Negative Gearing Here To Stay

May 6, 2011 Leave a comment

First National Real Estate says the government is ‘bluffing’ when it says it is considering cutting negative gearing as it does not make economic or political sense.

Talk of cutting negative gearing only adds to a worsening situation where property investors are already opting to stay out of the market.

Ongoing investment in property is crucial to Australia’s economy.  It also maintains a healthy rental market and any changes to the current policies could have a detrimental effect on this country’s economic stability, as well as the future supply of rental properties in an already tight rental market.

At the end of the day, it will be struggling renters who will bear the brunt of this burden and they may be forced into relying more heavily on government welfare agencies and government funded housing for their very survival.

This just won’t happen.  It is pure scare mongering on behalf of the government to even suggest that they are seriously considering cutting negative gearing.

The property market is also doing it tough with increasing rents which are set to rise by 7 per cent in capital cities as a result of low vacancy rates and a shortage of supply of suitable available accommodation.

Consumer nervousness is increasing at an exponential rate due to ongoing tight vacancy rates, low first home buyer and investor activity and the market suffering seven interest rate rises since October 2009.  Plus new supply coming on-line is quite constrained all amid a host of natural disasters and the ongoing unstable European and Japanese economies.

Negative gearing ensures a significant supply of rental housing, which serves to hold down rents.  Any dislocation in investment housing would affect those who can least afford it – people who pay rent.

Investors should be gearing up to take advantage of a market which is cooling and prices are coming off, good loans are available, good fixed rates are on offer, the banks are in real competition and there are less first-home buyers competing with investors.

In addition, rents have been increasing and vacancy rates in many areas are well below 2 per cent – all positive signs for the investor.

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First National Bucks Industry Stance

April 21, 2011 Leave a comment

First National Real Estate CEO, Ray Ellis, disagrees that stamp duties should be replaced with a broadening land tax or any other tax – saying it should just be abolished. 

It has long been recognised that stamp duty as a tax is inefficient and a complete rort, so, while it is obvious it needs to go, it should not be replaced with some other tax. 

When the GST was introduced, it was meant to phase out a number of various state and territory government taxes, duties and levies such as banking taxes and stamp duty. 

More than a decade on, we are still being burdened with stamp duty and it seems the industry is now being portrayed in the media as willing to settle for replacing the duty, instead of having it abolished altogether. 

The upcoming 2011 Federal Tax Summit presents the ideal opportunity to get blanket approval from state and federal governments to abolish this duty and there should be no further talk of ‘replacement’, but to deliver what was promised in the first place. 

A recent article said the OECD supported the rationalisation of state and government taxes, particularly stamp duty on house sales. Ex-Treasurer Peter Costello said it should have been eliminated when the GST was introduced and even the Henry Review recognises the need for it to go. 

The GST was meant to provide sufficient funding for state needs, and if they are not able to raise enough revenue through the GST they need to look at reform, rather than rorting hard-working Australians and replacing one tax for another.  Get rid of stamp duty altogether.

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First National Says Stamp Duty Too Taxing

February 24, 2011 Leave a comment

A reform of state taxes is being called for by First National, particularly inefficient ones like stamp duty which is proving too taxing for working families to pay.

Stamp duty is nothing more than governments gouging money from those who can least afford to pay – working Australian families.

We are already proven to be one of the most expensive property markets in the world and excessive property taxes, like stamp duty, is making it incredibly difficult for new entrants to gain access to the market or for existing home owners to upgrade.

The situation with the Australian property market is becoming untenable and needs to be addressed at a national level.

At a time when rents are soaring, vacancy rates are tight and there is a shortage of supply, there is a real potential that more Australian families will be forced onto the streets – increasing homeless rates and welfare payments and further adding economic stress to the Australian economy.

Serious consideration needs to be given to addressing the problems with the Australian property market if there is going to be hope for future Australians to realise home ownership dreams.

Plus, as the Henry Review points out, transaction taxes such as stamp duties reduce economic efficiency, either by discouraging turnover or being embedded in the cost of production, which just increases the problem.

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Property Market Outlook – Patchy But Signs of Recovery

February 10, 2011 Leave a comment

Deanne Lamprey, Principal, First National Real Estate Burnie expects the Tasmanian property market to consolidate in 2011, as waning consumer confidence due to job losses, mainly in the North West of Tasmania, and plentiful housing stocks, begin to stabilise house price growth.

“There is strong potential for growth in land prices, but this is dependent on the number of land releases in the state,” Deanne Lamprey said in First National’s 2011 Property Market Outlook released in January 2011.

“There is a steady supply at present, but building approvals are down as a result of an undersupply of builders locally.”

“There is also negative publicity on “head works” charged by the three water/sewerage authorities in Tasmania, which, if left unresolved, will definitely stifle development projects.”

According to Deanne Lamprey, vacancy rates may increase marginally by up to 1 per cent and weekly rentals upwards between 5 and 10 per cent as uncertainty of job prospects in some areas impact on confidence in purchasing, potentially placing an upward pressure on the rental market.

Movements in weekly rentals will be between 5 and 10 per cent in the main.

Any population growth for Tasmania, which has seen virtually none in the last few years, would impact the state’s property market significantly. The benefit of waving stamp duty or introducing concessions for the over 65’s age group could prove significant.

“To this end, the government should encourage tourism and more enterprise in regional areas in a bid to encourage population growth and employment opportunities,” Deanne said.

“The water/sewerage authorities need to rethink their obscene ‘head work’ charges that developers are absorbing – freeing them up to develop as they would like.”

Deanne Lamprey believes banks should be doing more to help keep the property market healthy and robust in 2011 and should consider abolishing mortgage exit fees and being more flexible with their loan products.

“Consumers would be the winners, as the major banks would need to be seen as more competitive with rates and may think twice about lifting rates above the RBA. However, there is the risk banks may try and be more creative with other consumer fees,” Deanne Lamprey said.

“They should also look at educating their customers about why they implement higher rate rises than the RBA and mortgage insurers need to be more flexible in lending requirements.”

Deanne Lamprey anticipates three additional interest rate increases which will have a negative impact on affordability as buyers’ borrowing capacity is reduced and may eat into what little equity some homeowners have – especially those who purchased in the ‘boom times’.

“Combine this with pressure on employment and we may still see a shift in values and turnover,” Deanne Lamprey said.

“Recent interest rate increases have already impacted on the property market, contributing to more of the higher priced properties coming into the market as families are looking to reduce their mortgage debts.”

Deanne Lamprey said Tasmania’s ongoing affordability will continue to prove too attractive for investors to ignore, however they may remain cautious due to future interest rate rises.

“They will however be fully aware that Tasmania is currently in the declining state of the real estate cycle,” Deanne Lamprey said.

Deanne believes widely anticipated electricity price hikes are expected to increase the number of buyers looking for energy efficient features as well as change the types of features they look for, especially in relation to heating and lighting.

Deanne Lamprey said the government needs to do more to alleviate the lack of supply such as releasing more land, allowing more medium density developments, improving planning and approvals processes and controls, and introducing a national planning authority.

“They should also consider reducing stamp duty and introducing stamp duty incentives for retirees, as well as rework stamp duty scales,” Deanne Lamprey said.

“These scales have remained the same for years in spite of the sharp increases in property prices over the last decade.”

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Bank on leaders working together for affordable homes

December 6, 2010 Leave a comment

Recent interest rate hikes demonstrate the increasing need for Governments and the Big Four Banks to work together to address the key issues of supply and demand and housing affordability.

The endless rounds of ongoing debates need to stop and the banks and government need to start communication if they hope to stop the spiraling downward cycle.  They are the ones with the power to fix up the property market problems and they need to stop taking with one hand while giving with the other, and start talking with each other.

The Property Market is suffering from an undersupply of stock which is making housing affordability even more elusive.  They need to look at influencing affordability and supply by reducing or abolishing stamp duties, abolishing exit fees, introducing more competition into the banking sector and looking at policies that will stimulate the construction industry.

Not even the prospect of a Senate enquiry into banking competition, the abolishment of exit fees, portable bank account numbers, or Parliamentary debate on legislation forcing banks to lift rates by no more than the RBA, is enough.

Any moves, or new policies must be done in light of the property sector, because ultimately it is the “mum and dad” property owners who will suffer the most.

Political leaders need to have the fortitude and imagination to reform property taxes and the banking sector if there is any hope of addressing affordability issues.

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Retirees Hold Answer To Housing Supply Woes

October 26, 2010 Leave a comment

Why not consider giving older Australians and retirees a bit of a reward for all their hard work and contributions to this great nation by letting them off the hook with stamp duty.

That may serve as an incentive for them to let go of their homes and downsize, so that new stocks would come on the market for new home buyers.

A recent survey showed that if just 20 per cent of baby boomers were to downsize into smaller accommodation, the vexing housing supply problem would be solved.

Statistics show that over 55 year olds make up 25 per cent of Australia’s population – that’s 5.6 million people.  Over 65 year olds make up a further 13 per cent – 2.9 million people.  The over 65 component will grow to 19 per cent by 2021 and when you add the figures together it’s not hard to see that the problem, with immigration thrown into the mix, is getting worse.

At current rates, it’s possible close to 20 per cent of Australia’s larger housing stock will be inaccessible to first home buyers, young families or investors.

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Girl Power Shouldn’t Be Turned Off

October 26, 2010 Leave a comment

Women are an increasing force to be reckoned with, but it seems more than one in four real estate agents continue to ignore them in the home buying process.

Research conducted on behalf of First National Real Estate by Newspoll shows almost 26 per cent of women surveyed felt real estate agents took more notice of their partners/spouses.

This needs to stop.  It is discriminatory, bad business practice and not good for the industry overall.

Statistics show the number of women planning to purchase property on their own has more than doubled in the last two years alone.  Their growing numbers and level of importance in the home buying process makes them a key demographic group that should be at the forefront of everything a real estate agent does – from the way they market a property, to the ‘inclusive’ nature of conversations with prospective buyers.

The survey, conducted by Newspoll, interviewed 1200 women from around Australia, across all age groups, and found that the older women got, they more they felt they were not being considered, or listened to by real estate agents.

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Elect for a New Lease on Property Life

August 24, 2010 3 Comments

Regardless of who wins the Federal Election later this week, now is the ideal time for those interested in investing in property to get on the bandwagon.  Strong rental yields coupled with good buying conditions are creating a perfect market for would-be investors to build their wealth through property.

There are many advantages to investing in property and at the start of a new financial year, when people’s minds are on tax, investors should look at capitalizing on the tax advantages in particular.  Property as an investment is also an excellent vehicle for generating income and capital gains and it is relatively low risk. There are a lot of ways for people to take the first step on the property investment ladder, such as buying with family, friends or work colleagues – it’s just a matter of being a little more creative and strategic in their thinking.

Investors are once again claiming the market space being vacated by first home buyers whose numbers are beginning to level out. So, now is the time to capitalize on market conditions before investor activity returns to normal levels and competition begins to heat up again. Existing home owners could consider using equity they have in their own home, or other investment properties.

 Over the last 12 months, rental yields have strengthened, vacancy rates have remained tight and there is an ongoing supply shortage in the face of strong and growing demand, especially as increasing interest rates erode housing affordability.

This general trend in the rental market is expected to continue for some time, and certainly for as long as neither party plans to do anything to effectively manage the supply versus demand equation. Regardless of the political outcome, property will remain a strong contender for the investment dollar.

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Market Ripe to Bear Fruit

August 5, 2010 Leave a comment

After yesterday’s announcement by the RBA that it will hold interest rates at 4.5 per cent. buyers and sellers will see there are still plenty of opportunities around, given current market conditions, as long as the fundamentals are focused on.

At times like these, homes that are properly presented, appropriately priced and well marketed will always do well, regardless of what happens with interest rates.

It’s a matter of making sure you get the basic factors right and plum properties should bear fruit.

When there is relatively high business confidence, strong levels of immigration and low unemployment, the market becomes suitable for buyers. However, those seeking to sell can also make sure they take advantage of these prime conditions.

In a slower market, there is less pressure on sellers and buyers and during the cooler months, there is less volume of stock around from which buyers can choose, so houses are more likely to sell.

Currently there are growing investment returns in the property market, which should prove lucrative for the astute investor.

Investors, in particular, can benefit greatly from the current market conditions and pick up some terrific properties that offer strong returns.

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Immigration a key factor

July 29, 2010 Leave a comment

 

From today’s Burnie Advocate www.theadvocate.com.au

Politicians slashing immigration would also cut house values, a prominent real estate figure has warned.

First National Real Estate Burnie managing director Deanne Lamprey is unimpressed by Prime Minister Julia Gillard’s talk of a “sustainable population” and Liberal leader Tony Abbott’s plans to cut immigration.

“The Prime Minister’s refusal to outline what she sees as a sustainable population is causing uncertainty for the property market, which is substantially underpinned by the highest levels of immigration since World War 2,” she said.

“She doesn’t want to debate the overall size of the population, nor birth rates, and she said `this isn’t about immigration’.

“However, her broad statement that she does not want a `Big Australia’ means if she supports personal choice on birth rates, there’s really only one place she can go; cut immigration.”

Ms Lamprey said any substantial cut would see businesses seeking labour suffer and a fall in demand for housing.

“That, in turn, would likely lead to a much slower market and, ultimately, falling home values.

` … one of the major advantages that helped our country avoid the 40% collapse in home values in the UK and USA during the (global financial crisis) was our solid immigration intake.”

Mr Abbott wants to cap immigration under 170,000 a year. It hit 300,000 two years ago.

Ms Lamprey said he was the “lesser of two evils”.

“At least he’s stating his intent.

“But what no-one is talking about is the fact that government is one of the major barriers to increasing supply of housing.”

“Ineffectual planning and approvals processes are the major barriers to increasing supply, so it is governments that will continue to drive the market into the future.”

Ms Lamprey was also scathing about what she described as “scaremongering real estate analysts” who predicted a housing bubble burst or affordability crisis amid claims Australia had the world’s most overpriced property.

“The reality is that we probably have one of the best buyers’ markets at the moment and houses at some of the most affordable levels in decades.”

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