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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 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. 

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 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.

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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Melbourne – 3 Weeks to Stamp Duty Increase

Victoria-stamp-duty-increase-csiprop
Victoria is due to impose on foreign real estate purchasers a 4% hike in stamp duty effective 1 July 2016. This totals to a 7% hike. Image credit: http://bit.ly/1rfUryG

TICK TOCK.

The clock is ticking. Come 1 July 2016, the 4% increase in stamp duty surcharge imposed by the Victoria state government on foreign property investors shall take effect. This increase, announced late April 2016, comes hard on the heels of the 3% stamp duty surcharge introduced on 1 July last year.

Victoria’s new stamp duty for foreign buyers of residential property is similar to changes adopted by the governments of Hong Kong, Singapore (and Malaysia), which charge an additional 15% stamp duty over and above the amount paid by domestic buyers.

Below is a FAQ detailing what the increase in stamp duty surcharge means for the foreign investor, and the implications to housing and investment into Victoria moving forward.

What is the new stamp duty rate imposed on foreign purchasers on 1 July 2016?

On 1 July 2016, foreigners will have to pay a stamp duty of 7% on purchases of houses, apartments and vacant residential zoned land in Melbourne and across Victoria. This is a 4% increase from the stamp duty surcharge introduced barely a year ago.

When does it take effect?

The new stamp duty surcharge applies to contracts signed on or after 1 July 2016.

Why is there a hike in stamp duty surcharge?

The Andrews Labour Government is taking action to ensure foreign buyers of residential property — who do not pay payroll tax and GST — contribute their fair share to the liveability of the state, and maintenance and development of government services. We believe that this new and rather sudden increment could be politically motivated: a federal election to determine all 226 members of the 45th Parliament of Australia will take place on Saturday, 2 July 2016 (one day after new stamp duty rate taks effect) after an eight-week official campaign period. This is Australia’s first double dissolution since the 1987 election. Yup, the stakes are high and this is a big deal, politically.

Melbourne’s population is set for massive growth, overtaking Sydney in 2053.

Statistics show that Victoria will have the largest population in Australia in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053. An increased population will lead to continual sprawl in the city and drive the demand for housing. And as migrants continue to move into Melbourne, there will be a greater need for rental accommodation.

With this increased surcharge, the Victorian government expects to raise $486 million over the next four years.

Are there any exclusions?

Yes; permanent Australian residents and New Zealanders will be excluded from the surcharge.

How does this affect the foreign investor and how should you take advantage of the situation in the short term?

(i) Save RM50K++ in duties*

Foreign investors are rushing to lock in their investments before the increased surcharge takes place. Timing is crucial and the window leading up to the surcharge increase, is small. If you have been thinking of investing in Melbourne property, now is a good time o decide. Acting quickly could save you more than RM50K++ in duties and ensure that you snap an investment in a good location.

For example, you could save approximately RM50K in stamp duties on a property worth $400K and about RM100K for a property worth $800K.

*dependent on price of property

(ii) Wise decisions go a long way

You should not invest for the sake of it or if you are not ready. We are strong advocates of making informed decisions: a thriving locality with potential for job growth, a growing economy, good amenities and increased infrastructure are key to a good investment. The best areas for investment and living in Melbourne are within the fringe of the CBD (click here to find out why). These include areas like Brunswick, North Melbourne, St Kilda and South Yarra, as well as landed housing across Melbourne, as they fetch better rental, capital appreciation and have higher chance of resale to Australians (by law, foreigners are only allowed to purchase brand new property. As such foreign investors can only dispose of their property to Australians who generally prefer to live outside the CBD).

What happens if you do not buy now?

You will merely have to purchase at a higher price, which means your rental return will be diminished. We stand by our advice to not be hasty, but to make informed decisions.

What are the ramifications of the stamp duty hike on foreign investment?

We foresee a slowdown in investments into Victoria and Melbourne in the short term. This could translate to a slowdown in construction of new builds, thus affecting supply of housing. This also means that Melbourne will become a more expensive city to invest in than Sydney, which is starting to see a comeback in investment. However, with the impending  growth and changes in Melbourne, we feel that foreign investments into Victorian property will continue unimpeded in the long run.


CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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Keeping a Close Watch on Perth Property

Property in Melbourne and Sydney often hog  the limelight, but savvy and seasoned investors are keeping a close watch on the West Australian city of Perth.

West Australian property is proving its broad appeal, with new figures from the Foreign Investment Review Board (FIRB) revealing a total of 2043 approvals for foreign buyers, an increase of almost 30% from the 1572 in the previous financial year.

To recap, Victoria topped the list with 16,775 approvals, followed by NSW with 12,349 and Queensland with 5023, with a big number of approvals for overseas buyers from the Chinese.

The Numbers are Looking Good

In the not too distant past, news had circulated of the mining slump adversely affecting Perth’s economy and softening the housing market. However, sales volume data up to March 2016 show signs of a bounce in consumer confidence. It appears that the property market is close to or at the bottom of the cycle with industry experts predicting a cautiously optimistic outlook for Perth in 2016.

This chimes with official figures released by the Australian Bureau of Statistics (ABS) which show a 0.5% jump in Perth’s residential property prices in the December 2015 quarter, marking an end to the trend of sliding property prices recorded since late 2013.

“The performance of the housing market is tied to the economy, which is reflected in unemployment rates/employment opportunities,” says CSI Prop spokesman Virata Thaivasigamony.

“And, here’s the thing: all that negative predictions of a boom or bust in the WA economy that has been going around, has not been reflected in employment stats. In reality, Perth’s economy is more diversified and not solely driven by the mining industry as people make it out to be.

“ABS’ labour force figures for March 2016 show WA’s unemployment rate had fallen to 5.5% — which is below the national unemployment rate of 5.7%. Of course Australia’s economic performance in general is tied to the global economy, but from these numbers, the WA economy isn’t a lost cause and the reason why the Perth property market hasn’t tanked drastically as has been predicted,” Virata adds, citing Melbourne as yet another city that has defied years of doomsaying.

According to ABS, WA’s unemployment rate is lower than Victoria’s (5.7%), Queensland’s (6.1%), South Australia’s (7.%) and Tasmania’s (6.8%), and marginally higher than NSW’s (5.3%).

Meanwhile, Perth’s population is expected to increase by 70% to 3.5 million by 2050. ABS statistics show that Perth’s population growth is scheduled to overtake Brisbane by 2028, becoming the third largest city in Australia. Wise investors are looking to leverage on this growth by investing in strategically located property at currently affordable prices (while there is little competition among buyers) in order to achieve strong capital growth in the coming decades. Note that prices of inner city property is far more affordable than a similarly located project in Sydney.

10 Years Rental Assurance

Investors looking to also benefit both in the short term (rental income) and long term (capital growth) can apply for the National Rental Affordability Scheme (NRAS), a joint Australia and WA Government initiative to increase the supply of new affordable rental dwellings in WA.

Under the NRAS, applicants can apply for annual incentives to buy and rent their homes to low and moderate income households (tenants must be approved by Australian Government).

NRAS landlords rest assured that their property will be the first pick among the rental community as the property must be rented at a 20% discount. However, this amount is paid back by the government to the landlord as an incentive. These incentives, totalling over A$100K, is tax-free.

In fact, these incentives are worth more than the discount given, which essentially means the landlords benefit a great deal at the end of the day.

Landlords end up with a 7.2% gross rental yield vs a typical property which generates only 4% – 5%. This also means that investors are essentially assured of rental for 10 years at a higher return.

Call us at 03-2162 2260 to learn more about Perth property, discuss options or how you can be part of the NRAS programme.

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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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 Prop 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 Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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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 Prop 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 Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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Australian Suburbs Blacklist 2016

Bangaroo, Sydney. Credit: Taken from http://bit.ly/1Ri9DWf

Summary:

·       AMP Bank has blacklisted 140 apartment suburbs across Australia due to oversupply and other issues

·       Queensland and Western Australia lead with most blacklisted suburbs

·       In Australian capital cities Sydney CBD and Melbourne CBD tops the blacklist for high rise builds

AMP BANK has blacklisted apartments in more than 140 suburbs due to growing concerns of oversupply, off-the-plan sales and falling prices. The list was leaked and published in the Australian Financial Review yesterday.

The concern of oversupply could push down prices, rents and lead to defaults. AMP is not the only big lender circulating black lists, where buyers will face tougher terms on the amount borrowed, number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees. Last year, NAB had blacklisted more than 80 suburbs across Down Under where they capped LTVs in the area.

Currently, Queensland and Western Australia leads AMP’s blacklist, while among capital cities, Sydney tops both AMP and NAB’s ‘high risk’ list, as building of apartments has boomed due to demand from investors and first-time buyers. Melbourne is not spared either, namely the CBD, Docklands and Southbank.

What’s worth flagging is that Brisbane CBD, Melbourne CBD, Perth CBD, and Sydney CBD have appeared on both NAB’s blacklist in 2015 and AMP’s blacklist this year.

“We have been warning our clients that the CBD is not the place to invest in as valuations have been unfavourable. We have refrained from marketing Sydney property as prices have gone too high and there is a great oversupply there. AMP’s blacklist just confirms our predictions,” says CSI Prop spokesperson Virata Thaivasigamony.

“Our objective is to make a difference in the lives of our clients, to help them achieve their investment goals, which is why our projects are concentrated in locations that have sound growth potential. We pride ourselves on our research, which is the bedrock of the investment projects that we offer,” he adds.

An estimated 45,000 apartments are due for completion and settlement over the next nine months to Christmas in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared to last year, with another 53,000 coming to the market in the same postcodes next year, according to planning consultancy MacroPlan Dimasi.

Below: AMP’s Apartment Suburb Blacklist 2016

Credit: Australia Financial Review http://www.afr.com/real-estate/amp-blacklists-more-than-140-suburbs-for-apartment-lending-20160322-gno3em

To read more about AMP’s Apartment Blacklisted Suburbs 2016, click http://bit.ly/1RAp8Li

To compare with NAB’s credit risk list in 2015, read: http://bit.ly/1MDqT2P

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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Melbourne Property: CBD or Fringe

Melbourne to overtake Sydney as largest city in 2053. Source: Australia Bureau of Statistics

MELBOURNE PROPERTY: CBD VS FRINGE

Among all the states in Australia, statistics show that Victoria will have the largest population in the future, driven by massive and rapid growth in Melbourne city (source: CBRE). The Australia Bureau of Statistics projects that Melbourne will overtake Sydney as Australia’s biggest city in 2053.

It’s easy to understand why – spurred by a highly diversified economy and world-class education and tourism, Melbourne has been named Most Liveable City five times consecutively since 2011.

Smart investors looking to net significant rental income from the growing population have been investing their money in various suburbs across this beautiful city.

The key question is, where is the best place to invest in Melbourne?

MELBOURNE CBD: SMART INVESTORS STAY AWAY

Melbourne CBD is an amazing place – organized, pretty, artistic and with amazing walkability scores – and we love it! From an investment point of view, however, property in the CBD is an absolute NO.

Here’s why:

  1. Valuation for property in the CBD has been 20%++ BELOW purchase price

In the CBD, housing projects are confined to high-rise development only, which usually takes about four to five years to complete. The team at CSI Prop has heard from many of those who had previously invested in CBD property, complaints that the banks had undervalued their property by 20% lower (or more) than purchase price. Statistics have shown that the average property price in Melbourne increases by 9.53% each year (source: Australia Property Monitors). This essentially means that the abovementioned properties in the CBD had not only been valuated BELOW its original purchase price, it had also depreciated! Speak to a licensed independent mortgage broker or lawyer for Australian property if you want verification.

  1. The last three years have seen NEGATIVE capital appreciation in CBD property (source: Australian Property Monitors).
  2. The CBD is approaching an oversupply of apartments. There is increasingly higher vacancies as more properties come to completion.

Melbourne CBD approvals for six months of 2015 was 12,516. Melbourne’s high-rise boom currently encompasses 33 towers under construction and a further 39 to be built, according to Skyscraper, Activity Monitor and UrbanMelbourne. Researcher BIS Shrapnel said, “The city is already heading for a glut of apartments. By June 2016, there will be a surplus of 15,000.”

  1. No Exit for the next 10 Years++

Last September, Australian website Domain.com published that investors should “get out as soon as possible (otherwise) it will take 10 to 15 years before you get your money back.” This is due to (i) the oversupply of apartments in the CBD and (ii) Australians generally dislike living in the CBD. In case you didn’t already know, foreigners are not allowed to purchase property in the secondary market. Which simply means that foreign investors looking to exit the market are only allowed to sell to Australians. But Australians don’t like living in the CBD…

 

CBD FRINGE PROPERTY – HIGH RETURNS, GREATER CAPITAL APPRECIATION

Research has shown that investing in property located at the CBD fringe is the most rewarding. We at CSI Prop are supporters of properties located in these locations, based on our own research which is backed by industry experts.

Property located in the CBD fringe are a top choice because:

  1. They are extremely accessible to the city by all kinds of transport including walking, yet removed enough from its hustle and bustle.
  2. Many are located close to areas with lots of green, F&B outlets, entertainment and the arts.
  3. Good appreciation value. If you invest in the right location, you should be able to own seven properties in 10 years, with an initial capital of only RM100,000. Ask us how.

We leave you with a chart of the top CBD-fringe suburbs to invest in:

Melbourne-Fringe-VS-CBD-csiprop
Comparative data of property located at Melbourne CBD-fringe

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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Australian Property: Doomsayer’s Obsession

Economist Steve Keen at the summit of Mount Kosciuszko after losing a bet house prices would plummet 40 per cent. Photo: Andrew Meares. Credit: Domain website http://bit.ly/1T7b9MT

“…we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as if it is a bad boy for making people money.”

IN 2010, Steve Keen undertook a 224-kilometre walk from Canberra’s Parliament House to the Snowy Mountains’ Mount Kosciuszko wearing a T-shirt with the words, “I was hopelessly wrong on house prices. Ask me how.” The walk was the result of a lost wager – the economist had made a bet with Macquarie Bank analyst Rory Robertson that home prices would fall 40% from peak to trough in a year.

Contrary to Keen’s prediction, capital city house prices in Australia rose by 12.1%, hitting a new high, as demand from first-home buyers sparked a revival at the lower end of the market.

In 2014, American economist Henry Dent forecast a fall in house prices of at least 27% in Sydney and Melbourne over the next several years. Macroeconomic researcher Lindsay David followed suit with his prediction of a housing bloodbath in the same year.

UK-based economist Jonathan Tepper is the latest in a line of doomsayers touting the proverbial Australian housing bubble and the property market crash of between 30% and 50% in values.

“Australia now has the highest level of household debt to GDP in the entire world,” says Tepper, following his well-publicised research ‘expedition’ in Sydney’s Western suburbs.

It’s fascinating how his predictions are based on a rather unrepresentative sample of the entire Australia. Equally fascinating is the forbearance of Australian industry experts and how they have patiently swatted away predictions by doomsayers time and again.

AMP Capital chief economist Shane Oliver said: “In a way I think it is a bit of a joke, this sort of story has been wheeled out almost continuously now since 2002, 2003. We had a big run up in property prices then and it did become a bit bubbly around that time and of course various people were inclined to think that property could crash. Then as the years rolled on I began to realise and I think most people in Australia realised, that the Australian property market is a lot more complex and a lot more stable than people give it credit for and the reason prices don’t crash is because we don’t have an oversupply like America did at the time of the GFC.’’

Real estate expert Andrew Winter said commentators who expressed this kind of “drama” about the market were forgetting what the commodity was.

“This commodity is property, residential property, and that is where all the calculations fail. For the simple reason is we can live without gold, we can even now live without oil, we can live without stocks and shares, we can live without just about everything now, but we can’t live without somewhere to live. There is this whole crowd of people who love to give the property market a hard time as it if it is a bad boy for making people money.”

Truthfully, there is much to be considered in the life and times of the Australian property market – not just prices in Sydney and one or two suburbs in Melbourne.

Things are going well Down Under, overall: the RBA has highlighted lower unemployment, above-average business conditions and stronger business lending, noting expansion in the non-mining parts of the economy had strengthened during 2015. The facts speak for themselves; research has shown that the Australian population is slated to increase over the years with Melbourne leading the way.

CSI Prop spokesperson Virata Thaivasigamony chuckled at the recent prediction made by Tepper, joking that doomsaying helps make headlines and drive newspaper sales.

“Australia has one of the highest population growth trends, superseding a good number of developed countries in child birth rates. Its capital appreciation rates are unlike Singapore, Hong Kong and Malaysia – there are no steep fluctuations. The last 50 years have seen Australia’s appreciation rates on average rise at a steady 7% thereabouts, which I would attribute to population growth. And with population growth comes increase in demand for housing,” he said.

But as they say, there are two sides to a story, just like there is always more than one story. Ultimately, the decision lies in the hands of the buyer/investor. As always, we strongly advise investors to research the market: do some reading and/or call us for obligation-free consultation and advice so that you can make informed decisions. At Cornerstone International, we place great value on research and strive to offer viable investment projects backed by research.

For now, let us leave you with a darkly humorous parting shot: predicting when the property bubble will pop is bad for your mental health, according to the Sydney Morning Herald J

CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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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Melbourne Suburbs to Watch in 2016

Melbourne Suburbs

If you’re watching the Melbourne suburbs market following our last posting on the Australia Outlook for 2016, here are some tips to give you a heads-up on what Melbourne suburbs to look out for in this city this year.

To recap, Melbourne did pretty well last year, ending 2015 on a high auction note compared to other cities in Australia. However, median house prices growth is expected to moderate this year, yet the increasing population and relatively low interest rates will continue to fuel interest in the property market in Melbourne.

Real Estate Institute Victoria (REIV) expects moderate growth across the city in 2016, with further price increases in a range of suburbs in Melbourne’s inner, middle and outer rings.

Based on research by the REIV, here are the suburbs to look out for:

West of CBD

  1. Footscray
  2. Altona
  3. Sunshine
  4. Spotswood

North of CBD 

  1. Preston
  2. Epping

East of CBD

  1.  Burwood East
  2. Montrose
  3. Mount Waverley
  4. Glen Waverley

South of CBD

  1.  Seaford
  2. Chelsea

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CSI Prop proudly promotes international investment property with high yields at low risk. Our portfolio comprises residential 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. 

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