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February 2017

ljhooker.com.auResidential | Commercial | Rural | Home Loans

Why I think property is an astute investment in 2017 by David Naylor, Co-founder of Chan & Naylor - Property & Business Tax Accountants

1. Interest Rates The word is that US interest rates will increase and Australian banks have already started to raise their rates independent of the RBA’s moves. However, Australia’s cash rate sat at a historic low of 1.5% as of January 31. Even if rates did increase, along with the predicted US rates over the coming 12 months, by the end of 2017 they will still be comparatively low.

2. Demand is still high Multiple publicly listed property developers noted that while the rate of price growth has slowed, pent-up demand remains strong. But it’s important to note with a marketplace as wide and diverse as Australia that conditions vary amongst the capital cities and regional areas. Banks have tightened lending on property development making it more difficult for smaller developers to access funds for projects. This means there will be less development and inevitably less housing coming onto the market over the coming years.

3. Bank funds readily available Banks still view residential property as a solid long term investment: why else would they be prepared to lend you 80% of the purchase price? The mortgage investment sector is very competitive, which is good news for investors who have scope to negotiate rates below advertised levels. There has never been more choice of products, interest rates and banks to select from that are willing to lend against property.

Long term investment Imposts such as stamp duty make property a long-term as opposed to a short-term opportunity. We have seen the statistics that show over a 10-year period, property has the potential to double in value, equating to a capital growth of 7%, plus a net of 3% rental return - giving a solid 10% return

over that period. You just need to be mindful that property works in cycles and although you may see extraordinary capital gain over a few years there will also be periods of little, zero or even negative growth.

4. Negative gearing (for the short term at least) The Turnbull Government has ruled out changes to Negative Gearing legislation which means - at least for the next couple of years - property investors will benefit from the tax savings. The tax benefits received assist the investor with the funding of the shortfall to hold the property longer term.

This is general information only. Always seek advice from your financial advisor to assess whether property is an investment you should consider, taking into account your individual situation. Visit LJH.chan-naylor.com.au to get in touch with a Chan & Naylor Property Tax Specialist Accountant in NSW, QLD, VIC, SA and WA.

As 2017 gets into full swing, LJ Hooker’s National Research Manager Mathew Tiller takes a look at the year that passed and what’s in store for the remainder of 2017.Looking back at 2016 summarised a tale of two market types; those on the up and those challenged by historically larger stock volumes.

Sydney and Melbourne were again the two standout performers with dwelling values in Sydney rising by more than 15% and Melbourne over 13%, according to CoreLogic. This result was driven by strong levels of investor and owner-occupier buyer demand and a distinct shortage of properties for sale.

The two surprise performers of the year were Canberra and Hobart, with both cities recording median price increases of 9.3% and 11.2% respectively.

Supply & demand

On the supply side, many markets saw building approvals and construction reach record levels, particularly in Melbourne, Brisbane and Sydney. However, increased construction activity has not yet stunted price growth in these markets. This is because nearly all of the new dwellings completed in 2016, and due to complete in 2017, were apartments. Plus, the majority of the new supply is only limited to a handful of inner city suburbs with listings of existing properties in serious shortfall in most capital cities.

And what about the demand side of the equation? Apart from cities and regional areas which had high levels of exposure to the mining and resources sector, investors, owner occupiers, downsizers, upgraders and rentvestors™ were all very active in 2016.

So what’s in store for 2017?

The large amount of new apartments which have been approved, over the past few years, will begin to reach completion. Although the detached housing market won’t be affected by this, apartments will dampen price growth overall, especially in a handful of inner city suburbs.

Interest rates will also play a big role in 2017. A lot of mortgage providers increased their rates, independent of the RBA, in late 2016. Rising government bond yields and increased interest rates in the US may lead to higher funding costs for Australian banks. This means more interest rate increases over the coming year.

Despite this, buyer demand is expected to remain strong, thanks to ongoing employment and population growth. The term rentvestor is a registered trademark of LJ Hooker.

ljhooker.com.auResidential | Commercial | Rural | Home Loans

Disclaimer. This newsletter does not necessarily reflect the opinion of the publisher. It is intended to provide general news and information only. While every care has been taken to ensure the accuracy of the information it contains, nei-ther the publishers, authors nor their employees, can be held liable for inaccuracies, errors or omission. Copyright is reserved throughout. No part of this publication can be reproduced or reprinted without the express permission of the publisher. All information is current as at publication release and the publishers take no responsibility for any factors that may change thereafter. Readers are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this newsletter as a substitute for professional advice. © LJ Hooker Limited 0715 LC2660-01

Property in perspective 2017 pool trends - Courtesy of realestate.com.au

Matt Leacy from Landart Landscapes in Sydney explains the latest pool trends to guide your planning if the warm weather has put a pool on your wish list.1. Tiling – extreme dark or all-white

“With a complete white tiled pool you get a really natural water colour,” Leacy says. “A black pool will give you a certain amount of elegance and can sort of act as a reflector. ”Patterned tiles running along the water’s edge have also seen a resurgence.”

2. Classic-contemporary “All the traditional styles are being done in a more contemporary or updated way,” he says. “In terms of surfaces we’re seeing a lot of finished concrete and grey limestone being used.”

3. Smaller space options People dealing with limited space are now opting for a small plunge pool or custom-made bespoke spa.

4. Mineral water The traditional salt and chlorine pool is falling out of favour as mineral water pools rise in popularity. “Mineral water has magnesium-based sanitisers which are more gentle on the skin and can be more low-maintenance, because they require less additives.”

5. Seamless connections Rather than having separate zones for outdoor dining, garden and pool, Leacy suggests using functional and visual connections to link the spaces. Glass fencing is no new trend but remains the number one choice for creating a safe pool area and a seamless connection between the pool and garden.

6. Wet-edge or infinity For backyards with level changes, infinity or wet-edge pools are an obvious choice. For split-level blocks a wet-edge works to connect the space because the spillover can be disguised into the pool itself. Wet-edge pools are also easier to clean because any leaf litter that accumulates runs straight off the edge and into the lower reservoir.