For generations backyards, barbecues and big houses have been the norm for Australian home owners. But what of future generations?

Some demographers suggest we are so much in love with the idea of having big spaces to raise a family that it’s impossible for us to change, despite the fact that Australia will likely have to absorb 2.3 million additional households over the next 15 years alone and we’re not sure we’re we are going to put all these people.

Sure, the baby boomers and many of their gen X offspring have found it hard to sacrifice sprawling McMansions in favour of smaller accommodation, but will gen Y be more inclined to embrace higher-density living?

A recent report from the Grattan Institute indicates a growing preference toward apartment-style accommodation in Australia.

The study, aptly entitled The Housing We’d Choose, found that Australians want more apartment-style housing and are moving away from detached housing.

It also found we’re not building enough of the type of accommodation more and more people want.

Not enough apartments to go around

In 1976, detached dwellings (houses) made up 78% of all accommodation; however by 2006 this had dropped marginally to 74%.

While 4% doesn’t sound like a large reduction, it’s interesting to note that many respondents indicated a preference for apartment living, with the issue being a lack of higher-density stock compared with the vast number of detached homes on the market.

The report suggests there are potentially thousands of tenants and home buyers out there who simply cannot find the type of accommodation they are seeking in the places they most want to live.

Author of the report Jane-Frances Kelly says there is an ever-increasing divide between the style of housing people want and what’s available and that the construction industry needs to be more aware of our changing needs and place greater emphasis on affordable, higher-density options.

No longer the slums

Over the years our perception of townhouse and apartment living has changed.

Where once we saw medium- and high-density developments as “slums” intended for lower socio-economic classes, in the last 20 years or so apartment living has become the practical and trendy alternative, in particular sought after by young, upwardly mobile professionals.

“In short, many of the detached houses…are a legacy of a time when Sydney and Melbourne were different cities. Today’s stock reflects attitudes formed and decisions made under different conditions, some of which no longer apply,” says Kelly.

So why aren’t we building more apartments?

Well, we are, in some locations.

The growth in apartment popularity has certainly influenced the Melbourne skyline of late, with a saturation of new stock hitting the market and more set to come on line in the next year or two.

In fact, I’m concerned that there will be an oversupply of apartments in the Melbourne CBD and that this will create a severe price correction in that market, especially as many have been bought by investors. Some who won’t be able to settle their purchase and others who won’t be able to find tenants at a time when we have fewer overseas students coming to Australia.

An oversupply of CBD and new near city apartments is also looming in Brisbane.

But in general the high cost of land, council restrictions, the resistance of communities, high development costs and difficulty obtaining funding is stifling new apartment development in many of our inner- and middle-ring suburbs.

Then of course there are the infrastructure constraints to consider – namely public transport access and the capacity for existing roads and public facilities, such as schools and hospitals, to handle the type of rapid growth in resident numbers that higher density housing would create.

Some lessons for investors

Let’s face it: as our population grows there’s no doubt we will need to embrace the apartment culture.

This should not be a real problem, as fortunately our lifestyle preferences are changing, with many gen Ys prepared to trade a backyard for a balcony.

It’s no coincidence that over the last few years investors who owned well-located apartments have done well as capital growth and rental growth has often outpaced growth in detached housing.

But as always, you can’t just buy any apartment and hope it makes a good investment.

I’d steer clear of generic, off-the-plan, and in particular, CBD stock. Inherently these lack scarcity and will be more risky in the next few years due to the glut of similar developments coming on line.

Here’s my recommendation: you would do much better buying an established apartment in a highly sought-after, near city or bayside location where you’ll find smaller, boutique-style apartments that are always in favour with buyers and tenants.

Sure they might need a bit of a facelift, but this is just a chance to add value to what already represents an asset with excellent potential for strong long-term growth.

Investors are expected to return to the Perth market, with a local agency reporting intense interest from potential tenants in one particular property last week.

“I received a report this week from one of our senior property managers on a property that was opened for inspection with 20-plus people viewing the property in 15 minutes,” Graeme Baxter, managing director at ACTON, said.

“There were six applications submitted and successfully leased at $20 above the asking price.

“This level of activity should see investors returning to the property market as a very secure form of investment compared to the volatility of the stock exchange as witnessed over recent months.”

Mr Baxter pointed to recent Real Estate Institute of WA (REIWA) data which showed that the vacancy level for residential rental properties is below two per cent in most parts of the city. REIWA also reported a 24 per cent drop in available rentals across the metropolitan area in February, falling from 2,900 properties to 2,200.

“Certainly now is the time for sales teams to target the ‘investor market’ and expand the availability of rental stock to satisfy the demand of our burgeoning population,” Mr Baxter continued.

“This is particularly relevant in Western Australia at the moment which leads the country in net migration growth.”

Mr Baxter’s comments come not long after ACTON, which has around 20 offices in WA, reported a 60 per cent on-month surge in sales in February.

via spionline.com.au

Chana Joffe-Walt/NPR

Willow Tufano, landlord.

Meet Willow Tufano, age 14: Lady Gaga fan, animal lover, landlord.

In 2005, when Willow was 7, the housing market was booming. Home prices in some Florida neighborhoods nearly doubled from one month to the next. Her family moved into a big house; her mom became a real estate agent.

But as Willow moved from childhood to adolescence, the market turned, and the neighborhood emptied out. “Everyone is getting foreclosed on here,” she says.

After the collapse, Willow’s mom started working with investors who wanted to bid on cheap, foreclosed homes. Sometimes Willow tagged along.

 

One day, she went to a house that an investor wanted to flip. “It was filled with all kinds of stuff!” Willow says. “I was like, ‘I can sell this stuff if he’d want to let me have it.’ “

That was fine with the investor. So Willow sold the furniture and appliances from the house on Craigslist. She did the same thing with a bunch more houses. After a while, she was clearing about $500 a month, and saving a lot of it.

One day, Willow’s mom, Shannon, saw a two-bedroom, concrete-block home on auction for $12,000 — down from $100,000 at the peak of the bubble. Shannon was telling her husband about the house, when Willow piped up.

“I was like, ‘What if I bought a house? That would be crazy,’ ” Willow says.

Willow wound up splitting the house with her mom. Willow plans to buy her mom out in the next few years, and put her name on the title when she turns 18.

The place was a mess when they bought it — “like there was a riot or something,” Willow says.

They cleaned it up and rented it out to a young couple for $700 a month.

As I was working on this story, I kept thinking that when a 14-year-old kid can buy a house, the market must have hit bottom. I kept saying this to Willow, and she’d sort of vaguely nod.

But it’s hard for Willow to see herself as symbolic of anything. To a 14-year-old kid in Florida, the housing collapse is basically the only world she’s known. It’s the landscape. It’s a Craigslist hobby.

She’s thinking she may save up for a second home.

If like many property investors you’re asking has the property market bottomed – you’re asking the wrong question!

Over the last week I’ve had a number of questions from the media and even more from clients asking me what’s going on in property and how much further will property values fall.

I guess this is because the latest figures came out showing that median house price are flat in some parts of Australia and still falling in others.

So I thought I’d give you my take on it and I’m sure not everyone will agree with me.

That’s O.K. because I love sparking debate and getting people thinking about what I’m saying.

How do you know what’s really going on?

The problem is, most people just take the information that the media spoon feeds them as truth, and they miss out on opportunities because they don’t really understand what’s going on.

Today, I wanted to give you one of the most important insights that I ever gained as an investor, because it opened up a whole new world of opportunity for me.

We already know that currently there’s a lot of debate about whether the real estate market has “hit the bottom.” Is property just too unaffordable? Are prices going down more?  Is the worst behind us?  Are they going back up?

This kind of debate sells lots of newspapers, but the reality is that sophisticated investors don’t care whether the market has bottomed out yet.  It doesn’t matter.

Here’s why…

A very, different, but critical insight

The moment you leave your success or failure up to what direction the market goes, you’re in TROUBLE.

Buying any kind of asset because you’re trying to “time the market” and hoping it goes up puts you in serious jeopardy.

You have no control over your returns, and you’re making one of the most common mistakes I see investors make – and that’s speculating rather than investing.

Timing the market is what unsuccessful investors do.

Here’s What Smart Investors Do?To Create Long-Term Wealth:

1. First, they become educated in a specific asset or investment strategy. 

They read, they learn, and they understand.  They don’t just throw money into an investment on a “hot tip” or because everyone else is doing it.

By the way if you’d really like to learn the property investment strategy that has worked for me for close to 40 years please join me at my upcoming 1 day trainings.

Click here to get all the details now to join Rolf Schaefer, Ken Raiss and me at my “National Property & Economic Market Updates”

2. Second, they choose an investment strategy that suits the market. 

I can’t emphasize this enough.  This is why most investors fail – they choose the wrong strategy for the market they’re in.

I learned years ago that there is no such thing as the “perfect strategy”.  It doesn’t exist.  There are always pros and cons.  And most importantly is choosing your strategy based on your market.

It may interest you to know that over the last year I’ve sold three properties because of what I see happening to our property markets (yes sometimes I do sell my properties) and I’ve committed my money to other properties instead.

When you join me at my 1 day training I’ll explain exactly what I’m doing and why. Click here  to find out all the details and join me.

Here’s the main message I wanted to pass on to you today…

If you’re waiting for the marketing to “hit the bottom”, you’ve MISSED THE POINT.

The only way you’ll know the market has bottomed is in hindsight – and if you were trying to wait until the bottom came, you’ll have missed it by the time you can see that it came!

So what should you do?

Instead of try to do what is almost impossible (timing the market), the better strategy is to get educated, and find out what truly is working in today’s markets.

I’ve found that timing is one of the most misunderstood concepts with regard to investing. The truth is successful investors know how to create wealth at any point in a cycle.

Of course timing matters – you don’t want to buy a property at the peak of the property boom, just to wait three or four years before its value starts to rise again.

But successful investors find that timing isn’t really that important.

Have you noticed how some investors seem to do well in good times and do even better in bad times?

Market timing isn’t really important to them? On the other hand others do poorly in good times and even worse in bad times? Market timing seems to have very little effect on them either.

Interesting isn’t it?

Another important point…

Is that there are multiple property markets.

I just looked up the latest statistics and found that over the last year there were a number of suburbs in most states where the median price increased by over 20% (yes over the last 12 months). And there were other suburbs where the median price fell by over 20%.

I’m not necessarily suggesting you buy in these suburbs – in fact there are one or two I would definitely avoid.

But what I’m saying is that while some investors are getting in the game taking advantage of some of the best buying conditions property investors have experienced in a long, long time; others are waiting for the timing to be perfect.

How will I know when the timing is right?

It wasn’t that long ago that I spoke with John who had been waiting for over 10 years for the timing to be ‘just right’ to start investing in property.

The timing will never be ‘just right.’ There will always be challenges, situations, circumstances, obstacles, fears, doubts and things that you are going to have to overcome. The timing is never going to be perfect.

Ten years ago John saw some obstacles and didn’t get into property investment. If he did, chances are that wherever he bought his property it would have doubled in value by now, even if he had made a mistake and paid a little bit too much or bought in the wrong street.

It’s a fact that wealth is attracted to people who are decisive and committed. If you are waiting for the timing to be perfect – the timing will never be perfect to you.

A window of opportunity?

Currently property investors are being offered a unique window of opportunity, a buyer’s market unlike anything they have seen for a long time.

Sure there are economic challenges out there, but testing times create great opportunities.

Walt Disney started the company that became Disney just at the start of the Great Depression. Bill Gates began Microsoft’s march to world domination in a recession. Jeff Bezos launched Amazon in 1994 during a recession.

The list is long of wealthy Australian property investors who sewed the seeds of their portfolio in the early 90’s property slump, or the property slump of the early 2000’s with “remarkably poor timing.” These successful investors were busy doing while others were pondering.

Yes, we’re going though a property slump and a major change in the economic landscape.

While the timing might seem unfavourable to some property investors right now, others are going to do very well over the next few years. That’s the way it always has been.

via propertyupdate.com.au

We usually start with a quote and “no crash – people are just storing their nuts for winter – and missing out on great buying opportunities”; which comes from one of our investor subscribers; and sums up the current local market situation quite well.

Brisbane is at the bottom of the cycle and is set to improve.  Three things drive a property cycle north – confidence, supply/demand and jobs.  Confidence is on the mend, the Brisbane new housing market remains undersupplied and a plethora of new resource and infrastructure projects will help drive future job growth.

Vacancy rates remain tight and rents are now growing well above inflation.  This will drive prices upward in coming years.  Sales are finally starting to improve too, albeit from a low-base.

Despite these fundamentals, selling new residential property remains a difficult task; even well-priced, positioned and designed product is still difficult to shift.

The more frugal market isn’t responding to the current sales messages, nor the more traditional vehicles that deliver them.  A new approach – or at least a refresh – is needed.

via matusikmissive.wordpress.com

Borrowing to the hilt to buy your home may have been a reasonably safe bet ten years ago when property prices were on a steep upward trajectory. But in today’s flat market, where house prices are either stagnating in some areas and falling others, it’s a much riskier proposition that could see you owe more than you own.

According to a report in the Sydney Morning Herald, one in fifty households have found themselves in a position of negative equity. In other words, their homes are worth less than the size of their mortgage.

And given the outlook for Australia’s property markets over the coming year is not much rosier than what we saw in 2011, the number of homeowners in this position could swell over 2012.

Estimates suggest that Western Australia and Queensland have the most households in this precarious position, with 4.5 per cent and 3.2 per cent of households respectively being in a position of negative equity.

They are followed by South Australia, where 2.1 per cent of households are “under water” on their mortgages, Tasmania at 1.5 per cent, Victoria at 1.2 per cent and faring slightly better is New South Wales with only 1 per cent.

What this means for our markets?

Concerns have been raised regarding the potential negative impact the emergence of a sector of the housing market “under water” on their mortgages may have.

Given that potential borrowers are already “edgy” and holding off entering the markets and that our housing markets are vulnerable to sudden shifts in local economic or consumer conditions; experts suggest forced sales at this point would not only make a considerable dent in household wealth, but resulting further drops in property prices would scare investors out of the market.

Principal research fellow at the National Centre for Social and Economic Modelling,  Ben Philips, was involved in the analysis that uncovered 60,000 Australian households with negative equity.

“The prospect of negative returns will certainly detract from sentiment through 2012,” said Mr Phillips.

The good news

The good news is that Australian households have coped better with the rising cost of living than most other countries, even as housing affordability threatens to hit an all time low.

Ratings agency Fitch reports that late payments on residential mortgages actually fell to 1.42 per cent of all loans in September, down from 1.77 per cent in March 2011.

And it’s anticipated that the Reserve Bank’s recent rate cuts will help to ease further pressure on households struggling to meet their monthly mortgage commitments, with market predictions for up to five more 25 basis-point cuts to come by June.

But back to the problem at hand; households who currently owe more than they own.

How bad is it?

Last year ended with RP Data  reporting Australian property values falling 4 per cent nationally for 2011.

Some markets fell more than this with Brisbane and Melbourne experiencing a 7.5 per cent and 5.8 per cent market value decline respectively with the more expensive end of the market suffering most.

It looks like we have now entered into the stabilization phase of the property cycle in most markets, so prices are unlikely to fall significantly further.

Of course different segments of the market will respond differently this year.

• The established home market is likely to perform better than other sectors
• The first home buyer’s market  is seeing a resurgence of interest, but is going to be very interest rate sensitive
• The investor market (off the plan, mining towns, etc)  is likely to remain subdued until general market confidence returns
• The top end of the market is likely to remain flat or fall a little further until our economy and the share market picks up

Whether you want to rent or buy, finding a new home can be pretty tough without a little help. Thanks to the internet, that help is freely available. There are tons of tips and tools that can help make finding and moving to a new home a lot easier. Here are our top 10 favorites.

Title image remixed from an original by Ben Freedman.

10. Know Your Rights

Whether you plan to rent or buy, you need to know your rights. Renters can quickly find this information in their state’s tenant handbook. To make things simple, the U.S. Department of Housing and Urban Development has a tenants rights page for every state. Just choose yours and start reading. Although homeowner rights will vary from state to state as well, the American Bar Association Family Legal Guide provides some broad answers. To find state-specific rights, just do a web search for “homeowner rights” and the name of your state. In most cases you’ll find a government web site and/or PDF document filled with everything you want to know.

Image via CB Blog Estate.

9. Hire a Reputable Mover

When you’re heading to a new home, hiring a reputable mover is obviously a better idea than hiring a crappy company that’s going to hijack your stuff. Still, it has been known to happen. To make sure you don’t fall victim to a moving scam, you need to sufficiently investigate the moving company you want to use. Consumer rights blog The Consumerist suggests that you check movingscam.com and movingsham.com to make sure the company isn’t blacklisted, know your rights as a customer, check out the mover’s Better Business Bureau record, check the mover’s D.O.T. number, and get at least three estimates in writing before making a decision. You may also want to consider using a tool like Angie’s List to avoid misleading, fake reviews.

8. Figure Out Your Budget for Owning a Home

Want to own a home but aren’t sure how much you can afford? MSN has an home affordability calculator that can help you out. You just enter the cost of your current financial obligations, how much you make, and a few other statistics to find out the cost of a home you can afford. If you’re thinking of buying, this is a quick way to get an approximate idea of what’s in your price range.

7. Score Free Moving Boxes and Packing Supplies

You don’t have to pay (much) for packing supplies. To start, there are plenty of ways to get free moving boxes. Craigslist, Freecycle, restaurants, grocery stores, furniture stores, and liquor stores are all great options. If you can’t locate any for free, however, you can always buy them on the cheap at UsedCardboardBoxes.com. If you want them new you’re definitely going to pay a bit more, but ULine is a great resource for getting everything you need delivered for a reasonable price.

6. Find a Real Estate Broker and Find Homes

If you’re buying a home, the first thing you’re going to need to do is find one and chances are you’ll need a broker or agent’s help to do that. Homethinking provides a broker search for both buyers and sellers and includes some helpful statistics on your options. If you’re just looking to search existing listings, Redfin can show you plenty of options in a given area with helpful statistics. It even includes a mortgage calculator on each listing page to help you figure out what you’ll need to pay per month depending on your term. Both are helpful tools when you’re getting started in your search for a new home.

5. Simplify the Moving Process

Moving isn’t fun or easy, but you can make it a little less painful. We’ve offered up a complete guide to a smooth move, but there are a couple of tools that are particularly helpful. WordLabel’s Moving Label Kit can make organizing and labeling your boxes a breeze with very little effort. Templating your furniture by outlining each piece with paper can save a ton of time when you’re figuring out where to put everything in your new place. When you’re done moving, you’re going to have a ton of leftover boxes. Post them on Craigslist or Freecycle so others can use them and move on the cheap (like you did, presuming you followed item #7).

4. Bring This Printable Checklist Form When You’re Apartment Hunting

If you’re looking for a new apartment, you need to know what questions to ask so you don’t end up moving in to a place that looks great but is actually terrible. We decided to help you out and put together this printable checklist form that you can take with you to a showing. It includes all the common questions you should ask (plus a few tech-friendly ones) so you’ll learn everything you need to learn and have it nicely organized for when it comes time to weigh your options and make a decision.

3. Map Apartment Listings In Your Area with PadMapper

PadMapper is a fantastic tool for finding a new apartment. You type in the area where you want to look, and it lays out your options on Google Maps. From there you can filter based on tons of criteria like price, bedrooms, and listing age. PadMapper also offers helpful statistics, such as crime in the area and if a particular listing is more or less expensive than the area’s average. It’s a great web app, but if you’d prefer to conduct your search on your mobile device you can pick up the free PadMapper mobile app for iPhone and Android.

2. Find Out If You Should Buy or Rent

Buying isn’t always better than renting. In many cases it can be more costly, or at least not the best way to invest your money. It’s best to compare your options first. The New York Times offers this renting versus buying calculator that can help you figure out what’s currently in your best interest.

1. Get Neighborhood and Property Statistics

Whether you want to look at property statistics in a given area or check out tons of information on a specific home, Trulia is a great resource for both. Just type in the location you want to investigate and it will provide you with tons of statistics. It’s kind of like stalking a house. You can find purchase histories, property tax information, how the area rates in various categories, the selling cost of nearby homes (if you’re looking at something specific), and much more. Another tool you’ll want to check out is Zillow, which also provides many useful statistics. As an added bonus, it has a mobile app for most platforms so you can look up information on the go.