PROPERTY INVESTMENT INDUSTRY UPDATE JANUARY 2017
NATHAN’S MARKET OUTLOOK FOR 2017
I expect 2017 will be another great year for property investors. Punishing lending restrictions remain in place for investors, however, if the last 12 months are anything to go by, then this won’t be a significant dampener on property price growth. I’ve put together a market by market breakdown for 2017 here.
In short, I expect to see more of the same for this year as we saw last year. When it comes to the markets Binvested is most active in, Sydney and Brisbane, I still see potential to find good investments in both.
Buyer activity is really gathering momentum in South East Queensland now. The market is reminding me a lot of Sydney on 2013 and I expect to see double digit growth throughout 2017.
However, the market is just starting to grow, meaning that there are still good bread and butter investment opportunities available, and rewards in the down the line for those who take further action now. We are still sourcing apartments, townhouses, units and even bulk purchased new homes in this region. These properties still provide good cash flow and an upside for future growth.
Looking towards Sydney, we have still been able to find great deals in this market. Although rental yields are now low in Sydney, the market is still very hot and there are opportunities to get chunky equity deals. In 2016 many investors opted to develop properties to manufacture capital, making $100,000’s of thousands along the way in a short time. For any investors who say it’s time to move on from Sydney, I disagree.
For 2017, I see it being more important than ever to have a balanced property portfolio and optimised strategy in place. Like 2016, this coming year will be tough for investors who passively sit back and hope for results to come their way. You can’t rest on your laurels anymore, you have to start taking action and it needs to happen now! Last year, we asked you what your goals for 2017 are … well, we’re already a month in, how are you tracking?
If you haven’t thought about what your goals are for this year yet, stop procrastinating – or the year will be over before you know what you want to do with it! Get in touch and book a Focus Session to review your position and understand your moves in 2017.
PS. Did you know almost 10% of the year has slipped through your fingers already. What have you done to make 2017 your goals a reality?
LEGAL UPDATE: FOREIGNERS TO PAY EXTRA LAND TAX
If you are not an Australian resident, and you own property in Australia, then you need to be aware of extra property holding costs that come into effect this year.
As of Dec 31 2016, a surcharge will apply to any land owned by a foreign person. The surcharge is equivalent to 0.75% of the taxable value of the land.
Unfortunately, there are no exemptions available, even if it is a principle place or residence. For property and tax related purposes, New Zealanders are treated as ordinary residents of Australia, therefore, these extra charges do not apply. Find out more here
FINANCE: LODGE YOUR TAX BEFORE APPLYING FOR A LOAN IN 2017
If you are a self-employed, working as a sole trader, working as a contractor or have any company directorships, then here’s a few finance tips for you.
Often, people in these positions prefer to delay lodging tax for as long as possible. A lot of people will wait until March or May 2017 to lodge their 2015 – 16 tax returns. However, this can hinder your ability to get the right finance.
Many banks have set the 1st of January as the cut off for submitting previous year’s tax returns. If you are applying for a loan after the 1st of January, and you haven’t received your tax assessment statement, then you are limiting your pool of potential lenders.
By narrowing your choice of lenders, you are reducing your options and the chance of getting the best loan, or a loan at all. You also forgo the opportunity of possibly showing a more favourable tax assessment, and accessing better loan deals or more finance.
So, if you fit the bill above and are planning on buying a property in the next few months, then please lodge you tax ahead of applying for a loan to avoid disappointment.
PROPERTY MANAGEMENT: SUMMER MEANS PEAK RENTAL DEMAND
It’s a new year and many people are looking for new roofs over their heads. Students move out of home to study, workers relocate to start new jobs and families move to more suitable areas for their growing needs.
This is always a time when listings are high, but so is demand. While more properties come on the market, they generally don’t stay vacant for long.
Similarly, tenants are feeling pressured to find a new home, but they have a lot of options to choose from. Despite the urgency to settle on a place, they know there are other similar and equally suitable alternatives available.
We advocate planning contract renewals for around this time of year, as it reduces the likelihood of prolonged vacancy. There is also an opportunity to get better rent. However, investors shouldn’t get carried away and set the price too high. When listing a property you always need to be aware of current market trends.
Market trends vary week to week so it’s important that your property manager has an eye on the market and adjusts your listing accordingly to attract a quality tenant ASAP. Blink property managers are currently re-assessing the market every few days given to enormity of change that is currently occurring.
Properties advertised with air condition are more attractive this time of year. If you advertise your property as having air-conditioning then you need to make sure it actually works. Recently a tenant from Perth suffered heat stroke in his home where the air-conditioning was not working properly, and the windows were sealed shut. The property owner was found fully liable as he didn’t attend to the maintenance and thus contributed to the situation. Make sure your property manager checks this during property inspections.