Hotspotting

We know that renting can be bad for your financial health, but a new study has revealed that renting is also bad for your physical wellbeing.

According to the study, people who rent age faster than people who own their homes.

It also indicates that renting is worse for your health than smoking and unemployment.

The study was conducted jointly by the University of Adelaide and the University of Essex in the UK and took a sample of 1,420 adults – comparing the impact of various housing elements such as ownership status, building type, location and heating on the ageing process.

Biological ageing, the cumulative damage to body tissue and cells that occurs regardless of chronological age, was found to occur more quickly among those who rent.

Why? According to the researchers, the stresses of housing insecurity and unaffordability are the most likely factors driving this link.

Lead researcher Dr Amy Clair from the University of Adelaide said: “Housing circumstances have a significant impact on biological ageing, even more so than other important social determinants, such as unemployment.”

She concluded that “it is therefore likely that private renters in Australia might experience accelerated biological ageing” as long as the rental crisis continues.

The University of Adelaide’s professor of housing research, Emma Baker, said that “policies to reduce the stress and uncertainty associated with private renting, such as ending ‘no- grounds’ evictions, limiting rent increases and improving conditions, may go some way to reducing the negative impacts of private renting.”

But she failed to factor in the reality that implementing those kinds of policies – particularly rental controls and anti-landlord legislation - will cause even more investors owners to sell up and get out of the market, further reducing the availability of rental properties and worsening the shortage.

Not being able to find a rental property at any price is a bigger stress than having a rental home and struggling to afford it.

It’s quite unusual to see major lenders doing something proactive to encourage investors.

Generally the big banks, along with all levels of government, treat property investors as cash cows, with higher charges for everything compared with what home buyers are charged.

That includes higher interest rates, higher insurance rates, higher council rates, higher rates of stamp duty - plus taxes that home owners don’t have to pay, like land tax and capital gains tax.

There’s no justification for any of that, other than the reality that investors are a minority and it’s politically more palatable to slug them and not home-owners.

But right now it appears that the big banks believe property investors deserve some encouragement.

Evidently, they believe investors will be returning to the residential market in large numbers because rising immigration will lead an extended rent squeeze.

The 2023 net immigration number is the equivalent of a city the size of Newcastle being added to the population, with major impact on housing supply – at a time when the national average rental vacancy rate is around 1% and considerably lower in many parts of the nation – and building approvals are falling when we need them to be rising.

Commonwealth Bank, the nation‘s biggest lender, has now announced it will allow investors to borrow up to 95% of property’s value. The bank’s previous maximum was 90%.

That means investors can get a loan to buy a property with less of a deposit.

At the same time, another big four bank, NAB, has upgraded its forecasts on the outlook for residential property this calendar year to 8% nationwide, after another upgrade earlier in the year had suggested 5% - and not forgetting that at the start of the year they forecast house prices would fall 15% or more in 2023.

Across Australia, residential property prices have been rising, month by month, for all the 2023 calendar year.

In addition, rental income has been showing double-digit growth - but investors have largely remained on the sidelines, having been massively discouraged by a range of policies at all three levels of government.

NAB’s figures suggest the number of investors buying in the market has turned the corner with signs of early growth.

It says the market share of “local investors for established houses” has nudged up to 18% but still remains well below average.

Overall, it appears some of the big banks are seeing better prospects and higher activity ahead for property investors across Australia.

The remarkable steadiness for which the Adelaide market is renowned continues, with our latest survey of market activity showing that most suburbs in the South Australian capital have busy markets and rising prices.

Consistency has become the key defining feature of the Adelaide market.

Our Spring survey found that while there are relatively few suburbs classified as rising markets in Adelaide, there are large numbers of consistency suburbs – with steady sales levels over the past few years.

Overall, seven out of 10 suburbs have positive rankings – which is one of the highest in the nation.

There are three key factors which underpin ongoing demand in the Adelaide market.

One is that South Australia is one of the nation’s strongest economies and continues to thrive on the state’s innovation in the areas of technology and alternative energy, as well as being a key location for education and the Defence industry.

Another big factor is affordability. Despite recent good growth, Adelaide is considerably cheaper than Sydney, Melbourne, Brisbane or Canberra.

Homes in Adelaide are around half the price of Sydney’s.

Adelaide and Perth are the only capital cities in Australia where you can still find a good supply of houses in the $300,000s and $400,000s.

The third factor about Adelaide is the resilience and consistency of its market. In 2022, when prices generally fell in the bigger cities, Adelaide continued to deliver price growth.

And that steady performance has continued in 2023.

In the first nine months of this year, the median house price for Adelaide rose 5.3%, according to CoreLogic, while the median unit price increased 6.1%, which was above the national average.

And Adelaide continues to have one of the tightest rental markets anywhere in the nation. The national vacancy rate, according to SQM Research, is 1.1% - but Adelaide is less than half that national average, at 0.5%.

As a result, residential rents in Adelaide have increased more than 10% in the past 12 months.

Overall, Adelaide presents as one of Australia’s strongest markets, with consistency of performance its defining characteristic.

Amazon #1 Best Selling Author in Property Investment & Finance Categories   Do you want to learn the secrets of generating passive income through property investment?   Catch this free webinar replay, hosted by Tim Graham of Hotspotting.com.au and featuring special guest, Chris Christofi.   Chris Christofi, founder of Reventon - a leading property investment company, and best-selling author of "Your Path to Wealth – Brick by Brick", shares his insights and strategies on creating passive income through property investment.

Superannuation has the potential to become a powerful tax haven and wealth creator for Australians, if handled well.

 

Investment expert Andrew Courtney of Plenitude Wealth says many Australians, however, fall into the trap of being asset rich and cashflow poor with their investments. But he says it’s possible to transition from active income (salary) to portfolio income (earning from your portfolio of investments, including real estate). “Instead of trading your time for money, get your money to start working for you,” he says.

Courtney says people who …

 start early with a SMSF,

 set targets and milestones,

 exploit the available borrowing capacity,

 properly apply the tax benefits, and

 acquire good property …

… can achieve results that out-perform most of the population. Hotspotting founder Terry Ryder and Andrew Courtney of Plenitude Wealth recently conducted a lunch and learn webinar on the 25th of October 2023 Catch the full replay today.

Somehow, according to the logic of the major economists, including those who work for the Reserve Bank, we may need to put up interest rates again to quell key inflationary pressures like residential rents and petrol prices.

As most of you will know, the Reserve Bank is obsessed with bringing down the rate of inflation.

And they’ve searched through their list of policies and possibilities – and come up with the brilliant concept that, if you increase the interest rates of one third of Australian households – the ones that have mortgages – somehow inflation will miraculously come down.

So, Plan A is to put up interest rates.

You may be tired of hearing about it, but the latest data on residential vacancy rates shows that they are continuing to fall.

And why wouldn’t they, given that the nation’s gaggle of politicians collectively haven’t got a clue about how to deal with this situation.

The latest data from SQM Research shows that the national vacancy rate dropped from 1.2% in August to 1.1% in September.

Comparing the situation with a year ago, Sydney’s vacancy rate has dropped from 1.5% to 1.3% and Melbourne is down from 1.8% to 1.2%.

In the latest month, vacancies dropped to lower levels, or stayed the same, in six of the eight capital cities.

Some of the nation’s leading economists have just released their forecasts for Australian property prices in 2023. 

Now, I imagine you think I’ve made a mistake and that I meant to says that they’ve made their predictions for property prices next year, in 2024. 

But No, they’ve made their forecasts for house prices in Australia this year – in late October. A little over two months before the end of the year, they’re telling us what they expect to happen with property prices in 2023.

This is according to a Bloomberg survey of 13 so-called leading economists published in the nation’s worst tabloid rag, the Australian Financial Review. 

Now, you can’t blame economists for leaving it until the year is almost over to make their forecasts about property price outcomes for the year – because this is something they’re really bad at.

It’s a reality of modern life that most of the impending disasters forecast by news media never happen – and that is particularly so in the property industry.

Recent years have been full of startling headlines of a collapse of property prices, including in 2020 when Covid struck Australia and at the beginning of 2023 when bank economists predicted prices would drop 15% to 20% because interest rates were rising.

Journalists love these kinds of “impending doom” stories and are happy to publish scary headlines warning of us of dreadful things to come.

It causes a lot of unnecessary anxiety in a community already struggling with high interest rates, rising prices for life essentials, climate disasters, the outbreak of wars, earthquakes causing devastation and a whole lot more.

Media, of course, never apologises when the disaster they predicted does not occur.

One of the notions very popular with journalists seeking to generate clickbait with a startling forecast is the concept of a cliff. A property market cliff, a property price cliff, a mortgage cliff – according to news media, there are always things about to fall off a cliff.

Except it never happens.

Australia has just recorded its highest population growth in 20 years.

And the data about which areas of the nation are growing the fastest shows that the trend we call the Exodus to Affordable Lifestyle is continuing strongly.

Western Australia and Queensland continue to be national leaders on price growth, while the two biggest states on population, NSW and Victoria, continue to lose population through internal migration – which means people moving from one part of Australia to another.

The biggest part of that trend is people leaving our two biggest cities, Sydney and Melbourne, and moving to smaller cities or to regional areas.

That’s been happening in significant numbers for the past decade and was NOT caused by the Covid lockdowns, as some media reports have suggested.