More Australians Are Becoming Millionaires

High net worth individuals in the country have grown by 15.5%, according to RBC Wealth management Asia-Pacific Wealth Report of 2013. It is forecasted that Australia and the Asia-Pacific will lead the world in HNWIs by 2014. The GDP rising by 3.6%, share markets increasing by 2.1% for property values all attributed to the growth of HNWIs by 9.4% over 2012 according to the report.

What’s interesting to note is that 40% of HNWIs invest in property investments. This percentage exceeds the global average twice, a clear indication that demand for property in Australia is not waning.

Read more about this on the Australian Broker Online website.

Reducing Interest Using Mortgage Offset Accounts

Mortgage offsetting is a growing payment scheme for home loans today because it gives the borrower the ability to pay the loan by linking it to their savings account. The balance in the account is then used to offset the loan due before interest. This takes out a big portion of the principal loan.

It does sound enticing to some, but there are other points to consider before opting for this payment scheme.

The borrower has to make sure that there is a sufficient sustainable balance on the savings account linked to the loan, otherwise there will almost be no interest savings. This offset account is not effective, as it is the just the same with paying the loan more than the minimum.

Mortgage offsetting is only allowed for variable interest rate loans, although there are lenders who have offered this scheme for fixed rate loans. It is still best to go through the home loan packages with a financial adviser as these are strategies that are only effective if done correctly.

You can read more about this on the Australian Times website.

Property Value Exceeds Record Set During The 2010 Property Boom

Property values for the month of September shattered the record set during the 2010 property boom, according to RP Data Rismark. Housing values for 2010 were at its highest at 141.45. As of 2013 year to date, capital city values are at 124.11.

Growing concern over the property price increase has caused analysts to speculate that this trend might result to a property bubble.

RP Data director Tim Lawless thinks otherwise. He calls the property value increase as a “technical” recovery, as there are other factors that keep the property value in check. Housing values are increasing, but in turn, there are shortages because of a rapid increase in population, low interest rate and strict lending standards.

Read more about this on the Age website.

Think Ahead When Investing In Property

The current financial situation has been enticing to home buyers. With low interest rates and rise in property investments, people are more likely to invest in the real estate sector than the others. But be advised – as property demand increase, people should be more wary of the long term effects.

The real estate sector has been experiencing a steady growth in the past few years. Property prices have increased to 5.1% from June 2012 to June 2013 because of high demand. It is also because of this price increase over demand that more and more people go into risky investments.

Assessing one’s future financial capacity is one way that these risks can be avoided, assuming that the interest rates and other fees will increase in the future. Getting financial advice on these matters will ensure the financial security of the buyer and the investment.

Read more about this on the Adviser website.

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Get in the Know: SMSF Investment Using LRBAs

Using SMSF to borrow money in purchasing assets was limited before September 2007. These restrictions were a hindrance to investors. Seeing the potential in the SMSF industry, these rules were revised in 2010. SMSFs can borrow money for property investments using LRBAs. (Limited Recourse Borrowing Arrangements) These can be used to borrow money for property investments, under certain restrictions.

There are certain key points to consider for this arrangement: SMSFs can only be used to purchase a single asset, or groups of assets with the identical market value. The LRBA cannot be used for property improvements, and that the LRBA benefits are reaped by the SMSF trustees, but the ownership is held on trust.

Knowing this together with all the rules and regulations governing property investments ensure that SMSF usage is maximized to its fullest potential.

Read more about this on the SMSF Adviser website.

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Property Hotspotting Is Not A Fool Proof Method

Hotspotting is often used to trend the growth and demand for property in a certain area. Most buyers would opt to invest in areas where there is known demand, although this is not often the most important, according to Michael Matusik, a property analyst.

Several things have to be taken into consideration, and hotspotting being one of them – is not the most important. Long term potential is one of them, as there are no properties immune to fluctuating values. It is interesting to note that on one research Michael’s team did, properties in Queensland that were said to be “hot”, or immune to these changes did experience a capital loss.

Knowing the dynamics and trends are often the way to go, as no one can really tell the actual property value in the future. Forecasting and contingency plans will not only minimize losses but also aid in getting the most out of your property.

Read more about this on the Property Observer website.

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