Posted by Rob Honeycombe on 25 October 2010
Australia’s rental marketplace has long had a reliance on small investors, but in recent years the number buying residential real estate in Brisbane’s inner city has been low. After the strong rental growth of 2006-2008 returns have leveled off and big capital gains aren’t considered a sure bet, at least in the short term. Finally the growing confidence from self-managed super funds may give investment property a much-needed new buyer group. One with a longer term view of returns.
Once considered an option only for the very rich, we’re recording more and more property sales to self-managed funds. These are often mums and dads with a decent but not massive sum in their funds, who are using the growing acceptance (and sometimes enthusiasm) from banks to fund a residential property purchase. Accountants and other advisers are learning more about the required structures, and despite tinkering from the government there’s increasing confidence in this as a way to leverage your retirement savings.
The set-up isn’t ridiculously expensive or time-consuming, the bank loan is limited-recourse, you can get some real diversity in your retirement fund and it gives you greater control over the asset’s management. Many of us know and trust real estate as an investment vehicle and directing some of this nation’s enormous superannuation reserves into housing can only be a good thing.
Worth a call to your adviser?
Tags: Brisbane property manager, Brisbane rents, capital gains, investment property, superannuation
Posted in Brisbane landlords, Brisbane's sales market, trends in Brisbane property | No Comments »
Posted by Rob Honeycombe on 25 August 2010
The boost to the First Home Owner grant was an important part of the government response to the GFC in 2009 and there’s no doubt it kept that sector of the market moving. The boost finished but the grant remains at $7,000.
During this recent election campaign the Real Estate Institute of Australia was pushing for the grant to be permanently upped to $15,000, noting that a decade’s passed since the amount was set and in that time Australia’s median house prices have jumped from $220,000 to $519,000. So when introduced the grant was 3.2% of a home price and is now 1.5%.
The other idea the Institute has been running is for first home buyers to be able to access their voluntary superannuation (not employer contributed funds) to buy a home.
“The REIA proposes that a scheme be established which would encourage young Australians to contribute to voluntary superannuation by allowing access to these resources for the purposes of raising a deposit for a first home. The scheme would be an adjunct to the First Home Savers Account but would allow flexibility for the saver to decide whether all or part of the voluntary superannuation payments was needed to augment the home purchase.”
We remember visiting pollies in the mid 1990’s as part of an Institute push for policy change for a similar idea back then. Nothing changed and from what we can tell neither of the major parties have had much time for this idea now.
We’re not sure how many buyers would take advantage of it, but to have a great tax vehicle like super as the place to save for your home seems a great idea.
Your thoughts?
Tags: first home owners, First Home Owners Boost, Real Estate Institute of Australia, superannuation
Posted in Brisbane's sales market, property taxes and rates etc | 2 Comments »
Posted by admin on 22 July 2009
We’ve written before about our lack of institution or company-owned residential real estate. Across Australia 30% of us live in rented accommodation and Mum and Dad investors own most of this housing. Despite 9% of our workforce’s wages going to superannuation, cash that has to find a home, the big funds have never been attracted to residential property.
Westpac looked set to change all that in 2006, buying a whole bunch of housing in anticipation of launching our first residential property trust. But this week they’ve announced they’re selling up. It’s almost 500 properties, all leased to the Defence Housing Authority. Not like they’ve had any vacancy.
Even with an incentive plan, the National Rental Affordability Scheme, put in place by Federal Labor (one of their 2007 election ideas,) the big end of town has proven disinterested in residential housing. Too low a return? Too risky? That’s not what history shows.
Westpac says they’re abandoning their plans for a funds management portfolio because the market has changed and “the strategy is no longer appropriate.” Who knows what that means.
Either way it puts more pressure on average Australians to invest in residential property.
Tags: Defence Housing Authority, Federal Government, funds management, investment property, National Rental Affordability Scheme, superannuation, Westpac
Posted in Brisbane landlords, trends in Brisbane property | 1 Comment »
Posted by admin on 15 April 2009
Here’s a copy of the media release we’ve just sent out:
New statistics released today show the pressure’s coming off tenants in Brisbane’s inner city as the rental housing market finally grows.
According to Bees Nees Research the March quarter saw the supply of accommodation growing strongly, with 338 homes added to the rental pool.
Managing Director Rob Honeycombe says many of these are owners-residents who’ve been unable to sell and have instead rented their property.
“This increase isn’t due to lots of new property been built – construction of new investment properties is still very low. But with some owners unable to sell it’s no surprise those who have to move city for example are often choosing to rent their home”, Mr Honeycombe said.
Mr Honeycombe said the total bonds held by the Residential Tenancies Authority (RTA) for inner city properties had finally risen.
“The increase in the March quarter was the largest since early 2007 and the inner suburbs really needed it. We’ve had an acute undersupply for some time”, Mr Honeycombe said.
“Rents have naturally started to flatten as tenants have more to choose from and across the inner city have actually dropped slightly (a 2bedroom apartment dropped from $430 to $420/week). House rents are similar.”
In the CBD rents were up $10 to $520/week but areas like Kangaroo Point and East Brisbane dropped $40.
Mr Honeycombe says the lower stockmarket and superannuation returns may also be helping tenants. “We have a client who recently chose to rent spare bedrooms in her own home to provide a new income stream. Her investments aren’t providing a high enough return. We expect there’s many more stories like this out there.”
“With the flurry of first home buyers expected to slow after June and without new construction of any volume, we do expect the rental market to tighten once again. For the time being at least there’s more rental homes and that’s a breath of fresh air for tenants.”
If you’d like a suburb by suburb guide to median rents go to www.WhatRentMyHome.com.au for all the latest stats.
Tags: Brisbane rents, East Brisbane, first home buyers, Kangaroo Point Brisbane, Residential Tenancies Authority, superannuation
Posted in Brisbane CBD, Brisbane landlords, Brisbane's rental market | No Comments »
Posted by Rob Honeycombe on 2 January 2008
Residential investment property in Australia is largely owned by individuals, with Mum and Dad landlords owning the lion’s share. But with so many of us recently injecting funds into superannuation there’s an ‘unnatural’ limit being placed on the supply of rental homes. Why? AMP and the other big super funds don’t own a bunch of residential property and generally self-managed super funds can’t borrow from a bank, so they rarely own rental homes. In the USA a lot of residential property is owned by companies, with many of them large trusts that own upwards of several thousand apartments. But Australia’s residential property has rarely offered returns that would attract the corporates, who’ve turned to commercial and industrial real estate for the stability of long leases and indexed rents.
There may be some change on the horizon here. In August Labor announced their $603million National Rental Affordability Scheme, an incentive package designed to entice Australia’s institutions to supply 50,000 new rental homes over the next 5 years. The scheme would see eligible tenants receive a 20% discount on market rent with the institutional property investor committing to this for 10 years in return for an annual handout from the government. The feds will pay $6000 per annum and each state government will chip in $2000. Hopefully new Housing Minister Tanya Plibersek now has this policy’s implementation right at the top of her 2008 ‘to do’ list.
Fifty thousand homes is only a bit more than a drop in the bucket as far as increasing supply and helping with rental affordability. But more interesting to watch will be the willingness of our big end of business town to take another look at residential investment.
Across the nation 30% of us are renting and many tenants are now looking for longer leases and are happy to pre-commit to annual rent increases. While rental yields are still low relative to the returns available from non-residential property, there’s simply so much money flushing about in superannuation that residential may soon be back on the shopping list. Have a look at www.equityresidential.com for one American company that offers a very tenant-oriented service. They own 160,000 residential apartments and are able to use the efficiencies that come with being a massive landlord. For example if there’s maintenance needed and they don’t have it done within 2 days they give the tenant a rent holiday! And their tenants never have to worry about the landlord selling up or moving back in.
If Australian institutions can find the viability in residential property investment and offer tenants an attractive renting alternative, the way we look at our rental market may just be about to get a shakeup.
Do you think institutional investors will start buying residential property? Tell us what you think!
Tags: Brisbane housing supply, Brisbane rents, superannuation, USA
Posted in Brisbane landlords, Brisbane's rental market, trends in Brisbane property | 1 Comment »
Posted by Rob Honeycombe on 26 September 2007
They’re just not great headlines: “Market good, some prices up strongly, other prices up a bit”. And of course it serves some peoples’ interests to talk a market up, especially if they have a bunch of new properties to sell. So amongst the repeated stories of a return to boom days, here’s a quick look at the stats and some thoughts from on the ground in Brisbane’s inner suburbs.
According to Macquarie Real Estate Brisbane’s house prices rose 9% in the first half of this year. Matusik Property Insights report a jump of 6% in the June quarter alone (yes that’s 24% annualised). These are very strong numbers from very credible sources. And with just under 50,000 people moving to Queensland in 2006 (net of those deserting us!) demand for housing is strong. Matusik rightly reports that supply is still constrained, and shortfalls in Brisbane are “acute”.
Inner city Brisbane is clearly a mixed bag with houses and many apartments suited to owner-occupants selling fast and with prices that reflect the reported stats. It’s fair to say we are going through a mini-boom in some pockets. Investors though have not yet leapt back into the market in big numbers. While rents are rising they’re not on fire, so net returns are yet to stir serious levels of interest. And investors are a little preoccupied elsewhere. ABS report a $72billion increase in Australians’ superannuation assets during the June quarter as people rushed to meet the June 30 deadline. That money’s simply not flowing back to property – yet.
So for a lot of smaller or older inner Brisbane apartments there’s now some big price savings compared to larger apartments and houses right next door, simply because there’s fewer buyers for them. The part-time developers are starting to pounce on unwanted, tired apartments and doing a Blitz/Block/Hot Property makeover, serving them back to a hungry owner-resident market. For those keen buyers who enjoy painting bathroom ceilings on their Sunday mornings there’ll no doubt be some dollars to be made!
Tags: Australian Bureau of Statistics, Brisbane home prices, Brisbane housing supply, Michael Matusik, population growth Brisbane, superannuation
Posted in Brisbane's sales market | No Comments »
Posted by Rob Honeycombe on 7 June 2007
In Australia some 80% of residential rentals are provided by private landlords, so any changes in property’s appeal as an investment can have a quick and dramatic effect on rental prices. According to Macquarie Bank the UK government provides more than half of London’s rentals, and in the USA massive trusts own large tracts of residential apartment rentals. Despite having this more resilient supply source both of those countries are also witnessing strong rental growth.
Locally a number of issues have combined recently to persuade some investors away from the residential market: tax rate reductions have reduced the net benefits, the stock market’s been delivering excellent returns, and superannuation’s new tax status has seen that vehicle soak funds away from residential property. With surging housing demand (including the highest net overseas migration in 17 years) it’s no surprise most forecasters are pointing to further strong rent rises.
Queensland’s tenancy laws are currently undergoing another review and landlords are watching with interest to see whether the Residential Tenancies Authority will provide any new disincentives to property investment. As any government body should the RTA is responding to consumer concerns including the failure of some agents and owners to respect tenant’s rights. Among their proposed changes: new options for tenants to challenge rent rises, limits on inspection times and the option for some tenants to cancel their lease if the property’s up for sale.
Bees Nees City Realty have approached the RTA’s General Manager Fergus Smith for further info and he’s agreed to speak at our special breakfast for landlords on Wednesday June 20th 2007 . If you’d like to come to the breakfast as our guest and hear what changes might affect property investors RSVP’s are essential. Please email rsvp@beesnees.com.au or call Michelle on 07 3214 6888. We’re holding it at the Convention Centre at South Bank at 7.15 for 7.30am to 8.45am. Public consultation on the Act’s review closes on the 22nd June and there’s more info at www.rta.qld.gov.au
Tags: Brisbane housing supply, Brisbane rents, population growth Brisbane, Queensland tenancy legislation, Residential Tenancies Authority, superannuation, UK, USA
Posted in Brisbane's rental market, property taxes and rates etc, trends in Brisbane property | No Comments »
Posted by Rob Honeycombe on 16 October 2006
If you’re feeling a little flush lately here’s why: recent stats from Ibisworld show at June 30th our nation had assets of almost $7 Trillion (that’s 7 million millions if you’re trying to get a handle on the number!). Even after allowing for some debt that’s net assets equivalent to $700,000 for every Australian household.
As you’d expect much of the assets ($4.2 Trillion) is held in property and residential dwellings account for almost two-thirds of that. Offices are the next largest property holding, at just 7.5%. Despite the long-held love affair with residential property for investment, Aussies are slowly responding to the government’s incentives and channelling more into superannuation.
At a Brisbane seminar last week BT’s Chief Economist Chris Caton confirmed what many have suspected however: even with compulsory super Australians are now saving less than we used to.
Tags: Ibisworld, superannuation
Posted in Brisbane landlords | No Comments »
Australia’s rental marketplace has long had a reliance on small investors, but in recent years the number buying residential real estate in Brisbane’s inner city has been low. After the strong rental growth of 2006-2008 returns have leveled off and big capital gains aren’t considered a sure bet, at least in the short term. Finally the growing confidence from self-managed super funds may give investment property a much-needed new buyer group. One with a longer term view of returns.
