Australia’s $3 million suburb club has doubled again

Australia’s $3 million suburb club has doubled again in 2021 thanks to the housing market boom, as the luxury property market powers ahead during the pandemic.

The hot pace of property price growth this year has led to more suburbs cracking the $3 million median house price, realestate.com.au senior economist Eleanor Creagh said. “The luxury market has continued to power full steam ahead in 2021

“The luxury market had a very strong year last year in 2020 and managed to shake off the recession, and this year has managed to shake off the Delta variant as well.” Ms Creagh said.

We know from Corelogic that Australia’s residential housing markets are now with more than $9 trillion, up to $1 trillion in the last six months alone.

But the more expensive end of our property markets has outperformed during the pandemic as record low interest-rate drive significant buyer demand and more Aussies are prioritising lifestyle and putting money into their homes rather than traveling overseas.

According to realestate.com.au the number of suburbs with median house sale prices over $3 million doubled during 2020 and has doubled again this year amid boom conditions in the overall housing market and the luxury sector.

Sydney suburbs account for all but a few of the 70 suburbs where the median house price is at or above $3 million.

Source: realestate.com.au

More coastal and lifestyle suburbs join the $3million club

Ms. Creagh explains:

“While the rapid increase in prices this year is the main reason so many suburbs have joined the $3 million club, buyers have also been looking for larger homes and a sea change during the pandemic and the latest lockdowns.

Coastal suburbs like Bondi Beach ($3.55 million median house sale price), Curl Curl ($3.3 million) and Coogee ($3.18 million) joined the club.

Many of the new entrants were also in Sydney’s north.

Sydney’s eastern suburbs historically had higher median prices, but the exceptional price growth recently had pushed more northern suburbs into the $3 million-plus category.”

Ms. Creagh said the COVID-driven desire for coastal living and holiday homes plus the continued growth in property prices were likely to see more suburbs cracking the $3 million medians.

ALSO READ: More Aussies join the millionaire club as Australian household wealth reaches record levels

from Property UpdateProperty Update https://propertyupdate.com.au/australias-3-million-suburb-club-has-doubled-again/

APRA sledgehammer impacts all housing markets — regardless

APRA – the financial regulator for the big banks – has introduced a policy initiative designed to reduce perceived emerging risky lending.

APRA is concerned that because of our recent strong housing market activity, home loan sizes are increasing faster than incomes, potentially increasing the debt load for new borrowers.

This could become an issue for banks if official interest rates rise – although the RBA has consistently stipulated that this is unlikely to happen until at least 2024.

Reflecting these concerns, APRA has instructed the big banks to raise the repayment risk buffer from 2.5% to 3% above the headline rate secured by new borrowers.

The tightening of lending conditions will impact all new borrowers regardless of the “risk” circumstances of local housing markets.

The latest Home Loan Affordability Index published in the September Bluestone Home Loan Market Report (that measures the repayment proportion of average incomes for newly approved home loans), reveals a significant disparity between the current level of loan affordability between states.

No surprise that NSW and VIC have reported sharp declines in home loan affordability over the past year, reflecting boomtime prices growth in Sydney and Melbourne.

By comparison, affordability has declined at lower rates in other states and with all significantly below the NSW result.

Sydney and Melbourne median home prices remain well above those of the other state capitals, with the gap widening over the past year.

With similar income levels, those capitals retain significant home loan affordability advantages.

NSW clearly retains substantial home loan affordability constraints compared to the other states, reflecting the high-priced Sydney market.

The latest action by APRA is designed to restrict perceived risky home lending is a blunt, one-size-fits-all approach that does not account for the clear affordability disparities of local housing market conditions.

And clearly reflects the market power wielded through the big banks.

ALSO READ: What our biggest lender’s chief economist thinks about APRA’s changes

from Property UpdateProperty Update https://propertyupdate.com.au/apra-sledgehammer-impacts-all-housing-markets-regardless/

Do you know about the new Director Identification Number and your obligations?

Are you a director of a company or maybe the director of the trustee of a trust or your SMSF?

As part of a suite of amendments introduced by the Treasury Laws Amendment (Registries Modernisation and Other Measures) Act 2020 (Cth) in June, all company directors will now be required to be identified by unique “Director Identification Numbers”.

Company directors in Australia now have a deadline for getting a director’s identification number.

This deadline will affect directors in more than 2.9 million registered Australian companies, including the corporate trustees in self-managed super funds (SMSFs)

What is the requirement to hold a director’s identification number?

A DIN is designed to be a single, unique and permanent identifier for all of Australia’s company directors.

It will remain attached to all Australian company directors even if they cease to be a director, change their name or move overseas.

It is designed to ensure that company directors can always be traced and held accountable for their activities.

The introduction of the DIN scheme was driven by the Federal government’s desire to clamp down on illegal ‘phoenixing’ activities.

This is when a new company is set up to continue the operations of a company that has been liquidated to avoid paying debts to creditors.

The term derives from the phoenix character in Greek mythology that rose from the ashes.

Further reasoning behind the scheme is to reduce the likelihood that a director is able to appear as a different person on different company records, by using a middle name, nickname, or false name.

There are significant penalties for directors who attempt to supply fake names to get around the intentions of the DIN scheme.

But it is much more difficult for regulators to track whether directors have repeatedly been involved in failed companies of illegal ‘phoenix’ activity, without clear and consistent identification of a director.

Further, by hiding a director’s identity, that director can potentially avoid being banned or disqualified as a director.

When do I have to do it?

Most current company directors in Australia will have until 30 November 2022 to apply for their DIN.

However, current directors of Australian corporations will have until 30 November 2023.

In addition, there are the different requirements for new directors who are appointed following 1 November 2021:

• new directors appointed between 1 November 2021 and 4 April 2022 must register for their DIN within 28 days.
• new directors from 5 April 2022 will have to apply for their DIN before the appointment.

How can I apply for a director’s ID?

You will be able to apply for a DIN online from November 1 this year via the newly created Australian Business Registry Services (ABRS).

This ABRS platform will replace the existing Australian Business Register platform.

It is free to apply.

You will need the following when applying:

1.  your MyGov ID
2.  two proof of identity documents (such as a tax assessment notice or your bank account details).

You can speed up the registration process by providing your tax file number.

You will also be able to update your contact details via the ABRS website anytime.

What happens if I don’t?

If you don’t apply for your DIN before the relevant deadline, you face a fine of $1.1 million (or $200,000 if you are a director of an Australian corporation).

The Director ID is attached to a director permanently, even if they cease to be a director, change their name, or move interstate or overseas.

What can you do about this?

Metropole Wealth Advisory can review your structure, make recommendations and then implement any required changes.

If you’re looking for independent expert advice about you your financial circumstances why not allow Ken Raiss to provide you with a Strategic Wealth Plan?

Imagine the benefits having a new level of support, guidance and insights into the critical drivers of your wealth:

• Minimise Your Tax
• Build Your Wealth
• Manage Your Risk
• Create Your Legacy

Click here now and we’ll be in contact to discuss how we can help you and your family.

from Property UpdateProperty Update https://propertyupdate.com.au/do-you-know-about-the-new-director-identification-number-and-your-obligations/

[Podcast] What Does Success Mean to You With Mark Creedon | Build a Business not a Job

The underlying theme of my podcast is property investment, success, and money, and today I will be talking a bit about success with Mark Creedon, founder of Business Accelerator Mastermind.

But this isn’t a business show – you will find what we discuss today relevant no matter what you do for a living, and if you are a property investor, you really do have a business on the side – a property investment business.

Many of us chase career titles, money, social status, or even a big property portfolio — and yet we don’t feel successful when we get those things. That’s because you can only measure success in your life when you define what drives your happiness and helps you find purpose.

So if you’re struggling to define what a successful life means, you’ll be pleased to hear Mark and me explain that:

1. It’s never too late to start over.
2. You get to write your own definition of success.

What is success?

Is it wealth? Is it happiness? Is it fame?

I have come to the conclusion that success can’t be defined in one sentence, but instead, it is comprised of many things.

Success is something you have to define for yourself and no one can do it for you.

For some success means a sense of giving back to the world and making a difference.

For others, it was a sense of accomplishment in their career or business. For others, it meant doing what they love.

I bet there will be some people listening to this podcast disappointed in where they are in life at the moment.

For some of their progress, we have been hindered by the economic and health challenges Covid has brought to us.

For others, there will be various reasons why they haven’t achieved the success they want to yet in life – yet.

Stick with us because it’s not too late and you’re not too old to succeed. I’m sure you’ve heard stories like:

• At age 23, Oprah had just been fired from her first broadcasting job.
• At age 62, Colonel Sanders’ fried chicken business KFC finally succeeded.
• At age 77, Nelson Mandela became South Africa’s president after spending 27 years in jail.

If we can learn anything from these people who succeed later in life, it’s this: Success has no deadline.

Success means attempting to move forward.

Let’s start with understanding the difference between accomplishment and success

Accomplishment is often associated with success, but it is not the same.

Accomplishment refers to the results we desire when we attempt to reach specific goals. Basically, it is the results that we plan or expect to occur.

Success is the positive consequence or outcome of an achieved accomplishment.

So what is needed to succeed in life?

1. Physical health: you need to be physically healthy to have the energy to engage in life. If you don’t have a baseline of health you can’t function and can’t be successful.
2. Mental fitness: you need to be continuously engaging your mind. Learning and growing, experiencing new ideas, getting better, pursuing mastery, and putting your ideas to work to accomplish your goals.
3. Emotional health: you need to be self-aware emotionally, feel good about yourself and have a positive self-image. If you are depressed to the point where you can’t function, you can’t be successful.
4. Social health: you need positive relationships in your life and people that love and support you. You have friends and loved ones that you trust to make you a better person and inspire you to be better there are people you can call at any time of the night if you have a problem. Humans are social if you don’t have people you care about and they care about you you can’t be successful.
5. Purpose/meaning/spiritual health: you make a positive impact in others’ lives, giving meaning and purpose to your work and daily life. This keeps you focused and inspires you to overcome the day-to-day struggles and setbacks that are a part of everyone’s life.
6. Material wealth: there is a basic level of food shelter and clothing that all people need and that is paid for through money. If you are too poor or have too much stress from struggling financially you can’t be successful.

Conclusion

Many people attribute success to how much money they have, what kind of car they drive, or the size of their home. However, should material items really define success?

True success is gained not only from the achievement of our goals but also from the happiness and satisfaction derived from pursuing those goals.

Links and Resources:

Why not join Metropole’s Business Accelerator Mastermind

Learn more about Mark Creedon – Business Coach to some of Australia’s leading entrepreneurs

Get a copy of Mark’s new book here – Have a business not a job

Get a heap of special reports and eBooks here- www.PodcastBonus.com.au

Some of our favourite quotes from the show:

“I believe it’s never too late to start over again, and you are allowed to write your own definition of success.” – Michael Yardney

“You can’t just have a goal, have a dream, you also have to have a plan to get there.” – Michael Yardney

“I don’t think you should define success as material items.” – Michael Yardney

PLEASE LEAVE US A REVIEW

Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes – it’s your way of passing the message forward to others and saying thank you to me. Here’s how.

from Property UpdateProperty Update https://propertyupdate.com.au/podcast-what-does-success-mean-to-you-with-mark-creedon-build-a-business-not-a-job/

An inside look at the Property Market’s Ponzi schemes

The unique feature of Ponzi schemes is that they use money collected from new investors to pay out existing investors.

This means that when the number of new investors starts to fall, they can suddenly crash.

But be warned – they exist in our housing markets.

Property booms often start with a genuine rise in demand for housing, but sometimes they can turn into speculative bubbles driven by the expectation of higher prices, rather than being based on a genuine need for accommodation.

When this happens, we have the makings of a property market Ponzi.

So who was Ponzi and why do such schemes ultimately crash?

Charles Ponzi started buying US post reply paid coupons in countries where they were cheap such as Italy and then selling them in the USA where they were worth far more.

Using this simple strategy, he was able to promise investors returns of up to 50% and more, but the actual profits soon proved to be less than anticipated.

So, Ponzi started using money from new investors to pay out earlier investors, and to attract more new investors offered even higher returns – up to 100%.

As long as the number of new investors stayed above the number of maturing investments, the scheme kept growing, with huge numbers of people taking part and enormous sums of money being invested.

Soon, however, investigators discovered that his scheme was not based on post reply paid coupons at all, but was a pyramid selling scheme that paid out profits by obtaining more new investors.

The scheme quickly collapsed with investors losing almost everything and Ponzi was jailed.

Property Ponzi schemes

Property booms often start out in the same way that Ponzi’s scheme did, based on genuine demand for housing in which investors can participate.

They can also turn into bubbles created by speculative demand from investors in which renters and homebuyers no longer take part, and so they turn into Ponzis.

Speculative booms begin like pyramids, with the number of investors buying property much greater than those who want to sell.

The increasing demand pushes prices up and creates more buyer demand, which then pushes prices up further.

The pyramid quickly turns turtle when the number of investors trying to sell starts to exceed the number wanting to buy.

This causes prices to fall, and so more investors want to sell.

Prices can then crash when virtually every investor is trying to sell and none want to buy.

This type of crash only occurs in markets controlled by investors because, unlike home buyers, they don’t live in the properties they own.

It’s encouraging to know that the stability of the property market comes from the fact that most property buyers are not investors at all, but owner-occupiers who are not seeking cash flow or price growth, but a secure home to live in.

This is why the only areas of our property markets that can experience such Ponzi-type crashes are those where investors own most of the properties, and even then a crash can only occur if the demand for properties is purely speculative and not underwritten by a genuine need for housing.

ALSO READ: The future of housing in Australia

from Property UpdateProperty Update https://propertyupdate.com.au/an-inside-look-at-the-property-markets-ponzi-schemes/

Who is driving demand for Queensland property?

We know that Brisbane property values have increased by over 22% in the last year, but who is driving this demand for Queensland property?

Home loan data allows us to identify who is buying and therefore driving demand for property.

Figure 2 shows that at the beginning of Covid-19 there was a dip in the value of home loan financing across all buyer types as the national lockdown hindered transactional activity.

This created uncertainty surrounding job security and also economic instability.

However, the bounce back and acceleration were swift across all buyer types.

The recovery was supported by the Federal Government’s HomeBuilder Grant which provided a timely boost to housing demand during an economically challenging period.

Owner-occupier loans skyrocketed 112% from May 2020 to the peak in January 2021.

While the value of the home loans has dropped in recent months, it remains close to record highs with upsize buyers being the biggest force of housing activity across Queensland.

What this means for some is that despite fetching a strong price for their property, their next purchase may prove more difficult to secure in such a high-demand environment and amongst escalating prices.

Investor home loan values hit the highest value since 2007, overtaking first home buyers in March 2021, a trend that has continued.

We are also seeing more investors are preferring established homes over new properties.

After an initial increase, first home buyer loan values have fallen as affordability could be becoming challenging for some, and investors in the market have increased competition.

“Queensland’s offer of relative affordability compared to other major capital cities, the lure of lifestyle and more recently Queensland winning the 2032 Olympic bid all provide key selling factors for increased investment within the state.”

Dr. Nicola Powell, Chief of Research & Economics, Domain

The rest of Australia wants a piece of the Queensland pie

Interstate buyers have always placed Queensland at the top of their wishlist – a traditional retirement haven. However, escalating internal migration, as a result of changing working patterns from all life stages, has brought to fruition a lifestyle that was considered a dream for some.

Blues are interested in converting to Maroons

66% of inquiries on Domain to Queensland are coming from New South Wales.

While the flexible life is beneficial for some, it does prove mixed levels of opportunity: 3 in 5 high-wage workers have the opportunity to work from home whereas less than 1 in 5 low-wage workers have the same flexibility.

“Significant shifts in the population like this don’t occur often.

What we’re finding is that people are fast-tracking their decision to move, taking the opportunity to live and work with flexibility and where they choose.

Whilst there is no questioning that cities will always be home to the biggest population, we’re witnessing a surge towards regional and less metropolitan areas which are experiencing the biggest impact of internal migration.”

Dr. Nicola Powell, Chief of Research & Economics, Domain

Millennials and Gen Z take over Brisbane

People in the prime of their working years (25-44 years) are the biggest interstate group moving to Brisbane.

“As a trend, young people tend to migrate to capital cities, in this instance, Brisbane, for career opportunities, university education, access to more infrastructure and services, and to make the most of the nightlife and hospitality options that come with an urban lifestyle.”

Paul Arthur, CEO, Queensland Sotheby’s

Pre and early retirement moves fast-tracked across the rest of Queensland

Relocation to the rest of Queensland, outside of Brisbane, is led by Gen X followed by Millennials, and Boomers.

“There is a significant shift in population from city to regional Queensland led by people in the middle-age bracket (45-64 years).

Those in this pre and early retirement stage are fast-tracking their plans, shifting towards regional areas with sprawling landscapes and more space around their homes […]

Often experiencing urban life in their younger years, trend analysis suggests that this age group prefers to move to rural and coastal areas of Queensland for a slow-paced and relaxed lifestyle to enjoy with their families.“

Paul Arthur, CEO, Queensland Sotheby’s

Source: Read the full report-  Domain’s Queensland Spotlight Report.

ALSO READ: What makes Queensland property so unique?

from Property UpdateProperty Update https://propertyupdate.com.au/who-is-driving-demand-for-queensland-property/

Australian property investors are more cautious about the future of property in 2022

How have the coronavirus lockdowns affected you?

Has the pandemic changed your strategy or approach to property investing?

Are you considering moving to live in a different location because of COVID-19?

These are only some of the Covid-19 related questions we recently asked 1,700 Australian property investors and would-be investors in our annual Property Investment Sentiment Survey conducted by Yahoo Finance and Property Update, and some of the answers were enlightening.

Running since 2011, our survey offers rich and vibrant insights into how property consumer trends and sentiments have changed over time.

A surprising result this year was that while only 12.4% of the respondents said their household finances had worsened because of the pandemic, in other words, most Australian households have noticed no real change or an improvement to their family finances, yet only 55.2% believe now is a good time to invest in residential real estate.

However, 24.7% of respondents plan to buy a new home in 2022 (up a little from 24% last year and 20% the year before.)

This is no surprise Covid has made us realise that our homes are more than just a place to live, but now they’re where we often work, work out, and spend most of our days.

You can download the full survey findings by clicking here, but for the moment let’s look at some of the survey highlights related to Covid 19.

Are you considering moving to live in a different location because of Covid19?

While 82.6% of the respondents were not considering living elsewhere, 6.2% considered moving to Queensland, while 5% thought regional Australia would offer a better lifestyle.

Do you believe now is a good time to invest in residential property?

Last year 74% of those surveyed believed it was a good time to invest in real estate, and they were right – property values have increased by more than 20% in many locations around Australia over the last 12 months.

Respondents to this year’s survey were less confident that now is a good time to invest in property (55.2%) and that’s most likely because of those significant increases in property values leaving many people wondering if it’s too late to get him to the market.

Respondents to the survey saw this as the best time to invest in property for a long time,

However, investors are optimistic about our property markets.

68% of respondents see property values rising in the next year.

Last year only 45% of respondents thought property values would rise in 2021.

Here’s the response when we asked what will happen to property values in 2022:

Has the pandemic changed your strategy or approach to property investing?

While 18% of the respondents were a little more cautious due to the current economic climate, the vast majority of investors (65%) are not changing their approach to property investment.

Has the pandemic impacted your immediate investment plans in the next 12 months?

While 17% are pausing the investment plans until the situation became clearer, the majority of respondents are not going to change their plans and 13% are going to take advantage of the current climate to enter the market sooner.

What type of property are you planning to buy?

Clearly off the plan properties are out of favour with respondents keen to buy established properties and in particular those with the ability to add value through renovation or development.

While only 6.8% requested a mortgage repayment holiday from their lenders (10% last year), 19.5% of the respondents had received a request for a rental reduction or holiday because of COVID-19 from the tenants – down from 24% last year.

Some other interesting results:

• 62.6% of the respondents believe this as a good time to lock in interest rates, suggesting that most felt the next move in interest rates will be up. Last year 47% of the respondents thought it was time to lock in interest rates

• 26.7% of respondents are finding the recent tighter lending criteria impacting their ability to purchase another property.
  Interestingly this is considerably lower than the last few years (2020 – 38%; 2019 – 42%; 2018 – 50%; 2017- 48%; 2016 – 46%) suggesting that banks’ lending criteria are easing a little.
• Difficulty with accessing more finance was the biggest concern of these property investors

The Bottom Line

The fact that respondents to this survey already subscribed to Property Update or Yahoo Finance meant they were a captive audience of people already interested in the property.

When asked for their combined family income 4% earned less than $50,000 while 34% earned more than $200,000 but the bulk earned a combined family income between $100,000 and $200,000.

83% owned at least one investment property, but a wide spectrum of investors partook in the survey:

• 16.9% owned no investments
• 22% owned one investment property
• 18.8% owned two investment properties
• 13.2% owned three investment properties, and it went all the way up to
• 4.8% owning 10 or more properties

And clearly, these investors took a long-term view because while over half the respondents planned to buy an investment property in the next year, they had realistic expectations about lower capital growth in 2022.

However, our survey shows that Australian property investors focus on long-term capital growth, rather than cash flow and many are looking for a property that has the potential to add value, rather than waiting for the market to do the heavy lifting.

Investors will still face a number of hurdles with the economic challenges facing Australia, yet few have changed their long-term plans due to COVID-19.

Click here to read the full survey results.

from Property UpdateProperty Update https://propertyupdate.com.au/australian-property-investors-are-more-cautious-about-the-future-of-property-in-2022/