A look back at 2014 and the experts’ market predictions for 2015
Happy New Year! We hope you had an enjoyable break and are refreshed and ready for the exciting new year!
As we look back on 2014, it has been a very interesting 12 months with some big things happening in our city and in our property market.
In an era where investors are faced with volatile share markets and strategies, property once again showed to be a solid investment throughout the year with Brisbane seeing a 4.8 per cent rise in property values.
“A rise of 4.8 per cent is a good, steady figure for Brisbane and exactly what we want to see happening in our market. This means good returns for investors and sellers but also keeps property prices affordable for purchases entering the marketing in 2015 so it is a win-win”, said Hannah Schuhmann, Principal of HS Brisbane Property.
"With the eyes of the world glued firmly on Brisbane during the G20 at the end of last year we are also seeing an increase in interested from overseas purchasers which again is great news for those looking at selling this year.
All of the above combined with the announcement of this months snap Queensland State Election will likely see a very positive and interesting year again for our local market.
What the experts are forecasting for Brisbane next:
Property Advisor
"The best risk-adjusted bet for counter-cyclical investors is on balance likely to be Brisbane. The Queensland capital has been struck by a number of setbacks to housing market confidence over recent years, but housing finance data for both owner-occupiers and investors suggests that the market has decisively turned a corner and the strongest three year returns are thus projected for Brisbane.”
source: http://www.propertyobserver.com.au/
CoreLogic RP Data head of research Tim Lawless
They are predicting only three of Australia’s capital cities to experience higher capital growth in 2015 than they did in 2014 being Brisbane, Adelaide and Hobart – with Brisbane forecast to be the standout.
"We are expecting the annual rate of capital gain to finish the year around 7.0 per cent, compared with 5.1 per cent over the 2013 calendar year," Mr Lawless said.
"With the rate of capital gain holding relatively firm over the second half of 2014, fewer affordability pressures and better rental yields than Sydney or Melbourne, we are expecting growth in Brisbane dwelling values to outperform the capital city average.”
source: http://www.rebonline.com.au/breaking-news/8534-more-signs-property-market-is-slowing
Domain Group senior economist Dr Andrew Wilson.
Dr Wilson has tipped we will see more buyers coming from interstate who will likely see Brisbane as a good area to invest in while other capitals may seem ‘less affordable’.
"The median price of property in both Sydney and Melbourne has now surpassed what the average family can afford, by well over $100,000, much more in some parts of each of those cities," she said.
"In Brisbane, the median price still sits around $100,000 under what the average family can afford. Put more simply, more people can afford to buy property in Brisbane than in both Sydney and Melbourne, yet the yields remain exceptional and it's a highly liveable city.”
source: http://www.esperanceexpress.com.au/story/2797591/brisbane-property-market-growth-to-be-moderate-in-2015/?cs=4092
Understanding the market… vertical vs horizontal analysis
Unlike some industries which rely on a specific method to get results, when it comes to real estate there’s not one, but several, methodologies which can be used to accurately measure the market. One approach is vertical analysis vs horizontal analysis.
Put simply, vertical vs horizontal analysis comes down to how you view the market. Do you look at it from a vertical or horizontal position? Do you take into account past and future records and statistics (vertical analysis) or simply consider the current situation (horizontal analysis)?
Often the answer to these questions will depend on what standpoint you’re coming from. Let’s take vertical analysis, for example, property investors tend to observe the overall real estate market from a vertical position (history and future) as this encompasses their entire investment portfolio; commentators, on the other hand, tend to adopt a horizontal position, which means they are only concerned at what’s immediately before them (present environment).
Whatever viewpoint you take (vertical or horizontal) there will always be several differentiating factors that come into consideration. Currently, on a national scale, such factors include the global financial crisis (GFC) and annual wage growth, which is at a historical low. In fact, when it comes to better understanding the current real estate market, keeping track of annual wage growth statistics can provide great insight, as this is an obvious trigger for increased action in the housing markets.
Nationally, we must also take into consideration the increasing number of household borrowers who are opting to pay off their loans via the interest-only option. Sure, this might prove to be an affordable option for borrowers now but it’s not a good sign of things to come once the Reserve Bank cash rate starts to rise. While this won’t be immediately, it is on the cards and therefore is certainly something to keep an eye out for. According to experts, it is predicted that the current cash rate will fall further next year (2015) but will then start to increase in late 2015 to early 2016.
With terms such as GFC being thrown around, it’s clear that the Australian economy has been through a rough trot in recent times. However, don’t be fooled, it’s not all doom and gloom, especially when it comes to local real estate right here in Brisbane. In Brisbane’s CBD, factors that differentiate vertical and horizontal analysis are much more positive.
Take interstate buyers for example… the Brisbane real estate market is currently buzzing with energy at the moment thanks to the increasing number of interstate buyers whom are seeking to take advantage of Queensland’s rewarding market conditions. A major plus for investors and home buyers alike! Not to mention Brisbane’s major urban development plans for the inner-city. This is another big tick for our local property market.
Effectively, due to these local positive indicators, Brisbane is expecting an increase in property values in 2015, which is nothing but great news for our local property market!
So remains the question, when it comes to understanding the real estate market (locally or nationally) are you a vertical or horizontal analysis type? Do you look for past and future market trends (GFF and annual wage growth statistics) before purchasing real estate or are you only interested in what is happening right now (current trends)?
Whatever ‘type’ you are – vertical or horizontal – the professional team at HS Brisbane Property understand the real estate market like the back of their hands and can certainly help you to make the most of local opportunities. Furthermore, if you want to take advantage of the current buzz surrounding Brisbane’s inner-city real estate opportunities then do yourself a favour and contact Hannah on 0419 782 133 for more information.
Brisbane CBD to undergo on-street parking transformation
As residents and frequent occupiers are well aware, parking in the CBD and inner city areas continue to become trickier and more costly as each year rolls on.
Recently the Deputy Mayor of Brisbane, Adrian Schrinner, headed up a six month investigation into parking issues across the city. The findings are set to result in a myriad of changes that while not ‘fixing’ all the issues as such, will definitely make inner city living and commuting a lot easier as we move into 2015 and beyond.
"This is the most comprehensive review of on-street parking that the city has ever had," Cr Schrinner said.
Cr Schrinner delivered the long-awaited findings at City Hall on Monday and the recommendations have been met with mixed reactions from residents and the media. Many of the changes are due to be implemented in the next 3 – 12 months and include the below:
Free 15 minute car parking in inner-city suburbs around the CBD
The introduction of free short term parking (up to 15 minutes) at over 7,700 parking metres across the inner city (not including the CBD area at this stage).
Cycling clear ways during peak hour
More roads throughouht the inner city areas will be marked as ‘clearways’ during peak hour periods with no parking, this will help make it safer for cyclists and everyone travelling on our busy roads.
Disability access
People with disabilities and their carers will now have licence to park in loading zones for five minutes, instead of two minutes, to park and leave.
Cap the number of paid on-street parking spaces within metered areas
In an effort to promote ‘off-road’ discounted off-peak parking rates the number of on-street metred car parks in the CBD is set to be capped. To put the numbers in persective, back in the 1940’s there were 5,000 on-street parking spaces in the CBD making up over 60% of the total city car parks –today there are under 600. Off road car parks now number more than 30,000 in the city which continues to grow on a regular basis.
Caps on the Residential Parking Permit Scheme
One of the more controversial recommendations to have come from the investigation is the capping of Residential Parking Permits.
Currently there is an uncapped number of resident parking permits that residents can apply for including up to two restricted visitor permits. The permits cost $10 each and currently more than 98 per cent of homes in the area have 1 – 2 permits.
While this will remain the same in some areas, in locations where metered parking is introduced the number of residential parking permits will be capped at one and the resident can also apply for one visitor parking permit.
Remove confusing parking signs
One of the other key recommendations is to remove the confusing parking signs with alternatives that "show" over a 7am to 7pm time frame which have garnered many complaints from locals over the years. The proposed updated signs will be designed to make the information more easily available to decrease the number of people being ‘caught out’ by not understanding what the overly complicated signage means. They are set to be progressively replaced over the coming 12 months.
What do you think of the proposed new changes? Will they affect you and your family? Comment below with your thoughts.
Interest rates on hold again… what does this mean for you?
Wow! Did you know it’s been an entire year since we have seen interest rates change here in Australia? Well, its actually now been over 12 months. That’s right! The Reserve Bank of Australia has kept the official cash rate on hold at a record-low 2.50 per cent – marking it well over 12 months since the rate has shifted.
This record-low rate has become a rather big deal in the world of Aussie finance and real estate, and it seems, according to experts, that it’s not on the ‘up’ anytime soon.
What does this mean for the real estate market? What does it mean for you? Simply put, it’s a great time to buy! Current unwavering interest rates and a highly competitive borrowing market are the right ingredients for a buyer’s market - meaning now is the perfect time to purchase a home or investment property.
Get in contact with your home loan provider, remembering to keep in mind when you do so, that you’re quite likely paying too much if your loan begins with a five.
Sure, Australia’s current interest rates are perfect for those looking to buy. However, buyers are not alone. Existing homeowners are on the front foot as well, with record-low interest rates presenting a great opportunity to get ahead on their mortgage.
This is something which many people have already been taking advantage of over the past 12 months – with many experts reporting that up to 50 per cent of home buys are now debt-free.
While the continued low rates may come as good news for many who are still busy paying off mortgages, it’s also really important for homeowners and investors not to overspend. As alluring as low interest rates may be, they can often end up trapping homeowners and investors into making bad decisions.
Sure, you might be building good equity in your property by paying off your loan faster (thanks to the current low rates)… and, sure, the market is indicating that now is a good time to use that built-up equity. However, often homeowners with decent equity can act a little gung-ho – especially at a time when interest rates are at a record low.
This in mind, while it is a good time to buy or invest in property remember to be cautious and not overextend yourself; make sure you’re not buying an overinflated property just because you can afford it.
Want to make the most of the current record-low interest rates by investing in your first home or subsequent properties? Why not speak to the professional team at HS Brisbane Property. For more information or an informal chat about current real estate opportunities in and around the Brisbane CBD, please contact Hannah on 0419 782 133.
Location, location, location
When it comes to buying property, there are so many factors that buyers take into consideration; each person, couple or family has their own list of wants and priorities. Some of these include location, price, style of home, block size, swimming pool, second bathroom, number of bedrooms, local amenities (schools, parks, transport) – just to name a few.
With so many stipulations, it’s often hard to find the dream home that comes with everything one could possibly want. This means buyers are often forced to compromise. The question is… when it comes to buying a home in Australia what is the first thing to go and what is the one thing most buyers won’t negotiate?
Well, according to realestate.com.au’s recent research for the 2014 Housing Affordability Index Sentiment (HASI) the one thing most buyers won’t budge on when it comes to buying property is ‘location’. That’s right, it’s all about location. Furthermore, the 2014 report shows that 44 per cent of those surveyed wouldn’t buy property more than 10 kilometres away from their preferred destination. With one in five also saying they wouldn’t even move five kilometres away from their chosen location.
Hannah Schuhmann, Principal of HS Brisbane Property says in her experience people choose a location for three main reasons; they want a home that is close to where they live, work and grew up. This is certainly the case for second- and third-time home buyers she explains.
However, it’s a little different for first-home owners. While location is still important, for buyers looking to break into the real-estate market the deciding factor is often price and sticking within a budget.
“When buyers come to me in search for a property, the first thing they mention is ‘where’ they want to live. People have an affinity with certain locations and often the most popular ones are those nearest to shops, cafes, night-life and work,” says Schuhmann.
Hannah goes on to say that people (both home owners and those renting) love living near their favourite coffee shop or theatre – when you choose a home for its location it becomes about convenience and lifestyle.
Many successful investors understand that location is key, which is what makes inner-city properties so highly sought-after – regardless of whether you’re a buyer, investor or simply just renting. Hence why buying property in the Brisbane CBD is such a solid long-term investment.
Other important factors that buyers take into consideration when looking at a property’s location is its close proximity to public transport, in particularly railway stations – ease of travel is always important, especially for those commuting to work. In fact, the HASI report indicates that 42 per cent of buyers wouldn’t sacrifice a location with proximity to amenities.
With location and amenities off the cards, what would buyers sacrifice for the right property? Interestingly the HASI report showed that Australians over the age of 24 would first sacrifice a swimming pool (65 per cent), followed by a second bathroom (35 per cent). Next off the list to go were spare rooms or a property that didn’t need renovating (both at 29 per cent).
We’d love to hear your thoughts. When it comes to buying property, what matters most to you? Do you agree with the majority… is it location? Also, what things are you prepared to compromise on?