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Property Analysis – October 2018

                    POSITIVES                                  

1. Population Growth All States +/-200k pa.

________________               NEGATIVES   _____________           .                                

  1. Interest rates moving up – particularly Investment Loans
  2. Tighter Bank Lending – max 10% growth APRA imposed on banks
  3. Very limited access to I/O Loans
  4. LVR’s decrease – SMSF / Other – Greater deposits req’d & liquidity
  5. Non Residents – Duties – Vacancy Tax States
  6. Non Residents – CGT PPR 6 Yr Exemption Proposed to be Removed
  7. Impact of Land Tax – Higher Land Values
  8. More Supply of properties – $300k Downsize Tfr to Super Cap – Retirees
  9. ATO – No claims of Investment Property Travel post 1/7/17
  10. ATO – Reduced Depreciation All’ce Existing Assets ( QS )
  11. ATO – Certificate of Residency $2M to $750k 12.5% Withholding
  12. Increases in Cost of Living – Power etc etc Capacity to service debt
  13. No or very low % increase in Real Wages
  14. O’ seas Investors – China etc , 50% down from 2016 year
  15. Credit concerns from China, lending restricted and flow of funds
  16. Oversupply of Units – Sydney, Melbourne and Brisbane
  17. ‘Fight’ for tenants – Rent incentives evident in market
  18. Developers cannot secure finance – property disposals ( Wanda )
  19. Developer’s GST taken away at source of transactions, Wholesale Disp.
  20. Home loan arrears hit five year high – Mainly in WA
  21. Key Drivers Negative – Clearance Rates down to 50% & below ( buyer advantage <50%) vs 80% prior year, Price Gap increasing , Investors Mix declining indicating softer market. Price decline ~ -10% p.a.
  22. Reserve Bank of Australia now stepping in to stress test the Banking System – Analysis Top Down as opposed to Bottom Up by APRA/ Banks to date.
  23. Bank Royal Commission in progress – Further constrain on bank lending
  24. SMSF Lending shrinking – STG/WBC withdraws from this segment
  25. Landlord protection weaker due to Tribunal Outcomes -Tenant’s Rights

 

** Government plans to cap this to +/-70k p.a. for Sydney down from approx. 100k, which may become a negative !

This document is of general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

Property Analysis – October 20182019-01-10T14:55:13+11:00

5 TIPS FOR PROPERTY INVESTORS

1 – SAVE YOUR MONEY

·       It is very important to set up a regular savings plan and stick to it!

·       This is not only important to build the deposit to secure your investment but to also hold it during difficult times or times of low/no returns.

2 – RESEARCH / EDUCATE

·       It is vital that you do proper homework when deciding where and what property to purchase, benchmarking such as days on market, yields, vacancy rates, future developments are all important checks.

·       Gaining some relevant education also goes a long way towards making the right choices, be wary of ‘educators’ that have conflicted interest in the transaction. Make sure they are properly licensed and regulated.

3 – BUILD YOUR TEAM

·       The team that you develop to assist you with acquiring and making the most of the investment is a key contributor to your long term success. Listed below are the key professionals that you need to secure to ensure you are well advised every step of the journey.

·       Correct structure of ownership, bank loan, sound understanding of tax laws ( income tax, capital gains, stamp duty, land tax and the like ), all contribute to the long term financial success of the investment.

·       Accountant / Financial Adviser

·       Banker

·       Solicitor

·       Buyers Agent (if required)

4 – BE OPEN MINDED

·       Do not focus only on a particular area or type of property.  Be open minded to other areas or type of properties, be it residential or commercial.

·       This includes acquiring sound advice and taking this on board.

5 – ACCEPT THE CHALLENGE

·       If it was easy everyone would have done it!

·       Protect – Make sure your personal insurances are sound to back you up ( Life / Income Protection etc.)

·       Cash Flow – Continue to reinvest funds back into the investment, do not access cash flow too early in the process to increase lifestyle as history shows us there are always difficult times after a boom.

This document is of general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

5 TIPS FOR PROPERTY INVESTORS2018-12-17T09:20:57+11:00