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The Animal Welfare League recently published an article in which I commented that with record low rental yields nationally, property investors should open their eyes to the benefits of renting their investment properties to tenants with pets that have good references.dogs-welcome

I am proud that First National Real Estate’s property managers take additional steps to protect a landlord’s interests such as adding specific clauses to the lease, requiring annual steam cleaning of carpets, and in some states, negotiating a pet bond.

Good tenants understand these are realistic trade-offs that help their landlord to feel more confident about their intentions. I hope you agree and for more facts on pet ownership in Australia, read more here.

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Select color swatch to paint wallAt First National Real Estate, my corporate team as well as our staff in member offices across Australia and New Zealand work extremely hard to excel in customer service, striving to exceed real estate buyers and sellers expectations.

As reported recently in the 2015 Consumer Perceptions of Real Estate Agents survey was conducted by CoreLogic, a total of 66 per cent of vendors rated their selling experience as ‘excellent’ (31 per cent) or ‘good’ (35 per cent).

I am also particularly proud that First National Real Estate was recently voted ‘Employer of Choice’ in an independent industry survey. The survey also showed our real estate member network had the best culture as well as the happiest principals and staff throughout its 400+ office network in Australia.

 

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First National Real Estate chief executive Ray Ellis says claims of a looming ‘housing market bloodbath’ in the Parliamentary submission of two economists are overly technical and fail to appreciate the realities of Australian Real Estate, where the bulk of our population wants to live in a fraction of available space, and where home ownership is deeply embedded in the national psyche.

‘The submission suggests that house prices must fall to once again reflect economic fundamentals. However, it Close up glowing vintage light bulbdepends entirely on what fundamentals you consider and with all the talk of affordability issues in the media, it’s easy   for consumers to be blinded to the truths that underpin Australian real estate’ said Mr Ellis.

Economists generally measure affordability using a comparison of middle-market house prices against average incomes, as measured by the Australian Bureau of Statistics (ABS). Based on average household incomes of $75,000   to $85,000, that makes a house in Sydney about 9.7 times average income; a house in Melbourne about 7.3 times income, and a house in Brisbane about 6 times average income.

‘The problem with the ABS income figures is that they disguise the real picture. They include a range of people not actually in the housing market and research from Barclays argues average household incomes are actually significantly higher in Australia – in the region of $122,000’ said Mr Ellis.

‘This explains why many Australians can afford homes in the region of $650,000 to $800,000 on loan to value ratios of 70 per cent. Also, 10 to 15 years ago, ABS statistics indicated only 250,000 households earned over $156,000 per annum. That figure has now increased to more than a million Australian households and the number of households earning in excess of $260,000 has tripled.’

By contrast, housing stocks in fashionable capital city areas have not increased by anywhere near that magnitude and, when people don’t want to consider suburbs where homes are cheaper, the impression is created that housing is unaffordable. Yet, throughout Australia’s suburbs and regions there are many affordable alternatives available.

‘Our local and Federal Governments need to maintain focus on much needed public transport infrastructure that facilitates easy access to employment centres, release more land for , and consider incentives that help people relocate to regional centres where businesses are struggling to find talented employees’ said Mr Ellis.

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It was with great delight that First National Real Estate returned to Queenstown with over 370 real estate agents for its annual convention in May. With over 400 offices throughout Australia, New Zealand and the South Pacific, First National is celebrating 30 years in New Zealand this year.

It was terrific to have John Blackman join us as Master of Ceremonies. Here we are pictured at Coronet Peak.

Ray Ellis & John Blackman

Our membership thoroughly enjoyed Queenstown in 2009 so it was clearly the ideal location to celebrate our network’s 30th anniversary of providing real estate services in New Zealand.

Befitting the 100th anniversary of the ANZAC alliance, the conference opened with a keynote speech from Australian Victoria Cross recipient, Mark Donaldson, who will share insight into Australian Army operations in East Timor, Iraq and Afghanistan.

I am proud to announce the new national website – http//:www.firstnational.co.nz which introduces advice about every stage of life’s journey in real estate.

We are the only real estate network in New Zealand that shares expertise about renting, buying your first home, investing, relocating, upsizing, downsizing and retiring. There’s a wealth of other information available so I encourage all Kiwis to visit our website and experience the First National difference.

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Forced Reverse Mortgages Threaten Australia’s Social Fabric

A proposal to force pensioners into a national reverse mortgage scheme threatens to fundamentally chaaussienge Australia’s social fabric and the relationship we have with the family home, potentially also leading to a collapse in house prices.

To solve the problem of funding retirement pensions into the future, the Centre for Independent Studies has proposed Government incorporate the family home in a pension assets test and legislate for a default national reverse mortgage scheme, the income from which would be counted in the income test.

Millions of Australians have worked hard to achieve home ownership. In fact, over 80 per cent of retirees own their own home and the vast majority have paid off their mortgage.

Along the way, these same retirees have paid income tax as well as significant amounts of Stamp Duty on property purchases, thereby helping Government fund community infrastructure and services that benefit everyone. Their reward is the security of being unencumbered in retirement and having an asset to leave their children.

This proposal could see equity in family homes hollowed out over time, so that there’s little or nothing left for children to inherit, making it even harder for young people to get a foot on the property ladder and own their own home.

Some have likened the proposal to ‘strip mining’ the young in order to solve a budgetary problem. Concerns have also been raised about reverse mortgages rendering an increasing number of illness or dementia-affected retirees unable to afford a nursing home, when it is most needed.

Ultimately, one has to ask what the incentive will be for young people to buy their own home and aim for financial independence, if Government then proposes to take that away in retirement.

There’s also the question of who will have the money to buy a house if there is not some form of inter-generational wealth accumulation within families. If average Australians cannot afford to buy a home, a collapse in property values could follow, bringing with it a massive, long-term, negative impact on the economy and the end of the ethos of a fair go.

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A Message from the Chief ExecutiveRay Ellis First National

Suggestions that negative gearing is a perk for the rich are misguided and, if eliminated in the next budget, the most vulnerable in our communities could soon see unaffordable rental prices.

The Real Estate Institute of Australia is right to urge the Government to retain negative gearing and the capital gains tax discount because it helps maintain the supply of rental properties.

The great Australian dream is to own your own home and it is important we remember just about every Australian begins his or her journey to property ownership as a tenant in a rental property.

Australia has one of the fastest growing populations in the OECD so keeping rents affordable depends entirely on maintaining an adequate supply of rental properties. This can only be done if Australians continue invest in properties they are prepared to rent to others. The main thing that keeps that attractive is
negative gearing.

Current taxation arrangements offer Australians the opportunity to invest in real estate as a way of saving for independence in retirement. However, with the average property investor owning just one rental property and having an income no higher than $80,000, suggestions that the rich are exploiting negative gearing are an exaggeration.

If negative gearing were removed in an environment of the lowest interest rates since the 1950s, Australians would be unlikely to continue to invest in rental properties at current rates. They would seek better returns elsewhere and, with population growth near record highs, the supply of rental proper ties would fall short of demand, thereby forcing up rents.

This would place unacceptable pressure on the most vulnerable citizens in our community. It would also lengthen the amount of time it takes for first home buyers who are renting to save a deposit to buy their first home.

Currently, the rate at which rents are rising is slowing down. In fact, rents had an annual growth rate averaging 1.8 per cent in 2014, which means they were rising more slowly than inflation in 2014. If negative gearing were dropped, that situation could change rapidly.

Negative gearing plays a vital role in balancing supply against the demand for rental properties and this helps keep housing affordable for everybody. It is incumbent upon our industry to explain the benefits of negative gearing to Australian consumers at every opportunity.

Ray Ellis
Chief Executive
First National Real Estate