2014 MARKET

UPDATE

”Brisbane is only just

now starting to take

off and I see much

stronger growth

there – perhaps over

10%.

Terry Ryder - property

commentator and founder of

hotspotting.com.au

Quickly

Combined capital cities

home values increased

by 9.8% in 2013

Interest rates remain at

all time lows

Major bank cut fixed

interest rate

Mortgage enquiries up

15%

Brisbane and Darwin are hot favorites for 2014

The crystal ball - How is the property market expected to fair in 2014? That’s the million dollar question and while know one really knows without

a magical crystal ball, what we can do is look at the most recent statistics,

global and national factors that influence the market along with the opin-

ions of those regarded as property experts around the country.

What are the experts saying in the media?

Interest Rates — which way are they going to go and what should you be doing to pre-pare?

Meet the client — take a look at some eve-ryday investors laying the foundations of their property portfolio’s.

2013 closeout — where did property finish

Queensland Property Advice 1st Qtr 2014

What will 2014 hold? An impressive 4th quarter and overall very positive 2013 around the country was a

great sign of things to come in the property market, with many experts around the

country tipping 2014 to really standout. The graph below illustrates the growth

cycles since 1996 and the impact of the GFC in 2008 which threw otherwise nor-

mal trends out of whack. Over the period from 2009 to 2013 you can see the bot-

tom of the market cycle, drawing a line from 2011 to 2013 there is a clear upwards

trend supporting the recent comments from experts and the media that 2014 is

looking primed for growth. The continuation of this trend relies on many national

and global factors which at this stage are all looking quite positive.

During November, December and January we spent a significant amount of time

around the country speaking with developers, builders, real-estate agents, mort-

gage brokers, construction companies and suppliers in NSW, VIC, SA, QLD and

NT not only forging new and fruitful relationships to benefit our clients but really

getting a true understanding of the demand right across the industry.

Builders commented that lead times for key items was significantly increasing hav-

ing to pre-order sometimes up to three months in advance of when they normally

would. Mortgage brokers had all noticed a significant increase in mortgage en-

quires over the later half of 2013. Auction clearance rates are well back up into the

80% region with many properties going unconditional prior to even hitting the mar-

ket which shows a very bullish trend. Around the capital cities large scale develop-

ments are full steam ahead with the endless sight of cranes around the skylines of

Melbourne, Sydney, Brisbane and Darwin showing the populations thirst for the

inner city lifestyle. Many of which are 80% sold out in the first two weeks.

We looked onsite at a number of new developments, many in early construction

phases and discussed a lot of future developments. The challenge around the

country in 2014 will be finding well priced and situated land as supply really starts

to dry up, which will only drive property prices up further. In the house and land

market there is just not enough supply to meet the demand at the moment. Over

the last six months of 2013 we saw a lot of movement in land prices, on average I

would say approximately $20,000 to $30,000.

Industry experts seem to be in general agreement as to the types of properties

and locations predicted as top performers this year, which is well supported by

recent statistical data and the forecasted data. Of course no one knows exactly

what the future will hold – the risk and the reward is ONLY for those taking action.

9.8% increase in capital city values in 2013 In the latest data from RP Data-

Rismark, 2-Jan-2014, across the

combined capital cities, home

values increased by 9.8 per cent

over the 2013 calendar year.

According to RP Data’s Cameron

Kusher, this was the fastest annual

rate of value growth since August

2010, and the largest calendar

year increase in values since 2009

when home values were up by

13.7 per cent. Looking at the

differences between houses and

units, house value growth at 9.9

per cent slightly outpaced the

overall increase in unit values at

9.0 per cent. The median property

value across all 8 major cities hit

$540,000.

Did you take action and make

money in 2013? Talk to QPA

about a strategy for you

Positive 2013 for property

Source: RP Data-Rismark Home Value Index, RP Data 2-Jan-2014

Interest rate outlook

The RBA has kept the

interest rate on hold at the

latest meeting in Febru-

ary. The ABE (Australian

Business Economists) at a

recent conference expects

interest rates to remain

"on hold” at 2.5 per cent

over 2014, with forecasts

within the group ranging

from a low of 2 per cent

and a high of 3 per cent.

The majority of the group

do not expect the Reserve

Bank to increase interest

rates before the first half

of 2015 – which is positive

news to those looking to

invest over the next 12 to

18 months. Looking fur-

ther out, the group ex-

pects official interest rates

to increase to around 4.25

per cent by the end of

2018. On the back of low

interest rates, continued

population growth and

continued domestic de-

mand, new housing in-

vestment is likely to see

increases over the next

year. (Source Bryce Prosser

1-Jan-2014)

QPA Tip: Play on the

side of caution, al-

ways allow for an in-

terest rate increase of

2—3% when reviewing

your portfolio. Con-

tact Tyson to help

with a portfolio review

and make sure you’re

covered

What are the experts around the country saying…. Terry Ryder, property commentator and founder of hotspotting.com.au,

predicts the big improver will be Brisbane "which is only just starting to

gather momentum". Improvements will be shared across the board.

"Brisbane is behind Sydney and Melbourne after being adversely affected

by the devastating floods of 2011 and the job losses experienced by 1,500

public servants after the election of the Newman government in March

2012.

"Brisbane is only just now starting to take off and I see much stronger

growth there – perhaps over 10%."

No-go areas, Ryder warns, are Melbourne’s Docklands, Southbank and

CBD, where oversupply has stymied the apartment market. Likewise,

oversupply will affect the Queensland coal port of Gladstone, he says.

Ryder is not enamoured with regional city Mackay nor tourism hotspot, the

Gold Coast. "Stay away from the speculative market," he warns, "and buy

in ‘real’ suburbs with real housing where people have jobs and buy hous-

es to live in.

Alan Kohler tips strongest 2014 property price growth for Darwin and Bris-

bane.

"In fact prices have only been rising for nine months, and mainly in Syd-

ney, which saw an extraordinary 15 per cent rise in the median house

price between March and December.

"That sort of pace in Sydney probably won’t continue (it slowed to an an-

nual rate of 9.6 percent in December) but other cities that were left out of

last year’s boom (Canberra, Darwin, Brisbane) could take over and pro-

duce another 10 percent year for the national average," he anticipated.

Darwin—activity, jobs and prospects in the North are looking good for 2014

How to find the best mortgage broker Finding the right mortgage broker is one of the most important steps in any property investment as they are the ones that

will be securing the finance for your purchase so you want to make sure you have the best solution possible that suits your

needs. Just as any profession there are good brokers and bad brokers, so how to you find one of the good ones?

Ask questions—here is a list of the most important questions you need to discuss with any potential broker

Are you licensed to recommend credit?

All mortgage brokers are required to hold an ASIC credit license (ACL) or operate as a credit representative under a

license holder. Ask to see evidence and do your own checking on the ASIC website using.

What lenders are on your lending panel?

A broker’s lending panel is the lenders they are accredited with to recommend loans. Get a list of a broker's lenders and

do some research. Most reputable brokers would offer a mix of banks, non-banks and mutual lenders. Be wary of broker

who only has a few unknown lenders.

How many lenders are you likely to recommend?

Most mortgage brokers will have at least a dozen lenders on their panel and sometimes as many as 30. However, they

are unlikely to be able to recommend loans from all these lenders, so you should find out which lenders they are most

familiar with and ensure you are comfortable with this selection.

How long have you been a mortgage broker for and how many loans have you written?

It’s important to gauge the level of experience of your broker. If he's a rookie, his knowledge may be limited and you may

feel more comfortable with someone who has more experience. It's also very important to ask if they invest in property

themselves.

Which is your favourite lender and why?

Brokers are required by lawyer not to recommend unsuitable loans to borrowers. Many, though, will have a lender they

recommend more than others, and you should find out why. Valid answers could range from lowest rates and fees to

excellent customer service.

How do you make your recommendations?

Many brokers will input your information into some kind of software program to come up with a list of suggested lenders

and loans. However, it is also the duty of a mortgage broker to consider your holistic financial needs and your personal

circumstances.

Can I speak to one or two of your clients?

This is a great way to assess a broker's performance for yourself and whether previous clients were satisfied with the

service they received. Also consider looking at their testimonials.

Do you charge a fee?

Most brokers are free as they are paid by lenders, but some do charge upfront fees for their mortgage advice. A broker

should disclose these fees upfront, but it’s worth checking.

What service do you provide post settlement?

A broker should provide continuing service to her client after the loan has settled. Most lenders pay brokers a monthly

trail commission as an incentive to provide good post-settlement customer service, but even if they don’t a good broker

relies on word-of-mouth referrals and recommendations to grow her business.

(source Jennifer Duke Tuesday, 28 January 2014 Property Observer)

QPA TIP: Mortgage brokers get valuations across a number of properties on a daily basis. A good

mortgage broker will have an understanding of current property values and how your valuation com-

pares. Make sure you discuss with your mortgage broker recent valuations of similar properties to

better understand your situation and work out the right investment strategy for you

Bank valuation vs market value:

what’s the difference? When you apply for a

home loan, the bank will

value the property to

determine the market

value, right? Wrong! So

how can one bank value

a property so much less

than another? The an-

swer lies in the individu-

al bank's tolerance for

risk and the kind of

property they view as

being a safe security. In

addition banks have

postcode restrictions in

place that determine

their lending policies

and these vary from

bank to bank.

While it’s true that when you apply for a mortgage, your bank will place a value on the property you ’re buying, the figure

they come up with is not necessarily an accurate representation of the property’s value.

“Banks are willing to become business partners with property investors, so that you both can achieve something you could-

n’t do without the other, but their support is not unconditional,” explains Bernard Kelly from www.retirelaughing.com.

“Novice property investors often expect a bank valuation to mirror the market price. In fact, a bank valuation is only an inter-

nal control tool, which reflects what a bank can reasonably expect to recoup should it need to repossess and sell the prop-

erty in distressed circumstances. This is why it’s less than market price.”

Generally, banks will value the property at the lower end of the scale as they need to protect their risk.

If you stop making your repayments and they’re forced to sell the property to recover the money they’ve lent you, they want

to be satisfied that they’ll be able to cover the debt. They need to factor in extra expenses like real estate commission, legal

fees and timeliness, so it pays for them to be cautious in their estimate.

While banks may veer towards conservative values, the valuation put on a property by an insurance company is often

above the market value, Kelly adds.

“For insurance purposes, a valuation simply reflects what the insurance company would reasonably expect to pay out

should the property need replacing – for example, if it was to be destroyed by lightning in say two years’ time,” he says.

In this instance they need to factor in a little “cushion” to cope with inflation/CPI and rising costs of construction.

“As you can see, valuations are tools the big corporates use for their own purposes,” Kelly says. “You should always keep

in mind that they only loosely relate to the real market price.” (source Nila Sweeney, Your Mortgage)

A great result - Rowan and Liz We first met Tyson and the QPA team at a Mackay work-

shop in mid August 2013. We attended not knowing what to

expect but right from the beginning we got the feeling of an

experienced, professional and knowledgeable group of peo-

ple working as a team. The workshop was extremely helpful

for us and after further discussion we decided to use their

expertise to help us in our dream to build a property portfo-

lio.

Basically that was the most difficult decision we had to

make. From that moment Tyson searched for the right prop-

erty to suit our needs and found a 'gem' north of Brisbane

and worked hard to negotiate a lower price for us. Every-

thing from mortgage brokers, builders, solicitors etc was

organised for us and apart from signing a few documents,

everything was taken care of. It was great to have the

peace of mind that everything was in capable hands.

We never thought from attending the workshop in Mackay

that 6 months down the track we would be building an in-

vestment property, but the process has been easy and defi-

nitely worthwhile. We are looking forward to dealing with the

team again when we decide to extend our property portfolio

next . All wrapped up - Mel and Ben After attending a couple of workshops my husband and I

were excited to grow our property portfolio with the help of

the guys at QPA. We were no strangers to the property

market having already built a number of properties our-

selves experiencing all the ups and downs along the way.

We met with Tyson to discuss how we could go about it

and together we developed a strategy tailored to us. QPA

found a great opportunity to build a beautiful investment

home in a boutique estate just outside of Brisbane. We

went and inspected the block, the surrounding area and

did a lot of our own research as well. Based on this we

were very happy to go forward and sign up.

Everything else to do with permits, planning etc was done

for us. Building commenced soon after without a hitch and

we were given photographic updates very regularly via

email. QPA organised a property manager for us and in

November called us with her rental appraisal – which more

than covers the mortgage. We received handover from the

builder just after Christmas, and the standard to which the

house was finished was outstanding. Our new tenants

moved in on the 10th of January.

We will definitely recommend the team at QPA to anybody

looking to create wealth through property. We are already

looking forward to building our next investment property to

add to our portfolio.

Rowan loving the location—thumbs up

Ben giving the block and location a good walk around

Contact Us

Give Tyson a call and make an

appointment to get your invest-

ment journey on track

Education & workshops

Strategy sessions

Finance structure

Coaching & mentoring

Portfolio reviews

Property selection

Tyson Clarke

0407 034 803

Tyson@qldpropertyadvice.com.au

Visit us on the web at

www.auspropertypanel.com.au

Who are QPA? Queensland Property Advice (QPA) was founded by everyday

investors with a passion for investing in property.

We have experienced everything that you have or will do on your

investment journey as we all started at the same point. With this

experience we now help and empower other everyday people to

turn their goals into reality. Whether that's investing in property,

building a business, or finding your passion in life.

Through education and inspiration we aspire to help you make

positive changes in all areas of your life. Perhaps you’re not as

healthy as you’d like to be, or your bank balance isn’t heading in

the right direction? Or maybe you just need a little motivation to

get back on track.

Queensland Property Advice as part of the Australian Property

Panel all around the country, brings together a group of amazing

people who took control of their life and now enjoy success in a

variety of areas. By sharing their stories in a fun and relaxed at-

mosphere, they hope you too will feel empowered to take control

of your life and make it extraordinary.

SOCIAL SNAPS Queensland Property Advice — Great times with great friends all over Queensland