The Experts Maximise yields with granny flats (Part one) Bookmark and Share I’m hearing more and more about investors using granny flats to maximise their rental yields. This is an increasing trend occurring in New South Wales as a result of changes to the planning laws back in July 2009. The State Government made the changes to encourage greater supply of affordable housing in a climate of chronic undersupply. It was a clever move and a fantastic win-win idea. With every granny flat built, a new home is made available to tenants, generally at a lower price than an apartment – a big win for tenants. And because they cost very little to build, the yields on granny flats can be well over 10 per cent – so a big win for investors. The new laws made it easier to get approval for granny flats and they also allowed them to be rented out. Previously, granny flats were only allowed for a dependent relative such as a teenager, or obviously, a grandparent. While you can build a granny flat out the back of your home and rent it out positively geared, you can also add a granny flat to an existing investment property to increase the yield. In some cases, adding a granny flat can turn a negatively geared investment into a neutral or positive one overnight (as long as you can find a tenant and there can be issues with this, which I’ll get into later). Granny flats are also cheap to build. I’ve seen advertisements for granny flats, fully installed, for less than $70,000. Obviously, you’ll pay more depending on the size of the flat and how many rooms you put in it. Say you spent $80,000 and rented it out for $250 per week. That’s a remarkable 16 per cent yield. Of course, yields vary nationwide, so talk a local property manager about how much a granny flat in your area typically rents for to determine your potential income. You should also ask them how easy it is to rent them out. Unfortunately, the opportunity to rent out a granny flat is only available in NSW, Tasmania, the Northern Territory and, as of December last year, in the city of Fremantle, Perth. Tasmania and NT have more restrictions in place than NSW, such as the flat having to share connections to essential services with the main house. Here are the basic rules for granny flats in NSW. If you can meet these criteria, you’ll get approval very quickly through a private certifier or your local council: Your block size must be a minimum 450 square metres Your block must have a minimum 12-metre frontage You need a three-metre clearance between the flat and the back fence You need about a one-metre clearance between the flat and the side fence The floor area of the flat can’t exceed 60 square metres The floor area of the flat and the main residence can’t exceed local council restrictions The height restriction is 8.5 metres. Interested? If you do a quick Google search, you’ll find many companies specialising in granny flats. Check out some of the designs and you’ll be pleasantly surprised. Granny flats are no longer drab little cottages; there are plenty of stylish designs available that will appeal not only to you but also to your prospective tenants. Now, there are some risks. I had a chat to our head of network property management, Michael Connolly, who confirms they are seeing a few more clients renting out granny flats in areas where there are larger blocks of land, such as Sydney’s Western Suburbs and Northern Beaches. But he does have a few words of warning. Next week, Michael and I will fill you in on the pros and cons of using granny flats as an investment strategy. We’ll also tell you about our experiences in leasing houses with granny flats attached or on the same lot. Stay tuned and please write to us if you have a granny flat that you’re using for investment – we’d love to hear about your experience.

Advertisements
Posted in LJ Gilland Real Estate Pty Ltd

Purplebricks fined by Queensland Fair Trading over misleading fees

Real estate disruptor Purplebricks has been fined $20,000 fine by the Queensland Office of Fair Trading.

It was over misleading customers about how it charges its fixed fees in agreements with clients between November 2016 and June 2017 that did not properly disclose the fee terms.

It avoided possible court action after it entered into two enforceable undertakings with the OFT for alleged breaches of the Australian Consumer Law and the Property Occupations Act.

“Between November 2016 and June 2017, Purplebricks Australia Pty Ltd, entered into agreements with consumers who were not made aware of the terms of the fees charged.

“Consumers were also misled about additional services offered by Purplebricks, despite the agency advertising ‘low, fixed fees’ for their services when selling property,” the OFT said.

Purplebricks launched its fixed-fee offering in Australia in September 2016.

The Queensland consumer watchdog said it had received “several complaints from consumers alleging false and misleading representations on the Purplebricks website and advertising regarding their fees, particularly that the fixed fees were payable regardless of whether a property was sold, or their services were cancelled”.

Purplebricks was ordered to pay a penalty of $20,000 and enter into two enforceable undertakings for a three-year period to ensure claims about the agency, its services and its fee structure are not misleading.

The OFT said that Purplebricks has already amended both its advertising as well as its contracts and processes to ensure consumers are fully aware of the fee structure before signing an agreement.

Purplebricks Australia CEO Ryan Dinsdale said Purplebricks had positively collaborated with Queensland OFT.

“Understanding that in many cases traditional real estate agents do not publish their fees and terms of business, our rates are prominently disclosed on our home page and we will always act on feedback to ensure we display everything as clearly as possible.

“Accordingly we have agreed to make some adjustments to wording to improve clarity and understanding,” he said

Posted in LJ Gilland Real Estate Pty Ltd

Forced sales for Queensland unit owners?

 

As buildings age and the cost of maintaining those buildings increases, we are sometimes asked how a Body Corporate can agree to dissolve and sell the property to a developer.   This can be a tense time for each of the property owners within a Body Corporate, especially where there is a mix of owner-occupiers and investors.

Unanimous decision currently required.

The current system with respect to scheme termination (a Body Corporate dissolving itself) is clear.  All owners must agree.  If there are 50 units in a scheme and 49 want to sell to a developer and one doesn’t, no sale can occur.  There are potential avenues to apply to the District Court for orders where there is a stalemate.

‘Majority Rules’ coming soon?

The Queensland Government recently engaged a review of Queensland’s Property Law.

The review made several recommendations regarding Queensland’s Body Corporate laws.

This includes a proposal to reduce the current threshold for scheme termination, essentially allowing for a certain percentage of owners to agree and take along unwilling sellers in that process.  What percentage of owners that would require is yet to be determined but the report offers the following suggestion –

  • a minimum requirement of at least 75% of owners to vote in the resolution to terminate the scheme; and
  • a maximum of 15% of lot owners voting against the proposal giving an effective 85% threshold

While the government has yet to publicly comment on the report, a response may occur sometime this current term of Parliament.  With the cost of maintaining ageing buildings continuing to rise, we expect this issue is likely gathering further political attention.

We will watch with interest and keep you updated.

 

 

Posted in ECONOMY FINANCE BUSINESS LJGREALESTATE RENTALS PROPERTY SALES PROPERTY INVESTOR PROPERTY MANAGEMENT, LJ Gilland Real Estate Pty Ltd | Tagged , , ,

The middle-ring Brisbane suburbs ripe for investment

REAL ESTATE
The middle-ring Brisbane suburbs ripe for investment
Feb 26, 11:00 AM
Inner-city suburbs always seem to get the media love, but it’s Brisbane’s middle-ring which could be about to steal the investment limelight.

With affordability and infrastructure as two imperative criteria, Domain has identified which Brisbane middle-ring suburbs should be on the radar of all buyers.

According to the Real Estate Institute of Queensland (REIQ), renters are flocking to Brisbane’s middle with the vacancy falling from 3.4 per cent to 2.1 per cent, which is good news for investors in particular.

REIQ northern suburbs zone chair Martin Millard said middle-ring suburbs had already experienced solid price growth.

“When you look at suburbs such as Kedron, in Brisbane’s northern suburbs, which demonstrated extraordinary growth over the past quarter and the past year, you can see the popularity of the middle-ring in action,” he said.

“This suburb offers access to high-quality high schools and primary schools, is a stone’s throw from shopping centres at Lutwyche and Chermside, the night-time economy of Nundah’s funky bars and pubs, and is on the doorstep of the Airport Link tunnel, which gets commuters to the airport or the CBD quickly.”

He said Boondall and Bracken Ridge were also proving solid performers with property prices rising due to their affordability as well as popularity with families.

On Brisbane’s southside, Carindale and Mount Gravatt were firmly in the sights of investors and homebuyers, REIQ southern suburbs zone chair Nick Brown said.

He said Carindale was not only home to one of the city’s largest shopping centres, it also had a strong public transport network and its own employment hub.

“Both Carindale and Mount Gravatt are anchored by multimillion-dollar Westfield centres that have recently been expanded to offer spectacular dining and entertainment precincts — and these add liveability factors to the surrounding suburbs,” Mr Brown said.

Chermside West, Keperra and Wynnum as middle-ring suburbs worthy of further investment investigation.

Chermside West’s popularity with owner-occupiers augured well for investors.

The AirportLink tunnel has been a significant boost for access to major employment hubs like the CBD and closer to home there is the establishment of Chermside as a bit of a mini CBD and two hospitals that separate the suburbs.

Unlike Chermside, Chermside West is close enough to benefit from these developments but not too close that it detracts from liveability for young families.

With Brisbane’s population set to increase by one million in the next decade or so, he said public transport options would be worth their weight in transport infrastructure gold.

And that meant that Keperra’s location near a train line would be one of the boutique suburb’s calling cards, he said.

We have seen the neighbouring suburb of Mitchelton really move over the past few years and we are starting to see the ripple effect starting to become evident with a median house price still around $100,000 less, but closing.

It still has the same benefits of its neighbouring suburb. The suburb is also seeing early signs of gentrification with the old quarry making way for a $313 million residential master plan.

Continued strong demand to live close to the water is likely to underpin Wynnum’s future market performance.

The bayside suburb offered entry-level opportunities on decently sized parcels of land, too.

“The suburb has seen some big auction results of late and this is another suburb close to a train-line that is gentrifying,” he said.

“The addition of a new cinema should also be a shot in the arm for local business and the community in general.”

8 middle-ring suburbs to watch

1. Boondall
2. Bracken Ridge
3. Carindale
4. Chermside West
5. Kedron
6. Keperra
7. Mount Gravatt
8. Wynnum
http://ljgrealestate.com.au/rental/7-16-20-wallace-street-chermside-qld-4032/

Credit Suisse thinks the RBA’s optimistic forecasts are creating a credibility problem that’s hurting the economy David Scutt · Feb 26, 8:29 PM The Reserve Bank of Australia is often referred to as being optimistic. It sees economic g

Credit Suisse thinks the RBA’s optimistic forecasts are creating a credibility problem that’s hurting the economy
David Scutt · Feb 26, 8:29 PM
The Reserve Bank of Australia is often referred to as being optimistic.
It sees economic growth, wage and inflationary pressures all building in the next two years, helped by an expected reduction in unemployment.
Credit Suisse says the RBA has been overoptimistic in recent years, contributing to weakness in wage pressures and household spending, making the task of lifting inflation and interest rates more difficult.
If you ask anyone who has been following the Reserve Bank of Australia (RBA) closely over the past decade or so to describe the bank in just one word, it’s a safe bet that “optimistic” will feature heavily.

Year after year, it seems to be optimistic about almost everything.

The global economy. Check. The Australian economy. Check. The outlook for Australian wage growth. Check. The return of inflation back to within its 2-3% target. Check.

The RBA’s latest economic forecasts, released earlier this month, are a sign that this undying optimism remains as strong as ever in early 2018.

It expects Australian economic growth to accelerate to above 3% over the next couple of years, above the level many deem to be the level where unemployment and inflationary pressures are stable.

As a result, it expects that will help to slowly whittle away unemployment, helping to gradually boost wage pressures.

That, in turn, will help push underlying inflation back to within its 2-3% target by 2020, allowing the bank to begin lifting interest rates for the first time since late 2010.

It’s an economic scenario as close to Goldilocks as one can get: strong growth, lower unemployment, faster wage growth, a slow pickup in inflationary pressures and eventually higher interest rates.

While some may beg to differ, it’s hard to get more optimistic than that.

If the RBA is right, it will enshrine it as the central bank that successfully managed the Australian economy through a once-in-a-generation economic transition following the mining investment boom seen either side of the global financial crisis.

Many doubted that was possible only a few years back, believing the collapse in mining investment would ruin the economy, dragging it back into recession for the first time since the early 1990s.

Those fears have been dislodged by a growing confidence that faster private and public sector investment, stronger commodity export growth, and a recovery in household spending will come to the rescue, extending Australia’s record streak without aanexperiencing a recession.

While it’s easy to see why the RBA and others are growing increasingly confident about what the future holds, Credit Suisse’s Australian economics team isn’t so sure. They think the RBA has not just been “optimistic”, but “overoptimistic”.

And this is potentially becoming a problem, they say.

“Everyone makes mistakes. The question is whether we learn from them,” Credit Suisse says.

To the Credit Suisse team, the RBA has made plenty of forecasting errors in the years since the European debt crisis, developing a reputation for over-promising and under-delivering when it comes to its expectations for growth and inflationary pressures.

Essentially, what it expects is often not replicated in reality.

Just take a look at charts below to show the RBA’s cumulative forecasting errors for real GDP growth and underlying inflation over recent years.

The first shows the RBA’s track record for forecasting Australian real GDP growth.

And the second shows the bank’s track record for forecasting Australian underlying inflation.

Both have undershot what the RBA was looking for by some margin.

“The RBA has become renowned over the years for delivering hawkish and arguably credible narratives, supported by consistent upward inflexion points in its growth and inflation forecasts, virtually dismissing near-term undershoots, resulting in consistent over-prediction of real GDP growth and core CPI inflation,” Credit Suisse says.

As such, it’s not surprised at the RBA’s latest optimistic economic offering, simply noting that its latest forecasts are simply a continuation of prior themes.

However, while the RBA has been given benefit of the doubt from markets about its optimistic outlooks, Credit Suisse says this can’t remain the case forever.

It says the RBA’s credibility is slowly being eroded away by this overoptimism, creating a scenario where it could eventually lead to undesirable economic consequences, especially when comes to inflation, wage growth and household spending.

“We think that there is evidence of erosion in the RBA’s inflation targeting credibility,” it says.

“Net of global factors, cumulative growth and inflation downside surprises are pushing down Australian real yields and inflation expectations.

“We believe that subdued inflation expectations are contributing to low wage inflation.”

This chart shows how Australian inflation expectations — either looking five years ahead or the average level looking five to 10 years into the future — both sit around 2%, the lower-end of the RBA’s 2-3% target.

They’re still anchored around the low-point of the RBA’s target band, but both have eased lower in recent years.

To Credit Suisse, this possibly reflects increased doubt from investors about the RBA’s ability to lift economic growth and inflationary pressures, something it says may be contributing to ongoing weakness in Australian wage growth.

“If sluggish wage inflation is a problem for highly leveraged consumers, and RBA forecasting errors are contributing to low wage inflation by allowing growth and inflation expectations to become unhinged, then it stands to reason that officials bear some responsibility for anaemic consumption growth,” Credit Suisse says.

“It is not just that policy makers have underestimated the degree of slack or competitiveness in the labour market, leading to wage inflation undershoots. Rather, officials also need to entertain the possibility that inadequate forward guidance has undermined credibility to the point that it is now feeding into the wage bargaining process.”

That is, not only have wage pressures fallen due to hidden labour market slack, globalisation and structural changes in the labour market, but increased concern that inflation won’t pick up (as the RBA has been forecasting) may be contributing contributing to weakness in household spending, the largest part of the Australian economy.

As seen in this next chart, annual wage growth, like real GDP and underlying inflation, has also undershot the RBA’s expectations since 2010.

Given high household debt levels, Credit Suisse this may explain why Australian workers remain cautious as they prioritise job security over asking for higher wages.

“Highly geared households may value job stability over wage claims in order to sustain their debt load over time. And the evidence is that if they value job stability, they are unlikely to secure very large wage increases relative to their peers who change jobs more frequently,” it says.

“The premium for job stability increases when growth undershoots, because it becomes much harder to find new work opportunities, and risk appetite falls.”

For a central bank looking for household spending to help lift economic growth and inflationary pressures over the next few years, this presents a problem, potentially repeating the cycle seen in recent years where economic growth falls short of expectations, creating headwinds for achieving faster wage growth, higher inflation and reducing unemployment.

To Credit Suisse, in order to avoid a repeat, the status quo will have to change.

“If the RBA continues on its merry way, lost credibility may become a more significant factor weighing on inflation expectations and bond yields, notwithstanding how global factors evolve,” it says.

“This means that either the Bank materially revises down its forecasts — and adjusts rates accordingly — to win more credibility, or fiscal policy makers need to take on more responsibility to help keep inflation within the target band.”

For the first option — lowering growth and inflation forecasts as a trigger to cut interest rates — Credit Suisse says that appears unlikely at present given the RBA’s increased focus on managing financial stability risks.

“In Governor Lowe’s era, the RBA has explicitly said that it has an asymmetric response function to core inflation,” it says.

“The Bank is prepared to raise rates in response to, or in anticipation of, inflation overshoots, but it is not so willing to cut rates in response to inflation undershoots because, at this juncture, the longer-term costs to financial stability arguably outweigh the shorter-term benefits from reflation.”

Regardless of what happens on the fiscal side of the equation, Credit Suisse says that in order to boost confidence that economic growth and inflation will pick up, the RBA will not only have to meet but exceed its forecasts over an extended period.

“To right the wrongs, we think that it is not enough for the Bank to temporarily hit its forecasts. Rather, consistent overshoots are needed to reverse consistent undershoots,” it says.

“If the RBA embraces this thinking, it will likely re-shape expectations for rate adjustments over the next few years.”

 
Wonderful service and excellent outcomes across the board – 25 Feb 2018

Linda and Carlos have been a pleasure to work with during the 10 years they managed our investment property, including the eventual sale. Engaging and personable, Linda and Carlos are always professional and consistently provide excellent, attentive service. I love the way they keep everyone informed in a timely manner and always seek the best outcomes for all parties involved. It’s been a wonderful association and I couldn’t be more enthusiastic about recommending their services.

 

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz43

 

Very helpful – 25 Feb 2018

Carlos was very helpful along the way. Thank you!

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz5u

 

 

Best Regards

 

Linda 姬琳达珍 and Carlos Debello (LREA)

琳达姬琳达珍Debello LREA – LJ Gilland Real Estate Pty Ltd

Request FREE Rental Appraisal here!

“Your Local Property Management & Sales Specialists”

PO BOX 19
ZILLMERE 4034
电话:07 3263 6085

0409 995 578 (L)

LJ吉尔兰房地产有限公司

要求在这里免费租赁评估!

“您的本地物业管理和销售专家”

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/32-musgrave-st-north-lakes-aail7o

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/19-eaton-cl-north-lakes-aaj14y

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/41-belmore-street-northgate-aafqu2

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/5-raymont-street-north-lakes-aagq0c

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/12-may-st-mango-hill-aafxwk

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/12-may-st-mango-hill-aag2go

https://www.ratemyagent.com.au/real-estate-agency/lj-gilland-real-estate/property-listings/10-karawatha-st-springwood-abpzj5

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/41-belmore-street-northgate-aafqu2

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/13-narelle-crescent-rochedale-south-aaf3pg

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/3-sunhaven-crescent-kuraby-aafggb

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/16-st-clair-court-redland-bay-aag45d

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/6-greenmeadow-road-mansfield-aafms7

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/11-reynolds-cl-redbank-plains-aafwtr

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/11-reynolds-cl-redbank-plains-aafu86

http://www.facebook.com/ljgrealestate & Find Us on Google+

 

UNDER CONTRACT IN JUST ONE WEEK!

The information in this message is intended for the recipient named on this email. If you are not that recipient, please do not read, copy, distribute or act upon the message as the information it contains may be privileged and confidential. If you have received this message in error, please notify us immediately by return email. Thank you for your co-operation

 

 

Posted in Australia, Brisbane, ECONOMIC OUTLOOK, ECONOMY FINANCE BUSINESS LJGREALESTATE RENTALS PROPERTY SALES PROPERTY INVESTOR PROPERTY MANAGEMENT, Empowerment, family, finance, Foreign Investment, LJ Gilland Real Estate Pty Ltd, ljgrealestate, maintenance & roofing, Maintenance Renovating tips Construction Home Staging Property Sales Property Management Property Investor Builders Developers Rentals Sales Tenance, Negative Gearing, property investor, propertymanagement, Queensland, Real Estate, rentals, rentals sales, sales, spanish Argentina Korea India United Kingdom USA Asia Japan Hong Kong

Credit Suisse thinks the RBA’s optimistic forecasts are creating a credibility problem that’s hurting the economy David Scutt · Feb 26, 8:29 PM The Reserve Bank of Australia is often referred to as being optimistic. It sees economic g

Credit Suisse thinks the RBA’s optimistic forecasts are creating a credibility problem that’s hurting the economy
David Scutt · Feb 26, 8:29 PM
The Reserve Bank of Australia is often referred to as being optimistic.
It sees economic growth, wage and inflationary pressures all building in the next two years, helped by an expected reduction in unemployment.
Credit Suisse says the RBA has been overoptimistic in recent years, contributing to weakness in wage pressures and household spending, making the task of lifting inflation and interest rates more difficult.
If you ask anyone who has been following the Reserve Bank of Australia (RBA) closely over the past decade or so to describe the bank in just one word, it’s a safe bet that “optimistic” will feature heavily.

Year after year, it seems to be optimistic about almost everything.

The global economy. Check. The Australian economy. Check. The outlook for Australian wage growth. Check. The return of inflation back to within its 2-3% target. Check.

The RBA’s latest economic forecasts, released earlier this month, are a sign that this undying optimism remains as strong as ever in early 2018.

It expects Australian economic growth to accelerate to above 3% over the next couple of years, above the level many deem to be the level where unemployment and inflationary pressures are stable.

As a result, it expects that will help to slowly whittle away unemployment, helping to gradually boost wage pressures.

That, in turn, will help push underlying inflation back to within its 2-3% target by 2020, allowing the bank to begin lifting interest rates for the first time since late 2010.

It’s an economic scenario as close to Goldilocks as one can get: strong growth, lower unemployment, faster wage growth, a slow pickup in inflationary pressures and eventually higher interest rates.

While some may beg to differ, it’s hard to get more optimistic than that.

If the RBA is right, it will enshrine it as the central bank that successfully managed the Australian economy through a once-in-a-generation economic transition following the mining investment boom seen either side of the global financial crisis.

Many doubted that was possible only a few years back, believing the collapse in mining investment would ruin the economy, dragging it back into recession for the first time since the early 1990s.

Those fears have been dislodged by a growing confidence that faster private and public sector investment, stronger commodity export growth, and a recovery in household spending will come to the rescue, extending Australia’s record streak without a experiencing a recession.

While it’s easy to see why the RBA and others are growing increasingly confident about what the future holds, Credit Suisse’s Australian economics team isn’t so sure. They think the RBA has not just been “optimistic”, but “overoptimistic”.

And this is potentially becoming a problem, they say.

“Everyone makes mistakes. The question is whether we learn from them,” Credit Suisse says.

To the Credit Suisse team, the RBA has made plenty of forecasting errors in the years since the European debt crisis, developing a reputation for over-promising and under-delivering when it comes to its expectations for growth and inflationary pressures.

Essentially, what it expects is often not replicated in reality.

Just take a look at charts below to show the RBA’s cumulative forecasting errors for real GDP growth and underlying inflation over recent years.

The first shows the RBA’s track record for forecasting Australian real GDP growth.

And the second shows the bank’s track record for forecasting Australian underlying inflation.

Both have undershot what the RBA was looking for by some margin.

“The RBA has become renowned over the years for delivering hawkish and arguably credible narratives, supported by consistent upward inflection points in its growth and inflation forecasts, virtually dismissing near-term undershoots, resulting in consistent over-prediction of real GDP growth and core CPI inflation,” Credit Suisse says.

As such, it’s not surprised at the RBA’s latest optimistic economic offering, simply noting that its latest forecasts are simply a continuation of prior themes.

However, while the RBA has been given benefit of the doubt from markets about its optimistic outlooks, Credit Suisse says this can’t remain the case forever.

It says the RBA’s credibility is slowly being eroded away by this overoptimism, creating a scenario where it could eventually lead to undesirable economic consequences, especially when comes to inflation, wage growth and household spending.

“We think that there is evidence of erosion in the RBA’s inflation targeting credibility,” it says.

“Net of global factors, cumulative growth and inflation downside surprises are pushing down Australian real yields and inflation expectations.

“We believe that subdued inflation expectations are contributing to low wage inflation.”

This chart shows how Australian inflation expectations — either looking five years ahead or the average level looking five to 10 years into the future — both sit around 2%, the lower-end of the RBA’s 2-3% target.

They’re still anchored around the low-point of the RBA’s target band, but both have eased lower in recent years.

To Credit Suisse, this possibly reflects increased doubt from investors about the RBA’s ability to lift economic growth and inflationary pressures, something it says may be contributing to ongoing weakness in Australian wage growth.

“If sluggish wage inflation is a problem for highly leveraged consumers, and RBA forecasting errors are contributing to low wage inflation by allowing growth and inflation expectations to become unhinged, then it stands to reason that officials bear some responsibility for anaemic consumption growth,” Credit Suisse says.

“It is not just that policy makers have underestimated the degree of slack or competitiveness in the labour market, leading to wage inflation undershoots. Rather, officials also need to entertain the possibility that inadequate forward guidance has undermined credibility to the point that it is now feeding into the wage bargaining process.”

That is, not only have wage pressures fallen due to hidden labour market slack, globalisation and structural changes in the labour market, but increased concern that inflation won’t pick up (as the RBA has been forecasting) may be contributing contributing to weakness in household spending, the largest part of the Australian economy.

As seen in this next chart, annual wage growth, like real GDP and underlying inflation, has also undershot the RBA’s expectations since 2010.

Given high household debt levels, Credit Suisse this may explain why Australian workers remain cautious as they prioritise job security over asking for higher wages.

“Highly geared households may value job stability over wage claims in order to sustain their debt load over time. And the evidence is that if they value job stability, they are unlikely to secure very large wage increases relative to their peers who change jobs more frequently,” it says.

“The premium for job stability increases when growth undershoots, because it becomes much harder to find new work opportunities, and risk appetite falls.”

For a central bank looking for household spending to help lift economic growth and inflationary pressures over the next few years, this presents a problem, potentially repeating the cycle seen in recent years where economic growth falls short of expectations, creating headwinds for achieving faster wage growth, higher inflation and reducing unemployment.

To Credit Suisse, in order to avoid a repeat, the status quo will have to change.

“If the RBA continues on its merry way, lost credibility may become a more significant factor weighing on inflation expectations and bond yields, notwithstanding how global factors evolve,” it says.

“This means that either the Bank materially revises down its forecasts — and adjusts rates accordingly — to win more credibility, or fiscal policy makers need to take on more responsibility to help keep inflation within the target band.”

For the first option — lowering growth and inflation forecasts as a trigger to cut interest rates — Credit Suisse says that appears unlikely at present given the RBA’s increased focus on managing financial stability risks.

“In Governor Lowe’s era, the RBA has explicitly said that it has an asymmetric response function to core inflation,” it says.

“The Bank is prepared to raise rates in response to, or in anticipation of, inflation overshoots, but it is not so willing to cut rates in response to inflation undershoots because, at this juncture, the longer-term costs to financial stability arguably outweigh the shorter-term benefits from reflation.”

Regardless of what happens on the fiscal side of the equation, Credit Suisse says that in order to boost confidence that economic growth and inflation will pick up, the RBA will not only have to meet but exceed its forecasts over an extended period.

“To right the wrongs, we think that it is not enough for the Bank to temporarily hit its forecasts. Rather, consistent overshoots are needed to reverse consistent undershoots,” it says.

“If the RBA embraces this thinking, it will likely re-shape expectations for rate adjustments over the next few years.”

Wonderful service and excellent outcomes across the board – 25 Feb 2018

Linda and Carlos have been a pleasure to work with during the 10 years they managed our investment property, including the eventual sale. Engaging and personable, Linda and Carlos are always professional and consistently provide excellent, attentive service. I love the way they keep everyone informed in a timely manner and always seek the best outcomes for all parties involved. It’s been a wonderful association and I couldn’t be more enthusiastic about recommending their services.

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz43

Very helpful – 25 Feb 2018

Carlos was very helpful along the way. Thank you!

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz5u

Best Regards

Linda 姬琳达珍 and Carlos Debello (LREA)

琳达姬琳达珍Debello LREA – LJ Gilland Real Estate Pty Ltd

Request FREE Rental Appraisal here!

"Your Local Property Management & Sales Specialists"

PO BOX 19
ZILLMERE 4034
电话:07 3263 6085

0409 995 578 (L)

LJ吉尔兰房地产有限公司

要求在这里免费租赁评估!

“您的本地物业管理和销售专家”

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/32-musgrave-st-north-lakes-aail7o

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/19-eaton-cl-north-lakes-aaj14y

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/41-belmore-street-northgate-aafqu2

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/5-raymont-street-north-lakes-aagq0c

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/12-may-st-mango-hill-aafxwk

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/12-may-st-mango-hill-aag2go

https://www.ratemyagent.com.au/real-estate-agency/lj-gilland-real-estate/property-listings/10-karawatha-st-springwood-abpzj5

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/41-belmore-street-northgate-aafqu2

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/13-narelle-crescent-rochedale-south-aaf3pg

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/3-sunhaven-crescent-kuraby-aafggb

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/16-st-clair-court-redland-bay-aag45d

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/6-greenmeadow-road-mansfield-aafms7

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/11-reynolds-cl-redbank-plains-aafwtr

https://www.ratemyagent.com.au/real-estate-agent/lj-gilland-real-estate/reviews/11-reynolds-cl-redbank-plains-aafu86

http://www.facebook.com/ljgrealestate & Find Us on Google+

UNDER CONTRACT IN JUST ONE WEEK!

The information in this message is intended for the recipient named on this email. If you are not that recipient, please do not read, copy, distribute or act upon the message as the information it contains may be privileged and confidential. If you have received this message in error, please notify us immediately by return email. Thank you for your co-operation

http://t.sidekickopen08.com/e1t/o/5/f18dQhb0S7ks8dDMPbW2n0x6l2B9gXrN7sKj6v4Lz1jW63K6BH5wvqRKN64J7hMQFLCHW1l_Hj91k1H6H0?si=6075850934059008&pi=a3b85dd8-c1eb-423d-9d28-27676fa8fdbe

Posted in LJ Gilland Real Estate Pty Ltd

Brisbane – the Sydney median house value is currently 96.9% higher, although the gap has reduced recently, the gap was previously this great in early 2003. The average premium for Sydney houses compared to Brisbane has been 64.7% which is much lower than the current gap.

Although dwelling values have started falling in Sydney, the city remains substantially more expensive than the other capital cities.  In fact, whether you look at the cost of houses or the cost of units, Sydney stands out as being much more expensive.

CoreLogic Median Values Of Capital City House

The above table clearly highlights how the cost of a house is substantially higher, despite the recent value falls, than the cost of a house across each of the other capital cities.  The chart also highlights the much greater escalation in house values in Sydney and Melbourne over recent years relative to the other capital cities.

Median House Values capital cities

The above table shows the difference in median house values across the individual capital cities currently compared, to five, 10, 15 years ago.

House values are reasonably similar nowadays in Adelaide, Perth, Hobart and Darwin, however, that has not been the case historically.  Sydney also stands out as being substantially more expensive than other capital cities.

Sydney Values

 Another way to look at the difference in housing costs is looking at Sydney’s premium in terms of the value of a house relative to the other capital cities.  Looking at this over time can potentially offer insight into how over/under valued some markets may be.  With Sydney values falling recently most capital cities have seen a narrowing of the gap in house values nevertheless the gaps are currently recorded at:

  • Melbourne – Sydney house values are currently 25.9% higher which is the narrowest gap since late 2013.  The average Sydney house value premium since January 2000 has been 39.5%.
  • Brisbane – the Sydney median house value is currently 96.9% higher, although the gap has reduced recently, the gap was previously this great in early 2003.  The average premium for Sydney houses compared to Brisbane has been 64.7% which is much lower than the current gap.
  • Adelaide – the median Sydney house currently costs 128.7% more than the Adelaide median house with a gap this wide never previously seen.  The average Sydney premium over time has been 86.4%.
  • Perth – Sydney median house values are currently 116.7% greater than those in Perth.  The last time the differential was so great was early in 2004.  The average premium for Sydney houses has been recorded at a much lower 62.1%.
  • Hobart – Sydney’s median house value is currently 142.7% higher than Hobart’s with the gap has narrowed recently, however, before the recent period the last time the gap was this wide was late 2003.  Since 2000, the average premium for Sydney has been 122.7%.
  • Darwin – a Sydney house typically costs 121.7% more than a Darwin house compared to a long-term average premium of 66.2%.  The last time Sydney’s premium was this large was mid-2004.
  • Canberra – Sydney median house values are currently 56.1% higher than those in Darwin with the gap previously this large back in early 2003.  Since 2000, the average premium for a Sydney house relative to Canberra has been a lower 36.3%.

 

Median values of capital cities

 It is a similar story when looking at unit values, with Sydney values falling recently yet remaining much higher than those across the remaining capital cities.  Again, values have increased over recent years in Sydney and Melbourne while there has been minimal change elsewhere.

capital city value units

 

Sydney’s current median unit value of $762,509 is noticeably higher than in all other capital cities.  In fact, the median unit value in Sydney is higher than the median house value in all other capital cities except Melbourne which highlights just how expensive housing is in Sydney.  Even in Melbourne, the current median unit value ($572,115) is greater than the current median house value in all cities other than Sydney, Melbourne and Canberra.

sydney values unit

Looking again at the Sydney premium it should be noted that there has been a recent decline in some of the differentials due to the declines in Sydney values.  Nevertheless, the premium for Sydney units relative to other capital cities remain well above long-term average levels:

  • Melbourne – over the long-term the average premium for a Sydney unit has been recorded at 28.5% while the current premium is a slightly higher 33.3%.  Before the recent period, the last time the gap was so large was in early 2005.
  • Brisbane – Sydney’s median unit value currently sits 98.3% higher than Brisbane’s which is the largest premium since late 2002.  The average premium for a Sydney unit over Brisbane has been recorded at 54.1%.
  • Adelaide – the median unit value in Sydney is currently 128.5% higher than in Adelaide which is widest differential in values since early 2003.  The long-term average premium for a Sydney unit is 97.9%.
  • Perth – Sydney median unit values are currently 88.7% higher than those in Perth which is much greater than the average premium of 48.4%.  In fact, the last time the premium was lower than the average was the middle of 2015 and the last time the gap was so wide was late 2003.
  • Darwin – a Sydney unit typically costs 121.3% more than a unit in Darwin currently which is the widest differential since mid-2004.  The average premium for a Sydney unit has been recorded at 65.7%.
  • Canberra – over the long-term, the premium for Sydney units to those in Canberra has been recorded at 38.9% compared to 76.8% currently.  Before the recent period, the last time the gap was so wide was late in 2001.

With house and unit values starting to decline in Sydney we should see a further fall in the premium that houses and units experience relative to the other capital cities.  Despite an anticipated fall in the Sydney premium, it shouldn’t necessarily be expected that the gap will revert to longer-term average levels.  Over recent years, housing costs in Sydney and Melbourne have become demonstrably more expensive than those elsewhere.  Some drivers of this have included but not been limited to an undersupply of new housing (Sydney more so than Melbourne), high rates of migration to each of these cities, stronger economic performances of NSW and Vic relative to other states and territories and significantly greater employment opportunities in Sydney and Melbourne than in other capital cities.  Although values are starting to fall in Sydney and Melbourne, most of these drivers remain for both Sydney and Melbourne.  In fact migration is picking up into Qld but to-date there has been only moderate increases in values.

We would expect the Sydney premium to reduce over the coming years as values decline however, we also believe that historical premiums for Sydney relative to other capital cities don’t reflect the likely differentials in the cost of housing going forward.  That is to say, we expect that the cost of housing in Sydney and Melbourne will continue to be higher relative to other capital cities than it has been in the past.

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz43

https://www.ratemyagent.com.au/real-estate-agent/linda-debello/reviews/3-planigale-cres-north-lakes-aajz5u

PLANIGALE SIGN UNDER CONTRACT

Posted in Australia, Brisbane, ECONOMY FINANCE BUSINESS LJGREALESTATE RENTALS PROPERTY SALES PROPERTY INVESTOR PROPERTY MANAGEMENT, Empowerment, family, finance, Foreign Investment, LJ Gilland Real Estate Pty Ltd, ljgrealestate, Maintenance Renovating tips Construction Home Staging Property Sales Property Management Property Investor Builders Developers Rentals Sales Tenance | Tagged , , , ,

REAL ESTATE
The ‘basket-case’ apartment building wracked with legal threats
Feb 22, 4:15 PM
Sue WilliamsDomain Reporter
It’s one of Sydney’s best known apartment buildings, but behind the scenes Gazebo, the former 1960s hotel in Elizabeth Bay, has become wracked with arguments, accusations and legal threats.

The round tower block regularly used as a setting for film and TV productions and converted into apartments in 2005, is in uproar after the failure of a bid to cancel a $5 million special levy to start work on fixing fire defects that could run to $7.4 million.

In the latest slew of legal actions, the NSW Civil and Administrative Tribunal (NCAT) awarded costs against a rebel band of owners who had sought to have the special levy suspended and remove the compulsory managing agent appointed by NCAT just last year.

NCAT principal Kim Rosser said in the decision that, “I have concluded that the applicants did not act reasonably in commencing proceedings”.

But shortly after that issue was settled, another long-term resident, TV commercial producer Paul Meredith, on Saturday wrote to other owners saying he’s personally putting $100,000 towards fresh legal action. In addition, he says in his note that he is happy to discuss giving out interest-free loans to any owners who have outstanding strata levies – which mean they’re not entitled to vote in future meetings – in exchange for them giving their proxy to vote to ‘a mutually agreed owner’.

When contacted by Domain, he declined to comment, saying: “I’m not interested as I do not believe it will benefit the Gazebo Owners Corporation.”

One owner, however, who spoke under the condition of anonymity, said the building had “become a basket-case. We’re sick and tired of all the legal actions, but it seems they’re never going to stop. And now it’s incredible to think an interest-free loan is being offered to buy votes!”

The trouble-torn building, once an icon of Sydney’s skyline, has rarely been without the dark cloud of legal action since its 89 apartments in the tower, and 60-plus units in the adjacent court building, were first occupied in late 2005.

Originally, much of the anger and many of the court battles were directed at colourful developer, businessman and decorated sailor Syd Fischer, whose development company 2EBR was fighting actions over claims for about $4.5 million in alleged defects, including fire problems, leaking windows and balconies, in the building.

Another issue was the private use, by the penthouses built on the tower’s roof space, of a third lift – which everyone else was paying for. In 2014 the Supreme Court overturned the penthouse residents’ right to use that lift exclusively. The same year 2EBR sold the main penthouse it retained ownership of, at the top of the 18-storey tower, for $8 million.

Finally, after a lengthy series of hearings, the Supreme and Appeal Courts ordered 2EBR to pay owners $135,000 in legal costs but in June 2015 it went into liquidation, so the bill was never paid, and the defects action was effectively cancelled.

Six months later came more agony when the City of Sydney Council issued a fire safety order against the building, requiring it to carry out extensive works. A special levy of $1.1 million was struck in August 2016 to fund stage one of the program.

After a number of rows among owners, a compulsory strata manager was appointed to run the building. Some appealed against the decision to appoint the firm Strata Choice, but their action was later withdrawn. The compulsory management order runs out on midnight this Friday, and an Extraordinary General Meeting has been set for Monday, at which all owners who are not in arrears with their levies will be entitled to vote.

Strata manager Daniel Cockerell, when contacted by Domain, declined to make any statement. “Because we are in compulsory management, we are not at liberty to comment,” he said.

It seems only one thing is certain at the Gazebo: even with the end of compulsory management, and owners taking their affairs back into their own hands, the arguments, and legal actions, are unlikely to stop any time soon.

Posted in Uncategorized