Introduction
The real estate outlook for Australia, as forecast by the QBE LMI Housing Outlook Report over three (3) years, 2011 to 2014, shows a healthy upward trend in the real estate market. A recap of QBE’s forecast for state cities over the next three (3) years is as follows:
1) Sydney: A 19-20% real estate boom is expected. Demand was predicted to outpace supply and result in higher property values; Perth: A 19-20% growth rate is expected in real estate activity due to investment inflows from the mining sectors.
2) Melbourne – Projected to have the slowest growth rate of 6% due to oversupply of new build homes in the low to mid price range.
3) Adelaide, Hobart and Canberra: moderate growth of around 6-8% expected
4) Brisbane: a healthy growth trend of 16% is expected, and
5) Darwin – A healthy burst of market activity is forecast at growth levels of 17%.
Prospects for the real estate industry in Australia
The industry experienced three (3) difficult years, from 2007 to 2009, in which industry revenue fell to around 1.2% per year due to declining demand. The trend had only begun to level off in 2009 and 2010. This was in line with the growth in Gross Domestic Product and the strong financial outlook for that year, which led to an upward price spiral in virtually all states. The QBE LMI report also showed an upbeat outlook, with an expected increase in demand associated with the inflow of Asian investors.
Property rentals are a growing trend in Australia today as real estate prices have gone beyond the reach of most first time home buyers. Mortgage interest payments have skyrocketed to levels that ordinary residents can barely afford. Although the industry outlook is optimistic, a large number of residents still find it difficult to own their own homes.
Property rental options in Australia
rental option
The rent is divided into two categories. One would be a direct rental agreement; and the second would be the rent-to-purchase scheme. The rental of real estate, per se, or direct rental, would have its advantages over direct purchase.
1. The first advantage would be – financial flexibility. Leasing would involve a smaller capital outlay than buying outright. A smaller rental payment could definitely save you a lot of cash than much higher monthly mortgage payments.
2. The second advantage would be the low maintenance cost. The only problem to overcome here is the fixed monthly payment. However, repair problems would be less of a financial burden, since they are usually taken care of by the landlord.
3. The third advantage would be flexibility. Changes in personal circumstances, such as a new career, or if by some lucky break you suddenly find yourself unemployed, these types of arrangements would not lock you into a situation where you have to make payments despite your inability to do so.
4. The fourth advantage would be – no market risk. Buying a property would involve a large capital outlay in terms of the down payment and monthly mortgage payments. You assume the risk of expectation: that the appreciation rate of your property will be more than what you paid for.
5. The fifth advantage would be – taxes and insurance. Rent payments are expenses, therefore, deductible from gross income. The house insurance is paid by the landlord, therefore, less cost on his part.
6. The sixth advantage would be: the additional bonus in the rental agreement. This would be in the form of benefits you get if you move. A good example would be the one (1) month free rent benefit provided by multiple landlords. There are also agreements in which the monthly rent payment would cover the payment of utilities such as water, cable and garbage collection. This saves you the trouble of not making the monthly payment yourself.
7. The best advantage so far when it comes to renting is that you will never be stuck in a situation where you have to put up with obnoxious neighbors next door. If you don’t fit in, just move on!
Rent-to-own options
In rent-to-own schemes, the buyer enters into an agreement, where they rent a property now and is given the first option to purchase that property in a period of time. The scheme would involve a couple of procedures.
1. The first would be the agreement between the parties (buyer and seller) on the sale price. The option has a duration of around three years, in which the buyer is expected to exercise that option. The monthly payment for this type of arrangement is higher than an outright lease. Typically, the buyer/lessee pays an additional amount for the option fee in addition to the monthly rent. The additional cost gives you the privilege of having the landlord grant you this type of arrangement.
2. Under the rent-to-own agreement, the option fee becomes an integral part of the down payment if the option is exercised. Otherwise, the option fee goes directly to the seller/lessor as a bonus. The option fee corresponds to around 1 to 5% of the agreed sale price. It cannot be refunded.
3. Monthly rents with the option to rent to own are usually higher, since you have to pay an additional rental premium. If the option is exercised, all lease payments, including rent premium, go toward paying for the property. If the buyer can’t close the deal, the seller gets the full rental premium as additional profit.
Warehouse Rental Option in Australia
When it comes to warehouses for rent in Australia, there are many options.
1. One of them is the temporary storage rental which has various sizes: length, width and height, according to the requirements of each one. The rental period is from three (3) three months to five (5) years. This can be installed in your own backyard without having to go through bureaucratic permits from councils. It can be installed quickly. Features would include having sheet metal sides for better security. This type of warehouse has insulating panels with good thermal properties. The structure can be moved with forklifts. This type of installation can be used by manufacturing and electronics companies, among many others.
2. There are many other storage facilities in the six (6) states of Australia that have warehouses for hire. The rent would depend on the facilities that are available, such as electricity, thermostat control, and basic services such as the availability of drinking water. Other facilities such as toilets, toilets, and adequate ventilation for the area would increase the convenience of the facility for prospective tenants. Location is of the utmost importance. Proximity to commercial areas would likely mean higher rental rates. Another consideration would be safety and proximity to shipping lanes. The choice of what to rent depends entirely on the specific requirements of the renter.