a success.
- The importance of research
Successful property investors never stop researching the market to capitalise on the best opportunities. You should familiarise yourself with all Australia’s various property markets and not just your local market, in order to find the best potential for profit.
If you’re looking to invest for the first time or expand your existing property portfolio, or to venture into investment for the first time, contact us today. We’ll help you with your finance and give you referrals to professionals who can help you with the purchasing process.
What is a ‘strata title’ property?
Strata title is a method of facilitating individual ownership of part of a property – generally an apartment, unit or townhouse. Uniquely, strata title allows for individual ownership of an actual lot or unit whilst sharing ownership of the common grounds on which it is built. The concept only came into being 50 years ago, however there are now more than 270,000 strata title properties providing more than two million homes across Australia.
Investing in a strata title property can be a smart move – it’s often an affordable way to enter the property market, and can be beneficial in managing repairs and renovations down the track. But whether you’re buying a unit or a townhouse, you should look into the history of the property and its strata scheme before you sign the contract. Here’s a few things you should know if you’re looking at buying a strata title property.
What is a strata scheme?
A strata scheme is another name for a strata title development. Basically, it’s a building or group of buildings divided into ‘lots’, which can either be individual units, apartments or townhouses. When you buy a lot, you own the individual lot as well as share the ownership of common property with people who own the other lots. Common property usually includes things such as gardens, roofs, external walls, staircases and driveways.
Strata living offers a friendly community-style environment, but it’s different from when you live in a freestanding house. There may be some activities that are more restricted, like where to park your car or how to renovate your lot. It’s very important that you’re aware of your responsibilities and obligations.
Why invest in a strata title property?
Are strata titled properties better than houses? To help you decide whether you should buy a strata title property, here are the pros and cons:
- The cost of the property compared to the land is cheaper than buying a freestanding house.
- Maintenance of the property is taken care of via the strata levies, which are paid every three months.
- The price of strata titled properties is usually cheaper than free-standing houses, so demand for them is higher, which in turn could push up their price in the future.
- It’s easy to get finance as lending policies for strata titled properties are favourable. Depending on which suburb the property is located in, you can get an LVR (loan-to-value ratio) of up to 95%.
- Strata levies can be expensive, particularly in larger blocks with lifts, gyms and pools.
- It can be very noisy to live in a strata title apartment since you’ll have neighbours living above and below you.
- Your unit/apartment could lose significant value, particularly in large blocks, if your neighbour has to sell quickly as a result of divorce or other financial difficulty.
The owner’s corporation
The owner’s corporation is one of the major differences between buying a house and a strata title property. The lot or unit owners in the strata scheme make up the owner’s corporation. However, the owner’s corporation also has an executive committee that makes certain decisions on its behalf, including the day-to-day management of the property. Large strata schemes can also appoint a professional strata management firm for the purpose of assisting and overseeing the functions of the owner’s corporation.
It is a good idea to have your solicitor look at any strata title contract before you sign on the dotted line, as they can be somewhat more complicated than purchasing a freestanding house. If you need a referral, or would like to get pre-approval on your financing before proceeding with your purchase, then give us a call. We’ll be happy to help.