MAY 2010

During the September quarter Australia's residential population broke the 22 million mark. Fuelled by one of the highest population growth rates in the Western world, the number of Australian permanent residents was estimated to be 22,065,671 persons; 451,876 more than at the same time last year.

Population growth is an important indicator for the property market. At the macro scale, population growth is a default measure of housing demand. Put simply, more residents equate to a larger requirement for housing. The ongoing high rate of population growth is half of the reason why Australia has an ongoing shortage of housing.

An ongoing shortage of housing together with a population fuelled demand, means property prices are only going to increase. As Australians we live in a unique climate of opportunity for property investment. We are one of the few, if only Western economies that has a triple whammy of increasing population, a strengthening economy, and a shortage of accommodation.

Based on the average household size of 2.6 persons, the latest population growth figure equates to a requirement for around 173,800 new homes over the year to September 2009; a target that the building sector is falling well short of. The latest dwelling commencements data shows that as a nation, over year to September, we have only commenced construction on 129,400 new dwellings - about one third lower than what is needed. In fact, the undersupply is actually worse than that. Factoring demolitions and second homes into the equation adds a further 23% to the equation (in a speech last year by Deputy Reserve Bank Governor Ric Battellino estimated that 15% of new dwellings constructed are to replace existing homes and a further 8 percent are likely to be second homes).

The primary driver of population growth in Australia remains overseas migration which accounts for about 65% of the nation's overall growth. The remaining component of population growth is the natural increase (births minus deaths). Despite the number of overseas settler arrivals trending downwards last year, net overseas migration to the country remains exceptionally high. This is largely due to fewer long term residents deciding to leave Australia thanks to our comparatively healthy economic conditions. On a regional basis, the Eastern Seaboard states continue to record the highest number of new residents. Victoria, New South Wales and Queensland account for 78% of Australia's overall population growth over the year to September 2009

There are opportunities and challenges that become apparent with a consistently high rate of population growth. From a positive sense, population growth creates economic stimulus. More people mean more demand for Australian goods and services. Also, with an ageing population and baby boomers moving into retirement, population growth provides more tax payers rather than higher taxes amongst a smaller pool of working Australians.

The real challenge, however, is ensuring Government policy is aligned with population growth. That means ensuring a strategic population growth strategy is in place, major infrastructure developments and upgrades run in parallel with population increases and enough strategically located and developable land is released to accommodate our growing cities.

And so to Queensland. The Clem 7 cross river tunnel has opened, reducing travel times across the city and enhancing traffic flow, we have just signed a massive twenty year deal to sell gas to China, our dams are 98% full with more wet weather just around the corner, the airport cross link road/tunnel and the Northern bus way are well underway, the second Gateway bridge will open later this year, and the new "Go Between" traffic bridge will soon be open. The South East corner of Queensland is bustling and booming, and for all the right reasons.

I strongly suggest that the time is right for you to pick up your own little piece of paradise, to put away for a rainy day.

Lionel Morris LREA DipFP.
lionel@wiseinvestment.com.au

With so many goods and services available on credit these days, borrowing has never been easier.
Problem is, a lot of this credit comes at a very high price, with interest rates up to 20% or more.
One way you can reduce your interest costs is to consolidate these smaller debts into one loan at a lower rate.
One regular monthly loan repayment can be a lot easier to manage and a lower interest rate will certainly bring savings.
I have recently helped one of my clients to reduce their loan repayments by $800 per month through refinancing their home loan and other debts.
In these uncertain times of interest rate changes most mortgage owners are now starting to consider their finance options. Perhaps I can also help you If you require:
Reduced loan repayments
Consolidation of debt
Funds to renovate, install a pool or purchase a significant item
Finance to purchase another property
Parent equity guarantees to assist your children to purchase a property
Or any other finance requirement.
A lower rate may be achieved by consolidating these debts into your home loan. Most lenders offer this option provided you have sufficient equity in your property.
If you do decide to roll these loans into your home, you should bear a few things in mind:
If possible, keep the repayments at the previous level.... with a lower rate this will result in the debts being repaid sooner.
Be mindful of any fees and charges involved
Remember that these debts are now secured by a mortgage over your home

Please pick up the phone and call us on 07 3420 0044 or email us first@firstchoicehomeloans.com.au for an obligation-free assessment of your current situation should you wish to explore this option further.

Any time you would like us to asses your borrowing capacity for another property simply send us an email or go to our website, or simply give us a call at the office.

Brad Oliver
Tel 07 342 00044
www.firstchoicehomeloans.com.au
first@firstchoicehomeloans.com.au

The recent Queensland "Ban the Banners" provision is a two edged sword. Ban the Banners prevents developers and body corporates from setting minimum house sizes, minimum bathroom or garage numbers, specific finishes and particular roof colours. Buyers could also take as long as they like to build on their site and even occupy the property before it is completed!
In the first instance, there are some potential serious negative impacts including a possible fall in price; an increase in land speculation and delays in service delivery. But there is an upside as well. Every cloud has a silver lining. Read more .....

I would have to say that it is getting increasingly difficult to come up with some awe inspiring words of brilliance that will ignite the pages of "The Wise Times."
Unfortunately the basic principles that I put on paper nearly ten years ago still hold true for successful property investing. My favourite which I explained in only the third edition of our Newsletter way back in 2001 is still my all time favourite - The First Rule of Economics is "Price is determined by Supply and Demand." It doesn't matter if you are buying/selling horses, houses or cans of pineapple - when demand outstrips supply prices will rise. When supply exceeds demand prices will drop. Read more .....

Have You Ever Thought About Starting a Small Business?
Don't Know How to Start, Don't Know What to Do?
Why not utilise the knowledge you have gained as a Wise property investor and help others to become successful property investors, as a Wise representative?
Wise Investment will be holding a series of two day weekend courses to enable you to gain the knowledge required to be able to confidently present:

• The concept of investing in property
• The benefits of investing in property
• How to build your own client data base
• How to answer the twenty most commonly asked questions
• How to explain how we pick the best areas to invest in.
• How property will help your clients create and build a wealth providing portfolio of properties.

Weekend Seminars in Darwin 22 & 23 May - Canberra 19 & 20 June

For details of this personally satisfying and financially rewarding opportunity contact Lionel Morris email: lionel.morris@wiseinvestment.com.au
or mobile 0419 719 520 Or contact your local Area Manager

The answer to the question is, of course, always. They are so different, beyond the average investors understanding. A QS report or to be terribly pedantic about it, is more correctly known as a DEPRECIATION AND BUILDING ALLOWANCE SCHEDULE. But please understand that it is not a uniform or standard product. Tax law on depreciation alone fills up a stationary cupboard. And it's not black and white. The ATO has taken to favour the press release rather than changing the law. It's "guide to rental properties" is frankly more of a wish list than one based in law. The Australian Institute for QS's is not much better. Their approach seems to be to list the various ways one can deal with various issues rather than refer to the law which is a bit too complex. Besides they don't want to offend the ATO. The ATO is, like most business's, suffering a skilled labour shortage. Try getting a sensible answer to a technical query! Read more.....