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Apr 19, 2024
False Prophets
In the dynamic Victorian real estate market, reliance on quarterly median prices to gauge the health of local markets and guide decisions in property transactions may prove folly. Recent data from the Real Estate Institute of Victoria (REIV) highlights significant growth in house prices across regional Victoria and metropolitan Melbourne, with towns like Lakes Entrance and Jan Juc, and suburbs like Brighton experiencing substantial quarterly rises, as much as a 35% increase in median house prices. No one is disputing the accuracy of the data collected and analysed by the REIV - their insights are incredibly value. However, while these figures present an appealing snapshot of market vitality, they often do not tell the whole story. Quarterly median prices can be heavily influenced by a variety of factors that do not necessarily reflect the overall market conditions. For instance, a small number of high-value transactions in a particular area can skew the median price upwards, while a similar number of lower-value sales can do the opposite. In East Melbourne, we have witnessed quarterly changes in the median value of properties of more than $1 million. This quarter, Melbourne’s perennial blue-chip suburb, Toorak, was dethroned as the most expensive suburb by Brighton. Even though Brighton is a stunning area to live in with magnificent homes, no one will genuinely believe that it is a more expensive suburb to buy property in than Toorak. Variances of this magnitude make it difficult to draw accurate conclusions about the true state of the market from a singular median figure for a single moment in time. These statistics often reflect the types of properties that happen to sell during that quarter rather than the overall market conditions. It is not uncommon to see a chain of similar properties sell based on the psychological security owners experience from seeing properties comparable to their own selling within the neighbourhood. In periods when higher-end homes are sold, the median price will naturally appear higher. Conversely, if the market is more active at the more affordable end, the median price will seem to decline. This aspect makes median prices a volatile metric that can change significantly from one quarter to the next without genuinely indicating long-term trends. The focus on regional centres in the REIV's report underlines another critical point: regional disparities. While metropolitan areas might see different trends, regional centres can perform distinctly based on local economic conditions, changes in amenities, and shifts in buyer preferences towards more lifestyle-oriented properties. Similar disparities can also exist between neighbouring suburbs, whether the announcement of new housing development or the planning of big infrastructure - properties on either side of a single road can experience radically different levels of interest. These local nuances are often lost in the broader data, leading to potentially inaccurate assumptions about more comprehensive market performance. A common refrain of our weekly blog is: make sure you consult with a real estate professional before making a decision about buying or selling a home, their expertise will help you make an informed decision that could save or secure you a significant amount of money.
Apr 5, 2024
Land Tax is Here
Recent updates in the property investment landscape highlight a noticeable shift, as Victoria, along with other states, has begun issuing new land tax notices. While this move signals an adjustment in land tax receipts, it's crucial to view it within the broader context of the booming property market in Victoria. Despite the adjustments in land taxes, the property market in Victoria continues to offer substantial growth opportunities. Over recent years, house values have seen a significant increase of nearly 45%, outpacing the adjustments in land taxes and rental incomes, which have grown by around 30%. This growth indicates a resilient and expanding market, underscoring the potential for property investments to yield robust returns. Land tax, a state-imposed levy based on the value of land holdings, is designed with a marginal rate system. This approach aims to maintain a fair and equitable tax distribution, with the majority of primary residences exempt from this tax. For property investors, the costs associated with land tax are partially offset by income tax deductions, ensuring that the federal government assists in subsidising part of the expense. In response to the need for fiscal adjustments post-COVID, Victoria has introduced a temporary adjustment to the land tax threshold. This change is part of a broader Debt Repayment Plan, aiming to stabilise the state's economy and ensure long-term prosperity. Despite these adjustments, Victoria remains an attractive destination for property investment, with the state's vibrant market dynamics and long-term growth prospects. It's also worth noting that the majority of property investors, including many first-time 'mum and dad' investors, continue to navigate the market successfully. While the new tax measures introduce considerations for investors, the potential for capital growth and rental income remains strong, particularly for those with strategic investments and diversified portfolios. For investors concerned about the land tax adjustments, get in touch with one of the CRE sales team members to talk about how you navigate the changed tax settings best. As Victoria and other states look towards recovery and growth, the property sector is poised to play a key role. The adjustments to land tax are part of broader economic measures aimed at ensuring stability and prosperity for all stakeholders. For prospective and current investors, the Victorian property market continues to offer compelling growth opportunities, underscoring the state's appeal as a prime location for investment. Written by Elli Blanco
Mar 1, 2024
First Home Buyers Loans On the Rise, The Time is Now!
Certainly, there are lots of Real Estate market changes, and with investors offloading their properties the time for first homeowners is here! There's been a significant increase in first-home buyer activity over the past months, based on the latest data from the Australian Bureau of Statistics. There were a total of 9,491 owner-occupier first-home buyer mortgages issued across Australia in December 2023, which was 12.9% higher than the year before. The are lots of options and incentives for those who are trying to get into their first home, we have; Victorian Homebuyer Fund the Victorian Government will use the Victorian Homebuyer Fund to make a financial contribution to the purchase price in exchange for an equivalent share in the property. For example, if you have a 5%* deposit together, the Victorian Government will provide a contribution of up to 25%. That means that you’ll only apply for a mortgage equal to 70% of the value. First Home Owner Grant A $10,000 First Home Owner Grant (FHOG) is available when you buy or build your first new home. Your first new home can be a house, townhouse, apartment, unit or similar. A new home can be a home that has been substantially renovated, or a home built to replace demolished premises. Stamp Duty Waiver Both the duty exemption and the 50% duty reduction are available to first-home buyers when they purchase a new or established property in Victoria with a dutiable value of up to $600,000. The duty concession applies where the dutiable value is more than $600,000 but not more than $750,000. Vacant land can also attract the exemption or concession if you are buying it to build your home. First Home Guarantee The First Home Guarantee (FHBG) is part of the Home Guarantee Scheme (HGS), an Australian Government initiative. It is administered by Housing Australia on behalf of the Australian Government. Under the FHBG, part of an eligible home buyer’s home loan from a Participating Lender is guaranteed by Housing Australia. This enables an eligible home buyer to buy a home with as little as 5% deposit without paying Lenders Mortgage Insurance. For the FHBG, any Guarantee of a home loan is for up to a maximum amount of 15% of the value of the property (as assessed by the Participating Lender). This Guarantee is not a cash payment or a deposit for a home loan. First Home Super Saver Scheme (FHSS) The FHSS scheme allows you to save money for your first home in your super fund. The scheme allows you to make voluntary contributions (both before-tax concessional and after-tax non-concessional) into your super fund to save for your first home. If you meet the eligibility requirements, you can have these voluntary contributions released, up to a limit, (along with associated earnings) to help you purchase your first home. Taking this into consideration and now knowing that we might start seeing some interest rate reductions coming in the next couple of months, the perfect time to buy your first home is now. Make sure you contact your broker or financial advisor to find out what grants and benefits you can take advantage of. If you have any questions or want to know more about market conditions specific to your desired area, reach out to your trusted Real Estate Agent for more information. Written by Elli Blanco
Nov 17, 2023
A Tale of Two Sales Campaigns
We recently had the privilege of managing the sale of two properties, A and B, both nestled in the same location and bearing striking similarities. However, the variation in their sales campaigns highlights the difference in how strategic decisions can affect the outcome. Property A: A Transformative Journey When the owners of Property A expressed their intention to sell, we embarked on a comprehensive evaluation of its condition. Despite having a renter and furnished lease, the property, dating back to its 2005 origins was in its original state. After careful consideration and consultation, the owner opted to vacate the property. This decision paved the way for a transformative process, including painting, new carpet installation, and strategic staging. The property was then listed on major real estate websites like Domain and REA. The results were impressive - a successful campaign that culminated in a sale above the asking price within just two weeks of launching. The proactive approach to presentation and accessibility proved instrumental in attracting potential buyers. Property B: Lessons Learned On the flip side, Property B, also occupied by a renter, opted to proceed with the sale with the renter still in place. This decision, while financially practical, presents challenges. The renter, though tidy, had configured one bedroom as a home office. Prospective buyers struggled to envision it as a bedroom, often referring to it as a studio. This limitation, connected with access issues, and the actual tenancy length, impacted the property's market appeal. After a period on the market with lukewarm interest, a decision was made to serve the renter a notice to vacate. Subsequent improvements, including painting and carpet replacement, were undertaken to enhance the property's overall presentation. Navigating the Tenancy Dilemma We acknowledge the financial implications of keeping a property empty and understand why some owners opt to sell with a renter in place. However, this decision can present challenges ranging from cleanliness and presentation to access issues. In certain cases, the tenancy agreement itself can shape the success or failure of a sales campaign. Property owners must recognize the potential impact on the sales price, as a poorly presented property may signal desperation, attracting lower-than-desired offers. If you find yourself at the crossroads of deciding whether to sell with or without a renter, consider seeking advice from our team. Our insights will prove invaluable in tailoring a strategy that aligns with your specific circumstances, ensuring a successful and lucrative sale. Written by Elli Blanco
Nov 3, 2023
Have you heard of Passive House?
Australia is witnessing a surge in sustainable construction practices, and leading the charge is C Street Projects with their groundbreaking development, Echo, in Hawthorn. Echo promises not just a modern luxury but also a commitment to a sustainable, energy-efficient future for its residents. At its core is the internationally acclaimed concept of Passive House construction, a game-changer in energy-efficient building. So what is Passive House? Originating in Germany, Passive House construction is gaining global recognition for its energy-saving potential. Now, Australia is embracing this approach, and C Street Projects is at the forefront with their Echo development. Passive Houses set a new standard for Australian construction, showcasing the synergy between luxury living and environmental responsibility. Here are some of the key features: Energy Efficiency: The design significantly reduces energy consumption through insulation, airtight building envelopes, and energy recovery ventilation. Superior Comfort: Residents enjoy consistent indoor comfort year-round with minimised temperature fluctuations and excellent air quality. Sustainability: Eco-friendly materials and energy-efficient systems minimise the project's carbon footprint. Financial Savings: The design leads to cost savings on energy bills, making it an appealing financial choice for residents. As the popularity of Passive House construction grows in Australia, we can expect more projects like Echo to transform our cities. These developments offer both luxurious living and sustainability, improving residents' quality of life and contributing to a greener, more energy-efficient future. If you're curious to experience the Echo project firsthand, don’t hesitate to contact me to arrange a tour and see the future of sustainable living for yourself. Written by Peter Hannon Partner & Auctioneer
Aug 11, 2023
NIMBY - NIYBY - NIABY
Earlier this week, our team had an impromptu debate about the impact of a new “Sobering Up Centre” to be opened down the street from our Collingwood offices. The area is gentrifying - rapidly. Helped along by one developer in particular, who just happens to have a luxury “mansions” development in the works directly across the road from the new Sobering Up Centre. Questions and opinions bounced around the room. Will the centre have a negative impact on property values? Is this the right place for a Sobering Up Centre? What is a Sobering Up Centre? I don’t know about you, but I hadn’t heard the term NIMBY until fairly recently and candidly, I quite like it. The first time I saw it written, I was mystified as to what was meant. It was used in the context of the current (permanent, really) housing shortage and referenced the perceived double standards of a certain Queensland MP in opposing developments within his home suburb whilst simultaneously calling for more development elsewhere. This somewhat paradoxical ideology is not entirely uncommon when it comes to matters that are literally and metaphorically “close to home”. It is, however, entirely problematic for resolving some of the bigger societal issues critical to functioning modern cities. We can see this thinking evidenced in attitudes toward renewable energy infrastructure. People might advocate for green energy and acknowledge the climate crisis yet oppose the construction of wind turbines or solar farms in their local community, fearing decreased property values or degradation of scenic views. Similarly, public transportation is, at least notionally, uniformly considered by the community as an eco-friendly and traffic-reducing solution. Still, many residents are prone to oppose the construction of a new rail line or bus route near their home, citing concerns about noise, property value, or crime. I go to a gym in the city and discovered early on Monday morning that an entire row of car parks across the road from the gym had been lost to an expanded bike lane…I was outraged! Yet, at dinner parties, will extol with great gusto that “they’ve got it right in Amsterdam”... just to be clear, I mean the bikes. And by “dinner parties”, I mean eating dinner with my wife and kids in our kitchen. Affordable housing, crisis accommodation and homeless “shelters” fall into the same category. Though we recognise the grave issues that necessitate these types of accommodations, when proposals arise to build low-income housing developments in certain neighbourhoods, residents tend to rail against them, fearing it will impact property values or change the character of their community. Likewise, proposals to build shelters or transitional housing are frequently opposed due to worries about increased crime and safety concerns. Our local council recently declared itself a “nuclear-free zone”, which I’m sure is a relief to residents that feared the construction of an AUKUS submarine repair facility on Sydney Road. However, within the energy sector, nuclear is very much back on the table for experts that realise a “clean and green” transition to a sustainable renewable energy future is going to prove challenging without alternative options. If there’s one thing Australians like less in their suburb than wind turbines, level-crossings, bike lanes, homeless people and drunks, it's anything nuclear. We’re all NIABYs when it comes to nukes! The problem remains; we need all of the above, at least some version of them. So, if not here - then where? I’m lucky enough to own property very close to the proposed Sobering Up Centre, and I’m fine with it. If that means someone is less of a danger to themselves and the public - that’s good, right? There are things on the list above that I’d be less cool about opening up on my street, but and it’s a big BUT, we’re all going to have to be OK with some of this stuff in our “hoods” if we’re going to keep enjoying living in this pretty great society, we’re lucky enough to live in.
Aug 4, 2023
Selling your investment property while tenanted?
As a landlord in Victoria, you may be feeling the pressure of recent interest rate increases, prompting you to consider selling your investment property and exploring other opportunities. If you find yourself in this position, it's important to be aware of the challenges and potential pitfalls associated with selling a property while it is still occupied by a tenant. Current laws in Victoria stipulate that the tenant must be given proper notice of the intention to sell the property. This notice can be provided at any time during the lease, whether it is a fixed-term or month-to-month agreement. It's crucial to remember that the tenant has the right to give only two weeks' notice to vacate the property without any penalties. Additionally, you are required to give the tenant at least 24 hours' notice of entry prior to any marketing activities, such as taking photos or creating floor plans. Please note that such activities should be conducted between 8 am and 6 pm, and the tenant may object to having their belongings photographed, which could present an issue during the sales process. During the sales campaign, the tenant is entitled to compensation for half a day's rent or $30, whichever is greater, for each open house inspection. However, sales agents are limited to conducting only two open house inspections per week. One of the challenges in selling a tenanted property is the condition in which the tenant maintains it during the sales process. According to the law, tenants are not required to make any special effort or incur expenses to enhance the property's appeal to prospective buyers. They are only obligated to maintain the premises in a “reasonably” clean condition. The presentation of the property may vary depending on how organised and tidy the tenant is. Although there are financial challenges of not having a tenant in place during a sales campaign, it remains more cost-effective than selling a property in poor condition, considering the adverse effect it would have on the sale price. To avoid such a scenario, I recommend that your sales agent visits the property and discusses the sales process with the tenant. This is to see if the property will be presentable for a sales campaign and if the tenant is willing to cooperate. Surprisingly, many tenants are more than willing to assist in making the process as seamless as possible. Offering a small financial incentive to the tenant can go a long way in fostering cooperation. Remember, a well-presented and cooperative property can yield better results in terms of sale price and overall buyer interest, making the temporary financial sacrifice worthwhile. If you have any further questions or concerns, please do not hesitate to reach out to me or your real estate agent for guidance and support throughout the selling process. Written by Elli Blanco
Jul 7, 2023
Methods of Sale - Maximising Efficiency and Effectiveness
In this article we're going to delve into the exciting world of buying and selling, but don't worry, we're keeping it short and sweet. We're going to explore the differences between three common methods - auctions, private sales, and expressions of interest. So grab a comfy seat and let's get chatting! First up, auctions! Picture this - a room filled with enthusiastic bidders, an auctioneer with a rapid-fire cadence (check out our newest auction video on our socials), and that unmistakable thrill in the air. Auctions are like a rollercoaster ride of emotions, where properties go to the highest bidder. It's an adrenaline-fueled battle to secure that prized possession. Whether it's a house, artwork, or even a briefly seen storage locker (have you seen storage wars?!), auctions offer a dynamic and fast-paced experience. One key advantage of an auction is transparency. The bidding process is open for all to see, eliminating any doubts about fairness. Plus, the competitive nature can drive up prices, potentially leading to a higher sale value. However, auctions can also be nerve-wracking. If you're not a fan of public pressure or the intensity of bidding wars, you might want to explore other options, which we will discuss. Next, let's talk about private sales. Ah, the more laid-back alternative. Private sales are like a cosy fireside chat between the buyer and seller, without the crowd and excitement of an auction. This method typically involves direct negotiations and a more personal touch. With private sales, buyers have the opportunity to negotiate prices, terms, and conditions directly with the seller. It's a more relaxed atmosphere where you can take your time to discuss and evaluate the property without feeling rushed. Plus, you may avoid the potential stress of competing against other buyers. However, it's important to note that private sales may lack the transparency of an auction, as negotiations happen behind closed doors. When the main demographic of potential buyers for a property requires certain conditions to make an offer, such as first home buyers who often need their offer to be subject to finance, the Private Sale method is often the best option. This allows for greater flexibility and accommodates the specific needs of these buyers, ensuring a higher likelihood of a successful sale. Last but not least, we have expressions of interest. Think of it as a mix between an auction and a private sale. Expressions of interest involve potential buyers submitting their offers or proposals within a specified timeframe. The seller then reviews the submissions and decides which offer to accept. This method allows buyers to make their best offer without the pressure of an auction. It also provides a level playing field for all interested parties. However, unlike private sales, you don't get the chance to negotiate directly with the seller. Instead, you must put your best foot forward in your initial submission. So there you have it, a simple breakdown of the differences between auctions, private sales, and expressions of interest. Each method offers a unique experience, catering to different preferences and circumstances. Whether you're a thrill-seeker, a fan of one-on-one negotiations, or someone who enjoys a balanced approach, there's a method that suits you. Remember, the agent will advise what works best for you and your specific buying or selling needs. So take your time, consider your options with the agent, and embark on your journey armed with the knowledge of these different approaches. Happy bidding, negotiating, or submitting offers, and may your transactions be smooth sailing! Written by Jess Wilking