First home buyers set to benefit from housing slump

Financial comparison website RateCity.com.au found that first home buyers face a tougher environment than last year, with the release of its second First Home Buyer Index.
But despite these concerns, the RateCity report shows property prices were relatively stable over the past 12 months and some states are lower. The national average house price for instance, (based on the RP Data-Rismark Hedonic Index using the capital cities data) fell by 0.15 percent to about $491,000.
"Interest rates have been on hold since November 2010, and recent Reserve Bank comments suggest relatively slow rate movements for the rest of 2011," says Mr Smith.
"We believe this is a very good time for potential first home buyers who are confident about their employment prospects and have a solid track record of building savings, and can therefore meet repayments with confidence."
RP Data's research director, Tim Lawless agreed.
"With household incomes growing at 6 percent per snnum, interest rates potentiall approaching the peak of the tightening cycle, rents increasing, and house values going nowhere, buyers are seeing an improvement in their position," he said.
"With first time buyers now representing a bit less than 15 percnet of all owner occupier housing finance commitments it is likely that market activity in the first-time buyer market will increase in the medium term."
The RateCity Index measures the level of difficulty for first home buyers entering the property market. It compares household incomes, first home buyer mortgage sizes, the benchmark basic variable rate – which is the average of the four major banks including ANZ, Commonwealth Bank, National Australia Bank and Westpac – monthly repayments and percentage of income towards repayments.
Currently first home buyers are facing tougher challenges than 12 months ago, with the RateCity Index lifting by nine points since February 2010 to reach 120 points in February 2011.
Damian Smith, RateCity’s CEO, said the biggest factor contributing to this change was interest rates.
"There’s no doubt that first home buyers are nervous about their chances of getting a foothold in the property market. We’ve seen the benchmark basic variable rate lift by 115 basis points in the past year to 7.17 percent. Also, lower government grants for first home owners, plus general consumer uncertainty are hanging over the market," says Mr Smith.
"The average first home buyer is paying around $164 more per month in mortgage repayments compared to 12 months ago, which has a big impact on the family budget.
"As a result, the level of activity from first home buyers is historically low. Compared to 12 months ago, the proportion of first home buyers out of all home loans financed has fallen by 3.7 percentage points to 14.9 percent."

Source: http://finance.ninemsn.com.au/pfproperty/buying/8242582/first-home-buyers-set-to-benefit-from-housing-slump

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How the rich got richer

The past year was very good to some of the richest people in the world. Many of the globe's wealthiest saw their net worth increase through entrepreneurship, investing, inheritances and other business endeavours. These individuals wisely put their money to good use and reaped the rewards of their wise stewardship in 2011. Let's take a look at how the world's richest people got a little richer over the past year.
Entrepreneurship
Bill Gates life is a testament to the wealth-building power of entrepreneurship. His tiny start-up company, Microsoft, has evolved into one of the largest technological companies in the world. He is proving that full-time philanthropists can still maintain a spot on Forbes richest list. Gates has given away billions of dollars over the past few years and no longer takes a salary from Microsoft, yet he remains the second wealthiest man in the world. Gates fortune increased from US$53 billion to US$56 billion dollars over the past year.
Commodities
The multi-year run up in oil and gold prices has not just benefited oil and gold investors. Business owners like Elke Batista have reaped a nice return on investment from their oil companies' holdings. Batista has a conglomerate, with the majority of his holdings being in the energy and mining sectors. He has seen an 11% growth in his net worth over the past year, as it grew to US$30 billion dollars. Elke Batiste is the wealthiest man in Brazil and has his eyes on the number one spot in the world.
Expansion
Bernard Arnault may have become wealthy by inheriting his father's construction company, but wealth has not made him lazy. The richest man in Europe increased his fortune 49% over the past year due to aggressive expansion. Arnault aggressively expanded his empire by acquiring profitable businesses through takeovers and shrewd decision making. He increased his fortune from US$27.5 billion dollars in 2010 to US$41 billion dollars in 2011.
Real Estate
The drop in the North American real estate market has not affected the price of real estate around the world. As Lee Shau-Kee has proven, there is still money to be made in the global real estate market. Real estate prices in Hong Kong have risen 65% since 2009. Lee has seen his net worth double from US$9 billion dollars in 2009 to US$19 billion dollars in 2011. Lee is increasing his investment in the real estate sector with his recent US$1.3 billion dollar investment in Henderson Land Development.
Inheritance
Inheriting wealth is one way that a person can rise from relative obscurity into the ranks of the rich and famous. Scott Duncan vaulted onto the Forbes billionaires list after the passing of his father last year. His father, Dan, was the head of the very profitable energy company, Enterprise Products Partners L.P. Scott inherited US$3.1 billion dollars along with each of his three siblings. At the age of 28, he is now one of the youngest billionaires in the world.
Investing
The Oracle of Omaha used the financial recession to make investments that have paid off big time for himself and his company. Buffett's net worth has risen US$13 billion dollars over the past two years to US$50 billion dollars, and his company, Berkshire Hathaway, has seen its value rise 15% last year. Buffett wisely invested in iconic companies like General Electric and Goldman Sachs. Buffett's Goldman Sachs preferred stock investment in Goldman Sachs made him US$15 a second.
The Bottom Line
As you can tell, the world's wealthiest people were able to increase their fortunes by putting their money to good use. Of course, they say the first million is the hardest to make, so it's no surprise that these multi-millionaires are able to propel their fortunes to greater heights each year.
Source: http://au.pfinance.yahoo.com/money-manager/smart-saving/article/-/9409444/how-the-rich-got-richer
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