Recoup, recover, return

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Housing Models and Sinking Stock market Prices
Plastic imitation model houses in green and red colors sit on top of sinking stock market price charts and graphs
Jospephs Gate

Now that the property boom is over, use the waiting period to build your portfolio and start saving so you are ready for the next boom cycle

It looks to me like the property boom has finally ended for this cycle. We will not be seeing double-digit growth like we have in Melbourne and Sydney for the past few years. We will see a moderate growth of 6-9 % in both the capital cities. You will see some doomsayers waiting for the property to crash in 2016. But, I predict we will have some growth this year and for a few years down the line until 2019.

If you missed the boat in terms of the property cycle, not to worry, it will return in a few years. But before that, there is no harm in arming yourself with knowledge on the market. And start saving. In a few years, you will build your portfolio and then all you have to do is wait for the tide of ‘real estate riches’ to come in.

The Australian economy may be suffering cut-backs resulting from the slowdown in the mining and manufacturing sectors, but there is a secret weapon — population growth.

Population growth might be slowing, but it is still growing at three times the rate of China. The Australian population is increasing by 390,000 every year. A decade earlier it was 220,000 per annum. In the next decade, Australian population will be increased by 4.2 million.

More People = More Jobs = More Houses = More Infrastructure.

The work from home revolution

We have had three revolutions in the past — Industrial in the 1700s, Technological in the 1800s to 1900s and finally the Internet Revolution, which began a few years ago. But now there is going to be another revolution – the ‘work from home’ revolution. I think in the next decade, half the population will start to work from home and that means we will need at least 4 million home office rooms. Even if my analysis is half-right, we are looking at 2 million rooms.

So, the bigger houses are going to get bigger and there will be demand for homes that are closer to amenities.

So, what’s happening with the home loan market?

According to the Australian Bureau of Statistics, there are three types of borrowers.

Investors.  Due to strict conditions applied by APRA to investor lending, we have seen the substantial decrease in investor lending. Investor mortgage demand has fallen sharply since peaking at $14.2 billion in April 2015, down -18.7% in November 2015.

First Home Buyers / Owner Occupiers. In November 2015, there was $21.8 billion worth of housing finance commitments to owner occupiers. Interestingly, after its recent low of $17.6 billion in commitments in May 2015, the value of owner occupier commitments has increased by 23.3% in November 2015.

These commitments were split between $1.9 billion for the construction of dwellings, $1.2 billion for the purchase of new properties, $7.1 billion for refinances and the remaining $11.6 billion for the purchase of established properties.

BOX

HEAD: Selling to the Indian buyer

INTRO: Vastu to numerology, good days to bad ones, what real estate agents need to know before meeting a potential home buyer from India

Indian migrants can be a challenge to sell homes to because their home buying decisions hinge on several external factors such as customs, social behaviour, and superstitions. For instance, if you sneeze, and cross or shake your legs you will most likely lose the deal.

Step in the right direction

Agents selling to Indians need to have basic knowledge about vastu or the Indian version of Chinese Feng Shui.

Some points to note: Houses facing North or East or North East will command a premium; South facing homes are least popular with Indians, followed by west facing homes; if you are selling a vacant block of land, park your car to the direction facing north — this commands a premium. Never ever park your car so the land is facing south.

Remember the days

While for most Australians house inspections are on Saturday. Indians usually never see a house on Saturday as they believe Sunday is a better day. In Hindu culture, Saturday is associated with the god (Shani).

Tuesdays and Thursdays are not good days as well.

Monday / Wednesday / Friday / Sunday are the only days to interact with Indians clients.

And finally, for some number crunching

The prices of the house should always end with number 1 (one), never an even number.  For eg, it’s better to price a house at $475,001 than of 475,000, the extra dollar a sign of good fortune.

Houses that end with Number 1 will most likely go for a premium. If a house is facing North or North East and ending with “1”, you’ve hit the jackpot.

Three and thirteen are not “good” numbers in Indian culture. So, keep these for the not so religious Indians or people of other nationalities, who don’t really bother with house numbers.

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