From Michael Yardney's latest newsletter on the topic of Labour's Housing Affordability Fund:
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[U]"The National Rent Affordability Scheme. [/U]
Property investors may initially see this as a bonus - build a new home and get a one-off payment of $8,000 from the government for leasing it at 20% less than the going market rent.
On the surface this may look good.
The problem is that this is really a cleverly disguised re-invention of public housing. The scheme will be co-funded by the Commonwealth, State and Territory governments and is designed to encourage new dwellings specifically for tenants on Public Housing waiting lists at a reduced rent of 20% below market value.
Not only will average working families, struggling to meet the rising cost of rent miss out with this scheme but so will investors.
By taking up the offer of $8,000, investors will be forced to build a new home in a less than optimal area (most likely the outer suburbs), thereby foregoing the strong capital growth available in the inner suburbs.
While it may look like the government is finally encouraging residential investment and giving us something for doing our part in supplying much needed rental accommodation, they are in fact enticing investors into areas that may not provide the best long term returns. ............."
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We have had multiple discussions on inner vs outer on the forum over the last few years however the above statements in my opinion are quite absurd and very far from actual truth. Inner DOES NOT provide any medium - long term advantage over outer suburbs as far as investment potential goes. I have my foot in all camps. From blue chip inner portfolio to outer and middle as well as interstate cities and interstate regional.
In my last 6 years, my inner portfolio has increased the least in % terms than middle or outer or even regional. The yields are half of outer suburbs and the above statements at best are misguided.
For someone who takes pride in being "Aus leading commentator on residential property", I believe it is paramount to follow factual information without making broad based and generalised statements which dont hold any water. Expressing an opinion is fine however when statements are made with a single point agenda to achieve one's own vested intrests, then it becomes highly questionable.
Over medium to long term, inner suburbs have never outperformed outer. Through factual data sourced from ABS, Residex, APM and REIV/ REIQ etal, it has been proved many times that all areas grow at similar rate in equity growth.
To "rubbish" an initiative by government which might benefit investing in outer areas and might not serve vested interest for someone promoting property development in inner areas,and then presenting that information as "valid statements" is twisting the truth.
I have looked at prop portfolio of a lot of investors from SS and discussed indepth the actual growth from different areas they actually realised and have not come across a single example where inner prop have somehow experienced acclerated growth than outer over a 5-7 year term.
Given the current investing climate, the above statements cannot be further from the turth. In my opinion it is definitely not the time to be investing in inner/ bluechip areas which experienced highest growth in the last 12-24 months and are set to take a long breather.
My inner portfolio (otherwise considered bullet proof by some) has actually lost around 10% value compared to Jan 08 valuations. Second valuation done 5 weeks ago. That is a big drop and totally discounts the theory that inner suburbs offer better stability than outer and always maintain their values.
Compare this with my outer portfolio, which not even defied the trend but increased another 5% in the same quarter that inner shed around 10%.
Now also compare this with the fact that most of my investments in outer suburbs have given me over 50% growth in the last 3 years. My 2 properties in lowly Frankston North have appreciated 65% in the last 24 months..!
The $8,000 gov grant will help low cost housing in outer suburbs and will increase demand for available vacant parcels of land and will indirectly benefit the existing prop values that will go higher as a direct result of that - Almost the same effect that introduction of FHOG did to prop values.
Sorry for the long rant however I was disappointed at the blanket statements in the newsletter and thought it needs to be corrected in the context of providing balanced and correct information and not merely information that serves one's own short term vested interests.
Cheers
Harris
........................................................................................
[U]"The National Rent Affordability Scheme. [/U]
Property investors may initially see this as a bonus - build a new home and get a one-off payment of $8,000 from the government for leasing it at 20% less than the going market rent.
On the surface this may look good.
The problem is that this is really a cleverly disguised re-invention of public housing. The scheme will be co-funded by the Commonwealth, State and Territory governments and is designed to encourage new dwellings specifically for tenants on Public Housing waiting lists at a reduced rent of 20% below market value.
Not only will average working families, struggling to meet the rising cost of rent miss out with this scheme but so will investors.
By taking up the offer of $8,000, investors will be forced to build a new home in a less than optimal area (most likely the outer suburbs), thereby foregoing the strong capital growth available in the inner suburbs.
While it may look like the government is finally encouraging residential investment and giving us something for doing our part in supplying much needed rental accommodation, they are in fact enticing investors into areas that may not provide the best long term returns. ............."
..................................................................................
We have had multiple discussions on inner vs outer on the forum over the last few years however the above statements in my opinion are quite absurd and very far from actual truth. Inner DOES NOT provide any medium - long term advantage over outer suburbs as far as investment potential goes. I have my foot in all camps. From blue chip inner portfolio to outer and middle as well as interstate cities and interstate regional.
In my last 6 years, my inner portfolio has increased the least in % terms than middle or outer or even regional. The yields are half of outer suburbs and the above statements at best are misguided.
For someone who takes pride in being "Aus leading commentator on residential property", I believe it is paramount to follow factual information without making broad based and generalised statements which dont hold any water. Expressing an opinion is fine however when statements are made with a single point agenda to achieve one's own vested intrests, then it becomes highly questionable.
Over medium to long term, inner suburbs have never outperformed outer. Through factual data sourced from ABS, Residex, APM and REIV/ REIQ etal, it has been proved many times that all areas grow at similar rate in equity growth.
To "rubbish" an initiative by government which might benefit investing in outer areas and might not serve vested interest for someone promoting property development in inner areas,and then presenting that information as "valid statements" is twisting the truth.
I have looked at prop portfolio of a lot of investors from SS and discussed indepth the actual growth from different areas they actually realised and have not come across a single example where inner prop have somehow experienced acclerated growth than outer over a 5-7 year term.
Given the current investing climate, the above statements cannot be further from the turth. In my opinion it is definitely not the time to be investing in inner/ bluechip areas which experienced highest growth in the last 12-24 months and are set to take a long breather.
My inner portfolio (otherwise considered bullet proof by some) has actually lost around 10% value compared to Jan 08 valuations. Second valuation done 5 weeks ago. That is a big drop and totally discounts the theory that inner suburbs offer better stability than outer and always maintain their values.
Compare this with my outer portfolio, which not even defied the trend but increased another 5% in the same quarter that inner shed around 10%.
Now also compare this with the fact that most of my investments in outer suburbs have given me over 50% growth in the last 3 years. My 2 properties in lowly Frankston North have appreciated 65% in the last 24 months..!
The $8,000 gov grant will help low cost housing in outer suburbs and will increase demand for available vacant parcels of land and will indirectly benefit the existing prop values that will go higher as a direct result of that - Almost the same effect that introduction of FHOG did to prop values.
Sorry for the long rant however I was disappointed at the blanket statements in the newsletter and thought it needs to be corrected in the context of providing balanced and correct information and not merely information that serves one's own short term vested interests.
Cheers
Harris
