In this issue:


November 2013


Welcome to our November newsletter

As the favourite Fiorente finally brought home the Melbourne Cup for Australian racing legend Gai Waterhouse, the Reserve Bank of Australia decided to leave the official cash rate on hold at 2.5 per cent for the third consecutive monthly board meeting, in line with expectations.

The decision follows encouraging improvements in household and business confidence throughout September and October, which is indicated by continuous upward movements in property prices and increases in demand for housing across the country.

Last month, the unemployment rate fell 0.1 per cent to 5.6 per cent, while the Consumer Price Index increased by 1.2 per cent over the September quarter, taking the annual inflation rate to 2.2 per cent – within the Reserve Bank’s target range.

The current cash rate of 2.5 per cent is at its lowest point in 50 years and it is expected the RBA will keep it on hold for several months until March of next year, despite the fact that RBA governor Glenn Stevens remarked in his press release that the Australian Dollar remains “uncomfortably high”.

Governor Stevens warned that “a lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy” as the high exchange rate is currently having a negative effect on commodities markets as well as our export and tourism markets.

Strategists expect the currency will remain high against the US Dollar until the United States Federal Reserve ends its current economic program at the end of the first quarter next year, meaning further cuts to the cash rate in the hope of lowering the Australian Dollar would be futile at this point in time in the face of the US Government’s current economic policy.

However it would appear that further cuts to the official cash rate may be on the cards at some point if the Australian Dollar does not decrease in value by itself. Market analysts have indicated that a more positive economic outlook would be achieved with the Australian Dollar around US$0.79c rather than its current high levels of around US$0.94c.

Nevertheless, analysts agree that the upward movement and return to confidence in the Australian housing market look set to continue and current low interest rates should have a positive effect on new housing construction levels over the next few months.

Australian house prices rose an average of 1.3 per cent in October in response to increasing demand in the housing market. Speculations that low interest rates have caused a housing price bubble have eased in response to the RBA’s decision and indications that low interest rates look set to continue into the first quarter of next year and beyond.

Additionally, the four big banks report that they expect more home loan and business borrowers will emerge to drive up demand for credit, with demand for credit increasing by 3.3 per cent in the year to date according to official RBA statistics.

Current mortgage rates are very low and there are some very competitive prices available as the lenders are gearing up to battle it out for your business in the coming year. If you’re looking to enter the property market or invest in property, now would be an excellent time to consider making a move as positive market trends look set to continue. To find out what all of this means for you and your property purchasing plans, give us a call today.

Sincerely, the Team at Great Aussie Dream




Property jargon – what does it all mean?

It’s a boom! It’s a housing bubble! It’s a buyer’s market. It’s all a bit overwhelming! If you’re confused by the terminology used in the real estate industry, take it easy on yourself.

With so many property reporters out there sprinkling their property articles with buzz words and industry jargon, it can be enough to make your head spin! Read on to find out some of the most commonly confused property terms and what it all means.

Show some appreciation!

Real estate terminology sometimes becomes confusing when a word we use in general speech has a completely different meaning in the context of property. Take the word ‘appreciate’ for example. In common use the word appreciate means to have a high opinion of something. In real estate jargon it refers to a shift in value.

Appreciation: This term refers to an increase in value of the property. It does not refer to how much you like the property or the real estate agent. Appreciation occurs due to a rise in the value of property in general, or when you do something to add value to a property – like adding a swimming pool.

Depreciation: The correct definition describes depreciation as an ‘accumulated effect on the value of an asset due to physical, functional, technological and economic obsolescence’. In other words, it’s what happens to the value of an item when the item gets old.

When is a per cent not a per cent?

If you’ve ever tried to keep track of interest rate rises and falls, you’ll have come face to face with the confusing term ‘basis points’. If you’re like me, you’re not exactly sure why they can’t just talk in percentages, but apparently those in the know consider talking in basis points to be easier and more accurate.

Basis points: One per cent (1%) is the equivalent of 100 basis points. Basis points are used as a convenient unit of measurement where percentage differences of less than one percent are being discussed. The term is frequently used when referring to property interest rate increases and decreases.

Is it a boom or a bubble? How can you tell?

There’s a lot of speculation at the moment about whether we’re experiencing a housing boom or a housing price bubble. But what’s a boom and what’s a bubble and what’s the difference?

Boom: A property boom is a period of time where the property market experiences rapid growth. During a boom property prices increase rapidly and auction clearance rates remain high despite the increase in prices. A property boom is a sustainable upturn in the property market.

Bubble: A property bubble is also a period of time where the property market experiences rapid growth, with the rider that it is a type of economic bubble that occurs periodically in local or global real estate markets. A bubble can be identified through rapid increases in valuations of real property until they reach unsustainable levels and then rapidly decline. A bubble is therefore a temporary increase in housing prices. At present, some of the big 4 banks are saying the current low-interest rates are creating a housing price bubble. Whether a housing price bubble actually exists or not, or whether we are at the start of a boom period remains to be seen.

Whose market is it anyway?

How can you tell the difference between a buyer’s market and a seller’s market? Isn’t it all the same market at the end of the day?

Buyer’s market: This condition exists when the pressures of supply and demand are such that market prices are at a relatively low level, giving the buyer an advantage. A buyer’s market exists when there is an over-supply of properties for sale causing prices to decline. During a buyer’s market it is easier to negotiate a lower price for a property because there are fewer bidders for the property available.

Seller’s Market: This condition exists when the market has a lot more buyers than sellers. Pressures of supply and demand are such that market prices are at a relatively high level, giving the seller an advantage. During a seller’s market, there is a lot more competition for any properties for sale, causing housing prices to increase.

We hope this helps clarify the property buzz for you. For more information about property markets, investing or real estate terminology, why not talk to your professional mortgage broker today?




Property capital gains tax explained

Capital gains tax is a term that crops up from time to time when shopping for property, particularly investment property. And like most taxes, it’s a term that most of us just don’t want to know about! But if you’re buying or selling a property you’ll want to know exactly what it is and how it may impact you.

Capital gains tax (CGT) is a tax paid on any profit you make from the sale of any asset, not just property assets. Put simply, a capital gain is the difference between what you paid for an asset and what you receive when you sell it.

If you are a property owner, capital gains tax may become an issue when you make a profit from selling your property. But there are a couple of standard exemptions you should know about and ways you can make a profit from selling real estate without paying the full whack of CGT.

CGT exemptions for your family home

A full exemption from CGT applies if you are selling your family home or principal place of residence. The Australian Tax Office (ATO) considers a property your principal place of residence if you and your family live in the dwelling, your mail is delivered there, you keep your personal belongings there, you’re registered to vote at that property’s address and you have phone, gas and electricity supplied to the property in your family name.

You can only claim one principal place of residence at any given time, so if you have investment properties it should be noted that you can only claim a CGT exemption on the house in which you live. If you’re selling your principal place of residence and buying another one, you’re entitled to an overlap period of six months as long as the new property you are purchasing will be your principal place of residence once the move is completed and you lived in the old property for at least three continuous months in the 12 months before you sold it – and did not rent it out to tenants.

If you rent out your family home, CGT will apply to the proportion of time it was rented out. For example, if you owned the property for eight years, but only lived in it for six years and rented it out for two years, you would be liable to pay CGT on the two years it was rented out, so you would have to pay CGT on 25% of the profit you made from the sale.

Even if you do rent out your principal place of residence, you may be able to avoid paying CGT under the ‘Temporary Absence Rule’ as long as you don’t claim your new house as your principal place of residence when you move. Using this rule, your old home will be treated as your principal place of residence for up to six years and you can be exempt from paying CGT on the property when you sell and also be exempt from paying CGT on the income generated from renting the property out.

CGT exemptions for home renovators

If you live in your home for the whole time you own it and haven’t rented it out to anyone during the time you own it, then you are entitled to a full exemption on CGT when you sell. This even applies to a property you purchase to renovate and sell on, as long as you live in the property for three continuous months in the 12 months before you sell it and haven’t rented it out to anyone during the time you owned it.

This is a great rule if you plan to live a renovator’s life. You can buy a property, renovate and sell for a profit as many times as you like without paying a cent in CGT.

CGT and investment properties

Calculating the CGT payable on your investment properties can be quite tricky and you should always seek professional advice. Basically, if you own your investment property for longer than 12 months you are automatically entitled to a 50% discount on the CGT payable when you sell. In addition, the CGT calculation is made on the sale price of the property minus your expenses, so it is vitally important that you keep good records regarding your expenses for each of your investment properties.

Deductible expenses for investment properties include:

  • Incidental costs including stamp duty, legal fees, agent’s fees, advertising and marketing costs.
  • Ownership costs like home maintenance, rates, title costs and interest on your home loan.
  • Improvement costs such as renovations to the kitchen or bathroom, addition of a swimming pool or garden and so on.

Once you have used these factors to work out the capital gain on your investment property, the figure is adjusted according to the period of time you owned the property and the period of time the property was rented out and not used as your principal place of residence.

Remember, this is general information and does not take your personal circumstances into consideration, so you should always seek professional advice from your accountant or financial adviser regarding CGT when you sell your property. It should also be noted that we are not authorised to give personal advice on taxation matters and other rules and regulations may apply to CGT that have not been mentioned here. For example, different rules apply to Australian citizens and foreign residents, and CGT may apply to other assets besides property.

For more information, visit the Australian Tax Office website, or for more information about investing in property, contact your friendly mortgage broker today!




Adding value to your property

Our home is the biggest asset that most of us will ever acquire. With interest rates at their lowest point in over 50 years, investing in your own property to keep it up to date is a wise move.

Even if you’re not looking to put your property on the market right now, it pays to find ways to add value to your home in the long term. So where are the best places to invest your money? This article looks at 5 easy ways to add value to your home on a budget.

  1. Vamp up the kitchen
  2. The kitchen is the centrepiece of your home and most real estate agents agree that spending money on the kitchen often returns two-fold in the sale price of your home. If your budget allows, you can replace the whole kitchen with new cupboards, bench tops and up-to-date appliances to really give the value of your home a boost.

    If the budget won’t stretch to a full kitchen replacement, take a look at your space and focus on the areas that are looking dated and tired. Look at replacing the cooker and range hood with budget options sourced from eBay or discount appliance centres. Brighten the whole room with a coat of paint and update the cupboards with new door handles. Bench tops tend to be a focal point in a kitchen, so if your bench tops are worn, go ahead and replace them over other renovations.

  3. Give your bathrooms the once-over
  4. Modern bathrooms are a must-have for most home-buyers. A grubby, tired looking bathroom can be very off-putting to people viewing your home. Additionally, most home buyers prefer a residence with more than one bathroom, so if you only have one and can find a way to add another, this will add significant value to your property.

    You can give your existing bathroom a quick lift by using a grout pen to whiten the space between your bathroom tiles. If your toilet, sink and tap ware are looking worn or dated, replacing them is a good idea and is a great way to modernise the entire look of your bathroom. Additionally, take a good look at the shower screen and door. An old screen will really date your bathroom, so look at new glass screens without the heavy framework.

  5. Get the floors looking their best
  6. Carpets require regular professional cleaning to keep them looking their best. If your carpet is not cleaned on a regular basis, they will wear out much more quickly. To give your home a quick lift, get the carpets professionally cleaned. If they have reached their use-by date, be realistic about having your home recarpeted or look at other budget flooring options to give your home a lift. Exposed wooden floor boards are very popular and have the advantage of not dating. If your carpet is worn-out, consider sanding and sealing the floorboards underneath instead of going to the expense of putting new carpet throughout. If you’re lucky, you’ll find the floorboards underneath your carpet have been protected over the years and you’ve got a hidden gem. If you’re not so lucky, you can consider covering them with floating floorboards, which can be an inexpensive option if you shop around. Or visit a budget carpet centre and choose one colour for the whole job.

  7. Create an off street parking space
  8. Does your home have off street parking? If not, finding a way to get your car off the street and under a carport or into a garage will add significant value to your home. Look at adding a driveway and shade sail or carport to the front garden. This is the most obvious way to add a parking space to your home.

  9. Add some elegance to you outdoor entertaining area
  10. Today’s home owners crave outdoor living spaces. Adding a deck, patio or simply creating an ‘outdoor room’ with pavers and furniture could add significant value to your home. If you decide to add a deck or patio, make sure it flows on from your kitchen/dining/living area and keep it looking as open plan as possible. Add doors that can be folded back to bring the outside in. Think about adding a pergola, veranda or shade sail for a stylish, functional finish.

    If your home already has an outdoor entertaining area or deck, giving it a makeover can add significant appeal and value. Replace any rotten planks in the deck and give it an oil or varnish. Replace tired old pot plants with modern pots and more attractive plant varieties and look at getting a modern table and chairs. Clean or replace the barbeque and get rid of any untidy yard clutter that’s lying around the place. Generally giving your garden a make-over is also a good idea. Keep it simple and structured. If you haven’t got a green thumb, consider hiring a landscaper to create a stylish, low-maintenance garden that looks great without the maintenance hassles. Home-buyers are time-poor these days and making sure your garden is low-maintenance will make your home more appealing to buyers.

Keeping your most valuable asset maintained and up to date is something you should seriously consider, even if you’re not looking to sell. If you want to renovate your home but the budget doesn’t allow it, talk to your mortgage broker about refinancing your home loan to give yourself a renovation budget. With today’s low interest rates and competitive financing options, you could not only create an opportunity to add value to your home, you could be better off.


Wine review

Hoddles Creek Yarra Valley Chardonnay 2012

This wine is a taste of sophistication that’s effusive on the nose and lively in the mouth. It has the immaculate balance and length of all Hoddles Creek Estate chardonnays with hints of white peach, melon, apple and a citrus acidity. Wine experts all agree that this light, delicious wine is something very special at a very average price. Worth buying a case before Summer sets in.

Rating : 4 stars
RRP : $18.99


App review

MagicPlan App by Sensopia

Looking to renovate a property? Yes! There’s an app for that. As a real bonus for renovators, MagicPlan makes it easy to make a professional floor plan. All you have to do is load up the app, take pictures of the rooms you want to renovate with your phone and MagicPlan does the rest! It will give you a to scale drawing of your floor plan in PDF, JPG and DFX format, or even publish an interactive floor plan on the web!

Available on :  iPhone, iPad and iPod touch. Optimised for iPhone 5. Requires iOS 6.0 or later




Contact us







Great Aussie Dream

T 1300 72 68 48
F 02 4733 4115

Australian Credit Licence Number: 387787 | ABN: 84129326352


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