What makes prices rise and 3 ways to make money in property in 2019

Transcript
“Today I’m going to discuss 2 things with you.

Why property prices grow and the 3 ways you can make money in property.

What makes prices grow?

1. Supply – too few new dwellings built and Demand – are there factors making the area really desirable such as zoned schooling, convenient work and public transport and lifestyle factors like cafes, beaches and the bush.

2. Interest rates – are they low, as this means the cost of money to borrow is less than when they are high. A lower cost of money means more people can afford to borrow.

3. Unemployment – low unemployment generally means a larger percentage of the working age population have jobs and usually a more stable workforce.

4. Incomes – rising incomes generally means more disposable income and more disposable income means more money to spend on things like property or lifestyle activities.

5. Sentiment – what does the general population feel about the market and forecast will happen in the future, this can often be influenced by media and industry experts.

6. Economic wide factors – royal commission and APRA affecting lending standards, borrowing capacities and deposit limits.

How can you make money in property?

There are 3 ways in my opinion.

Hope and wait – hope that the market will increase and increase the underlying value of your property.

Zoning – changes by local council can cause the highest and best use to increase for example, if your property goes from being low density to high density. You suddenly have more options to profit from the property.

Actively control – increase the value of the property yourself through renovations, additions, subdivisions and low, medium and high-density developments.”

The future potential

Transcript
“When inspecting a property, it is often better to think about the potential of the property and what can be done into the future, rather than what it currently is like.”

The difference between capital growth and sweet equity

Capital growth is dependent on the market.

Sweet equity is dependent on you.

Capital growth is passive.

Sweet equity is active.

Capital growth happens when there is too much demand.

Sweet equity occurs when you make something more valuable than you spend.

Capital growth usually takes a few years.

Sweet equity can take months.

Capital growth can happen relatively easily.

Sweet equity can be extremely hard work.

Capital growth doesn’t usually occur when a market goes down.

Sweet equity can continue to occur in any market.

How we accumulate wealth

We go to school and study hard to get into university.

Then go to university for a few years and become qualified.

We work for a few years and eventually buy our first home.

We continue to work and become more specialised and advanced in our field over the next 40 years.

We continue to pay off our mortgage every few weeks.

Gradually paying more as we continue to work.

Eventually we retire.

You realise the bulk of your retirement wealth was the very thing that sheltered you for those last 40 years.

First home buyer benefits

New South Wales

First home owner grant (new home) scheme – the first home owner cap for new homes purchases is $600,000 and $750,000 when you enter into a contract to build or as an owner builder. For eligible transaction a $10,000 grant is available.

First home buyers assistance scheme – exemptions on transfer duty on vacant land below $350,000 and new and existing homes below $650,000 and concessions on duties on vacant land below $450,000 and new or existing homes below $800,000.

Queensland

First home owner grant – $15,000 first home buyer grant towards buying or building your new house, unit or townhouse valued at less than $750,000.

Renovated houses and the first home owner grant – You may be eligible for the first home buyer grant if you purchase a substantially renovated home. The renovated home must not have been lived in since the renovations and the house was a taxable supply and previously was an established house that went through substantial renovations.

Victoria
First home owner grant – A $10,000 First Home Owner Grant is available when you buy or build your first home which is valued below $750,000. For new houses built in Regional Victoria the grant becomes $20,000.

First home buyer duty exemption, concession or reduction – There is also a first home buyer duty exemption or concession reduction. If the property is worth less than $600,000 then an exemption may apply and a concession may apply under $750,000. For eligible first home buyers, it doesn’t matter if the property is new or established for the duty exemption or concession reduction.