Wednesday, December 17, 2008

Product Newsletter 1 January 2009

Investment property at frame stage in Ipswich for a private client (right)


Now that the four horsemen of the apocalypse (Fear and Anger and Gloom and Panic) have galloped past to a distant paddock, some of their audience will now realise

(1) that not all financial institutions have gone broke,

(2) that equities will have to increase in value due to the need by superannuation funds to invest their billion dollar weekly inflows, and

(3) that the real estate still offers an excellent investment for retirement planning.

If you would like me to help you explore your options for 20-25 years of dignified retirement, contact me – Bernard Kelly - anytime on


The number of new homes in the Ipswich local government area will treble over the next 20 years if the Queensland Government's forecasts are right.

Its draft regional plan for southeast Queensland, released on 7 December, predicts that the Ipswich region will need 116,000 new dwellings by 2031.

Ipswich Mayor Paul Pisasale's reaction was to declare: "Bring it on."Ipswich wasn't ready 10 years ago, but we are now."The new regional plan, which will be open to public comment until April next year, proposes that Brisbane's western corridor be the area's next major population growth.

The state's new draft regional plan for southeast Queensland forecasts that 735,500 dwellings need to be built in the region by 2031, a 65 per cent jump on the current number of 1.1 million.

Source: The Courier Mail 8 December 2008


According to there are 1092 different mortgage loan products available from lenders in Australia.

Perhaps half of these would be “investment property mortgages” but there’s no way that anyone apart from an independent funding strategiest would know where to source them, and which one suits a particular investor.

If you would like me to introduce you to a funding strategiest at the peak of their profession, contact me – Bernard Kelly – anytime at


HIA, Australia’s largest building association says the Australian Bureau of Statistics House Price Index for the September Quarter confirms house prices remained relatively flat during the period.

ABS preliminary estimates show the price index for established houses on a weighted average for Australia’s capital cities decreased 1.8 per cent in the September Quarter. This contrasts to 2007, when established house prices were up by 2.8 per cent.

HIA Chief Executive - Policy, Mr Chris Lamont said, the result is as expected and reflects the slowing in the Australian economy over the same period.

The result is a far cry from the 40 per cent fall in house prices some commentators were predicting just weeks ago.

Relative to other forms of investment, housing is doing very well. It is worth noting that while other classes of investment have seen reductions in asset value of 20 plus per cent the housing market has been shielded by, record levels of underlying demand for housing in excess of supply and population growth from immigration.

“There is no doubt that recent drops in interest rates and a top-up of the First Home Owners Grant will also help in putting a floor under house prices,” said Chris Lamont.

HIA has stated that a fall in asset prices should be expected during periods of economic uncertainty.

But a chronic undersupply of new housing, conservative lending practices and population growth mean that Australian house prices in an aggregate sense are unlikely to see the same turbulence affecting other investments.

“We remain concerned, that restrictions on the availability of capital are placing additional constraints on the supply of new housing particularly for higher-density development. Impediments to new housing supply have already placed considerable pressure on housing affordability and it is essential that capital is available to finance new housing projects,” said Chris Lamont.


What attracts many investors to Defence Force Housing is the 10 year rental “guarantee”.

Of course, when you understand the fine print, what this “guarantee” really means is that DFH will only keep paying you the rent while they need your investment property to house defence force personnel.

If a base closes, all that local DFH accommodation will no longer be required. With a glut of houses for sale, investors won’t be able to exit, and of course there won’t be tenants to occupy all of those ex-DFH properties.

Now the Rudd government has commissioned an audit by the Boston Consulting Group to slash $2 billion from the Defence Department’s budget.

Late in the Howard years, there were proposals to close the Woodside Army Barracks in South Australia and the Richmond RAAF Base in New South Wales. These proposals could be readily reactivated.

A far better investment strategy is to avoid such obvious risks and only acquire investments properties in a growth corridor adjacent to a major, diversified economic zone.

If you would like me to help you explore your options, contact me – Bernard Kelly – anytime at

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