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Investment and leasing conditions improving for 2014

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Colliers International indicate that Australia’s property sector will see a return to more positive conditions in leasing markets and further confidence in the investment market in 2014.Moreton Investor, Property Management, Investment properties, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, Moreton property prices, rental properties

  • Colliers International Chief Executive Officer, Australia and New Zealand, John Kenny said strong investment conditions had been the defining feature of the Australian property market in 2013, with Australian property continuing to attract increasing capital from both Australian and offshore investors.
  • “Our market has been considered a safe haven with low interest rates and attractive yields continuing to attract international investors and providing solid investment conditions for local investors”, said Mr Kenny.
  • Colliers International found that heading into 2014 there are a number of factors which will lead to continued confidence in the investment proper markets and an improvement in demand for business premises across office, retail and industrial and will have high employment impacts.
  • “This includes an ongoing improvement in global conditions, the strong recent return of confidence in the housing market and increasing business confidence on the back of improvements to consumer confidence”, said Mr Kenny.
  • “As consumers begin to move away from high levels of cautiousness and move to increasing their spending, this is likely to lead to greater business activity and higher levels of business investment.”
  • Nerida Conisbee, Colliers International National Director of Research, said 2014 would see a continuing shift in buyer profile within Australia’s property market.
  • Ms Conisbee found that the offshore investors have been experiencing the strongest growth over the past five years and in 2012 accounted for more than half of all direct purchases by volume. In 2012 local investors re-entered the market and by November 2013 accounted for more than 70 per cent of total direct sales.
  • “By the end of October, this group accounted for $4.3billion of total transactions. This is higher than what was experienced in 2007 prior to the global economic downturn, and more than double the 2012 level” said Ms Conisbee.
  • Colliers International found that the improving conditions overseas have started to influence investment in Australian REITs and will directly impact property over the next 12 months.
  • “Earlier this year, there was a lot of offshore capital flowing in however at present, there appears to be a shift back to other markets, particularly the US and Europe,” Ms Conisbee said.
  • “Offshore buyers are, however, still active although there are a number of changes that are occurring to the types of buyers targeting Australia. The majority of offshore money has been coming from Singapore, Hong Kong, Europe and North America. Australia remains attractive and in some ways is becoming more so for a new emerging group of investors.”
  • Colliers International also found that the key player of international investing was China and large capital also coming from South Korea.
  • “Chinese investors have been very active in the residential space this year and this trend is now starting to spill into the commercial property market,” Ms Consibee said.
  • “In 2013 the amount of Chinese direct investment in commercial property stands at $871million (to the end of November), which represents a rapid increase from 2007 when just $17million was recorded.  This was boosted significantly by the sale of Centennial Plaza in Sydney in November which was one of several transactions completed that month involving a Chinese purchaser.”
  • Colliers International saw significant Chinese purchases in Australia during 2013. These sales include; Centennial Plaza (260, 280 and 300 Elizabeth Street, Sydney): Sold on behalf of Investa Property Group to Invesco (on behalf of Chinese Investment Corporation), for $305 million. The largest direct property transaction in the Sydney CBD this year, which was brokered by Colliers International, and; 229-234 Franklin Street, Melbourne: Sold for $17 million to a private Chinese investor by Colliers International on behalf of Jimmy Goh.
  • It was primarily privately-owned companies and private investor groups that had risen significantly, including HNA Group, Ridong Group, Dongrun Investment Group and Maville Group.
  • “We can expect to hear more of these groups over the next decade as changes to regulations surrounding investment into property by Chinese investors is expected to lead to significant amounts of capital entering Australia.
  • “We are also seeing waves of capital from South Korea, where the nation’s huge pension system is actively investing in property globally.
  • “It is likely that pension funds will continue to increase their investment in Australian property, both local superannuation funds, and offshore groups. Malaysian investors are also expected to become more active, particularly from the huge amounts of personal wealth in that country.”
  • Colliers International forecasts for leasing markets in 2014 were cautiously optimistic as the improved business confidence and better economic conditions offshore will improve the housing market and return consumer confidence and will see a recovery in rent across all sectors.

 

 

Original article published at www.theurbandeveloper.com  16/12/2013

Opinion

Experts warn of ‘debt bomb’ as housing downturn worsens

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debt bomb
AUSTRALIA is facing a “debt crisis” — and the property market and our entire economy are at risk as a result.

That’s according to the sobering 60 Minutes segment Bricks and Slaughter which aired last night, revealing the country’s property downturn was just the tip of the iceberg.

According to reporter Tom Steinfort, the current slump is actually “more like falling off a cliff”, with a number of real estate and finance experts claiming houses could plummet in value by up to 40 per cent in the next 12 months.

If that happens, it would also cause an economic “catastrophe”.

Mr Steinfort spoke with data scientist Martin North from Digital Finance Analytics, who said Australia was uniquely vulnerable when it came to an economic crash tied to a property downturn.

“At the worst end of the spectrum, if everything turns against us we could see property prices 40-45 per cent down from their peaks, which is a huge deal,” he said.

“There’s $1.7 trillion held by the banks in mortgages for owner-occupies and investors. And that’s about 65 per cent of their total lending.

“That’s higher than any other country in the Western world by a long way.

“There’s probably no country in the world more susceptible to the ramifications of a housing crash than Australia. We are uniquely exposed at the moment.”

Mr North said Australia was now in the same position as the US was back in 2006 and 2007 — a position which triggered an economic collapse.

“As a society, and as a government, and as a regulatory system, we’re all banking on the home price engine that just goes on giving and giving and giving. It’s not going to,” he said.

“We’ve got a debt bomb, we’ve got a debt crisis and at some point it’s going to explode in our face.”

debt bomb

Melbourne homeowner Mohammed Souid told 60 Minutes his family was experiencing mortgage stress. Picture: 60 MinutesSource:Supplied

It’s a sentiment shared by Laing and Simmons real estate agent Peter Younan, who said the median house price in his patch in Granville in Sydney’s west had dropped from $1.2 million to $1 million in just one year — a shocking $200,000 plummet.

He said foreclosures had also risen by 600 per cent in the region.

“The mortgage stress is definitely being felt especially in this area,” he said.

60 Minutes also spoke with several Aussie homeowners who gave harrowing details of the stress they faced trying to pay off their mortgages, including having their power turned off and being “hounded’ by their banks.

What does a million dollars buy in Aussie capital cities?

debt bomb

Market analyst Louis Christopher of SQM Research said the market had been “clearly overvalued”, labelling the downturn as the “correction we had to have” — at least in Sydney and Melbourne.

“On our numbers, Sydney was effectively over 40 per cent overvalued. And Melbourne was overvalued by about the same amount,” he said.

But property investor Bushy Martin said the blame lay squarely at the feet of buyers who “mortgaged themselves up to their eyeballs” in a bid to snap up dream homes before being able to afford them.

debt bomb

Property investor Bushy Martin says homeowners are to blame for the crisis. Picture: 60 MinutesSource:Supplied

However, the segment has also sparked backlash online, with some claiming the situation had been exaggerated.

One Reddit user branded the report as an example of “alarmist journalism and scare tactics”, while another said it was “dramatic and cringe-worthy”.

Others also criticised the segment for making it seem like all homeowners would be affected, when the downturn was actually mainly focused in the NSW and Victorian capitals.

And some said it was unfair to blame the banks for the situation, and that homeowners needed to take responsibility for their own decisions.

That was in response to comments made by one homeowner on the program, who said the bank had “suddenly switched the mortgage to interest and principal”, raising his repayments by 57 per cent.

“The interest only part annoyed me the most. The bank didn’t ‘suddenly change’ your repayment from (interest only) to (Principal and interest) your IO term expired. You a) knew this would happen and b) assumed the bank would renew it when it expired. I hope this speculator gets burnt first,” one Reddit user said.

Related article: Experts warn of ‘debt bomb’ as housing downturn worsens

Source: news.com.au

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Opinion

Queensland is the next property hotspot, experts say

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Queensland is the next property hotspot, experts say

As New South Wales and Victoria continue to experience weakness. Queensland is expected to take the lead, a National Australia Bank (NAB) poll of property professionals revealed.

According to the survey, industry experts project house prices in Queensland to increase by 0.7% next year and 1.3% in two years.

Some areas seen to perform strongly over the next year include Brisbane, Cairns, the Gold Coast, and the Sunshine Coast. Out of the suburbs, Coomera and New Farm are expected to realize robust gains.

Meanwhile, Queensland’s rental market is also poised to enjoy an upward boost, growing by 1.3% next year and 1.9% in two years. This is despite the stricter rules on housing investment.

The respondents of the survey also expect Queensland to retain foreign buyer interest. In fact, the share of foreign sales hit a four-year high of 22.8% over the previous quarter.

The results of the survey go against NAB’s own projection of the market. For instance, the bank expects house prices to remain flat in Brisbane over the next three years. Unit prices, on the other hand, is seen to fall by 4.5% over the next year.

NAB chief economist Alan Oster said Brisbane’s housing market seemed to be going sideways and its unit market still creates concern.

“It hasn’t peaked yet, so that’s good. We’re seeing quite strong economic activity in Queensland, so that always helps,” Oster said, as quoted by The Courier-Mail.

Source: brisbaneinvestor.com.au

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Opinion

Gold Coast house values record the biggest growth in Queensland

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Gold Coast house values record the biggest growth in Queensland

The Gold Coast has recorded the strongest growth in house prices in Queensland over the past 12 months.

GOLD Coast house prices are leading the way in Queensland, up six per cent in the past 12 months to an average $620,000.

The latest figures by the Real Estate Institute of Queensland show homes on the Glitter Strip are $35,000 more on the same time last year.

Unit prices are up 1.9 per cent to $428,000.

Gold Coast house values record the biggest growth in Queensland
REIQ data reveals houses on the Glitter Strip are worth $35,000 on the same time last year.

REIQ’s Queensland Market Monitor for March said the strong population growth came on the back of infrastructure projects such as the $550 million Gold Coast Health and Knowledge Precinct and M1 upgrades.

“The property market has been one of the big winners from the sporting event as the $1.5 billion infrastructure investment has boosted confidence and demand for housing in the region,” the report stated.

“We expect house prices will show an upward path in 2018. However, this growth will most likely be more moderate.”

A quiet real estate period leading up to, and during, the Commonwealth Games likely contributed to a slight drop (-0.3 per cent) in the March quarterly median sales price, the report reveals.

Gold Coast house values record the biggest growth in Queensland
Andrew Henderson says a growing population and employment opportunities were contributing to a strong property market. Picture: Jerad Williams

REIQ Gold Coast zone chairman Andrew Henderson said he expected interstate migration to continue to benefit the city.

“I expect the market to remain strong,” he said.

“There is a heavy amount of interstate buyers moving here.

“I was at an auction recently where the winning bidder was from Sydney and the underbidder was from Melbourne.”

Mr Henderson said growing employment opportunities were also attracting homebuyers to the city.

Gold Coast house values record the biggest growth in Queensland
The Gold Coast property market is expected to remain strong.

“We have some of the best health facilities in the country and our universities are world recognised.

“Those two things alone complement the tourism industry and the lifestyle aspects that the Coast offers.”

The report found the fastest-selling suburbs on the Coast included Worongary, Merrimac, Highland Park, Mudgeeraba and Carrara.

It also revealed the rental vacancy held tight throughout the first quarter of the year at 1.1 per cent.

Gold Coast house values record the biggest growth in Queensland
Andrew Bell says the Coast had evolved from a tourist town into a vibrant city with an expanding economy. Picture Mike Batterham

Ray White Surfers Paradise Group CEO Andrew Bell said the Games heralded the next chapter for the Coast, as it evolved from a tourist town into a vibrant city with an expanding economy.

“The city’s property market is riding the irreversible momentum that has now come to the Gold Coast in terms of economic diversity and with more employment options we will need more housing options for people,” Mr Bell said.

“We are no longer going to be subject to tourism upsides and downsides as we were in the past because our economy has well and truly diversified beyond just tourism.”

Source: brisbaneinvestor.com.au

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