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Millions going into Brisbane homes with Asia boom 2.0 well underway

MILLIONS of dollars worth of savings of Chinese buyers have begun flooding into Queensland property, with Brisbane the key destination.

Chinese market specialist, the Ausin Group – which set up an office in Brisbane because of rising demand for property here – has been sealing at least one residential deal a day, averaging between $550,000 and $600,000 each.

The vast bulk of transactions were from individual investors, said Ausin Group managing director Joseph Zaja, with homes bought for students making up around 10 per cent of sales.
“We’re getting between 30 to 60 sales a month ($16.5M-$36M) out of mainland China and seeing that trend increasing. The signs are extremely positive, we’re looking at Brisbane growing further and gaining a larger share of sales.”

“We’ve got lots of enquiries from lots of people who have pulled out of Chinese stock and are looking at stable options offshore. It’s still volatile over there whereas property here is extremely safe and stable.”

The biggest chunk of buyers, he said, were sophisticated investors who had bought property previously in southern states, but there was also a big number for whom Brisbane would be their first ever Australian purchase.

“They’re looking at other options to diversity their holdings and Brisbane has popped up really quite recently as an option. Brisbane yields are higher than Sydney and Melbourne so from an investment point of view it seems to stack up.”

Real estate agent Tom Zhang of Yong Real Estate said some of the amounts Asian buyers were prepared to pay to get the right property was staggering.

A 10 Monteith Strett property in Robertson, which sold for $1.17M in 2013, was relisted last month when the owner returned to China and sold for $1.5M. Two years ago the bank valuation on the property was $950,000.

While that sort of capital gain was rare, Mr Zhang said Brisbane property prices were considered affordable by Chinese buyers and places like Sunnybank, Eight Miles Plains and suburbs close by could expect to see massive property rises.

Phillip Cheung and Mandy Ma have just put down $900,000 for their MacGregor home, preferring to put an offer in before auction than take a chance on missing out.

The previous buyer had paid $530,000 for the Nevern Street property but then put the home through a renovation program before resale.

“We got married last year so we planned to get a new house,” Ms Ma said, with the couple deciding to move as soon as possible after seeing how high prices elsewhere were.

“We think is Brisbane is a good start, especially compared to Sydney and Melbourne. In Brisbane you can get a start into property now.”

Ms Ma, who was from mainland China, said she met her Australian husband after completing her studies here, and the couple decided to settle here

She was impressed with the news of a massive mixed use casino development in Brisbane city which augured well for growth here.

“We feel the house prices will keep increasing. We wanted to get a property here while the prices are good.”

Mr Zaja said his firm was seeing inner city and surrounding suburbs land the most deals “because of infrastructure, amenities and accessibility”.

The biggest chunk of buyers, he said, were sophisticated investors who had bought property previously in southern states, but there were also many buyers who were making their first-ever Australian purchase.

“They’re looking at other options to diversity their holdings and Brisbane has popped up really quite recently as an option. Brisbane yields are higher than Sydney and Melbourne so from an investment point of view it seems to stack up.”

Originally published as Millions going into Brisbane homes

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Apartment price growth could outperform house price growth in 2022: SQM

house price growth in 2022

SQM Research’s base case forecast is for property prices to rapidly slow from the current annual 20%-plus growth rates

The national housing market is starting to show signs of a peak, according to the SQM Housing Boom and Bust Report 2022.

But 2022 should see a turnaround in the unit rental markets and unit price growth could outperform that of houses.

“With houses being overvalued, apartments are relatively affordable and are expected to be in greater demand from an expected rise in net migration from interstate and overseas with Australia’s border now open,” Louis Christopher, managing director of SQM Research said.

“As 2021 draws to a close, the national housing market is starting to show signs of a peak.

“Auction clearance rates have fallen from their highs amid record listings.

“However, we may also be recording some seasonality and pent-up selling after vendors held off listings during the lockdown.

“Nevertheless, we expect the market to peak in 2022, with further expected intervention by APRA, which could come as early as next month, halting the price momentum.”

SQM Research’s base case forecast is for property prices to rapidly slow from the current annual 20%-plus growth rates.

The research house expects a slower rate of price rises over the first quarter of 2022, followed by price falls as early as mid-2022.

The price falls will be led by Sydney and Melbourne houses, given a significant overvaluation.

“These cities are the most are sensitive to even minor intervention by the banking regulator, the Australian Prudential Regulatory Authority (APRA) in home lending,” SQM boss Louis Christopher said.

SQM Research forecasts Brisbane will record the largest dwelling price rises over 2022, with prices predicted to rise between 8% to 14%, with prices supported by expected strong interstate migration flows given relatively good housing affordability compared to Sydney and Melbourne.

“This gain will nevertheless represent a slowdown compared to 2021 increases,” he said.

“If the Australian housing market does not slowdown by mid-2022, APRA will likely keep intervening in home lending until the market does slowdown.

“We cannot afford another year of 20%-plus gains across the national housing market.

“And so, to ensure a soft landing for the market, it is best we see additional intervention sooner rather than later to reign in property valuations.”


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House Prices Tipped to Rise 6pc in 2022

House Prices

The ANZ has upgraded its housing market forecasts, tipping house prices to lift by 6 per cent next year before falling by 4 per cent in 2023 as the post-pandemic boom cools.

The bank is predicting the strongest gains will be in Brisbane, lifting by 9 per cent’ Hobart, by 8 per cent; and Melbourne, by 7 per cent.

Sydney, where the median house price is a record-breaking $1.5 million after a 30.4 per cent surge, will moderate to 6 per cent next year before dropping by 4 per cent in 2023.

ANZ chief economist Felicity Emmett said affordability constraints and higher mortgage rates would mean that the gains in house prices over the past year would not be repeated in 2022.

“We expect housing construction to grow another 15 per cent by mid-2022, before activity brought forward by government incentives starts to dry up,” Emmett said.

The Reserve Bank of Australia recently reiterated its stance that the cash rate would not be changed until inflation is sustainably within their 2 to 3 per cent target range, implying a requirement for tighter labour markets and a “material” boost in wages growth before the inflation requirement is met.

ANZ said it expected the RBA to leave the cash rate— currently at 0.1 per cent—on hold until the first half of 2023.

APRA said the move aimed to reinforce the stability of the system and ensure borrowers could meet the level of debt they took on today and in the future.

“Another lift in the buffer or a measure which targets a combination of high debt-to-income and high-LVR loans is the most likely in our view,” Emmett said.

“But financial conditions are already tightening and the market may do some of APRA’s work for it.

“Indeed, the rise in fixed mortgage rates over the past few weeks may see lending slow enough to obviate the need for further macroprudential measures.”

The total value of residential real estate in Australia is now worth a record-breaking $9.1 trillion—almost a third more than all superannuation, the ASX and commercial real estate combined.

Low interest rates, which has propelled market growth, and the increase in housing prices has since pushed up the level of debt Australian homeowners have entered into.

Corelogic head of research Tim Lawless said any early lift in interest rates posed additional downside risk for housing values as well as the economy as a whole.

“We are already seeing the rate of house price appreciation ease due to affordability pressures, rising stock levels and, as of November 1st, tighter credit conditions,” Lawless said.

“Once interest rates start to lift, there is a strong chance that housing prices will head in the opposite direction soon after.”

Last month, Westpac updated its forecasts with similar expectations for housing prices to lift by 8 per cent next year before moving into a “correction phase” and dropping by -5 per cent the year after.

Harcourts Australia chief operating officer Lisa Pennell told The Urban Developer the plethora of forward predictions, despite their “good intentions”, usually failed to hit the mark, as the market is “inherently difficult to forecast”.

“Never would this uncertainty be greater than in the midst of a global pandemic with so many variables at play,” Pennell said.

“Almost 18 months ago the popular predictions were for a major crash—so we would not hazard a guess on what may or may not happen two years down the track.

“What we can say is that while supply has increased post NSW and Victoria lockdowns providing more opportunities for buyers who’ve been waiting in the wings for some time, demand remains healthy and we expect to trade strongly throughout the remainder of the year.”


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What Should Every Entrepreneur Know About Caveat Loans?


Who among us hasn’t entertained the idea of running your own business?

Thousands of Australians launched one throughout their middle years. If you wish to join them, though, raising funds might be a roadblock. However, here’s some good news: when you’re in an excellent financial position and have no debt other than your mortgage, you may qualify for a caveat loan.

“Caveat loans are primarily provided to businesses in need of short-term financing, and they are frequently covered by the business’s or shareholders’ personal property,” says Max Funding’s lending specialist Shane Perry.

If you think caveat loans are a viable financing option for your small business, here’s everything you need to know about caveat loans.

How Do Caveat Loans Work?

The first thing to learn about caveat loans is what they are and how it works for entrepreneurs. Caveat loans are short term loans, also known as “bridge loans.” When you take out a caveat loan, you may use any property (commercial, residential, etc.) as collateral and get funds. This kind of financing does not need a lot of paperwork and maybe approved within a day.

Typical Caveat Loan Conditions

Short-term funding is the goal of most caveat loans, which typically have terms of one to twelve months. As a result, small businesses may find themselves in a precarious position despite the decreased interest rates if they fail to pay back their loans on time, placing them in danger of default. In addition, the lender can forfeit the property if the loan is not repaid on time.

Interest Rates On Caveat Loans

If you’re looking for long-term financing, a caveat loan may not be the best option. Private lenders often disclose caveat interest rates on loans on a month-to-month basis. That indicates a monthly interest rate of 0.99 % to 1.5% for many Australian lending institutions.

At first sight, it seems to be an excellent deal — until you factor in the annual rate. Assuming a 12 to 18% yearly interest rate, a borrower would pay least that much every year. By accepting these rates, cash-strapped borrowers risk default and losing the collateral where the lender has placed a caveat.

Second Mortgage, Are They The Same As Caveat Loans?

One of the most common misconceptions regarding caveat loans is that they are seen as a second mortgage—which is wrong.  Many people mistakenly believe that a caveat loan is a type of mortgage since the property is being used as collateral; however, this is not the case.

Using the equity in the property as collateral, the lender grants you a loan. However, the lender restricts the property by placing a lien on it. The lender’s caveat prevents you from selling the property. In addition, you can’t obtain additional financing against the same property. Mortgages and caveat loans vary significantly in this respect.

Do Some Australian Business Owners Use Personal Properties As Collateral For Caveat Loans?

Small business owners and sole proprietors often use their personal property as collateral, and lenders are more than willing to accept that. However, if the property is occupied as a residence, the risk is just too high.

Final Thoughts

It’s usually a good idea to understand caveat loans before applying. Don’t rush into the deal since you won’t secure additional financing for your property. However, it’s good to note that caveat loans allow you to finance 100% of your loan-to-value ratio even if you have a poor credit history. Caveat loans are a great option if you’re looking to grow your business, launch a new venture, or improve your cash flow.


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