Here is an extract from the Herald Sun Story:

AT FIRST the Melbourne multi-millionaire John Castran thought he had escaped the avalanche unscathed, unaware that metres away his Sydney skiing companion was dead.

Buried under more than 1.8 metres of snow on a New Zealand mountain range, Mr Castran, 53, could still move his arms and legs. But then the snow shifted and he was crushed.

Pinned beneath the overwhelming weight of what moments earlier had been featherweight powder snow, Mr Castran realised he did not have enough oxygen to yell for help.

The real estate agent survived the avalanche at Ragged Range, near Methven, west of Christchurch, yesterday, but a NSW businessman, 61, whose name has not been made public, was killed.

As Mr Castran ran out of air, he too thought he would perish under the ice. "You choke with the snow, you can’t breathe, you’re suffocating … it’s like being poured into plaster of Paris. The only thing I could move was my tongue, to push the snow away from in front of my mouth.

Here is a link to the full story: http://www.smh.com.au/world/avalanche-victim-shut-himself-down-to-survive-20090724-dw62.html

HOME hunters locked in bidding frenzies are pushing the prices of some properties through the roof.

Four bidders went hammer and tongs for a house in King St, Richmond, at the weekend, pushing the sale to almost $100,000 above its asking price of $620,000.

Eventually it went for $718,000. The price for the imitation Edwardian was touted in the $550,000-plus range during the campaign.

Even more spectacular results were achieved across the suburbs with even bigger margins.

Staggering results and a record price for the suburb saw do-or-die bidders vying for a parcel of land in Brunswick, which sent it almost $1 million over its reserve.

Quoted at $1.6 million, the block sold on Saturday for $2.58 million. Edwardian "Illoura" in Kew, advertised in the $750,000 plus range, changed hands for $915,000.

The weekend clearance rate of 86 per cent kept the overall clearance figures above 80 per cent for the seventh week in a row.

The home-ownership dream rarely used to feature a sibling in your bathtub and a parent on your certificate of title. These days though, first-home buyers are prepared to be flexible.

Housing affordability fell to record lows in the March quarter this year according to the latest Housing Industry Association-Commonwealth Bank report.                Mortgage payments accounting for 30.7 per cent of total first-home buyer income these days!

Generations X and Y are also settling down later meaning for many home ownership is a solo battle.

It’s not surprising then that increasing numbers of first-home buyers are teaming up with siblings, parents or friends in a bid to break into the property market.

“There’s been a noticeable trend towards family members buying property together, as property prices are still very high, particularly for first-home buyers,” says Aussie Home Loans boss John Symond.

The number of family members taking out mortgages together has jumped from about 1% of all loans originated by ‘Aussie’ to 5 per cent over the past two years!   Mortgage Choice has reported a similar trend. A survey carried out by the company last year revealed more than 6 per cent of people who bought property within the past two years had done so with family or friends. And of those who intended to buy property within the next two years, over 8 per cent intended to do so with family or friends!

The result can be a kind warning or a significant fine and large interest bill.

The tax office says investors’ should be responsible in getting their tax returns right and they can’t blame their accountant or plead ignorance if they get it wrong.

One of the most common mistakes investors make is claiming items that should be depreciated over several years.

According to the ATO, initial repairs to fix damage, defects or deterioration that existed when a property was bought are capital expenses that should be claimed as capital-works deductions over either 25 or 40 years.

Capital improvements such as re-modelling a bathroom or adding a pergola should also be claimed as capital-works deductions.

Other mistakes can include:

Interest

Taxpayers sometimes use loans for investing and private purposes — for example, to buy or renovate a rental property or to buy a motor boat.

The interest expense on the private portion of the loan (the boat) is not deductible!

Legal expenses

Conveyancing expenses incurred when buying and selling a property are not deductible. These form part of the cost for capital-gains tax purposes.

Travel expenses

If you take a holiday and visit your investment property while you’re there, you cannot claim a deduction for the full trip.

The tax office says you may claim only those expenses directly related to the property inspection and a proportion of accommodation expenses.

Plunging average prices for regional seaside homes don’t tell the full story.

Valuer-General Victoria sales figures released this month by Land Victoria show median house prices rose in a third of seaside towns!

From the end of 2007 to the end of last year, prices fell in 16 of 30 coastal towns and stayed level in four others!

Hardest hit is Port Fairy with a 34.6 per cent drop from $390,000 in late 2007 to $255,000 at the end of last year. Average house prices also fell dramatically in Blairgowrie, Barwon Heads, Portarlington and Rosebud West.

Anne Murphy of Stockdale & Leggo said Port Fairy sales during the summer were the best in the eight years she’s been there, with the big drop in the median house price for Port Fairy not because property values have fallen. Instead, figures have been skewed by tightly held, top-end properties being kept off the market.

“We’ve been recommending they delay selling because demand isn’t strong.”

People have owned houses here for 30 to 50 years. They’re kept in the family and passed down. Unless unforeseen circumstances such as a divorce occur, why sell in this market if you don’t have to?”

But Murphy says those Port Fairy vendors on the market are more realistic than past years.

“We’re not expecting a good summer season with the economy the way it is, but we’ve had extremely good results in the number of sales and most sales were within 10 per cent of asking prices.”

“In the last 18 months in our office there has been only one sale of a property that sold for less than the vendor paid for it!”

“Most properties here are about $450,000. You won’t get much for your money under $400,000.”

That still hasn’t stopped holiday-home hunters prowling Port Fairy.

“We’ve had people come in looking for that bargain,” “I personally don’t have any bargains but there are realistically priced properties and motivated vendors who’ll negotiate.”

A historic fishing port, Port Fairy is now a popular holiday and retirement town famed for its annual folk festival about 290km west of Melbourne.

An understandable concern and today’s historically low interest rates can’t be sustained forever because at some point the economy will begin recovering, inflation will grow and rates will rise!

That’s the economy’s cyclical nature for you.

When rates do rise it’s doubtful they’ll hit the dizzying heights of the late 1980s. The major lenders certainly don’t think so; they’re setting their 10year fixed rates about 7per cent.

With vast resources and access to the world’s top economic minds, it’s highly unlikely that major lenders will make the wrong call about the future direction of interest rates.

But for argument’s sake that they do and rates climb back to the heady levels of 20 years ago.

If interest rates go up that far it’s a sign that business and consumer confidence is high. When rates go up so does inflation. And when inflation rises, so do property values. Yes, your holding costs will be higher because of higher interest rates but as an investor you will benefit on three fronts.

High rental returns

First-home buyers won’t be prowling the property market for a buy as it’s less affordable in a high-interest-rate environment. This will keep them in the rental market, put pressure on the available rental accommodation and drive up asking rents. The higher the interest rates the higher the investment yield!

Negative gearing benefits

If your expenditure on the property exceeds your rental income, you’ll be able to soften the impact and increase your cash flow by claiming the difference as a tax deduction.

Substantial sale proceeds

If you can’t afford to hold the property you can sell it. Whilst not an ideal scenario, your property will have grown substantially in value during the time of high inflation so you’ll be better off than when you purchased it and that’s the aim of investing!

Of the 452 properties up for auction, 83 per cent sold and 77 properties were passed in!

However, the number of properties for auction was 126 fewer than at the same time last year!

The CEO of Real Estate Institute of Victoria attributed the high clearance rate to the extension of the first-home buyer’s grant announced in last week’s federal Budget, combined with low interest rates and an increase in investor numbers.

“It’s off a low base. There were not a lot of auctions,” Mr Raimondo said.

The part of the market performing really well is priced at or below the medium of about $410,000.

“The next two weeks we expect to see just under 1300 auctions, which is a very high number of auctions at this time of the year.

“I expect the clearance rate to remain high until the September 30 when the full first-home owner’s boost will be phased out.”

Flat and apartment clearances were also strong: 90 per cent of 136 properties at auction sold.

The latest residential land report from the Housing Industry Association revealed Melbourne’s median land price grew 0.7 per cent in the December quarter to a record $152,000.

The HIA-RP Data residential land report showed the price of land in Melbourne was up 4.8 per cent over the year.

The median land price in regional Victoria fell 2.8 per cent in the December quarter to $97,250, the lowest price since mid-2007.

Mortgage broker Mortgage Choice reported in April basic variable mortgages accounted for 48.15 per cent of all home loans approved - up nearly one per cent from March, while standard variable mortgages comprised 42.77 per cent of the market, down 1.47 per cent from March.

Basic variable loans generally have fewer loan features than a standard variable loan.

Fixed rate loans accounted for four per cent of all approvals up a percentage point from a month earlier.

Basic variable loans have been the most popular loan type though for four months after overtaking standard variable for the first time in January 2009!

Rates charged on variable home loans move in line with interest rates set by the Reserve Bank of Australia which successively cut its overnight cash rate since September last year to a 49-year low!

And despite interest rates being at their lowest in decades, the sensitive global and domestic economic climate is having a strong influence over loan product preferences.

Consumer conservatism with rates and fees continues to win out against loan flexibility and extra features.

Line of credit loans in April, popular with property investors, posted a fall, five per cent down from the previous month.

Commitments for owner-occupied housing rose 4.9 per cent in March, seasonally adjusted, to 59,793, Australian Bureau of Statistics data showed this month.

Total housing finance by value rose 6.7 per cent in March, seasonally adjusted, to $20.688 billion, based on the latest data available.

Vacancy rates across Melbourne are reasonably steady having been between one and 1.4 per cent for 12 months.  However it‘s significant that there’s a noted improvement in the outer suburbs.

The improvement could be due to the number of first homebuyers moving from rented accommodation into their own homes with the assistance of the grants, bonus and boosts.

The March quarter median prices showed that most of the activity in the marketplace has been in the outer suburbs; for instance Craigieburn, Melton South, Hillside, Epping, Caroline Springs, Werribee and Meadow Heights – all outer suburbs of Melbourne very popular with first homebuyers.

It‘s great news for renters if a by-product of the grants, bonus and boosts is an improvement in availability of rental accommodation, however monitoring of the situation over the next few months will tell of any continual improvement..

We’d consider that the rental market would be in balance once we reach a Melbourne-wide vacancy rate of 3%.

The last month’s REIV members figures have shown a very minor change in the inner suburbs where the vacancy rate moved from 1.5 to 1.3 per cent and in the middle suburbs where it moved from 1.4 to 1.3 per cent.