Single woman Rebecca Willis is working hard to buy her first house – and she’s not alone

SINGLE women are proving to be the new breed of first home buyers (FHB), ably assisted by higher incomes in an evolving workplace and supportive families.

Gen Ys in particular are taking the plunge into the real estate market with the Australian Housing and Urban Research Institute’s (AHURI) 2010, Changing Patterns of Home Ownership, bulletin revealing home ownership rates for singles aged 25-44 improved by 8.1 per cent between 1996-2006.

Having saved for five years for her dream home and done plenty of research on the subject, little deters or daunts 26-year-old Rebecca Willis, including the fact that she’s single.

While Miss Willis deals with homes every day as part of her work as a real estate agent, she admits things are a little “hairier” for single FHBs.

“The accountants and financial planners I’ve talked to are all sure I can buy a home on my own but banks do seem to prefer couples over singles,” Miss Willis said.

“As a single, it’s not just about having a good deposit – you need to show banks you’ve got the goods and have what it takes.

“As a single FHB, I also know it’s important to have income protection and insurance and to think everything through very carefully before buying.

“It’s not enough just to save willy nilly – you need to have good advice from professionals and a supportive network.”

Place Annerley agent Tristan Rowland said 50-60 per cent of his FHB clientele were singles with the majority of these people being gen Y girls.

“This could be because boys don’t want to settle down as early as girls.

“There is also a lot more parental influence on girls to settle down.

“About 30 per cent of my female FHBs are bankrolled by mum and dad.”

Mr Rowland said the dramatic change in banks’ lending criteria during the past five to 10 years plus the changes to first-home buyer grants were just some of the challenges FHBs faced.

“Singles also have only one income stream to rely on so they are effectively putting all their eggs in one basket,” he said.

“They also have only one voice of reason to listen to when buying their first home.

“Talking to a good broker, doing research on preferred properties and the surrounding areas, and using good solicitors and building inspectors will help.”

With 40 per cent of her client database single, Brisbane-based Mortgage Choice broker Caroline Jean-Baptiste is well aware of the different challenges facing these people.

But it was a lack of confidence, rather than finances, that held most singles back from the real estate market.

“Most singles find it’s not too much of a stretch to actually buy a home but single women in particular lack confidence and most would prefer to wait for someone to buy a home with them,” Mrs Jean-Baptiste said.

“For single men, it’s the small sacrifices that all potential home buyers have to make that hurt the most, such as not going out with their mates for a drink.”

While there are plenty of pros and cons when buying a home as a single person, Mrs Jean-Baptiste said she had seen plenty of singles succeed in the real estate market.

“A positive for single FHBs is that they’re in full control of their decision and can buy something that suits their lifestyle,” she said.

“Plus if singles do find a partner, they can rent out their single home or sell it.

“And while singles will need good income protection insurance and can’t split mortgage repayments, they can always rent out one of their rooms.”

Mrs Jean-Baptiste said her single clients had varying degrees of confidence but she hated to see people waiting to make a firm decision on buying a home.

“I’m a great believer in getting into the market when you can,” she said.

“If you’re single and waiting around for a partner, you could miss out on a great opportunity in the marketplace.

“You don’t necessarily have to earn a lot of money to buy a house – make some small sacrifices, get a guarantor, chat to plenty of different people and stretch yourself a little.

“With a sensible approach, anyone can buy a home.”

Despite the challenges, Miss Willis is determined to plough on and achieve her dream of buying a home.

With her career including a new move to Agnes Water, between Bundaberg and Gladstone, her hopes for a small brick home with good bones and a view of the beach could also come true sooner than expected.

“The only thing that’s been holding me back is trying to decide where to buy but I think Agnes Water could be the right place,” she said.

“I’m not looking to get rich in property – I just want to set myself up so I’m not working like mad when I’m 65.

“And I prefer to buy a home myself so I can look after me, no matter what happens.”

“Girls are way ahead of boys when it comes to buying real estate,” Mr Rowland said.

From – The Sunday Mail (Qld)

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Australian housing is not overvalued but “dire predictions” spooking new housing investors

“Hysteria” about Australian housing being overvalued is spooking institutional investors from investing in much needed new housing, says Rismark economist Christopher Joye.

Joye says contrary to what’s being said by some in the media, housing in Australia is not overvalued.

Delivering a presentation titled “Australia’s Broken Housing Model” at the recent HIA Housing Summit which highlighted a serious undersupply of new homes to meet population growth, he said current housing valuations could be explained by market fundamentals with “dire predictions never remotely coming to pass”.

Joye pointed out that  peak-to-trough fall in housing values during the GFC were less than 5% and provided the following graph to show historical valuations of property.

“Since 2003 house prices have tracked disposable incomes…as an asset-class, housing has been a very safe store of wealth,” said Joye.

He said the housing market had significantly outperformed equities and bonds and the current market cycle should be investment-friendly.

“We should be seeing a surge in new supply,” said Joye, but instead “institutional capital has certainly been ‘spooked’ by housing hysteria”.

Joye highlighted that Australia has a population planning crisis and equally a serious housing/infrastructure crisis.

“Australia needs to build seven million new homes in next 37 years to accommodate 13.7 million extra people by 2050.

“This equates to around 200,000 new homes per year, but since 2000 only 156,000 new dwellings have been approved on average per annum.”

To address this chronic undersupply of new homes, Joye focused on property taxes.

“Housing is one of the most heavily taxed sectors of the Australian economy, both in absolute and relative terms,” he said, contributing 12% of total govt tax revenue and 45% of total state/local govt revenue.

New housing, he said adds 1.2% of value to the economy; but accounts for 2.8% of total government tax revenues.

According to Joye, tax reform could drive a 30% to 40% affordability gain.

“We need to work out how to more equitably redistribute the national tax/infrastructure burden,” he says, pointing to guidance in the Henry Review including:

  • Reform (land) taxes that discourage institutional capital
  • Replace inefficient transaction taxes with immobile taxes
  • Relax zoning restrictions/allow higher densities
  • Speed up approval decisions through State govt direction
  • Overcomes NIMBY (not in my bank yard) conflicts that plague councils

Furthermore, he said an obvious savings would be to convert first-home owner grant into an interest-free loan due on sale, which would save  around $1 billion per annum.


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Lessons from Christchurch: Property investors come unstuck

Over the past 2½ years, Christchurch’s business environment has challenged many assumptions and contracts. In a six-part series, Christchurch legal firm Malley & Co looks at some of the lessons all businesses can learn. Here, Carolyn Foss looks at how property investors were caught out by inadequate insurance.

While working through the extensive damage to residential and commercial properties in Christchurch, property investors and their legal advisors have uncovered several due diligence issues that lay dormant before the earthquakes.

Those issues highlight how crucial it is to get the right insurance cover, and why property investors nationwide should note some of the lessons from the Christchurch earthquakes.

A significant number of property owners were under-insured at the time of the earthquakes, particularly those with two-storey investments. These owners unknowingly had not recorded an accurate property floor area on their policies, which restricted cover to the recorded, not the actual, size of the property.

This may have happened for two reasons: they may have recorded an inaccurate floor area at the time of taking out their insurance; or they may have extended the property after the original policy was in place, but had not adjusted the policy.

Those owners whose properties had to be rebuilt have suffered financial loss because of the difference between the actual replacement costs and what they were covered for.

Some property investors have been unable to raise the necessary extra finance to replace their investment(s), others have reinvested in Christchurch, but with higher borrowings and others have taken the cash and invested in cheaper properties.

This issue is particularly relevant throughout the country, given the new sum insured requirement insurance companies are adopting. The worst scenario would be a property investor who has geared a property with 100 per cent finance but who has inadequate insurance cover. Not only could this place the investor at financial risk, it could also place the investor in breach of his or her banking covenants.

It is very important, therefore, that all property investors check their portfolio to ensure they have accurately calculated the correct floor area of each property, and if or when their insurer renews the insurance based on an agreed sum or agreed metreage that they have the appropriate sum insured.

This may mean getting an expert measurement, obtaining a valuation for the property that the insurer accepts as a basis for agreed value, or ensuring that the dollar per square metre cover noted in the policy is adequate.

You might also need to review the level of cover each calendar year because of increased construction costs or improvements or enhancements. If you are looking to increase your property portfolio, then it is important to include an expert measurement or insurance valuation of any prospective new property as part of the legal due diligence process, depending on the type of insurance being put in place.

Some other Christchurch property investors also suffered hardship because they had not informed their insurers they had tenants in place at the time of the earthquakes. Most competent insurance brokers will highlight the exclusions contained in a policy and point out some of the ongoing obligations of disclosure.

So, in summary, it is important to treat the insurance of any investment property very seriously. If in doubt, property investors nationwide should reflect on the hardship a number of fellow investors suffered in Christchurch, because they were not properly covered. For the sake of a few thousand dollars a year, are you prepared to take an unnecessary risk?

If you are unsure of the legal implications of an existing or proposed insurance policy then it is prudent to seek advice from a lawyer with the relevant expertise.

Carolyn Foss is a legal executive at Malley & Co, with more than 20 years’ experience in property law and conveyancing.

From the New Zealand Herald.

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