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Here are some recent net migration figures for various states. Unfortunatley it isn’t broken down by city [glum]
Basically for QLD it says that numbers are down from last year. As I see the math this is about 515 (Net) people moving to QLD each week last year – what % move to the SE??? Then you would have to add to that migration from overseas. Certainly the graph at the bottom shows QLD as the major destination still.
Ohhh I found some overseas net migration figures http://www.abs.gov.au/ausstats/[email protected]/39433889d406eeb9ca2570610019e9a5/6a8f1b1a1f70ae1aca256e5a00756134!OpenDocument
for QLD this looks to be about 568 people a week, once again though nothing SE specific
Why not too. I moved here 4 years ago from Canberra. No way I am ever going back south!!! This truly is god’s country [thumbsup2]
Cheers,
here is the article
A sceptic’s view of the property boom
The game has changed and not for the better, in the opinion of Bill Bowness, who says it could end in tears.
Bill Bowness fairly drips with caution. With a dogged prudence he has ridden the booms and the busts of property for more than 30 years.Last month he decided to sell up in a $330 million deal with FKP Property Group.
As he explains his motives for selling the company he co-founded, Wilbow Corporation, there is the usual talk of more time for tennis and seeking a new challenge. Yet the intensely private Bowness, 62, also has a very strong view on the future of the property market and he is not an optimist. He says the sun has set on an unprecedented boom in Australia’s residential property market and the next bull run will be different.
Bowness, like many long-timers in the industry, appears bemused by the quantity of investment capital available and the willingness of its minders to take a punt.
“There is so much money around there are fund managers who are wanting to do all sorts of things,” he says. “The money game has finally found the residential land game and probably joined it faster than [it] should have.
“There will be tears. I would have thought some of the funds seem prepared to pay higher prices than what I will call a private developer.”
His own deal is a perfect demonstration of the heated market mood. It took FKP less than a day over tea and biscuits with institutional investors to raise the $112 million for the purchase of his business.
It’s a completely changed world and Bowness has been in the business long enough to see the metamorphosis of the property industry.
“When I started there were literally hundreds of people doing 100 or 200 blocks per year, now it’s corporatised,” he says.
“The colour is going, not in a bad sense, but you go to the UDIA [Urban Development Institute of Australia] lunch and the environment is absolute dark suits. Go back 20 years ago and it was white shirts and gold chains.”
Not that he suffers from the common allergy to all things accounting shared by most old-style property developers.
In fact, Bowness, as an unremarkable high school graduate, started his professional life in a branch of the National Bank of Australasia in Queensland.
He emerged 10 years later in Melbourne with a scholarship-financed commerce degree and serious ambitions.
“My banking experience I don’t regret one little bit, in fact it has been a major plus,” he says.
“I learned during my banking experience that if you look after your bank, keep them informed, let them know what’s going on, keep your word, they will take care of you.
“The other fact is that I trained as a CPA – the capacity to understand financial statements, balance sheets, cash flows has been so important.”
Bowness concedes that this is not the language of the traditional property-is-in-my-blood developer.
“Quite a number of those people also go broke,” he says.
Aside from his obvious misgivings about the fast money feeding into property at the moment, he is still cautiously, of course, optimistic about Melbourne’s future.
“If there is no artificial shortage of land, then it should be reasonably stable. The market should be there to give some moderately consistent growth.”
You can forgive Bowness for viewing the future with suspicion. He saw the boom of the mid-1970s become the downturn of the early 80s and the boom of the late 80s disintegrate in the early 90s and is now leaving as the market bottoms out from the longest boom in history.
Perhaps it’s because he has survived it all.
“We played the late-80s boom as hard as we could, as we knew it would come to an end, and we prepared ourselves accordingly.”
His golden rules for working through a bust sound surprisingly simple: look for warning signs, do not get caught with stock or debt when the music stops, and keep plenty of good old cash at hand.
“We had the fiscal balls,” he says. “What breaks developers is not a bad buy but the holding costs.”
Spotting the warning signs is the key, and he says that comes from knowing your knitting.
“Understand the economic and political scene, understand that the world changes, [that] interest rates can go up,” he says. “You didn’t have to be a genius to see that the market was going to slow after the introduction of the GST.
“But one of the great things of a bust for a professional developer is it puts the part-timers – the would-be, could-bes – out of the marketplace.”
Planning and prudence are only part of the equation.
“Every developer has luck from time to time. If you play the game right, you almost deserve [it], the secret is to exploit it to the full.”
When you have luck, Bowness says, it is important to recognise it and not put it down to some special skill. It’s a rule he calls: don’t believe your own crap.
“I have rolled the dice a great deal but I have always had a plan A, plan B or plan C.”
Diversification was also an important part to that equation. For a small business, Wilbow had an impressive geographic footprint with commercial and residential operations in Melbourne, a residential business in Queensland as well as offices in New Zealand and in Texas.
In fact, by the late-1980s Wilbow was the third-biggest greenfields developer in Victoria.
In his early years in property the strength of the Australian dollar against the greenback allowed Bowness to get a taste for American property and a network of contacts.
In the early 1980s they pointed him towards Texas, which at the time was a basket case, but it did not go to plan immediately.
“There was hardly a bank or building society in the state that failed to go broke, but people said ‘Texas is a big strong state, it is going to come back’.
“We bought about 500 rental flats there – they were a total waste of time – essentially, crap is crap. We had a lack of knowledge, wrong locations, wrong stock.”
But as the 1980s wore on, Bowness was travelling there regularly and could see the family housing market was recovering.
“The timing was very fortuitous,” he says. “The local builders were starting to come back, the single-family market was starting to come back and the local builders couldn’t buy land, their balance sheets were too constrained, and local developers had mostly gone down.”
Again cash was king in a recovering market. Incidentally, Bowness did not sell his Dallas-based interests in the FKP deal.
Well known in the Melbourne property scene, he is variously described as cantankerous, honest, cautious, talented, private, hard-nosed and very successful.
He is certainly a straight talker. The monthly lunches of the UDIA are a Melbourne institution, and at one such lunch recently Bowness had a typically direct question for a state government speaker. “Can you look us right in the eye and say these funds will be spent there, for the advantage of those people living there, and not on the socialist chardonnay set?” he asked.
This was not bluster. Bowness is a man who picks his words carefully. Frequently, while speaking to The Australian Financial Review, he raises a hand in a stop signal indicating he needs to gather his thoughts out loud, in his headmasterly tone, before committing them to the record.
Bowness has also recently flagged his exit as chairman of the Monash Gallery of Art, which he helped save from closure seven years ago.
That Bowness ended up as the saviour – apart from his time he has donated hundreds of thousands of dollars to the gallery – of a large suburban art gallery seems to be an accident of geography.
The way he tells it Wilbow was based in Monash, was the biggest developer in that part of Melbourne and so had an obligation to contribute.
“I believe if you take, you should give back,” he says.
“I had been to the gallery a few times, I was collecting art and building a collection . . . I just phoned up a few people.”
Building a collection indeed. The walls of his offices in suburban Melbourne are jam-packed with paintings bearing names like Blackman and Boyd.
A Rupert Bunny sits on the floor in a spare office awaiting a home.
His assessment of his time at the gallery sounds very much like balance sheet entries.
“It was costing council $450,000 a year and getting 12,000 people through it a year,” he says.
“Now we cost the council $350,000 a year and get 55,000 people through it.”
He also sponsors a charitable trust and is a patron of the Australian Ballet but, with that characteristic gesticulation, declares the topic of philanthropy off limits and awaits the next subject.
It is a desire for privacy that is hard to begrudge. Bowness is not one who has ever sought the spotlight that some of his counterparts pursue with such vigour.
His family and personal life, not surprisingly, is a palm-forwards area as far as this discussion is concerned.
“I have always had a low profile. Why do you need a high one? Those who need to know, know,” he says. “Melbourne has 3.5 million people but it is still a small town . . . there are no secrets.”
As the deal with FKP settles over the next few years, it is believed Bowness will walk away with more than $110 million in his pocket.
Aside from Texas, Bowness plans to open a small office in Melbourne and says he might get into mezzanine financing or joint venture funding.
Looking back on the past 30 years he says he has no regrets, despite saying he believes he could have possibly made more money.
“I sleep well . . . there’s a saying you either eat well or sleep well.”
My partner and I love property ladder, selling houses and how to be a property developer. They are great shows to watch. The american reno shows on the how to channel are so scary. Over there is seems anyone can do electrical and plumbing work. The show is like “this is so easy” as they plumb a bathroom or wire up a kitchen!!!!
Things like tiling and painting is all sweet but that other stuff if you get wrong could damage your house big time or yourselfThank you all for your responses. You have made things that little bit clearer. I am printing out the ATO guide and will review it in more detail, I did look at it initially but found it confusing as it is combined with information for partnerships. I think it will make more sense now thanks to your assistance.
I am also looking to get one of the books recomended previously on this forum by Ed Chan or Dale GG.Thanks again all,
Great post Clones a very interesting article.
I must admit to being completley naive with regards to Super in particular SMSF. I know how much super I have and the contributions my employer and I make but that is about it.
Can anyone explain to me how this “tax-free” super is some kind of super investment? (no pun intended)
Cheers,
Terry and Cata,
Thanks for your thoughts. I appreciate the opinons of more experienced investors such as yourselves. I will try it and see how I go this year [biggrin]
Cheers,
I will answer wealth4life’s question first with regards to what our long term goal is in property (though it is probably better suited to a post of it’s own)
I am in my late 20’s (partner early 30’s) and have a long term goal of being semi-retired by 2020. For us this would require approximatley a 1.5 – 2 million dollar property portfolio (approx 40% LVR) so long as we had our PPOR paid off. We would both work part-time to suppliment our income. We would also like to have about 250,000 in shares/other investments.
Beyond that we would see how that lifestyle suits us, I can’t see us really ever “retiring” we would get too bored. working part time would give us the flexibiltiy to purse our own hobbies and other investment opportunities. When our Super becomes available is another chance to re-evaluate.
back to the topic at hand
We are novice investors with 1 investment property and a share in another (family trust). We are based in QLD and now is a reasonably good time to buy going on the stage in the property cycle we are in. Other area’s of Aust i.e Perth are not such good opportunites at the moment.
Personally I see another 2 rate rises at least and am currently saving my $$$ with belief in Steve’s “cash is king” theory. I am currently researching as much as I can as to where I will buy in 6 – 9 months time in QLD. I believe I could get a pretty good deal now but feel if I wait that little bit longer that I will;a) avoid mortgage insurance (something I hate so much… why do I pay the banks insurance !!!!!)
b) be able to buy 2 property’s in quick succession
c) the deals that are around today will still be there, but there will be more of them.Is this procrastination…….. perhaps, I don’t know. I tend to be very impatient and want to do something for fear of being stagnant and missing out. Fortunatley my partner is the gently yin to my yang, she points out that although we could buy now. Signs point to the market being more favourable and us in a better position in 6 months.
Keep in mind i am talking specifically about QLD, the different states are in different stages in the property cycle and my research is only based on parts of QLD and I wouldn’t pretent to know even all of this state yet alone any others.
My thoughts,
Thanks for the feedback guys.
It has made things a little clearer in my head with regards to the attidude to NG in this forum.
For my own purposes I have been happy making some CG, developing some equity and having taxation advantages. I really only bought a house initially as the prices just seemed to keep rising and I was worried if I didn’t jump in I would never be able to afford a house. I am glad I did as it gives me more options now as a more informed investor.
I read your post Derek and found it interesting and informative. There are some options there that I was already looking at and some new concepts to investigate. Much apprecieated.
Cheers,
[email protected]Hmm rents are increasing also though never enough to catch up to consecutive interest rate increases.
If I took a simplistic view then I would say that the rise would cause a drop in prices however I feel that even if it was a .5% rise this time that the price never really drops but doesn’t keep pace with inflation and other economic factors like the average wage.
I read a post on this forum from an investor who claimed he had some properties drop by 20% in value about 7 years ago?Not knowing much about trends I wonder if the housing market does ever take such a dip overall or if he had an issue with a particular area. I know all the talk about “being safe as houses” and the value increasing every 7-10 years (strongly debated by foundation in another post that I am struggling to digest) but does the market ever really take a fall?
Cheers,
McDeyessalways learning
mspartal,
I have been looking at this product in QLD http://www.granitetransformations.com.au/
This resurfaces your existing benchtops with a granite based product. It has a 10 year warranty and is apparently reasonably priced though I haven’t got a quote yet.
I am not typically a fan of resurfacing however a friend of mine worked for a commerial company that started to get this product in when it first came to Australia and she reckons it is wonderful. It doesn’t quite look as good as pure granite but I think it looks way better than laminate and it is more durable. I am looking at this product to really add some value to a kitchen reno for a budget price.
They do have an office in Perth if you check the locations.
Hope this helps.
Cheers,
[email protected]Hello all,
I think this is a fantastic idea. My partner and I are based in Brisbane. We have one investment property and are interested in getting more into the game. It would be great to talk to other like minded people. August 2nd 7.30 at breakfast creek was published. Is that the go?
Cheers,
[email protected]Thanks Terry, this sure is theoretical. I am just trying to put the research together for how this whole thing is going to work. My partner and I are young, have time, equity (from our 1 ip) and cash. It is just a matter of whether the market in QLD is right and if we can make a profit that is worth our time. We both enjoy looking at the property market and trying to find a bargain so for the next year or so this is going to be a hobby outside our normal rat race jobs.
The research continues, I am sure you will all hear more from me if we progress. I hope to one day be able to give some advice on these forums instead of just asking questions.
I am meeting with my accountant later in the month so will be talking with him about what options are available, I appreciate the info I get on this forum as it means I get a lot more out of the time I spend with a tax professional.Thanks again to all who responded.
Cheers,
[email protected]I am not carrying out a business…. yet. I wanted to try my hand with a few renovations and see how it went.
I only have one investment property and was looking to do a few reno’s next year. My tax is all sorted this year, I am planning how things will go next year. I am one of those crazy people who likes to do some research before spending lots of money [weird]Thanks again for your assistance.
[email protected]Thanks foundation, a very interesting link. I believe I would fall in to this category;
snip
profit making activity of property renovation, your position may be briefly summarised as:- the CGT discount and the main residence exemption do not reduce your net profit
- your net profit (or loss) is included in your income tax return – it is calculated as the difference between your receipts (such as money or other goods of value) from the sale of the property and the costs incurred in buying, holding, renovating and selling the property
- if you make a net loss, it can reduce your other income for the year
- you also make a capital gain from the property, however, your capital gain or capital loss is effectively reduced by any amount of net profit or net loss included in your return, and
- in the unusual case that your capital gain exceeds your net profit, other capital gains tax concessions may apply.
snip
I am particularly interested in the second point “your net profit …. is calculated as the difference between your receipts …. from the sale of the property and the costs incurred in buying, holding, renovating and selling the property “This says to me;
Sale of the property $275K
deduct agents fee’s, interest on repayments and renovation costs = about $12K ??? huge guess
Net profit = $3000 (wow don’t spend it all at once)
I would then pay tax on the $3K as per my income tax rateSeems logical, I will search for further clarification on “costs incurred in buying, holding, renovating and selling the property “. Do loan repayments count? I am guessing not [glum]
Thanks again,
Cheers,
[email protected]Have you thought about shares? The current commodities boom is going well thanks to our friends in China [biggrin]
Though it is good to diversify I am guessing you were asking more specifically about property.
I bought my first investment property a few years ago in QLD without knowing too much and just wanting to get into the game. It is going ok but I would like to be more informed and researched before buying again.
Like yourself I am confused as to what direction the market is taking. For a long time I have looked at things like the massive debt held by individuals in Australia, and that is household not just credit card. I have felt that many people live beyond their means and when interest rates increase by a few % things are going to get tough. Your post suggests the more heavily geared are already hurting. In many respects I feel the current commodities boom is a major factor in keeping us afloat as a country. I am not sure what else there is going to be when that dries up. I don’t think there is going to be some massive drop in house prices, it is more likely that the market “levels out” to allow incomes to catch up and improve affordability. How long with that take….. who knows. Interest rates always play a big part and they are certainly creeping up. I have read that by mid – late 2007 or early 2008 affordability will be improved.
I know that even in a “down” market money can be made by savvy investors but typically I believe people who play it conservative seek to invest for the long-term and reduce the debt in their portfolio. Others tell me that as the property market falls, shares often rise…. maybe those commodities aren’t looking so bad after all!I don’t think I have been very helpful, but I think this is a great question and would love to hear what the more experienced investors on this forum think.
Cheers,
[email protected]Thanks very much to everyone who has responded, I appreciate the feedback. [biggrin]
I did have a quick look at IKEA kitchens, they did seem a bit more expensive but perhaps the quality is better. I am mindful of the time it may take to do the work. I have only previously ripped a kitchen out and not installed a new one.
I will look out for aution houses as another possibility for a kitchen. A face lift is another great idea I was talking to some friends last night who had done that to theirs I had aways assumed it was brand new so it is certainly an option that can work.Cheers,
[email protected]Hi there,
I am based in QLD, I have one investment property and am looking to get another to renovate and rent/on-sell. I thought this was a good question with regards to how the current market is with regards to renovations.
Even in an up market there are opportunities to find a bargain but I guess you possibly limit your profit potential?? I don’t think QLD is booming like WA but it hasn’t peaked. I notice Steve’s advice on waiting till the budget and current interest rate hike settle’s down. I will take the time to research I guess, but would be interested on other members thoughts.Cheers,
Dyce
It isn’t often you hear a bombers fan say this but “Well done Richmond” [
]I think typically no matter how much you earn you always want more. I have climbed the ladder in my industry and you always adjust to your new pay level. Even when I got a 13K pa rise in pay it only took about 6 months to think…well it’s good but more would be better. I saved lots but you always want more [}
]There is also the tax brackets to take into account, I have a friend who was on the same salary as me but decided because he was in the top tax bracket to work part time. He has every Wednesday off and earns maybe $50 less per week than me while still being in the top bracket.
Having said that paying tax takes a pounding in this forum at times. I would like to say that it is an important part of our society. I have read some recent articles that suggest the wealthy in Australia are very selfish. Big business and rich individuals in America and the UK contribute a great deal of money to charities, welfare etc. In this country I think they do about half as much of that. If people want to save on taxes, fine but make sure you give something back to society. The fact is in many cases if you have an abundance of something (money for example), it is coming out of someone else’s pocket somewhere. They don’t just print more of the stuff for you.
*gets off soapbox*
McDeyessWriting down what you spend your money on before you start is the best way to go in my opinion. My accounting class was set to do this as our first task in UNI so we could build a ledger, profit and loss etc. It opens your eye’s as to where you spend your money.
I have an excel spreadsheet that I have configured with mine and my partners budget, it is great as you can see how much money you put away a week will accumulate to in a year. We also split our funds across bank accounts. For example money for Food, Petrol, pocket money, train fare’s etc goes into an account that can be accessed via a debit card. Money for bills and savings goes into our offset account, it reduces the interest on our home loan and we cannot access it via a card. We also have only one credit card between us, we only use this as an interm measure for a large cost and quickly pay it off from our offset account. We don’t have any store cards or anything like that either. We also have an account we put money away for xmas, you know all that extra food and presents, we found it is a time of year when all kinds of unexpected costs come up that you don’t budget for.
We also “buy smart”, home brand sugar and olive oil tastes the same as stuff that costs a dollar more. I believe if you can’t taste the difference then why pay more, for anyone who has read the book “no logo” you know that with the popular brands you pay for shelf space, the “brand”,advertising and for someone to sell it to you. By the same token I have never found a no name washing powder that works on clothes as good as omo for front loaders.
I would also say it depends on your “personality” my partner never saved a cent until we moved in together. Now she has saved enough to pay her car loan off twice as quick and still have more left over.
It is important to reward yourself, I generally save for two things, Investments 90% and “toys” 10%(stuff I want). This way you still get little rewards while doing the big save for important things. There is no point in having money if you can’t enjoy life by going out for a nice dinner occasionaly or going away for a weekend.Happy saving.
McDeyessWithout knowing where these properties are a 100% return on your investment is brilliant, the times when people run into trouble is when they get greedy. If you are looking to sell, now is the time. If you are concerned about penalties from fixed rate loans, why not sell one now and wait a few years to get rid of the other without a penalty. I don’t like paying tax either but it is important to our society, one way to look at it is the more you are paying the more you are getting. If I was in your position I don’t know if I would sell, difficult to say without knowing someones full financial position and how much debt they are comfortable with. For me at the moment I am trying to become more liquid, because the time will come when things are very different to how they are now…..having money at the right time can be very valuable. Isn’t it Steve who says you make your money when you buy not when you sell?
Just trying to provide a different point of view.
McDeyess
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