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February 2014

 

Welcome to our February Newsletter


At its first meeting for 2014 the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at its record low of 2.5 per cent. This is great news for the Australia property market, as its 2013 recovery charges on.

In his statement following the meeting, RBA Governor Glenn Stevens indicated that we can look forward to enjoying the current low interest rate environment for some time, stating: "On present indications, the most prudent course is likely to be a period of stability on interest rates."

Interest rates have now been on hold since August last year, the longest period of stability since 2006/2007 when the RBA kept the cash rate on hold at 6.5 per cent for ten consecutive months.

According to Housing Industry Association's Senior Economist Shane Garrett, "The RBA has emphasised the importance of stable interest rates at this time. Accordingly, we may be set for record low interest rates for a prolonged period".

Other market analysts are predicting the official cash rate will remain on hold for the remainder of 2014 and suggest that those looking to invest in the property sector can expect the situation to prevail without interest rate rises, well into 2015.

According to some market analysts, there may be even more good news on the horizon for property buyers later this year. Rising unemployment rates could influence the RBA to lower interest rates even further in late 2014. However, the RBA's decision will be determined by the performance of the economy as a whole and other indicators such as the level of the Australian dollar and inflation rate trends.

In its statement, the RBA noted recent improvements in indicators of business conditions and confidence, saying the information becoming available over the summer suggests slightly firmer consumer demand and a solid expansion expected in housing construction.

In the last three months of 2013, the construction sector continued its expansion with particular strength in new homes. This bodes well for improvement in first home buyer activity in 2014.

According to the APM House Price Report December 2013, Australia's combined capital city median house price increased by 9.8% over the 12 months to December 2013.

Melbourne and Sydney led the way in this recovery, with their growth likely to continue into 2014. Sydney enjoyed growth of 15.1% and Melbourne 8.6%. However, growth was slower in smaller cities and regional markets with all other capital cities only recording growth of 8.4% or lower, suggesting there may still be bargains to be had for those looking to invest, with plenty of funds available to qualified borrowers.

The outlook for the property market in 2014 continues to look bright with both house prices and housing activity responding well to the low interest rate environment. Conditions are positive for first home buyers, investors and those looking to refinance in 2014. For more information about low interest rates in relation to your personal financial situation, please get in touch today.

If you would like to discuss any of the topics outlined in this newsletter, or simply want to chat through your financial options for the month ahead, give us a call.

Sincerely, Rick and the Team at Nieuvision Finance

 
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How do property valuers make valuations?


When you’re looking to purchase a property, there’s a lot of things to get organised. Building inspections, pest reports and let’s not forget the home loan. But one very important thing to consider when you’re looking to purchase a new home is the valuation, particularly if you’re going to buy at auction. So how is a property’s value determined? This article looks at valuations and how independent valuers to arrive at that all important figure.

What is a valuation used for?
Whenever you want to borrow money to purchase a property, the lender will use a professional valuer to give them an independent assessment of the property’s actual worth. This is necessary for the lender to confirm that the property represents adequate security for its loan. The lender will then use this valuation to determine how much money they are prepared to lend you to purchase the property. Lenders always conduct a professional valuation, even if you have already obtained one yourself, as it is important that their valuation be independent and unbiased.
Valuations are also important if you are trying to assess the amount of equity you have in your home. With refinancing, equity can be used to make other purchases, like investment properties, stocks and shares, home improvements and so on. If you’d like to access the equity in your home, call us for a chat.

Why are valuations so important?
A valuation determines how much money you can borrow. Both real estate agents and vendors can sometimes be unrealistic when setting an asking price for a property, so their price may not reflect the actual value placed on the property by the lender’s valuation expert.

That’s why some kind of valuation is important if you are considering purchasing a property at auction, to help you set your spending limit and avoid overpaying. If you pay too much for a property, there may be a gap between what you have agreed to pay and what you can actually borrow.

To obtain a valuation yourself, you can employ a professional valuer for around $300 depending on the size and location of the property. Alternatively, as your mortgage broker we may have access to similar information as a professional valuer, so you can ask us to help you establish an approximate value of the property you wish to purchase.

What methods do professional valuers use?
There are two main methods professional valuers use to make a valuation. The first is called the direct comparison method. Using this method, valuers research recent sales of similar properties in your area within the last six months and make a comparison of your property with them. The comparison properties act as a valuation guide enabling the valuer to compare like with like and make adjustments up or down if there are any material differences between the properties.

The second method of arriving at an accurate valuation of your property is called the summation method. This method is a formula which adds the value of the land to the value of the improvements on the land – such as a house, pool and garage for example. Land value takes into account things like size, shape, location, views and surrounding infrastructure. The value of the improvements takes into account things like age, style, architectural features and overall appearance.

Most professional property valuation companies use a combination of these two methods.

What’s involved with the valuation process?
For the first step in the process, the valuations company will send an assessor to inspect the property. This inspection should take only 20 – 30 minutes at most.

Your property valuer will then undertake extensive background research on your local property market. Valuers have access to software and market data which allows them to compare the sales data of properties like yours over the past six months.

After the research is complete, the property valuer will produce a written report – usually within 48 hours of making the inspection. Usually professional property valuations are commissioned by the lender, so you may never see the valuation report unless you organise one yourself.

For more information about property valuations, talk to us today. As your mortgage broker we can often access market data that will help you to make an approximate valuation of your home - which may be all you need to bid at auction or pre-arrange finance. If you require a professional valuation, ask us about a referral to a reliable organisation. Chat to us today.

 
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Buying a property with family or friends


Even with interest rates at their lowest levels in fifty years, getting onto the property ladder in today’s economic climate isn’t always as easy as it sounds. Saving the deposit for the property you want can be difficult all by yourself. But by pooling your resources with friends or family members, you could find a way to get into the property market sooner rather than later.

Here’s a few important things to take into consideration.

It’s best to get legal advice
They may be friends and family, but purchasing a property together is a business arrangement so the first thing you should do is seek legal advice from a professional solicitor and draw up a formal agreement in writing.  Always consider the worst case scenario when setting up the legal side of things and include a dispute resolution process so you have a method of working out any disagreements. You may think this is unnecessary when dealing with people you know and trust, but a formal agreement will make sure you all have clear and consistent expectations regarding your arrangement.

You also need to take into consideration what may happen down the track. You and your family or friends may all be on the same page now when it comes to your investment, but what happens when time goes by and your spouse or children inherit your assets? Avoiding disputes now and into the future is an important consideration.

In addition to a dispute resolution process, the agreement should also cover every other contingency you may encounter throughout the process. You should decide in advance things like: how the price will be determined when it comes time to sell. What will happen if one person wants to buy the others out. Who will take care of managing the property – day to day details like insurance, rates, finding tenants and so on? What will happen if one of you cannot meet their financial obligations for some reason?

Only a professional legal advisor can make sure you are meeting all the legal requirements of entering into this kind of partnership. They will also be able to tailor a contract that covers off all the contingencies that might arise during the arrangement.

Consider your financial liability
If you and your co-owners are borrowing money from a lender to purchase the property, the lender will consider you ‘jointly and severally liable’ for the debt. That means that if one of you cannot pay their share of the mortgage, the others will be held responsible for their share as well as yours.

Insurance products can help to minimise the risks and cover your commitments in the event of unemployment, illness, injury or death. Perhaps you can look into insurance products for everyone involved, like life insurance and income protection insurance to make sure that no one is left holding the baby as far as mortgage repayments are concerned.

Additionally, you should have a plan in place for how you will cover the cost of unexpected repairs and expenses. Consider setting up a sinking fund that everyone pays into for repairs and renovations.

What’s your exit strategy?
Buying a property with family or friends may restrict your capability to borrow money to purchase property on your own in future, because the bank takes into consideration the whole of the first loan as your responsibility – just in case your co-owners default.

For this reason, it’s best to have an exit strategy in place.  Think about how long the arrangement will last before you begin. In an ideal case scenario, will you hold the investment for a minimum of five years, seven years, or ten years? Can the decision to sell be made by one partner or will it take all of them to be in agreement? How will you proceed to a sale if one partner is suddenly unable to pay their share of the mortgage?

In your written agreement, include details of how a sale will be managed. How will the sale price be determined, how will a real estate agent be appointed, whose solicitor will you use?  How will the sale proceeds be distributed? These details are easy to resolve in advance, but circumstances may make them extremely difficult to negotiate down the track.

 If you would like to enter the property market by pooling your resources with family members or friends, talk to us today about arranging a mortgage. Joint financing can be arranged for the right partners, so teaming up with someone may just be a good idea to get you started on the property ladder. Call us today.

 
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What colour will your new car be?


Thinking about buying a new car? You probably have a make and model in mind, but what is the most popular car colour? In 2013, the most popular car colour was white when for the previous decade, the most popular shade was silver.

PPG Industries, the leading supplier of automotive paints, says 25 percent of the vehicles it supplied in the 2013 model year were white, which is up 3 percent from 2012. Silver and black tied for second, with 18 percent each. In recent years there has been a consolidating back to white which now dominates in Europe, North America and Asia. Only in South America is silver still king.

Jane Harrington, PPG's manager of automotive colour styling says carmakers are currently scouting choices for the 2016 and 2017 model years, and she is showing them options from a pink-tinged bright red developed in Asia to a strong dark grey with faint green highlights.

The changes include eleven different browns - from light copper to dark chocolate - and an equal number of greys are part of PPG's annual colour show for car makers. There are six yellows and seven greens. One notable absence is powder blue which is increasingly confined to electric cars or hybrids.

Harrington and her international team determine colours by watching fashion and architectural paint trends. She thinks there will be more deep tones like teal and more earthy metallics in the coming years: “With the end of the recession, drivers don't mind being showy again.

“Car companies usually choose up to 10 colours for every model and PPG works with them as they think about the vehicle and how that colour will translate to sales success. That colour, sparkle and finish helps define the car's character." Harrington said.

Choose the right colour for a better resale value
According to a 2013 survey in Australia by Autogenie, the most popular car colour for us is white representing 21 per cent of the total sales. The second most popular colour was grey making up 18 per cent followed by black and silver on 17 per cent each. Only 27 per cent of the survey participants would choose a more vibrant colour for their car.

If you’re going to have your car for a long time – or are concerned about the resale value when it comes time to sell, these stats may be worth taking into consideration. It may be best to stick with classic white or the simple colours that most people prefer as these generally have a higher resale value. This may be because white/lighter coloured cars are often perceived as being safer as they are more visible on the road, and have the advantage of being cooler because they reflect the sun’s heat better.

No matter what make, model or colour of car you choose for your next purchase, it pays to have the right financing in place before you start shopping around. Car dealers offer financing, but this isn’t always the wisest choice when it comes to choosing a loan to meet your personal circumstances.

As your mortgage broker, we can offer you the same high level of service over motor vehicle loans as we do on your home loan – the capacity to choose from a variety of lenders for the best terms and rates to suit your financial situation.

Talk to us today about your new car aspirations, we’ll be happy to help.

 
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Wine review

Paracombe: The Reuben Cabernet Blend 2010

This delicious drop from the Adelaide Hills is the perfect combination of Cabernet Sauvignon, Merlot, Cabernet Franc, Malbec and a touch of Shiraz - producing a well-balanced, fruit driven style of wine. The bouquet is highly aromatic with lifted fragrances of poached rhubarb and plum, together with hints of delicate oak, leatherwood and a little spice. This wine’s intense colour has deep ruby tones with bright edges in the glass. The Reuben is a great food wine and at this price, a real bargain.



Rating : 4 stars
RRP : $17.99

 

App review

Spendee

Want to take control of your personal finances? Spendee is an awesome new app that automatically and thoroughly analyses your income and expenses, giving you intelligent advice on how to make the most of your money. It allows you to analyse your income and spending using gorgeous info-graphics, bringing beauty to your finances! Simply punch in the numbers and see your money analysed and expressed as informative and easy to read info-graphics. Set frequent payments to save time and money. You can even snap a photo of your bills and add them to the app for easy storage and management.



RRP : $1.99 iPhone. Android Free.
Available on :  iPhone, iPad and Android

 
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Contact us

 
 

 

Nieuvision Finance
Clovercrest Plaza, Unit 25, 427 Montague Rd, Modbury North, SA
PH: 08 8263 4009
FX: 08 8396 4552
Mob: 0412 518 343

www.nieuvision.com.au

  

Credit Representative Number 442771 is authorised under Australian Credit Licence Number 389328

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