Luxury Real Estate for Sale Around the World

At the forefront of luxury real estate marketing, the proud the recipients of two awards from the esteemed Who’s Who in Luxury Real Estate The World’s Most Outstanding Luxury Agency Under 2 Years Old (Outstanding Rookie 2008) and Best Luxury Real Estate Brand (2009), Marquette Turner Luxury Homes is the home for your property search including luxury homes, resorts, developments, apartments, condos, villas, mansions, penthouses and islands throughout the world.

We focus on assisting high-net-worth individuals to achieve the most appropriate exposure in marketing their luxury properties via the luxury lifestyle magazine-style website MarquetteTurner.com and in assisting aspirational investors find their ideal property.

We have forged partnerships with developers, real estate agents and vendors throughout the world and are proud to present to you an exceptional showcase luxury homes for sale or rent throughout the world.

Thursday, November 13, 2008

Tuesday, March 11, 2008

The Little Black Book of Scams

The ACCC has just released a brand new edition of its very popular The little black book of scams.

The little black book of scams highlights a variety of popular scams that regularly target Australian consumers and small business in areas such as fake lotteries, internet shopping, mobile phones, online banking, employment and investment opportunities. It also offers consumers tips on how to protect themselves from scams, what they can do to minimise damage if they do get scammed and how they can report a scam.

Scams do not discriminate; they target people of all backgrounds, ages and income levels. There is a scam out there for everyone. The little black book of scams has been designed to be appealing and accessible to a broad range of people–younger people; older people; families; and business people alike. It is colourful and engaging and the information is clearly set out so you can find what you are looking for.

Stay one step ahead of the scammers. Read The little black book of scams get the low-down on scams which target you! You can also check out Scamwatch

You can download a free pdf of The little black book of scams clicking on the link.

DOWNLOAD HERE

Love That Place: Social Networking meets Real Estate

Love That Place, which just launched earlier this month, is a social network designed to let users search, discuss, rate and register interest in property, whether it's for sale or not.

Property owners begin by creating a page and uploading photos of their place—simply to gather feedback and advice, or to test the market and see what other people think. Members of the site can leave comments or send private messages (forums are coming soon), and admirers of a particular property can even send a virtual "door-knock" to see if the owner would consider selling.

If the owner is interested, the two parties can negotiate privately or through a facilitated process with an agent. Both casual users and serious investors and developers can use Love That Place, with services tailored accordingly. Membership options range from a free, standard option that covers listing up to 3 properties, all the way up to a "property guru" level that's AUD 249 per year for up to 300 properties.

Love That Place is definitely more of a social network than the other real estate 3.0 sites we've covered, with its features for conversation and networking. But the basic premise is the same: Even property owners who aren't actively trying to sell their homes can often be convinced to sell when the offer is right. It's a matter of facilitating intentions, and it's a new approach to selling property around the globe. Those in real estate: Don't delay too long!

Website: www.lovethatplace.com.au

Australian's Repossessed: Foreclosures on the Rise

Foreclosures in New South Wales set to rise to a record this year after the central bank increased rates twice in the past two months to a 12-year high.

Banks are in the middle of their third mortgage rate increase this year and that's pushing more Australian families out of their homes.

Mortgage payments are increasing at least 2 1/2 times faster than household incomes. Lenders including Commonwealth of Australia Bank Ltd. and National Australia Bank Ltd., the nation's biggest, have raised loan rates three times this year, boosting the average monthly mortgage payment by more than the average annual increase in wages.

We're only now really starting to see a situation where defaults arise because people aren't able to meet their payments.

The Reserve Bank of Australia last week increased its benchmark borrowing cost for the fourth time in seven months to 7.25 percent to cool inflation that grew at its fastest pace in 16 years in the fourth quarter.

Banks are charging more as the global credit crunch raises funding costs after investors fled debt markets, as fewer residential mortgages are being granted after funding costs are increasing in the wake of the U.S. subprime market's collapse.

Global financial turbulence and the peculiar exposure of the Australian financial system which is heavily dependent on foreign markets for funding, and this leads to the banks having to charge more.

A situation in Sydney's West recently saw one mortgage holder owed A$600,000 and received bids of no more than A$330,000 when his property went to auction.The seller had previously refinanced, adding more debt to the A$475,000 or so he borrowed to buy the house. Some people are just walking away from their properties: the equity's halved in many cases.

Housing affordability dropped to the lowest in at least 33 years in December, as average disposable incomes stayed below the amount needed to qualify for the median home loan for the fifth- straight quarter, according to an index compiled by the Housing Industry Association and the Commonwealth Bank.

Repossessions in New South Wales rose 1.6 percent to 5,454 last year, according to figures from the state's Supreme Court. Victorian repossessions increased to 2,720 in the year to June 30 and have tripled in the past four years, according to the state government.

The actual number of mortgage defaults may be four times the repossession figures, which only include seizures and sales approved by the Supreme Courts of New South Wales and Victoria.

Rising borrowing costs are pushing more families into housing stress, with some 1.1 million Australians paying more than 30 percent of their income in rent or home-loan costs. In fact, Australians are paying the second-highest mortgage rates in the developed world.

Simon Turner simon@marquetteturner.com.au

Layman's Terms: Low Doc & No Doc Finance Explained

These types of loans are generally suited to small business & self employed. Specifically these loans have been designed for borrowers who may not be able or do not want to substantiate their income for a variety of reasons.

Lenders of these loans require an applicant to evidence business activity, currently the primary test for most lenders is an ABN for 2 years & GST registration. In the absence of a full set of recent financials other substantiation may include letters from Accountants, BAS statements, proceeds from sale of assets & other business documents to support this business activity status.

There are some lenders operating in this space that do accept a lower set of criteria. Of course it makes more sense for investors to have access to a wider range of lenders, so our advice is to try and conform to the main level of lenders’ expectations.

Another important aspect to these types of loans involves mortgage insurance. In the Australian market today most of these types of loans are insured by a mortgage insurer. Depending upon the specific arrangements between the lender & the mortgage insurer these institutions cover all or part of the lenders risk in the event of a loan defaulting. In some cases the lender will absorb this fee generally up to certain Loan to Value Ratio (LVR) or loan value thresholds.

Relative to the number of products & lenders in the market there are very few mortgage insurers, in fact currently only 2 mortgage insurers dominate the Australian market place. It is these bodies that set many of the parameters, rules & guidelines for the finance industry including lenders at the higher LVR (where mortgage insurance is applicable) end of the finance market. Some of the major elements that are impacted by mortgage insurers include: security type, location (post code), maximum LVR & maximum lending amount.

Obviously these measures are used to minimize the risk & the extent of potential loss. Let’s face it lenders first aspect in lending money is “not to lose any money”. They do this by lending on assets that are not likely to go down in value & to lending to individuals & entities that have the capacity to repay their money!

Simon Turner simon@marquetteturner.com.au


Thursday, March 6, 2008

7 DAYS: a Longtime in Politics, but a Lifetime in Real Estate

Seven days is a long time in politics and a lifetime in real estate. After I wrote last weeks’ article on “The Death of Real Estate As We Know It” we have seen the very public demise of three franchised offices in North West Metropolitan Sydney. The issues were all just a little close to home and I am gob smacked to see how Raine and Horne Corporation have dealt with the situation. If I were a Raine and Horne Franchisee at least I would now be aware of the “process” and “support levels” that I could expect if the worst were to happen. Angus Raine’s comments regarding the collapse should send a shudder down the spine of every Franchisee – it should be a shudder that lasts for hours, maybe days, maybe weeks and for some longer. A shudder that should see smart operators exit the brand sooner than later.


Marquette Turner Directors have been in contact with staff from Raine and Horne in all three offices and the collapse has brought forward the release of our “Marquette Turner Licensee Program”. We have been very loud and clear about the pending disaster that current franchised models are facing and have spent hundreds of hours planning and are now releasing our solution to what is a critical situation. Marquette Turner Corporation is the result of thousands of hours of planning, travelling around the globe as well as around every State and Territory in Australia to see what the real estate world was doing. What were the best bits? What were the worst bits? How can both start-up and current operators maximize their incomes? The old fashioned franchised model just doesn’t maximize incomes for franchisee’s, and certainly doesn't for their Licensed employees. There are limited protections in place which really assist franchisees when the chips are down. I will release the exact detail of our brand new, innovative “Licencee Agreements” in next weeks’ E Mag.

For anyone interested in real estate there will be a information evenings in both Newcastle and Sydney in April, 2007. We will release the exact times of each once suitable venues have been confirmed. We are extremely excited that we have been able to take care of the “cost” of setting up a licensee as once approved by the Board you will not be forced into wasting money on a shop front, getting a receptionist etc. You can work from home (or out of your boot). Our aim is simple – have the best agents possible representing our brand, who are committed to the brand, aren't burdened with huge overheads, continual training and most of all the positive growth of each other. In doing so we are confident of creating many other income producing opportunities for every licensee as we work tirelessly to produce a better and better brand.

What we have seen this week is a shocking display of the failure of what was and still is the typical business model of a real estate office. The scary thing is that there are thousands of offices around Australia which are all set up in the same way and anyone of them may be the next to fall. The inefficient business models that current franchises operate within have taken little except email and word processing from the Information Revolution. The internet has changed the way we live forever but the same people who insist on expensive Newspaper Advertisements (at the vendor’s expense of course) – portraying it as extremely effective in achieving the highest sale price (Studies show that property ads are more effective in getting more business for real estate agents than they are in actually selling properties – National Association of Realtors) are also the people with the biggest stake in keeping things just as they are – inefficient, antiquated . My prediction: We have not seen the tip of the iceberg!

WATCH THIS SPACE!

Michael Marquette michael@marquetteturner.com.au

The Battle for Tenant's (plus some good news)

NEW renters have been locked out of some of Sydney's most sought-after suburbs as real estate agents report that they have no properties for lease. This is certainly the case for Marquette Turner.

It has not been uncommon to see upwards of 50 people competing for properties in the city, inner-west, eastern suburbs and the lower North Shore. Occasionally that figure surpasses 100. There are so few places available that applications are being thrust into agents' hands even when people are dissatisfied with the property on offer. Bidding wars are frequently bumping up asking prices, and keen home hunters are giving three to six months' rent in advance.

The President of the Real Estate Institute of NSW, Steve Martin, said the vacancy rate in Sydney last month was 1.2 per cent, the lowest January figure in at least five years.

"People are literally lining up to inspect rental accommodation," Mr Martin said. "And subsequently what's happening is they are looking at the competition they've got and they are filling out application forms and offering in excess of what the asking rental is just to secure rental accommodation."

The lack of properties is putting the squeeze on potential tenants, literally, with agents forced to separate interested parties into groups so they can fit into small, inner-city apartments. Viewing times are also being extended to cope with the huge demand.

Prospective tenants will be pleased to know that not al hope has gone. Marquette Turner will have available a 2 bedroom apartment in Surry Hills from 10 March.

CLICK HERE to view more

Contact: Michael Marquette

Michael@marquetteturner.com.au

Mobile: 0433 170 170

Wednesday, March 5, 2008

Kylie Minogue Puts French Island Up For Sale

Pop princess Kylie Minogue is selling her holiday house on French Island in South Australia.

The 221 acre property, including a lavishly renovated four-bedroom home is where she sought refuge after breast cancer surgery in 2005.

The four-bedroom property on French Island, a two-hour boat trip from her Melbourne hometown, is expected to go for $2 million Australian ($1.8 million US dollars). She has has spent close to $1 million on the retreat, including planting 1,000 trees.

French Island has no piped water, electricity or gas. It is served by a ferry that runs services to the mainland.

Some Gloom but NOT all Doom: Australia's Outlook

Home buyers have been squeezed by rising property prices and a string of interest rate hikes, and this is having a knock-on effect to tenants too.

So could the property bubble burst? That is now a real possibility. The 0.25 per cent rate rise of this week will push more Australian families into housing stress, and whilst many will cope many will not. This will force many to sell up, many for whatever they can get.

That trend is already evident in the outer suburbs of many Australian cities, particularly Sydney. So property prices, in some suburbs, might well fall further in the months ahead.

Is it all gloomy though? Another rate rise could attract a flood of hot money into this country.
Australia’s interest rates are already substantially higher than those in America, Japan and many other countries.

So foreign investors are likely to find relatively safe, interest only, investments very attractive indeed. This will, once again, strengthen the $A, which will help to ease inflationary pressures in Australia. But this will be relatively slow.
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None of this, though, will help sustain property prices, particularly in the outer suburbs.

One factor might, however, and that is a strong migration program.

Western Australia and Queensland are still keen to attract more migrants. The two big resource States still need many more people to fill the gaps in their workforces. Those shortfalls are restricting development, in those places. But neither New South Wales or Victoria are likely to benefit much from that.

High house prices are already forcing people out of Sydney, and the current slowdown, in the manufacturing sector is likely to limit job opportunities in Victoria and South Australia.

So while the outlook is gloomy for some, it's not all doom.

Simon Turner simon@marquetteturner.com.au

Asian Expats Vote For The World's Most Liveable Cities

Asian expatriates have ranked Singapore as the best place to live in the world for its safe and clean environment, while Europeans chose Copenhagen, a survey showed on Tuesday.

Asian expats chose Singapore over Hong Kong (15th place) and Shanghai (78th place) and placed Sydney, Melbourne and Canberra as well as two Japanese cities Kobe and Yokohama in their top ten list of favourite locations, said ECA International, a human resource consultancy for multinationals.

Lee Quane, general manager of ECA International, said that Singapore’s solid infrastructure, low crime rate and clean air made it a favourable place to live. ‘While Hong Kong has seen an improvement in some categories, such as personal security, air pollution remains the biggest cause for its lower rankings relative to Singapore,’ he said in a statement. Singapore is competing with Hong Kong as a location for banking and financial services.

For locations in China and India, Shanghai and Chennai (138th place out of a total of 300 locations) came in top for Asian expats, said the annual survey.

European expats ranked Copenhagen as their top choice to live in the world. They placed three Swiss cities - Geneva, Basel and Bern - and three German cities - Dusseldorf, Bonn and Munich - in their top ten.

East European cities such as Bratislava and Bucharest have made improvements in this year’s survey because of advances in security, housing and health, the survey said.

European expats rated Bratislava, the capital of Slovakia, as their 20th choice and Romania’s capital of Bucharest in 14th place.

In the Middle East, Manama, the capital of Bahrain, ranked top in the region along with Dubai and Muscat. Baghdad, in last place globally, lost marks for poor security, the survey said.

Top 10 best locations in the world for Asian expats
1. Singapore - Singapore
2. Australia - Sydney
3. Japan - Kobe
4. Australia - Melbourne
5. Denmark - Copenhagen
6. Australia - Canberra
7. Canada - Vancouver
8. Japan - Yokohama
9. New Zealand - Wellington
10. Ireland - Dublin

Source : Business Times - 4 Mar 2008

Sydney: A Tale of Two Cities?

Sydney is home to Australia's sharpest divide between rich and poor.

The harbourside suburb of Milsons Point was rated Australia's most advantaged and Claymore in the south-west the most disadvantaged in a new study by sociologist Scott Baum, based on 2006 Census data. Associate Professor Baum said the study, for Brisbane's Griffith University Urban Research Program, was not just based on real estate prices or household incomes.

It included a number of factors, including participation in the labour market, public housing, whether or not they spoke English well, the number of single parents and the number of elderly people in the suburb who required help on a daily basis.

"It's interesting that Sydney, the most global city and the one that is supposedly pulled along by the global economy, is also the most polarised," Prof Baum said.

"So, in a large sense, you've got this feeling that some suburbs have more in common with places in New York and London than they do with suburbs in their own city. "In Sydney's case, it really is a tale of two cities."

Researchers drew on the Census data to compare and overlay several indicators of disadvantage to come up with a rating, with "band one" being the poorest or most deprived and "band six" the wealthiest or least deprived.

Melbourne was rated the most liveable city, with its worst deprivation in the suburban industrial heartland of Broadmeadows and Sunshine.

East Melbourne and newly-gentrified inner urban areas of Docklands were least disadvantaged.
"While not suffering the extreme polarisation of Sydney, economic spin-offs (in Melbourne) ... don't flow evenly across the metropolitan area," Prof Baum said.

Neither Brisbane nor Perth had a band one area of highest deprivation, but Brisbane's outer suburbs of Inala and Logan Central were rated as band two, along with Perth's Karawara and Crawley.

Thursday, February 28, 2008

The Death of Real Estate As We Know It

Soon household names like LJ Hooker, Ray White, Raine and Horne & Century 21 could be brands of yesteryear.

It is hard to think that companies like “Google” were started in September 1998 – less than 10 years ago. Their initial public offering was in August 2004 – less than 4 years ago. Google is currently ranked number 289 in the Forbes 2000 List. This means that Google is now the 289th largest company in the world with a share price of $US472.86 and market capitalization of over $US200 billion.

Google has done all of this without a shop front, without an office in every suburb, without an advertisement in the Wentworth Courier, Mosman Daily, Newcastle Herald or any other real estate related newspaper in Australia. Yet they are the largest internet search engine in the world and are growing by the day. In the last 12 months Google have grown so much that their company ranking in Forbes Magazine had increased by around 200 spots.

Also have a think about E Bay – have you seen an E Bay store in your suburb? The answer is no and yet this business is now one of the most recognized and fastest growing in the world.

The importance of the shop front has gone. The internet is the new shop front. So where does this leave the local franchised real estate agent? The reality is that the local shop front is under such financial pressure that they are on the brink of extinction – the local shop front is dying. Buyers rarely search in every shop window in every possible suburb they are looking in to find a new home – they search on the internet. They search by suburb name and by price – they are able to define their search criteria online better than ever.

With total spending on real estate advertising in newspapers tipped to decrease by around 18 % annually for the next three years according to the National Association of Realtors the world is evolving rapidly. We are moving to a point where remnants of the past are discarded quicker than many companies can keep up with.

The new shop front is the internet and the new real estate agent franchise is one that can innovate, minimize costs, provide exceptional customer service, reward and incentivise their people like never before and take the lead with a completely new business model.

Real estate agency’s are not keeping up with change, stubbornly sticking to business practices that most other industries have left behind.

Thus, who will “do a Google” by transforming real estate? Whoever it is, it surely is not far off. Watch this space!

Michael Marquette michael@marquetteturner.com.au

Sydney Prestige Property Sales Dive.

Sales of Sydney prestige homes, properties worth more than A$2 million ($1.8 million), slowed more than 35 percent this year, the Australian Financial Review reported.

There have been 190 such properties sold since the start of 2008, compared with 295 in the year-earlier period.

We are, however, expecting the market to pick up as people become more tolerant of, or held hostage to changing market conditions.

Michael Marquette michael@marquetteturner.com.au

Disney Land, Sydney?!

THE Walt Disney Company has been looking at a prime piece of real estate on Sydney Harbour as it seeks to expand its global empire of theme parks and resorts.

The NSW State Government has confirmed that Disney recently held unsolicited discussions with the Department of State and Regional Development about the redevelopment of White Bay, a working port next to the Anzac Bridge.

Disney, which has 11 theme parks, eight resorts and a cruise line across three continents, was one of a number of unnamed companies that have approached the NSW State Government with unsolicited proposals for the site, the spokesman said.

There are no "active" concepts at present.

A spokesman for Walt Disney Parks and Resorts, John Nicoletti, said his company was constantly exploring opportunities to grow. "As part of that process, we have conversations with lots of entities," he said. "And, while Australia is an attractive market, at this time we have no plans for this region."

He would not comment on what Disney had envisioned for the White Bay site, including whether it was for a Disneyland theme park, a Disney resort or some other venture.

The Government has established the Bays Precinct Taskforce to formulate a development strategy for White Bay, Glebe Island, Blackwattle Bay and Rozelle Bay.

Details are expected to be released when the sub-regional strategy for Sydney's inner west goes on display this year.

The executive director of the Sydney Chamber of Commerce, Patricia Forsythe, said a Disneyland at White Bay would be a wonderful opportunity for Sydney. "It is a spectacular site worthy of an iconic development," she said.

She said a world-class arts facility would also be suitable.

Can Cars Destroy Real Estate Values?

Despite the recent pullout of Mitsubishi from Australia, we are not talking here about the demise of the Australian car industry

Ever been to Zermatt, Switzerland? No cars are allowed in the whole town. There are some electric carts and horse carriages. It is absolutely relaxing walking about town with no polluting cars to disturb the tranquility.

Fast forward to Sydney or Melbourne's freeways into the cities. Every morning cars are backed up for km's and even worse at the entrance to the cities. It is not uncommon to take 30 minutes for that dreaded last "k" into town. Once there parking is the next nightmare.

Often a pedestrianised mall is one of the few no-go places for traffic. Water fountains are common, whilst people can sit and relax in cafés and socialise, or just people watch.

It is so blatantly obvious that car free areas thrive and yet it seems that man enslaves him selves to serving the servant of mobility. Wherever piece and quite rules, real estate prospers and people enjoy themselves. A combination that is hard to beat.

Alternative transportation methods, such as a credible train/metro system would allow people to reclaim our towns and make them ours again.

We live in hope!

Simon Turner simon@marquetteturner.com.au

Aspen Real Estate Prices are "Nothing Special"

Aspen Ski Resort in the US sounds expensive just thinking about it. It might look cheap or expensive compared to the budget you have for buying real estate and secondly it might look cheap or expensive compared to other luxury real estate in other US ski resorts.

The first price distinction is a personal matter; it just depends on your budget. If your budget is $US100,000 to buy a vacation apartment, then Aspen will definitely look expensive to you.

But if your budget is $US2 million for a two-bedroom condo and you are comparing it to other luxury resort towns you will find that Aspen prices are not outlandish anymore. Back in the heydays of Aspen becoming a hip place its prices always bordered on the insane. It used to really take a leap of faith to buy.

That is what changed. Aspen apartments in the central core of town range from about $US1,400 to $US1,800 per square foot depending on level of finish, age and location. International real estate prices like London and Dublin have far outpaced Aspen and tourists often go bargain hunting for real estate in Aspen.

As Aspen is fast becoming an international destination resort the weak US Dollar is turning real estate prices into bargain basement levels for a large swath of wealthy individuals. The British Pound is hovering around 2:1 to the Dollar and the Euro is at an all time high nearing 1.50:1 to the Dollar.

Aspen, with its 5,000 single-family homes and 5,000 apartments between them are on an even keel with standard Manhattan Real Estate and we are not talking the Fifth Avenue places that demand prices of up to $6,000 per square foot. Just that fact should ensure that real estate in this little town will do well in the future as Aspen is a special place at currently an “un-special”price.

Posted by Toby Munk on 02/23/2008 at 06:23 PM
Aspen Real Estate

Saturday, February 23, 2008

One Good Real Estate Agent Saves The Life of Another

Canberra real estate agent Cory McPherson has parted with something priceless to save the life of his co-worker Jenny McReynolds. The father-of-two donated a kidney to Mrs McReynolds who was suffering from polycystic kidney disease an inherited condition that can cause renal failure and death.

A mother-of-three, Mrs McReynolds, said "thank you" was thoroughly inadequate to express her gratitude. The real estate agents were professional competitors before they became colleagues at Richard Luton Properties.

Mr McPherson, 35, made the extraordinary offer to Mrs McReynolds at their work Christmas party in 2006. "Richard Luton made an announcement saying 'anyone who doesn't know, Jenny's very sick. "She's got kidney disease and if anyone's o-positive and has a kidney, please see Jenny'," Mr McPherson said.

"I went up to Jenny almost immediately and I said 'look you might not believe me now but I tell you I'm your man'." Mrs McReynolds, 44, was "floored".

"I couldn't believe it. What an amazing thing for him to do. What a gift. It's lifesaving for me," she said. She was diagnosed with polycystic kidney disease in her early 20s and her health had started to deteriorate in recent times. She was hooked up to a dialysis machine for four-hour stints, three times a week.

Mr McPherson had a battery of tests to ensure he was physically suitable and psychological fit to donate his kidney. The results revealed that the co-workers were "almost a perfect match", which was extremely rare when the donor and recipient were not blood relatives.

The transplant was successfully performed at RPA the Royal Prince Alfred Hospital in Sydney on December 4. Mrs McReynolds spent 712 hours in the operating theatre and seven days in hospital before she was sent home. It took 512 hours to remove the kidney from Mr McPherson who was discharged from hospital after four days.

Mrs McReynolds said people suffered immense hardships and pressures as they waited for a transplant. "A lot of people who do get sick lose their homes [and] they lose jobs," she said.
Mr McPherson said the organ donation rates "aren't impressive" in Australia."So many of us are busy in our own lives. We don't kind of look around much to see the people who are not doing so well and often there's things we can do to help," he said.

Australians who want to become organ donors should discuss their wishes with family and register by telephoning 1800777203 or visiting www.medicareaustralia.gov.au

Simon Turner simon@marquetteturner.com.au

The (Lack of) Housing Affordability Conference

The federal opposition has called on federal and state governments to cut land tax and stamp duty to help boost rental stock. Thousands of people across the country are skipping meals to pay rising rents, a housing affordability conference in Sydney heard on Thursday. And housing experts warn the home affordability crisis threatens to destabilise the economy and drive the country into recession.

Opposition frontbencher Greg Hunt said on Friday this week's national housing conference was an ideal opportunity for federal Housing Minister Tanya Plibersek to address land tax and stamp duty, to lessen the burden and help increase the stock of homes available for rent.

"These are killers for people and what they do is decrease the rental stock," Mr Hunt, opposition spokesman for Climate Change, Environment and Urban Water, told the Seven Network.
"A lot of people have said we're not willing to pay the cost of holding a rental property if we're whacked with a huge land tax or we have to deal with stamp duty and today is the day, Tanya, stamp duty, land tax and more land releases - you have a great opportunity."

Ms Plibersek said a lot of people had taken money out of investment property and put it into superannuation when favourable tax treatment was introduced last year under the previous government.

She said the Rudd government had committed to introducing the first home saver account to help people into their first house. "We know that as a proportion of all home buyers, first home buyers have shrunk as a proportion, so we want to help them save through a superannuation-style savings account," Ms Plibersek stated. "We've also got a national rental affordability scheme, 50,000 new rental properties, because there is a terrible shortage all around the country."

Experts told the housing conference on Thursday that Australia faced great social unrest and human suffering as well as chronic labour shortages without affordable housing. Professor Rachel Gatt, an affordable housing policy expert from Tufts University, Massachusetts, said the housing affordability equation was brutally simple. "Either wages have to stay high enough so people can afford to buy housing on the private market or if the private market is not able to meet the housing challenge then you need to have government subsidies," she told reporters.

"If you don't have affordable housing, and if your wages don't keep pace with the cost of housing, you are going to find people doubling up with relatives, turning into homeless people and creating a great deal of social unrest and human suffering than what you have now."

Research presented at the conference show people are going without food as they struggle to pay their rent. Professor Terry Burke of the Australian Housing and Urban Research Unit presented the research, which showed 26 per cent of low-income renters sometimes go without food and 42 per cent of low-income renters cannot afford school excursions, Fairfax reported.
Labor says the Howard government failed to acknowledge the rental crisis, despite knowing more than two years ago that more than one third of renters were suffering from rental stress.

Simon Turner simon@marquetteturner.com.au

Australia's Property Scandal: Town Planner Seeking "Approvals"

A sex-and-property scandal involving a female city planner on a "mission for sex" in return for approvals of high-rise buildings is threatening to engulf the beluigered New South Wales State Government.

An undercover sting by anti-corruption investigators uncovered a web of affairs involving 32-year-old town planner Beth Morgan in the steel-and-surfing city of Wollongong, south of Sydney, with three prominent building developers. Morgan, said by one of the three men to be "on a mission for sex", gave approval for millions of dollars worth of unlawful city building developments in return for gifts and affairs, the powerful Independent Commission against Corruption(ICAC) heard.

Morgan gave testimony to the commission about the affairs, admitted to by two developers, while a third denied the pair actually had a sexual relationship. The scandal, however, also threatens several ministers in the state government.

Australians generally believe their country to be largely corruption free and we rank well on the international index prepared by Transparency International.

Amid the public ICAC hearings, state Premier Morris Iemma promised to sack a senior minister if he was found to have improperly given a job to a Wollongong city councillor linked to the scandal. Four other state ministers have also been indirectly linkedby the ICAC to central figures in the furore.

The ICAC hearings have been given front-page treatment,with corruption investigators documenting lurid details of emails and phone messages between Morgan and her alleged lovers, which in turn have run in newspapers nationally. Adding to public shock are photographs of the stylish Morgan and the men she pursued, receiving from them cameras, cash payments, a China holiday and designer handbags, the ICAC heard.

Simon Turner simon@marquetteturner.com.au

Friday, February 15, 2008

Agents Leading Their Clients "Down The Garden Path"

Thousands and thousands of dollars in so-called “marketing” is being ripped out of clients’ hands by real estate agents. Agents that claim they tailor every campaign to suit the needs of each property – as long as it involves thousands of dollars on newspaper ads!

There has been an enormous amount of research done by The National Association of Realtors on how buyers are finding their new home. The results are damning with less than 5% of buyers indicating they found their new home in a newspaper.

The so-called “expert” agents in Sydney are preaching how important it is to capture every possible buyer and therefore place numerous advertisements in several newspapers at the clients’ expense. It seems more than a little suspicious that the majority of the money in a marketing campaign is being spent on newspapers that evidence is suggesting fails more than 95% of the time. If we look at it another way it only succeeds less than 5% of the time – yet it costs a fortune.

So who is really benefiting from this? The answer of course is real estate agents. It is wonderful branding to have pages of property advertisements in the local paper. Those looking through perceive that these agents are successful and fall into the trap of calling them into sell their home and also spend thousands of unnecessary dollars promoting the agent – not their home.

The internet age is well and truly upon us. The National Association of Realtors suggest that more than 80% of buyers find properties on the internet, around 15% from signboards and less than 5% in newspapers. The real estate agent’s own magazine doesn’t get a mention and nor does the agency database. When you decide to sell your home do not fall into the trap of wasting thousands of your hard on dollars on promoting the agent and not your home. Food for thought?

Michael Marquette michael@marquetteturner.com.au

Shopping List: Bread, Milk and a New Home!?

Tesco has set the cat amongst the pigeons of UK estate agencies and property portals by announcing that it intends to launch an online estate agency service. The financial strength behind Tesco could see undercutting the traditional estate agencies. The move is response to the difficulty it experienced with it private sellers website services. Rightmove and Primelocation could also be forced, under competition rules, to list Tesco's properties if it becomes a fully fledged agent.

Tesco now operating in various countries of Europe and Asia are the biggest chain in England, Scotland a Wales with a turnover of over 15 million pounds. It has ventured into various sectors of the market including clothing, electrical goods, and insurance services. Its attempt to enter into the online private sellers market was met by closed doors from competitors who refused Tesco property listings on their websites.

The world's third largest supermarket chain, Tesco's of Britain, has issued a written statement "While being an online estate agent was never our immediate intention, we are so encouraged by the positive reaction from customers to Tesco's entry into this market that we are now reviewing our business with a view to launching a new and exciting online estate-agency service.

Ian Springett, the chief executive of Primelocation.com (the main internet portal that the British use in searching for real estate), said: "We are not surprised to hear that Tesco is planning to launch as an estate agent. Clearly it is an extremely powerful brand and already offers a number of services related to home moving. But it will be entering an already very competitive market and may find it difficult to gain a foothold.

Fronted by TV property expert Louisa Fletcher, www.Tescopropertymarket.com
will begin displaying homes for sale both in Britain and abroad from March – traditionally the busiest period of the year for house hunters.


Simon Turner simon@marquetteturner.com.au

Thursday, February 14, 2008

NSW Development Crisis

A property developers' lobby group says "radical" changes to the state's planning laws are needed to save New South Wales from a social and economic crisis.

In a submission to the State Government's planning review, the Urban Task Force says the system needs to better integrate the development of housing, workplaces, shopping and recreation areas. It says Sydney's population is expected to grow by more than 1 million people by 2031, meaning more homes, industrial land, and commercial and retail space will be needed.
The task force's chief executive, Aaron Gadiel, says these demands cannot be met under the existing planning laws.

Mr Gadiel says NSW will fall further behind other states without "far-reaching reform" to streamline the process.

"The Urban Task Force would like to see quicker planning approvals," he said. "If the government agency doesn't deal with them or doesn't respond in 90 days, they should be deemed approved.

"We want State Government agencies coming back to councils quicker with their concurrences or approvals, or if they've got a problem, they need to say what those problems are so developers can address them. New developments can take easily 12 to 14 months to be approved or even longer," he said.

"Frankly, the development industry has been voting with its feet. It's been developing in Queensland and Victoria instead of NSW because it's just not profitable to do so here."

Straight Talk: Economic Round-Up Blow By Blow

The Reserve Bank says inflation will be worse than almost everyone expected.

Equity prices plummet. The Aussie dollar rises. Respected economists run round like headless chooks squawking "more rate hikes to come!"

Financial markets dramatically mark up the chances that the next rate hike will be in March. Businesses plan their price hikes. Unions think harder about how to protect the bruvvers and sisters.

Ordinary people - whose inflation expectations were already elevated - grimly recalibrate their household budgets.

The government says all this was the Liberal Party's fault. John Howard hits the international speaking circuit. Peter Costello leaves for a supposedly lucrative overseas job. Malcolm Turnbull flips between saying "look what Labor has already delivered" and "there is no problem, inflation is still in the target band".

What about the blame that should be sheeted home to the Reserve itself? It is the agency with formal responsibility for controlling inflation, a responsibility that, after initial scepticism by its then leader, it embraced warmly.It is the organisation that after a long intellectual struggle was given by financial deregulation, including the flexible exchange rate, the technical ability to control inflation. It is the mob that was given salaries sufficient to attract and retain what it saw as the "best and brightest" of Australia's economists.

To read more from Henry Thornton, simply click on the link.

Buy One House, Give One Free!

Donating money to charitable causes is all very well and good, but there's usually an abstractness about it that makes one wonder if the funds are really helping those who need it. A new project by California eco-urban design firm LJ Urban aims to make giving more concrete—quite literally—by matching its sales of homes domestically with funds to build homes in the impoverished African nation of Burkina Faso.

LJ Urban has designed a new eco-urban community of 35 LEED ND Certified homes in the urban core of Sacramento, its home town. The community is suggestively named Good, and for each home within it that gets sold, LJ Urban has committed to funding the complete training of a West African mason to build sustainable homes for families in Burkina Faso.

By partnering with the Association La Voûte Nubienne (AVN), which has already trained about 60 local masons to build durable homes out of earth bricks and mortar, LJ Urban aims to go beyond just providing homes to impart enduring skills and jobs to the local community. Taking the notion a step further, LJ Urban has also opted to skip the expensive marketing campaign to promote its Good community, and to use that money to train more African masons instead.

So, for every 100,000 people who visit LJ Urban's new, dedicated website by July 1st, the company will fund the complete training of another local Burkina Faso mason—up to 20 in all through this viral approach.

The Good project was inspired by Toms Shoes, a project that donates a pair of shoes for every one it sells. "[That] approach captivated us because it broke through the 'charity fatigue' all of us have felt at one time or another," LJ Urban's team explains. "The question then became: 'What if we could do something like that with our houses?'…" The project is also reminiscent of One Laptop Per Child's (OLPC's) "Give One Get One" campaign last year through which consumers could donate a laptop and get one for their own use at the same time. A model of giving to bring to your neck of the woods...?

Website: http://www.dosomegoodnow.com/
Simon Turner simon@marquetteturner.com.au

Thursday, February 7, 2008

Auction Clearances Better Than Last Year

The first auctions of the year last weekend showed an improvement compared with this time last year.

The clearance rate for properties rose by almost 10 per cent in Sydney to 56 per cent while the number of houses listed also increased by 10 per cent compared with this time last year.

Of the 77 properties listed in Sydney, 59 were auctioned, with 36 sold, seven more than at the same time in 2007.

Melbourne had a slower start with only 29 properties listed for auction compared with 55 at this time last year. The clearance rate rose by 1 per cent to 50 per cent and out of 27 properties reported as auctioned, 14 were sold compared with 24 out of 49 properties reported as auctioned this time last year.

Whilst it is early days yet, the 2008 story will indeed be an interesting one to follow. Marquette Turner will of course keep you on track.

"Going, going, gone!" - Where Do Auction Hammer & Gavel's Originate?

The cult of Thor had gained in popularity through the Viking Age, so that by the tenth century, he was venerated above all other gods in most parts of Scandinavia. Unlike the grim and aristocratic Odinn, Thor was a god of the people, and a friend of landowner and peasant alike.

Thor was patron of justice, his oath-ring could seal any contract, the Althing assembly of Iceland was opened on Thor's day (Thursday). Thor was seen as a protector, defending the old order of the heathen landowners and petty nobles from the predations of the land-grabbing, power-hungry and zealously Christian Kings of Norway.

Wearing the sign of the hammer, then, was not just a symbol of one's trust in Thor, it was also an instrument of his protection.

For more information, see "Hammer in the North: Mjollnir in Medieval Scandinavia", by Daniel Bray.

Apartments Beat Houses in 2007

Apartments were a better investment than houses in 2007, according to data compiled by property researcher RP Data-Rismark.

Across all capital cities, unit values increased by 16.9%, compared to 11.9% for houses. And units still produced a better yield for investors of 4.8%, compared to just under 4% for houses.

The best performing market in 2007 was Adelaide with a 27.3% increase in dwelling value to a median of $375,685. Brisbane, with 22.8% capital growth, and Melbourne, with 19.6% capital growth, were next best.

Sydney was more moderate, with 5.9% increase in the value of houses and 10.7% for units. Perth went backwards thanks to affordability constraints; the median house price fell 1.2% to $506,179.
Looking ahead, Marquette Turner believes that 2008 will be a strong year of growth for residential property.


The Property Cycle: What's Happening This Time

In 2000 the NASDAQ stock market collapse in the United States gave rise to Sydney's biggest and most widespread property boom.


This time it will be different. The cheaper end of the property market simply will not be invited to the party.



A tanking share market is going to have divergent effects in Sydney. On one hand, in our eastern suburbs and the North Shore there is an army of baby boomers and wealthy business owners with high discretionary income and asset wealth. Property will continue to look good in leafy suburbs.



In this demographic, many nervous “mum and dad” shareholders will retreat from the volatile, and less the welcoming share market and head for the safety of property. For some, the tax-free haven of a more expensive family home is a compelling place to park cash. For others, rising rental returns will provide the reason to transfer equity from shares to property.



Fuelling this trend, apartment prices in inner-urban Sydney markets are starting to look cheap compared with other capitals. Typical prices in the top five national apartment markets are within 16 per cent of each other. Undervalued Sydney apartments will be on the shopping list of many investors and capital growth over the calendar year should exceed 5 per cent. House values are also forecast to grow by 5 per cent, propped up by the top end.



While Sydney's enduring obsession with beach and harbour will ensure the top end of the market continues to record ridiculous prices, there is strong evidence that this year lower- to middle-income mortgage holders and first-home buyers will be further squeezed out of well-located property markets. House values grew by 10 per cent last year in lower North Shore suburbs but Sydney's south-west had a 2 per cent drop in house values over 2007.



Those pinning hopes of a recovery in outer suburban property markets off the back of a faltering share market will be sorely disappointed. In mortgage land, few will be influenced by the fortunes of shares when they do not even hold any. Rising interest rates and record petrol prices do not leave room for such luxuries.



In 2000 a softening share market, buoyed by cheap interest rates and easy credit, was perceived by some to have triggered the frenzied property market that followed. Meanwhile, aggressive mortgage market competition helped baby boomer mums and dads to become landlords. Low interest rates helped. They competed with droves of first-home buyers, and brokers fell over themselves to lend money.

In 2007 the correlation between inner vs. outer suburbs and wealthy vs. poor strengthened, with stark contrasts between the thriving inner cities and the struggling outer ‘mortgage belts’. Overall, however, the national property market has performed extremely well, and this general trend has begun to flow over to major regional centres.

The biggest factor in rising prices is demand: we are simply not building enough quality detached owner-occupied housing.

The underlying demand in Australia is approximately 170,000 new starts per annum – this equates to 450 new dwellings per day. According to BIS Schrapnel there will be a deficiency of approximately 100,000 dwellings by June 2008, which equates to eight months of construction. This undersupply is causing a surge in rentals and land prices. With current vacancy rates hovering around the 1% mark (a balanced market is 3%) I cannot foresee prices falling in the short term. Our national population continues to grow in record numbers at 1.5% annually, with our population now estimated at 21 million.

Derailers are rising interest rates, rising oil prices and a looming credit squeeze. However, unlike the last property correction, this time we have high employment levels and a strong stock market. The rich appear to be getting richer and have greater propensity to manage any changes in their financial circumstances. Last time it was corporate debt, this time it will be consumer debt, and it will be the many on the bread line in the mortgage stress suburbs who will suffer the most and be least able to cope with even small changes to their financial circumstances.

Simon Turner simon@marquetteturner.com.au

Howeowners Becoming Prey For Some Real Estate Agents

There are concerns that some unscrupulous agents are cashing in as homeowners sell up for less than market value.

Federal and New South Wales politicians are calling for an inquiry into online real estate agents who offer quick house sales to people who can no longer pay their mortgages. It is feared the agents are exploiting people who are under pressure to sell their houses below market value due to falling prices and high interest rates.

Some agents have promised to sell houses in just days without the usual fees. One organisation advertises for houses where owners are behind in repayments and face repossession.

Marquette Turner advises that homeowners should avoid dealing with such companies because they are not licensed agents, and despite the code of ethics that we are bound by, unfortunately, our society always has its share of bottom feeders who try to take unfair advantage of people who are in difficulty.

If you are experiencing mortgage stress, make sure that if you're going to sell your home, however you're going to sell it, you get a licensed agent to do so. And, make sure that you go to your lender and let them know the sort of trouble that you're in and get some financial counselling advice.


MONOPOLY: Australia Vs the World

Vote your favourite town onto the first ever global MONOPOLY board! The world’s most popular board game is about to go global – with a world wide vote to decide which of the world’s 22 greatest cities will take pride of place on the first ever international MONOPOLY board – MONOPOLY Here & Now: The World Edition!

The new World Edition follows on from the hugely successful election campaign for the all new Australian Here & Now MONOPOLY in 2007, which attracted in excess of 17 million votes from MONOPOLY enthusiasts around the country. Australians are now being asked get on line and get voting again, to ensure Australia is well represented on the first ever global edition of MONOPOLY.

While Sydney and Melbourne are on the voting card together with 66 of the world’s best known cities, any other towns or cities, big or small can also vie for one of two wild card spots on the board to be nominated and determined by public vote. Hasbro are hopeful of not only getting both cities on the board, but even possibly securing the coveted blue position and becoming the new “Mayfair” and “Park Lane”. The most prestigious positions will be assigned to the cities that receive the most votes.

Size does not matter when it comes to winning a spot on the board, for example last year it was the Barossa Valley that secured the most votes in the Australian MONOPOLY elections. With other small towns like Kalgoorlie and Sovereign Hill attracting many more votes than the big cities, proving that community spirit and enthusiasm is the key to securing a spot on the MONOPOLY board.

Australia has already proven we’ve got what it takes when it comes to voting, clocking up more votes in the Australian national elections than either the USA, United Kingdom or Germany did for theirs.

Voting is easy and accessible to everyone from 23rd January 2008 – 28th February 2008 at http://www.monopoly.com/, where you can cast votes for up to 10 nominated cities daily, and nominate 1 wild card city each day. Voting for the top 20 wild card nominations will begin on 29th February and will close on the 9th March 2008.

The twenty cities that receive the most votes will be part of MONOPOLY history as the first cities selected to be on the World edition game board. However, two spaces on the board will be reserved for cities that are nominated through the wild card vote. Any city from any country in the world can be nominated for these property spaces, which means that anywhere from Condobolin to the “Back O’ Bourke” could make it on the board!

Simon Turner simon@marquetteturner.com.au

Thursday, January 31, 2008

How Much Money Do Real Estate Agents Really Earn?

We have all seen real estate agents driving luxury cars of all types. Some agency car parks are like the “magic mile” of German sports cars so the question is how much do agents really earn? Is real estate the easy way to earn your first million dollars?

People generally don’t come straight out and ask what I earn, however there are always comments like “You must be doing well for yourself”. The instant perception is that a tailored suit, polished shoes and a BMW equal success. This is probably the conclusion I would draw if I were to see a person randomly in the street and this has definitely been the conclusion drawn by the public when it comes to real estate agents.

The reality is that around 80% of first year real estate agents fail. That means that around 4 out of every 5 new agents drop out of the industry in their first 12 months on the job. An entry level sales agent can expect to earn less than $40,000 in their first year and it is this constant financial battle which proves catastrophic to most people. The average salary in NSW for a residential sales agent is $63,133, with commercial sales agents averaging $96,782. Of course some agents earn well in excess of $1 million dollars but they are a very rare find. Enormous amounts of hard work, dedication and perseverance are needed to perform at the very top level.
Most real estate agents earn between 30-60% commission depending on their sales volume, so when you see agents driving luxury cars ask yourself how much work is required to really make it to the top and stay there? If you believe you can or if you believe you can’t then you are right!

Michael Marquette michael@marquetteturner.com.au

Best Countries To Retire To

Recent research compared the top ten locations for pensioners to retire abroad. The results saw Cyprus and Panama coming tops based on tax, ease of residency, healthcare and average property costs.

It is fact that Australia is seeing large numbers of it's people leaving the country to live overseas. Years of being in the Australian housing market has left many retirees with large amounts of equity in their homes and a desire for better things.

The report shows the vast differences in taxation, inheritance laws and the availability of healthcare. How many of us know that France for example has income tax rate of up to 40% plus.

Cyprus tops the list of destinations because it has an income-tax rate of just 5% on pensions for retired residents, as well as low property prices and no inheritance tax. It also scores highly on related issues such as ease of gaining residency, low property buying and selling costs and benefits for pensioners. Not only does Cyprus offer a warm, sunny climate, it also benefits from favourable taxation and healthcare policies.

Panama, now infamously the chosen destination of “back from the dead” British canoeist John Darwin and his wife Anne, comes a close second. This is largely thanks to its pensionado scheme, which offers attractive discounts for pensioners.

Simon Turner simon@marquetteturner.com.au

World's Top 3 Most Expensive Cities for Real Estate

London, New York and Moscow are now the world’s most expensive cities for residential apartment buyers, according a survey by the Global Property Guide (http://www.globalpropertyguide.com/), an international property research firm.

Residential apartments in Prime Central London are among the priciest in the world, at US$21,800 to US$36,200 (£10,960 - £18,214 or €16,305 - €27,095) per square metre (sq. m.). Prime Central London includes Belgravia, Chelsea, Mayfair, Notting Hill, Knightsbridge, Regent's Park, South Kensington, St. John's Wood, and St. James.

Prices in other luxurious areas in London such as Wimbledon, Hampstead, Richmond, and Wandsworth range from US$14,142 to US$19,361 (£8,675 - £9,719 or €10,560 - €14,458) per sq. m., also among the highest in the world.


New York comes in second place with property prices in Upper Manhattan ranging between US$13,270 and US$22,923 per sq. m. Apartment prices in Lower Manhattan are around US$12,510 – US$20,456 per sq. m

Moscow comes in third place with central Moscow apartment prices ranging from US$10,764 to US$20,506 per sq. m

Other cities in Europe that are among the top ten most expensive cities for apartment buyers are Paris, Barcelona, and Geneva. Condominium prices in Paris are around US$12,930 to US$18,070 per sq. m.

In Spain, prices of flats in Barcelona are between US$9,160 and US$9,870 per sq. m. Prices of apartments in Madrid are lower than Barcelona, at US$6,535 – US$ 8,000 per sq. m

In Switzerland, prices of flats in Geneva are around US$6,870 - US$10,400 per sq. m. Prices in Geneva are higher compared to Zurich, US$5,900 – US$9,830 per sq. m

Of the three German cities included in the study, Munich is the most expensive with prices of flats at US$3,485 – US$3,700 per sq. m.; followed by Frankfurt at US$2,360 – US$3,300 per sq. m. Property prices in Berlin are still relatively subdued at US$1,840 – US$2,600 per sq. m.

Residential apartments in Istanbul, Turkey are among the cheapest in Europe, at around US$1,850 to US$2,500 per sq. m.

Most Expensive Asia-Pacific Cities
Among the top ten most expensive cities, four are in Asia: Hong Kong, Tokyo, Singapore, and Mumbai.

Residential apartment prices in Hong Kong range from US$10,490 to 14,780 per sq. m., in Tokyo from US$7,600 to US$11,870 per sq. m., and in Singapore from US$11,500 to US$13,340 per sq. m.

Mumbai is a notable exception among the ten most expensive cities; it is located in a poor country, albeit rapidly growing. A mix of high population density, archaic land laws, rapid urbanization and strong economic growth contributes to the surprisingly expensive property prices in Mumbai.

Property prices in Mumbai are around US$8,600 to US$10,300 per sq. m. This is significantly higher than New Delhi (prices at US$1,970 – US$3,260 per sq. m.) or Bangalore. Despite equally rapid economic expansion, property prices in Bangalore are still among the cheapest in the world at US$950 – US$1,900 per sq. m..

Compared to Mumbai, Chinese cities are significantly cheaper. Prices of flats in Shanghai are around US$2,870 to US$3,540 per sq. m. while those in Beijing are priced at US$2,100 to US$2,330 per sq. m.

Properties in Australia are near the top of the scale, with apartment prices in Sydney at around US$6,290 to US$9,690 per sq. m. New Zealand is significantly cheaper than Australia, with apartment prices in Wellington at only US$4,360 – US$4,500 per sq. m.

Do you feel better for now knowing what an expensive city Sydney is!

Simon Turner simon@marquetteturner.com.au

Thursday, January 24, 2008

Is Property A Safe Haven Whilst The Stock Market Is Stormy?

As the stock market slumps into what is now technically a bear market, investor attention turns towards safe havens, particularly Australian residential property.

Historically, as sharemarkets fall, investors head towards bricks and mortar. This time around though, as stocks are falling, the latest property data indicates a further tightening of already chronically low rental stocks with the prospect of increases of between $50 and $100 a week in rents. If the projections are accurate, rental yields will continue to rise, particularly in outer suburbs.

Before you rush for the real estate sales guides, take a steady, deep breath and read on.

Monique Wakelin writes in the Eureka Report that the cardinal sin is to assume that all property is going to provide a short-term, safe haven of income and growth, and to buy quickly and indiscriminately!

The good news for investors is that record low rental vacancy rates and a growing housing shortage have pushed median rents up consistently throughout 2007 with the promise of more to come this year. Australian Bureau of Statistics figures show that in the year to September 2007, average dwelling rents showed their highest growth rate in 17 years. Separately, property group Residex’s measure of the growth in advertised annual rents shows a jump of 18% to 35%, depending on location, over the past 12 months.

Average weekly rent rose by $35, and Residex claims we could see increases of up to $100 a week this year. Further, ANZ's annual property outlook indicates that the long lead times on lease renewals (which prevent investors from raising rents) mean we won’t see true market values emerging until later this year, but we can expect upward movements when lease renewals start to bring the rental increases into the data stream.

Moreover, the latest report from property research agency RP Data says that rents in the outer suburbs have surged ahead of increases in capital values, whereas the opposite is the case for inner urban and coastal locations.

It is true that accurate market rates of rent require relatively long lead times to emerge. Investors can’t raise rents on existing tenancies until leases expire. What's more, there’s nothing uniform about when that occurs. Put simply, no two properties are ever created equal and rental properties are no different.

The tenant market, like the home buyer market, has only so much capacity to pay. Like the general housing market the tenant market has become multi-layered and multi-faceted and is being driven primarily by affordability issues. For instance, rent movements in the most sought-after inner-urban end of the rental market are less volatile because of perpetual demand. Already relatively high rents for the most sought-after properties tend to rise – over the longer term – in a slow and steady fashion, underpinned by higher demand for locations offering a particular lifestyle.

Even though it is owner-occupiers that drive price growth, the additional demand from tenants helps maintain values. Investors in these prime zones are focused (as they should be) on capital growth first and foremost and rental yields second.

Property investors need to understand where their “consumers” (tenants) come from. About 30% of the Australian population rents, both out of economic necessity and choice, in the short-to-medium term and most do not expect luxurious accommodation. Break this down and we find that outside of the largely lifestyle-driven inner urban areas, the rental “consumer” is in pursuit of comfortable, affordable accommodation. This core pool of renters includes first-home buyers excluded from the market for longer in the face of low housing affordability.

In the real world, irrespective of the data, to suggest that an average rental property that currently returns $320 a week is going to remain in hot demand if it is bumped up to closer to $370 or $420 a week in six months is to misunderstand the realities of market capacity.

The informed investor must instead strike a sensible balance between arriving at a reasonable and sustainable income level that will bridge the gap with loan repayments for an asset and avoid raising rents to a level that would effectively price them out of the market. Investors must look beyond the hype and the generalised data and assess their own assets very specifically.

When a lease is up for review, ask the managing agent what that particular property, in that specific location, with that tenant pool would realistically rent for if it was vacant and being offered to the market for the first time. It is critically important to weigh up the advantages of reliable, steady income from good tenants and moderate rental reviews against dramatic rent increases that lead to high tenant turnover, greatly increased wear and tear and potentially long and costly vacancy periods.

And, let’s not forget the bigger picture; greedy investors who adopt the “let’s raise the rent as far as we can, as quickly as we can” will add further to upward inflationary pressures. That can only bite them where it hurts the most – by way of increased interest rates.

How Dumb Are Most Real Estate Agents?!

This question has been asked many times. Real estate constantly polls as one of the most untrustworthy professions in the country. Have you ever heard the phrase “trust me I’m a real estate agent?” While this all sounds a little cliché the reality is that the general public has very little trust for real estate agents.

They tend to drive flashy cars, wear suits (some cheap, some not) and are always just a little bit late for every appointment to the frustration of buyers, tenants, vendors and landlords. So does this perception that real estate agents are untrustworthy, incompetent and overpaid really have merit?

The last comprehensive survey of the public put Doctors, Solicitors, Dentists, Pharmacists, School Teachers and even Accountants all well ahead of Real Estate Agents – the big question is why is this consistently the case? I believe the answer lies in the entry requirements to the profession which only require a 3 day course to become a certified agent. Could you imagine a 3 day crass course in Medicine and you could then operate on unsuspecting patients?

There would be enormous public outrage and the course would be banned in a flash. So why has Real Estate been allowed to offer such crash courses to the profession which bring completely unsuitable people into the industry with absolutely no idea what they are doing? The answer lies with the pressure groups that our Government actually listen to like the Real Estate Institute – they make a small fortune from memberships and training. They have self interest at heart when directing policy and have been allowed to influence decisions for far too long.

There are no base requirements to be a real estate agent. Your English can be disgraceful, as can your people skills. You don’t need to have completed high school and there are no checks in place to see if you even attended school. At Marquette Turner we believe that there is only one way to change the perception of the industry and that is through formal education. My fellow Directors are all studying a Masters degree or a Doctorate and we believe that will change the real estate landscape over the next 20 years. So next time you are deciding which agent is best to sell your home it might be worth asking them what formal qualifications they have. Ask them what formal negotiation and marketing training they have completed – after all you are entrusting your greatest asset to them and you have a right to know that you have chosen the best person for the job.

We have posted two parts of the five part expose of the “Real Estate Cartel in Australia”. This is a must read and the third part will be published in next week’s E Mag. You can catch up on the previous exposes by clicking on the links below.

EXPOSED: The Real Estate Cartels, Part 1 & Part 2

Michael Marquette michael@marquetteturner.com.au

A Little Inflation Is Like Being a Little Bit Pregnant

HAVING a little bit of inflation is like being a little bit pregnant. Is that old adage worth bearing in mind as consumer prices across the globe accelerate? Marquette Turner takes a look at what's going on.

According to an index produced by Goldman Sachs, global inflation was 4.8% in the year to November, two percentage points up from the previous year. Prices accelerated in 80% of the countries that Goldman tracks.

By historical standards, this is all small fry. An inflation rate of 5% hardly marks a return to the double-digit price increases that haunted rich countries in the 1970s and emerging economies for far longer. (For much of the 1990s, the average inflation rate in poor countries was 50%.)

Nonetheless, the upswing is broad enough to pose awkward questions. With ever more signals, from weak retail sales to rising joblessness, pointing to an American recession, is the world headed for a bout of stagflation-lite? And will stubborn price pressures constrain the marked easing of monetary policy that America's central bankers now promise?

As The Economist reports, the answers depend on what has been driving inflation up and whether those pressures persist even as economies slow. Ultimately, inflation is a monetary phenomenon, so responsibility lies with central bankers.

Pessimists point out that monetary conditions have been loose in recent years, with real interest rates low and credit growth rapid, particularly in emerging economies.

Others worry that the task of central bankers has become harder as globalisation has shifted from being a disinflationary phenomenon to an inflationary one. The downward price pressure from cheap Chinese goods may be abating while the developing world's rampant demand for resources may continually drive commodity prices higher.

There is some truth to these arguments, but none offers a complete explanation of recent price trends. In some emerging economies monetary laxness is clearly fuelling inflation—in the Gulf states, for instance, as the direct consequence of their dollar pegs.

But elsewhere the picture is less clear. Take China, where fears of social unrest have made inflation one of the government's top concerns and have led it to impose various price controls over the past week. The accumulation of vast foreign-exchange reserves has fuelled domestic money growth and the inflation rate has tripled in the past year. But that rise is almost entirely due to a jump in food prices, particularly of pork. Core inflation (excluding food, but including oil) is running at only 1.4%. Pig disease deserves more blame for China's recent inflation than loose policy. What's more, China's monetary conditions are tightening fast.

More important, China's productivity is growing faster, by 20% a year, according to America's Conference Board, a research organisation. That means overall unit costs are still falling.
It is true that the prices of imports from China are rising after several years of decline. But that has more to do with the weakness of the dollar than with increasing Chinese production costs. And even if the prices of Chinese goods rise, they could still dampen inflation in richer economies, because they are much cheaper than domestically produced equivalents and are gaining market share. As China produces higher value items, it will push down prices of domestically produced goods in ever more industries.

A more direct link between developing countries such as China and inflationary pressure comes through commodity prices. The prices of many raw materials have surged in the past 12 months. The food index is up by almost 50%. The price of oil has risen almost 80%. These jumps are the main cause of higher inflation across the globe. They are also related, at least in part, to structural changes in the global economy.

The world economy is increasingly powered by countries, such as China and India, whose growth is far more energy- and commodity-intensive than that of rich countries. Since 2001, China has accounted for about half of the increase in the world's demand for metals and almost two-fifths of the increase in oil demand.

This shift means that the usual relationship between America's business cycle and commodity prices may change. Past American recessions have sent the prices of oil and other resources down. That may no longer be so. Economists at HSBC say that the correlations between industrial output and commodity prices began to fall apart a few years ago.

But that does not mean commodity prices will continue to surge. Emerging economies may be more resilient to an American recession than hitherto, but they are unlikely to grow faster. At the margin, therefore, the demand for commodities will slow. And in the longer term, higher commodity prices will eventually lead to greater supply. Much of the surge in raw-material prices in recent years reflects the fact that few foresaw the pace of emerging-market growth. All of which suggests that, even if commodity prices don't fall, their rate of increase will ease, and the biggest driver of recent global price pressure will weaken.

Given the American backdrop, the Fed's recent decision to step up the pace of interest-rate cuts is understandable. The weak economy poses a bigger danger than inflation. But there are risks. Even if commodity-price inflation wanes, the falling dollar means America faces other inflationary threats. And if overall price pressure remains stubbornly elevated, inflation expectations may yet rise. If that happens, the Fed will face the unenviable task of curtailing its easing or even raising rates while the economy is weak.

Simon Turner simon@marquetteturner.com.au

Thursday, January 17, 2008

The Global Correction: What's Going On?

Global markets have taken a battering over the last week, and Australia certainly has not been immune. We are increasingly appreciating that the air of immunity that has hung over us for over a decade has been somewhat intoxicating.

Australian shares are now down more than 14 % from their recent peak in November. Another way to put this is that average share prices have given up most of 2007's stellar gains and have fallen to last quarter of 2006 prices. The shareprice of Qantas has notably been one of the casualties, with the few that have benefitted being food producers, such as AWB.

Already the tough-nut, hardened experts are shrugging off the "correction", noting that when shares fall 20 % in a day, that's a crash.

Nevertheless, Australian shares have fallen slightly more than US shares, despite the fact that the Australian economy seems to be in far better shape. Unemployment in the US is rising, and new home approvals is at the lowest level in 27 years.

Both Australia and the US are indeed suffering inflation, led by rising food and energy costs. Growth indicators are far stronger in Australia, but unsustainably so (for example, retail sales and job vacancies growth of the order of 7 % annually). Australian banks and other financial institutions seem in far better shape than similar institutions in the USA and indeed are somewhat less dependant on the US market than some would have us believe.

There are, however, warning signs. Those most clear are the sheer expanse of Australia's credit boom; our heavy reliance on our resources propping up other sectors; and as many of you are experiencing, rising interest rates and inflation are certainly burdens that we are having to take on the chin.

As Henry Thornton adeptly explains, "Equity markets are said to be driven by waves of fear and greed. While fear produces crash and greed causes bubble, markets in more normal times are also the best economic prediction machines we have."

Just possibly, Australia's greater correction so far may be signalling that the Australian economy has more slowing to do from this point than the US economy. Compared to the USA, growth has to slow in most places, even in China and India.

This does not mean either the US or Australian economy, or the Chinese economy need suffer a recession. Growth has to slow in all three countries, and in many others, because recent growth is unsustainable.

The message of the markets is that this slowing is underway. If we are lucky, adjustment will be mild and will be achieved with minimal damage in terms of lost jobs, bankrupt businesses and social and political unrest.

Despite the financial market trembles, the Reserve Bank should help Australia achieve a soft landing with at least one more rate hike next month. The Rudd government needs to tighten spending substantially - having "found" a surprise saving of $3billion from "underspending" in health care, education and infrastructure from the Howard Government, Rudd has been helped in it's quest for finding savings of $10billion.

The much discussed drop in consumer confidence should be welcomed as a sign that Australian households are rational, and some spending restraint is highly rational now - better late than never.

Simon Turner simon@marquetteturner.com.au

The Global House Price Growth Decline: Except Australia!

House price growth across the world has slowed down slightly over the last year, and property values on a global scale rose by 8.2 per cent during the third quarter of 2007.

This is down from a 9.7 per cent increase recorded 12 months earlier.

However, Australia still managed to record a strong rate of growth during this period. During the year to September 2007, the nation's average property values rose from 9.5 per cent to 10.3 per cent.

Price growth has been driven by gains in Brisbane, Melbourne and Adelaide, where in each case, inflation over the year to quarter three of 2007 has been over 16 per cent.


Simon Turner simon@marquetteturner.com.au

Sydney's Losing...It's People!

Sydney is bleeding 22,000 citizens a year to all parts of Australia, and for the first time the people deficit covers all key groups, from students and young singles to families and retirees.

The nation's biggest city is the only capital to lose more people aged 15-34 than it gained from interstate migration between 2001 and last year, and is the only capital apart from Adelaide to go backwards for both professional and blue-collar workers.

But for every Sydneysider who is forced out by the cost of living, another two are replacing them from the overseas migration program.

New official data analysed by The Australian reveals a dramatic realignment in the nation's make-up as young and old alike criss-cross the continent from Perth to Melbourne and from Sydney to the "rest of" Queensland - everywhere outside the capital city.

Hobart is the surprise packet, rising to third place behind Brisbane and Perth as the most popular city destination for interstate migrants, while the rest of Tasmania has leapt to second behind the rest of Queensland on the regional growth ladder.

The rest of Victoria and the rest of NSW are also in the black - breaking the past pattern in which they gave up more people to Queensland than they received in seachange and treechange retirees from Melbourne and Sydney.

The bigger picture shows that the rest of Queensland has replaced the state's capital as the nation's top people magnet, gaining 14,000 people a year compared with Brisbane's 10,000 a year.

The customised tables were extracted from the 2006 census, and track interstate migration over the past five years by age and qualification.

Responding to The Australian's analysis, demographic experts said the cause of the drift away from Sydney could be explained in part by its high property prices but also by its slowing economy.

The director of Monash University's Centre for Population and Urban Research, Bob Birrell, said Sydney's population decline mirrored the decline of its economy relative to the rest of Australia.
"We're seeing a big change in Sydney's relative attraction since 2001 or, really, since the Olympics. Sydney's demographic fortunes have changed sharply," he said.

"It's a chicken-and-egg thing, but the actual fact is that job growth in Sydney has slowed relative to Brisbane and Melbourne since 2001."

Demographer Bernard Salt said Sydney had become a divided city, between those who lived the "globalised" lifestyle, close to the CBD, and those who lived in the outer suburbs and rarely saw the Sydney Harbour Bridge.

"We've got floods of people coming in through the front door, into Sydney through Mascot (airport from other countries), but the backdoor's wide open, and Gen Y and down-shifters are streaming out. You don't find that to the same extent in other capital cities," Mr Salt said.

The latest census shows 111,400 more people left Sydney than arrived from elsewhere in Australia between 2001 and last year. This is almost double the rate of defection between 1996 and 2001, when 59,700 people left Sydney in net terms. Every capital, state and territory is officially an importer of Sydneysiders, the data confirms. Four out five Sydney defectors moved to the rest of NSW (46,500), the rest of Queensland (27,800) or Brisbane (18,700).

But Sydney's loss is most acute in the youth belt, which is the group providing the best gauge of a city's health. Almost one in 10 departing Sydneysiders was aged 15-34 - 10,000 out of the total 111,400. Sydney had previously been a net importer of youth, with 14,000 recruits from the rest of the nation between 1996 and 2001. The reversal over the past five years suggests cost of living pressures are pushing out Sydney's young and discouraging others from settling in their place.

The top beneficiaries of Sydney's youth drain were the rest of Queensland (5900), Brisbane (4600) and Melbourne (1800).

Sydney has struggled to meet the infrastructure needs of its population, but growing cities such as Brisbane could face the same pressures.

The other telling deficit for Sydney involves its local workforce. Sydney lost 7200 professionals and 5100 labourers between 2001 and last year.

Sydney also suffered professional worker deficits with Melbourne and Canberra (600 each).
Traditionally, Sydney and Melbourne received more professionals from Brisbane than went the other way. But the tables flipped in the past five years, although Melbourne lost 400 professionals to Brisbane, compared with 1700 who moved north from Sydney.


Simon Turner simon@marquetteturner.com.au