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Don’t abandon negative gearing REIQ tells Labor’s Chris Bowen

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Don't abandon negative gearing REIQ tells Labor's Chris Bowen

Don't abandon negative gearing REIQ tells Labor's Chris Bowen

Rental rates would be driven upwards if negative gearing benefits were removed, the Real Estate Institute of Queensland (REIQ) claims.

The real estate industry lobby has criticised recent comments from Labor Shadow Treasurer Chris Bowen, who flagged that the party may wind back negative gearing benefits if it comes to power.

REIQ chief executive Antonia Mercorella believes negative gearing increases the supply of affordable rental properties.

“Investors help maintain supply to the rental market and a strong supply also ensures rental affordability is maintained,” claims Mercorella.

“In Queensland more than a third of our population is in rental accommodation, so it’s crucial that supply is maintained for this large section of the community.

“If private rentals were drastically reduced this would place enormous strain on the limited resources in public
housing.

“It would also serve to drive up rents in remaining limited stock,” she says.

Mercorella cited a “surge” in rents when the Hawke government removed negative gearing benefits between 1985 and 1987.

“We saw rental affordability plummet in Sydney and Melbourne when negative gearing benefits were quarantined.”

Her claim mirrors those made by Treasurer Joe Hockey recently on ABC’s Q&A.

“You saw a surge in rents and those people who were paying rents are usually – not always, but usually – people that can’t afford in many cases to buy their own homes,” Hockey said last month, of the 1980s negative gearing changes.

However, his claims were refuted by economist John Daley of the Grattan Institute, who said the rental increase was confined to Sydney, which could have been attributed to an undersupply of property.

“But look beyond Sydney and rents were dead – barely moved in Brisbane, didn’t go up very far in Melbourne, didn’t go up very far in Adelaide,” Daley said on the show. The varied performance of rents across Australia “made you suspect very strongly that the race memory we have of abolish negative gearing, that rents will go up, is a race memory built on Sydney,” he said.

Mercorella, however, believes there is still reason to draw evidence to support negative gearing from the 1980s.

“Sydney and Melbourne are our bellwether states, and they lead the property market trends, so we know with absolute certainty what will happen if we do this again – it will destroy rental affordability and place enormous  strain on the public housing system as investors desert property as an asset class,” she argues.

She cites the Queensland government’s Housing 2020 report, published in 2013, which details plans to scale back public housing, encouraging residents to consider social housing “transitional”.

According to the REIQ, investors make up 34% of owners in the residential market.

By JESSIE RICHARDSON

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Luxury Noosa home fetches $8m as buyers rush to cash in

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Luxury Noosa home fetches $8m as buyers rush to cash in

INTERSTATE buyers lusting after the Noosa lifestyle are forking out millions for waterfront properties, as they rush to cash out of Sydney and Melbourne’s flagging housing markets.

INTERSTATE buyers lusting after the idyllic Noosa lifestyle are forking out millions for waterfront estates, as they rush to cash out of Sydney and Melbourne’s flagging housing markets.

The ink has just dried on the purchase of an ultra luxurious, waterfront home in Noosa Heads for a cool $8 million in one of the biggest settlements in the resort town so far this year.

Luxury Noosa home fetches $8m as buyers to cash in

Selling agent Adam Watts of Century 21 Conolly Hay Group said the four-bedroom, four-bathroom Hamptons style property, with its own private jetty, at 45 Witta Circlehad just settled after selling to an expat to use as a holiday home.

Mr Watts said interstate and international inquiry for Noosa’s prestige market was strong, with many people wanting to move there for the lifestyle — not just to buy a holiday home.

A luxurious house on the waterways of Noosa Sound has also just sold for $5.75 million to a Melbourne buyer planning to retire in the sunshine state.

Luxury Noosa home fetches $8m as buyers

Selling agent Nic Hunter of Tom Offermann Real Estate said another two, older-style properties had gone under contract in the same street at the weekend for around the $4 million mark each.

And down the road in Sunrise Beach, another four bedder on the beachfront has just been signed for $4.2 million.

Luxury Noosa home fetches $8m buyers rush to cash in

Mr Hunter said the buyer of 27 Mossman Court had previously owned a holiday villa in Noosa, but decided it was time to move there for good.

“There are five bedrooms, so plenty of room for all the family to come and visit,” Mr Hunter said.

“He wants to enjoy fishing out on the jetty with the grandkids.”

Luxury Noosa home fetches $8m buyers to cash in

Mr Hunter said the increase in interstate migration to Queensland was being felt strongly in the Noosa region, with buyers snapping up properties on the water with proximity to Hastings Street and room to park a boat.

“It’s a big trend going on here at the moment,” he said.

“The higher-end, lifestyle seekers are fuelling the market — mostly from interstate.”

Luxury Noosa home fetches $8m as buyers rush to cash

The latest Herron Todd White property market outlook reveals expat buyers benefiting from the weaker Australian dollar are looking to the Sunshine Coast as Sydney and Melbourne investors feel the effects of a softening market.

The report cites proximity to the beach as a driving factor for purchasers, which was expected to continue in 2019.

HTW expects the prestige markets in Noosa to continue to see “some good activity this year on the back of some record sales in 2018, but it may be impacted by the slowdown in confidence in the Sydney and Melbourne markets.

Originally published as Cool $8m for Noosa dream home

Source: news.com.au

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Finance

Aussie hotspots enjoying a sudden property boom

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Aussie hotspots enjoying a sudden property boom

Property prices across the country saw their steepest fall in 15 years in 2018, bringing them back to 2016 levels in what has been a housing downturn like no other.

But it’s not bad news everywhere – while investors shy away from Sydney and Melbourne, there are some hotspots which are enjoying a sudden property market boom, according to news.com.au.

Queensland

The South East and Gold Coast regions are seeing the most buying activity, with Brisbane, Moreton Bay, the Sunshine Coast and Ipswich booming along with the Gold Coast, Tugun and Burleigh Heads.

Tasmania

Unsurprisingly Hobart is the strongest property market, although activity has spread beyond the inner city and into the middle and outer rings, while Launceston has also recorded solid interest.

South Australia

The entire South Australian capital is booming, although most activity is happening in the inner city and Adelaide Hills.

New South Wales

While many investors have deserted Sydney, areas such as Paddington and Winston Hills and the nearby Central Coast are doing well.

Other booming areas are further north in Tweed Heads and Byron Bay.

View from the experts

Daniel Walsh of investment buyer’s agency Your Property Your Wealth, told news.com.au that investment activity has now firmly shifted to Queensland.

“We’re seeing rising demand particularly in the housing sector in southeast Queensland where yields are high and jobs are increasing due to the amount of government expenditure around infrastructure which is attracting families to the Sunshine State,” he said.

“With Brisbane’s population growth at 1.6 per cent and surrounding areas like Moreton Bay at 2.2 per cent, the Sunshine Coast at 2.7 per cent and Ipswich at 3.7 per cent, we are forecasting that Brisbane will be the standout performer over the next three to five years.”

Realestate.com.au chief economist Nerida Conisbee agreed, telling news.com.au Sydney investors especially had started to turn their attention north.

“Interest is strong in the Gold Coast across the board although there’s more action on the south side in places like Tugun and Burleigh Heads,” she said.

She added there was also a notable trend towards Tasmania, Adelaide and pockets of NSW such as Tweed Heads and Byron Bay.

Adelaide has also been flagged as finally booming after recently hitting the highest median house price ever recorded, largely driven by jobs and economic growth off the back of defence contracts, the announcement of the new Australian Space Agency and other investment in the area.

“Inner Adelaide, beachside and the Adelaide Hills tend to have the most activity but there’s also quite a lot of rental demand in low-cost suburbs so we’re expecting to see a bit more investment there in those really cheap suburbs over the next 12 months,” Conisbee said.

“There you can get houses for $250,000 so for an investor, it’s a relatively low cost in terms of outlay and the area is seeing really strong rental demand which means you’re more than likely to get tenants, so for investors it’s a really attractive area,” she said.

Source: brisbaneinvestor.com.au

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Finance

Why equity can help you buy again

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Why equity can help you buy again

Unlocking the equity in your home could help you purchase another. Chief executive of property advisory firm Property Mavens used her home’s equity to buy a Preston investment property. Picture: Lawrence Pinder

WE’VE all heard of the benefits of refinancing to get a better deal on your home loan, particularly a more competitive interest rate.

But what if refinancing could also help you buy an investment property?

“Borrowers may be able to refinance their existing home loan to access equity they may have built in their property, in order to buy an investment property,” Mortgage Choice chief executive Susan Mitchell said.

Refinancing with the aim of buying an investment property could allow borrowers to grow their wealth, according to Ms Mitchell, as, generally speaking, property was considered a safe asset class in Australia with decent returns over the long term.

“CoreLogic found that over the 10 years to June 2018, national dwelling values increased by over 40 per cent, a good return on investment,” she said.

But she cautioned there were a number of costs associated with refinancing, so it was important borrowers made an informed decision before jumping in.

Why equity can help you buy again
Leveraging your home’s equity could help you to buy another.

The nuts and bolts

So, how does refinancing using equity work?

The Successful Investor managing director Michael Sloan explained that lenders would typically lend you 80 per cent of the market value of your home, less the debt you still owed against it.

“This is your usable equity as banks hold some back as security,” he said.

“So, say, for example, you have a $500,000 property and a $200,000 loan. Your usable equity will be $200,000,” he said.

As to what value investment property you could buy, Mr Sloan said a simple rule of thumb was to multiply your usable equity by four.

“But remember that one of the risks of property investing is spending too much,” he said.

“You need to buy well below the median house price ($742,000 in Melbourne, according to CoreLogic), in fact you shouldn’t be within $200,000 of it.”

Ms Mitchell said the figure depended on how much a lender determined a borrower could afford to repay.

“Available equity is important but the key factor a lender needs to consider is how much a borrower can afford,” she said.

“If a borrower does not have additional capacity to repay a proposed new loan, they may not be able to borrow, irrespective of how much equity they may hold,” she said.

Why equity can help you buy again
Consulting an independent broker may be helpful for would-be investors.

Where do I sign?

And there’s the rub: having equity in your home is not a guarantee you’ll be able to access it.

“You can have a million dollars of equity but if you don’t satisfy the institution’s lending criteria, they are not going to loan you any money,” Mr Sloan said.

“The bottom line is they will take everything into consideration: for example, how many children you have, as the more you have the less you can borrow, your work situation and how much you spend on everything from your daily coffee to the tyres on your car.”

Lenders have also tightened their assessment procedures as a result of recent regulatory measures, such as The Australian Prudential Regulation Authority (APRA) imposing a 10 per cent benchmark in growth on investment lending last year.

This was introduced in a bid to curb activity in the housing market, Ms Mitchell said.

“These regulatory measures have resulted in lenders increasing their scrutiny of a borrower’s ability to service a loan,” she said.

“When deciding if an applicant can afford a mortgage, a lender will consider a borrower’s available ongoing income and from this allow for existing debt commitments and living expenses,” she said.

“Their decision will also factor in a buffer for potential increases in interest rates.”

But it’s not all doom and gloom. Ms Mitchell advised that borrowers could overcome the increased scrutiny by getting “financially fit”.

“Get out of debt, spend your money wisely and adopt a disciplined savings strategy to show lenders you can service a loan,” she said.

Air Mutual director Damien Lawler advised would-be investors to consult an independent broker who could access a range of lenders, which might have varying assessment procedures.

“Everyone is talking about the banks tightening up – which they are – but there are banks, particularly the smaller, tier-two banks, who are still lending,” he said.

Why equity can help you buy again
Getting the right structure for your loan is essential.

And finally …

Mr Sloan said his No.1 piece of advice for would-be property investors was to play it safe and to have some funds in reserve if things go wrong.

“You should never buy (another) property if you have no extra money available to you after you settle, so you need to have a buffer. And protect what you are building with income protection and life insurance, if you have a partner,” he said.

Source: brisbaneinvestor.com.au

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