Evolution Home Loans Newsletter DECEMBER 2008

Contents

Time To Stop Renting?
Coining It In

Evolution Home Loans
Elmbay Holdings Pty Ltd - FBL 2395

PO Box 1132
Joondalup WA 6919

Tel:	08 9300 1410
Fax:	08 9300 1412

E-mail:	Click Here
Website:	Click Here

While you are busy looking for a property, Evolution Home Loans can analyse and compare the home loan market on your behalf. We offer a range of home loans with access to 25+ lenders through the Australian Finance Group (AFG).

With fantastic software capabilities we are able to quickly and accurately determine which banks may best suit your lending requirements.

Our service to you is complimentary and may save you time, effort and money. We are available to see you during the day or evening, even on weekends, because we work "your" hours not bank hours.

The Mortgage and Finance Association of Australia (MFAA) has over 10,000 members including all the major banks and lenders, plus mortgage brokers.

The membership application process has strict requirements for experience, education, industry sponsorship, and probity checks.

All members must join the independent dispute resolution service, the Credit Ombudsman Service Limited (COSL), or a recognised equivalent.

Australian Finance Group (AFG) is an independently owned, Australian company specialising in arranging loans for almost any purpose, in most cases at no charge to the customer.

AFG is the largest third party wholesaler introducer of mortgages in Australia processing on average 6000+ residential mortgages per month, with market share in excess of 20% of the Australian broker market.

Hello,

Wishing you and your families an enjoyable and relaxing Christmas and all the best for a Great New Year. I look forward to catching up with you again in 2009.

Time To Stop Renting?

Renting a property can make sense in certain situations.

However, there are plenty of reasons why now is a great time to buy - so perhaps it's time to make the move.

There have been a lot of significant changes in the economy and the property market in recent months. Many of these changes are encouraging for those seeking to exit the rental market and buy their own home, and means that now could well be the right time to buy.

Interest Rates

The most striking trend in recent months has been the “global financial crisis”. This has had a significant impact on two areas of concern to potential home buyers: job security and interest rates.

Some business sectors are contracting and reducing their employees - the financial services sector in particular. But many other sectors remain largely unaffected, and job security remains strong.

For the majority of people, then, job security is not a major concern. Indeed, the current crisis offers opportunity for many because of the significant reduction in interest rates.

The Reserve Bank has reduced the cash rate four times since September 2008, from 7.25% to 4.25%. The rate hasn’t been this low since May 2002. Lenders have passed on most of these decreases to their home loan rates. Further, many economists are forecasting that interest rates will continue to fall to record lows during 2009.

First Home Buyers Boost

The Government has recently announced a $10.4 billion Economic Security Strategy. Part of the package offers increased help for Australians wanting to buy their first home.

The First Home Owners Boost (“FHOB”) doubles the existing First Home Owners Grant (“FHOG”) on existing homes to $14,000 and triples the existing grant for newly built homes to $21,000. This is a time limited measure, running until 30 June 2009. Further, some State governments have offered additional incentives to first time buyers.

“Now could be a good time to invest in some property.”This means that now is a great time to purchase your first home – low interest rates and significant cash incentives.

But what about the rental market? Is it still as attractive to remain as a renter?

Vacancies and Rentals

According to the Real Estate Institute of Australia’s latest Market Facts report, the industry vacancy rate benchmark is considered to be a value of 3.0%. Vacancy rates lower than 3.0% indicate strong demand for rental accommodation.

Currently “vacancy rates remain at record lows in most capital cities around Australia” with average rates sitting around 1.6%.

This means that demand for rental accommodation remains high, which in turn has led to increased rents. The REIA reports that “high demand for rental properties ensures that median rents continue to rise in most capital cities.”

Median rents are reported to have increased by 10% and more in most capital cities over the past 12 months.

This means that the economic case for buying rather than renting has become stronger in recent months.

House Prices

At the same time, the property sales market has been weak in recent months with median house prices decreasing in seven of the eight capital cities over the most recent quarter.

The largest decline has been in Canberra where the median house price decreased 7.0%. Only Darwin experienced any increase in median house price, and this was just 0.6% over the quarter.

Whilst no-one can be certain whether the market is “at the bottom”, there is increasing evidence that the next 12 months will see an increase in house prices as demand from first home buyers starts to reignite the bottom of the market.

This means that, from a price perspective, now would be a good time to buy a property as prices are weak, but look likely to start increasing within the next twelve months.

Summary

There are plenty of reasons for people to move into property ownership. Low interest rates, weak property prices, government cash incentives plus increasing rents are all factors that make the “buy” decision an attractive proposition.

Coining It In

For some people, collecting coins is an interesting hobby.

For others, though, it is a niche investment that forms part of their overall wealth or retirement strategy.

Numismatics is the name given to the science, study or collection of coins, medals and similar objects.

It is believed to be the oldest hobby known to man. People have been collecting coins for over two thousand years, or as long as coins themselves have existed.

Why Collect?

People collect coins for various reasons:

Historical interest. Coins can give us a “window” into history. They allow us to understand a moment in time – the people, their values, their leaders, and the way that the society was developing.
Family heirlooms. Coins can become part of a family’s own history, as they become a unique and valuable heirloom passed from generation to generation.
Investment. For some people, rare coins form a part of their investment strategy.

But can rare coins really be an effective and profitable part of an investment portfolio?

History Of Strong Returns

New investors are often surprised that the Australian coin market is so well established. It has been an important focus for investment since the 1950s.

Certain parts of the coin market have enjoyed steady growth of around 13% to 17% per annum. For example, the 1919 Type 5 Square Penny was purchased in 1986 for $3,600. In 2007 it sold for $79,000, realising an annual capital growth of 15.8% net.

Like most markets, the coin market responds to supply and demand. The finite supply of coins gives the market some long term stability, meaning that it is less affected by interest rate or inflation.

Benefits Of Investment

The ATO recognises that rare coins can be a legitimate investment of a Self-Managed Super Fund. In addition, there are other benefits:

Rare coins can be accumulated privately, as no deeds need to be lodged with authorities.
They are quite a liquid asset that can be bought and sold easily.
The profits are not taxable until the coins are sold.

Are Coins Worth Collecting?

The dawn of the internet means that there is a lot of market information available. It also facilitates efficient buying and selling.

Entry into the market can be done cost-effectively, as many coins cost only a few hundred dollars to buy.

Investors should be aware, however, that coin collecting may not offer the same kind of instant return that some stocks have achieved (NB nor the same kind of loss). Some may find coin collecting a slow, frustrating investment as good collections can take many years to build – as can market knowledge.

But for investors looking for a different, niche addition to their portfolio, coin collecting could be worth considering.

DISCLAIMER: This newsletter is provided for general information only. Please do not rely on this newsletter as a substitute for specific legal or financial advice. Before making any decisions you should consider your specific objectives, financial situation and needs.