Finance

Hotspotting has been credited with providing property investors with the inside edge on where to buy. Here we look at what it means and whether it can work for you. What is hotspotting? It's the process of identifying the locations that will show superior capital growth in the future. These are often suburbs that are currently underperforming but are within close proximity to more popular suburbs. When these popular areas become too expensive, buyers often look to the neighbouring suburbs, causing an outward ripple effect. How do I find a hotspot? Investors trying to buy into the next hotspot will often get their advice from online reports, magazine articles and wealth creation seminars. It's important to look carefully at who is providing the 'expert advice' that an area is a hotspot, as it may well be the PR agent of a developer or someone...

'Pool' is the number one most searched for feature by browsers of Australian property website realestate.com.au. It also appears twice in the top ten ('pool', 'swimming pool') along with 'waterfront', 'living + areas', 'granny flat', 'bedrooms', 'views', 'investment', 'duplex' and 'shed'. While some say that owning a swimming pool may affect a property's sales potential by ruling out some groups of buyers, it seems Australians are still attracted to the delights of a backyard pool. In deciding if a pool really does add value; experts advise it's important to consider design features and quality of construction. Many pools are now almost an extension of the house, making them part of the entertainment area and visible from living rooms for easier supervision of kids.  A well-designed pool should not overwhelm the garden, but instead fit with the landscape and still allow room for...

A Deposit Bond offers a quick and convenient way to offer a deposit for the purchase of a property if you don't have the cash on hand. Rather than paying the full 10 per cent deposit you would normally have to produce up front, you hand over a deposit bond, which is a guarantee that the deposit will be paid at a future date. Deposit bonds are underwritten by an insurer to guarantee the vendor that they will be paid their deposit in full at settlement even if the purchaser defaults on the contract of sale. They are in effect a form of credit because when the time comes to settle, you will still have to produce the balance of the purchase cost, plus the 10 per cent deposit that was covered by the bond. Once issued, deposit bonds can't be refunded,...

Save money on your energy bills and add value to your property by going green. Improvements that reduce your home's energy and water use will significantly increase its resale value. A study by the Australian Bureau of Statistics found that increasing a home's energy efficiency rating by half a star adds 1.91 per cent to its sales price - which equates to $7,000 for a property worth $365,000. The study was conducted in the Australian Capital Territory using 2006 sales price data and since then the demand for eco-friendly houses has increased to the point where it is now well-accepted that buyers are prepared to pay more for a property that ticks all the green boxes. Conduct a search of properties for sale and there's a good chance you'll find that solar hot water, photovoltaic roof panels and water tanks are common...

Should you accept an early offer on your home or hold out for a better price? According to a recent study by RP Data, the longer you wait, the less you may get. It seems a quick sale is a good sale, with quick sales experiencing low levels of discounting while properties that sit on the market for longer typically see excessive levels of discount. Over the past five years, homes that sold in less than 30 days recorded an average vendor discount of 3.9 per cent. Homes that sold between 30 and 60 days attracted an average discount of 5.2 per cent while homes sold after more than 120 days on the market were discounted by 10.1 per cent. While not every home is going to get an offer within the first 30 days, a property is most likely to receive offers...

At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent. Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined from their peaks, but generally remain at high levels by historical standards. Inflation in most countries remains well contained. Overall, global financial conditions remain very accommodative, though the recent reassessment by markets of the outlook for US monetary policy has seen a noticeable rise in sovereign bond yields, from exceptionally low levels. Volatility in financial markets has increased and has affected a number of emerging market economies in particular. Notwithstanding the higher volatility, Australian institutions have ample access to funding markets. In Australia, the economy has been growing a bit below trend over the past year. This is expected to...

Learning from the mistakes of others is a great way to become a successful property investor. Here's a list of what to avoid on your way to the top. 1. Putting if off 'Too busy', 'too risky' or 'not the right time in the property cycle' are common excuses for not taking action, but in reality there may never be a perfect time. Live by the slogan 'never put off tomorrow what you can do today'. 2. Not enough research Look at multiple properties and do financial analysis on many properties before committing to buy. Remember the real estate agent is there to sell the property so although they can be a good source of information, don't rely on their word alone. 3. Getting emotionally attached Don't picture yourself living in the property; instead keep your thoughts focused on the big picture: 'can I sell...

The Reserve Bank of Australia has slashed interest rates to a record low of  2.5 percent at its August board meeting today. The cut is the first since the RBA announced a 25-basis-point cut in May when the Australian dollar was above parity with the greenback. It is also only the second time the rate has been cut during an election campaign. RBA governor Glenn Stevens announced the cut, explaining: "In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. "The unemployment rate has edged higher. Recent data confirm that inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with...

If there's one topic that's bound to cause debate, it's whether you are better off buying or renting a home. Although the debate has been around for decades, the climate of low interest rates and rising rents has once again stirred discussion. Numerous studies have attempted to compare the finances of each option but with so many variables to take into account, few studies have been able to reach a substantive conclusion. Comparing like with like is a difficult task when factors such as interest rate charges, rent increases, maintenance costs and appreciation are hard to predict. Assumptions have to be made about how often rents increase, and likewise, any calculations of property purchase has to take into account costs like the deposit, loan establishment fees, property maintenance and strata/council costs. Reasons for Buying Thankfully money is not the only contributing factor in the...