Melbournes most expensive property on Saturday was a four bedroom, 3040sq m property at Ivanhoe, which sold for $4.3m, and the cheapest was a Rockbank property which sold for $237,000.

In other cities, Sydney auctioneers cleared 72.5 per cent of their 316 listed properties, with the most expensive being a six bedroom home in Burwood which sold for $4.2m.
APM head of research Yvonne Chan said the strong results came on the back of unusually high levels of stock in the marketplace, especially for winter.
Ms Chan said the effect of interest rate rises and the withdrawal of stimulus had forced many first-home buyers out of the market, creating higher demand for rentals.

However, BIS Shrapnel asserts in its Residential Property Prospects, 2010 to 2013 report that although the prices of property are not expected to decline and rents are inclined to witness an increase due to the lack of supply.

Angie Zigomanis, senior project manager with BIS told that first home buyer activity witnessed a decrease after the termination of first home owner’s grant boost during the end of year 2009. He also asserts that affordability has been affected since interest rates rise above their low levels.

The report also gives an indication that investors are expected to compensate for decrease in first home buyers. This also implies that property prices are expected to increase, but not with the recent trends.

“The more stable interest rate environment is expected to underpin purchaser confidence as economic conditions continue to strengthen, and should continue to push through moderate house prices rises,” Mr Zigomanis said.

He also asserts that on an average, the growth in prices of houses is expected to remain in the mid-single digit percentage range during the coming three years.

Paul Castran and Mark Forytarz, the two pillars of Castran Gilbert hold years of experience in the Australian real estate market. Both of them have presided over many real estate sales. Mark Forytarz and Paul Castran express their views about the ongoing situation in real estate market.

My brother John Castran has had a lucky escape over the weekend, after being buried under over 1m of snow in an avalanche in New Zealand. John escaped after his son Angus located him using a tracking beacon, then dug him out.

Here is an extract from the Herald Sun Story:

AVALANCHE survivor John Castran has told how he thought he had seen his last sunset as he lay in his "icy tomb" in New Zealand.

Speaking from Mt Hutt yesterday, the South Yarra father of two, 53, gave a haunting account of the most terrifying day of his life.

Trapped beneath 1.8m of snow after two avalanches ploughed into his five-man skiing group in the Ragged Ranges on Friday, Mr Castran described the 15 minutes he spent, alone, in the frigid dark.

He had been on a heli-skiing trip with his son, Angus, 23, and another man, Lynden Riethmuller, when the world turned white then deadly black.

Mr Riethmuller, a NSW company director, could not be revived after he was buried by snow.

Mr Castran, an experienced skier, was on an annual holiday with his youngest son when he was hit by a wall of snow.

"There was a point where I thought ‘This is it. I have seen my last sunset’, " Mr Castran said.

"Then this second wave came five to 10 seconds later and there was this rustling noise, then terror really set in."

Mr Castran knew a second avalanche had struck.

Here is a link to the full story: http://www.news.com.au/heraldsun/story/0,21985,25834667-661,00.html

The weekend Auction Clearance rate rose to a healthy 85% on increased volume, up from 84% last week.

The home-ownership dream rarely used to feature a sibling in your bathtub and a parent on your certificate of title. These days though, first-home buyers are becoming more and more flexible.

Housing affordability fell to record lows in the March quarter this year according to the latest Housing Industry Association-Commonwealth Bank report.                Mortgage payments accounting for 30.7 per cent of total first-home buyer income these days!

Generations X and Y are also settling down later meaning for many home ownership is a solo battle.

It’s not surprising then that increasing numbers of first-home buyers are teaming up with siblings, parents or friends in a bid to break into the property market.

“There’s been a noticeable trend towards family members buying property together, as property prices are still very high, particularly for first-home buyers,” says Aussie Home Loans boss John Symond.

The number of family members taking out mortgages together has jumped from about 1% of all loans originated by ‘Aussie’ to 5 per cent over the past two years!   Mortgage Choice has reported a similar trend. A survey carried out by the company last year revealed more than 6 per cent of people who bought property within the past two years had done so with family or friends. And of those who intended to buy property within the next two years, over 8 per cent intended to do so with family or friends!

The result can be a kind warning or a significant fine and large interest bill.

The tax office says investors’ should be responsible in getting their tax returns right and they can’t blame their accountant or plead ignorance if they get it wrong.

One of the most common mistakes investors make is claiming items that should be depreciated over several years.

According to the ATO, initial repairs to fix damage, defects or deterioration that existed when a property was bought are capital expenses that should be claimed as capital-works deductions over either 25 or 40 years.

Capital improvements like re-modelling a bathroom or adding a pergola should also be claimed as capital-works deductions.

Other mistakes include:

Interest

Taxpayers at times use loans for investing and private purposes — for example, to buy or renovate a rental property or to buy a motor boat.

The interest expense on the private portion of the loan (the boat) is not deductible!

Legal expenses

Conveyancing expenses incurred when buying and selling a property aren’t deductible. These form part of the cost for capital-gains tax purposes.

Travel expenses

If you take a holiday and visit your investment property while you’re there, you cannot claim a deduction for the full trip.

The tax office says you may claim only those expenses directly related to the property inspection and a proportion of accommodation expenses.

Plunging average prices for regional seaside homes don’t tell the full story.

Valuer-General Victoria sales figures released this month by Land Victoria show median house prices rose in a third of seaside towns!

From the end of 2007 to the end of last year, prices fell in 16 of 30 coastal towns and stayed level in four others!

Hardest hit  …Port Fairy with a 34.6 per cent drop from $390,000 in late 2007 to $255,000 at the end of last year. Average house prices also fell dramatically in Blairgowrie, Barwon Heads, Portarlington and Rosebud West.

Anne Murphy of Stockdale & Leggo said Port Fairy sales during the summer were the best in the eight years she’s been there, with the big drop in the median house price for Port Fairy not because property values have fallen. Instead, figures have been skewed by tightly held, top-end properties being kept off the market.

“We’ve been recommending they delay selling because demand isn’t strong.”

People have owned houses here for 30 to 50 years. They’re kept in the family and passed down. So unless unforeseen circumstances such as a divorce occur, why sell in this market if you don’t have to?

But Murphy says those Port Fairy vendors on the market are more realistic than past years.

“We’re not expecting a good summer season with the economy the way it is, but we’ve had extremely good results in the number of sales and most sales were within 10 per cent of asking prices.”

“In the last 18 months in our office there has been only one sale of a property that sold for less than the vendor paid for it!”

“Most properties here are about $450,000. You don’t get much for your money under $400,000.”

That still hasn’t stopped holiday-home hunters prowling Port Fairy.

“We’ve had people come in looking for that bargain,” “I personally don’t have any bargains but there are realistically priced properties and motivated vendors who’ll negotiate.”

A historic fishing port, Port Fairy is now a popular holiday and retirement town famed for its annual folk festival about 290km west of Melbourne.

An understandable concern and today’s historically low interest rates can’t be sustained forever because at some point the economy will begin recovering, inflation will grow and rates will rise!

That’s the economy’s cyclical nature for you.

When rates do rise it’s doubtful they’ll hit the dizzying heights of the late 1980s. The major lenders certainly don’t think so; they’re setting their 10year fixed rates about 7per cent.

With vast resources and access to the world’s top economic minds, it’s highly unlikely that major lenders will make the wrong call about the future direction of interest rates.

But for argument’s sake that they do and rates climb back to the heady levels of 20 years ago.

If interest rates go up that far it’s a sign that business and consumer confidence is high. When rates go up so does inflation. And when inflation rises, so do property values. Sure, your holding costs will be higher because of higher interest rates but as an investor you will benefit on three fronts.

High rental returns

First-home buyers won’t be prowling the property market for a buy as it’s less affordable in a high-interest-rate environment. This will keep them in the rental market, put pressure on the available rental accommodation and drive up asking rents. The higher the interest rates the higher the investment yield!

Negative gearing benefits

If your expenditure on the property exceeds your rental income, you’ll be able to soften the impact and increase your cash flow by claiming the difference as a tax deduction.

Substantial sale proceeds

If you can’t afford to hold the property …sell it. Whilst not an ideal scenario, your property will have grown substantially in value during the time of high inflation so you’ll be better off than when you purchased it and that’s the aim of investing!

Of 452 properties up for auction, 83 per cent sold and 77 properties passed in!

However, the number of properties for auction was 126 fewer than at the same time last year!

The CEO of Real Estate Institute of Victoria attributed the high clearance rate to the extension of the first-home buyer’s grant announced in last week’s federal Budget, combined with low interest rates and an increase in investor numbers.

“It’s off a low base. There were not a lot of auctions,” Mr Raimondo said.

The part of the market performing really well is priced at or below the medium of about $410,000.

“The next two weeks we expect to see just under 1300 auctions, which is a very high number of auctions at this time of the year.

“I expect the clearance rate to remain high until the September 30 when the full first-home owner’s boost will be phased out.”

Flat and apartment clearances were also strong: 90 per cent of 136 properties at auction sold.

The latest residential land report from the Housing Industry Association revealed Melbourne’s median land price grew 0.7 per cent in the December quarter to a record $152,000.

The HIA-RP Data residential land report showed the price of land in Melbourne was up 4.8 per cent over the year.

The median land price in regional Victoria fell 2.8 per cent in the December quarter to $97,250, the lowest price since mid-2007.

Vacancy rates across Melbourne are reasonably steady having been between one and 1.4% for 12 months. However it‘s significant that there’s a noted improvement in the outer suburbs.

The improvement most likely due to the number of first home buyers moving from rented accommodation into their own homes and also securing home insurance plans with the assistance of the grants, bonus and boosts.

The March quarter median prices showed that most of the activity in the marketplace has been in the outer suburbs; for instance Craigieburn, Melton South, Hillside, Epping, Caroline Springs, Werribee and Meadow Heights – all outer suburbs of Melbourne very popular with first homebuyers.

It‘s great news for renters if a by-product of the grants, bonus and boosts is an improvement in availability of rental accommodation, however monitoring of the situation over the next few months will tell of any continual improvement..

The last month’s REIV members figures show a very minor change in the inner suburbs where the vacancy rate moved from 1.5 to 1.3 per cent and in the middle suburbs where it moved from 1.4 to 1.3 per cent.