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Property Ownership Skills Start Early

Property Ownership Skills Start Early

With all of the talk recently about the increasing difficulty that First Home Owners face getting a foothold in the market a recent study by Cambridge University may have a solution.Property Ownership Skills Start Early

Many parents don’t talk about the value of saving money with their children until they are in their teens. A Cambridge university study shows that children are open to learning about the intricacies of financial management much earlier and can develop good habits as young as seven.  The Cambridge study uncovers how the different phases of a child’s understanding can be encouraged so that property ownership follows naturally on as an almost inevitable next stage.

According to the study, there are several stages on the path to learning about money and spending – and learning to count is one of the first. By the age of five or six most children grasp the idea that money represents something and can be exchanged for goods at a shop. By the age of seven they can understand that if the money they have isn’t enough for a purchase they want, they cannot buy it. But it isn’t until children can understand the passage of time past a month (about age eight) that they can learn the value of delaying an immediate want to get something greater later. This delayed gratification is the key component of saving and then of investing.

Most parents don’t think of explaining their choices as they fill a shopping bag, but letting children participate in purchases and understand why you buy what you do is a great start to making them realise that you don’t spend all your money on a whim and that some expenses have to be planned at least week to week and others over a larger time frame.

At the same time, providing pocket money and a piggy bank so they can touch and count money allows them to try out some of these principles for themselves – not buying a bag of lollies today is not only good for your teeth but it means you can save for  a toy from which the pleasure will be more long-lasting .Property Ownership Skills Start Early

It pays to set up a bank account for your child as early as you can, making it exciting to go and put money into the account where it will earn interest.

It also helps if parents don’t just buy children what they want whenever they want it. Get them to use pocket money or wait for birthday, Xmas or other special gift times. They learn that the world doesn’t grind to a halt if they go without and that the pleasure of many things is short-lived anyway. Understanding that some items need to be saved for is a key life skill and without it property ownership is likely to be out of reach.

When a child’s savings reach an appropriate level, they can choose an interest-bearing account with parental help and as they get older they are ready to learn about investing. When teenagers get a part-time job, show them how to budget, dividing their money into saving, (long term goals) and spending (short term goals) and perhaps even allowing a little for charity.

Let us know what you think, do kids these days know how to be effective savers?

Should you include your Family home in your retirement plans?

Should you include your Family home in your retirement plans

AUSTRALIANS believe in the phrase “safe as houses” so much that they will spend most of their working lives buying and upgrading the family home.

With most of our resources channelled into this endeavour, some can proudly wave the ownership banner upon retirement as the greatest retirement asset acquired.

According to a Productivity Commission research paper, households with people aged 55 years and over hold almost 59 per cent of the total home equity in Australia.

However, when it comes to using the wealth accumulated through the family home, it is often the last asset considered.

An analysis of Centrelink records between 1999 and 2007 found that pensioners who passed away left behind residual wealth equal to about 90 per cent of the amount recorded when they first retired. Most of this wealth was in the family home and left unused as a source of retirement funding.

Most of this wealth that is created in houses is simply capital growth that has occurred over time.  Because we see our houses rise in value, it has been found that older Australians view their family home as a precautionary saving measure or a potential bequest.

So should you consider selling the family home and downsize as part of your retirement planning?

The longer the sale of the family home is put off, the higher are the costs of renovations that are needed to get the property ready for sale.

Finding suitable accommodation close to necessary amenities, such as hospitals, becomes increasingly difficult as property prices in these areas generally increase more than other areas.

This makes the idea of extracting equity from the family home difficult.

Apart from the financial impact of delaying selling the family home, there are also physical and emotional issues.

Australians prefer to age in their existing family home but, as they do, mobility becomes a bigger issue.

A reduction in the age pension payment can also be a reason for the reluctance to downsize.

Under the current assets test, you will lose $1.50 for every $1000 above the threshold.

In terms of return, this is about 3.9 per cent a year.

However, the equity that is released, when invested properly, may be able to yield a higher long-term average and, more importantly, would also provide a buffer for emergencies — something that the retention of the family home cannot easily provide. One possible solution is to consider downsizing before retirement. It is a sensible idea to plan how we are going to approach retirement.

Should you include your family home in your retirement plan

For example, when there is still an income, renovating the property prior to a sale may well be easier. The funds that had been freed from this exercise could either allow us the option of working longer, or investing to produce in the long term higher retirement savings.

An Association of Superannuation Funds of Australia survey found that for the June quarter the average annual expenses for a modest and comfortable lifestyle were $34,216 for singles and $59,160 for couples.

As a guide, assuming 20 years in retirement, investing in a conservative investment option and including the government age pension, you need about $430,000 for a modest retirement and slightly under $950,000 for a comfortable one.

Houses are safe. We invest in them to help us retire. But it could be a pointless exercise if we continue to hold on to them in retirement.

As the population ages, perhaps there should be more done in terms of providing suitable housing for retirees.

Until then, we may have to consider changing our perception and be willing to put our investment to good use.  What do you think?  What is your strategy leading into retirement?

We would like to acknowledge Elson Goh is a senior lecturer at the School of Economics and Finance at Curtin University, for some of this research.

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Confidence returns for property investors

Confidence returns for property investors

 A new survey confirms high-income property investors have returned to the Australian property market with the intention to buy, a considerable shift from the same time last year. There has been a nine per cent increase in demand by investors looking to buy a property at the upper end of the market, according to the realestate.com.au’s Consumer Insights Report (Buy).

Twenty-five per cent of investors were searching for properties to buy in the $500,000 or more price range, up from 16 per cent in April 2009.

General manager of sales and operations for realestate.com.au Peter Wright says the research findings paint a promising picture of the property market.

“The report revealed one in two property seekers now believe the market is rising – a result not observed for two years,” he says. “Of those who believe the market is rising, the perceived reasons for growth include a seven per cent increase in investors returning to the market (35 per cent), a shortage of properties (54 per cent) and a growing economy (40 per cent).

Confidence returns for property investors

“Investors were also one of the top three homebuyer groups (39 per cent) that have sought pre-approval for finance with the intention to buy or build. First homebuyers and investors were also more likely to say they had thoroughly researched the market – up by 16 per cent and eight per cent from the last wave respectively,” Wright says.

The report also showed that investors were more likely to be male, aged 50 to 64 and living in high income households, while female investors were more likely to be younger, aged 25 to 34 years (30 per cent), compared to males (21 per cent). Both male and female investors were more inclined to come from double income households (54 and 50 per cent respectively).

The report is an in-depth survey that delves into the psyche of the Australian property buyer, covering topics such as buy, rent and share. The survey ran from May 31 to June 3 with 4082 Australians taking part.

Source: Australian Property Investor

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Home prices chipping away at fairness: Ratings executive

S&P credit ratings expert confirms the strength of the housing sector but questions the benefit of high home prices for society

A managing director of a credit ratings agency responsible for scoring the quality of Australia's mortgage debt has questioned the social impact of the nation's soaring house prices, even while she confirms the strength of the sector.

Standard & Poor's managing director of rating services Fabienne Michaux said the strength of Australia's mortgage quality is a success on the capital markets but the high valuation of homes underlying the debt presents a long-term risk to the basic fairness in society.

"The social implication of house prices in the longer term is a key issue," she said. "One of the things people were proud of was that (Australia) was fairly egalitarian and even and everybody had basic rights to housing and basic education and good healthcare."
"Those are the sorts of things that start to chip away when you've got people who can't afford to actually to find somewhere to put a roof over their head."

 

home-2-min

The median national city median home price was $468,000 in May, according to RP Data-Rismark, following years of nearly uninterrupted increases in value, driven by a shortage of available new land, a cumbersome building approvals process and tax incentives that reward owners to purchase and hold second homes.

There is an estimated 200,000 home shortage in the nation, expected to worsen as a recovery in building stalls. Ratings agencies such as Standard & Poor's grade the quality of the mortgage debt that is repackaged and on-sold by local lenders to institutional investors.

While confirming the strength of assets underlying Australia's residential mortgage backed securities market, which has issued $352 billion since 2000, Ms Michaux noted home owners are unwise to take too much satisfaction in becoming property millionaires.

"Ultimately the utility of the house is still that you're living in it," she said. "When you pass it on, it's still one house. If you've got two kids you've got half a house each."

Story by Chris Zappone Fairfax Digital

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DEMAND STILL OUTWEIGHS SUPPLY

DEMAND STILL OUTWEIGHS SUPPLY

Rates are rising, some effects of the GFC still linger, and every day the newspapers have a different take on what Brisbane’s property market is doing. But let’s look at some of the hard facts.

  • Building Approval levels have dropped to low levels not seen since the 1980’s
  • Release rate of new stock and lack of competition is affecting prices
  • Still not enough homes being built in Queensland
  • South East Queensland saw a population increase of 75,000 in 2008-09 with a need for 30,000 homes, yet only 17,000 were built
  • Interstate migration has dropped only slightly in Queensland (Victoria now leading the way), but there is still a high number of people coming from overseas

Given these fact, I still believe the market is strong for sellers. The average days on market for houses in this area is 21 days, which also speaks volumes.

DEMAND STILL OUTWEIGHS SUPPLY

The other day I had a lady yelling at me because I still had not found her perfect home. I told her to sell her a home I had to literally wait until the owner was ready to move. I could just got to the wholesaler and buy her one off the shelf. Sellers are holding on – nothing I do can force people to sell – no use yelling at the agent because we have no stock on our shelf.

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SELLING AN INVESTMENT PROPERTY

SELLING AN INVESTMENT PROPERTY

With the end of the financial year looming, now is crunch time in assessing your assets and setting an action plan into place. When selling an investment property there are several factors to consider.


1.
First and foremost, consider the tenants. This may be your property but it is their home. Tenants can make or break a sale. Unco-operative tenants will make your agent’s life hell! It is up to them to present the property for inspection to prospective buyers.

SELLING AN INVESTMENT PROPERTY

2. Lease: Have a look at the term of your lease. It is always best to put the property on the market at the end of the lease. This will often up your pool of buyers to include buyers who want vacant possession, as well as investors who may want the tenants to stay. Do not put a 12 month lease in place and then decide to sell. The lease will be an encumbrance on the sale.

3. Tax: Investment properties attract Capital Gains Tax. Make sure you speak to your accountant to educate yourself on your own personal tax implications. The last thing you want is a huge tax bill.

4. Presentation: If you have difficult tenants, consider selling after they leave. Then tidy up the property and go to market.

Best of luck! If you need hints on how to handle tenants just give us a quick call.

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LOOK TO THE FUTURE WITH CONFIDENCE…. BUT EYES WIDE OPEN!

LOOK TO THE FUTURE WITH CONFIDENCE.... BUT EYES WIDE OPEN!

The market in Brisbane is said to be booming. Buyers are paying well over asking prices. Sellers are chasing - and getting - top dollar.

For property owners a boom market is great news. Personal wealth increases with each passing week and the thought of an early retirement becomes a real possibility.

But how long can the market sustain the pace of the recovery currently being seen?

Australia's economy is relatively strong. Not so others. There are plenty of questions hanging over the debt burden in the US. Equally there are a number of other economies that are taking a long, long time to emerge from the GFC. If the US stock market were to take a large correction Australia would almost certainly follow suit and that would wipe out capital gains that might otherwise have been used to fund property investments.

Then there's the issue of interest rates. The Reserve Bank is fully aware of the dangers of a housing price bubble; and they're likely to do everything at their disposal to avoid one. That means putting up interest rates – as we’ve recently seen - possibly in aggressive manner. Investors - or more particularly speculators - could well see extended periods of flat market performance as a result. It's a scenario that could put significant cash-flow pressure on highly geared property portfolios.

LOOK TO THE FUTURE WITH CONFIDENCE.... BUT EYES WIDE OPEN!

Of course there are other factors that suggest a market correction isn't on the cards. Chinese demand for resources produces significant demand for skilled trades in the resources sector. This puts downward pressure on Australia's unemployment rate and brings confidence to the broader economy.

We shouldn't forget burgeoning Australian population. Immigrants need to live somewhere and this places further upward pressure on rents making property investment more attractive.

The takeaway is to look to the future with confidence but with both eyes wide open. While there'll be some fortunes made it makes sense to scan the horizon for potential risks. Property has traditionally been a sound long-term investment. Those who approach investing in this way will be the winners. If you believe in slow and steady, start now. Property prices will always go up in the long term. Tomorrow may cost you an extra

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Team Work – What can I do?

Team Work - What can I do

SELLING TIPS: What you can do to help

Remove any objects such as children’s toys on the front steps, which might cause accidents.  Keep the front entrance and stairway clear.  Try for uncluttered appearance.

 Neat orderly rooms look bigger, especially bedrooms.  Tidy up all rooms for a spacious appearance.

Check and double-check your bathroom.  Bright and clean bathrooms sell many homes.

When you are showing your home three is a crowd.  Avoid having  too many people present for inspections.  The prospect will feel like an intruder and will hurry through the house.  If possible go out for a short walk.

If you can’t go out, stay out of the way.  Do not accompany the prospect and the sales person around the house.  The Agent knows the Buyer’s requirements and can better emphasise the features of your house when alone.  They will call you if they need you.

Love me, love my dog does not apply when selling a house.  Pets are best kept out of the way, even taken on a walk when there is an inspection.

Never apologize for the appearance of your home.  After all, it has been lived in.  Let the real estate agent answer any objections that are raised, that is their job.

Switch off the TV during inspections it is very distracting.  Put on some mellow music that will get prospective purchasers relaxed and in the mood for buying.

It is best not to discuss price, terms, possessions or other factors with the buyer.  Refer them to the agent.  Real Estate Agents are better equipped to bring the negotiation to a quick and favourable conclusion.

You and your Real Estate Agent need to work as a team.  If you feel they have overlooked some important selling points, feel free to discuss them once you are alone together.

Sweep all the walkways to create an impression of constant maintenance to your house.

Remove excess mail from your letterbox.

Park extra cars, which do not fit in car parks, away from the property.

Clean windows and window coverings.

Make sure gutter and down pipes are clean and in working order.

Team Work - What can I do

Fresh flowers inside the home can add extra colour and vibrance.  They also appeal to a Buyers sense of smell with their exotic   fragrances.

Having a pot of fresh coffee brewing or a loaf of bread baking will also add a pleasant aroma to your house.

Open curtains and turn on lights so the house feels warm and bright.

If people unaccompanied by your Real Estate Agent ask to see the property, for security reasons, refer them to your real estate   professional for an appointment.

Have an air freshener in the toilet and bathroom to have a fresh, clean smell.

Place a bowl of fruit with a variety of colours in a prominent position in the kitchen.

It is important that a home gets a buyer in the right mood to buy, all the above tips and hints will help to do this.  You can also use the season to your advantage. 

 If it is wintertime make sure that the house is warm. It is very welcoming on a cold day and adds extra character if you have the fire burning.

 If it is summer time ensure that the house is cool by using, fans, air-conditioners or opening all the windows to make the most of any breeze.

For more information just comment on this post and I will get back to you or email me on madeleine@madeleinehicks.com.au

 

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Homes for Sale Everton Park

Homes for Sale Everton Park

There has been a huge recovery in the Everton Park market place as property savvy first home buyers swoop down on Everton Parks proximity to the CBD.  Everton Park is offering value for money.  Only 8km from Brisbane CBD, serviced by good infrastructure it is proving a winner after a slow start in the first quarter of the year.  Median prices in March were $424,000 rising in April to $480,000.  In my humble opinion in the next few years Everton Park will be the next new urban village.

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Recession is always followed by Inflation.

Recession is always followed by Inflation

There is nothing better than real estate.  Now at the bottom of the market is the time to buy and wait for the changing time.  With inflation real estate increases in value.  Many savvy expats and interstate investors have started buying investment properties positioning themselves when the inevitable inflation cycle begins.  The movement is only mirroring the USA where the real estate is being purchased by long term investors. You don't build wealth waiting for the boom to start - start buying wisely now.

On a personal basis I Refuse to participate in this recession I am going to have the best year ever.  Cheers