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The Right Time to Invest in Perth

Artists impression pictures of the new footbridge to connect East Perth with the Burswood peninsula as part of the new Perth stadium project.
Source: Government of WA

“I like Perth and am thinking of investing in property there, but everyone says now’s a bad time. When is it a good time to invest?”

Here’s a valid and oft-asked question. True, the Perth property market has hit a low but could now be the best time to focus on the Perth property market? Our answer is: “YES”.

Questions will arise as to why now is a ‘bad’ time for investment, but here are 5 Reasons that challenges the status quo and explains why the time is NOW.

#1 Affordable prices. Big choices. Greater yield potential

The Perth property market is at the bottom of the current property cycle. Property prices here are among the most affordable of any capital city in mainland Australia, and half that of Sydney — perhaps the most affordable it has ever been. Perth residents are spending 21.5% of their monthly household income on mortgage repayments, the lowest in 10 years, says a report from Moody’s. By contrast, homeowners in Sydney are spendng 39% and 34% respectively of their income on mortgage. Simple math works out that you can buy more at $500K in Perth, with a pick from some of the most prime locations (compared to Melbourne or Sydney) and still likely achieve a discount off the listed price.

Once the property market starts to go up again, you stand to reap significant benefits. The market is already buzzing that Perth property market cycle will turn in 2017, with prices going up albeit at a slow and steady rate.

#2 Perth Economy – More than Just Mining

Western Australia is rich with resources in a region and world in need of iron ore, bauxite and liquefied natural gas. But Perth is more than a mineral supply; Western Australia is well positioned to serve as a base for military back operations and transportation and logistics businesses that service the western half of the continent.

Plans are afoot to bring a vibrance to the economy and transform Perth by 2021 thanks to several multimillion-dollar infrastructure projects:

  • New additions to Perth CBD & skyline to include apartment towers and a Ritz-Carlton Hotel at Elizabeth Quay, a public square and marketplace at the Perth City Link and a new museum in the cultural centre
  • A $12 billion boost to tourism by 2020 will see four new hotels built in the CBD, whilst suburbs such as Shenton Bay, Cottlesloe, Armadale, Gosnells and Butler, among others, would start to take shape as development stepped up along major transport routes.

But back to mining: both Pilbara Minerals and Altura Mining have announced plans to secure abandoned workers camps in Roy Hill for their future mining projects. Additionally, there is growing investment in lithium and the world’s premier producer of lithium concentrate from spodumene, Tianqi Lithium, has confirmed plans to build a $400-million lithium hydroxide plant in Kwinana which will create 500 jobs.

Estimated & projected population, larger Greater Capital Cities – 1973 to 2053. Source: ABS

#3 Growing Population

Perth today is like Sydney 20 years ago, some say. With the growth in infrastructure, the City of Perth’s population alone is forecast to grow from 22,324 last year to 27,317 in 2021. But that aside, Perth’s population is on a long-term upward trajectory with expert predictions that its population could be at least 3.9 million people or nearly double what it is today by 2050. Perth is expected to supersede Brisbane in becoming Australia’s third largest city by 2028 according to the Australian Bureau of Statistics (ABS). ABS also predicts that Perth will grow at a rate of 187% between 2012 and 2061.

#4 Long Term Success

The west has gone through a number of cycles before, previously in the 1990s and then the early 2000s, with the last good year being 2012 during the mining boom (if you held property over the long term, you would have gained significant capital growth). Long-term residents and business operators well understand the west’s cycle of growth and development and realise how these cycles represent opportunity for expansion and investment.

Perth is now in a state of adjustment and has been since 2013. Experts are predicting the market will pick up in 2017 albeit at a slow pace, and savvy investors are taking their pick of properties in the city, in anticipation of growth. Nerida Conisbee, REA group chief economist says, “It’s not about the short term. Perth is for someone with a slightly stronger appetite for risk, but they’ve got a longer window for investment so it’s for someone on a high income, who is in a younger age bracket, someone who can absorb the first couple of years being slightly choppy in terms of performance.”

Artist impression of the Perth City Link project. Source: https://yhoo.it/2giZDic

#5 Jobs Growth

Yes, unemployment has taken a bit of a dip, but there are job opportunities on the cards, what with new infrastructure in the city, which includes a new sports stadium, road and rail upgrades, new social projects planned along the Swan River, among others (see #2). In September, recruitment specialists DFP Recruitment says there is a cause for cautious optimism after a 16.3% increase in job ads in WA (mainly in mining) over the past 12 months — the biggest growth of any state.

Conclusion: Buck the Trend

Most property investors follow the herd, investing in growth markets and competing with each other, causing prices to increase. Investing at the bottom of the cycle, with careful observation of the market, means you get substantial growth when the cycle peaks. Remember, all property markets go through cycles.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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VITA Student – OCT 2016

VITA Student is the UK’s most highly-rated student property, with 5-star ratings from students. Here’s the latest VITA Student review, with construction updates for VITA York and latest happenings with the VITA Student properties, as at END Oct 2016.

Buyers of VITA York will be pleased to know that the construction of the building well on track. For a detailed update on construction works as at END OCT 2016, kindly click on the image below. Once you have done that, you may enlarge the page by double-clicking on the above image. Below, we attach a drone visual of the site detailing the extent of work already done.

VITA Student York is the flagship student property under the VITA brand. With less than a year to opening, works have progressed smoothly. These two months till end 2016 will see the focus turn to the structures of Pear House, Barley House, Kiplin House and Colletines House. Wall and roof claddings will be completely finished to Haelwood House, Middlethorpe House and Minster House, and all roof tiling and external brickwork will be ticked off to Apple House. Following which, the internal fit out of Apple House and Hazelwood House studios will begin.

Vita York Project Highlights

  • Fully integrated kitchen with SMEG appliances and Formica worktops with integrated four-ring hob
    • Floor to ceiling windows
    • Juliette or full balconies
    • Fitted wardrobes, drawers, under-bed storage, study desk and dining table and chairs
    • Fully fitted en-suite shower room with toilet and washbasin
    • Wood laminate flooring throughout
    • 40-inch Smart TV (wall mounted)
    • Secure key fob entry door with intercom

VITA Student projects can be found in top student cities in the UK including Bristol, Exeter, Liverpool, Manchester, Newcastle, Glasgow & York. VITA Student is developed by Select Property Group.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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One Wolstenholme Square – OCT 2016

We are pleased to present the latest construction update from the site of One Wolstenholme Square as at END Oct 2016. Click on the image below to view latest photos from the construction site in Liverpool, UK.

The developer has reported that work is going well, with a summary of the completed works as follows:

  • Block A substructure complete with Block B at reduce level
  • Block A steel frame complete
  • Block A upper steel sheet laid out with concrete works due to commence on Tuesday 8th November
  • Block A pre case concrete stairs installed
  • Block B steel frame in production
  • Crane base cast and crane boom delivered to site
  • Site and welfare facilities set up

The Epicentre of History & Culture

Imagine being at the centre of a quaint and cultural city bustling with life and steeped in history…Welcome to Wolstenholme Place, the latest £40 million development in the most desirable postcode in Liverpool.

Located five minutes away from the city’s attractions and top university campuses, Wolstenholme Place comprises a selection of studio and one-bedroom residential apartments with a panoramic view of the Liverpool skyline and the remarkable World Heritage Waterfront.

Liverpool is one largest economies in the UK, and home to half a million people, some of the UK’s top universities, football clubs (Liverpool FC & Everton FC), a staggering student population of over 53,000 and, of course, The Beatles!

Investment Highlights

  • Prime location, prime rental market right in the city centre
  • 8% nett yield guaranteed for 3 years
  • Demand for housing from more than 53,000 students
  • Projected return of 9% nett after year 3
  • Thriving rental market
  • Rental returns outpace London (source: HSBC)
  • Exit to property market

Project Highlights

  • Fully furnished
  • Fully managed by professional management company
  • Large studio and 1-bedroom apartments
  • Located in the city centre
  • Walking distance to One Liverpool, Albert Dock, Mersey River, convenience stores and F&B outlets.


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Britain, a Nation of Renters?

Image credit: http://bit.ly/2eThsCC

Home ownership across England was at its peak in April 2003, when 71% of households owned their homes, but the figure fell to 64% by February this year, according to a new report by the Resolution Foundation thinktank. The report also shows a big slump in home ownership in Greater Manchester and cities in Yorkshire and the West Midlands. This figure is the lowest since 1986, when home ownership levels were on the way up as a result of policies introduced by the Thatcher administration.

Today, the UK is populated by a generation of renters, with the number of UK households renting property having risen from 2.3 million in 2001 to 5.4 million in 2014 according to the Royal Institution of Chartered Surveyors (Rics).

Here are 5 reasons why buy-to-let or rental property will remain crucial in the UK for some time to come:

Savills calculated the cost of buying vs renting a home. Image credit: http://on.ft.com/2eKm5kU

Reason #1: It’s about 20% cheaper to rent a home in the UK on a monthly basis than to buy (Savills)

Renting a home used to be 25% more expensive than owning back in 1996, but in 2007, it became 79% cheaper to rent than buy your own.  When the costs of capital repayments on a mortgage in Year 1 are factored in, costs rise and renting becomes significantly cheaper than buying on a month-to-month basis. In order for a first-time buyer’s monthly costs to be lower than the costs of renting, the purchaser would require, on average, a deposit of at least 39% of the value of the property, according to Savills’ calculations.

Growth in house prices vs wages in the UK as at Jan 2016: While UK house prices increased by 7.9% last year, figures from ONS show that the UK median wage increased by just 1.8%. This suggests that house prices are growing more than four times as fast as median wages. Source: ONS. Image credit: http://bit.ly/1SjLa5f

Reason #2: House prices too high in proportion to wage growth

Despite recent figures from mortgage lenders showing an increase in the number of loans taken out for house purchases (possibly due to low interest rates), the number of homes for sale is close to a record low, and prices continue rising.

A typical home in the UK now costs six times average annual earnings despite slowing house price inflation. According to Nationwide, house prices have risen by 20% over the last three years while wages rose by just 6%.  Meanwhile, prices in the capital are 9.2 times average earnings, while the Royal Institution of Chartered Surveyors (Rics) said 22% more surveyors in London expect sales to fall over the next three months. The last time prices/earnings ratio was so high was in March 2008. A ratio of 4.5 times a borrower’s income is regarded as the maximum that banks and building societies will agree to lend.

Over in Greater Manchester, the proportion of home owners dropped from 72% in April 2003 to 58% this year. According to financial analyst Louise Cooper, the average house price in England in 1986 was £38,000 but today it is £226,000 (Rightmove’s latest report on average asking prices for a home in England and Wales in October 2016 now stands at £309,122). And that over the same period, the average salary had only gone up 2.5 times. “Everyone says it is a London problem. It is not,” said Cooper.

Renting privately is now the norm, according to a PwC report, for those who cannot afford to buy but do not qualify for social housing. By 2025, PwC predicts that 7.2m households will be in rented accommodation, compared with 5.4m today and just 2.3m in 2001. Source: PwC. Image credit: Guardian http://bit.ly/2eTdslz

Reason #3: Private rented sector – biggest provider of rented homes

The private rented sector has taken over from councils and housing associations as the biggest provider of rented homes with prices paid by tenants in Britain increasing by 2.3% in the 12 months to Sept 2016, according to latest official data. The number of households renting from a private landlords stands at 4 million while the number of those renting from a council or housing association stands at 3.7 million. Statistics peg the number of renters in the UK at 5.4 million as at 2014, but Rics predicts that at least 1.8 million more households will be looking to rent rather than buy a home by 2025. An analysis published last year by PwC suggests that 7.2 million households will be in rented accommodation by 2025 compared with 5.4 million in 2015 and 2.3 million in 2001.

According to the English Housing Survey, four in 10 renters in the growing private rented sector do not expect to ever buy a house and of those who do, 44% expect to wait more than five years before they can afford it.

House building has abysmally failed to keep pace with Britain’s population explosion, a crisis that was further exacerbated following the financial crisis that induced a slump in house building as the graph shows the UK annual population change against annual new housing build completions. Data source: ONS. Image source: Market Oracle http://bit.ly/2fBK9Wc

Reason #4: The UK has an undersupply of housing

It is an old refrain, but the UK is facing a critical undersupply of housing even up till today. In late 2015, the BBC published an incriminating article on the shortage of housing in the UK, citing the Labour government’s failure to build 240,000 homes by 2016 — a target set in 2007. The Barker Review of Housing Supply had noted in 2005 that about 250,000 homes needed to be built every year to prevent spiralling house prices and a shortage of affordable homes. The closest the UK got to hitting the target was in 2006/07 when 219,000 homes were built. During the EU Referendum campaign, Brexit-backer Iain Duncan Smith said the UK would need to build 240 houses a day for 20 years to cope with increased demand, a claim that has been substantiated by the BBC. And the consequence of undersupply and high demand? Skyrocketing prices. With house prices at unaffordable rates, the only other option would be to rent.

Trivia 1: #DidYouKnow that for decades after WWII, the UK used to build more than 300,000 new homes a year? Now it’s about half that amount.

Trivia 2: In May 2014, BoE governor Mark Carney complained that housebuilding in the UK was half that of his native Canada despite the UK’s population being twice its size.

Home ownership is clearly declining among those within the younger age group. This is caused by a number of reasons including affordability and, increasingly, preference (lifestyle).

Reason #5: Lifestyle – the increasing preference for renting vs buying

While for some it is an economic choice, more are choosing to rent their homes over buying due to lifestyle. This shift is being prompted by younger workers today, also known as the Gen-Y demographic who are setting down later in life and changing jobs and careers with more regularity than their parents. This generation are marrying and having children later in life, allowing them the freedom to move as they want and when they want.

A research conducted by AXA discovered that less than 50% of the research participants are renting because they cannot afford it compared to the 67% in a study performed in 2013. The research revealed that many enjoy the freedom and flexibility of being mortgage-free. Thus the idea of being tied down to a mortgage and a single location is preventative for a workforce that wants to remain transient.

Conclusion

Owning property for rental in the UK is a good investment. It is important, however, to be aware of the costs involved and to be prudent about where you should invest in buy-to-let in order to maximise your returns.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260

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Will the Australian Property Market Crash?

Is the Australian property market going to crash? Image credit: http://bit.ly/2f3ezlS

Word is going round again that the Australian property market is up for a crash. Over the last five years or so, this topic has been a popular refrain among doomsayers, yet Australia has managed to avoid the Global Financial Crisis and property prices have gone up, almost doubling in Sydney.

True, there has been a slight dip in investment now compared to last year, but the numbers are still strong according to CoreLogic RP Data’s latest report in October and FIRB’s latest annual report for the FYE 2014-2015, if that is anything to go by. Prices have continued to rise with Sydney and Melbourne leading the pack. And, for all the concerns that have been voiced, capital city auction clearance rates remain high, led by Sydney (>80%) and Melbourne (>70%).

Taking a step back, the prediction about a property crash is resultative of and/or predicated upon several factors including:

  • General unaffordability of property especially in Melbourne and Sydney
  • Tighter regulations on foreign property ownership in Australia
  • Lower rental yields
  • Tightening of lending policies to foreigners by Australia’s top banks
  • Property (over)supply in cities like Brisbane, Melbourne & Sydney

We’re not about to ‘cry wolf’ as the future of the Australian property market should be based on the history of its performance and on facts. Here’s our take on why the Australian property market won’t crash.

Fact #1: Robust Population

Australia has been charting robust population growth. From 2013 to 2016, its population increased by approximately 1 million! Part of this growth is attributable to immigration, with the large majority of immigrants moving to Sydney, Melbourne and Brisbane. An increased population usually results in increased demand for housing. Logically, the reported oversupply of apartments should be absorbed by the incoming population.

Latest demographic data from the Australian Bureau of Statistics (ABS) showed that over the 12 months, the national population increased by 1.4% which translates into an increase of 327,610 persons. Charting the growth is the state of Victoria, as Melbourne remains the powerhouse of population expansion in the country.

Latest figures released by Australian Bureau of Statitics in Sept 2016 show growth in population over the last 12 months, with Victoria charting the growth. Image credit: CoreLogic. Source: ABS& CoreLogic

Click here to WATCH a SPECIAL NEWS REPORT on the growing population of Melbourne.

Fact #2: Sound governance & banking system

The state governments of Victoria, NSW and Queensland have imposed stamp duty taxes on foreigners while the FIRB is now levying new fees on foreign buyers. In the meantime, Australia’s main banks have tightened lending policies to foreigners, at the same time that the Reserve Bank has cut interest rates — now at the lowest level on record. The tightening measures imposed by the government and financial sector is a means to keep a lid on house prices.

On the issue of rates reduction — it is a move to stimulate the property market. Reduced rates encourage more people to take loans and buy property. It seems unlikely that the bank will implement this if the property bubble was a concern as reduced interest rates will mean more people buy and prices rise further.

Fact #3: Fragmented market

Australia’s property market is fragmented. It is inaccurate to blanket the entire market as one, as each state is at its own stage of a property cycle. Even in each state, different segments of the markets behave differently.

Real case study

In Sept 2016, demand for houses and apartments nationally grew 3.1% and 1.9% respectively, yet it was dragged below April levels by a softening WA market. Demand was high, driven by Sydney and Melbourne, yet in WA there was reduced demand. And yet, despite the decline, pockets of Perth bucked the trend: demand for WA houses and apartments fell 6% and 2.9% respectively, but demand for dwellings was at 2.9% increase in September.

Fact #4: Investor Appetite

Offshore investor interest is still high despite the 4 main Australian banks pulling the brakes on lending to foreign buyers earlier this year, as other banks continue lending. HSBC, for example, is enjoying steady lending to foreigners especially with the cuts to interest rates this year. This is the 12th cut since 2011 and the lowest since. In addition, tightening governmental policies have done little to dim the allure of Australian properties among Asian investors.

Fact #5: Sound economy & low unemployment rate

Australia’s seasonally adjusted unemployment rate was at 5.6% in Sept 2016 – the lowest jobless rate since September 2013. Unemployment rates source: ABS. Image credit: Trading Economics

Australia generally enjoys a sound economy, despite the slight dip in its performance this year. But growth is poised to strengthen in 2017 as the nation continues to transition from a mining-based boom to non-resource drivers of growth. Australia currently enjoys the lowest unemployment rate in the last three years according to the Australian Bureau of Statistics and the government is expecting employment growth to remain solid.

Conclusion

The property market has always been a cyclical one. Too many doomsayers have come forth in the past, but none of their predictions have come to pass. This is not to say that everything is hunky-dory. Yes, we think there will problems — there will be a correction and moderation in certain segments of the housing market just as there had been before; as an example the CBDs in major cities like Melbourne and Sydney have already been correcting over the past few years (we have been advising clients to stay clear of the CBD if they are expecting strong short term capital growth). Yes, there is all that, but certainly not enough to cause the economy to implode.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential and purpose-built student property in cities across the United Kingdom (London, Luton, Manchester, Liverpool, Newcastle, York, Glasgow, Scotland; Sheffield, etc); Australia (Melbourne, Perth, Brisbane) and Thailand (Bangkok). Our projects are concentrated in high-growth areas with great educational, infrastructural and job growth potentials. We aspire to make a difference in the lives of our clients by helping them achieve their investment goals through strong market research backed by third party experts and due diligence. 

Disclaimer: CSI Prop does not provide tax & legal advice and accepts no liability. Readers are encouraged to consult a qualified tax or legal advisor for a thorough review.

Need advice or clarification? Call us for more information and/or to find out about our projects! Hotline: 03-2162 2260