House prices on streets with silly names are significantly lower than houses on nearby streets, a study by Victorian school students has found.
High school girls at Sacred Heart College (SHC) in Geelong conducted the research with guidance from the school’s head of science, Adam Cole.
The students identified 27 streets in Victoria with silly names, including Butt Street, Wanke Road and Fanny Street.
“We looked at them on Google Maps and found two adjacent streets with relatively normal names,” Dr Cole told ABC Radio Melbourne’s Jon Faine.
Working with staff from the Australian Bureau of Statistics, the University of Sydney and a Melbourne real estate agent, the girls analysed house sales on the streets over the past 47 years.
They found that property prices in streets with silly names were about 20 per cent lower than properties in the normally-named roads.
As the report notes, that amounts to a $140,000 saving on a median-priced Melbourne house.
To explore the reasons behind their findings, the girls surveyed 323 adults about their attitudes towards silly street names.
One third of those surveyed said they would not be happy living in a street with a name like Beaver Street, Willys Avenue or Grogan Court.
Dr Cole said it was likely this affected the supply-and-demand equation for properties on those streets.
“We think that there is a proportion of people that would not be comfortable living in those streets, so they don’t compete for those properties and that would drive prices down,” he said.
“We think it’s probably got to do with a proportion of people being embarrassed by the address when they have to give it out.”
The silly name effect was more prevalent in the capital city suburbs than in regional areas, Dr Cole said, which was “probably because there’s more supply, there’s more choice in Melbourne”.
The price discrepancy was also greater in lower-priced properties than more expensive ones.
Research a long-term project
The team behind the study analysed more than 4,500 property sales totalling nearly $1.5 billion to reach their findings.
The research was conducted by members of SHC’s Bradbury Club, which students can elect to join to pursue long-term science, technology, engineering and mathematics (STEM) projects.
“We don’t talk about science, we don’t talk about coding or geography or anything like that,” Dr Cole said.
“We just have a project to do, and we get it done, but along the way the girls will be learning.”
Originally Published: www.abc.net.au
Millennials driving new-found optimism in housing market
HOME hunters have singled 2018 out as the year they will finally make a move on the housing market, with Millennials driving the newfound optimism.
A NEW wave of optimism has hit the housing market, with Aussies singling out 2018 as the year they’ll finally chase down their dreams of property ownership — and Millennials are leading the charge.
A national poll has revealed two in five people believe it is a good time to buy a home amid rock bottom interest rates, less competition from foreign buyers and a national cooling in house prices.
Nearly a third of those surveyed plan to buy property this year, whether upsizing, investing, moving to a new area or buying their first home, according to the YouGov Galaxy Poll commissioned by Realestate.com.au.
Millennials have driven much of the new-found optimism, with more than half of those born between 1983 and 2000 planning to pull the trigger on a home purchase.
Realestate.com.au head of home loans Andrew Russell said the increased optimism was the result of a shift to more stable price movements amid a low interest rate environment.
“With a lot of the recent commentary talking about a slowdown, some buyers may be looking at the market and thinking it will be a good time to buy,” Mr Russell said.
Activity on Realestate.com.au’s home loan platforms showed confidence was at a high among one group in particular, he added.
“Excitement is coming from all categories of buyers, but especially first homebuyers,” Mr Russell said.
“It shows that the dream of home ownership has continued to grow and first homebuyers are more confident they can achieve that dream than perhaps they were in years past.”
Canstar financial services expert Steve Mickenbecker said some homebuyers may had spotted a rare gap in the market.
“Rates are at rock bottom, are likely to stay low for some time and prices are down in some areas so you’ve got a lot of people saying ‘now’s our chance’,” Mr Mickenbecker said.
“Investor participation is down too and there are less foreign buyers in the market so some (house hunters) may feel there’s more space for them.”
Brisbane couple Matt Brandon, 31, and Alice Tidmarsh, 27, have just bought their first home together and are feeling positive about their decision.
“With interest rates low and the first homeowners grant still available, I think it’s a great time to get in to the market,” Mr Brandon said.
The Millennials have purchased a new townhouse in a residential development in Cannon Hill and will be paying only $25 more a week than they currently are renting.
“Our plan was to buy something new and live in it for one to two years,” Mr Brandon said.
“We would like to build a portfolio in the future.
“This isn’t going to be our last home — it’s a stepping stone.”
Aaron Woolard of Place Estate Agents said about 80 per cent of his clients were Millennials renting in the trendy, Brisbane inner-city suburbs of New Farm and Teneriffe, who were now looking to buy there.
Mr Woolard said Millennials were willing to spend up to $1 million to get into those suburbs, even if it meant taking on a bigger mortgage.
“Most people I talk to want to get into the market and invest wisely,” he said.
“They have drive and ambition to reach their goals, and one of those is property.”
Mr Woolard said he had also noticed an increase in the number of young people wanting to take advantage of the extension of the Queensland First Home Owners’ Grant to June 30 this year.
The research surveyed more than 1000 people across the country under age, gender and regional quotas reflecting ABS demographics estimates.
The survey also included a mix of renters, adult children living with their parents, mortgagees and those who owned their properties outright.
With less barriers to potentially shut buyers out of the market, those with property ambitions said lofty prices would likely be their biggest obstacle.
More than half of respondents (53 per cent) said high prices would be the factor most likely to derail their property goals for the year, followed by not being able to borrow as much as they would like (30 per cent).
To combat those challenges, 84 per cent of Australians were prepared to make sacrifices to get into the market.
That percentage rose to 94 per cent for Millennials, who were more likely than Baby Boomers and Gen Y buyers to forgo luxuries such as a new car, overseas travel and new clothes, among others.
“Young people are determined to get into the housing market,” Mr Russell said. “They realise how much a home loan will impact their lives and they’re willing to make sacrifices.”
WHAT MILLENNIALS WOULD SACRIFICE FOR HOME OWNERSHIP:
— New car 62%
— New clothes 58%
— Eating out/going to movies 56%
— Domestic holidays 50%
— Overseas holidays 68%
— Private health insurance 36%
— No sacrifice 7%
(Source: YouGov Galaxy poll)
Originally published: www.news.com.au
Chinese New Year home hunting surge tipped for Brisbane
Linda and Steve Pearce are selling their home in Eight Mile Plains during the Chinese New Year period. Image: AAP/Steve Pohlner.Source:News Limited
CASHED-UP Chinese tourists have descended on Brisbane for Chinese New Year — and many are going property hunting.
From today, the state’s Chinese community officially begin celebrating the Year of the Dog, but some real estate agents are hailing it the Year of the Deal, with the seven-day holiday viewed as the ideal time to scope out potential investments.
Brisbane real estate agents are reporting an increase in interest from Chinese buyers in the local property market, with 2018 considered to be a lucky year to invest in bricks and mortar.
Data from realestate.com.au shows Chinese searches for property in Brisbane for the six months to the end of January increased more than 66 per cent compared to the same period last year.
The most searched suburb was South Brisbane, where searches increased by a whopping 300 per cent, followed by the inner west suburbs of St Lucia, Toowong and Indooroopilly.
According to China’s largest real estate website Juwai.com, Australia is the second most in-demand country among Chinese property investors after the United States.
Juwai chief executive Carrie Law said some Chinese investors had postponed purchasing property abroad so they could buy this year instead.
She predicts a big upsurge in activity in August, because it will be the 8th month of 2018.
It has long been known in real-estate circles that an address or price that includes the number ‘eight’ — which when spoken in Cantonese sounds like the word for “prosperity” — can make a property more popular with Chinese buyers.
Melbourne is the most popular city for investors, followed by Sydney and Brisbane.
The Gold Coast has also experienced a resurgence in popularity among Chinese buyers.
LJ Hooker Sunnybank Hills partner Zora Liu said she had noticed an increase in Chinese tourists arriving in Brisbane earlier than usual this year.
Mrs Liu said she was expecting strong selling activity, describing the period as “like Christmas for Westerners”.
“It’s policy in China to have a longer holiday period over the New Year festival and many will have enough time to travel to Australia for the period,” she said.
“Earlier this week, I met a gentleman from Beijing who was intending to stay in Brisbane until New Year and he is on the lookout for property with a budget up to $2 million.
“In general, Chinese buyers don’t hesitate to spend for real estate. In China, they invest in stocks just as they do in property but, in Australia, they don’t feel as comfortable in understanding the sharemarket, especially when English is not their first language.
“That’s why property is so popular — they can see a block of land or a home and appreciate its value and opportunity.”
While the Chinese Government has restricted funds from exiting China for real estate purposes, many Chinese-based investors are still able to purchase property through funds held outside the mainland.
Mrs Liu said there were pockets around Brisbane which held extra appeal to Chinese buyers, including Eight Mile Plains, Sunnybank, Sunnybank Hills and Stretton.
In the past 12 months, she said there had been 25 house sales above $1 million in Eight Mile Plains, with all but one attributed to a buyer with Chinese heritage.
“Eight Mile Plains has a lot of large homes with luxury appointments, which is a visual sign of wealth and success; this is a common ideal for Chinese,” Mrs Liu said.
“The Sunnybank area, close to Market Square, is very popular as this is the social hub for Chinese. It’s like Brisbane’s own little Hong Kong.
“Neighbourhoods which are close to bus routes to (Sunnybank) Market Square and the city are very popular. There is a lot of multi-generational living in Chinese households so they older members of the family, or the young teenagers, who may not drive, need access to bus services.”
Mrs Liu also said school catchment areas were also an important factor for Chinese buyers.
“Anywhere around Brisbane State High and Mansfield State is always very competitive,” she said.
“We’re seeing more million-dollar sales in Wishart because parents want to push into the Mansfield (State High School) catchment area.”
Steven and Linda Pearce are auctioning their property at 10 Azzure St, Eight Mile Plains, this Saturday, hoping the Chinese New Year period will prove lucky for them.
“We knew this weekend was the start of Chinese New Year,” he said.
“It’s when the Chinese get away on holidays and like to buy property.
“It’s not number 8 though, it’s number 10!”
The couple has outgrown the five-bedroom, four-bathroom house and are looking to downsize.
KEY FACTORS FOR CHINESE BUYERS IN BRISBANE:
*Proximity to Sunnybank Market Square
This is a major social and commercial hub for the Chinese community, so properties in close range are in high demand.
*Access to bus routes
It’s not uncommon for multi-generational living in Chinese households.
Older family members and teenagers, who often do not drive, need access to public transport.
Homes are a sign of wealth and success among the Chinese.
Grand homes throughout Eight Mile Plains and Stretton are of particular appeal.
Originally published: www.news.com.au
How to make the most of a property market on the turn
Just how much the nation’s property market is turning depends on where you are. Residential real estate in Sydney and Melbourne peaked last year, say market specialists, and this weekend’s auction and sale results across the country are expected to show who can motor along as before or whether you need to change direction.
Sydney’s property values have fallen by just over 3 per cent since last July after rises of more than 75 per cent over the past five years, making it the second most expensive city in the world after Hong Kong. Melbourne, which is among the five most expensive cities, has come off by just 0.4 per cent since November after rising more than 60 per cent over five years.
“It looks pretty mild so far,” says Tim Lawless, head of research for CoreLogic which monitors property prices. “But it is still early days.”
Tailwinds driving market growth include a rising population, strong economy, employment growth and historically low interest rates, especially for buyers with at least a 20 per cent deposit.
Headwinds include lack of affordability in major cities and tighter credit conditions imposed on new and existing borrowers by lenders under pressure from prudential regulators. Arsineh Houspian
Headwinds include lack of affordability in major cities and tighter credit conditions imposed on new and existing borrowers by lenders under pressure from prudential regulators to keep a lid on rising costs and build a buffer against sharp economic shocks.
Those winds will become much stronger if interest rates begin to rise.
Brendon Hulcombe, chief executive of valuer Herron Todd White (HTW), says ways to handle a turning market are complex because real estate differs across the country. Here are four strategies to help navigate changing conditions.
Focus on location
Melbourne and Sydney’s house and apartment markets are past their peak and starting to decline, according to HTW analysis.
The question is how steep and long any fall will be.
“There is still strong demand for quality, well-positioned property,” says Christopher Koren, a buyers’ agent with Morrell and Koren in Melbourne.
Shaun Thomas, residential director for HTW, also says there is strong demand for quality, well-located property, particularly if it is affordable for first-time home buyers.
“There is going to be limited growth in less sought after areas or those with higher concentrations of apartments,” he says.
Melbourne’s growth will “remain stable”, says Perron King, HTW’s Melbourne director.
Residential estates within 10-25 kilometres of the central business district are continuing to expand because of population growth but concerns remain about inner-city apartments and off-the-plan purchases.
It’s a similar story in Brisbane, says David Notley, HTW’s Brisbane director. Apartment over-supply in Brisbane is making some investors nervous but there are opportunities in middle-ring suburbs such as Wavell Heights, Kedron, Stafford and Chermside.
Affordability is a big drawcard for inner-suburban Adelaide properties, says Natalie Patterson, HTW residential valuations manager for the city.
For example, Prospect, four kilometres to the north of the central business district, has properties available in the $500,000 to $800,000 price range for character dwellings on larger allotments.
Risks to another strong year for Hobart include an indecisive outcome from March’s state election, any reduction in first-time home buyers assistance, an interest rate rise and fallout from slowdown in Melbourne and Sydney, says Andrew Peck, HTW Tasmanian director.
There’s cautious optimism in Perth that the worst is behind it in most market segments, says Chris Hinchliffe, Perth director.
Increasing annual population growth of around 370,000 means about 55,000 extra homes are required a year, according to government analysis.
“Unfortunately, the supply of dwellings did not keep pace with the surge in population growth so a massive shortfall built up [which is] driving high home prices,” says Shane Oliver, chief economist for AMP Capital.
“Thanks to a recent surge in unit supply, this is now being worked off. But there is no broad-based oversupply problem. Consistent with this, average capital city vacancy rates are around long-term average levels, low in Sydney and falling in Melbourne.”
Most big lenders and financial companies use confidential blacklists identifying postcodes and buildings they are wary of financing, particularly high-rise, off-the-plan purchases and micro-apartments in central Melbourne and Sydney. They have also tightened acceptable securities and income to support loan applications.
Drill down on finance
Owner-occupiers with a deposit of at least 20 per cent, regular income with a good savings and credit record are highly coveted by lenders who are offering great deals to win their business.
For example, Westpac Group is offering a 3.59 per cent variable rate for owner-occupier loans with principal and interest repayments. It is the lowest rate since the 1956 Melbourne Olympics, the year television was launched in Australia and mortgages were repaid in pounds and pence.
It pays to shop around, which is easy with the help of online websites like Canstar, RateCity and Finder.com.
Brokers such as Mortgage Choice claim they can probably knock another 100 basis points off many lenders’ headline standard variable offers.
Lending markets have changed in the past two years as prudential regulators moved to prevent reckless borrowing and lending drive up property prices, increase debt and make the system vulnerable to economic shocks.
It means the average interest-only investment standard variable rate has risen by more than 44 basis points in the past 12 months alone, according to Canstar.
Lenders are also much more closely scrutinizing a borrowers’ capacity to comfortably pay a loan for the full term.
“Be prepared for lenders to ask very specific questions about sources of income and monthly expenses,” says Christopher Foster Ramsay, principal of broker Foster Ramsay Finance.
Borrowers switching a low-cost interest-only term loan into a principal and interest mortgage need to prepare to show their lender they can service loan rates as high as 7.25 per cent.
“Start talking to lenders and brokers six months out from the end of the fixed term to discuss strategies for meeting the serviceability rates,” says Foster Ramsay.
Be realistic on returns
Property is a long-term investment. The cost of an average house in Sydney in 1993 – whose buyer would this year be completing payment of a 25-year mortgage – was about $188,000 (now about $1.1 million). In Melbourne it was $126,000 (now more than $800,000).
Houses and apartments resold at a loss are typically sold after six years. Owners posting a profit typically held them for a minimum of about nine years, says CoreLogic.
“Speculative property buyers are attempting to time the market,” says Mario Borg, a director of Strategic Finance, a property and financial consultancy. “But it’s not like company shares where you can get in and out quickly.”
For example, moving home costs about 10 per cent of gross sale receipts after paying stamp duty, sales and other costs.
“The best risk mitigator is a long-term strategy,” adds Borg.
AMP’s Oliver says over the shorter term, the likelihood of rising rates and lower rental yields means investors in Melbourne and Sydney need to be careful.
“It’s best to focus on those cities and regional areas that have been left behind and where rental yields are higher,” he says.
For example, 12-month rental returns on Sydney houses have increased by about 0.3 per cent, compared to Melbourne’s 5.3 per cent. In Brisbane returns on houses and apartments have fallen by up to 1 per cent.
This contrasts with Hobart where returns on houses and apartments have increased by 11 and 14 per cent respectively.
Originally Published: www.afr.com
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