CHOICES

CHOICES
AUTUMN/WINTER 2010 ISSUE AUTUMN/WINTER 2010 ISSUE

MORTGAGE CHOICE NEWS REVIEW

Housing Market
Statistics
Australia’s residential property market MORTGAGE CHOICE NEWS REVIEW
begins 2010 in the black Anthony Smith
Mob: 0413 439 761
Craig Micallef
Mob: 0417 655 577
anthony.smith@ craig.micallef@
Comments from Tim Lawless – rpdata.com National Research Director and mortgagechoice.com.au mortgagechoice.com.au
Christopher Joye – Rismark International CEO
buyers are for the time being outweighing
sellers and new supply is being quickly
consumed.”
“In addition, auction volumes are higher than • National dwelling values up 1.8%
at the same time last year and the national in month of January Chris Howitt Shaun Curtis
Mob: 0401 334 599 Mob: 0423 720 340
weighted clearance rate last week was a • National dwelling values up 11.8% chris.howitt@ shaun.curtis@
very healthy 73 per cent,” Mr Lawless said.
According to Rismark International CEO
over the last 12 months
Capital growth (hedonic index) and median
The time is right for upgraders mortgagechoice.com.au mortgagechoice.com.au

Christopher Joye, “While the January sales dwelling prices, January 2010 quarter
data is typically thin, we have yet to observe • Melbourne values á 4.3%
a sustained cooling in market conditions, (median: $455,000)
which Rismark expects to see given the
Australian home values are up 2.4 % Data provided by RP Data-Rismark Index As property values rise and interest Angus Raine, CEO of the Raine & Horne
recent tapering in seasonally-adjusted housing Mitch Jones Stephen Forrester
over the three months ending January * Results are indicative and subject to revision. They are rates remain comparatively low, property group notes, “Some home Mob: 0412 881 907 Mob: 0409 250 347
finance commitments. In the long-run, one typically based on 40-50% of the population of all sales mitch.jones@ stephen.forrester@
Based on the RP Data-Rismark Hedonic transacted in the region. existing home owners are taking the owners are conservative and won’t even
would anticipate that house prices should mortgagechoice.com.au mortgagechoice.com.au
Home Value Index, Australia’s housing opportunity to upgrade, taking over consider looking at properties for sale until
track disposable incomes.”
market started 2010 with a resilient showing, from first home buyers as the driving their existing home is sold and they have This franchise is independently owned and operated by
Gracetree Group Pty Ltd ATF Gracetree Trust ABN 47921528245.

CHANCE TO WIN
registering a solid 1.8 per cent capital gain in force in the property market. cash in the bank. The problem here is that
the month of January based on the indicative According to the Australian Bureau of you could miss out on a lower price for
index results. This, however, employed a small Statistics1, house prices nationally grew by your next home if the market is trending
sample of sales due to the seasonal summer an average of 13.6% last year. Melbourne upwards as it currently is.”
slowdown (the volumes recorded in January
were around half the sales in a typical month).
$5000 CASH! values came up trumps, rising 19.7%, Other home owners are less cautious,
while Darwin (up 13.6%), Sydney (12.8%) listing their home for sale while actively
The indicative December 2009 estimate, which To enter, simply fill out the form below to confirm your contact details and communication preference and send and Canberra (12.4%) all enjoyed strong looking for a new home. The risk with this NEWS FROM
was -0.3 per cent, has revised only very slightly it to a Mortgage Choice consultant.
price growth. Adelaide (5.1%) was the only approach is that you commit to buying a our team at
to -0.4 per cent. Post: 302 Charman Road, CHELTENHAM, VIC 3192
Email: ebony.curtis@mortgagechoice.com.au
state capital that failed to record double property while your home remains unsold. Mortgage Choice
Looking through both December and January, digit growth. But there are solutions.
Full Name:
We are proud to inform you that earlier
the average monthly growth rate was 0.7 per According to Raine, “It may be possible this year, Mortgage Choice received
cent, which possibly implies that the double- Street: Suburb:
After several years of market doldrums to arrange an extended settlement period the highly coveted Retail Aggregator/
digit capital gains seen in 2009 may start to State: Postcode: Email: and the uncertainties of an economic – of up to several months, on your new Originator of the Year award from
moderate to more realistic single-digit levels. Home Phone Number: Mobile Number: downturn, many upgraders are taking home”. He adds, “The worst case scenario Mortgage & Finance Association of
According to rpdata.com’s National Research I prefer to receive information from Mortgage Choice by  Mail  Email or  I don’t mind advantage of today’s buoyant conditions is that you may need to consider bridging Australia (MFAA).
Director Tim Lawless, a number of positive  I would like to make an appointment for a home loan health check to secure the price they want for their finance while your old home sells. When
This is the fourth time in six years that
market indicators during January suggest that existing home while still securing good this happens it can make sense to make
UPDATE DETAILS TO WIN PROMOTION: To enter, complete the entry form in the Mortgage Choices Autumn/ Mortgage Choice has won this award,
the residential market has started the year with Winter 2010 newsletter and send it to a Mortgage Choice consultant. Alternatively, fill out the entry form on value on a new property. one property available for short term rent to
www.mortgagechoice.com.au. The opening date of the competition is 30/04/10. All entries must be received by
but it is particularly meaningful for us
some confidence. help cover the additional finance costs.”
Mortgage Choice by 5pm AEST on 29/07/10. The draw will be held at 4pm AEST on 30/07/10 at the offices of this year given the tough financial
“Week-on-week, we are seeing an increase Mortgage Choice. The name of the winner will be published in The Australian on 02/08/10. There will be 1 draw Apartment owners may be particularly well- That said, Raine points out that in today’s climate over the past 12 to 18 months.
and the first valid entry will win. Complete terms and conditions and the privacy notice are available from
in the number of new property www.mortgagechoice.com.au. The promoter is Mortgage Choice Ltd at Level 10, 100 Pacific Highway, North placed in the current market as investors market well-located and sensibly priced
So when you speak to a Mortgage
advertisements coming to the market. Sydney, NSW 2060. Authorised under NSW Permit No. LTPS/10/02639 and ACT Permit No. TP 10/01252.1. are making a return to bricks and mortar, properties are selling quickly. He notes,
Choice consultant, you can be sure
Whilst new stock has been increasing rapidly, and for many a unit is regarded as a lower “The trick is to establish the right selling
that you are working with a trustworthy
the total number of properties available for Congratulations maintenance option than a house. price so that your home sells quickly while
industry leader, whose dedication and
sale has been falling which is an indicator that Congratulations to A. Cook who was the lucky winner of the Mortgage Choice ‘Win $5,000 cash’ competition. Nonetheless upgraders face the unique still reflecting its market value. Homes that
professionalism has proven to withstand
challenge of buying and selling at the same are overpriced can languish on the market,
the test of trying economic times.
time. It’s a juggling act that can call for and that’s when problems tend to arise”.
Privacy: There will be occasions where we would like to send you valuable information directly related to property finance, as well as other related offers, tips and opportunities. However should you wish to receive only certain types
of information or nothing at all, please contact your local franchise principal. Disclaimer: The content of this newsletter is written expressly for education purposes and is based on the opinions of the authors. The authors and agents
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ABS Cat: 6416.0 - House Price Indexes: Eight Capital Cities,
for the authors are unable to accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person or entity arising from the use of this information. It is recommended that careful management. Dec 2009, Released 2 January 2010.
you seek professional advice relevant to your specific circumstances before acting on the information based in this document.

03 9585 7779  www.mortgagechoice.com.au/cheltenham1 03 9585 7779  www.mortgagechoice.com.au/cheltenham1

302 Charman Road, CHELTENHAM, VIC 3192 302 Charman Road, CHELTENHAM, VIC 3192
 Paying your
bills is to
Taking property your credit
We’ve probably all received reminders
investment about late bills, but ignoring them can
hurt your chances when applying for
plans off hold
credit again in the future, including
your mortgage.
Your credit file is usually generated the first
time you apply for credit, such as when
signing a mobile phone contract. The service
provider contacts a credit bureau like Veda
Advantage or Dun & Bradstreet to see what
Becoming a property investor is a popular wealth creation strategy for information is stored on you, and a new file
many homeowners who have created wealth through the value of their is created containing your name, birth date,
property increasing, generating rental income and reaping tax benefits. drivers’ license number, employer’s name
Being uncertain about the practicalities of what’s involved, however, or being and current and previous addresses. Every
unfamiliar with the costs associated with this type of investment holds some future credit application is then checked
homeowners back from pursuing their property investment dreams. against this.
When considering an investment property strategy, be sure to factor in purchase
costs (e.g. inspection fees, stamp duty, legal fees and loan establishment
costs) and ongoing ‘holding’ costs, including mortgage repayments, building
maintenance/repair costs, Council fees and utility bills, as well as management
and letting fees (e.g. advertising for a tenant).
If your property is part of a strata scheme there are strata fees payable and if your
investment is a house, there’s annual land tax. Don’t neglect landlord insurance,
either, which safeguards your investment and rental income if, for example, your
rental property was damaged in a storm, a fire, or through theft. On the tax side,
there are deductions to take advantage of, such as depreciation (the writing down
of the cost of an asset over its life) of items such as furniture and carpet. Consult Your credit file also stores any significant
your accountant to get a complete picture of associated costs. problems you have had meeting your credit
obligations. Failure to pay within 60 days
An ideal investment property should cost very little to ‘hold’, can lead the credit provider to commence
and ideally the rent should cover the loan repayments and outgoings, recovery action, which is recorded as a
but this isn’t always the case so research your purchase thoroughly. default.
According to Veda Advantage’s customer
service manager Rebecca Barbour this
Property investment should be considered a long term strategy as rental returns
may not always meet your expectations and the property value cycle may vary default remains in place for five or seven
over the life of your investment. years, and is considered when determining
if you are a good credit risk. Your credit file
Mark, from Sydney, who has a growing property portfolio in Sydney and Brisbane,
is however available for you to view and you
suggests: “In addition to the recommendations you’ve received from your financial
have the right to dispute any entries that
advisor, ensure you do your own due diligence and be completely comfortable
you do not agree with. Credit agencies are
about the level of debt you’re taking on.”
required to give a copy of your credit file to
Having bought investment properties interstate, Mark suggests keeping up to you for free.
date with market rent and having a property manager onboard to resolve tenancy
“When you are going for something as
issues and building repairs quickly and effectively has helped him manage his
important as a mortgage, I would absolutely
interstate portfolio.
advise you to get a copy of your file,”
Thinking of buying an investment property? Looking at loan choices? Barbour says. “Do it early, so there aren’t
Call 13 MORTGAGE or visit mortgagechoice.com.au today. any surprises for you.”
The best way to avoid defaults is simply
to pay your bills on time. Consider using
automatic deductions from your bank
account to prevent missed payments and
always maintain an organised budget.
A SUPER WAY TO OPEN THE Selling at
DOOR TO PROPERTY auction –
Recent changes to superannuation tax laws means that Australians with DIY could it work
for you?
super funds can now borrow to buy property.
With recent volatility in financial markets both here and abroad, this approach to
investment is being taken by an increasing number of Australians seeking to diversify
With buyers coming back into the
their investments.
market, auction clearance rates are
A DIY super fund can be used to purchase residential, commercial, retail, and holiday rising. For example at the end of
units - subject to the property being acceptable to the lending institution. February 2010, the Melbourne market
Under this approach to property achieved a clearance rate of 85%1.
investment, the owner of the property Undoubtedly many vendors have been
is the DIY super fund. While ever pleasantly surprised by the final bids,
there is a mortgage associated with but not all properties are suitable for
the property, the legal owner of the sale at auction.
property must be a special trust entity.
The most likely candidates are
The DIY fund makes all the
homes with unique qualities such as
necessary payments – taxes, loan
exceptional views that will generate
repayments, lenders’ fees, repairs and
strong buyer interest.
maintenance costs, insurance and
receives rent and other income. Vendors also need to weigh up the
People considering this approach potential costs of auction, which can
to property investment also need to be considerably higher than for a
factor in associated costs, including private treaty sale.
set-up fees, legal and accounting fees Intense marketing campaigns may call
and ongoing management expenses. for extensive advertising and glossy
flyers, which can cost thousands of
Most lenders will also require that
dollars. Vendors will also be up for the
people considering this approach
auctioneer’s fee plus the listing agent’s
have met with a financial planner to
commission.
carefully weigh up whether this type
of property investment is suitable for Auction sales typically involve an
their financial and lifestyle needs. ‘unconditional’ contract, which ensures
the sale is final on the fall of the
Thinking of using your DIY super fund to purchase an investment property? Got questions
hammer. Offering a contract that allows
about buying an investment property but don’t know where to start? Talk to your local
buyers to bail out if, say, finance cannot
Mortgage Choice loan consultant today to discuss how you could get your foothold in
be arranged, may attract more bidders
property investment sooner!
though for the vendor it can mean a
Call 13 MORTGAGE or visit mortgagechoice.com.au today. less certain sale.
Setting a realistic reserve (the lowest
price you will accept) is a key aspect
POTENTIAL BENEFITS: POTENTIAL CHALLENGES: of the auction process, and the
• The investor selects the property • Complex transaction – requires selling agent and auctioneer can
consultation with accountant, provide valuable guidance.
• Another option for people seeking
solicitor and financial adviser
to create wealth If the reserve isn’t met and the property
• ‘Stricter than normal’ lending is ‘passed in’, the agent’s job is to
• Many people are quite familiar
criteria apply negotiate with the highest bidders for
with and therefore comfortable
with investment property • Borrowing increases the potential for an after auction sale. This can prove
bigger losses from an investment unsuccessful, so it’s worth having a
• Potential to offset rental income
(do your research!) back up plan that addresses whether
and other costs
you will aim for a sale through private
• Investors’ other assets can be treaty or withdraw your home from the
protected from borrowing risk* market altogether.
(advice required)
‘Auctions Maintain Sell Rate’, Herald Sun, 27 February 2010
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