Home Renovations That Increase Property Values - PDF

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					                                                                                        N E W S L E T T E R I S S U E T W E LV E 2 0 0 3

                                                                     REALNEWS WA
                                                                               w w w. p r o f e s s i o n a l s . c o m . a u

                           Surge in Older Homes
                           for Renovation
                           During the past six months, the Professionals Real
                           Estate Group has recorded a surge of interest by
                           homebuyers purchasing older style properties for

                           renovation in the outer Perth suburbs according
                           to Steve Wright, CEO of the Professionals Real
                           Estate Group.
                           Mr Wright said that the 'fixer-       approvals during the December      "Rising land values in these
                           up' homebuyer market has              2002 quarter which is a 59% rise   outer Perth areas are now
                           traditionally been focused on the     compared to the December 2001      making it financially more
                           inner and near city areas of Perth.   quarter.                           attractive for homebuyers to
                                                                                                    renovate older properties.
                           "During the second half of 2002       "The Hills areas is also
                           and      early     2003,     the      experiencing strong activity in    "In particular, there is now a
                           Professionals Real Estate Group       home renovations with the ABS      growing number of investors
                           offices has sold a large number       figures showing that during the    who are purchasing older style
                           of homes to people in the outer       December      2002     quarter     properties in these outer Perth
                           suburbs of Perth for the purpose      approvals totalling $1.8 were      areas for renovation purposes
                           of home renovations.                  given in Kalamunda which is a      and     then    renting   these
                           "This is underlined by ABS            93% increase compared to the       refurbished homes to achieve
                           building approvals figures which      December 2001 quarter.             higher rental returns.
                           show in the Rockingham area
                                                                 "Gosnells is also recording        "The rental market in many of
                           during the December 2002
                                                                 stronger activity in home          these outer Perth suburbs is still
                           quarter renovations totalling
                                                                 renovations    with     home       very strong and home prices are
                           $1.5 million were given approvals
                                                                 renovation approvals totalling     still very competitive which
                           which is a 72% rise compared to
                           the December 2001 quarter.            $1.1   million   during    the     means     that    these  astute
                                                                 December 2002 quarter which is     investors can achieve very high
                           "In Kwinana, home renovations         a 45% rise compared to the         returns on their refurbished
                           totalling $1million were given        December 2001 quarter.             properties," he said.
                                                                                                     In This Issue
                                                                                                     Surge in Older Homes for
                                                                                                     Renovation ..............................................1

                                                                                                     Harvesting the Equity in Your
                                                                                                     Home ..............................................................2

                                                                                                     New Safety Proposal by State
                                                                                                     Government ............................................2
                                                 Proud to be a Corporate Partner of the
                                                                                                     Strong Growth in
                                                   National Breast Cancer Foundation
                                                                                                     Southwest ..................................................3

                            Pink Ribbons available from all Professionals offices                    Win a Trip to Hollywood ..........4
Harvesting the                                                New Safety
Equity in Your                                                Proposal by State
Home                                                          Mains-powered smoke alarms will have to
                                                              be installed in all homes before they are
The choices you make over time about                          sold under proposed changes being
the equity in your home will determine                        considered by the State Government.
the financial benefits you derive from
                                                              Emergency Services Minister Michelle Roberts today
homeownership. Most people have                               announced the findings of a review by the Fire and
some equity in property.                                      Emergency Services Authority (FESA) into the
                                                              requirements for installing smoke alarms in the home.
Seventy per cent of the population are homeowners.
About half of all homeowners own their homes                  Mrs Roberts asked FESA to conduct the review
outright and the other half are paying of a home loan.        following the death of a mother and her son in a house
The degree of equity you have in your home depends            fire in the northern suburb of Craigie earlier this year.
on the size of your mortgage. If you do not have a
mortgage then you have 100% equity in your home. If           “The onus would be on
your mortgage is equal to half the value of your home         landlords to ensure smoke
then you have 50% equity in you home. The larger the
equity in your home the larger is the amount of money         alarms are fitted before a new
that is available for investing or personal expenditure.      tenant walks through the door.”
The most often discussed means of accessing the
                                                              "While the Coroner is still to bring down his findings
equity in your home is to take out a home equity loan.
                                                              about the cause of that terrible double fatality, I believe it
Most financial institutions will allow you to borrow a
                                                              was necessary for FESA to conduct a review of smoke
significant proportion of the equity in your home.
                                                              alarms in Western Australia," she said.
These funds are often used to purchase investment
properties. This is a smart move because the rental           The Minister said while house fires had caused the deaths
income from the investment property will help to repay        of 21 people over the last three years in WA, about a third
the equity loan. And in many instances the extra funds        of all homes still did not have a smoke alarm installed.
required to help repay the loan, in addition to the
                                                              "We have to take action to save lives," she said.
rental income, may be used to reduce your taxable
income.                                                       "With more than 70,000 homes sold in WA annually, I
                                                              believe that a point-of-sale approach to installing smoke
There is also a growing interest in home equity loans         alarms will address this shortfall.
from retirees who use the extra funds to top-up their
existing retirement funds like the pension or                 "It's an approach that I believe should also apply to rental
superannuation.                                               properties when they are coming up for a new lease.
                                                              "The onus would be on landlords to ensure smoke alarms
Another way of exploiting the equity in your home is
                                                              are fitted before a new tenant walks through the door."
to sell off a part of your property that you no longer
required. This has been a common practice amongst             Mrs Roberts said under current regulations, smoke alarms
farmers. Now it is also common in the residential real        had to be mains-powered in all new homes and homes
estate market in places where properties are situated         undergoing significant renovations.
on large blocks of land that can be split into smaller lots   "All WA homes should have a smoke alarm and for an
for the construction of home units.                           investment of as little as $10 people can have peace of
Apart from freeing up funds, sub-dividing solves other        mind that they had taken a life-saving precaution against
       problems particularly for older people who             a fire tragedy," she said.
            own large homes in high value areas that          "But only working smoke alarms save lives. Today - on
                 require substantial maintenance.             Change Your Smoke Alarm Battery Day - fire authorities
                                                              are encouraging people to check their smoke alarms and
                                                              replace the battery.
                                                              "The message is clear, 'don't gamble with the lives of
                                                              your family'.
                                                              "By replacing a battery, people will have the essential
                                                              time to get clear and alert fire services."

                                                              "Nothing is interesting if you are not interested"
Disclaimer: The comments provided are of a general nature only and you should obtain specific advice in regards to your own specific circumstances before acting on this advice. The Professionals Companies, members, directors, offices and employees do not give any warranty as

                                                                                                                                                                                                                                                                                      Strong Growth
                                                                                                                                                                                                                                                                                      in South West
to the accuracy, reliability or completeness of any information provided in this newsletter. The Professionals, recommends that you seek advice from your own financial, taxation and legal advisors before entering into any financial or other transaction.

                                                                                                                                                                                                                                                                                      The South-West housing market is poised for sustained growth over the next decade
                                                                                                                                                                                                                                                                                      because of a surging population.
                                                                                                                                                                                                                                                                                      Already, more than 123,000 people live in the South West     increase from 3,000sqm to 5,000sqm the size of a new
                                                                                                                                                                                                                                                                                      region and with a growth rate three times that of the        $19 million warehouse in Busselton because of market
                                                                                                                                                                                                                                                                                      national average, the South West has one of the fastest      research revealing impressive population growth in the
                                                                                                                                                                                                                                                                                      growing populations of regional Western Australia.           region.

                                                                                                                                                                                                                                                                                      It is anticipated that by 2011 that 157 300 people will      The confidence in the housing market is underlined
                                                                                                                                                                                                                                                                                      make the region their home.                                  that in some parts of the region such as Dunsborough,
                                                                                                                                                                                                                                                                                                                                                   property prices are now comparable to the blue-chip
                                                                                                                                                                                                                                                                                      More people are moving to the South-West of the State        areas of Perth like Dalkeith and Peppermint Grove.
                                                                                                                                                                                                                                                                                      because of growing employment
                                                                                                                                                                                                                                                                                      opportunities in the region.                                                    It is no coincidence that the
                                                                                                                                                                                                                                                                                                                                                                      Professionals Dunsborough office
                                                                                                                                                                                                                                                                                      The Department of Local Government                                              was the most successful office of our
                                                                                                                                                                                                                                                                                      and Regional Development estimates,                                             entire Group throughout Western
                                                                                                                                                                                                                                                                                      for example, that the South West's                                              Australia last financial year with the
                                                                                                                                                                                                                                                                                      gross regional product was $4.6                                                 highest gross sales.
                                                                                                                                                                                                                                                                                      billion in 2000/01.
                                                                                                                                                                                                                                                                                                                                                                    It is also no coincidence that new
                                                                                                                                                                                                                                                                                      There were more than 7,800                                                    home building activity in the region
                                                                                                                                                                                                                                                                                      business locations within the South                                           is also at record levels with $125
                                                                                                                                                                                                                                                                                      West Region, with over one-third of these operating in       million being committed to new homes in the region
                                                                                                                                                                                                                                                                                      the agriculture, forestry and fishing industry sector.       during the December 2002 quarter because of the
                                                                                                                                                                                                                                                                                                                                                   strong demand for accommodation in the region.
                                                                                                                                                                                                                                                                                      This strong local economy is resulting in a low
                                                                                                                                                                                                                                                                                      unemployment rate with the unemployment rate in the          The Professionals Real Estate Group projects that home
                                                                                                                                                                                                                                                                                      area falling to just 5.5% by the end of the last financial   sales will continue to perform strongly during the
                                                                                                                                                                                                                                                                                      year.                                                        coming year in the region and that many parts of the
                                                                                                                                                                                                                                                                                                                                                   South-West area should enjoy home price increases of
                                                                                                                                                                                                                                                                                      The growing number of people in employment means
                                                                                                                                                                                                                                                                                                                                                   more than 10%.
                                                                                                                                                                                                                                                                                      that there is now a strong local demand for housing in
                                                                                                                                                                                                                                                                                      the area with the Professionals 8 offices located            The growing equity levels of home owners in the area
                                                                                                                                                                                                                                                                                      throughout the region reporting very strong home sales       is also encouraging more local people to invest in local
                                                                                                                                                                                                                                                                                      to local residents during the past 12 months.                real estate and this local investment market should give
                                                                                                                                                                                                                                                                                                                                                   this regional housing market a further boost during the
                                                                                                                                                                                                                                                                                      Confidence in the region is also increasing and this has
                                                                                                                                                                                                                                                                                                                                                   coming years.
                                                                                                                                                                                                                                                                                      been highlighted by the recent decision by Bunnings to

                                                                                                                                                                                                                                                                                         Population Growth in Western Australia
                                                                                                                                                                                                                                                                                         Australia's estimated resident population at June 2002 was 19.7 million people, an increase
                                                                                                                                                                                                                                                                                         of 249,500 people over June 2001. This represents an annual growth rate of 1.3% slightly
                                                                                                                                                                                                                                                                                         higher than the average annual growth rate of 1.2% for the five years to June 2001.
                                                                                                                                                                                                                                                                                                                               Three states recorded annual growth rates greater than Australia's overall
                                                                                                                                                                                                                                                                                           “There is a strong                  growth rate in 2001-02. These were Queensland which increased by 2.2%,
                                                                                                                                                                                                                                                                                                                               Victoria and Western Australia by 1.4%.
                                                                                                                                                                                                                                                                                           relationship between
                                                                                                                                                                                                                                                                                           population growth and               There is a strong relationship between population growth and property
                                                                                                                                                                                                                                                                                                                               values and this is supported in the latest population survey. Apart from Perth,
                                                                                                                                                                                                                                                                                           property values…”                   the fastest population growth centres in the to 2001 were Mandurah, the
                                                                                                                                                                                                                                                                                                                               remainder of the south west of WA and the Kimberly.

                                                                                                                                                                                                                                                                                                     "The best preparation for tomorrow is to do today's work superbly well'.
   WIN a
People who have ever wished to visit the factory of dreams in the United States -
Hollywood - now have the opportunity through the latest national listings campaign
being promoted by the Professionals Real Estate Group.

Local homesellers have the chance of winning a               lists their home with the Professionals qualifies for two
fabulous holiday in Hollywood, USA, for two people by        entries into the competition.
entering the latest Professionals home listing
competition.                                                 "The total value of this fantastic holiday for two people
                                                             is nearly $7,000.
The two lucky winners will receive a blockbusting
holiday in Hollywood and as part of this movie star          "The Professionals Real Estate Group anticipates that
package trip they will enjoy a full day tour of the          there will be strong interest in this competition
fantastic Universal studios, a celebrity tour of the homes   following the huge success of a national listings
of the rich and famous and a visit to the legendary walk     competition held during 2002 which had a major prize
of fame.                                                     of the Safari holiday to South Africa. The prize was won
                                                             by a Melbourne couple.
The winners will have the opportunity of visiting some
of America's most famous icons such as Beverly Hills,        "Theme holidays are becoming more popular and we
Rodeo Drive and Venice Beach.                                expect a very large number of entries from local
                                                             residents for this wonderful holiday to Hollywood.
According to Steve Wright, group chief executive
officer, homesellers who receive an appraisal from the       "In addition to the major prize of Hollywood, there will
                         Professionals Real Estate           be super saver movie passes for the runners-up in each
                          Group will automatically           State."
                          entered into the national

                            "Prospective homesellers            "Our business life is not to get ahead of
                            can double their chance of          others, but to get ahead of ourselves - to
                             winning if they decide to             break our own records, to outstrip
                             list their home with the
                              Professionals   because                   yesterday by our today".
                              anyone who gets an
                                                                                               STEWART B. JOHNSON
                          appraisal and subsequently

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