State Of The Nation Compiled By Kevin Lee of Smart Property Adviser

www.smartpropertyadviser.com.au E: kevin@smartpropertyadviser.com.au T: (02) 9980 1311 M: 0416 083 995

Disclaimer: This document is a compilation of recent articles published in the media. The media sources are quoted beneath their respective article capture. Smart Property Adviser does not claim to be the author of any articles included within this document.

State Governments Decimating Jobs, Confidence And The Property Market Terry Ryder wrote in his article about the ongoing demise of public sentiment in the face of generally positive circumstances that has plenty of observers baffled. The interest rates are down, incomes are up, unemployment is low and the federal government is sending money to families, but people remain stubbornly pessimistic, according to the latest consumer confidence index. According to Mr. Ryder, the best clue as to why public sentiment remains so fragile is this: Queensland had the nation’s sharpest fall in confidence levels. Queensland, with all its assets, is more pessimistic even than struggle state Tasmania. Read more: www.propertyobserver.com.au/trends/state-governments-decimating-jobs-confidence-and-the-property-market-terry-ryder/2012082056133?utm_source=Property+Observer+List&utm_campaign=976c098e3e-August_21_20124_10_2012&utm_medium=email, 21 August 2012 Don’t Be On Bubble Popping, says RBA RBA Governor Glenn Steven’s speech at a charity luncheon last month was characteristically cautious, neither confirming nor denying the possibility of a housing market crash. He said the housing bubble “had yet to pop.” “We should never say a crash couldn’t happen here, and the Reserve Bank continues to monitor property markets and the performance of mortgages quite closely. “But the housing market bubble, if that’s what it is seems to be taking quite a long time to pop – if that’s what it is going to do. Read more at News, brokernews.com.au, Page 8, n.d. US Doomsday Forecaster Jordan Wirsz Prefers To Keep Australian Housing Crash Predictions To Himself Larry Schlesinger reported that Eight months ago self-promoted US real estate analyst Jordan Wirsz came to Australia to tell anyone who would pay to listen

that Australian house prices would fall 60% over the next five years. Wirsz’s outrageous claims even went further than US property bear Harry Dent, who has tipped a 50% slide. Read more: www.propertyobserver.com.au/residential/us-doomsday-forecaster-jordan-wirsz-now-prefers-to-keep-australian-housing-crash-predictions-to-himself/2012082256166?utm_source=Property+Observer+List&utm_campaign=bf71f8c313-August_22_20124_10_2012&utm_medium, 22 August 2012 Australia’s Resources Boom Is Over, says Martin Ferguson, After BHP Shelves Mine Expansion Resources Minister Martin Ferguson has declared the end of the mining boom, following the shelving by BHP Billiton of its Olympic Dam mine expansion. “You've got to understand, the resources boom is over,” Mr Ferguson told ABC radio this morning. “We've done well - $270 billion in investment, the envy of the world. It has got tougher in the last six to 12 months.” But Finance Minister Penny Wong contradicted her cabinet colleague. “No, I think the mining boom has got a long way to run,” she told ABC 24. Minerals Council of Australia chief executive Mitch Hooke also disagreed with Mr Ferguson. “The boom is not over, it's just different,” he said. Read more: www.theaustralian.com.au/business/mining-energy/australias-resources-boom-is-over-says-martin-ferguson-after-bhp-shelves-mine-expansion/story-e6frg9df-1226456301996, 23 August 2012 Life After Mining Will a predicted ‘mining boom fizzle’ impact Australia’s property market? Experts say yes, and the solution lies in government incentives. Forget the Mayan 2012 apocalypse. 2014 is the year Australia’s economic growth will grind to a spectacular halt, with a fall-out even the best-laid plans may not be able to stop. Of course, it’s all speculative and largely rests on the predicted ‘mining boom fizzle’ in two years time. In August, analyst Deloitte and BIS Shrapnel offered a grim forecast for the Australian economy, claiming the mining boom – which the government relies heavily upon for economic stability – will inevitably dissolve. Read more at Money Talk, brokernews.com.au, Page 26, n.d.

Issue # 003 August 24, 2012

State Of The Nation Continued…

E: kevin@smartpropertyadviser.com.au T: (02) 9980 1311 M: 0416 083 995 Disclaimer: This document is a compilation of recent articles published in the media. The media sources are quoted beneath their respective article

capture. Smart Property Adviser does not claim to be the author of any articles included within this document.

10 Tips For Investing In Mining Towns Do you know the factors that will ensure your clients succeed even in a harder mining market? Seasoned investor Patrick Cornwell reveals his 10 secrets. (1) Timing, (2) Phase of development, (3) Type of mining involved, (4) Number mines in a town, (5) Infrastructure spending, (6) Influence of FIFO (Fly-in, Fly-out), (7) Lifespan of mines and outlook for the sector, (8) What type of tenant will you get?, (9) Corporate lease, and (10) Rental Return. Read more at Money Talk, brokernews.com.au, Page 27, n.d. Positive Property Results Deliver A Boost RP Data’s Home Value Index of July showed both a rise in capital cities and a surge in auction clearance rates. This made it a second consecutive month of growth, with an overall 0.6% rise. It’s modest, but a positive sign of improvement, according to RP Data’s research director Tim Lawless. “The July result, when viewed together with the positive June result, suggests housing markets may be starting to respond to the RBA’s latest Board meeting minutes, are around 50 basis points below their 15-year average,” he said. Lawless added that auction clearance rates were above-average at 56.6%, the highest since February 2011. Read more at Money Talk, brokernews.com.au, Page 27, n.d. The 10 Worst Postcodes In Victoria For A Number Of Mortgage Arrears: Fitch Ratings Cassidy Knowlton accounts in her article the top 10 worst postcodes in victoria for mortgage arrears, by total number, according to fitch ratings, are: 3214 Corio, Norlane, North shore; 3024 Mambourin, Mount Cottrell, Wyndham Vale; 3337 Kurunjang, Melton, Melton West, Toolern Vale. Read more: www.propertyobserver.com.au/mortgages/the-10-worst-postcodes-in-victoria-for-number-of-mortgage-arrears-fitch-ratings, 23 August 2012 Malaysian Family Spend $14 Million On Dorcas Street, South Melbourne Development Prospect Jonathan Chancellor reports that a Malaysian family has snapped up an inner-city Melbourne commercial property with redevelopment potential. The five-level building at 11 Dorcas Street, South Melbourne, fetched $14 million. The building, which is fully leased to IT group Dimension Data, sold through CBRE agents Mark Wizel and Justin Clarkson at an 8.1% yield on the current passing income. Clarkson says the sale highlighted continued demand for commercial

investment property in Victoria. Read more: www.propertyobserver.com.au/developments/malaysian-family-spend-$14-million-on-dorcas-street-south-melbourne-development-prospect/2012082256160, 23 August 2012 The Best Places To Make Money Outside Term Deposits “In the past prices have gone nowhere for an extended period of time,” the managing director of property investment consultancy Atchison Consultants, Ken Atchison, says. “That’s the way the market’s corrected for being fully priced. So I’d expect very flat capital growth for a long time.” He predicts annual returns from investment properties of 7 per cent to 8 per cent, over half of which will come from rent rises. So like the sharemarket, go for a reliable income and let values look after themselves. Among the capital cities Sydney, where the shortage is most pronounced, is likely to be the best performer, but only parts of it. Specifically the outer west and south-west where prices are low, producing high rental yields. “Investors should look at lower socio-economic areas where rents are 7 per cent or more gross,” the principal of Smart Property Adviser, Kevin Lee, says. Properties in Gosford, north of Sydney, are yielding almost 9 per cent, he says. Since property prices aren’t likely to increase more than 2 per cent a year for the foreseeable future, forget negative gearing with an interest-only loan. Instead make sure the rental yield is more than the interest you’re paying. “Negative gearing with an interest-only loan is a risky strategy,” he says. “It’s hard to beat having a tenant pay off the loan for you. That’s how you get equity.” Incidentally, the best yields are on units. Read more: http://www.afrsmartinvestor.com/p/howto/investing/the_best_places_to_make_money_outside_7ib0PvZ5yUpGYDcc1T4AZO March 2012

Controversy Corner Facebook Loses A Friend In the most catastrophic example of clicking ‘buy now’ too many times, UBS accidently bought $340.8m of shares in Facebook after it assumed its modest buys to Nasdaq weren’t getting through. UBS is now suing the US stock exchange for the bungle which put the investment bank into the red. Read more at News, brokernews.com.au, Page 8, n.d.

Until Next Time…. Kevin Lee

www.smartpropertyadviser.com.au