KY Accountancy

Stamp duty exemption boosts first-home buyer loan activity in NSW, Victoria

By Gerv Tacadena

The stamp duty exemption introduced in New South Wales and Victoria might be responsible the strong growth in first-home buyer activity last year.
According to the QBE Australian Housing Outlook Update 2018, first-home buyer loan activity in New South Wales and Victoria jumped by 34.4% and 16.3%, respectively. State governments introduced stamp duty exemptions in July 2017 for properties below $650,000.

However, first-home buyer activity increased the most in Australian Capital Territory with a 35.9% growth. All other states, except Tasmania, recorded an improvement in first-home buyer activity.

"As a result of the tightened investor lending controls, investors have reduced buying power and are less able to outbid first home buyers, with both parties typically competing for the more affordable properties with attractive yields," QBE said.

Meanwhile, loan approvals to non-first home buyers have been relatively muted, especially in the last quarter of 2017.

Check out the table below to see how active first-home buyers, regular buyers, and investors in the past year.

Your labor is your contribution to the miracle. Elizabeth Gilbert

Rooftop solar sector to face inquiry after reports of dodgy practices Top business news for you selected by KY

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Say goodbye debt (and hello home loan) in seven straightforward steps

It’s all too easy to rack up debt – credit cards, HECS, car loans – and may seem all too hard to pay it off. Debt can also have a big impact on how much money you can borrow for a home loan, so reducing your debt is essential when you set out to buy your first home.

Here are seven steps you can take towards minimising your debt and moving into the property market.

1. Work out how much you’re spending
Create a spreadsheet and track your expenses for a month – record everything so you can see where your money is going. You may be spending much more than you think on some things – more than you can really afford.

2. Decide where you can cut back
With a clear idea of how much you spend each month, you can figure out how much you really need to spend, and where you can cut back. That second coffee every day could be costing you $20 a week – that’s $1,000 a year. Buying your lunch rather than bringing it could cost you $2,500 a year. Buying one less bottle of w**e a week could save you another $1,200 a year. With a bit of commitment, you can rein in your spending and have more money to repay debt.

3. Make a budget
The only way to get on top of your credit cards is to stop using them. Make a budget for the money you need to spend each week or fortnight, based on how much money is coming in and what your necessary expenses are, and stick to it.

Calculate how much is left over after you’ve paid for the necessities, then figure out how much you want for discretionary spending and how much you can put towards repaying debt. Also, put money into a contingency fund to cover unexpected expenses such as car repairs that could bust your budget and cause you to reach for the credit card.

4. Prioritise your debt
Work out how much money you actually owe on credit cards and loans – you may not realise how much it is. When you know how much debt you’re in, you can think more realistically about repaying it.

You need to pay at least the minimum amount due on all credit cards each month to avoid going backwards and in some cases being charged fees and penalties. But by paying only the minimum, you may never get the cards paid off; you need to pay more to make progress.

Consider:

paying high interest credit cards and loans first to save on interest
paying smaller debts first to give you the sense that you’re getting ahead, and that paying off debt is possible.
5. Make a repayment plan
Armed with your budget and having worked out your debt priorities, you can plan which debts you will pay off over what period of time. Having a plan will increase your sense of control over your debt; sticking to it will increase your sense of achievement.

6. Set goals and celebrate them
The thought of paying off all your debt may seem daunting, so breaking it down into milestones will help you see the way ahead. Set goals such as paying off 10%, then paying off 25% and so on.

Remember to celebrate each time you reach a milestone – buy yourself lunch or go to a movie as a small reward for your achievement.

7. Stick to the plan – and ride out the setbacks
Keep going with your repayment plan. If you miss a payment because of an unforeseen expense, stay positive. Avoid feeling demoralised or derailed by looking forward to the next debt milestone – you can get there.

We did not come to fear the future. We came here to shape it. Barack Obama

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Treat your investment property like a business and your tenants like clients

It’s important to look after the tenants in your investment property – it encourages them to stay long term and take care of your property. So how can you keep your tenants happy? By treating your property like a business and your tenants like valued customers.

The tenant as customer

The rental market in most Australian cities is tight, with plenty of renters looking for accommodation. But that doesn’t mean you have your tenants over a barrel. They pay good money to rent a property and in return they expect a clean, safe and well-maintained place to live.

If you can keep your property in good order and your current tenants satisfied, you’ll save yourself the time and money it takes to find new tenants. Many businesses run on the idea that it costs far more to acquire a new customer than it does to retain an existing one and if you’re one to agree with this, the same principle should be applied to your tenants.

Reputation counts

Word of mouth is important in business. These days, business reviews – both good and bad – are shared widely on the internet and social media. There are even websites dedicated to reviews of dodgy landlords, and you don’t want to appear on them – that’s the kind of online exposure no business wants.

Know the law – and respect it

Residential tenants have legal rights. These differ from state to state, but it’s vital for you as a business operator (landlord) to know and respect the law if you want to maintain good relations with your customers (tenants). Make sure to seek professional legal advice if you need more information.

Residential tenancy laws in Australia cover many aspects of tenancy including:

when and how the landlord can access the property
who’s responsible for repairs and maintenance
when and how each party can give notice to vacate a property
how to introduce rent increases
how bonds and security deposits should be handled.


Customer service 101

Because your tenants are your customers, the regular principles of customer service apply:

First impressions count. Make sure your relationship starts on the right foot.
Respond to your tenants’ needs. Listen actively and seek workable solutions to any problems.
Make yourself available and ensure your property manager has provided the appropriate
contact information should any issues arise
Respond to requests for repairs in a timely way. Urgent repairs may require quicker response times.
Treat your tenants the way you would want to be treated.
Keep in mind that people remember how you make them feel and may base their actions towards you (and your property) on those feelings.

When you approach your tenants as customers and treat them with respect, there’s a good chance they’ll respond in kind. This can lead to longer tenancies and a reduced vacancy rate – which means more money in your pocket.

Learn to sell. Learn to build. If you can do both, you will be unstoppable. Naval Ravikant

A big decision is due today in the Clive Palmer vs WA border row — here's why it matters Top business news for you selected by KY

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Experts weigh in on the fate of housing market

By Gerv Tacadena 28 MAY 2018

While major cities have already started showing signs of a downturn, the extent that the overall housing market will decline is something experts and market watchers have yet to agree on.

In a piece on the Digital Finance Analytics (DFA), industry watcher Martin North said more industry players are predicting a slowdown in the housing market and this is saying something.

"More are going negative. And when the largest lender in Australia signals they expect a fall, even mild, this is significant," he said.

Recently, the Commonwealth Bank of Australia (CBA) predicted the market to experience a price deflation over the next 18 monthsprimarily due to the waning markets of Sydney and Melbourne, the country's two biggest housing markets.

"Some further dwelling price deflation looks probable in 2019 and we see the peak to trough being around 10% in Sydney and a little less in Melbourne," the bank noted. It did say, however, that a hard landing was not likely.

In a report for the Business Insider Australia, Morgan Stanley said property prices could go down by as much as 8% this year and lending activity by over a third.

“Our central expectation is that this slowing is orderly, but we still expect this to continue weighing on sentiment and consumption through 2018 and 2019 as wealth effects partially reverse," Morgan Stanley said.

For author and economist Harry Dent, the worse is yet to come for the property market, and prices could fall even further.

“Your problem is you’ve got the second highest real estate costs compared to income in the world. I see Australia as the best house in a bad neighbourhood, but you can’t escape a global crisis," he said, as quoted by DFA.

Dent said the real estate bubble is like "a popcorn popper with different markets frothing over and peaking at different times, but all will burst ultimately."
He added: "I think this time, your real estate will come back 20, 30, 40, 50 per cent. That’s good. When young people have to pay 12 times their incomes for a house, that’s not good, so this is where the reset needs to come. I think you will have a recession this time.”