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2023 Property Market Year in Review

BMT team — Mon, 20 Nov 2023 22:47:43 +0000

Despite ongoing interest rate hikes, high inflation and a subsequent ease in consumer spending, the residential property market has shown resilience with a 7.0% growth rate in the year to November 2023. As at the end of November, residential real estate constituted $10.3 trillion of Australia’s wealth, with superannuation at $3.5 trillion, Australian listed stocks at $2.8 trillion, and commercial real estate at $1.3 trillion following closely behind. RESIDENTIAL AND COMMERCIAL PROPERTY VALUES There has been renewed growth in the capital cities property market this year. Brisbane properties have shown growth at an impressive 10.7% over the past year and dwelling values are currently at a record high. Perth has taken a definitive lead at a growth rate of 13.5%, followed by Adelaide which has shown a slowdown from a significant 13.4% in November 2022 in comparison with a growth rate of 7.6% in November 2023. In Sydney, dwelling values increased by 10.2% over the past year, but are still below the record highs of January 2022 and Melbourne showed a respectable 3.0% growth over the past year. Canberra, Darwin and Hobart have struggled to get above the line this year with values falling by -0.3% in Canberra, -1.5% in Darwin and -3.0% in Hobart respectively. The rise in the value of regional property has also slowed across the country showing a more moderate growth rate of 3.4% as of November 2023 compared to the 10.1% growth rate seen at the same time last year, suggesting a potential downtrend in the tree change and a return to city life for many. PROPERTY SALES Most residential homes across Australia take approximately 32 days to sell, with 10.2% more properties on the market across Australia, than the same time a year ago. Perth has once again broken the trend, selling within less than 12 days, highlighting the lack of availability and rise in demand in the already heavily burdened property market in Western Australia. RENTAL PROPERTY MARKET As always, rental rates in the capital cities have shown significant growth at 9.7%, followed by a much more muted growth rate of 4.1% in regional areas. Rental rates across Australia as a whole have averaged 8.1%. According to CoreLogic, there has been a slight compression in gross rent yields nationally to 3.69%, which is down from 3.70% the previous month. LOAN APPROVALS AND CREDIT Covid era fixed rates expired this year, forcing many Australians into mortgage stress, spending well above the recommended 30% of their income on mortgage payments. In 2020 the average three – year fixed rate investor loan was at 2.2%. For some, this has now increased to a comparable variable rate loan of up to 7.21% with the Big Four banks, averaging 6.0% for owner occupiers and 6.49% for investors. Lending standards tightened for all residential and commercial real estate loan categories, but secured, tenanted investors are still positively favored by banks with investor finance comprising 35.6% of new mortgage lending through October. This share of investment lending was highest across NSW at 40.4% and is trending higher than the historic average at the national level. Most owner-occupier loans granted this year were first time buyers, comprising 28.9% of new owner occupier finance, which is well above the decade average of 24.2%. indicating a positive uptake of government schemes for this market segment. In terms of the number of dwellings approved for construction, both detached home – and unit approvals trended well below the historic 10-year average, with units trending even lower than detached homes. INTEREST RATES The 25-basis point Melbourne Cup Day rate hike has taken no one by surprise, leaving 1 in 4 lenders now with loans greater than their incomes according to the Reserve Bank of Australia. The number of Australians defaulting on their home loans, now surpasses the mortgage stress peaks of the Global Financial Crisis, however, returns on interest bearing investments, such as term deposits, have been favorable. Many mortgage customers have also found a way forward by refinancing their loans at more competitive rates. BMT NEWS As quantity surveyors, we have been steadfast in our approach to depreciation, believing that a physical onsite inspection will ensure an accurate and reliable depreciation schedule that will earn the owner the highest possible tax deductions. In 2023 our stance was validated by the Australian Institute of Quantity Surveyors, whose principal mission it is to establish and uphold professional standards at all times, maintain uniformity in procedures, support industry education, and foster public faith in cost certainty and the quantity surveying profession overall. Since opening its doors in 1997, BMT Tax Depreciation has completed more than 900 000 tax depreciation schedules to date, averaging first full financial year deductions of almost $9 000,00 in all residential properties and more than $15 000,00 in new properties, once again cementing our position as market leaders in tax depreciation. To maximise property tax depreciation deductions on your property, Request a Quote from us. The information in this article is sourced from CoreLogic and the Reserve Bank of Australia. This article is general in nature and should not be taken as advice or a guaranteed outcome.

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2023 property market update

BMT team — Sun, 02 Apr 2023 23:14:25 +0000

2022 was an interesting year for the property market. Interest rates and rental yields increased, while property prices fell. Nonetheless, Australian investors persevered and made it through this challenging year. We sat down with Bradley Beer, Chief Executive Officer of BMT, and asked him some questions surrounding the property market outlook of 2023 and the latest BMT news. Read on for Bradley Beer’s insights into the year so far and what may lie ahead. What did the Australian property market look like in 2022? The value of the residential real estate market fell from $9.6 trillion in December 2021 to $9.3 trillion in December2022. Australian national housing values fell 5.3 per cent over 2022, the largest calendar-year decline since the Global Financial Crisis in 2008 where values fell 6.4 per cent. The median price of a residential dwelling as of 31 December 2022 was $708,613 with combined capitals at $770,374 and combined regionals at $577,616. What can we expect from the housing market in 2023? I expect that property prices will continue to fall as long as interest rates are rising. It is likely that sales from owners unable to service their loans due to interest rate rises and inflation will increase, with 35 per cent of outstanding housing credit on fixed terms and around two-thirds of these expiring in 2023. And what about interest rates? At 7.8 per cent, the Consumer Price Index (CPI) is still well above the RBA’s target of 2-3 per cent. To return inflation to target, the RBA has lifted the cash rate every month from May, with it now sitting at 3.60%, the highest rate in eleven years. It is expected that inflation will return to 4.7 per cent over 2023 and 3.2 per cent over 2024. How are rental markets performing so far in 2023? Rental markets have remained firm so far throughout 2023, with the current national rental vacancy rate sitting at a record low of 1.0 per cent. As of January 2023, gross rental yields were 3.9 per cent, a growth of 0.7 per cent from January 2022. CoreLogic reported annual growth in Australian rent values of 10.2% in the 12 months to December, a record high. The most rapid annual rise is evident in unit rents across Sydney, Melbourne and Brisbane, where rents have increased around 14 to 17% annually. What is loan activity looking like? The percentage of investor loans increased by 5.3 per cent between September 2019 and September 2022. New variable home loan rates for owner occupiers increased from a low of 2.41 per cent in April 2022, to 4.58 per cent in October, notably impacting housing affordability. While the rate rises are making owner-occupier mortgage repayments less affordable, investors are less impacted thanks to the tax deductibility of interest on investment loans. How will changes to international borders and migration affect the market? To ease workforce and skill shortages, the permanent migration quota has been increased from 160,000 to 195,000 in 2023, with all additional spaces allocated to skilled work visas. This will likely further decrease vacancy rates and increase rental yields and house sales. The reopening of borders has caused interstate and foreign buying activity to resume strongly which will likely continue to grow throughout 2023. There has been increased foreign investment in commercial property, with remaining popularity in the office and industrial sectors. What’s the latest in BMT news? In BMT news, we reached a milestone of 800,000 schedules completed since opening our doors in 1997 – an accomplishment we attribute to our valued clients and referrer partners. In 2022 we also found clients an average of almost ten thousand dollars in depreciation deductions within the first full financial year. Last August saw BMT’s private equity partners exit, and the executive team acquired one hundred per cent of the company. This allows us to have full control to drive the future direction of the business. Our strategy focuses on customer service and thorough, accurate reporting, always with the aim to maximise claims and make life easy for our clients and corporate partners. Now that we are on the other side of the pandemic and have full control of the business, we will continue to find customers the highest compliant deductions while delivering the outstanding customer service that we are known for. We look forward to seeing what the year will bring. The information in this article is sourced from CoreLogic and the Reserve Bank of Australia. This article is general in nature and should not be taken as advice or a guaranteed outcome.

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Government stimulus package to maximise commercial property cash flow for businesses

BMT team — Fri, 13 Mar 2020 02:15:26 +0000

The Morrison Government has announced a $17.6 billion economic plan in response to the challenges posed by the coronavirus. A media release from the Prime Minister’s office yesterday explained the plan is to keep Australians in jobs, keep businesses in business and support households in the Australian economy. The targeted stimulus has a number of elements focused on helping 3.5 million businesses across the country that employ more than 9.7 million employees, or three in every four workers. In this article, we will cover: Instant asset write-off threshold increase 15-month investment incentive Business cash flow assistance What the stimulus means for business owners Instant asset write-off threshold increase The Government announced $700 million to increase the instant asset write-off threshold from $30,000 to $150,000. This increase has been extended to include businesses with an aggregated annual turnover of up to $500 million. The instant asset write-off increase and expansion is now in place and will be until December 31 2020. As a result, many assets purchased from now until June 30 2020 that would have previously been depreciated over their effective life or in a small business pool, will now be written-off immediately. Here are some examples of assets that business owners will now be able to write-off: Industrial gantry cranes: $120,000 Air-conditioning large office: $100,000 Cool room in pub: $80,000 Farmer tractors: $70,000 Mechanic Spray booth: $50,000 15-month investment incentive $3.2 billion was announced to encourage business investment by introducing a fifteen-month investment incentive set to expire June 30 2021. The incentive will support business investment and economic growth by accelerating depreciation deductions for remaining assets not affected by immediate write-off changes. Businesses with a turnover of up to $500 million will be able to deduct fifty per cent of the asset cost, plus an additional amount of the standard depreciation on the remaining balance, in the year of purchase. Business cash flow assistance In addition to the depreciation and investment incentives, the Government has also announced funding to further support employment and businesses who employ apprentices and trainees. $6.7 billion will be dedicated to boost cash flow for employers by up to $25,000 with a minimum payment of $2,000 for eligible small and medium-sized businesses. This tax-free cash flow boost will support businesses with a turnover up to $50 million that employ staff between 1 January 2020 and 30 June 2020. $1.3 billion will be dedicated to support small businesses and the jobs of their apprentices and trainees. Eligible employers will be able to apply for a wage subsidy of 50 per cent of the apprentice’s and trainee’s wages from 1 January 2020 to 30 September 2020. What the stimulus means for business owners It’s clear that the Government is serious about supporting Australian business through the coronavirus pandemic. This stimulus will allow business owners to further maximise their cash flow with the immediate asset write-off increase and expansion, and by claiming higher depreciation deductions sooner. To ensure they take advantage of the stimulus, business owners and tenants must have a comprehensive tax depreciation schedule. BMT Tax Depreciation has been the business owner’s choice for over the past twenty years. To learn more, Request a Quote or contact our expert team on 1300 728 726.

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Everything you need to know about interest rate cuts

BMT team — Thu, 03 Oct 2019 00:17:09 +0000

The Reserve Bank of Australia (RBA) made history in the first week of October, slashing the official interest rate and signalling further cuts in the coming months. What is the current interest rate? The RBA dropped the official interest rate to just 0.75 per cent on Tuesday, 1 October. The first time the official cash rate has dropped below 1 per cent in Australia and the third rate cut since June. Interest rates are significant in affecting the economy, which is why the RBA’s decision is so important. If interest rates are lower, it’s likely to encourage more people to take out a mortgage and purchase a property or take out a loan for home renovation. Why did the RBA drop the interest rate? In a statement issued after the call, the RBA said they made the decision to lower the rate in a bid to revive consumer spending, lift Australia’s otherwise stagnant wage growth, drive employment and provide greater confidence that inflation would be consistent with the medium-term target. RBA Governor, Phillip Lowe also noted trade conflict between the United States and China as a contributing factor. “While the outlook for the global economy remains reasonable, the risks are tilted to the downside. The US–China trade and technology disputes are affecting international trade flows and investment as businesses scale back spending plans because of the increased uncertainty,” Lowe said in the statement. “At the same time, in most advanced economies, unemployment rates are low and wage growth has picked up, although inflation remains low. “Interest rates are very low around the world and further monetary easing is widely expected, as central banks respond to the persistent downside risks to the global economy and subdued inflation.” Have the banks passed on the current interest rate? So far, the big four banks have baulked at passing the official interest rate cut in full to consumers. Both the Commonwealth Bank and National Australia Bank (NAB) defied the RBA by refusing to pass on the cut in full just hours after the decision. The Commonwealth unveiled its mortgage rate changes, withholding 12 basis points from borrowers. Treasurer Josh Frydenberg blasted the two banks for failing to pass on interest rate cuts in full, saying it was “very disappointing” and that “customers should vote with their feet.” Reduce Home Loans cut interest rates by 0.20 per cent with the lowest variable rate currently at 2.69 per cent. Homestar Finance and Athena Home Loans both dropped 0.25 per cent, with variable rates at 2.74 per cent and 2.84 per cent respectively. Will there be further rate cuts? The RBA has suggested that another rate drop is expected to take place if the economy remains subdued, however when this might occur remains unclear. “It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” Lowe said. “The [RBA] Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.”

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Federal Budget 2019 breakdown

BMT team — Wed, 03 Apr 2019 04:53:44 +0000

The 2019 Federal Budget was handed down by Treasurer Josh Frydenberg on Tuesday, 2nd April at 7:30pm AEST. Taxpayers, commuters, regional Australia and small to medium businesses were among the winners. Treasurer Frydenberg announced the Australian Federal Budget will be back in the black for the first time in twelve years, with a budget surplus of $7.1 billion dollars forecast for 2019/2020. What does the Budget 2019 mean for Australian property? According to Morgan Stanley, the 2019 Federal Budget is unlikely to kick-start property prices or buyer confidence. However, the property market needs stability and this comes through job creation, improved infrastructure and a support package for the small to medium business sector, which this budget delivers. Small to medium business owners will benefit from improved access to finance, with a $2 billion lending fund announced. This will deliver a direct, positive flow-on effect to the property market. Currently, if small business owners want to grow their business, they can leverage their home equity to do so. With access to better funding, small to medium business owners can grow their business and use their home loan to upsize their existing property or invest in the property market. Small to medium business owners with an annual turnover of less than $50 million will also benefit from changes to the company tax rate, which has been lowered to 27.5 per cent. This rate will be lowered further to 25 per cent by 2021/22. In addition, the Government announced they will increase the instant asset write-off threshold to $30,000 and expand access to medium-sized businesses with an annual turnover of less than $50 million. These changes will apply from 7:30pm AEDT on the 2nd of April 2019 to the 30th of June 2020 and will benefit 3.4 million businesses employing around 7.7 million workers. The threshold applies on a per asset basis, so eligible businesses can instantly write-off multiple assets. More than 350,000 businesses have benefited from the existing instant asset write-off rules and more businesses will benefit from the extension of this incentive. Regional Australia is the big winner The Government has increased planned spending on infrastructure and intends to deliver a total of $100 billion of investment over the next decade (including existing commitments). The national infrastructure plan includes a new road safety package, a long-term fast rail vision, investment in regional and international airports and funding for improvements to national roads. Regional farmers affected by the North Queensland floods will also benefit from $232 million in support. The Government will also provide up to $300 million in grants to help flood-affected farmers rebuild damaged farm infrastructure, to replace livestock and replant crops. Personal income taxes Australians will benefit from personal income tax cuts planned once 2018/2019 tax returns have been completed at June 30, 2019. The Government is reducing tax for low and middle income earners of up to $1,080 for single earners or up to $2,160 for dual income families for the 2018/2019 to 2021/22 income years. Taxpayers will be able to access the offset after they lodge their end of year tax returns from 1 July 2019, which is in just 13 weeks’ time. From 2022/2023, the Government will increase the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and the low income tax offset from $645 to $700. From 1 July 2024, the Government is also increasing tax thresholds further and reducing the 32.5 per cent tax rate to 30 per cent. By 2024, under the proposed changes there will only be three tax brackets: 19 percent, 30 percent and 45 percent. These changes will benefit both property investors and home owners as they will have more funds available to help pay down their mortgages or save for future investment. Looking ahead to the next election The 2019 Federal Budget from the Coalition delivered a strong focus on building a stronger economy and securing a better future for all Australians. This comes through lower income taxes, incentives for small to medium business and increased infrastructure spend. Australians need to be aware of how these changes will impact them and consider the Opposition’s budget response. Some previously announced Opposition policies could result in significant changes that will affect the property investment market. For a copy of Budget 2019/2020, click here.

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Research reveals new housing demand hotspots

Simon Pressley — Wed, 07 Mar 2018 01:02:54 +0000

Contrary to general belief, population growth is not the biggest influence on property prices – far from it, in fact. There are a range of factors that influence the demand side of the property price equation. Aside from affordability, the biggest influence is economic conditions. Jobs. Jobs. Jobs! Propertyology’s recent analysis of national job data for the 2017 calendar year concluded that numerous locations across regional Australia may soon see considerable strength build in their property markets. In alphabetical order, Albury, Armidale, Ballarat, Ballina, Bowral, Cairns, Coffs Harbour, Dubbo, Mackay, Muswellbrook, Port Macquarie, Townsville, Warragul and Warrnambool are likely to see increased market activity over the coming year or two. A marked improvement in local economic conditions was a key driver that transformed 2011-12 property price declines in Sydney and Melbourne into boom markets over the last four years. Similarly, it’s not that long ago that Tasmania was in recession but the remarkable turnaround in its economy now sees Hobart as Australia’s hottest property market by a country mile. Sustained job growth within a community puts more money in people’s pockets, attracts new people to a region and boosts local confidence. It increases the chances of renters becoming home owners, provides home owners with confidence to renovate, increases demand for local goods and services, and gets more people at open homes. Tracking trends of job volumes is a more reliable measurement of the direction a localised economy is heading in, rather than looking at isolated unemployment rate. At a capital city level, Melbourne (10 per cent), Hobart (there it is again ~ 9.8 per cent), Canberra (8.7 per cent) have produced the largest increases in jobs over the last two years. While the measurement of job volumes is far from the only metric that Propertyology look at, it’s no coincidence that these numbers correlate with property market performance. While Brisbane is (finally) producing some encouraging employment data, inner-city jobs continue to reflect the post-mining boom pinch. The miserable 1.9 per cent increase in CBD jobs over the last two years is not the only disappointing data. CBRE recently reported that commercial office vacancy rates were 16.2 per cent (in other words, one in six Brisbane offices is empty). The significant number of regional locations that have produced rates of job growth above the two-year national average of 6.6 per cent is reflecting strong regional tourism, a very exciting outlook for Australian agriculture, advanced manufacturing (especially food-related), some good infrastructure projects, and a rebound in (parts of) the mining sector. The strong growth in retail, accommodation and food, and arts and recreation jobs reflect the sustained strength of Australian tourism. From 5 million international visitors in 2008, Australia is on target for 10 million by 2020. But, it’s more than the traditional holiday hot-spots of Sydney, Melbourne, Brisbane and the Gold Coast that people are now visiting. With more affordable airfares and a significant increase in destinations that now offer direct flights within one or two hours, tourists are exploring alternative attractions throughout Tasmania and mainland regional Australia. The continuous extra demand from international and domestic tourists is creating new jobs in great cities like Cairns (tropical wonderland), Dubbo (Western Plains Zoo), Orange and Armidale (foodie experiences), Bendigo and Ballarat (our gold rush heritage), and regional Tasmania (because, well, it is God’s country!). If Queensland can ever get its act together with a serious tourism campaign, the state with more tourist attractions than any other has the potential to set economic records. And, when the cash registers start ringing again, Queensland’s affordable housing and desirable lifestyle will drag interstate migration well above 20,000 per year. That’s one of the most sustainable growth drivers that any property market could wish for. April’s Commonwealth Games is just a short sugar fix; the state still lacks a long-term tourism strategic plan. While growth in jobs for regional Australia is well overdue, the 2017 data just supports the trends that Propertyology flagged a few years ago and has influenced our decision on a few locations across that our buyer’s agents are helping people invest in. Aside from Australian tourism, the millions of extra people entering the middle class each month during the Asian Century have an enormous attraction to our produce. This nation that was first built off the sheep’s back is now Asia’s food bowl. Universities have recently experienced an unprecedented increase in agriculture-related degrees. And new manufacturing jobs are being created by food processing businesses such as abattoirs, cheese factories, and wine making. Renewable energy is a fast-emerging sector that benefits regional economies more than capital cities. Household budget pressures and environmental pressures are the trigger for billions of dollars already being invested in job-creating wind, solar and battery projects across this vast country. 2017 was one of the strongest years for job growth in Australian history, with a 5.7 per cent increase in volumes for the year. And it wasn’t a year in isolation – total jobs in Australia for the last two calendar years have increased by 6.6 per cent. Closer analysis of ABS data shows that the industry sectors which produced the largest rates of employment growth in 2017 were health (104,317), construction (100,664), retail (60,064), education (40,991), accommodation and food (36,485), and agriculture (28,901). A 2017 net job loss occurred in manufacturing (85,060), admin and support (28,698), public admin and safety (27,433), and mining (4,688). One would assume that a significant portion of manufacturing job losses in 2017 related to Toyota and Holden plant closures (Adelaide and Melbourne) late last year. The health sector is Australia’s biggest direct employer (13.3 per cent of all jobs). The recent growth in the health sector is indicative of our aging population combined with the rollout of new positions under the NDIS program. Propertyology believes that Australia’s construction industry (the backbone of our economy) is now at an interesting cross road. Completion of the mining construction boom in 2012-13 resulted in large volumes of workers in this sector being redeployed to new residential […]

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Property investors to lose out from proposed budget changes

BMT team — Thu, 11 May 2017 06:23:46 +0000

The 2017 Federal Budget, handed down by Treasurer Scott Morrison on Tuesday night, 9th May at 7:30pm AEST includes proposed changes which will affect residential property investors Australia-wide. The Australian Tax Office (ATO) allows owners of income producing property to claim depreciation deductions for the wear and tear that occurs to a building’s structure and the plant and equipment assets within. The proposed changes relate to the depreciation of plant and equipment assets and the eligibility to claim this deduction. Currently, investors are eligible to claim qualifying plant and equipment depreciation on assets found in an investment property they purchase, even if they were installed by a previous owner. “Under the new rules which are yet to be legislated by Parliament, investors will be able to depreciate new plant and equipment assets and items they add to their property, however subsequent owners will not be able to claim depreciation on existing plant and equipment assets,” said the Chief Executive Officer of BMT Tax Depreciation, Bradley Beer. “This change will have a major impact on investors, essentially reducing the annual deductions they can claim therefore reducing their cash return each year. This could lead to investors being in a tighter financial position and may discourage future investors from purchasing a second hand residential property,” said Mr Beer. “It is our understanding at this stage that if the property is new, they will be able to continue to depreciate plant and equipment as they were previously. We are seeking further clarification on this,” said Mr Beer. Investors will still be able to claim capital works deductions also known as building write off, including any additional capital works carried out by a previous owner. The budget notes were clear that existing investments will be grandfathered. This means that anyone who has purchased a property up until the 9th of May 2017 will be able to claim depreciation as per normal. If a property investor exchanges contracts to purchase a second hand property after 7:30pm on the 9th May, there could be different depreciation rules applicable to their scenario. “We are currently speaking with government to further understand the intricacies relating to the budget notes and the proposed changes to depreciation of plant and equipment assets,” said Mr Beer. This article was originally published as a media release at www.bmtqs.com.au/news-media/media-releases/property-investors-lose-out-budget-changes

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Australian real estate hot property for international retailers

BMT team — Sun, 23 Oct 2016 22:19:47 +0000

Australian real estate is currently hot property for international retailers. In the last two to three years we’ve had a massive influx of global brands hit our shores and we can only expect this to continue for the next few years. Some big brands will enter the market for the first time (Marks & Spencer, Debenhams and Banana Republic, for example) while already established names such as Sephora, H&M, Zara Home and Costco will continue to grow their presence with more stores across the nation. According to CBRE, there are 130 brands interested in rolling their stores out to Australia and New Zealand for the first time in the next year, with a large percentage of these being mid-range fashion retailers. While these brands typically aim for prime real estate in Sydney’s Pitt Street Mall or Bourke Street Mall in Melbourne when first entering the market, as time goes on we’re seeing them spread their presence to other capital cities and regional areas, and some even opening secondary stores in additional locations to meet the demand. Here are nine reasons why Australian real estate is hot property for international retailers. Low market penetration In January this year, only thirty nine of the world’s top 250 retailers had operations in Australia. This is a saturation of 16 per cent and therefore the representation of international brands in the Australian retail market is quite low. For international retailers, this low penetration means a lower level of competition and increased returns, and we’re nowhere near the point of being oversaturated with global names anytime soon. According to CBRE, an additional fifty global brands would need to roll out stores in Australia for our market to match the global brand penetration currently seen in China, Hong Kong or Singapore, and we would need an additional ninety brands to match the same penetration as Britain. This shows there’s still plenty of room in our market and retailers are jumping at the opportunity. European and American growth prospects limited for international retailers The European and North American retail markets are quite saturated with global brands, meaning opportunities for expansion there are becoming limited, so they’re looking to our shores as a new market. Australia is also a smaller market in comparison, potentially meaning an easier rollout and the ability to establish a notable presence sooner. Resilient and healthy economy On a global level, our economy is comparatively healthy and relatively stable, and is more sheltered from global happenings, as highlighted by the Global Financial Crisis from which we escaped relatively unscathed. This stability is appealing to international retailers looking for a new market. We love to shop There’s no secret about it – Australians love to shop. Whether it’s online or in store, we have solid spending habits over both platforms. Australians typically also have reasonable disposable incomes, allowing us to partake in this past time. Combine this with a positive level of consumer confidence and it’s no wonder global brands want to be part of our market. Growing tourism Tourism levels in Australia are growing, particularly from Chinese tourists. Currently, 30 per cent of retail industry revenue can be attributed to tourism, so it makes sense that increased tourism equates to increased shopping and increased spending, and more opportunity for big brands looking to expand. A new market for China China currently has nine stores in the top 250 global retailers. Yet despite our close relationship and geographic proximity, none of these brands currently exist on Australian soil. But this is about to change. Alongside Chinese growth in residential and commercial office property investments, we will soon see Chinese retailers enter the retail market in a big way, most notably with online retail giants Alibaba and JD.com. Currently, US-owned retailers dominate the foreign retail market here in Australia, accounting for about half of global brands represented, while French retailers come in second with an estimated 13 per cent share. Strong demand for international products There is a strong demand for global brands from Australian consumers. You only need to look at the lines in apple stores whenever a new iPhone is released or the queues to get into new H&M and Topshop stores when they launch to know they’re in demand. Furthermore, Australians love to travel so many already have a strong exposure and connection to these brands and would love to have them more easily accessible in our own backyard. We’re already buying online Thanks to the rise of online shopping in the last decade, these global brands know without a doubt that we want their products – and that’s because we’re already buying them. And if we’re paying the overseas shipping costs to order online, it’s fair to say we’d support a traditional bricks and mortar store without the additional expense of delivery. And thanks to our activity on their online shopping portals, international retailers already have access to our buying behaviour patterns and valuable demographic information; it’s primary market research that puts them in good stead to enter our market, as they already have an in-depth understanding of it. A growing population Australia has a growing population, and it’s currently growing faster than a lot of other markets. This is particularly true for cities and inner urban areas. And what does more people mean? More disposable income, more goods needed and more shopping – and an attractive market for international retailers looking for long term expansion options.

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Rental returns have risen 32.1 per cent since 2007

Bradley Beer — Fri, 02 Aug 2013 05:29:01 +0000

New research from RP Data claims that rental prices have risen significantly since the end of 2007. According to research shown by RP Data’s latest Property Pulse, between the end of 2007 and mid 2013 there was an increase in rents of 32.1 per cent. Analysts from RP Data advise this is currently creating an excellent market for investors, particularly when coupled with low interest and mortgage rates. One of the contributing factors listed as a cause of the growth in rental values has been the significant number of renovations that are taking place. Renovating investors are believed to be helping to drive rental prices upwards. For investors who choose to complete a renovation to their investment property the benefits are two fold, not only may this help them to increase the rental value of their property, but they may also be entitled to claim more depreciation deductions for their property. To read an article with further details about RP Data’s latest research click here. To find out what depreciation deductions are available when renovating, click to request a quote.

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Insights into the investment intentions of wealthy Australians

Bradley Beer — Wed, 24 Jul 2013 07:11:30 +0000

In his number one selling book ‘Rich Dad Poor Dad’, American businessman, investor, author and motivational speaker Robert Kiyosaki sheds light on an obvious truth that the rich think differently. While the book has its critics, ‘Rich Dad Poor Dad’ makes for a good starter’s read. It challenges the potential entrepreneur and investor to assess how they think about financial management and wealth creation. Robert encourages the reader to become financially literate and understand the nuances and distinctions between the ‘rich’ mindset and the ‘poor’ or ‘working middle class’ mindset. “An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket” (Robert Kiyosaki). One of these shades in thinking is the difference in definition of assets and liabilities. Many home buyers over the years have generally accepted their primary residence as an asset. Given Robert’s definition of an asset, your home is not an asset as it does not produce a positive cash flow. Yes, the definition doesn’t follow general Accounting standards and Robert acknowledges this, but the point is to focus on positive cash flow for wealth creation. In property terms there are arguments for negative gearing, while the cash returns on the actual property might be negative the strategy is supposed to have a secondary positive benefit in the reduction of tax payable elsewhere. The book makes other notable distinctions such as “wealth is a person’s ability to survive so many number of days forward…or if I stopped working today, how long could I survive?” and “rich people acquire assets. The poor and middle class acquire liabilities thinking they are assets”. Small nuances and distinctions in thinking can make a huge difference in life and investment results. At BMT we are dedicated towards building a community of smarter property investors Australia wide. We spread the gospel of tax depreciation and how it can save you thousands of dollars. The key is to be well informed with the right information. So arm yourself, educate yourself to make smarter and wiser financial and investment decisions. Which brings me to the point of this blog post, below is a link to the latest Westpac, Private Wealth, BT Financial Group report. It’s their quarterly High Net Worth Investor (HNWI) report, and it’s an insight into the investment intentions of wealthy Australians. Have a read, compare your thinking and let us know how you fared. Are you thinking like the rich and Australia’s High Nett Worth Investors or do you need to assess the way you think about your finances and investment decisions? http://bit.ly/BMThnwi

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