Friday, 29 February 2008

Real Estate Mastery

Attended the Real Estate Mastery Workshop on Sunday 24th Feb, presented by Empowernet. Here is a summary of some points presented...

1. There are many factors that can influence the price of property:
  • supply vs. demand (scarcity of property, land, materials, labour)
  • population growth and demographics
  • location (of property, amenities, work, schools, shops, etc.)
  • interest rates, inflation and affordability
  • rental market
  • employment and the economy
  • taxation concessions, housing grants, stamp duty incentives
  • finance availability
  • fees (land, council, body corporates)
  • media and market sentiment
2. The value of land has generally appreciated more than that of houses, due to the following reasons:
  • land is scarcer than property
  • land can be subdivided into multiple blocks
  • the "blank canvas" effect - people are looking for the "perfect" piece of land to build their houses (e.g. right land size, shape, gradient)
  • higher fees associated with council costs
  • building depreciates as they age
3. As a property investor it is important to stay up-to-date with the latest news and events. You can do this in a number of ways including reading newspapers, magazines, attending seminars, being part of a property forum/interest group, and using the Internet. You should use the service of Google News Alert to filter out relevant stories related to properties and get it delivered to your email account - this is very useful feature.

4. For property investors, increase in the interest rate usually means higher mortgage (interest) repayment. However, if the property is rented out the increase in interest rate is actually good up to a certain point (up to 10% interest rate or so) , as rents can be increased correspondingly (say every 6 months) and this will more than cover the increase in interest cost.