Happy Easter from First National Burnie
March 31, 2010 Leave a comment
Property Management a Billion Dollar Business
March 30, 2010 Leave a comment
Property Management a billion dollar business
Property Managers and business owners from across the country who met in Sydney this week heard that property management is the unsung hero of the property industry.
“We had 140 property managers in the room and between them we estimated the market value of the properties under management to be more than $2.6 billion dollars,” said First National Board member and Tasmanian State Chair Deanne Lamprey.
“Each of our property managers are looking after millions of dollars worth of assets, they play a very important role in the real estate industry, economy and the community”.
First National Real Estate CEO, Ray Ellis, agreed. “All the data and analysis focus on the sales side of the property industry,” Mr Ellis said.
“When people work hard to put away money for an investment, they want to make sure that asset is looked after so they earn good returns and the value of their investment will continue to grow in the future. In real estate, the people who look after those assets are property managers.
With our housing stock in such short supply and vacancy rates tight across the country, effective property management is a vital part of our economy. Without good property management, the value of Australia’s housing stock would deteriorate in condition and then in value.”
“It is very easy in a real estate business to focus on sales, but that side of the business is often very short term and easily affected by changes in interest rates, market sentiment and local developments,” Deanne Lamprey said.
“Property Management is the business that tends to remain steady regardless of whether sales are up or down. Looking after the assets of the community is important work that is often under valued.”
First National Says National Planning Needed
March 30, 2010 Leave a comment
First National Real Estate CEO, Ray Ellis, supports the call from the Australian Local Government Association for a national planning authority but says Australia’s problems with its planning processes go far beyond the single issue of coastal climate change planning and require a major overhaul.
“It’s very myopic to just consider this one issue in isolation of what is happening in other areas of the property market around this country,” Mr Ellis said.
“In Queensland, they are working off two year old planning approvals, while NSW planning approvals have dropped dramatically in recent times.
“And, while Victoria has just posted strong planning approval figures for some years, this is a result of a minister wielding a big stick rather than systemic structural changes.”
Mr Ellis agreed that the confusion created by inconsistent sea level rise predictions makes planning and development increasingly difficult on coastal regions, but more importantly have the potential to impact negatively on the property market in general.
“Home owners and other property market pundits need certainty around property prices so that they can make decisions based on facts and consistent information,” Mr Ellis said.
“It’s all well and good to say that the responsibility for planning rests with state and local government, but ultimately, a consistent, unified and national approach needs to be considered in the property market.
“This is unsustainable and I can’t think of any other industry that would operate with this level of uncertainty and confusion.”
Can Renting Be Better Than Buying?
March 23, 2010 Leave a comment
Rent or Buy?
Current market conditions, coupled with growing concerns over housing affordability, are causing uncertainty for home buyers who are wondering whether they should continue to rent or commit to buying their own home.
It all comes down to what suits individual’s personal and financial situations best. Renters and buyers should consider which will be best for their net wealth and cashflow over their lifetime and seek good professional advice.
Renting offers great flexibility, is often a cheaper alternative to buying, especially in the inner city areas particularly favoured by Gen Y-ers who want that urban lifestyle close to where they work and monthly rental payments will usually be less than a mortgage repayment for a comparable property along with maintenance costs, repairs, rates and insurance bills which are the responsibility of the property owner.
However, buying a property means you are able to put your own personal stamp on the property or make it reflect your individual style and design preferences, and eventually you will own your own property and no longer need to find monthly repayments.
With advice and assistance from a real estate agent, who has the necessary knowledge, experience and skills to understand the market, its trends and its weaknesses and opportunities, the right decision can be made.
Historic Renting Trends In Australia
March 23, 2010 2 Comments
A current trend towards renting in favour of home ownership could alter Australia’s distribution of net wealth if it becomes sustained long-term. To make sense of the trend and consider its possible effects, an assessment of long-term rental patterns is essential.
Whilst the current trend towards renting is irrefutable, the more important questions are why is it happening, will it be sustained long term, and what are the implications of a permanent shift? Census, REIA and ABS statistics clearly show a decline in rental trends since records began in 1947 from 44% of households to 28.7% in 1996.
The rental population has remained relatively constant since 1961, hovering between 25.7% and 28.7%.
In the wake of the city fringe industrial revitalisation taking place in many Australian cities, significant numbers of Australians are placing an unprecedented demand on inner urban housing. Census statistics reveal that it is primarily those under 30 taking advantage of these urban renewal areas, contrary to the popular belief that it is chiefly ‘empty nesters.’
The Australian experience appears to mirror similar trends in other major international cities. One only has to look at Paris and New York to identify the established pattern of city living currently gathering momentum in Australia. Why is it then that this migration seems to be associated with an increased demand on rental accommodation in particular?
Those who are relocating and taking up this rental accommodation are doing so for the following reasons:
- Renting in new complexes or inner suburban developments is currently more affordable than buying, particularly in the light of rising interest rates and a tightened credit environment.
- The established inner suburban property market tends to be tightly held and the rate at which new developments are being approved remains insufficient to meet demand.
- Inner urban relocatees will frequently rent for a year or two before purchasing, to ascertain whether their new lifestyle suits them – ‘empty nesters’.
- Some are renting so that disposable incomes can be invested in assets, which are tax effective compared with an owner occupied residence.
- Significant numbers are opting to delay marriage and families. Renting provides this group with greater lifestyle choices and flexibility.
It is probably significant that rental figures appear to have some relationship with construction patterns and related legislation. The last construction boom occurred in the mid 1960s to early 1970s following changes in ownership of flats from Company Share to Stratum title in 1960, and then Strata title ownership in 1967.
Until then, conventional home loans were not available to would be purchasers since they did not have a freehold title to offer as bank security. It remains the case today that most Australian banks remain reluctant to provide finance for the purchase of the country’s relatively small stock of Company Title apartments.
This change made affordable inner suburban living a reality, fuelling demand from many young people wanting to leave home and rent with ‘flatmates’ during their university and early working years. Unit construction went ahead in leaps and bounds.
In 1971 rentals accounted for 27.9% of households, up from 26.7% in 1966. Then, as with now, legislation, effective town planning, land releases, zoning, and structural barriers, all exerted a similar influence. Technological development and its effect on work patterns, career expectations, marriage and child bearing patterns, is engendering new lifestyles.
However, long term statistics show that the percentage of rental households has never exceeded the 30% benchmark of the late 1950’s and early 1960’s, notwithstanding severe recessions, legislative changes, demographic shifts and construction booms. The ‘highs’ have always moderated, as other variables have levelled out.
City renewal, increased construction and availability of rental accommodation would therefore appear part of a predictable cyclical pattern to which all cities are subject. As those in the current under 30s age group become more affluent, establish careers and form relationships, it is likely that home ownership will follow, albeit later in their lives than previous generations.
Many recent reports on long term viability of home ownership assume that people make one dimensional decisions regarding home ownership, and fail to consider basic elements of human nature. The drive to ‘set down roots’ is a powerful one, irrespective of lifestyle fashions, fluctuations in home affordability or advice on what may be technically correct in an investment sense.
Whilst not all homes technically represent a superb investment, home ownership is a form of enforced saving that creates a financial discipline, allowing the owner to release equity for wealth creation later on. Renting for an extended period and investing in prime assets including inner suburban investment property could well expedite home affordability, given the tax advantages and rental income.
The reality is that human beings have culturally and biologically ingrained needs. These powerful catalysts motivate us to achieve our financial and personal goals. It is unlikely that wealth creation will ever become the exclusive motivation for home ownership.
If however, the rental pattern does revert to post war levels due to severe financial hardship, we risk the bulk of material wealth being held by fewer people, or a society more European in style, where long-term rental is a more common expectation, or, mortgage products where the principal is never repaid (just the interest) enable people to live in houses that they believe they could never afford to own.
Deanne Goes To Texas Part 5
March 21, 2010 Leave a comment
Peter Sheahan from Australia spoke on Day 2 of the Convention and seemed to be received very well. “The real money gets made in the cracks, and the opportunity for mind-blowing success is all around us,” Peter said. Our challenges, he pointed out, are that we are conditioned by our experience, blinded by our business model and conned by the media to believe that there are no new ideas and that we are susceptible to the current economic times. He spoke about turning opportunity into profit.
More workshop sessions in the afternoon. The first workshop I went to was ‘build your business with an armchair and a laptop’. This is a very diluted version of our Utopia system….the US is so far behind in their technology compared to ours. The final session was named “The Need for Feeds: RSS Feeds and blog marketing skills”. This session was great and simplified the use of blogs and the need for blogs now to have a mix of not only text but video and audio which helps with SEO and the all important google rankings. This is a fantastic tool to drive more and more clients to our website, blogging gives our web visitors a voice!
Overall the convention gave me an insight into how difficult the US market has been. There were workshops to become well versed in how to handle a ‘short sale’ and dealing with foreclosures. The current market seems to be geared towards the first home buyer market, investors and foreclosure investors (foreclosure rehabbers).
The news on real estate has been steadily improving, pointing to a historic buying opportunity for consumers and a better year in residential real estate. Home prices seem to be bottoming. The freefall seems to be over but the market has a lot of questions to be answered before they get clear on what’s happening.
Our taxi driver on the way to Austin Airport says the government is scamming the rate payers by increasing prices on properties and feels that Austin is very overpriced. The higher the price, the more taxes the government received. A lot of people came into Austin from other overpriced areas looking for bargains, purchased thinking they would make money if sold the property in a couple of weeks/months to find that they are now stuck with them.
On the news recently Hawaii and a few other states announced that they could not afford to pay their tax refunds so they are holding on to them for the time being. Another sign that the U.S. economy is still very volatile.
Deanne Goes To Texas Part 3
March 21, 2010 Leave a comment
We have just returned from our 1st day of the Prudential Conference – all I can say is how lucky the members in First National are! Our convention kit contains very little, and no give-aways. First National Convention is a dream by comparison!
The opening was great – national anthems sung live, another live performance, a fireworks display and then a speech was then made by Earl Lee, President, Prudential Real Estate and Relocation Services, Inc, who introduced the new CEO.
Visited the trade exhibition where we saw “green loans” on offer. Touch screen TVs were set up with participants answering a series of questions about the environment. With First National having already worked on energy efficiency, I was able to pass with flying colours.
Had a long conversation with the guys from the New York Times. I showed them my website and they were so impressed with the layout, ease of use etc. They were amazed when I explained to them that our listings are pushed directly to the major portals. Apparently in the U.S. someone is employed to do that! Online is quite big for them – they spend heavily in developing online applications for phone so people can connect to the news online. They made the comment that Australia is more advanced with technology for real estate than the US.
We then went off to one of the “Power Sessions” which I will update you on next time.
