Hello,

Welcome to the Investment House property newsletter for December.

For the last twelve months we’ve been highlighting a noticeable shift in gear within the Brisbane property market, and these more buoyant conditions seem to be gaining momentum.  Recent figures released by the Residex support this conclusion.

In this issue we

• Review the property results for 2007 and the boom in the Brisbane market
• Big Announcement... In-House Construction now building for owner-occupiers
• Introduce you to Socceroo Shane Stefenutto and explore the development he undertook

I also wanted to wish everyone a happy holiday season and a fantastic New Year.

Of course, if you have any specific questions regarding this newsletter and what it means to you, please feel free to contact our team on (+61 7) 3369 0111.

And if you know friends or colleagues who might find this newsletter interesting, please spread the word by forwarding it on to them.

Best regards,

Colin Ferguson

2007 - A Year in Review

Don’t tell anyone.., but there’s a PROPERTY BOOM underway in Brisbane!

Have you heard?

This time last year we boldly pronounced that the Brisbane Residential market seemed to have shifted up a gear.  Now it’s in the history books.  And the latest statistics suggest the market is continuing to gain momentum. 

Sydney-based research company Residex reports that Brisbane house prices rose by 6.15% in the three months ending November.  That is spectacular price growth.

It’s 24.5% on an annualised basis.  And clearly that is a “property boom” result.  Yet it might be the best kept secret around, because the media hasn’t jumped on the band wagon yet.

Even the election didn’t seem to dampen things.  Traditionally, State and Federal elections cause a softening in the market.  But the softening wasn’t very pronounced, and with the election behind us it’s business as usual again. 

The demand is huge.  Last financial year saw international migration top a new high of 177,600.  And these new arrivals to the country need to live somewhere.  At 2.4 people per house, that’s another 73,000 homes needed Australia wide – most of them focussed in the capital cities.

And supply is constrained.  Home builders are working close to capacity.  The nationwide skills shortage means they can’t get enough tradespeople to substantially increase production.  The shortage of houses (stock deficiency) is not going to change in the near future.

The rental market is the “shock absorber”.  But there’s no room to move there either.  Vacancy rates remain very low at around 1.5% and the continued pressure is resulting in rents continuing to rise in the order of 12% p.a.

So what does it all mean?

It means supply cannot keep up with demand – and that means profits for property investors!

For some time we’ve been crying out to “get on the train”.  Don’t fall prey to analysis paralysis – it’s time for action!  And it almost doesn’t matter which carriage you’re in.  What matters is you don’t miss the train.  So get into the market – it’s now travelling at about 25% p.a. If it goes much faster you may not be able to get on.

Imagine looking back this time next year… and imagine if you “missed the train”.  Imagine you didn’t buy that $500,000 investment property and consequently didn’t enjoy the $125,000 in potential capital growth.  How would you explain that to your family?

Ticket’s please - email Marco now at marco@investmenthouse.com.au to get on the train!

In-House Construction Now Building For Owner-Occupiers

The construction arm of Investment House, In-House Construction, is now building for owner occupiers, not just investors.

“In the past, the company has worked almost exclusively for investor clients coming via Investment House, but now we’re expanding to provide high quality turn key homes for owners within a 15km radius of the GPO” explains Managing Director Colin Ferguson.

In-House Construction is well regarded in property development circles not just for producing high quality homes, but also for delivering them on time and on budget, guaranteed. But it’s not widely known in the “owner occupier” market.

“We engaged a market research group to see what people liked and disliked about their building experience” says Colin.  “And we’ve used this research to structure our service and brand promise”.

The research showed that 70% of owners who engaged a builder in the last twelve months were unhappy with their experience.  And much of it stems from poor systems and poor communication.

Selecting the right builder in the first place is important. 

Construction manager John Lambe explains “From our research, it seems many people don’t understand there are different types of builders, and that each type has different strengths and weaknesses” he says.  “It’s like using the right tool for the right job – if you engage the wrong type of builder for your job, then it’s just not going to be a happy experience for either party”.

The big project builders offer very good value in “house size for dollars” because they have such enormous buying power and they build the same houses over and over like a production line – but they are usually very inflexible and generally not well placed to build custom homes.

At the other end of the spectrum, is the “one man band” builder who is infinitely flexible, but lacks buying power and may not be able to start your home until he finishes what he has going now.  And delays in starting means your price has to be higher.  And there’s the risk of a “one man band” having an accident or getting sick which can mean more delays (or worse - being unable to complete the job).

“We fit in the middle – there’s a niche in between these two groups” says Colin Ferguson.  “With the advantage of strong buying power and a great team using established technology-based building systems, we are ideally positioned to offer high quality custom building solutions at excellent value.”

The researchers found home builders love the commitment to quality and to finishing on time and to budget – but they pointed out many builders PROMISE the same things.  It seems the key difference clients are looking for is the ability to communicate well before, during and after the project is undertaken. 

This is where the In-House Construction team’s hard won expertise and systems give them an edge.  Developed from years of providing turn-key investment solutions, the team now draws on their track record to provide this same high level of communication to owner occupiers.

“And building within established suburbia is vastly different to building in new estates” adds John Lambe.  And he sums it up well “Any builder can start your house, but only a select few can bring it in on time and to budget. We guarantee that we will!”

A new report will be available shortly which will help prospective home builders understand the different types of builders and how to select the right one for you.  To ensure you receive your copy, make sure you sign up for In-House Construction’s Special Report here.    You will be notified when the new report is released.

Socceroo Shane Stefanutto Scores with Investment House

Shane Stefanutto was playing soccer for the Brisbane Strikers when he first came across Investment House.  In addition to his commitments playing in the Australian national league he was also very much involved with supporting and encouraging kids’ soccer at the local club level.

“I was asked to be the guest speaker at a fund raising function for a new club being formed just north of Brisbane” explains Shane.  “That was when I met Col Ferguson and got to hear a little of what Investment House was doing for their investor clients – it sounded pretty interesting!”

Shane met up with Colin shortly afterwards and explained he was thinking about buying his first home. 

“We talked over a bunch of different strategies, but what really caught my attention was the idea of buying something now that had development potential for the future” explains Shane.  “And we could live in it while we were getting all the development approvals in place” he added.

At the time, Shane wasn’t in a position to undertake the development immediately.  He and his partner Tammy had stretched to buy the 809m2 site in the leafy southern Brisbane suburb of Tarragindi.  And they still had to fund the cost of obtaining the development approvals.  So, to help with cash flow, they elected to take in a boarder until they got on top of things.

In 2003, Shane was contracted by a European Soccer Club and moved to Norway – nothing like a slight change in weather!

“Playing in Europe was a big step up for us – it was exciting, but we had to have a fall back position just in case it didn’t work out” Tammy explains.  “We decided to put the development on hold while we found our feet and we had the Investment House Property Management team look after rental side of things.”

Once settled, they shifted gear and engaged Investment House Corporate Services to project manage demolishing the old house and undertaking the subdivision.  The plan was to sell one block and then build a new house on the remaining site.

So how do you develop property in Australia, when you live in Europe?

“It was pretty easy.., but there was a time when it was really full on.., we had Investment House emailing progress updates and photos of the development coming together here in Brisbane, and we were busy buying a property in Europe.., and (if that wasn’t enough), we also had our first bub” says Shane with a big grin “but it all worked out really well – there were a few little twists here and there; and selecting colours on the other side of the world was a bit tricky,  but the house is great. We were both really blown away with how big it is – it’s awesome!” he adds, still grinning.

The new house is being rented for $650 p.w. which makes it cash flow positive.

As it turned out, Shane returned to Australia just as the new house was being finished but he didn’t get to see it.  A Socceroos match in Sydney meant there was no time for sightseeing, and he was back on the plane without visiting Brisbane.

Now, Shane and Tammy are in Australia for the Christmas break.  They’re spending time introducing their daughter Stella to her Aussie family and enjoying the warmer weather.  And they’ve also found time to engage Investment House to kick off their next project - this time in Camp Hill.

“The first one went well, and we’ve made a tidy little sum, so it just makes sense to keep on doing what’s working!” concludes Shane.

For more information on how YOU can create wealth with Investment House, please contact us for a no-obligation chat.