Construction Costs in Australia Decreasing

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Construction cost in Australia are among the most expensive in the world but are coming down according to an international report.

 

The report by Turner & Townsend a multinational professional services company ranked Sydney at 10th, Perth at 16th, Melbourne at 19th and Brisbane at 20th most expensive cities in the world for construction costs.

The study analysed 35 residential and commercial projects in different markets around the world and found that New York is the most expensive place to undertake construction activities.

Markets analysed and the report’s predicted construction market in next 12 months included:

Cooler Staying the same Warmer
Australia – Perth Australia – Melbourne Australia – Sydney
Brazil Canada Doha
China Chile Hong Kong
Kazakhstan Germany Ireland
Malaysia India Kenya
Russia Japan Netherlands
Singpore Poland UAE
Uganda South Africa UK – Central
South Korea UK – London
Vietnam UK – North
UK – Northern Ireland
UK – Scottland
UK – South
USA – Houston
USA – New York City
USA – Seattle

 

Construction market in Australia

According to Sourceable Senior economist Gary Emmett from Turner & Townsend said Australia is becoming a relatively cheaper place to build, due to low interest rates and a falling Australian dollar.

“The 2015 report shows that compared to 2011, it would cost overseas investors paying in US dollars 13 per cent less to construct buildings in Australia, which is a significant reduction,” he said.

Mr Emmett said that with the exception of Sydney’s apartment market, the cost of construction is stable and the outlook moderate for the medium term.

“Overall, it is a great time to build. Construction costs should remain fairly stable although some residential construction trades may become increasingly difficult to source, adding pressure to costs,” he said.

“Foreign investors are expected to seek more opportunities here to capitalise on the favourable conditions to build projects.”

Construction cost per square meter in Australian cities

The Turner & Townsend report estimated construction costs of detached houses, townhouses, low rise apartments and high rise apartments in the Australian cities Brisbane, Melbourne, Perth and Sydney.

Detached house construction costs per square meter in Australian cities

The construction cost of building a detached house is $1,600 per square metre in Melbourne, $1,650 in Brisbane and Perth, and $1,750 in Sydney.

Melbourne

$0

per metre squared

Brisbane

$0

per metre squared

Perth

$0

per metre squared

Sydney

$0

per metre squared

Building a prestige detached house costs $2,700 per square metre in Melbourne, $2,850 in Sydney, and $3,000 in Brisbane and Perth.

Melbourne

$0

per metre squared

Sydney

$0

per metre squared

Brisbane

$0

per metre squared

Perth

$0

per metre squared

Townhouse construction costs per square meter in Australian cities

Townhouses construction cost $1,700 per square metre in Brisbane, $1,750 in Melbourne, $1,850 in Perth and $1,900 in Sydney.

Brisbane

$0

per metre squared

Melbourne

$0

per metre squared

Perth

$0

per metre squared

Sydney

$0

per metre squared

Low-rise building costs per square meter in Australian cities

Construction costs to build low-rise apartments are $1,800 per square metre in Brisbane, $1,900 in Perth, $1,960 in Melbourne and $2,100 in Sydney.

Brisbane

$0

per metre squared

Perth

$0

per metre squared

Melbourne

$0

per metre squared

Sydney

$0

per metre squared

High-rise construction costs per square meter in Australian cities

High-rise apartments building cost $2,500 per square metre in Brisbane, $2,700 in Melbourne and Sydney, and $2,900 in Perth.

Brisbane

$0

per metre squared

Melbourne

$0

per metre squared

Sydney

$0

per metre squared

Perth

$0

per metre squared

Borrowing to build your dream home or a small development project?

A construction loan may be a good choice for a single dwelling (house, townhouse or unit) or up to 4 dwellings (houses, townhouses or units on a single title – prior to subdivision) in a small property development. Find out about Construction loans here:

Borrowing to build a larger property development project?

Larger property development projects (multi-dwelling developments – houses, townhouses, units or apartments) require specialised construction finance.

Oak Laurel – Construction and development finance made easy!

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SMSF loans will not be banned says assistant treasurer

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Self Managed Super Fund loans will not be banned but may face tougher regulation says assistant treasurer

Whilst speaking at the Tax Institute annual superannuation conference in Sydney on Friday 21 Aug 2015, Josh Frydenberg the assistant treasurer stated that the Government has no plans to ban SMSF loans, that is limited recourse borrowing arrangements (LRBAs) through SMSFs to purchase real estate according to Fairfax.

David Murray’s Financial System Inquiry, released in December 2014, warned that SMSF borrowing for property increased speculative investment which could pose a risk to the financial system over time and called for a ban on LRBAs,

“I want to emphasise that we have been considering this recommendation very carefully but flag that we want to make sure the approach we take is proportionate to the risks that have been identified,” Frydenberg said.

“To put it in context only 0.07%, perhaps 6,500 properties, were held in an SMSF through a limited recourse borrowing arrangement in 2013.

“David Murray highlighted the risks associated with increased leverage in the financial system. Increased leverage always represents a risk and we recognise that. The government also recognises that most SMSFs do the right thing.”

When asked whether there were any plans for increased regulation of SMSF loans – instead of completely prohibiting it – Fairfax reports that the assistant treasurer said it was “under consideration”.

This appears to be good news for those taking control of their Superannuation through SMSFs. Though clearly not for everyone, borrowing to investing in property through your SMSF remains an option. It is suggested that you seek advice from a qualified professional before making any investment choices though your self managed super fund. If you are considering borrowing to invest in your SMSF we can provide you with Limited Recourse Borrowing Arrangements for your SMSF.

Borrowing to purchase property in your Self Managed Super Fund?

Ask an Oak Laurel mortgage broker about your Self Managed Super Fund loan options.

 

 

 

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Is Melbourne overtaking Sydney as the hottest property market? Aug 2015

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Property price growth data shows that in the last Quarter, Melbourne property has out paced Sydney’s to become Australia’s hottest property market as at Aug 2015

Property price growth in Melbourne and Sydney

Latest property price data from PRData shows that in the last quarter Melbourne property price grew 7.85% out pacing Sydney price growth at 6.66%. Month on month price data also shows a similar trend, Melbourne price growth outpacing Sydney’s, overall and for houses. Though Sydney’s unit prices grew faster than Melbourne the difference was only 0.06% between the two or in practical terms they were the same.

In recent years Melbourne has shown some reasonable price growth but until the last quarter have been outpacing Melbourne’s by a large amount. With Sydney’s property prices now so high many believe that they are unaffordable. There have also been reports that property investors looking to buy in Sydney have been turned off by the high prices and are now turning to Melbourne where prices have been rising at steady pace. Now that Melbourne’s price growth appears to have overtaken Sydney’s investors chasing capital gains may also be more attracted to Melbourne.

Melbourne property has not had the attention from property investors that Sydney has had with a larger proportion of owner occupiers. However, if investors now find Sydney too expensive or decide to target Melbourne which has in the last quarter become the hottest property market, this may be the start of a flood of investors to Melbourne property.

Auction clearance rates in Melbourne and Sydney

Recent auction clearance rates show a similar trend to the property price growth in Melbourne and Sydney. Over previous five weeks Melbourne’s auction clearance rates have shown a steady building increase from 74% five week ago to 75%, 76% , 77% to 80%.  Sydney’s auction clearance rate though having 80% last week have showed a decreasing rate previously from 78% five weeks ago to 76%, 76%, 73% before last weeks jump back to 80%.

Is Melbourne a good place to invest in property?

Invest where people want to live, especially where people who have wealth want to live as this is the demand side of what drives up property prices. People want to live in Melbourne. Melbourne has been named the world’s most liveable city for the fifth year in a row, achieving a near perfect score on the Economist Intelligence Unit’s (EIU) liveability survey of 140 cities. Each year thousands more people move from NSW, mostly Sydney to Victoria, mostly Melbourne than go the other way. Melbourne has the greatest number of people immigrating to it than any other Australian city. The ABS forecasts that given current levels of migration and fertility rates, Melbourne will overtake Sydney as Australia’s biggest city by 2053.

It is not all Melbourne’s way though. Vacancy rates in Melbourne at 2.3% are however, slightly above that in Sydney at 1.8% as of July 2015, according to SQM research data. However, both cities have lower than the national average vacancy rate at 2.4%.

Latest data also shows that rental yields are also slightly lower in Melbourne than in Sydney.

Conclusion

This data does not mean that Sydney’s property prices will not continue to grow, there is every indication that the it will continue to grow into the future. The data does suggest that Melbourne is now the hottest property market and may catch up to Sydney over the coming years.

Only time will tell if Melbourne will continue to be Australia’s hottest property market!

 

Want to talk to one of our Melbourne based mortgage brokers?

We have mortgage brokers around Australia. Do you want to talk to one of our mortgage brokers in Melbourne? Click here:

 

Want to talk to one of our mortgage brokers in Sydney?

Contact our Sydney based mortgage brokers to discuss your mortgage needs whether it is for an owner occupied property or investment property. Click here:

 

 

 

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Good investment loans easy to find in Australia

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Whoever said that it was hard or expensive to get an investment loan must have been looking for one in their own navel. Many lenders are still actively competing for investors as they have not exceeded the Government Banking Regulator’s 10% investment lending growth ‘speed limit’.

 

Many lenders are still offering loans to investors at higher loan to value ratios and competitive interest rates. The major banks who have exceeded the Government Regulator’s investor growth limit are getting out of investment loans and some are now spruiking that the investment market is dead.  This smacks of If I can’t play I will close my eyes and shout that the property market over. But with so much demand for property in Australia’s two largest cities, Sydney and Melbourne, no one wants to hesitate only to have to pay thousands more for a comparable property next week. Anyone who has attended an Auction in Sydney or Melbourne recently knows that the demand is stronger than ever as are prices.

 

Here is the tip to getting a good investment loan. Don’t bother going into a bank branch. Don’t bother going to a mortgage broker that is owned by a bank. These places don’t give you a lot of choice even if you are not an investor. Go to an independently owned mortgage broker who has access to a wide range of lenders including non-bank lenders. You will find out that there is plenty on offer for property investors with competitive loan packages to boot. Find more info about what kinds of investment loans are still available here: investment loans

 

Now that the big banks are out of investment lending they have started talking down the property market prospects, it does not even matter that the data says the opposite. There may be an affordability issue in Sydney but the Melbourne market median house prices are around $200,000 cheaper than Sydney and are just starting to really take off. The most recent property price growth data shows that Melbourne has overtaking Sydney as the fastest price growth city and prices are growing even faster than before. The big banks may be disappointed that they can’t lend to investors in this growing market but this will just give the lesser known lender a chance to show off their investor loans expand their investor market share. These new Government Regulator measure are levelling the playing field for lenders and introducing more competition that is long overdue.

 

 

Mortgage Broker Oak Laurel By Dr Nigel Abery (PhD) 

 

 

 

 

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Federal Government Treasurer’s new measures for illegal foreign property purchases

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Australian Federal Government Treasurer Joe Hockey announces proposed new measures to crackdown on illegal foreign property purchases.

Today 8 August 2015, Joe Hockey Federal Government Treasurer, announced that the law will be changed so that foreign investors breaking the law and purchasing established properties (instead of new properties) will be forced to forfeit capital gains on the property and will be fined 25% of the purchase price or 25% of the property value. Temporary residents can still purchase existing properties to live in whilst they are residing in Australia so long as they sell the property if they permanently depart Australia.

There is currently a moratorium on criminal charges for foreign investors self reporting that they have broken the rules. However, those that have broken the rules will still be required to sell the properties.

It has been reported that 400 Australian properties are under investigation for being illegally purchased by foreigners. However, it is acknowledged that the vast majority of (Chinese) foreign property investors are complying with the Foreign Investment Rules.

The rules on foreigners purchasing Australian property are quite simple and easy to comply with. Non-residents must obtain approval from the Foreign Investment Review Board (FIRB) and generally can only purchase new properties. If they are a temporary resident they may be able to purchase an existing property to live in whilst that reside in Australia. The Foreign Investment Review Board may grant permission to purchase existing property for the purpose of redevelopment to increase the supply of property. However, it is unlikely that the existing property will be able to be rented out / leased whilst it is waiting to be re-developed.

The Government has already announced that it is introducing a new fee/tax for foreigners applying to purchase property in Australia. However, this is not expected to reduce demand from foreigners for Australian property.

Non-residents can borrow to purchase property in Australia

Did you know that some banks will lend to non-residents to purchase property in Australia? Find out more about mortgages for non-residents here:

 

Are you a property developer?

The Government is encouraging new dwelling supply. Ask us about your property development finance options. Non-resident can also borrow from Australian lenders to for development projects. The criteria have become stricter for both non-residents and Australian residents. Find about property development finance here:

 

Are you a temporary resident?

Did you know that temporary residents like 457 visa holders can borrow to buy property in Australia? Find out about home loans for 457 visa holders here:

 

Chinese mortgage brokers

Do you want to compare your finance options and need Chinese language support? Contact one of our Chinese mortgage brokers!

 

 

Oak Laurel Finance Brokers – loans made easy!

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Australian property price gains remain strong – Aug 2015

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Australian property capital gains remain strong in Sydney and Melbourne – Aug 2015

Despite bubble talk from some media commentators the property price gains remain strong in Sydney and more so Melbourne – Aug 2015. If you were waiting for housing prices to drop in Sydney or Melbourne the latest data shows that it looks like you may have made the wrong decision. Demand for property in Australia’s largest and future largest cities remains strong. House price data from Corelogic PRData  monthly values – 31 July 2015 shows that “% Change Month on Month” unit prices were up by 3.23% in Sydney and up by 3.18% in Melbourne. Furthermore, house prices were up 3.32% in Sydney and up 5.12% in Melbourne, month on month. Rather than being dampened, surprisingly the data shows that property price gains in Sydney and more so Melbourne appear to be gaining speed. Melbourne price growth looks to be starting to catch up with Sydney’s.

Auction clearance rates over the last week (25 Jul – 1 Aug 2015) in Australia’s two largest cities show a similar picture with both Sydney and Melbourne having clearance rates at 79% according to the APM Market Reports on Real Estate listing site domain.com.au.

What about the changes some banks have made reducing maximum loan to value ratios for investors?

The changes in bank lending for investors does not appear to have had a dampening impact on property prices. There are still lenders that are providing 95% LVR investment loans and competitive interest rate, fees and feature packages. Furthermore, if you have equity from the already owned property price gains then you probably don’t need a higher LVR.

What about the interest rate rises for investors that some banks have made?

So far the interest rate rises that have been made by some banks have been modest. Investors must find the increase in interest rate insignificant compared to the capital gains that are being seen in Sydney and Melbourne. I wonder how much interest rates need to rise by before the current rate of capital gains becomes unattractive? Furthermore, there are still lenders out there that are under the Government Banking Regulator’s (the Australian Prudential Regulatory Authority – APRA) ‘magic number’ of 10% maximum allowed growth in investment lending and are more than happy to lend to investors. Investors can still get interest only investment loans in the low four percent range and even when borrowing over $1million. Note, you will need to meet the lender’s eligibility criteria. This information is correct at time of writing, the market is in a constant state of change. Check with us if in doubt.

What is the major limitation on borrowing now?

As previously mentioned the big losers from the new bank measures are first home buyers that want to enter the property market by buying an investment property. If you are a First home buyer looking to enter the property market as an investor to take advantage of the rent and negative gearing to help with the payments you may be interest in a guarantor home loan.

If you already own well located property in Sydney or Melbourne that was purchased some time ago you probably have access to some equity in your property. This equity can be used for a deposit on an investment property.

The major limitation on borrowing is then your borrowing capacity. The Government Regulator crackdown also included getting some banks to tighten up their borrowing capacity calculators and policy to make it more difficult to demonstrate your ability to make repayments if interest rates rise. The some banks have now changed how they consider rental income, living allowance and other some aspects in considering your ability to repay a loan. Want to maximise your borrowing power? Ask you what you can do and how you can do it, when you enquire with one of our mortgage brokers for a mortgage.

What is the solution for investors looking to borrow?

Looking to borrow to invest in the Sydney, Melbourne or other property markets? Ask one of our mortgage brokers about getting an investment loan with flexible borrowing capacity requirements, access to higher LVRs and competitive interest rate, fee and feature package. Note: this information is correct at time of writing, the market is in a constant state of change. Check with us if in doubt.

Contact one of our local mortgage brokers to go through your options.

Mortgage broker in Adelaide

 

Mortgage broker in Brisbane

 

Mortgage broker in Melbourne

 

Mortgage broker in Perth

 

Mortgage broker in Sydney

 

 

 

Oak Laurel Mortgage Brokers – Home loans made easy!

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Home construction loans: how do construction loans work

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Construction loans

Building your dream home can be an exciting experience. Taking an idea and turning it into reality can be a rewarding experience if done right. When you build your own home you can decide how you want it to be.

It is not always trouble free. Constructing a home can be a long and expensive process and there are many possibilities that things can go wrong.

If you are borrowing money for the construction of the home then the lender is also taking on the risk that something will go wrong. The major risk is what the finish building will be worth. Some of the other risks include the quality of the builder. If the builder does not finish the building it can be very difficult to sell an unfinished home without providing a significant discount on the price. Even if the builder does finish the home, if the quality of the finished home is poor then the value may be less than expected.

Lenders don’t like taking on a lot of risk and will put in measures / requirement to reduce this risk. In the case of lending to build a home some lenders offer home construction loans, with all their strict criteria, specifically for this purpose.

Typically, a qualified and licenced builder must be engaged. Furthermore, the lender will want you to have a fixed price contract (not a cost plus) with the builder so the lender knows exactly how much it will cost to finish the building. Owner builder construction loans are available but generally only for builders who are building their own property. This means that you may have an especially hard time finding an institution to finance your project if you are intending to be an owner builder.

Having a fixed price with a licenced builder is only one of the many requirements of getting a construction loan.

Did you know that some lenders will allow you to use a construction loan for a three or even four units/townhouses development? If you are undertaking a small development contact us to go through your options.

 

Find out more about construction loans

Find out about the requirements and process of getting and using a construction loan. Everything you need to know.

 

 

Oak Laurel Mortgage Brokers – Construction loans made easy!

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95% Investment property loans; 90% LVR Investment loans

 

95% Investment property loans; 90% LVR Investment loans: What is the maximum loan to value ratio for investment property loans – July 2015

NOTE: Bank policy is now in a state of change this information is only valid at the time of writing 29 July 2015.

Bank policy has been changing recently. Some banks have stopped lending to investors. Others banks have reduced their loan to value ratios available on investment property lending and or increased their interest rates for investment property lending. There has also been changes to the serviceability calculators used by banks and lenders that reduce borrowing power in many cases.

We have been getting inquiries from property investors asking:

Is it still possible to get investment property loans at 90% loan to value ratios (LVR / LTV)?”;

Can I get an investment property loan with 10 percent down?

I have bought ‘off the plan’ can I still get a higher loan to value ratio investment loan?

What is the maximum investment property loan to value ratio available now

Will I need to pay much higher rates on an investment property loan now?

Whilst many lenders have changed their policies other lenders have not, well at least not yet.

Is it still possible to get investment property loans at 90% loan to value ratios (LVR / LTV)?

It is still possible to get investment property loans to 90% loan to value ratio (LVRs) from some lenders. However, the number of lenders offering 90% loan to value ratio investment property loans are much less than before.

Is it still possible to get 95% investment property loans?

Yes, it is still possible to get investment property loans at 95% of the property value (LVR). However, because bank policy is changing rapidly it is advisable that you contact us immediately before this situation changes.  Contact us now for a 95% Investment property loan!

What is the maximum investment property loan to value ratio available now?

The maximum investment property loan to value ratio available is currently 95% LVR. Many lenders have stopped offering 95% loan to value investment property loans but some lenders are still offering these high LVR loans for investors. This lenders are generally not deposit taking institutions that are regulated by APRA. Instead they are regulated by ASIC. However, it is likely that in the near future ASIC may pressure these lenders to also reduce investment lending and they will also introduce policies similar to those of the major banks. Contact us now for up to a 95% Investment property loan!

Can investors still get competitive interest rates for investment property loans?

Yes, investors can still competitive interest rates from some lenders it is advisable that you get your investment property loan approved as soon as possible to avoid a nasty surprise when shopping for low interest rates for investment property lending.

I have bought ‘off the plan’ can I still get a higher loan to value ratio investment loan?

If you have bought off the plan and you are settling within the next few months you may want to contact us to check what options you have. Some lenders have longer periods where they will honor a loan approval before settlement. Contact us now for a high LVR investment property loan!

Why use Oak Laurel mortgage brokers for your investment property loan?

Oak Laurel mortgage brokers have access to a wide range of lenders and wide range of loans. Some mortgage brokers only have access to a smaller number of lenders and loans this can restrict your ability to access those lenders that have policies that suit your needs, including if you are property investor. This includes those lenders that currently still offer high loan to value ratios for investment properties.

 

 

Contact an Oak Laurel mortgage broker

Don’t delay act NOW!

+614 30129662

Oak Laurel Mortgage Brokers – Investment property loans made easy!

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Find out about the new property investment winners and losers.

RBA: further interest rate cuts likely – July 2015

RBA: further interest rate cuts likely – July 2015 appeared first on Oak Laurel.

Reserve Bank of Australia (RBA) Governor Glenn Stevens stated the further interest rate cuts remains “on the table”

In a speech to the Anika Foundation Luncheon in Sydney on 23 July 2015, the Reserve Bank of Australia (RBA) Governor Glenn Stevens stated the further interest rate cuts remains “on the table”.

Here are some key points that the RBA Governor noted in his speech:

  • the financial spillovers from the Greek situation have not been large;
  • the likely direct economic [from Greece’s troubles] spillovers to the rest of Europe also seem fairly contained, since Greece is quite a small economy.
  • the “quite spectacular developments” in China’s equity market may end up having little impact on the Chinese economy;
  • the evolution of China’s property market and financial sector are likely to be more important;
  • the depreciation of the [Australian] currency is having an expansionary effect on the economy;
  • inflation that has been well contained;
  • despite the lowest interest rates that any current borrower has ever seen, the pace of lending to households remains moderate;
  • many Australians are saving more and using funds in ‘offset accounts’ to offset mortgages.
  • despite the doom and gloom and fulminations over the airwaves, in newspapers and in cyberspace, business confidence has risen in recent months.

 

“The question of whether they [interest rates] might be reduced further remains, as I have said before, on the table” said Glenn Stevens, Governor Reserve Bank of Australia

 

My commentary

by Dr Nigel Abery (Ph.D.)

My conclusion from Mr Stevens’ remarks is that despite some instability in certain sectors of the Global economy, the Australian economy remains fairly stable and is adjusting from the mining led economy. There does not appear to be an immediate need for an interest rate cut(s). However, the RBA is prepared to cut if needed.

I believe that sometime in the next six months there will be an event (some poor economic news), that will not be a disaster for the Australian economy, but will spur the RBA to cut interest rates to boost consumer confidence and encourage spending. This of course will not only boost spending on consumer goods but also increase property prices in major capital cities.

 

 

Make your own interest rate cut – refinance to a better home loan

Don’t wait for the RBA to cut interest rates. Ask an Oak Laurel mortgage broker about what they can do for you and your loan package. Contact a mortgage broker.

 

 

COBA concerned about vertical integrated mortgage brokers

The Customer Owned Banking Association has raised concerns about mortgage brokers in a submission to the parliamentary inquiry

The Customer Owned Banking Association (COBA) has raised concerns about mortgage brokers in a submission to the parliamentary inquiry into home ownership. COBA’s concerns include a misunderstanding of brokers limitations as far as lenders and products offered, obligations of the broker when offering products to the customer and the lack of disclosure regarding vertical integration in the mortgage broking industry.

According to the Mortgage and Finance Association of Australia (MFAA), aggregation/mortgage broker groups that are owned by the big 4 banks, totally or substantially, comprise an estimate of 40% of mortgage brokers. The COBA has strongly and repeatedly opposed vertical integration of mortgage broker groups with banks in the past.

Consumers (You) are right to be concerned about mortgage brokers being owned by the banks and lenders. Many of which have access to only a limited number of lenders and loan products, which may result in customers being directed to their owner’s (Banks) home loan products. Consumers want to visit a mortgage broker so that you can select from a wide range of lenders and loan products. If consumers wanted to go to a Bank and and over pay, then they don’t need to go to a bank owned mortgage broker, just be be fed that bank’s products. Consumers expect that a mortgage broker is owned independently from the bank.

  • Oak Laurel mortgage brokers are NOT owned by a big bank or other lender.

  • Oak Laurel are mortgage brokers owned independently from the big banks.

  • Oak Laurel are family owned mortgage brokers!