November economy diggest

Hi Everyone. I usually try to summarize myself a few economic every month, to keep on top of things and I have decided it could be a good idea to share this content.

US real estate price finally recover

It was reported that the famed US Case-Shiller index now records house prices as having finally moved above their 2006 peak.
Case-Shiller’s index enjoyed a spectacularly bubbly run over the two decades running up to 2006, with prices all but quadrupling over that time, but it’s been a very different story since the sub-prime crisis erupted.
And nationally prices at long last eclipsed the previous peak seen in July 2006, albeit very marginally.

 

New home sales 2 years low
New home sales declined by 8.5 per cent in October to their lowest level in two years.
Sales were down for both detached houses (-8.2 per cent) and multi-units (-9.2 per cent).
The Housing Industry Association (HIA) sees this as consistent with its forecast of housing starts declining to 172,000 by 2018/19, driven by a substantial drop in apartments, which is fair enough.
More parents helping their kids to enter the market

According to a Fairfax report, figures from both NAB and Westpac have confirmed that guarantor loans are becoming increasingly common. The loans see parents or close family members provide their property as security for a home loan, eliminating the need for a deposit.

NAB told Fairfax guarantor loans had risen from 4.8% of all new loans in 2010 to 6.7% last year. A Westpac spokesperson also told Fairfax that the number of guarantor loans through its St.George subsidiary had risen 9% in the last year.

Immigration up
Annual net permanent and long term arrivals into Australia increased marginally in September to +267,500, some way up from the nadir of +262,800 in June
Aussies to struggle with repayments?

A study by UBank has found 25% of borrowers are experiencing stress due to their home loan repayments, the Daily Telegraph has reported. The study found borrowers were sacrificing holidays, social events and time with family in order to meet their mortgage payments.

According to the Daily Telegraph, 56% of the survey’s respondents said they had missed out on time with their children to earn more money to meet home loan repayments, while 54% said they had sacrificed a family holiday due to financial pressures. Around 59% said they had cut a family holiday short because of financial strain due to mortgage repayments.

Boom and bust report
Christopher’s Housing Boom and Bust Report 2017  has now been released and is immediately available at this link.
It may pay to be cautious as the housing market is currently at its second most overvalued point on record driven by a combination of factors including loose monetary policy, strong population growth and booming local economies, especially in New South Wales and Victoria.
The earth awaits
The Earth Awaits started to imagine a tool that would build budgets for places all around the world while considering the important aspects of a person’s lifestyle: their price range, family size, housing needs, and their lifestyle expectations. I knew about Numbeo, which gathers cost of living data for cities around the world. I knew where to get information about safety, visa information, and I had a pretty good idea of how to create a budget that would reflect the local cost of living anywhere in the world. Someone just had to put all the pieces together. Why had nobody thought of this before?
US Fastest earning growth
The US Bureau or Labor Statistics reported that the US economy added +161,000 jobs in October, with upwards revisions to the two preceding months totalling +44,000.
Business expectation to rise to 17 year high
Reports Greg McKenna over at Business Insider
Capital city prices continue to rise
CoreLogic reported its October dwelling prices today, which you’ll no doubt read about elsewhere.
Capital city dwelling prices rose by +7.5 per cent over the year to October.
Vacancy rate down in October
Vacancy rates declined nationally to 2.3 per cent in October according to SQM Research, led by falls in Sydney, Melbourne, Perth, Canberra, and Hobart.
Sydney (1.7 per cent) and Melbourne (1.9 per cent) have seen their rental markets tighten a little over the past year. Nationally, rental markets have held fairly steady over the last 12 months. There was another uptick in Brisbane to 3 per cent, where there is also a high number of inner city apartments still under construction.
Bonus: Excellent article on how to transfer property and its consequence on CGT
The main issues to think about and plan around when gifting or transferring property include:

  • When was the property purchased by the transferor
    • Before 19/09/1985 or
    • After 19/09/1985
  • Why is the transfer necessary .. at this time
    • Is there a better result when transferred throuh a will
  • What is the Capital Gains tax status of the recipients/transferee
  • Stamp duty implication to be paid by the transferee
  • Centrelink implications for the transferor – where they are of pension age
  • Legal/conveyancing fees for transfer

To better understand the implications of CGT when gifting and transferring property it is important to start with understanding the basics of how capital Gains tax works. Click the link below for the fact sheet we have prepared on the PTS website  http://propertytaxspecialists.com.au/property-cgt-the-basics/

For case studies and examples of the implications on transferring or gifting property or just adding names to title click the link below to the fact sheet we have prepared on our website

http://propertytaxspecialists.com.au/cgt-implictions-transferring-gifting-adding-names/

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