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Property Investment Continues To Grow – Despite Mortgage Downturn
Property investors are continuing to grow in numbers despite an overall mortgages decline across Australia on the back of successive interest rate rises.
We look at why this is the case…
Portfolios is part of Australia’s largest independent brokerage network Australian Finance Group (AFG).
Throughout March, April, and likely to continue in May, AFG confirms the emergence of a two tier mortgage market, with the proportion of investors surging as sales to owner occupiers decline.
Property investors accounted for 36.9% of all mortgages arranged in April, the highest such figure AFG has ever recorded.  This compares with 10.2% for first home buyers and 16.3% for up-graders.
The remaining mortgages in April, 36.6%, were for refinancing purposes.
(Sub Headline) Why The Confidence in the Investment Property Market?
In our opinion there are a number of reasons to be confident in the Australian property market, we offer some below and welcome your comments:
* The volatility in the share markets always serves as a reminder of the stability and strength offered through a property portfolio.
* When company profits fall dividends stop – amongst all of this property investors continue to take in rental income experience changes on an anualised basis not day by day.
* Property investors – buy and hold particularly – are long term investors – minor fluctuations in the market – and they tend to be minor in Australia – do not pose a threat to long term investors
* The Australian population continues to grow at rates outstripping the supply of housing
* Australian lenders continue to operate on the conservative side of the market meaning there is confidence in the capacity for Australians to repay their debt – unlike the scenarios witnessed in the American sub-prime market collapse. See the comment by Paul Braddick below.
* Rents are continuing to climb across most markets regional and metropolitan meaning investors can get in and hang on for longer.
(Sub Headline) Property Investors Still Making Money
Property investors are continuing to see potential in the Australian property market, particularly in key market areas such as rural mining communities, growth cities such as SE Qld and Brisbane. Major growth centres, or smaller towns receiving substantial financial and infrastructure investment are good bets.
This is not so obvious as in the resource rich state of Queensland where property prices in the mining communities are still reasonable and rentals are beginning to climb even on the back of the existing investment.
(Sub Headline) Confidence Amongst Bankers
Paul Braddick, Head of Property and Financial System Research is upbeat about the state of the housing market and is cautious when discussing the need for deleveraging of debt in the market place.
Braddick says “Economy wide debt to income ratios, gearing ratios and even debt service ratios tell us little about the underlying sustainability of household debt. The distribution of debt across the household sector, lending criteria applied and the strength of the labour markets are far more telling for debt sustainability.”
“Relative to offshore  experience, lending into the Australian household sector has remained very conservative.  This is reflected in the virtual absence of a sub-prime mortgage market and extremely low delinquency and default rates.”
Braddick’s sentiments are echoed across the banking sector.
What Next?
Braddick sums it up well:
“In the near term, Australia’s growth prospects are bright and much will depend on the RBA and government’s ability to effectively manage the expansion. Higher household debt means the RBA has considerable leverage over the household sector and their actions during the GFC should instill confidence that the present upswing in growth will be handled well”
Source AFG Mortgage Index April 2010.
Source ANZ Australian Housing Update April 21 2010

Despite Mortgage Downturn

Property investors are continuing to grow in numbers despite an overall decline in the number of mortgages across Australia on the back of successive interest rate rises.

We look at why this is the case…

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Find out more about this deal…

Your Own Investment Property From $32 per Week
What if you could own your own investment property from just $32 per week? You could be realising return on invesmtent in excess of 700%
Portfolios investment property of the month is Chinchilla.
Chinchilla, located in the Surat basin Region is undergoing a massive build up of workers and their families, with a strong capital growth over the last 3 years and with the newly signed LNG deal with China this is a place to buy.
Chinchilla is located about 200km west of Brisbane with ever increasing job opportunities. Tightening rental availability has driven up rents sharply and will continue to do so.
The region has hospitals, schools and many amenities of normally much larger towns. Over $10 Billion being spent on Coal mines, a gas pipe line, rail links, gas exploration and waste water purification projects.
The government is also investing in rail in the Darling Downs, linking this region and its rich, diverse production with export ports such Gladstone.
According to investment sources the region around Chinchilla enjoys a 98% employment rate and a rental vacancy rate around 1%.
If you earn over $80,000 per anum we’d love to talk to you about this deal. We have turn key, brand new, four bedroom homes ready to be tenanted today.
If you earn under $80,000 then you might find this deal to be worth while with low property price entry, expected capital gains and expected rental hikes in the coming 12-24 months.
Chinchilla presents a great opportunity. You can view this and other properties in this region at www.portfoliosproperty.com.au or just go to Featured Properties.

What if you could own your own investment property from just $32 per week? *

You could be realising return on invesmtent in excess of 700%.

Queensland – The Property Investment Hotspots
With all the talk once again of flattening markets in Australian cities astute property investors are looking to regional Australia, Queensland in particular, and with good reason.
There are plenty of opportunities to be found in regional Australia particularly in the resource rich state of Queensland where the mining boom is being re-born in towns where property values are still affordable.
I seriously think we might be staring at another Karratha in the Darling Downs and around service ports like Gladstone. Karratha is a mining town in northern WA wher the property market soared almost overnight due to the intense mining boom of the last decade. Average properties became million dollar hotspots and rents went from average to exorbitant in a short space of time.
The best part of the Darling Downs and Surat Basin area is that property prices are still reasonable and the large projects for the region are starting .It is a case of strike while the iron is hot and this one is hot.
The government and private sector have committed to investing over $10bn in infrastructure which will on its own create significant demand for housing and rental accommodation.
We mentioned in the last newsletter that the largest company to company deal Australia has ever seen has been signed between a Chinese resource company and an British mining company based in Queensland that will see Liquid Natural Gas exported from the Surat Basin to China over the next 20 years.
Putting the Darling Downs aside there’s Gladstone, and surrounding local region, already a strong infrastructure hub set to receive billions of dollars of investment on top of that invested in the last few years in new industry, mining and infrastructure.
Coming back to something more predictable are the growth spots in SE Brisbane. Brisbane and the Gold Coast is the fastest growing population centre in Australia. Areas such as Coomera north west on the Gold Coast Hinterland is a great investment.
Portfolios has property available in all these areas, ask us about places like Chinchilla, Dalby, Kingaroy or Gladstone, Calliope or Coomera. Properties like these ones present a great investment opportunity to enhance any portfolio. We already have clients snapping up these properties sometimes multiples of them.
You can see some of these properties in our Featured Properties section or ask us about other opportunities for you.
The team look forward to working with you to… Make it Happen

With all the talk once again of flattening markets in Australian cities astute property investors are looking to regional Australia, Queensland in particular, and with good reason.

Will the market go up? Will the market go down?
Will it stay exactly as it is? What is happening out there?
Without predicting the next market movements lets talk about the state of play.
Currently in Australia the economy is looking good, growth is abounding, people are sensing a greater level of confidence in the market as evidenced in the following news article. (http://www.smh.com.au/business/prosperity-on-rise-as-economy-shows-signs-of-recovery-20100321-qo40.html) CommSec’s National Performance Guage shows that those who owned shares and property have increased their wealth by 8% in the last year and 40% in the last decade.
The way I see it there  are two sides to the property market – what is going on locally and what is going on globally. I just want to focus on the local market for now.
The Australian Economy is performing well. Growth indicators are up, interest rates are climbing in response to strong economic growth and there has been a considerable jump in house prices.
In the favour of property investors is the growing housing shortage facing Australia. It is predicted that Australia will need an additional 800,000 properties than it is currently supplying if nothing changes between now and 2030. This is a phenominal claim, and even if something is done this is great news for property investors.
A shortage of properties means great potential capital gains, as well as increased rentals driving more cash flow positive property, or at least swallowing the gains in interest rates.
Finally, on the economy, banks continue to be tight in their lending – so getting money for that investment property is a challenge without someone like Portfolios to work for you. We have sound long term relationships with a number of banks and financial institutions , with our level of understanding of the finer details of their policies and ways we can often help you where others cannot.
So boom or bust – the age old question is when is the right time to buy, but a long history of capital growth has taught us that now is always the right time to buy in the long run.

Will the market go up?

Will the market go down?

Will it stay exactly as it is?

What is happening out there?