Central Coast Regional Development Corporation

On 28 June 2010 the Minister for Lands announced that the former Festival Development Corporation is to change its name to the Central Coast Regional Development Corporation (CCRDC) which will be expanded to accelerate growth and private investment in the Central Coast Region.

The CCRDC will be used to drive development in the Central Coast region in a similar manner to that of the Hunter Development Corporation and the Honeysuckle Development Corporation in Newcastle.

Of particular significance to Gosford is that the Crown Land in the Gosford Central Business District , which includes the foreshore, will be brought under the control of the CCRDC. This will mean that the CCRDC will have the resources to implement development of the Gosford waterfront. These recent changes will mean that all development of Government owned land within the Gosford challenge area will be taken out of the control of Gosford Council thereby giving certainty to any private company who is seeking to develop the Gosford foreshore area in particular.

Source: Central Coast Business Review - August 2010

Gosford Waterfront Redevelopment

As detailed in the Central Coast Business Review in August 2010 proposals are now being sought for the redevelopment of the Gosford waterfront.

Requests for proposals for “The Landing” at Gosford where advertised in the National Media in mid July seeking partners to work with the Land and Property Management Authority in the redevelopment of the Gosford waterfront. The Gosford waterfront redevelopment proposal is a project that will have enormous local significance involving approximately 100 hectares of waterfront land and sea bed and a construction/development timeframe of 20 or more years with in excess of $1 billion of infrastructure and construction. The implementation of “The Landing” project at Gosford will be a core project of the recently renamed Central Coast Regional Development Corporation.

Blue Tongue Brewery at Warnervale

As reported in the Central Coast Business Review in July 2010 the recently constructed Blue Tongue Brewery at Warnervale, constructed at a cost of almost $120 million commenced brewing in late June. The development has taken approximately 18 months to become operational and boasts global start of the art brewing technology. The Blue Tongue Brewery will produce up to 1 million bottles of beer a day when at full capacity.

Retail Changed on the Peninsula

The recent opening of a new Woolworths Supermarket at Umina Beach has created a new retail dynamic for the Woy Woy / Umina Beach Peninsula area. As reported in the Central Coast Business Review in August, local retailers are now seeing customers from a broader geographic region covering the full 7 day week period. Woolworths is now trading 7 days a week which has encouraged retail patrons to visit the town over the weekend as well as the working week.

With the proposed opening of a Coles supermarket in October and an Aldi Supermarket in the near future significant confidence is returning to the retail sector of the Peninsula. Coles are currently converting their Bi-Lo Supermarket into a full format Coles Supermarket. The proposed Aldi Supermarket is also to be located within close walking distance of both the Woolworths and Coles facilities. It is also understood that McDonalds are planning a new restaurant which will revitalise the West Street/Ocean Beach Road intersection.

The retail changes taking place at Umina Beach are going to have significant affect on the Woy Woy Business Centre. It would appear that Woy Woy will change from being a retail shopping destination given the strength in retail now evolving at Umina Beach. The Central Coast regional strategy sees Woy Woy as a town centre with Ettalong Beach and Umina Beach being villages. The likely changes for Woy Woy could mimic the changes that occurred to the Gosford Central Business District when Erina Fair was established. Woy Woy obviously has an established commercial business component and is a recognised public transport interchange which will provide new opportunities as the town centre strategy evolves.

Central Coast now a Region

On the 28 June 2010 the New South Wales Minister for Planning, Mr Tony Kelly announced that the Central Coast has now been a declared a region under State Environmental Planning Legislation. This announcement has been in formal recognition of the Central Coast’s significance to the state. The Central Coast region was formerly recognised by the Geographical Names Board in 2005 and whilst it has also being recognised in various planning strategies to date it has been properly recognised under the Environmental Planning and Assessment Act. The declaration formally acknowledges the Central Coast as a region distinct from the neighbouring Hunter Valley Region and the Sydney Metropolitan area. The Gosford and Wyong local government areas have normally been included as part of the greater metropolitan region for statistical purposes however it is important that they now be identified as a separate region. The affect of this decision is that Governments at all levels will be able to access more accurately the Central Coast Communities needs which will have a flow on affect to the allocation of funding, services and other government resources.

Source: Central Coast Business Review – July 2010

5 Year Value Decline

A report in the Sunday Telegraph of 28 February 2010 has shown that approximately 25% of Sydney Home Owners who bought and sold properties during the past five year period had experienced a loss.

Broadly reflecting the situation on the Central Coast market property analyst Residex has shown that 24% of properties bought and sold between January 2005 and January 2010 in the Sydney Metropolitan area showed average losses of around $54,000 which did vary between suburbs. The biggest losses experienced were in the more affluent suburbs of Neutral Bay and The Spit area with losses in the range of $275,000, while average losses in the Campbelltown area over the five year period were around $31,000.

The Residex report attributed these losses to purchasers paying too much for properties combined with “over-the-top” valuations.

The Residex report went on to further warn that with lower growth predicted for property markets around the country buyers need to be more careful when making investment decisions.

Architect Survey

As reported in the Sunday Telegraph on 24 January 2010, the Building Advisory Service of the Australian Institute of Architects “Archicentre” recently polled approximately 900 architects around Australia to find the current trends in home renovations.

Most Australians will renovate their home at some point in their lives but exactly what the renovations will entail vary from year to year. The recent survey of architects revealed the following trend highlights of the past calender year 2009. These trend highlights are summarised as follows:

Kitchen

•  Drawers and not cupboards – 81.7%

•  Large island benches – 77.2%

•  Walk-in pantry – 58%

•  Concealed appliances – 50.2%

•  Colourful splashbacks – 35.6%

•  Computer data points – 22.8%

•  Concealed food preparation area – 20.5%.

Activity Centre

•  Rumpus room – 54.3%

•  Parents retreat – 50.7%

•  Gym – 17.4%

Master Bedroom

•  Ensuite – 93.2%

•  Walk-in robe – 85.4%

•  Deck or balconies – 57.5%

•  Study – 28.8%

•  Freestanding furniture (sofas) – 17.8%

•  Bidet – 7.3%

Bathroom

•  Frameless shower – 80.8%

•  Double basins – 54.8%

•  Separate powder rooms – 50.2%

•  Bars – 48.4%

•  Double showers – 37.9%

•  Concealed cisterns – 37%

•  Heated floor – 37%

•  Freestanding bars – 30.1%

•  Views of internal courtyard – 28.8%

•  Spa baths – 13.7%

Ensuite Trends

•  Parents ensuite – 93.2%

•  Childs ensuite – 12.8%

Childrens’ Bedroom

•  Computer data point – 65.8%

•  Study – 46.1%

•  Ensuite – 12.8%

Technology

•  Security systems - 56.6%

•  Wireless – 46.6%

•  Not wireless – 22.8%

•  Smart wiring – 39.3%

Home Theatre

•  Plasma TV’s – 61.2%

•  Ceiling mounted projectors – 15.5%

•  Mini cinemas – 10.5%

•  Data projectors – 8.2%

Storage

•  Garbage storage – 78.1%

•  Storeroom – 72.6%

•  Wine cellar – 47.5%

Source: Sunday Telegraph 24 January, 2010

Buyers Returning To Market

A report in the Sydney Morning Herald on 27 February 2010 indicates some momentum is returning to the Sydney residential property market with a number of high property sales now occurring although prices generally remain subdued. Recent high sales in Sydney include a Clareville Beachfront which sold for $5.1 million however was originally listed for sale with an $8 million price tag in 2008. Further a Bondi Beach penthouse sold for $7.1 million which last traded off the plan for $8.5 million in 2006.

Researchers at RP Data indicate buyers are now outweighing sellers in the market and new supply of homes are being quickly consumed.

Auction clearance rates are performing well with Australian Property Monitors recording an 88% success rate in the Eastern Suburbs with 87% clearance rate in the west and 86% clearance rate in the inner west.

Housing Approvals in Decline

A report in the Sun Herald on 17 January 2010 reports that Housing Industry Groups are expecting another year of declines in new dwelling approvals.

51,980 new dwellings were approved in New South Wales in 2002 however since this time there has been a steady decrease in approvals despite the population growing from 6.65 million to 7 million. New dwelling approvals from January 2009 to November 2009 were 23,642.

The Housing Industry Association Chief Economist blamed land supply problems and various State and Local Government charges for the reduction in dwelling approvals whilst the Master Builders Association indicated the high cost of new land was keeping Developers out of the market.

Confidence Returning To Residential Market

A recent survey by the Westpac-Melbourne Institute Consumer Sentiment Survey indicates that only 3% of people expect home prices to fall this year compared to 33% of people expecting a fall at the same time last year. This is despite three official interest rate rises and the likelihood of more interest rate rises in 2010. The Consumer Sentiment Survey ranked at the highest level of optimism since around 1994.

The biggest rise in optimism occurred in New South Wales with vastly improved auction clearance rates in the latter period of 2009.

Approximately 84% of New South Wales respondents to the survey expect price rises to increase this year with almost 25% of these people expecting a 10% price gain.

Property Market Outlook

At the Australian Property Institute’s Annual Property Market Outlook Seminar Mr Rod Cornish, head of Property Research at Macquarie Bank, gave an overview for his outlook on residential property for 2010.

Mr Cornish referenced his statements by showing that the Sydney residential property market had increased its median value for a residential dwelling by 12% in 2009 with the value of median priced units increasing by 10% in 2009. Mr Cornish indicated the big driver in the annual increases of 2009 was the 4% reduction in interests by the Reserve Bank of Australia and not the first home buyers grant as widely commented on. Mr Cornish indicated that the residential property market will remain steady for the first half of 2010 however as interest rates are tipped to increase to around 7.5%, with rises expected up to around the early period of 2011, a slowdown in price growth in the second half of 2010 is considered likely.

Mr Cornish also indicated there will be a very tight rental market over the next two year period with moderate rent rises likely over the next 12 month period. Further Mr Cornish indicated price growth in residential property is likely to moderate in late 2010 through to late 2011 before a further uptake in property values and price growth.

No Fear Regarding Housing Market

A recent presentation by the Reserve Bank Deputy Governor Ric Battellino at a bankruptcy conference in Sydney revealed some interesting and encouraging news regarding the housing market in Australia given the current global economic turmoil.

Although some forecasters predict the housing market to fall by significant levels Mr Battellino said that prices in Australia would hold up much better in the US where they have fallen by up to 16% in the past year. Further he indicated that the housing bubble had already burst in Australia approximately 3 years ago and that the Australian housing boom had ended because price levels rose to unsupportive levels rather than because too many houses were built as was the case in the US. Further he indicated clearly that the oversupply of housing that happened in the US has certainly not happened in Australia and there is a significant shortage of housing here in Australia with an underlying latent demand to support the market. Interestingly he indicated the housing debt in Australia was largely held in the hands of middle age borrowers who could generally afford it. The lending boom in Australia was concentrated on existing home owners who traded up to bigger and better homes and purchased investment properties.

As a word of caution he did indicate that the Australian economy is now being affected by powerful global forces from different directions, and it is certainly unclear what the net effect will be.

First Home Owner Grant Boosts Market Activity

As reported in the Sun Herald on 19 October 2008 it appears the Federal Governments recent upgrade to First Home Owner Grants has provided a spike to the poorly performing property market.

Australian Property Monitor figures show the Sydney auction clearance rate hit 60.1% on Saturday 18 October following a recorded clearance rate of 54.3% on 11 October 2008 with clearance rates of only 48% recorded in the previous weekly figures.

Activity appears to have strengthened in the lower price segment of the market with Sydney real estate agents reporting an increase of around 50% in auction attendances. Recent reports also indicate that builders and developers are reporting a big increase in enquiries from the first home buyer market.

Source: Sun Herald 19 October 2008

Stamp Duty Revenue Falls

The State Government has revealed there is a short fall in Stamp Duty revenues of about $180 million during the first two months of the current financial year. The significant reduction in Stamp Duty revenue is a result of the impact of the year old sub-prime credit crunch which has prompted less liquidity and more job insecurity in the market.

The Australian Property Monitors report there have been about 70 reported sales above $3 million in New South Wales since the June budget compared to about 250 sales in the same period last year.

Australian Property Monitors also report that there have been approximately 320 house and unit sales above $3 million across Sydney’s most affluent suburbs in the first 8 months of the calendar year 2008 compared with approximately 600 sales in the corresponding period of 2007. This reported sharp decline in luxury property sales has generally been a result of the sub-prime credit crunch combined with the general decline in property sales across Sydney’s mortgage belt where activity has fallen across the board after 10 consecutive interest rate increases.

Examples of the slowdown in prestige property sales has been shown in other exclusive suburbs such as Mosman where there have been approximately 50 sales above $3 million reported this year compared with 95 sales in the corresponding period last year. Sales in the prestige suburb of Bellevue Hill have shown approximately 17 sales above $3 million so far in 2008 compared with 36 sales recorded in the corresponding period last year.

Prestige property tax is applied to all residential sales above $3 millions. A 7% Stamp Duty is levied on all sales above $3 million. Accordingly the stamp duty on a $3 million home is $150,000; $220,000 for a $4 million sale and $640,000 plus for sales in excess of $10 million.

For a comparison of prestige property sales involving the Central Coast please refer to the Market Movement section of this website.

Dwelling Approvals Fall

A report in the Sydney Morning Herald on Wednesday 3 September 2008 shows that New South Wales local councils approved just 1,156 freestanding homes in July 2008 representing the lowest monthly number since records began in 1983. Figures also showed that in New South Wales only 31,000 new dwellings were approved in the 12 months ended July 2008 also representing the lowest number on record. The report also confirms that Australia continues to face a shortfall of housing with just 150,000 dwellings approved each year across the country as compared to an underlying demand for around 180,000 new homes nationwide. Also a recent ABS study has shown that the average time taken to build a new house in New South Wales has increased from 5 ½ months, 10 years ago, to nearly 7 months in 2007.

Media Reference to the ‘Perfect Storm’ in Recent Article on Housing and Slowing Credit

An article on 1 July 2008 in The Sydney Morning Herald stated that borrowing for housing has slowed to its lowest annual rate since the 1991 recession, in a further sign of the squeeze on household budgets caused by high debt and fuel costs.

According to the article credit provided for housing grew by 10.6% in the year to May, which was the slowest annual pace since August 1991, when the uptake of home loans grew by 10.3%. This fall was said to be reflective of the rising costs of living, and the possibility of further interest rate rises in the coming months. Furthermore it states that private sector credit remains under significant pressure from the “perfect storm” of higher interest rate and tightened lending criteria, rising petrol prices and a slowing economy.

The article went on to note that although spending was slowing, the inflationary risk of high oil prices, and the possible increase in consumer spending following the latest tax cuts could keep alive the possibility of a further official interest rate rise this year.

Total private sector credit showed its slowest growth since mid 2001. The annualized rates of housing credit which came to about 7%, was said to be rare in the last three decades and mainly restricted to times of recession.

Reiterating comments from an earlier article referenced on our website, the article noted that the number of dwellings built in 2008 – 2009 will fall 40,000 short of the expected national demand of about 190,000 and about 18,000 short of NSW demand resulting from a high rate of immigration and fewer people in each residence.

Encouragingly for investors the shortfall should encourage rents and prices to rise making the present strong buyers market the ideal time to invest in residential property.

Source: The Sydney Morning Herald 2008

Auction Clearance Rates Down as Housing Crisis Spreads

As reported in the “The Australian” on 23 June 2008, auction clearance rates around the country are significantly down as the property market around the country shows no signs of a recovery.

This latest data coincides with calls by Australia’s chief architect advisory group “Archicentre” for the government to reform its current tax system on housing, including land tax and stamp duty.

The reported auction clearance rate in Melbourne over the past weekend was 52% which is down 3% from the previous week and down 27% on the same weekend in 2007. An even bigger slump was experienced in Adelaide recording a clearance rate of 47% being 40% lower than the same weekend in 2007. Brisbane experienced a clearance rate of 29% which compared to 41% clearance rate on the same weekend in 2007. Sydney’s clearance rate at auction last weekend was 49% which was 4% better than the previous weekend, however still well below the 63% clearance rate recorded on the same weekend in 2007.

The head of Australian Property Monitors, Michael McNamara said “the soft property market would mean a decline in values by years’ end. Buyer demand remains extremely weak with substantial stock on the market exacerbating the problem”.

Source: The Australian 23 June 2008

Some Good News for Property Market

As reported by Annette Sampson in The Sydney Morning Herald on 21 June 2008, some good news is starting to emerge in the NSW property market.

Market researcher “BIS Shrapnel” predicted this week that total growth in Sydney house prices will be around 18% over the next three year period to June 2011. Their research predicts that rents are growing faster than house prices which will effectively underpin property prices. They did however predict that the bulk of the growth will come towards the end of the three year period rather than in the short term.

A report by “CommSec” this week also reported a lift in investor interest with investment loans up 1.4% in April this year. Loans for home building were also up by 1.8% although the overall value of housing finance commitments fell by 3%.

A recent report by Mortgage Choice/REIA for the March quarter found that house prices fell in the first three months of 2008 with the National Median house price dropping from $471,300 in the December quarter of 2007 to $458,488 in March 2008, a fall of 2.7%.

The article points out that the strongest argument for price growth is supply and demand. Sydney has experienced a housing shortage over the past few years which has been exacerbated by high levels of immigration. The number of new dwellings constructed in NSW has halved since the peak of the market in 2002 and is reportedly at its lowest level in 38 years.

The shortage of housing stock is however driving rents up and vacancy rates down. In its recent report, BIS Shrapnel is forecasting the strong growth in rents will continue for the next three years with some estimates showing that rents are predicting to grow by as much as 50% over the next three or four year period.

Source: Sydney Morning Herald 21 June 2008

Housing Shortage May Assist Recovery to Residential Property Market

As reported in the Business Spectator 12 June 2008, Australia is experiencing a chronic shortage of housing according to recent population figures whilst at the same time experiencing the highest population growth in almost 20 years. According to the article, “Australia is experiencing a chronic shortage of housing, estimated to be around 30,000 too few dwellings being constructed each year”.

The report stated that record overseas migration and rising fertility rates were creating the population boom.

Source: Business Spectator 12 June 2008

Challenging Conditions Prevail in Residential Property Market

An article in the Sydney Morning Herald dated 23 April 2008 reports that recent data predicts almost 1 million households will experience mortgage stress by September, with 40% classed as severe stress. Of those experiencing severe stress, half are expected to lose their homes.

The IMF issued a warning about Australian property prices saying Australian housing prices are now 25% higher than that which could be explained by fundamental trends.

Analysts suggest that a 30% fall in house prices across the board is not realistic, yet “significant falls” are likely over the next few years. New figures also suggest that more home owners at the top end of the NSW market are coming under pressure too, with 14% more homes worth more than $1 million for sale than at the same time last year.

Source: Sydney Morning Herald 23 April 2008

Housing Crash in Sydney

A review of property auction results in the Sydney Morning Herald on Monday August 21 shows significant decreases in sale prices of properties as compared to previous sales achieved around peak market times in late 2003. A three bedroom brick veneer home at St Clair sold at auction for $260,000 having sold previously for $450,000 in 2003. This result shows a 42% reduction in sale price reflecting the recent slump in the market. Auction clearance rates in Sydney are now hovering around 48 - 50% and many vendors are now facing situations of negative equity where their debt levels are higher than the property's current value.

Another auction result showing the significant market slump was recorded at Lethbridge Park when a townhouse which previously sold for $257,000 in 2003 was re-sold by the mortgagee in possession for $156,500. This re-sale shows a reduction of approximately 40% from the peak of the market. Additionally it was reported that mortgagees in possession of a property at Parramatta accepted $541,500 for a dwelling that previously sold for $736,000 in 2003. The mortgagees lent $580,000 on this property on its 2003 sale.

Source: Sydney Morning Herald 21 August 2006

Housing Affordability

Respected industry analyst and forecaster, BIS Shrapnel has released it's Residential Property Prospects, 2006 - 2009 Report. The report suggests that homeowners should expect continued slowing in residential property price growth over the next 3 years apart from Brisbane , regional Queensland and some regional NSW centres. The report states that Sydney is the most expensive Australian city and will lag behind any national recovery with a continued strong buyer's market expected. Regional centres are expected to experience some modest price growth due to lower median house prices compared to capital city markets.

BIS Shrapnel anticipates the Reserve Bank will be forced to raise interest rates again in 2006/2007 but predicts static interest rates over the 2007/2008 period. BIS Shrapnel expects a decline in interest rates and an economic turnaround to provide a recovery in property prices across the board over 2008/2009. Rental growth is predicted to accelerate over the next 3 years with rental growth predicted in Sydney of around 10% and significant rental growths in the capital cities of Melbourne and Brisbane.

House Prices Still Falling

As reported in the Sydney Morning Herald on 06 May 2006 recent figures published by the Reserve Bank show Sydney house prices fell a further 1.1% on average in the March quarter. The recently released figures show prices have now fallen 9.6% on average since the property market turned in early 2004. Sydney's median value has fallen from $570,000 to $516,000. The falling value levels will have a more pronounced effect for people who bought in late 2003 near the peak of the property boom may be facing a negative equity situation if they were forced to sell today after taking into transaction costs.

The reduction in the house prices is likely to affect highly geared investors or property speculators who bought near the peak of the market in late 2003.

Property analysts have now predicted that the Reserve Bank interest rate rise of last week of .25 of 1% may have the effect of further driving down Sydney house prices by up to 5% by the end of the 2006 calendar year.

Source: Sydney Morning Herald

Development / Conservation Concern at Forresters Beach

As reported in the Central Coast Express Advocate on 23 September 2005 the recent sale of privately owned land adjacent to The Entrance Road at Forresters Beach comprising part Melaleuca wetlands is causing concerns for local residents. The area to the north of Crystal Street is zoned residential, however has previously been declared as part of the coastal flood plains which are endangered ecologically. The recent sale of the land has generated concern that the individual sites could be developed or possibly further subdivided. Concerns have been raised about the potential development of this land having a significant impact on adjacent Council reserve, Wamberal lagoon nature reserve and the Wamberal lagoon itself.

Source: Central Coast Express Advocate 23 September 2005

Dredging of Tumbi Creek to Proceed

As reported in the Central Coast Express Advocate on 23 September 2005 the State Government has provided the go ahead to allow Wyong Shire Council to dredge 15,000 cubic metres of spoil from Tumbi Creek and for the spoil to be utilised as land fill. The approval by the State Government has effectively meant that Wyong Shire Council finally has permission to clean up the creek.

Gas Drilling for Yarramalong and Dooralong Valleys Abandoned

As reported in the Central Coast Express Advocate on 23 September 2005 Sydney Gas announced it has abandoned plans for gas extraction in the Dooralong and Yarramalong Valleys .

The Australian Gas Alliance, formed specifically to stop coal seam methane gas extraction within the Dooralong and Yarramalong Valleys has stated that Sydney Gas's decision will ensure the protection of the Central Coast water catchment and unique and pristine environments of the Wyong Valleys .

Vendor Tax Abolished

Incoming NSW Premier Mr Morris Iemma announced today 2 August 2005, after being formerly elected as the state's 40th Premier, that the vendor duty will be abolished. The abolishment will be affective for all contracts exchanged on or after today, i.e. 2 August 2005. Mr Iemma said the vendor duty was introduced in a very different property market and that times had changed. He stated that "in the current market conditions, vendor duty is a brake on economic activity".

The 2.25% vendor duty that was introduced by the then treasurer Mr Michael Egan in 2004 and was applied to the sale of investment properties in NSW. It has subsequently been criticised by investors, unions and the real estate and building industries.

Source: Sydney Morning Herald

The president of the NSW division of the Australian Property Institute Mr Mathew Davis said the removal of the vendor tax was "great" news not only for property investors in NSW but also for the many associated industries that support property and construction. Mr Davis said "we would expect to see a turnaround in the results from the API's property directions survey in April, where 93% of the valuers, funds managers, property analysts and property financiers surveyed reported that vendor tax was having an adverse effect on purchaser's decisions on residential and non-residential single properties in NSW".

Property Auctions - GST Inclusive or Exclusive Prices

The Australian Competition and Consumer Commission (ACCC) have indicated that Auctioneers and vendors who fail to clearly indicate at the commencement of an auction whether bids are being taken on a GST inclusive or GST exclusive basis will face significant consequences under the Trade Practices Act 1974.

Under the ACCC's GST Pricing Guidelines, Auctioneers have some flexibility as to whether they conduct auctions on either a GST inclusive or exclusive basis. The ACCC has stated that it is crucial for Auctioneers conducting an auction to make it crystal clear at the commencement on what basis the bids are to be taken. The announcement has followed a case of a Melbourne Real Estate Agent who auctioned three residential properties on behalf of a local City Council. Following the auction the ACCC received numerous complaints regarding the advertising and auction of the land in the Melbourne suburb of Doncaster . It was found that the land was advertised and promoted in newspapers without indicating whether the prices were to be inclusive or exclusive of GST. Further at the auction there was no clear disclosure made to bidders whether GST applied to the land's sale price. In one auction the Auctioneer indicated that he did not believe GST was applicable when in fact there was a GST liability on the auction price. As a result of this case all buyers will receive a full refund totaling $48,350 comprising the GST paid.

As reported in the Central Coast Express Advocate on Thursday 19th May 2005 recent data compiled by the NSW Transport and Population Data Centre and the Department of Planning, Infrastructure and National Resources shows that Wyong Shire's population will overtake Gosford City's population within the next 12 years.

As at May 2005 Gosford City 's population is now calculated at approximately 166,000 with Wyong Shire's population calculated at approximately 150,000. The data compiled reveals that on current trends both local government areas will have a population of 179,000 by the year 2016. However, Wyong Shire will increase steadily after 2016 and by 2021 will have an estimated population of 193,000 people compared to Gosford City 's 187,000 people. It is predicted that by the year 2031 Wyong's population will be approximately 220,000 people with Gosford City 's at 201,000 representing a total Central Coast population of approximately 421,000 people.

It is interesting to note that for the past 10 years Wyong Shire's population grew steadily at an average increase of 2.5% per year being more than twice the NSW state average. The annual growth rate is expected to remain at approximately 2% over the next six years.

Demographic information also reveals that people over 65 years of age are projected to increase by 5% in Wyong Shire and 9% in Gosford City .

The State Governments statistics and data projections have been based on recent population trends, current settlement patterns and projected forecasts.

Source: Central Coast Express Advocate

Australian Property Institute Media Release – Re: Sydney Property Scam

AUSTRALIAN PROPERTY INSTITUTE
NEW SOUTH WALES DIVISION
MEDIA RELEASE
Wednesday 6 October 2004

Australian Property Institute Warns of Other Potential Fraudulent Real Estate Schemes

The Australian Property Institute, which represents the majority of registered valuers in Australia, has warned of the potential for other fraudulent real estate schemes, similar to the one exposed by police in Sydney yesterday, involving the residential real estate market.

The residential real estate market across most of Australia, including regional and rural areas, has, in the last five years, experienced the longest upswing in prices in memory. Although the market has now plateaued, the aggressive marketing of their products by banks and other financial institutions in recent years may have allowed unscrupulous operators to take advantage of the ready availability of mortgage money.

The API has been concerned for some time that many of the banks and other lending institutions have lowered their standards of care in assessing home loan applications. Whereas in the past, most lending bodies would obtain an independent valuation from a registered valuer, in many cases in recent years banks have done away entirely with this practice in favour of accepting, on face value, information on the particular property from the client (borrower) or mortgage broker.

The Senior Vice President of the API (NSW Division), Mr Phillip Lyons said “At any time in the property cycle it should be prudent lending practice to obtain an independent value of any property that is going to be subject to a mortgage. By law, the valuer must be registered and those valuers that are members of the Australian Property Institute are subject to a strict code of ethics and practice standards that will ensure that the lender will have a fully independent assessment of the likely value of the property at the time of issuing the loan. The need for a fully researched valuation is even more obvious when the market is in a state of flux.”

Mr Lyons also said “In the scheme uncovered by police yesterday, if independent valuations of the properties had been obtained, the lenders would have had available to them fully researched and totally independent assessments of the fair market value of each property which would have demonstrated immediately that the transaction prices were grossly inflated. In addition, it is almost certain that the valuers research would have disclosed the first transaction at a significantly lesser figure than the fraudulently inflated price.”

Real Estate Scam Catches Banks Unaware

The lack of relevant independent property valuations by a number of major banks has resulted in a real estate scam netting fraudulent operators an approximately $3.5 million profit and resulting in the Commonwealth Bank, NAB and ANZ losing substantial amounts of money. A property empire estimated at approximately $15 million has been understood to have been built from the proceeds of this crime. Police are currently investigating possible bank staff member involvement, mortgage broker involvement and real estate agent involvement. The fraudulent activity involved a number of people purchasing Sydney properties cheaply then on-selling these properties to bogus accomplices at vastly inflated amounts. The accomplice would then obtain a loan from a bank using false information and identification. Profits would be split between the accomplice and the original buyer with the scammers disappearing and the bank foreclosing on the property but unable to find the culprits. The banks were therefore left with properties worth far less than the amounts they had lent against them. It is understood the banks did not request independent market valuations on the properties and the properties, generally being at the lower end of the value range, slipped in under the banks procedures. The banks admit they are now reviewing their procedures and are taking action to recover their lost money.

The Australian Property Institute has called on all banks to avoid the trend towards “desk-top assessments” of loan applications and issued a media release today.  (Refer to copy of media release within this website)

Source: Sydney Morning Herald 6 October 2004

Mixed News on Building Activity and House Price Movements

A recent quarterly survey of Economists by the Australian Financial Review has shown mixed opinions regarding house price movements over the next few years, however a general agreement on building activity. Indeed many experts surveyed wished to point out the distinction between building activity and house prices.

It was generally agreed that building activity was expected to remain relatively strong over the next few years, however there were differing opinions on house price movements.

Several Economists surveyed already indicated that house prices have fallen by between 5% and 10% with further corrections of up to 15% possible during the next two years. Some experts surveyed anticipated a levelling of house prices with some potential for modest rises which would be dependent on first home buyer and investor activity over the next few years.

On average the Economists surveyed anticipated a decline in building activity of between 5% and 10% in the 2005/06 financial year.

Chief Economist of the Housing Industry Association, Mr Simon Tennant, said that although building approvals across the country were falling, strong migration, low unemployment and relatively low interest rates would prevent any major downturn in the market.

Source: Australian Financial Review August 2004

Reserve Bank Sceptical about Price Data

The Reserve Bank has recently expressed its confusion over data being supplied regarding house price movements. In the March quarter 2004 estimates of house price movements in the Sydney market varied from plus 4% to minus 2.9% which provided confusing and conflicting market data. The Governor of the Reserve Bank, Ian MacFarlane, recently said the information available on home prices was “hopeless”. This is somewhat surprising given the variety of experts that the Reserve Bank sources for its market information such as the Housing Industry Association, The Australia Bureau of Statics and specialist companies such as Australian Property Monitors and Residex. It would appear these industry experts have difficulty agreeing on market movements.

The Reserve Bank is particularly worried that there appears to be a significant lag between when prices actually rise or fall and when these movements are actually reported. It is generally thought that delays between the reality of actual market movements occurring and the reported perception is around six months.

Timely information is critical to correct economic management by the Reserve Bank. As an example in recent months the Reserve Bank has been considering increasing interest rates because statistics were showing prices were still rising, however the reality was that house prices started falling prior to Christmas but this actual market trend has only been reported quite recently. Correct market predictions are also obviously very important to buyers and sellers, if you are a buyer it is essential to know if prices have fallen or else you have the potential to pay too much for a property, likewise if you are a seller you may be wondering why no one is showing any interest in your property when the asking price has been set relative to prices obtained in a stronger prior market.

Source: Sydney Morning Herald Domain 2 September 2004

North Entrance Development Set to Begin

As reported by the Central Coast Business Review the Mirvac Group has recently announced that all conditions for its purchase of the 100 hectare beach front development site at North Entrance from the Darkingjung local Aboriginal Land Council have been satisfied and as the deal has now become unconditional work was expected to commence on the site in August or September.

Mirvac has received approval to develop a five star Quay West Resort with associated conference and recreational facilities plus an 18 hole Golf Course and around 600 dwellings with an integrated mix of residential houses and resort villas. The resort comprises a large absolute Pacific Ocean beach frontage site just north of the North Entrance residential precinct.

The Managing Director for Mirvac, Mr Robert Hamilton, has said there has been an enormous amount of interest already in the “Majenta Shores” which is very pleasing and that we can now move forward and start work on the site. Mirvac confirmed that they expect to commence construction of the Quay West Resort Hotel building early in 2005.

Source: Central Coast Business Review July 2004

Kooindah Waters Resort

Kooindah Waters Residential Golf Resort project at Wyong is now well under way with construction of the Golf Course and roads having commenced. The General Manager of CPG Developments said that interest in the $180 Million Residential Golf Resort project has been overwhelming.

The Kooindah Waters Residential Golf Resort is to feature 252 homes and a 100 plus room luxury hotel resort built around an 18 hole championship golf course. The first 12 homes on the site including six display homes are expected to be open for inspection around March 2005. The entire course is expected to be completed by around Christmas 2005 with opening of the resort expected around mid 2006.

Source: Central Coast Business Review July 2004

New Laws Covering the Sale of Real Estate in New South Wales

The new Property Stock and Business Agents Act came into force in New South Wales in September 2003.

The major changes under the new legislation are:

- Bidders must register before an auction and bid with an allocated number.

- Vendors are only allowed one bid which must be declared as such by the Auctioneer.

- Agents are prohibited from under quoting to vendors to gain a listing and under quoting

  to buyers to entice them to an auction.

- Home owners have a cooling off period of one business day in which they can withdraw from a

  sales agreement with an agent.

It is interesting to note that auction clearance rates have fallen and property prices have generally slowed since dummy bidding and over quoting were outlined by the new legislation.

The Australian Competition and Consumer Commission (ACCC) have reinforced the New South Wales law by providing penalties on a national level for infringements of the rules. The penalties are steep and allow the ACCC to allocate fines of up to $1.2 million against corporations and $220,000 against vendors and agents. Under the new state laws collusive practices at auction can now attractive fines of up to $22,000 for a corporation and $11,000 for individuals.

Proposed selling price estimates provided by agents have been a contentious issue for a number of years particularly with vendors and purchases. The Office of Fair Trading now states: “It is now an offence for an agent to quote to a property owner an estimate of a selling price that does not reflect their true estimate. It is also an offence to publish an advertisement or to make a statement in the course of marketing a property that falsely understates the estimated selling price to potential buyers”. The Department of Fair Trading now requires Real Estate agents to justify any estimate given.

Date: July 2004

Evolution of Selling Tactics

With the recent changes to auction laws in New South Wales, the associated drop in auction clearance rates and the uncertainty about falling or stagnating property values, it is interesting to note that a significant number of properties are now being advertised for sale without a price tag. A large proportion are now being offered for sale by “expressions of interest”.

This new sales tool can be a frustrating experience for both sellers and buyers alike. No auction date for a property sale is set and therefore many people are not sure whether there is a set time frame to achieve a sale on the property.

Many properties are also advertised as pre-auction which could be interpreted as an attempt by the owner/vendor to gauge whether or not their property will receive some offers if offered for sale.

The reluctance of Real Estate agents to advertise an asking price on properties listed for sale, could be a result of many agents living in fear of getting it wrong under the new state laws. Since September 2003 it has been an offence for an agent to misquote the likely selling price to a vendor or a prospective buyer of a property.

It is now clear there is a correlation between low auction clearance rates throughout the end of 2003 and into the early period of 2004 and the expansion of sales by “expressions of interest”.

Date: July 2004

Upgrade to Northlakes High School to Commence

As revealed in the Central Coast Express of 24 March 2004 New South Wales Commerce Minister Mr John Della Bosca has stated that a start on the $3,600,000 upgrade to the Northlakes High School will commence in the near future. The successful tenderer, Richard Crookes Constructions Pty Ltd, will manage the project from their Central Coast office based at Gosford. The Northlakes High School was originally built in 1986 to accommodate approximately 800 students and until a few years ago had an enrolment of approximately 1,400 students. This figure has levelled out to approximately 1,000 students generally, due mainly to the opening of the new Munmorah High School. The upgrade to the Northlakes High School will include a new single storey building comprising six class rooms, an extension to the library, first aid room, commercial bay in the kitchen, performance space and staff common room.

Approximately 125 tradespeople and suppliers are expected to be involved with the Northlakes project.

Ford Workshop to make way for 70 Units

As reported in the Central Coast Express the site of Grawill Ford's workshop at West Gosford is to be redeveloped into a $7,200,000 unit project combining 70 residential units and 12 ground floor commercial premises fronting the Pacific Highway. The project, to be located to the corner of the Pacific Highway and Racecourse Road at West Gosford, will comprise four buildings between three and four stories in height and will occupy one of the Central Coast's most visible commercial locations. Redevelopment plans were lodged in late 2002 and were approved on 11 February 2004.

It has been reported that remediation work will be required before construction can start because of site contamination due to petroleum products.

Gazumping

After a long period where the auction method was the primary method of transacting property the changes brought about to auction laws in 2003 may well result in private treaty becoming the first choice for property sales.

The expansion of private treaty sales has the potential to raise the issue of gazumping. Further, private treaty negotiations will place further emphasis on the integrity and skills of Real Estate Agents. In private treaty situations the only important factor is whether or not the contract has been exchanged. Until exchange of the contract a vendor and agent are able to continue negotiations in the hope of raising the agreed price. Once contracts have been exchanged however, there is a five day cooling off period where only the buyer has the option of backing out forfeiting 0.25% of the agreed sale price.

For high quality properties, in areas of significant demand, auctions will still remain to be the most appropriate way of transacting the property. However private treaty will remain to be the most suitable option for sales involving properties with no significant stand-out features. If ever a bidding war starts on a property for sale you are within your rights to demand to see written proof of any competing offers.

Central Coast Economy Continues to Strengthen

The Hunter Valley Research Foundation's half yearly report on the Central Coast economy was presented at the Ourimbah Campus of the Newcastle University in early December 2003. The Foundation's Senior Research Officer reported that the Central Coast economy had grown strongly throughout 2003 and that business operators and consumers were very confident about prospects for the year 2004.

Employment figures, housing activity and consumer spending all improved over the past 12 months and it is considered highly likely that this growth will be sustained well into 2004.

The report found that the employment market continued to strengthen in 2003 with approximately 15,000 new jobs created in the 12 months until October 2003. The total number of people now employed in the Central Coast region is estimated at 141,200.

Unemployment fell from 8.9% in October 2002 to 6.4% in October 2003. Despite this decrease, employment is still much higher than the NSW state average of 5.2%.

The value of residential building approvals for the 12 month period to the June 2003 quarter showed an increase of 10.4% which compares very favourably with the NSW average of minus 15.1%.

Both short and long term business confidence rose to five year highs in September 2003 with 48% of business people surveyed expecting improved economic conditions and only a very minor percentage 5% over the next 12 months and 2% over the next 12 months expecting a deterioration in business confidence.

Evidence of a Slowing Market in Sydney

Sydney auction activity continues to show signs of a slowing trend with a Bondi unit sold in the past week at $399,000 having been previously purchased in 2001 for $470,000. The $399,000 sale was advised to be a break-even deal for the bank holding the mortgage.

A Balmoral apartment held by the mortgagee was passed in at auction last weekend for $2,160,000 having previously been purchased two years ago for $3,050,000 by a recently bankrupted property developer.

It has been widely reported that residential auction clearance rates have continued to slide reaching a figure of 42% in December 2003. As we now reach March 2004 with large volumes of properties listed for sale it appears that prices are now under pressure, particularly for properties that may have problems or lack strong market appeal.

It has also been advised that a cottage at Bronte had a top bid last weekend at $1,250,000, wherein six months ago there was a strong offer of $1,650,000 which was rejected by the vendor who was chasing $1,780,000 at the time.

Source: Sydney Morning Herald

Interest Rates Likely to Rise

As reported in the Sydney Morning Herald on 21 February 2003, Australia’s increasing debt level continues to rise even after consecutive back-to-back interest rate rises late in 2003.

The increase in home borrowing accelerated at its fastest level since records began in the 1970’s in the last month. The recent figures suggest that the modest interest rate increases of late 2003 are unlikely to deter people for continued borrowing activity. Accordingly it is anticipated that the Reserve Bank will more than likely increase rates either at their next meeting in early March or their following meeting.

Source: Sydney Morning Herald

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