Interest Rates Could Stay On Hold Until Mid 2015

Reserve bank no 2 thumb Interest Rates Could Stay On Hold Until Mid 2015

The Reserve Bank has made no secret that it is watching house prices closely but it is becoming clear to economists that the board will not use the cash rate to cool things down this year.

On Tuesday the RBA left the official cash rate on hold at 2.5 per cent for the 14th consecutive month.

Australia is now experiencing the longest period of interest rate stability in more than a decade, and it looks set to continue.

All 28 experts surveyed by mortgage comparison website are now expecting the cash rate to start rising next year, most probably in June. Six months ago almost half of the respondents (five out of 11) expected the cash rate to start rising this year.

The senior economist for the Domain Group, Dr Andrew Wilson, said the RBA was unlikely to move rates while key economic data remained "mixed".

But Dr Wilson did note that despite rates staying on hold, finance was becoming cheaper.

"Mortgage rate settings, however, remain competitive with major banks continuing to improve housing loan affordability through lower lending costs," he said.

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Bad tenants don’t only cause headaches they can cost property owners thousands

badtenantsno2 thumb Bad tenants don’t only cause headaches they can cost property owners thousands

Bad tenants can be a costly nightmare, property owners can get stuck with massive clean up bills and may never see the back rent owned to them.

So how do you sift out the good from the bad?

According to Terri Scheer Insurance executive manager Carolyn Parrella, attracting the right tenant can make or break a landlord.

She said it was not only important to find the right tenant but to keep them happy also.

“If tenants are happy they may be more likely to pay their rent on time, stay in your property longer and look after it as if it were their own,” she said.

Follow her tips for avoiding dodgy tenants;

• First think about the type of tenant you want to attract.

“When choosing an investment property, think about the tenant demographic you want to attract, for example a family, sole tenant or couple, and choose a property that is likely to appeal to them.

“Properties that are close to good schools, shops and public transport are likely to be well sought after and may give you a larger pool of prospective tenants from which to choose.”

• Screen tenants.

Thoroughly check potential tenants’ references during the screening process.

“Speak with previous landlords or property managers and ask specifically whether they had any

issues with the tenant in the past,” Ms Parrella said.

• Present your property well.

“A property that is poorly presented by the landlord may be poorly cared for by the tenant. No one wants to live in a property that has stained carpets and marked walls.

• Appoint a property manager

“They have experience in screening prospective tenants and have access to databases that list

tenants with a history of defaulting on rental payments, damaging property and eviction.’’

• Attend to maintenance issues promptly.

“A tenant who isn’t getting the attention they deserve might begin to question their commitment to your property and become more careless with it.’’

Plus injury or loss as a result of a safety hazard might result in costly legal claims.

• Landlord insurance

“Even the best tenant can accidentally damage a property or lose their job and be unable to pay rent,” Ms Parrella said.

“Every landlord should have a tailored landlord insurance policy that covers them for both malicious and accidental damage, their legal liability and the loss of rental income.’’

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tt twitter micro3 Bad tenants don’t only cause headaches they can cost property owners thousands

Liberal MP flags tougher foreign buyer rules

forsale4 thumb Liberal MP flags tougher foreign buyer rules

The Liberal chair of a parliamentary committee has flagged tougher enforcement of rules prohibiting foreign purchases of existing homes, as both she and the Treasurer welcomed overseas buyers of new dwellings.

Speaking at a Bloomberg economic summit in Sydney, the chair of the House of Representatives Economics Standing Committee Kelly O’Dwyer says there has been worrying evidence of foreign investment restrictions not being enforced.

Ms O’Dwyer says the Foreign Investment Review Board (FIRB) has not mounted a prosecution or made a divestment order for breaches of the rules since 2006.

"If you have a framework in place, in order to give confidence to people more broadly in the Australian community, you have to have a regime that will be properly enforced, and so far FIRB have demonstrated that they have not been doing their job in that regard," she said.

"I think there has been a failure of leadership in FIRB. I think that they have not been proactive in the way that they have gone about their role."

The FIRB testified to the committee that it only had eight staff dedicated to reviewing thousands of foreign purchases of residential real estate.

Ms O’Dwyer says that is no excuse for the non-existent level of prosecutions for breaches, however she has raised the possibility of more funding for the FIRB’s real estate monitoring.

She says the committee is looking at recommending a tougher civil penalty regime than the current fines of $85,000 for breaching the rules, which she says many investors regard as simply a potential "cost of doing business".

"We’re actually looking at a sliding scale that would attach to the value of the property if people do breach the rules in place," she said.

"I think that money that would come in from any new penalty regime should be hypothecated to FIRB so that they have the right resources at their disposal, so that they can be far more proactive."

Ms O’Dwyer says the committee is also looking at introducing penalties for people who aid and abet foreign buyers in contravening the rules, such as real estate agents or conveyancers.

Story:  Michael Janda and Simon Frazer   Source:

tt twitter micro3 Liberal MP flags tougher foreign buyer rules

Demand for home loans misses forecasts

demandforhomeloans thumb Demand for home loans misses forecasts

DEMAND for home loans rose in July, official data showed, but by much less than expected, as loans for owner-occupied homes slipped in the month.

According to the Australian Bureau of Statistics, the number of home loans granted in July rose 0.3 per cent in seasonally adjusted terms to 52,251.

Economists surveyed by Bloomberg had expected the number of housing finance commitments to rise by 1 per cent in the month.

Total housing finance by value rose 2.7 per cent in June, seasonally adjusted, to $28.571 billion.

The value of investor lending surged 6.8 per cent in the month to $11.513bn.

The number of loan approvals for refinancing rose by 2.4 in July.

Loan approvals for owner-occupiers, excluding refinancing, fell by 0.7 per cent in the month, to be also be 0.7 per cent lower over the year.

At 12.2 per cent, first-home buyers accounted for the smallest share of housing finance in the history of the data.


Story:   Mitchell Neems   Source:

tt twitter micro3 Demand for home loans misses forecasts

Sales surge sees house prices defy talk of winter slowdown

housepricesremainsteady thumb Sales surge sees house prices defy talk of winter slowdown

HOUSE prices have defied predictions of a gradual slow down, posting the biggest jump over the three months of winter since 2007 as low interest rates continue to fuel the market.

Figures from RP Data, released ahead of today’s Reserve Bank of Australia monthly meeting on the cash rate, found prices across the capital cities increased 4.2 per cent to a median of $520,000 for the quarter to August 31.

Interactive: Growth in property prices

Sydney’s median price surged 5 per cent to $650,000 and Melbourne’s prices jumped up 6.4 per cent to $523,750, a growth rate far ahead of the other capital cities.

Canberra homes were up 2.4 per cent, Adelaide prices increased 1.5 per cent, Brisbane was up 1.3 per cent and Perth was up by 1 per cent.

Hobart was down 0.8 per cent while Darwin dropped 0.6 per cent.

Cameron Kusher, a senior researcher at RP Data, said while spring generally saw higher price growth than winter, he wouldn’t be surprised if this had reversed. “We saw a strong winter because of a lack of supply at the same time as low interest rates. Buyers could have a lot more supply to choose from in spring,” he said.

Worried about continued price growth, Megan Harold and husband Chris decided to sell their house in Sydenham, in Sydney’s inner west last weekend, moving to a larger house they purchased at the same time. “The way the market was going, we knew if we didn’t make the move now we wouldn’t get the kind of property we wanted,” Megan said.

The Harolds purchased in Earlwood, where larger block sizes mean it will be easier to ­reconfigure the house as their family grows.

Sydney realtor Maria Hodgson-Smith, from Day & Hodgson, said there weren’t enough houses to satisfy demand, with many selling before auction date as buyers became more aggressive.

Brian White, chairman of real estate agency Ray White, said the housing market was mimicking the economy with the resources-driven cities of Perth, Brisbane and Adelaide performing well, but completely outshone by the financial services-oriented cities of Sydney and Melbourne. Offshore investment had also underpinned those markets, he said.

Mr Kusher said price growth was encouraging many to invest in property, although he said once interest rates began to rise this should pull back as investors moved on to other markets. “Sydney prices have increased by 50 per cent since 2009, and Melbourne by 45 per cent, so a lot of people have built up a lot of equity in their home to invest, and there’s not been a lot of returns to be had with money parked at the bank,” he said.

Scott Haslem, chief economist at investment bank UBS, interest rates would begin to “normalise” around May next year, increasing again in June.

Story:  Kylar Loussikian and Turi Condon    Source:

tt twitter micro3 Sales surge sees house prices defy talk of winter slowdown

5 tips to cut the clutter

Declutter thumb 5 tips to cut the clutter

Ever said any of the following to yourself?

Even if I can’t use it, I’ll keep it for someone who can. It was too expensive to get rid of now. It reminds me of a special time or person.

What about these?

  • One day it might fit me.
  • I’ll read it when I have more time.
  • It may look like a mess to others but it’s organised chaos to me.

We use a zillion excuses to justify the physical clutter that collects on our desks, in our wardrobes, on our bench tops and on other unsuspecting surfaces around our homes.

But instead of rationalising our behaviour to self and others, it may be more helpful to ask: how do I feel when I live, sleep or work amongst the clutter? Or what emotions come up for me when I think about sorting through the piles and files to clear the mess?

For many would-be hoarders, the mere idea of getting rid of clutter can create varying degrees of anxiety, guilt, embarrassment, shame, paralysis and insecurity.

In order to placate the overwhelming bubble of discomfort growing within, the clutter-bug clings a little tighter to the pile in question, which results in a sense of relief (at least in the short term) thereby reinforcing the unhelpful behaviour.

For others who struggle to sort and clear their clutter, there is often a misled belief that the items represent some kind of extension of who we are at our very core, therefore to get rid of the mess is erroneously perceived as akin to losing some sense of self.

In order to make progress in the battle of the mess, it’s important to understand what our relationship with the clutter represents. Only then can we hope to taste the sweetness of empowered lightness that freedom from the stuff we no longer need will bring.

For those drowning in a sea of insignificant memorabilia, bedside table pick-up sticks, a mounting floordrobe, or dust-coated items untouched in years, there is help at hand, and you can start today.

5 tips to cut the clutter

1. Start small

Bite sized chunks are key. Start with one pile, one shelf or one drawer. The act of sorting even one area free from clutter can help clear the physical and mental cloud to get the ball rolling.

2. Get real

What’s really important to you? If you haven’t worn or used an item for several years, give it to a charity or bin it.

3. Find clutter a home

Aim to sort and file papers and items to a permanent home, behind closed doors and drawers, rather than leave them on open shelves and surfaces. Keeping the items out of sight reduces the often overwhelming assault on our already overloaded senses.

4. Picture this…

Imagine a life without clutter. Picture how you will operate at your desk with the papers gone or how it will feel to sleep in a room minus the maze of clothing or books.

5. Document it

Take before and after pictures as a reminder of the progress you’ve made and the state you choose not to return to.

Story:   Sabina Read     Source:

tt twitter micro3 5 tips to cut the clutter

Most investors miss out on tax rebates

TaxTime thumb Most investors miss out on tax rebates

Even small items like smoke alarms and shower curtains can be claimed on rental properties.

Four out of every five property investors are missing out on potentially thousands of dollars in tax rebates, by forgetting to claim on everyday household items.

Shower curtains, smoke alarms, lawnmowers, roller-door motors, microwaves and garbage bins are among the dozens of minor objects in the average rental home that landlords routinely forget to claim depreciation on.

New research conducted by tax depreciation specialists BMT has revealed that figuring in these assets can increase the cash flow generated by a property by around 15 per cent.

“Property investors tend to focus on the larger-ticket depreciation items available, such as the structure of the house and large plant items in the house,” said BMT managing director Brad Beer.

“However it’s often the smaller items which can make a significant difference to an investor’s cash flow.”

Beer, who recommends investors engage a qualified quantity surveyor to create a deprecation schedule for their property, says investors can often name a few depreciable items, such as carpet, hot water systems and light fittings. “But a range of less obvious items, such as garbage bins, exhaust fans or smoke alarms, are often overlooked,” he says.

BMT conducted their survey among their 190 staff Australia-wide, asking them which items their clients found “very surprising” when told they could be depreciated or which they’d missed out in their DIY filing of depreciable items. The company has more than 8000 regular referrers to their business, including property professionals and accountants who recommend their services to property investors.

They found the most common assets never claimed for were items like garden sheds which have, on average, a depreciable value – the purchase price of the item minus its salvage value which can then be claimed for over its useful life – of around $855 and ceiling fans ($265) right down to smaller expenses like shower curtains ($30). Frequently missed were other assets like solar-powered generating systems ($5500), automatic window shutters ($800) and intercom systems ($745).

Story source: ; Story by Sue Williams

tt twitter micro3 Most investors miss out on tax rebates

Reserve Banks Interest Rate Policy Decision


Reserve bank no 2 thumb Reserve Banks Interest Rate Policy Decision

At its meeting yesterday, the Reserve Bank Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy is continuing at a moderate pace, helped by firmer conditions in the advanced countries. China’s growth remains generally in line with policymakers’ objectives. Commodity prices in historical terms remain high, but some of those important to Australia have declined this year.

Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low. Emerging market economies are receiving capital inflows. Volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates, or other adverse event, over the period ahead.

In Australia, growth was firmer around the turn of the year, but this resulted mainly from very strong increases in resource exports as new capacity came on line; smaller increases in such exports are likely in coming quarters. Moderate growth has been occurring in consumer demand. A strong expansion in housing construction is now under way. At the same time, resources sector investment spending is starting to decline significantly. Signs of improvement in investment intentions in some other sectors are emerging, but these plans remain tentative as firms wait for more evidence of improved conditions before committing to significant expansion. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend over the year ahead.

Interest rates are very low and for some borrowers have continued to edge lower over recent months. Savers continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices has been slower this year than last year, though prices continue to rise. The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.

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Home Owners Paying Off Loans Faster

Home loan thumb Home Owners Paying Off Loans Faster

Home owners are taking advantage of record low interest rates to pay off their mortgages faster.

The National Australia Bank says new figures show 85 percent of its mortgage customers pay more than their minimum monthly repayments, Fairfax Media reports.

Such NAB customers are ahead by an average of 13 months now, compared with 12 months a year ago — a "meaningful" shift considering the size of the bank’s mortgage book, said Antony Cahill, NAB’s executive general manager of lending and deposits.

The bank has about 16 percent of the mortgage market with a home loan book worth $241 billion.

NAB said its customers are also paying off credit card debt faster, with the number of accounts paid in full rising six percent in the past year.

"These are themes that point to the Australian consumer being a little bit more careful, a little bit more prudent in terms of understanding debt and ensuring they keep that under control," Mr Cahill was quoted as saying.

Last week the major banks cut fixed interest rates to new lows of less than five percent.

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When does it make sense to turn your home into investment property?

Investing and making money thumb When does it make sense to turn your home into investment property?

Before you decide to convert your current home into a rental property, there are serious financial and tax considerations that you need to take into account. Margaret Lomas explains.

So, you have made the decision to move out of your home, buy something new to live in, and rent out the home you are moving from. Have you made the right decision? And if so, what do you need to do to your present financing arrangements to ensure that they become tax effective and, more importantly, remain within the tax laws?

Too many people undervalue the importance of getting this all right, and I see many investors who end up in trouble with the Tax Office because they made claims which they simply were not allowed to make.

There are many considerations to make when initiating this kind of move – from whether you are actually making the right financial decision right through to ensuring that your structures are correct and you are making all of the tax claims you can. Here is a guide to help you through the minefield.

Is it right financially?
You have decided to move from the house you live in for any one of a number of reasons. It could be that you are being transferred with work, but think you may be coming back again to the home you are vacating.

You may have decided to upgrade to a bigger and better property for yourself, and because you like the one you are moving out of so much, believe it will make a good investment. Or, you might be moving for a number of reasons, but just cannot bear the thought of letting go of the house you have known and loved so much. Let’s put all these reasons into perspective to be sure that you are operating from your brain, and not from your heart!

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