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Real Estate Roundup!

‘Win-win’ for property investors in latest government move

New policies tackling congestion have been announced by the federal government, but how will they affect your property portfolio?
On 9 October, the Minister for Cities, Urban Infrastructure and Population Alan Tudge announced his intent to take on the congestion challenges Australia’s major capital cities are currently facing.

Mr Tudge pointed the finger of population growth and migration as the root cause behind the current congestion challenge.

“The greatest challenge is the pressure it puts on our big cities in the form of congestion. This is a serious problem in Melbourne, Sydney and South East Queensland particularly,” Mr Tudge said.

“This challenge is exacerbated by the fact that 75 per cent of the population growth has been to our three largest population areas: Melbourne, Sydney and South East Queensland.”

To address this challenge, Mr Tudge outlined four key parts of the government’s plan:

A boost in infrastructure spend;
Addressing congestion pinch-points at the local level;
Direct more population growth away from Sydney, Melbourne and South East Queensland to smaller states and regional centres; and
Develop a better population planning framework.
The third part in particular has the potential to influence local economies, as Mr Tudge said the aim is to help smaller states and regions to benefit economically from increased population.

“There is no geographical requirement for a newly arrived migrant. We are working on measures to have more new arrivals go to the smaller states and regions and require them to be there for at least a few years,” Mr Tudge said.

“In that time, the evidence suggests that many will make it their home for the long term.”

How will property markets be impacted?

For the smaller areas, property lecturer and chairman of the Property Investment Professionals of Australia Peter Koulizos said the smaller capital cities and regional areas will likely see property prices rise, as he said it all comes back to the simple economics of supply and demand.

“If you increase the demand by increasing the number of people looking for property, and it is very hard to increase supply in those areas because they are more remote than the major capital cities, then there will be property price increases, there is no doubt about that,” Mr Koulizos said.

However, for the larger areas, property prices would be challenged, according to Simon Pressley, head of research at Propertyology.

“Population growth last year broke through 100,000 for the first time on record but 84,000 was from net overseas migration,” Mr Pressley said.

“It would be interesting to see what would happen to Sydney property prices if you stripped out a large chunk of that overseas migration component.”

Mr Pressley said a proper population plan for Australia that received support from both major parties was “well overdue”, as the current congestion challenge has come from failures.

“Australia is one of the least dense countries in the world. Our problem has never been the size or density of our population – we’ve failed grossly with things like disbursement of population, infrastructure investment, and economic development,” Mr Pressley said.

“We’ve been terrible at effectively communicating the appeal of many parts of the country outside of our four or five biggest cities.

For Mr Koulizos, the announcement was “a win-win-win” scenario.

“It’s a win for those people in the major capital cities who think that they’re cities are getting too congested, it’s a win for the regional centres and the smaller capital cities who are desperate for population and it’s also a win for the migrants because there’s far better chance of being able to afford to rent or to purchase a property in a regional centre or small capital city than a major capital city,” he said.

However, both Mr Koulizos and Mr Pressley both believed there needs to be confirmed infrastructure investment in order to support an increase of population for smaller areas.

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Shift in home loan preferences following out-of-cycle interest rate hikes

Demand for fixed rate home loans surged over the month, accounting for almost 24 per cent of all loans written throughout September 2018, according to Mortgage Choice’s national home loan approval data. This is a monthly increase of over 6 per cent and the highest level since December 2017.

CEO Susan Mitchell said that the shift in borrower demand was largely anticipated given the recent changes in the lending landscape.

“September’s data is unsurprising when you consider the recent rate hikes to variable rate home loan products announced by three of the four major banks. This would no doubt be encouraging more borrowers to fix,” the CEO said.

“History has shown that when the majors lift their rates, smaller lenders are quick to offer competitive pricing on their own products in order to attract borrowers in search of a better deal. However, we have seen limited market movement due to a combination of factors such as the regulatory environment and increasing wholesale funding costs, which would no doubt be affecting smaller lenders.”

Ms Mitchell said that other shifts were also evident.

“Institutions across the country have become more selective about the customers they lend to, vying for borrowers in a healthy financial position. Indeed, lenders are seeking high-quality borrowers who present low risk.”

Ms Mitchell said that when mortgage interest rates are on the rise, borrowers are more likely to consider fixing, either in part or all of their home loan.

The data found that borrowers in Queensland were the most likely to choose a fixed rate mortgage, with 26.47 per cent of borrowers choosing this type of home loan product.

This was followed by New South Wales where 26.24 per cent of borrowers chose to fix.

Victoria has seen the lowest level of fixed rate demand for eight consecutive months. However, demand for this type of product rose to almost 17 per cent in September, a monthly increase of almost 4 per cent.

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Hello world!

Di Jones launches 3-year academy to develop its top sales talent

Di Jones will launch a new academy program called Future Superstars Program, an intensive three-year initiative designed to produce top sales agents, as it invests in attracting and developing the sales leaders of tomorrow.

CEO Rob Ward said that one of the network’s key strategies is to nurture and develop new talent within the real estate industry.

“The Future Superstars Program has been created to facilitate the exponential growth of individuals by offering participants training, coaching and mentoring, and a support network to maximise their chance of success,” Mr Ward said.

“There are many agents in the marketplace who aren’t reaching their potential and, as part of our program, we are actively hunting these associates and business development managers in our industry.

“We found that the majority of companies are either a franchise or one-office boutique that often had its director as a selling agent.
Mr Ward said that property management BDMs and sales associates often hit a ceiling when moving into an agent role in these businesses, as they are then competing against their employer.

“I am not an active selling director and will personally mentor the Future Superstars,” Mr Ward said.

“As a result, we have an investment in their future success and offer unparalleled support in helping them become the best in the market.”

After an extensive search and interview process, Joe Sissons and Sam Outch became the first inductees into the program.

“We are incredibly excited to be investing in their future and to be working with them. Joe joins the Di Jones North Shore team and Sam is at Di Jones Northern Suburbs,” Mr Ward said.

“The training for the program runs on strict KPIs that can be hard for most agents to achieve, but the results will be their reward.”

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We’re ready for the TRID rules!

At 5 p.m. EST June 17, the Consumer Financial Protection Bureau issued a statement that the effective date for the TILA-RESPA Integrated Disclosure (TRID) rules would be pushed back to Oct. 1, 2015.

CFPB Director Richard Cordray said in a prepared statement: “The CFPB will be issuing a proposed amendment to delay the effective date of the Know Before You Owe rule until Oct. 1, 2015. We made this decision to correct an administrative error that we just discovered in meeting the requirements under federal law, which would have delayed the effective date of the rule by two weeks. We further believe that the additional time included in the proposed effective date would better accommodate the interests of the many consumers and providers whose families will be busy with the transition to the new school year at that time.”

Rainier Title has been working towards the TRID implementation for over a year and felt prepared for August 1st. However, with the proposed delay we will be taking this opportunity to continue our education and training of TRID. While we believe that we have been proactive and ready for this change, there are still so many unknowns that will have to be addressed at the time of implementation. The industry should still prepare for 45-60 days for transaction to close due to the new timing parameters of the forms.

We’re working hard to be ready for all changes!

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Real Estate Roundup

Active Home-Building Industry Will Lead to More Demand for Warehouse Space

Strong consumer spending and the rise in housing construction activity are currently the prime factors for the incredible rebound of the U.S. industrial real estate sector, and experts say as home buying continues to increase, so will demand for warehouse space. — From NRE Online

To Buy or Not to Buy: That Is the Developer’s Question

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