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Foreign Investment in Australia Property at Record High

Approvals for foreign investment in Australian property hit a record high of  A$61bn, an increase of 75% in the 2014-15 financial year, possibly accounting for approximately a quarter of new developments Down Under.

This increase is on the back of a 102% spike on the year before.

The Foreign Investment Review Board (FIRB) records 36,841 (60% more than FYE 2013-14) applications by non-citizens and non-permanent residents to buy residential properties, representing 81% of total value of residential building approvals in 2014-15.

According to UBS economists, 75% of these new properties are located in NSW and Victoria, with data strongly suggesting that most were concentrated in the inner-city high-rise markets of Melbourne, Sydney and Brisbane.

“From these approvals, it is estimated that roughly about 1 in 3 convert into actual investment which means foreign investment accounts for about 25% of the new developments in Australia. The highest proportion of real estate investments by foreigners into Australia comes from China while Singaporeans and Malaysians have also been identified as some of the top investors in Australian residential real estate,” said CSI Properties  (Cornerstone International) spokesperson Virata Thaivasigamony.

“Australia’s popularity amongst investors is not unfounded due to its sound economy and policies. However, investors should study the markets well and find out which states and sectors general investment monies are going into before putting money down on property for investment. We place a lot of emphasis on research and we cannot stress more how important knowing the market is.”

Newsflash: Victoria Doubles Foreign Buyer Stamp Duty

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

With the increase in foreign investment in property in Victoria, the government is taking action to ensure foreign buyers of residential real estate contribute their fair share to the liveability of the state.

To this end, the Australian government is increasing stamp duty surcharge on foreign buyers of residential property from 3% to 7%, applicable to contracts signed on or after 1 July 2016.

Additionally, land tax surcharge on absentee owners will also rise from 0.5% to 1.5% from the 2017 land tax year.

“Australia is headed for an election and one of the biggest challenges the government faces is the complaint from voters that foreigners are buying and pushing up prices; this could be a form of appeasement.

“Victoria’s surcharge on foreign owners of residential real estate has been in effect since July 2015, but it has had little impact on foreign demand. Similarly, we don’t see a significant impact with this new surcharge increase, but we are bracing ourselves for a surge in demand over the next two months as investors rush to save on the surcharge hike,” said Virata.

CSI Properties  (Cornerstone International) proudly markets 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: Cornerstone International 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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The Silver Lining Behind Perth Property

Imagine owning a home just within walking distance from Cottlesloe Beach in Perth, Australia. It’s a buyers market now, and chances are, you can! Photo Credit: http://www.bosso.com.au/portfolio/cottlesloe-beach/

With property prices softened, buyers can now call the shots, purchasing real estate in some of the best suburbs at lowered prices. Strategic purchases will yield better returns and result in greater appreciation when the property market escalates.

The Perth property market has been on a decline over the last few years, but it may be that the market has bottomed out. Official figures released by the Australian Bureau of Statistics show that Perth’s residential property prices jumped 0.5% in the December quarter, ending the ongoing trend of sliding property prices recorded since late 2013.

That said, industry observers are remaining conservative, predicting a mild rise in prices (or for some, not at all) in 2016. Still, as they say, behind every cloud is a silver lining. It is now a buyers’ market in Perth and, coupled with low interest rates, a great time to shop for real estate. In time, when the market recovers, property is bound to see a corresponding rise in value.

What you COULD get with $A1million

So what can you get with A$1 million in West Australia today? Most likely an impressive 2-storey house near the city, acreage in the east or a beachfront cottage in the South West, reports the West Australian.

  • In Perth North – $999K buys a 4-bedroom, 2-storey house 10km from the city in Stirling.
  • In Perth South – $999K buys a 3-bedroom, 2-bathroom townhouse with a shared tennis court.
  • In Perth Southwest – $1 million could get you a beachfront property.
  • In Mosman Park – traditionally one of Perth’s most expensive suburbs – you could get a home for below $1 million.

What you SHOULD get with A$1 million

If you’re looking to take advantage of the market and get a better long term investment, a wise move would be to buy in sought-after suburbs that have seen a temporary softening in price instead of splurging on bigger and fancier homes.

There are predictions that older entry-level properties in suburbs like East Fremantle and Wembley Downs in the $550,000-plus range will see capital growth of up to 10% in the next 12-18 months.

“We are firm believers that location plays a big role in your investment. It makes logical sense to pay for a good location that has lots of potential for growth,” says CSI Properties (Cornerstone International) spokesperson Virata Thaivasigamony.

“We like areas with infrastructural growth and job employment like Atwell, but we also see the potential in established locations like Cottlesloe, West Perth and Southwest Perth where capital appreciation is concerned. Of course, it is the buying motive will guide the purchase at the end of the day. The important thing is to speak to people who know the market, consult your own tax advisors, do your research,” he adds.

Are you watching the Perth suburbs? Here’s a list of bargain buy suburbs courtesy of Realestate.com.au:

CSI Properties (Cornerstone International) 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 Properties (Cornerstone International) 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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The State of Melbourne and Sydney Property Markets

Property investment is viable in Brisbane as the market is more affordable than Melbourne & Sydney, and has entered into an expansionary/ growth phase.

Speculations on the Melbourne & Sydney property market following the Australia Bureau of Statistics’ (ABS) latest figures on home prices in the June quarter, have been pretty disparate.

According to the ABS, Melbourne & Sydney had posted home price rises of more than 1% in the June quarter, with prices rising by almost 9% in Sydney – more than twice Melbourne’s 4.2% gain. This comes on the back of a tighter regulatory environment, including the crackdown on errant foreign investors.

Experts from Morgan Stanley and Goldman Sachs have pointed out that a recession could be imminent as auctions for homes in Sydney and Melbourne soften.

Conversely, some of Australia’s leading economists say that there is no bursting bubble in the near future, predicting that Melbourne & Sydney could enjoy strong growth this coming year. An exclusive Fairfax Media survey of 25 leading economic forecasters reveals that most believe house prices have risen for fundamental economic reasons and NOT over-exuberance from investors.

Apparently, only a third of economists (7 out of 25) believe that there is a housing bubble in Sydney or parts of Melbourne.

Despite the woes of rising house prices, housing investment is deemed the only really bright spot and, perhaps, the wisest option for saving.

However, it seems that the more widely held view is that growth is set to moderate. UBS economist Scott Haslem says that the banks see a “moderation of strength”, not a “downturn”, and that “the outlook for housing depends on who and what you ask” while at the same time cautioning that some factors are hard to quantify.

At the end of the day, it is imperative that you read and do your research while keeping in mind the various methodologies used by the different experts in interpreting data. Be sure to questions and talk to as many people as possible to make informed decisions.

There is, for sure, a sound alternative. The housing market in Perth and Brisbane are more affordable, with prices expected to appreciate as they enter into an expansionary/ growth phase in the property cycle.

Looking for Australian property? Need to speak to someone? Call us at 03-2162 2260.

CSI Properties (Cornerstone International) proudly markets 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: Cornerstone International 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