Streetwise Property Alert 31st October 2013

Has everyone read the UK and international property newsletters for October? Last call! Email back.


Australia – More News

There is something of a recovery taking place in the property market in Australia; some, with vested interests, are talking it up as a boom but more cautious pundits are suggesting it is a recovery and, arguably, a fragile one at that. Moody’s, the investors service, goes further and says a correction ‘cannot be ruled out.’

‘There is some risk of a correction in the housing market that would be a potential problem for the banking system. We don’t think we’re seeing any kind of cliff where you’d suddenly have a big problem for banks and the government and banks are well placed to cope with a sudden weakening in the housing market.’ Pause for thought though?

Turkey – A Warning

Tolga Han, international vice-president of Projebeyaz International offers a note of caution on investing in Turkey; in essence, there are good investment opportunities but investors also run the risk of being scammed. ‘Whatever they want to buy, they must consult (i.e. take advice).’

‘The Istanbul property market averages 12 to 15 per cent (price growth) annually. It is also cheap. The average price was $2,500/square metre. Of course there are many high-quality projects right now with $10,000/sqm, $15,000/sqm.’

‘The returns on off-plan projects could double in two years in the right deal. However, the minimum gain was 15-20 per cent over the same timeframe for established projects. Rental returns average about seven to eight per cent annually. But all the GCC investors are looking for 10, 12, 15 per cent. It’s not possible in Turkey right now.’

HMRC Reminder

We’ve been talking to various members about the new HMRC campaign – in short, declare your rentals before HMRC comes to get you. One member sent me a clipping from a blog by an accountant which reveals a common theme. ‘Not every landlord with untaxed rental income is deliberately evading tax of course. I spoke to a client in the south of England in the last few days who was planning to rent out her home whilst she was out of the country for a short while. Apparently, the estate agent had told her that she would not have to pay any tax on the rents. That was simply not correct.’

‘Bad advice can often lead people into making bad decisions. Rented property, whether in the UK or abroad, has to be declared to HMRC in nearly every situation and the taxman will not regard bad advice as an excuse. If you are a landlord who has not paid tax on your rents then you should take steps to put your affairs in order.’ Good advice.

New Zealand Update

If ‘supply and demand’ and ‘a strong home market’ are part of your overseas investing criteria you will be interested in New Zealand. The largest real estate group there, Harcourts, draws attention to the rising population – 30,000+ a year – and the need for ‘rapid construction’.

‘Prices have only risen sharply in Auckland and Christchurch. Construction simply has not kept up with demand. We need the government to make the consent process easier and more attractive to developers to build in our two largest cities. Our population is growing and we need more houses. Adjusting LVR restrictions and interest rates won’t change that.’

‘It also impacts on parts of the country where the property market is not strong. Provincial New Zealand, Wellington, Dunedin and Hamilton do not have an issue with housing affordability, but as of 1 October things have got a lot harder for people wanting to purchase in these areas.’

‘We have reached this housing shortage in Auckland and Christchurch when population growth is comparatively low. When growth speeds up again, as it inevitably will, we need to have the housing and infrastructure in place to cope. This is what the Government should be focusing on.’

That’s it other than to say that if you want to read the latest currencies review from Peter at Pure FX, please email back for it.

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