Australia is one of the most unaffordable counties in the world when it comes to property. As the population increases, the demand for houses and property subsequently increases. When demand is high and supply is low, the prices rocket to sky high prices, making it almost unaffordable for many. Australia is one of the top countries with the highest GDP per capita and the one of the 10 most expensive countries, costlier than many of the world’s most well-established and developed areas. With a population of about 24.4 million as of October 2016, it has a density of 2.8 people per square kilometre – this is actually a low value given the size of the country. As the 6th largest country in the world, Australia isn’t completely occupied. From 2013 to 2016, Australia’s population increased by nearly one million and around half of this increase was due to immigration. The large majority of immigrants tend to move to Sydney, Melbourne or Brisbane, which is why there is a building boom on the east coast. Many of the main cities reside along the coast of the country. The majority of Western Australia and South Australia is occupied by desert which is uninhabitable. Even though Australia has a low density of people per square kilometre, Australia is one of the world’s most developed nations. Cities including Sydney and Melbourne have even been named one of the most liveable cities in the world. The country has also seen an influx of immigrant from many countries, mainly China, New Zealand and the United Kingdom. Not only that, there is the prominent issue of asylum seekers and refugees from third world countries travelling by boat seeking to live a better life in Australia away from their war torn country. Countries include Syria, Iraq and Iran. Given the state of the world and Australia’s relatively safe position, population growth will not end anytime soon. As a developed and relatively safe country, it is easy to understand why people risk their lives hoping for a better life here in Australia. Australia’s population will not be slowing down anytime soon and with the increasing rise in population, property prices are not likely to decrease. With this said many Australian’s are in need of first home buyer loans with little interest.

Economic growth is a huge factor that comes from population and productivity growth. As the population rises, more infrastructures will be built, therefore creating more jobs and productivity. However, statistics show that the unemployment rate unexpectedly fell to 5.6 per cent in August 2016, from 5.7 per cent in July, which is below the market consensus. To date, Sydney is Australia’s largest yet most expensive housing market. Another trend that is directly affecting the prices of property in Australia is the demand for loans from Chinese investors in Australia. Chinese buyers of Australian property has surged in recent years, and recently the abrupt slowdown in demand from China is now seen as a potential risk to house prices in some markets, especially inner-city apartments in Melbourne and Sydney. With foreign investors buying Australian property, there is the problem of the decrease in availability of affordable housing for Australians. This pushes property prices higher and higher which favours foreign investors and places us Australians at a disadvantage struggling with the problem of not being able to afford and purchase a house of our own. Many of us dream about having our own house and starting a family. But for now, this dream has been put on hold for many while we wait for property prices to decrease. Currently, every Australian capital city is considered severely unaffordable but with the right first home buyer loans, you can achieve your dream home.

Banks offering first home buyer loans usually require an initial deposit fee. Many banks require 10 per cent and even 20 per cent deposit to be eligible for first home buyer loans. On top of that, you need to show evidence of regular savings over a period of time. When you are ready to start looking for your first home, a key starting point is knowing how much you have and how much you can afford to pay in monthly loan repayments. By knowing this, it will help determine the size of the first home buyer loans you can take out, and therefore the type of property you can afford to buy. Typically, when you cannot afford to deposit 20 per cent or more, you will also have to pay for Lender’s Mortgage Insurance which enables the banks to lend you a larger percentage of the purchase price. This is not ideal, especially for someone with little savings and don’t want the added cost of the Lender’s Mortgage Insurance. By paying for this added cost, it will either be included in your upfront cost or in your loan repayments so that it’s spread out over the term of the loan. In the end, this insurance protects the lender – not you. This insurance is put in place in the event that the borrower defaults on repayments. If you can’t repay your loan, it’s a cost you may want to avoid. Most of us know that the bigger a deposit is, the less you will have to borrow. This means lower regular repayments and less interest over the lifetime of the loan. Ideally, we would all love to be able to deposit a larger amount in order to pay less on interest in the long term, but not all of us are able to do so.

For first home buyers, it can be daunting to look at the property market and the high prices, especially in this day and age. Saving for a deposit can be very hard work, especially if you (like many others) have a lot of payments to make such as car insurance, petrol, electricity bills, etc. But it is a good way to get into the habit of saving money specifically for loan repayments. It also shows lenders that you’re more than capable of managing your finances. If you are someone that struggles with savings, here are some tips to help you get started:

1. Create a budget and stick to it as much as possible. The best way to save is to pay yourself first by putting your savings into a separate account as soon as you get paid. This way, you won’t be as tempted to spend it on things like clothes, shoes – impulse buys and the like.

2. Restrain yourself and cut back on unnecessary expenses. This can include memberships you don’t use, new clothes, bottled water or buying coffee on the daily. Be strict with yourself, the more you are committed into saving for your dream home, the closer you can reach that goal.

3. If you have any debt, it is best to pay it off as soon as possible. Work out how much debt you have and how you plan on paying it off. You could try paying off the debt with the highest interest rate and work your way down the list, or you may like to consolidate your debt to save on interest and fees.

4. Just because you are strict on your savings, it doesn’t mean you have to sacrifice your lifestyle. Factor in your everyday costs and try to minimise them as much as possible. However with this said, you can still pay your bills and expenses while still enjoying yourself by treating yourself every once in a while.

5. A good way to save quicker is by placing your savings in an account that has high interest that can’t be easily accessed. This way, the more you save, the higher interest you will earn, therefore enabling you to apply for first home buyer loans sooner and purchase your dream home.

With these tips in mind, you can save much more in a shorter period of time, but if you are still struggling with your savings, there are companies out there to help you out in your time of need. At Tandem Uehling, we provide professional loans in Australia for as little as a 5 per cent deposit. Yes. That’s right. 5 per cent! We have access to first home buyer loans that only require a 5 per cent deposit and you can buy your very own property that you’ve always dreamed about. Whether you are an investor, high income earner with little saved, non-resident, non-conformer, professional (in the fields of accounting, medical, legal and mining, energy and resources) or like many of Australians, first home buyers, you too can benefit from our second to none services. When you choose Tandem Uehling, we assist you in owning property by utilising our decades of experience in the financing and property market. We’re working for you and not for the banks. We provide you the right loan to meet your specific needs along with unlimited and ongoing advice. With the right tools and resources, we bring you the best possible outcome when it comes to first home buyer loans in Australia. Our committed team at Tandem Uehling are driven by results and providing our clients with the highest standards of experience that will ensure you the added peace of mind you deserve. With Tandem Uehling, you now don’t have to worry about your dream home that is now not so far out of reach.

Replay of the Conference Call on the Post-Brexit Market Outlook. Morgan Stanley’s Mike Wilson will be joined by guest speaker Alistair Darling, former UK Chancellor of the Exchequer and current MS & Co. board member. Also, Rick Rieder, Managing Director of Blackrock, Chief Investment Officer of Fundamental Fixed Income Co-Head of Americas Fixed Income.

Bloomberg

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Blackstone Rushes $2.5 Billion Purchase as Homes Rise
By John Gittelsohn and Heather Perlberg – Jan 9, 2013

Blackstone Group LP (BX), the largest U.S. private real estate owner, accelerated purchases of single- family homes as prices jumped faster than it expected.

Blackstone has spent more than $2.5 billion on 16,000 homes to manage as rentals, deploying capital from the $13.3 billion fund it raised last year, said Jonathan Gray, global head of real estate for the world’s largest private equity firm. That’s up from $1 billion of homes owned in October, when Blackstone Chairman Stephen Schwarzman said the company was spending $100 million a week on houses.

“The market is moving much faster than anybody thought possible,” Gray said during an interview in Blackstone’s New York headquarters. “Housing is much stronger than people anticipated.”

Read the story: Bank CEOs See No Housing Crisis

Blackstone is the largest investor in single-family homes to manage as rentals, acquiring properties in nine markets, from Miami to Phoenix, where prices surged 22 percent in the 12 months through October. The firm, along with Thomas Barrack’s Colony Capital LLC and Two Harbors Investment Corp. (SBY), is seeking to transform a market dominated by small investors into a new institutional asset class that JPMorgan Chase & Co. (JPM) estimates could be worth as much as $1.5 trillion.

The market, which has been “dominated by ‘Mom and Pop’ owners” could total 12 million homes and be double the size of the institutional multifamily market, JPMorgan analysts led by Anthony Paolone, wrote in a note yesterday. “A corporate structure with institutional capital around the business makes sense.”

Racing Recovery

Blackstone, which started buying the properties last year, has been racing against the real-estate recovery as prices across the U.S. rose more than economists forecast, with the areas hardest hit by the crash rebounding the most.

The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent in the 12 months through October, the biggest 12-month advance since May 2010, the group said last month in New York. Prices will gain 3.3 percent in 2013 after an estimated 4.5 percent jump last year, based on the median estimates of 15 economists and housing analysts surveyed by Bloomberg News.

Blackstone is buying in Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California; Miami, Orlando and Tampa, Florida — where prices fell so far that they “overshot,” said David Roth, managing director at Blackstone overseeing single-family home rentals.

‘Warehousing’ Homes

Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market’s peak in 2006.

Read: Goldman Sachs Part of Fed-Led Foreclosure Settlement

It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.

“Renovating the 16,000 homes is an enormous job,” Gray said.

By comparison, D.R. Horton Inc. (DHI), the largest U.S. homebuilder by volume, sold 18,890 homes and generated $5.35 billion in revenue in fiscal 2012.

Colony Capital has bought about 5,500 homes since April, spending more than $500 million, and expects to reach $1.5 billion invested by the end of the year. Closely held Waypoint Homes said it has bought about 2,500 homes and expects to have 10,000 homes by the end of 2013.

Silver Bay

Silver Bay Realty Trust Corp., a publicly traded arm of Two Harbors, raised $245 million in an initial public offering last month. It rose 2.1 percent to $21.58 at 12:53 p.m. in New York, extending its 14 percent gain through yesterday since it started trading. The firm, led by Chief Executive Officer David Miller, a former Goldman Sachs Group Inc. executive and U.S. Treasury Department official, is the largest public real estate investment trust concentrating on single-family homes.

“We are seeing increased supply of rental homes as some of these big companies have moved into the space, but we’re still seeing a strong appetite as well,” said Colin Wiel, co-founder and managing director of Waypoint. “We always anticipated that prices were going to rise pretty quickly. They’ve risen quicker during the last 12 months than we would’ve guessed.”

Blackstone currently buys all of its homes with cash and then finances pools of houses with up to 60 percent debt. Conventional single-family home mortgages are financed with a 20-percent down payment.

Credit Line

The firm got a $600 million line of credit from Deutsche Bank AG (DBK) in October. It’s in talks with the Frankfurt-based lender to double the financing, according to two people with knowledge of the negotiations. Deutsche Bank will lead a group of banks that will contribute an additional $600 million, according to the people, who asked not to be identified because the talks are private.

Financial institutions have been slow to back single-family rental homes, because large investors have little history to demonstrate cash flows and cost of operations.

“While leverage is currently limited, potential financing options include secured credit lines, lending syndicates, high- yield debt, government sponsored enterprise-provided financing, and securitization,” Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote in a note yesterday.

Citigroup Extended

Citigroup Inc. (C) extended a $245 million line of credit to Waypoint in October, enabling the investment firm to multiply its initial $150 million in capital from GI Partners, a Menlo Park, California-based private equity fund. American Residential Properties, which has 1,500 homes in five states, received a line of credit from Wells Fargo & Co. (WFC) in June 2010. The company announced plans for an initial public offering of shares as early as the first quarter of this year, depending on market conditions.

Acquisitions have been limited to one property at a time because holders of large pools of foreclosed homes haven’t conducted bulk sales. Fannie Mae, the largest holder of foreclosed houses with an inventory of 107,225 repossessed homes as of Sept. 30, plans to sell most of them one-by-one after a bulk sale of 2,500 properties last year.

“Frankly, we see that our retail execution, selling individual homes to individual buyers, as still our best execution,” Fannie Mae Chief Executive Officer Timothy Mayopoulos, said during an interview at Bloomberg’s Washington office yesterday. “So we will continue to do the vast bulk of our executions in that way.”

Fix, Sell

Blackstone’s strategy in real estate generally has been to “buy, fix and sell,” said Gray, who in 2007 engineered the largest real estate buyout ever when Blackstone acquired Sam Zell’s Equity Office Properties Trust for $39 billion including assumed debt. Gray’s real estate business brought in $1 billion in profit for the firm in 2011.

In the case of the single-family business, Blackstone will rent and manage the homes through Invitation Homes, which it founded last year with Riverstone Residential Group, an apartment management company based in Dallas.

While Blackstone ultimately will benefit from the properties’ price appreciation, in the meantime, the homes will generate revenue and cash flow, Gray said.

“We’re building a real company,” he said.

To contact the reporters on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net; Heather Perlberg in New York at hperlberg@bloomberg.net

To contact the editors responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; Rob Urban at robprag@bloomberg.net
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®2013 BLOOMBERG L.P. ALL RIGHTS RESERVED

Real estate market cycles can turn on a dime.  That’s why it’s so important to be “plugged in” to real data and statistics so you don’t make a mistake.
 
Practically overnight, real estate in many U.S. cities has moved from a buyer’s to a seller’s market.  This is hard to believe when we’re still hearing stories of shadow inventory, negative equity and unprecedented foreclosures.
 
What is happening?
 
A seller’s market results from a lack of supply combined with increased demand.  The opposite, of course, is a buyer’s market in which an abundance of supply is met with little demand.  It would make sense that you would want to buy when there’s a lot of inventory and little competition, which is what we’ve been seeing during the recent buyer’s market.  However, now that everyone wants to buy bargain real estate, the competition is getting fierce.
 
Several events happened simultaneously that turned the tide.
 
1. When Warren Buffet speaks, investors listen.  In early 2012, he announced on CNBC that he’d buy a couple hundred thousand homes if he could find a way to manage them.  The world finally woke up to what we’ve been saying for years. Real estate has never been so affordable and never cash flowing so well.  Now hedge fund managers with billions of dollars are now buying up everything they can get their hands on.  This is unfortunate for individuals who don’t have a billion dollars, and especially difficult for those requiring financing. It can take hundreds of offers to get a response.
 
2. Since 2007, building had slowed down to a trickle since there was already so much existing housing on the market that was far cheaper than the cost to build.  And yet, the U.S. population is growing.  New construction will be needed to keep up with demand, but it will take awhile for builders to get up and running and acquire the land and financing they need.
 
3. Banks aren’t foreclosing. On-going legal battles, robo-signing ordeals and state laws that block banks from foreclosing are keeping many delinquent borrowers in their homes with out a Notice of Default.  It appears the banks are realizing it’s better for them to hold back inventory in order to create the seller’s market we’re now having.
 
It is very important to stay grounded in a seller’s market, because it can be so tempting to get caught up in the flurry of multiple offer competition.  Not all markets have recovered, even if they are currently in a seller’s market.  Inventory could hit the market just as quickly as it disappeared in those areas, and you don’t want to get caught having paid too much for something just because everyone else was.  (You may not remember – the frenzy of 2006 in the USA which wasn’t that long ago!)
 
It’s also important to understand that some of the most solid US markets are in full recovery, and you could miss the boat if you don’t act quickly.  The lack of inventory in those areas may be real, which will drive prices up and investors out.
 
So how do you know which markets are experiencing a real recovery and which are not?  While it’s far too much to get into in this post, the main factors to consider are job and population growth, state taxes, affordability and government regulation.  Check out which markets we believe are the best markets and engage in a discussion on the data that makes those markets good.
 
It’s an exciting time to be in the property game in the USA.  Just make sure you know how to play.

By: Kathy Fettke, renowned real estate professional and host of her own radio show on KABC in LA; and Greg Uehling, property consultant in Australia.

Have you ever wanted to buy property in the United States but thought that it would be easier just to buy property in Australia? I decided to compare a $100,000 investment in property in any state or territory in Australia with the same amount in Dallas Texas, one of the strongest markets in the US. You may be surprised to see how it can be truly advantageous to purchase property in the US in comparison to Australia.

Let’s focus first on some of the pros and cons of each location.

Australia

Pros:

1. Can borrow up to 80 per cent without Lenders Mortgage Insurance (LMI)
2. Interest Only loans are available
3. Property management fees, council rates and insurance are lower in Australia than the USA and should expect growth over time
4. Good demand in certain markets based on population growth

Cons:
1. Stamp Duty prevents you from using all your investment capital
2. Low rental yields
3. Property prices are high and categorised as some of the most unaffordable in the world
and Focus on growth to gain returns
4. Negatively gearing properties are considered a (tax) benefit
5. Requires a substantial amount of time to see growth generate into Total Equity
6. Small relative population.

USA

Pros:
1. Very affordable market
2. Low interest rates if you can get financing
3. Large population as well as population growth
4. Hi rental yields based on being a renting society and tight financing policies
5. Cash flow positive from the beginning
6. Should expect growth over time.

Cons:
1. Maximum 70 per cent financing (for the time being)
2. Loans are Principal and Interest not Interest Only
3. More than 9000 miles away.

The numbers reflected in the table below are very genuine and accurate. I used a recent investment property purchased for my wife last year for the Australian figures. This property is in Fletcher, NSW just outside of Newcastle. Albeit she had benefited from no Stamp Duty on her investment but those days are now gone.

From the above figures, at the end of your first year of investing $100,000 in the property market, which position would you rather be in?

A) Australia: Cash flow negative to the tune of about close to $5,000 with a total equity position of $80k-$86k (depending on which state you invest in).

B) USA: Cash flow positive to the tune of about $11,000 and a total equity position of about $106,371, about $6,000 more than what you started with because your loan requires principal payments.

S. Gregory Uehling is Director and Principal of Tandem Uehling. He is a dual Australian/USA citizen who has lived in Australia for the past 11 years. Greg has had his own Australian based Proprietary Limited Company for over 8 years with financial planners and accountants topping his client list. Greg visits the US regularly while providing his tailored services to his customers in Australia. Tandem Property USA is a wholly owned brand of Tandem Uehling.

Greg can be contacted at 1300 854 431, info@TandemUehling.com.au, www.TandemPropertyUSA.com or follow him on Twitter @TandemProperty

Rents are rising while interest rates remain low, yet young Americans are still largely choosing to rent instead of buy.

Home rent costs have jumped 14 percent since 2010, and are expected to rise another 3.3 percent this year, to year to an average of $1,161, according to commercial property tracker to Reis Inc.

Real estate agent Joan Kamens said high student loan debt is preventing adequate debt to income ratios required by lenders for a mortgage.

Lifestyle habits are a significant contributor as well, she added.

“Millennials are getting married later in life than previous generations, and a sense of urgency to purchase comes with stability, marriage and growing families,” said Kamens, an agent with Coldwell Banker Hearthside in Newtown, Pennsylvania, near Philadelphia. She is also the mother of two 20-somethings.

According to a recent Goldman Sachs study, 30 percent of millennials consider buying a home important but not a priority.

So when will the next generation start to buy houses? Kamens said it will happen once they’re more established in their careers and family, and “when education for children becomes a factor, they may settle with less for the convenience of quick travel time to workplace.”

Neeta Mulgaokar, a real estate agent in New York with Mirador and a millennial, stands by the trend.

“Many of my clients are saying, ‘Why would I buy when it’s so expensive? I could use that money for something else like travel or starting a business.’ ”

Another big factor is the transient nature of the generation’s preferences coupled with the technology that supports their habits.

“Many companies, like Ernst & Young, are including remote work options for their millennial employees,” Mulgaokar pointed out.

“Many millennials have been burned or felt trapped by contracts (cell phones, cable, even student loans) and are shying away from long-term commitment,” she said. “They will pay more to avoid it all together.”

The Associated Press contributed to this report posted on CNBC April 14, 2015