Newsletter - Inner Circle February 2016
Inner Circle
The first look at the market in 2016 shows Melbourne is travelling just fine thanks very much; in fact it’s performing a lot better than many expected.
The first two Saturdays with a reasonable number of auctions saw clearance rates over the critical 75% mark. CoreLogic numbers show Melbourne taking over from Sydney as the nation’s best performer, with 11% growth for the year to the end of January.
It’s pretty clear to see why. With a gap of $300,000 between the median house prices, our office is fielding more enquires from interstate investors who see better value and growth prospects here in Melbourne.
It’s one of the reasons why during the upcoming autumn season, we are expecting solid results to continue, with competition hot in the $500,000 - $800,000 range but some cooling off for properties selling above $2 million mark.
If you’re an investor or home buyer, the bottom line is that prices for the right properties are set to continue growing in the first half of 2016.
Well all the talk is back again. Every two years, our lovely politicians start chirping about negative gearing and this week they were joined by seemingly everybody in the media - or with a social media account.
Last weekend, the ALP launched a policy that would see negative gearing restricted to new housing from July 2017 and the Capital Gains Tax discount lowered from 50% to 25% for assets held for 12 months or more.
The government is being a little more circumspect, with Treasurer Scott Morrison bypassing an opportunity on Wednesday to announce a change in policy.
It remains possible there will be an announcement in May’s Federal Budget, but my money is still on the no change scenario. But as both major parties are talking about negative gearing, it’s worthwhile me making a few notes here.
First, all of the proposals floated so far wouldn’t change the treatment of people who currently have a negatively geared property.
Second, while a change to negative gearing may result in some small market fluctuations; these aren’t likely to be significant. When negative gearing was quarantined the 1980s, house prices continued to rise more or less in line with the trends already in place.
If this proposal comes to pass, the grandfathering of existing arrangements means investors are less likely to sell their properties in the short term. And besides, many investors who have held their property for years typically don’t receive gearing benefits anyway, as their rent exceeds their mortgage payments.
The most important take out for investors from all this kerfuffle is to underline why it is so important to choose a property based on sound analysis - and avoid properties marketed to you based on a tax strategy alone.
We had the opportunity to work for a lovely couple recently, who despite their tight budget were determined to find a property that would deliver them above average capital growth and secure their children’s financial future.
After meeting with them last year, the Property Mavens team set right to work and were able to find this Moonee Ponds gem in in a popular residential area.
After a lot of negotiation and due diligence beforehand, we were able to secure this unit right on market value at auction - and insert specific clauses into the contract to mitigate their risk.
In their own words, they told us afterwards “Through years of indecision and doubt to commit to an investment property ourselves, we can’t believe how easy you made the process to secure a property.”
It's lovely feedback like this which makes our job so worthwhile.
If you want to invest or buy the right home for your budget, click here to book a time, or call us for a chat about securing your financial independence.
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