Forced Sale

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<p>EXPERT OBSERVER</p>
<div>A quick look at today's arrivals and departures figures. </div>
<div> </div>
<div>Well, it's a bit like the famous old chart chronicling 1,001 days in the well-being of a Thanksgiving turkey.</div>
<div> </div>
<div>Chinese short-term arrivals into Australia fell to a seasonally adjusted total of just 19,500 in February, to be down by about 90 per cent. </div>
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<div class="separator"><a href="https://1.bp.blogspot.com/-6i1Av1jlptY/XpaY17aaUAI/AAAAAAAA1O4/101Tn39UUQw_-P0YcoS3-TsyQN-nZEV1wCNcBGAsYHQ/s1600/China.jpg"><img src="https://1.bp.blogspot.com/-6i1Av1jlptY/XpaY17aaUAI/AAAAAAAA1O4/101Tn39UUQw_-P0YcoS3-TsyQN-nZEV1wCNcBGAsYHQ/s640/China.jpg" width="640" height="354" data-original-height="803" data-original-width="1447"></a></div>
<p>Ouch.</p>
<div>There were still some 72,500 international arrivals for the purposes of education in the month, but February is normally one of the two months of the year wherein far higher numbers are expected, as students are typically expected to return from their Xmas break.</div>
<div> </div>
<div>And it was not so this year, as many international students were stuck in China or elsewhere. </div>
<p> </p>
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<div>Australia has long seen its economy juiced by relatively high intake resulting from net overseas migration, international students, and tourism from China and other parts of Asia. </div>
<div> </div>
<div>To date, there's been less impact showing up in the figures for permanent and long-term movements.</div>
<div> </div>
<div>Indeed, there were still some 97,840 permanent and long term arrivals in the month, and only 32,930 long-term departures, although the next intake is often higher than this in sunny February. </div>
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<div>These figures will naturally slow through the remainder of Q1 and Q2, however. </div>
<div> </div>
<div>Thus while the economy might see a staged re-entry to business trading, things can't really 'return to normal' until the borders can be opened again, which must obviously take time. </div>
<div> </div>
<div>Out of interest, the IMF is forecasting a very strong rebound for Australia's economy in 2021 - faster than the US, UK, Germany, Canada, or France - though how they actually arrived at these figure is anyone's guess. </div>
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<div class="separator"><img src="https://1.bp.blogspot.com/-lG7XeYPpXJc/XpbmleYO-jI/AAAAAAAA1QA/xc0cVVG5gXsrOWZmtShtXxNqO8HIOs9rACNcBGAsYHQ/s640/IMF.jpg" width="640" height="346" data-original-height="758" data-original-width="1398"></div>
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<div><span style="text-decoration: underline;"><em>Source: Joiner, IFM Investors</em></span></div>
<div> </div>
<div>A sceptic might justifiably ask how their 2020 forecasts are tracking so far...</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Listings down</span></strong></div>
<p>There's not been too much sign of forced selling in the housing market just yet, with new listings all but cut in half.</p>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-Fzr9yrwd84U/Xpa3PsmxG2I/AAAAAAAA1PQ/sX72dYuvdc40IQ0nLSSBnI2KrKNTjKzsQCNcBGAsYHQ/s640/EVmOH_7UMAErMCP.jpg" width="640" height="376" data-original-height="488" data-original-width="828"></div>
<p><em>S</em><em>ource:</em><em> My Housing Market</em></p>
<p>Resi construction is also forecast to all but dry up this year, with annual dwelling commencements tipped to dip below 100,000 over the coming quarters (UBS), which would the lowest rate of new supply since 'at least 1960' (h/t Scutty).</p>
<p>In fact, we're still seeing plenty of competition for the limited amount of new stock in blue chip areas, and even some examples of prices going above price guides.</p>
<p>It's extremely doubtful that's the case in outer suburban areas or regional hubs, though, as rising unemployment and underemployment begin to bite</p>
<p><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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pwargent-M4siyDbqQY

International arrivals at multiyear lows: Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>There's not been too much sign of forced selling in the housing market just yet, with new listings all but cut in half.</p>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-Fzr9yrwd84U/Xpa3PsmxG2I/AAAAAAAA1PQ/sX72dYuvdc40IQ0nLSSBnI2KrKNTjKzsQCNcBGAsYHQ/s640/EVmOH_7UMAErMCP.jpg" width="640" height="376" data-original-height="488" data-original-width="828"></div>
<p><em>S</em><em>ource:</em><em> My Housing Market</em></p>
<div> </div>
<p>Resi construction is also forecast to all but dry up this year, with annual dwelling commencements tipped to dip below 100,000 over the coming quarters (UBS), which would the lowest rate of new supply since 'at least 1960' (h/t Scutty).</p>
<p>In fact, we're still seeing plenty of competition for the limited amount of new stock in blue chip areas, and even some examples of prices going above price guides.</p>
<p>It's extremely doubtful that's the case in outer suburban areas or regional hubs, though, as rising unemployment and underemployment begin to bite</p>
<p><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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New listings nearly cut in half: Pete Wargent

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<p>A tsunami of forced sales is much more likely to be a trickle, says RiskWise Property Research CEO Doron Peleg.</p>
<p>Peleg said a tsunami of forced sales was extremely remote and the that despite the doomsayers forecasting the end is nigh for the property market, high levels of equity and a strong labour market will eliminate the potential of any collapse. </p>
<p class="x_MsoNormal"><span>“What we are finding is the greater the holding period</span><span class="Apple-converted-space"> </span><span>in strong markets, the greater the equity people have,” Peleg said.</span></p>
<p class="x_MsoNormal"><span>“Overall in Greater Sydney, based on CoreLogic data, the estimated equity is $588,000 for houses with a percentage of 127.5 per cent capital gains since a property changed hands and for units $325,000, with a median of 82.5 per cent capital gains.</span></p>
<p class="x_MsoNormal"><span>"In Greater Melbourne the median estimated equity is $405,909</span><span class="Apple-converted-space"> </span><span>with a percentage of 121.3 per cent capital gains since a property changed hands and for units $193,0102, with a median of 55.5 per cent capital gains.</span></p>
<p class="x_MsoNormal">Click here <a href="https://www.propertyobserver.com.au/images/2018/9/26/Graph1.jpg" target="_blank">to enlarge.</a></p>
<p class="x_MsoNormal"> <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/26/Graph1.jpg" alt=""></p>
<p class="x_MsoNormal"><span>“Add to that a strong job market in both Sydney and Melbourne, with an unemployment rate of 4.4 per cent and 5.3 per cent respectively, meaning people have stable incomes, it follows that even if the market does fall dramatically they are at least able to hold on to their properties for longer periods and, in the vast majority of cases, will be able to refinance due to the level of equity they have.”</span></p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/9/26/graph2.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/26/graph2.jpg" alt=""></p>
<p class="x_MsoNormal">According to the RiskWise quarterly<span class="Apple-converted-space"> </span><span class="x_MsoHyperlink"><a id="LPlnk357788" class="OWAAutoLink" href="https://www.riskwiseproperty.com.au/News/riskwise-quarterly-report-queensland%E2%80%99s" target="_blank">Risks &amp; Opportunities Report</a></span>, NSW displays strong economic fundamentals while Victoria has the highest population growth across Australia, a solid economy and a healthy job market.</p>
<p class="x_MsoNormal"><span>“The NSW economy has delivered and is projected to deliver solid economic growth. Government spending is high, and the state also attracted a consistent level of private capital expenditure which has contributed to its stability,” he said.</span></p>
<p class="x_MsoNormal"><span>“The strength of the economy has a strong connection with a healthy job market and good population growth.”</span></p>
<p class="x_MsoNormal"><span>He said while Sydney had capital growth for houses of -5.5 per cent, Melbourne of 2.5 per cent, and auction clearance rates were in the mid 50s, there were no signs of a total collapse of the property market on the horizon.</span></p>
<p class="x_MsoNormal"><span>“The market is really not that bad. Yes, there have been some reductions this year and perhaps there will be some more next year but it’s not as bad as has been made out,” he said.</span></p>
<p class="x_MsoNormal"><span>“Also, while the auction clearance rates, which are a strong indicator of the market, are low they are still reasonable.</span></p>
<p class="x_MsoNormal"><span>“There could be some small pockets of increased supply and reduced profits but overall there won’t be a tsunami of forced sales.</span></p>
<p class="x_MsoNormal"><span>“There is only a very small proportion of people who bought very recently, experienced price reduction and who are struggling with mortgage repayments who are potentially at risk. </span></p>
<p class="x_MsoNormal"><span>"However, taking into consideration the strength of the labour market in Sydney and Melbourne and also taking into consideration the current default rates for those capital cities, it’s clear to see the situation is not as dire as some are saying.”</span></p>
<p class="x_MsoNormal"><span>Peleg said the potential of a Labor win at the next Federal elections and therefore likely changes to negative gearing and capital gains tax was far more likely to have a significant impact across the entire country.</span></p>
<p class="x_MsoNormal"><span>However, he said the RBA could in that case intervene in the market, if required, as it did during the GFC by cutting interest rates while state governments provided significant boosts to first home buyers.</span> </p>
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jrobinson-rf4aSBido9

Forced sales more likely to be trickle rather than tsunami: RiskWise

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<p>There were 170 Brisbane homes taken to weekend auction with a 50 percent preliminary clearance rate, higher than one year ago, when 44.9 per cent of the 151 properties taken to auction were successful.</p>
<p>The nation's cheapest sale was at <a href="https://www.realestate.com.au/property-house-qld-regency+downs-126373750" target="_blank">27 Kingfisher Ct, Regency Downs</a>, west of Brisbane which sold for $235,000 in a mortgagee sale.</p>
<p>The three bedroom home on 4357 sqm had sold at $307,500 in 2010 and $265,000 in 2007.</p>
<p>It was initially offered for sale in 2015 with $380,000 hopes with the price expectations adjusted over the past two years.</p>
<p> </p>
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j.ballantyne1990-6AQqhLzZaK

Regency Downs mortgagee sale at less than a decade ago

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<p>A vacant lot at Point Vernon, near Hervey Bay has been listed for mortgagee sale.</p>
<p>Located at <a href="https://www.realestate.com.au/property-residential%20land-qld-point+vernon-201901098" target="_blank">100 Corser Street</a>, the 641 sqm property last sold for $100,000 in 1992.</p>
<p>It is 15 minutes to the Hervey Bay CBD.</p>
<p>The property is fenced on two sides and fully serviced by water, power and sewerage.</p>
<p>There is kerbside guttering.</p>
<p>The property is being marketed as ideal to develop with Gatakers Bay close by as well as shops and cafes.</p>
<p>The property will be auctioned on October 8 through Scott and Katrina Mitchell from Mitchell’s Realty Hervey Bay.</p>
<p>CoreLogic puts the median house price as $315,000.</p>
<p>The latest vacant block to sell was at <a href="https://www.realestate.com.au/sold/property-residential+land-qld-point+vernon-201867902" target="_blank">18 Mant Street</a>, Point Vernon (below) which sold for $447,500 in July 2017.</p>
<p>The land size was 663 sqm with waterfront views.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/18%20Mant%20Street.jpg" alt=""></p>
<p>A cheaper block of land at <a href="https://www.realestate.com.au/sold/property-residential+land-qld-point+vernon-201733770" target="_blank">5 Montrose Close</a>, Point Vernon (below) was sold in May 2017 for $170,000.</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/5%20Montrose%20Close.jpg" alt=""></p>
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Point Vernon vacant land mortgagee sale 

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<p>An oceanfront apartment in Sydney’s Manly, set in a boutique building of six, has been sold under the watch of the Foreign Investment Review Board. </p>
<p>The price expectations for the two-bedroom apartment at <a href="https://www.realestate.com.au/sold/property-apartment-nsw-manly-124916206" target="_blank">5/60 Bower Street</a> was between $2.75 million and $3 million.</p>
<p>It was offloaded by a Canadian family with two kids who unwittingly found themselves in the midst of FIRB’s new rules of foreign ownership.</p>
<p>They were forced to sell their home of 14 years.</p>
<p>Set to a simply breathtaking 180 degree ocean and coastal panorama, this 168sqm oceanfront apartment evokes an ambiance of relaxed sophistication - reminiscent of a Mediterranean luxury villa. Placed in a boutique building of six, its desirable and exclusive setting is right between Shelly and Manly Beach. </p>
<p>Rob is best known in his Canadian home town as the high-profile oil and gas entrepreneur who co-founded the Peters and Co brokerage in 1971 and owns the Black Diamond Polo Club.</p>
<p>He unknowingly bought it in contravention of the rules on foreign investment.</p>
<p>The couple’s apartment, and another they own in the same block, are two of 61 properties hit with divestment orders since the federal government launched its foreign investment crackdown two years ago.</p>
<p>“There’s the story being portrayed by Treasurer Scott Morrison to the media, and then there’s the human story behind these purchases, and the two are not the same,” Mrs Peters told Domain.</p>
<p>The Peters family bought their two-bedroom apartment in a block of six overlooking Fairy Bower on a leasehold owned by the Catholic Church in 2003 for $1.1 million.</p>
<p>“At that time the issue of the legalities of our purchase was never mentioned by our lawyers or anyone, and we were not aware we were in breach of any rules,” she said.</p>
<p>"We came forward as part of the amnesty,” Mrs Peters said.</p>
<p>Jake Rowe, of Rowe Partners Real Estate, also <a href="https://www.realestate.com.au/sold/property-apartment-nsw-manly-125124442" target="_blank">listed their second apartment</a> which is now sold as well.</p>
<p>They were given 12 months to sell and there’s been no fine or charges laid.</p>
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jonathanchancellor-7SQnKwU6yx

Canadian family forced to sell Manly home under FIRB rules

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<p>Treasurer Scott Morrison has forced the sale of 15 more illegally bought residential properties held by foreigners, taking the total number of forced sales to 61.</p>
<p>The 15 latest properties are in Victoria and Queensland, with a combined purchase price of more than $14 million and are held by investors from China, India, Indonesia, Iran, Malaysia, the United Kingdom and Germany.</p>
<p>Of the 15, six were owned by Chinese while three were from the UK. The highest divestment was a $5.9 million property in Melbourne’s Rockbank, owned by an Indian national.</p>
<p>In all, the combined value of the 61 properties is $107 million, according to a press release on the Treasury department’s website.</p>
<p>The foreign nationals in the latest group of forced disposals purchased their properties without Foreign Investment Review Board (FIRB) approval and in some cases held multiple established properties in breach of the rules. The ATO identified these breaches through data matching programs as well as using information provided by the public.</p>
<p><img src="https://www.urban.com.au/images/2017/02/13/IlegalProperties.png" alt=""></p>
<p>Another 36 foreigners have sold properties during the course of ATO investigations, underscoring improved compliance with the rules, it said.</p>
<p>So far, the taxation office has found more than 570 foreigners who have breached property rules. </p>
<p>Foreigners are not allowed to buy established dwellings and can only buy new property and have to get their applications approved by the FIRB.</p>
<p>Failure to meet these conditions could result in civil penalties or criminal prosecution.</p>
<p>The Turnbull government has increased stamp duty and other taxes for foreigners applying to buy property in Australia with a view to check the rapid rise in dwelling prices.</p>
<p>Since introducing the new fees on 1 December 2015 more than $140 million has been collected, the release said.</p>
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Government forces foreign owners of 15 illegally bought properties to sell

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<p class="x_MsoNormal"> </p>
<p>The Federal Government has issued a list of the properties where they have forced foreign nationals to divest a total of 42 properties.</p>
<p class="x_MsoNormal"> </p>
<p>Treasurer Scott Morrison has ordered the divestment of a further 16 Australian residential properties this week.</p>
<p class="x_MsoNormal"> </p>
<p>He said under the previous Labor government, no foreign nationals were forced to divest illegally held Australian property. </p>
<p class="x_MsoNormal"> </p>
<p>“Since the Government's transfer of responsibility to the ATO for compliance in May 2015, over 2,200 matters have been referred for investigation.</p>
<p class="x_MsoNormal"> </p>
<p>"Through information provided by the public, together with the ATO's own enquiries, approximately 400 cases remain under active investigation.</p>
<p class="x_MsoNormal"> </p>
<p>“Since a new penalty regime was introduced from 1 December last year, 179 penalty notices have been issued, totaling over $900,000.  </p>
<p class="x_MsoNormal"> </p>
<p>“Illegal real estate purchases by foreign citizens attract criminal penalties of up to $135,000 or three years' imprisonment, or both for individuals; and up to $675,000 for companies.</p>
<p class="x_MsoNormal"> </p>
<p>"The new rules also allow capital gains made on illegal investments to be forfeited.</p>
<p class="x_MsoNormal"> </p>
<p>“In addition to divestments, a number of people came forward during the reduced penalty period who were not in breach and some who voluntarily sold their properties while the ATO was examining their case.</p>
<p class="x_MsoNormal"> </p>
<p>"There are at least 25 examples of foreign investors self-divesting in this way showing a change in behaviour towards more compliance with the rules and a strengthening of the program overall."</p>
<p class="x_MsoNormal"> </p>
<p>“While Australia welcomes foreign investment, foreign investors must comply with our laws,” Mr Morrison said.</p>
<p class="x_MsoNormal"><span lang="EN-US"><span style="font-size: 12.16px; line-height: 1.3em;"> </span></span></p>
<p class="x_MsoNormal"><a href="/images/2016/09/20/Screen%20Shot%202016-09-20%20at%208.14.51%20AM.png" target="_blank"><span lang="EN-US">Click to enlarge</span></a></p>
<p class="x_MsoNormal"><span lang="EN-US"><img src="/images/2016/09/20/Screen%20Shot%202016-09-20%20at%208.14.51%20AM.png" alt=""></span></p>
<p class="x_MsoNormal"> </p>
<p class="x_MsoNormal"><a href="/images/2016/09/20/Screen%20Shot%202016-09-20%20at%208.17.09%20AM.png" target="_blank">Click to enlarge</a></p>
<p class="x_MsoNormal"><img src="/images/2016/09/20/Screen%20Shot%202016-09-20%20at%208.17.09%20AM.png" alt=""></p>
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