Report:
THE dearth of investment sales of assets of more than $100 million has left values languishing as vendors and buyers fail to reach agreement on prices.
But that may be the least of their worries. There are predictions that values could drop by up to 30 per cent in the coming 12 months.
Investment Property Databank says in a report that Australian commercial property returns were unchanged from the preceding quarter, earning investors 1.1 per cent in the September quarter. This is the lowest total return since March 1995.
Capital values at the All Property level slid -0.5 per cent. The mixed use and other properties category was the worst, values on a quarterly basis falling -1.1 per cent, while office capital values slid -0.6 per cent.
John Garimort, managing director in Australia of Investment Property Databank, said All Property total returns were unchanged largely because there had been a dearth of transactions.
"However, there is in excess of $20 billion of commercial real estate for sale, and once the expectations of buyers and sellers converge, we expect values to fall substantially.
Sunday, November 30, 2008
Your Home Is Your Best Investment
Report:
Without a doubt - without any question in my mind - the best investment you will make in your lifetime is the home you buy and live in. As long as you are alive, you have to live somewhere. And if the recent downturn in the stock market proves anything, it's that housing is your best investment. Why? First of all, you can't live in a stock, mutual fund, bond, treasury, money market account, etc.
"When you buy a home, you get to live in it! Your home is your castle. It's where you love and live with your family - it's where your memories are made. Homes are much more than investments, they are your shelter and your safety. But if you return to why homes make great investments, the simple answer is that they are forced savings (when you pay your mortgage you pay down your home), they ultimately are leverage and they go up in value long-term. I promise you a decade from now, most housing markets will be higher than where they are today."
I cannot agree with Bach more! One of the fundamental basics behind investing in anything is "buy low, sell high."
Here we are: a time when prices have stayed relatively stable and interest rates are historically low. As I write this today, owner-occupied interest rates for a 30-year loan are hovering around 5.5 percent. This is a wonderful opportunity to buy a new home, whether you are ready to move up, downsize or buy an investment property.
Unlike a stock or bond, a home is a tangible asset. Years from now, everyone will look back and say, "I wish I would have bought back in 2008 or 2009." You can make that wish a reality.
Without a doubt - without any question in my mind - the best investment you will make in your lifetime is the home you buy and live in. As long as you are alive, you have to live somewhere. And if the recent downturn in the stock market proves anything, it's that housing is your best investment. Why? First of all, you can't live in a stock, mutual fund, bond, treasury, money market account, etc.
"When you buy a home, you get to live in it! Your home is your castle. It's where you love and live with your family - it's where your memories are made. Homes are much more than investments, they are your shelter and your safety. But if you return to why homes make great investments, the simple answer is that they are forced savings (when you pay your mortgage you pay down your home), they ultimately are leverage and they go up in value long-term. I promise you a decade from now, most housing markets will be higher than where they are today."
I cannot agree with Bach more! One of the fundamental basics behind investing in anything is "buy low, sell high."
Here we are: a time when prices have stayed relatively stable and interest rates are historically low. As I write this today, owner-occupied interest rates for a 30-year loan are hovering around 5.5 percent. This is a wonderful opportunity to buy a new home, whether you are ready to move up, downsize or buy an investment property.
Unlike a stock or bond, a home is a tangible asset. Years from now, everyone will look back and say, "I wish I would have bought back in 2008 or 2009." You can make that wish a reality.
Australian Investment Property
Report:
VICTORIA'S property market has taken a turn for the worse with almost half the homes auctioned on the weekend being passed in.
With 420 of the 865 houses on offer over the weekend not selling, it was the worst auction week for four years.
On the up side, some buyers snapped up bargains and dictated the settlement terms.
REIV chief executive Enzo Raimondo said the economic downturn was expected to hurt house sales into the new year.
"We can't see any huge increase in clearance rate between now and the end of this selling season," Mr Raimondo said.
"If there is one positive out of this market it is that buyers with the capacity to buy or borrow can secure a home or investment property at a price they wouldn't have got last year.
"If we get some more interest rate cuts, perhaps in the first quarter of next year we might see some improvement," Mr Raimondo added.
VICTORIA'S property market has taken a turn for the worse with almost half the homes auctioned on the weekend being passed in.
With 420 of the 865 houses on offer over the weekend not selling, it was the worst auction week for four years.
On the up side, some buyers snapped up bargains and dictated the settlement terms.
REIV chief executive Enzo Raimondo said the economic downturn was expected to hurt house sales into the new year.
"We can't see any huge increase in clearance rate between now and the end of this selling season," Mr Raimondo said.
"If there is one positive out of this market it is that buyers with the capacity to buy or borrow can secure a home or investment property at a price they wouldn't have got last year.
"If we get some more interest rate cuts, perhaps in the first quarter of next year we might see some improvement," Mr Raimondo added.
Investment Property In UK
Report:
British banks have underlined the need for a swift solution to the UK’s mortgage problems by reporting a low rate of home loan approvals.
The British Bankers’ Association released statistics showing October’s mortgage rates were lower than the average for the last six months.
The availability of investment property loans has suffered as a lack of liquidity prevents the UK’s main lenders from approving new deals.
However, officials pointed out that ‘high street’ banks were still providing two-thirds of all mortgages and said new measures could help availability.
BBA statistics director David Dooks said banks had increased lending to non financial firms and had bolstered financial intermediaries.
Mr Dooks said:
“That support, together with lower interest rates, will feed through to lending and the pre-budget report measures will help consumer demand.
“Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now.”
He said there was currently a “reduced appetite” for borrowing and consumer credit was still “subdued”.
British banks have underlined the need for a swift solution to the UK’s mortgage problems by reporting a low rate of home loan approvals.
The British Bankers’ Association released statistics showing October’s mortgage rates were lower than the average for the last six months.
The availability of investment property loans has suffered as a lack of liquidity prevents the UK’s main lenders from approving new deals.
However, officials pointed out that ‘high street’ banks were still providing two-thirds of all mortgages and said new measures could help availability.
BBA statistics director David Dooks said banks had increased lending to non financial firms and had bolstered financial intermediaries.
Mr Dooks said:
“That support, together with lower interest rates, will feed through to lending and the pre-budget report measures will help consumer demand.
“Comparison of current lending levels with last year is obscured by the very different economic conditions that exist now.”
He said there was currently a “reduced appetite” for borrowing and consumer credit was still “subdued”.
Investment Property In Dubai
A view from the UK:
Dubai investment property developers must delay requests for payments from buyers in order to stabilise the region’s real estate market, a consultancy firm has claimed.
RichVille released a fourth quarter report on the emirate’s property market and included a suggested rescue plan to prevent a potential collapse.
Some developers also criticised the government of Dubai for not doing enough to help out the sector.
Officials must work with builders to work out how to stimulate demand, the RichVille report claims.
Tariq Ramadan, chairman of Tharaa Holding, of which RichVille is a member, said;
“It is very interesting to see that while the authorities around the world are taking all possible measures to revive their real estate markets, authorities in Dubai seem to be doing nothing to support the real estate sector.”
Dubai investment property developers must delay requests for payments from buyers in order to stabilise the region’s real estate market, a consultancy firm has claimed.
RichVille released a fourth quarter report on the emirate’s property market and included a suggested rescue plan to prevent a potential collapse.
Some developers also criticised the government of Dubai for not doing enough to help out the sector.
Officials must work with builders to work out how to stimulate demand, the RichVille report claims.
Tariq Ramadan, chairman of Tharaa Holding, of which RichVille is a member, said;
“It is very interesting to see that while the authorities around the world are taking all possible measures to revive their real estate markets, authorities in Dubai seem to be doing nothing to support the real estate sector.”
Investment Property Down Under
From the Sydney Morning Herald:
DIRECT property returns continue to tumble across Europe, and rental contraction in the office and industrial sectors in Britain is adding to property market woes, the Investment Property Databank survey has found.
In its British monthly results to last month IPD's index showed all property total returns fell to minus 3.8 per cent.
Last month's results were more negative than those for last December, making it the weakest month on record. Commercial property capital values in Britain have plummeted by the largest monthly figure in IPD's 22-year history, minus 4.3 per cent.
This is more bad news for the Australian real estate investment trusts with exposure to British and European property markets.
Jonathan Kriska, an analyst at the financial services company Patersons, said the latest International Monetary Fund report forecast global growth to slow from 5 per cent last year to 2 per cent next year.
He said several Australian REITs had large exposures to European property.
DIRECT property returns continue to tumble across Europe, and rental contraction in the office and industrial sectors in Britain is adding to property market woes, the Investment Property Databank survey has found.
In its British monthly results to last month IPD's index showed all property total returns fell to minus 3.8 per cent.
Last month's results were more negative than those for last December, making it the weakest month on record. Commercial property capital values in Britain have plummeted by the largest monthly figure in IPD's 22-year history, minus 4.3 per cent.
This is more bad news for the Australian real estate investment trusts with exposure to British and European property markets.
Jonathan Kriska, an analyst at the financial services company Patersons, said the latest International Monetary Fund report forecast global growth to slow from 5 per cent last year to 2 per cent next year.
He said several Australian REITs had large exposures to European property.
Plunging Interest Rates
From the Washington Post:
Several readers complained that policy changes by Fannie Mae and Freddie Mac are limiting investors' ability to buy more of the surplus housing inventory.
Richard Moroscak Jr., a vice president with OlympiaWest mortgage in Lansdowne, wrote: "I get a call once a day from borrowers who are interested in purchasing an investment property. They have 780 credit scores, full documentation, cash for a 30 percent down payment or more, great assets besides real estate, etc. In other words, they're the perfect borrower in most lenders' eyes. But if they own more than four properties they do not qualify to purchase another investment property. Investors tend to own multiple properties.
"If they take a short-term hard-money loan, which is insane, they generally cannot refinance out of them. The result is foreclosure unless they find another hard-money loan. Investors are on the prowl, but in my humble opinion, the market would stabilize much quicker if they actually had access to cash."
A column about the risks to consumers' deposits if someone they're doing business with files for bankruptcy drew hard-earned advice from one reader.
"This happened to me, and I should know better because I used to be a lawyer who did a lot of debtor-creditor and bankruptcy work," said Ellen Paul of Chevy Chase.
"I wrote to my state legislators to suggest legislation that would require companies that take advance payment or deposits to be bonded for an amount reflecting the amount of deposits or pre-payments they held over the previous year. That way, we unsecured creditors would actually get our money back."
Several readers complained that policy changes by Fannie Mae and Freddie Mac are limiting investors' ability to buy more of the surplus housing inventory.
Richard Moroscak Jr., a vice president with OlympiaWest mortgage in Lansdowne, wrote: "I get a call once a day from borrowers who are interested in purchasing an investment property. They have 780 credit scores, full documentation, cash for a 30 percent down payment or more, great assets besides real estate, etc. In other words, they're the perfect borrower in most lenders' eyes. But if they own more than four properties they do not qualify to purchase another investment property. Investors tend to own multiple properties.
"If they take a short-term hard-money loan, which is insane, they generally cannot refinance out of them. The result is foreclosure unless they find another hard-money loan. Investors are on the prowl, but in my humble opinion, the market would stabilize much quicker if they actually had access to cash."
A column about the risks to consumers' deposits if someone they're doing business with files for bankruptcy drew hard-earned advice from one reader.
"This happened to me, and I should know better because I used to be a lawyer who did a lot of debtor-creditor and bankruptcy work," said Ellen Paul of Chevy Chase.
"I wrote to my state legislators to suggest legislation that would require companies that take advance payment or deposits to be bonded for an amount reflecting the amount of deposits or pre-payments they held over the previous year. That way, we unsecured creditors would actually get our money back."
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