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Welcome to O’Meara Property
Cloudy 19°
12 Stockton Street
Nelson Bay, NSW 2315
t: 02 4980 4400
f: 02 4984 1606
The latest edition of our popular newsletter “The Bay News” is now available and can be downloaded via the link below.
http://www.omeara.com.au/wp-content/uploads/2010/07/webnewsletter.pdf
Printed editions will be posted to subscribers next week and should be letter box dropped over the coming week.
Reports this morning from ‘Australian Property Monitors’ predict a more than ten percent rise in rents in Sydney throughout 2010. In short, it appears that the Tomaree peninsula will see similar increases as stock levels fall and costs for investor to hold properties increase.
The interest rate rises of late 2009 and the predicted rises through 2010 means that investors will be very keen to maximise the rent they achieve throughout 2010. Falling stock levels of properties to rent, particularly family homes has increased competition considerably and will ultimately lead to increases in rent prices. We’ve included below a few tips for investors to maximise their returns this year.
For professional property management advice please feel free to contact me on 02 4980 4400 or email jane@omeara.com.au
On behalf of all the team at O’Meara Property I’d like to wish you and your family an ejoyable, safe and happy Christmas.
Our trading hours over the Christmas / New Year break are:
*Archicentre’s recent online poll revealed that rainwater tanks are now a sought after housing feature. When asked the question: When purchasing a home, which one would you favour if all other things were equal? Water tank for garden watering, spa in the ensuite, or a large plasma screen, what do you think house buyers voted for?
A survey conducted by allrealestate.co.nz suggests that one in 10 people are prepared to pay up to 25 percent more for a sustainable home.
Australians’ attitudes to the houses they are living in are undergoing change. In fact, only 6.4% voted for a large plasma screen, 14.3% for a home with a spa in the ensuite and a huge majority – 79.3% of the 1006 participants – voted for a house with a water tank for garden watering.
Climate change awareness, with a lack of water and the potential steep rises in energy and water costs, is increasing the focus of home owners on the environmental performance of their homes as well as structural integrity and appearance.
Archicentre’s Mr Hallett reported that questions are increasingly being asked as part of the Archicentre Design Concept service by home owners wanting to save money on energy and water, but also wanting to create a ‘green friendly environment’ utilising natural resources and to design a home or renovation which in the future can be marketed as eco-friendly. Changing weather patterns, which forecast less rain but in heavier less frequent falls, means that roof design and the ability to harvest rainwater have also become an important consideration for home buyers seeking rainwater tanks in properties for sale.
Pre-purchase inspections are being used to provide home buyers with a negotiating tool where houses, especially older homes or poorly designed apartments, are energy inefficient or do not have any insulation.
The Australian Bureau of Statistics says that the proportion of homes in Australia with air-conditioners rose from 33 per cent in 1994 to 60 per cent in 2005, yet 40% of homes are uninsulated.
Insulating Australia’s 2.7 million uninsulated homes would cut greenhouse gas emissions by about 90 million tonnes by 2050, according to the Insulation Council of Australia and New Zealand.
It’s not hard to work out that, as more homes become environmentally friendly, and buyers have more choice, 90 million tonnes of greenhouse gas emissions could result in home owners missing out on a few sales dollars when they eventually sell.
After all, as energy costs rise and the negative social impact of energy inefficiency becomes more and more unpopular, the environmental performance of a home will be reflected increasingly in the sale price.
*Archicentre is The Australian Institute of Architect’s Building Advisory Bureau.
The latest edition of our printed newsletter, ‘The Bay News’ is being mailed out right now. Residents of the area will also receive it in their letter box next weekend.
A link to the online .pdf version is below for those that can’t wait.
Whilst it was certainly no surprise that the reserve bank lifted the official interest rate today it was a surprise that they raised the rate by just 0.25 percent.
Recent comments from the majority of financial commentators indicated that the RBA would raise rates by 0.5% based on increasingly positive employment and spending data in an effort to ensure inflation doesn’t soar. Personally, I see the 0.25% rise as welcome news rather than a sudden sharp jump. The property market will better accept a moderate rise in rates over a sustained period of time. Certainly, the buyer activity around the area in recent weeks shows that buyers have a very strong opinion of the local proeprty market at the moment and a couple of moderate rate rises isn’t expected to have an adverse effect.
Of course, when the RBA lifts official rates the race is on between the banks to get their rates up. The winner this time round? ANZ lifted their variable rate by 0.25% within minutes of the RBA. No word from the other major players yet but they’re all expected to announce rate rises with the next 24 hours.
The Government has recently raised the national home insulation assistance package to $1,600 for owner-occupiers, landlords and tenants.
One of the great initiatives of the Rudd Government, this package along with the solar hot water grant helps home owners tackle climate change while providing a clear point of difference in a rental or sale property.
To be eligible, the property must be currently un-insulated – or have very little ceiling insulation – and was built before the mandatory thermal performance requirements under the Building Code of Australia were introduced commencing in 2003.
If the total cost of installation is less than $1,600 there will be no more to pay. This will be the case for most households.
The industry has seen unprecedented demand and many clients have already told us lead times for installation have been running into several months.
With these recent spring heat waves the demand will only increase so make sure you register now to be prepared for summer.
The interest rate rise this week, the first Reserve Bank rise since March 2008 marks the start of an upwards trend in interest rates for the foreseeable future. Market analysts are tipping rate rises again in November and December and predict that the average variable mortgage rate will be around 6.5% before the end of the year (still well below the last 20 year average of 8.8%).
The increase in interest rates is unlikely to see any real burden placed on recent borrowers as banks have been quite ‘gun shy’ lately and will most certainly have assessed loan applications based on a higher interest rate than what we see at the moment. With most lenders lately requiring a minimum deposit of 10% and a track record of genuine savings the banks have been showing a much more considered approach to lending. Current mortgage arrears rates are reported to be 0.5%, the lowest rate in quite some time.
The number of investors entering the market is increasing solidly as first home buyers continue to taper off and there are still plenty of owner occupiers looking to buy. According to information provider RPDATA the number of properties going onto the market in the past three weeks is the highest in many months but the total number of properties for sale is decreasing. A clear sign if any that sellers are showing confidence in the market and demand from buyers is increasing at a faster level than stock coming onto the market; the next six months could be very interesting!
Many home owners who extend or renovate their homes make money when they sell, while others wonder why they have trouble getting their money back. What are the main things to consider before embarking on a renovation or extension?
Firstly, ask yourself whether improvements will make your house significantly better than the others in your street. The best-house-in-the-street phenomenon is often an unhappy one as the values of the other houses in the street affect the upgraded one – after all, this is not a street where purchasers will be looking to spend the higher prices the vendor is after. Those who renovate above and beyond the level of surrounding homes are less likely to get good capital appreciation when they sell.
Furthermore, do the changes you are making really improve the home? Many home owners simply increase the cost of their home without necessarily adding to its value, because some alterations don’t improve the standard of the property enough to compensate for their cost. Others leave a mishmash of disparate styles, or serve only to emphasise the datedness of the original house, or are too personal in their application to have wide appeal and so end up worth less than they cost.
It is not even uncommon for home owners to sacrifice one feature to gain another, thereby adding cost but not value. Frequently reported examples of this sort of expenditure include turning a bedroom into a dining room or a garage into a rumpus room.
Ideally, extensions should be seamlessly integrated with the original home. Many three-bedroom homes don’t “work” once a fourth bedroom and family room are added – the original rooms may be too small to balance the extensions. Furthermore, bad design resulting in poor natural light or an inconvenient floor plan will be reflected in the sale price of the property. Many of these problems could be avoided if architects were consulted before the work was undertaken. “Saving” on the cost of an architect is nearly always false economy.
Sometimes renovators over-capitalise by deviating from their budget during the course of their renovations. Many homes and locations don’t justify the top-of-the-range appliances and fittings some renovators choose. And if renovators run out of money before completing the work or have to skimp on the finishing touches, the overall effect can be disappointing and limit the ultimate selling price.
Home owners concerned about investment potential should also think twice before making changes for their own unique needs. Above all, major work should not be carried out if homeowners plan to sell in the near future. Sometimes a homeowner will ask a question such as: “I am planning to sell in a year but the house could do with a new bathroom. Should I undertake the work?” It could be argued that the home owner will get the benefit of using the new bathroom for the year until the property is sold, but unless they are in a location or marketplace or price range where the cost of the bathroom will be easily absorbed in the overall capital increase during the next year, it would be pointless to renovate the bathroom only to sell it. Prospective buyers may want an entirely different bathroom, or a bathroom that is very new might make the kitchen or other areas of the house look as if they need work.
The state of the market can also be an important factor in the overall cost-effectiveness of renovating a property. In a buyers’ market, such as we are currently experiencing in most parts of Australia and New Zealand, it often makes sense to take advantage of someone else’s hard work and expenditure rather than embark on costly and time-consuming renovations of your own, unless you are so attached to the property that you can’t bear to leave it, or unless you live in an area or type of home where there is always strong demand and low supply. Trading up in a buyers’ market should actually produce a financial advantage as you inevitably ’save’ money when you purchase a more expensive house on a slow market. (For example, do your sums and work out why a 10% ‘loss’ on a $500,000 home that you are selling is less than a 10% gain you make on the $750,000 house you are buying which is also ‘losing’ its owner 10%). Trading up makes even more sense in areas where First Home Buyers’ Grants are raising the price of the kind of house you might be selling but not affecting the cost of the home you are planning to purchase.
At the same time, quality of life is also important and the good news is that if people stay in a property long term the cost of idiosyncratic changes will usually be absorbed in most locations experiencing growth. The question of whether they would have made more money by making different choices often simply doesn’t come up.
Homeowners wanting to maximise the investment potential of their homes should consider consulting an estate agent with whom they have a good relationship before making improvements. In many instances, agents aren’t called until the work is nearly completed and it’s too late to choose a different path. Builders can tell you what your renovations will cost but only an experienced, well-referenced estate agent can tell you whether the value is worth the cost sufficiently to justify the expenditure.
Many people think it’s simpler to move out of their home before selling it while others find themselves doing it by default, because they have already found another home. But selling an empty home should be avoided where possible.
It’s hard for an empty house to ooze charm or vitality. And few prospective buyers are good at visualising a house’s charm potential. Empty houses usually take twice as long to sell and often sell for less. After all, people don’t buy houses they buy homes. In other words, when they walk into a property for sale, while their heads are looking at features and benefits, their hearts are engaged only when the atmosphere makes them feel at home. If their hearts aren’t engaged, the fact that the features of the property add up on paper rarely makes a sale happen.
Empty houses also make it hard for people to do decide whether their furniture will work. Without chairs or sofas to indicate size and scale, how can they make the translation from their current living room to the one they are looking at? If there are, say, two two-seater sofas, buyers can quickly make comparisons with their own living room without resorting to time-consuming measurements when they are simply trying to form their early impressions. Uncertainty makes people lose interest, especially when the house isn’t sending out lifestyle vibes that engage their emotions.
Above all, when the house is empty, prospective buyers tend to focus on negative details. It is all too easy to see chips or cracks when there are no paintings, furniture or window coverings to take their attention and camouflage imperfections.
If you have to move out, it’s worth contacting a home staging company (available in most areas these days) whose services include moving in furniture and accessories to make a house look like a home. The costs will be worth it in the long run, as the house will sell faster for a better price.