ANY OTHER SUPER IDEAS?

ANY OTHER SUPER IDEAS?

Always a great read when the week’s topic of conversation is property or shares? Property trusts again were awarded the gold star with a 15.8 per cent return over the last ten years. The share market sat at 12.8 per cent annually so where does that leave real estate ? Current figures from Australian Property Monitors show that Mosman houses are enjoying around an 8.00 per cent capital appreciation (tax free if your home) and apartments are sitting around 4.00 – 5.00 per cent. According to data obtained from the Australian Bureau of Statistics, house prices across the nation increased 8.3 per cent for the twelve months to December 2006.

What we are presently seeing with our property market in ‘accelerate’ mode, is a direct result of the success that business has enjoyed from the financial market’s dynamic returns. This is why the top end suburbs continue to exceed price expectations as they again become too popular. Days on market have gone in some instances from months to minutes. Given the confidence in the market, the June quarter will see many real estate businesses set new records as well as street records despite the fact that we will have at least one interest rate increase in that period.

With the unemployment rate presently at a 32 – year low, it will be interesting next Tuesday, when the consumer price index is released for the March quarter. What business is experiencing today with low unemployment, is wage increases throughout the economy – up goes inflation as do interest rates. The inflation target was first formulated in 1993. Consumer price index inflation in Australia averaged 2.5 per cent over that period and this sits exactly in the middle of the target zone. When it sits above 3.00 per cent, pressure is put on interest rates. If interest rates go up on May 1 – then it will become a political debate. Although this is an interesting graph.

Many are somewhat perplexed over what to do with their superannuation and some who recently sold, now believe they should have held on. There is no doubt that the new superannuation laws have contributed to record-low vacancy rates. Investors have to ensure that investment properties settle before June 30 if they want to take advantage of the new laws. Opposition Leader Kevin Rudd has promised he will not change the government’s new superannuation laws if elected to power later this year. From July 1 Australians aged 60 or over can access their superannuation benefits tax free so long as they are paid from a taxed superannuation fund. Even more interesting this week was that a study by Senior Australian Equity Release Association of Lenders (SEQUAL) identified that older Australians took out $560 million in reverse mortgages in 2006 which was an 80 per cent increase from 2005. The study found that 41 per cent of the reverse mortgages were taken out in NSW. Victoria and Queensland accounted for 20 per cent. The reverse mortgage markets are relatively new but these figures indicate they are becoming most popular. It would be interesting to see what percentage of these borrowings actually went back into buying property ?

For those who are frustrated at the low levels of property currently on the market, your wait will soon be over as from next week, we go into the final run to June 30. It should by all accounts, be a fast and furious market with controlled levels of property available. The days of over-supply appear to be a thing of the past (in Mosman). Currently we are selling more than listing and this is evident in our property menus which, like vacancy rates, are at record lows.

One thing is consistent – agents complain when they have too much stock and do exactly the same when they don’t have enough. Unlike property prices some things never change! Cheers ^__^

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