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| Units Outperform Houses |
The results of the RP Data-Rismark Home Value Index for June showed that the unit market has outperformed houses over the last 12 months and during the last five years.
Historically, houses have enjoyed a much more rapid appreciation in value than the growth recorded by units. There are a number of reasons for this more rapid level of growth: greater demand for houses, diminishing availability of development land, higher quality of stock and design available for houses rather than units and the greater Australian dream to own a house rather than a unit, amongst a number of other reasons.
Despite these factors, over the last five years units have recorded average annual value growth of 7.4% compared to 7.1% for houses. However, the results suggest that the superior performance of units compared to houses is quite a new phenomenon as over the last 10 years the average annual value growth of houses (9.9%) has well and truly outperformed units (8.0%).
Article courtesy of RP Data |
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| GETTING IT RIGHT |
Commenting on today’s announcement by the RBA that it will hold interest rates at 4.5 per cent, Andrew Thomas, Principal of Cremorne First National says there are plenty of opportunities around for home buyers and sellers, given current market conditions, as long as the fundamentals are focused on.
“At times like these, homes that are properly presented, appropriately priced and well marketed will always do well, regardless of what happens with interest rates,” Andrew said.
“It’s a matter of making sure you get the basic factors right.”
When there is relatively high business confidence, strong levels of immigration and low unemployment, the market becomes suitable for buyers. However, those seeking to sell can also make sure they take advantage of these prime conditions.
“In a slower market, there is less pressure on sellers and buyers and during the cooler months, there is less volume of stock around from which buyers can choose, so houses are more likely to sell,” Andrew said.
Andrew Thomas said currently there are growing investment returns in the property market, which should prove lucrative for the astute investor.
“Investors, in particular, can benefit greatly from the current market conditions and pick up some terrific properties that offer strong returns,” Andrew said.
- copy ends -
Issued by: First National Real Estate
For further information contact Andrew Thomas, Principal, Cremorne First National on 02 994 1234.
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| To Fix Or Not To Fix |
As the Reserve Bank eyes the possibility of further rises in interest rates, John Kavanagh examines the pros and cons of fixing a home-loan rate.
Interest rates on a number of fixed-rate home loans are currently lower than the variable rates of about 7.4 per cent that are being offered by many lenders.
With the prospect that interest rates will go higher over the next 18 months, the question of whether to fix all or some of the borrowing should be accorded serious consideration.
With signs of mortgage stress growing, borrowers need to make sure they are taking every opportunity to manage their debt burden efficiently.
Right now the best opportunity may lie in taking advantage of highly competitive fixed rates.
The financial services analyst for Infochoice, David Lalich, says most of the changes are to two- and three-year rates.
The best two-year fixed rates are below 7.2 per cent, which is competitive with a number of lenders' variable rates. The most competitive are RAMS, the Bank of Queensland, HSBC, Nationwide Mortgage and Commonwealth Bank.
Borrowers can have three-year rates below 7.5 per cent from RAMS, Heritage Building Society, Westpac, National Australia Bank, Better Option Home Loans and Greater Building Society.
Fixed-rate loans usually cost more than variable rates because the borrower is paying a premium for certainty.
It is like an insurance policy, whereby the borrower pays the bank for taking over the interest rateAt the moment, that premium is very low, which reduces the chances of becoming locked into a rate that could very well become unattractive a couple of years down the track.
Part of the fixed-or-variable debate has to be a consideration of where interest rates are headed.
The Reserve Bank's decision to hold off on a rate rise this month, combined with concerns that the European sovereign debt crisis is the beginning of GFC II, might lead people to think that the Reserve has taken further rate increases off its agenda.
Bank economists say it would be a mistake to think that way. All of them are forecasting higher rates later this year and throughout 2011.
ANZ forecasts that the official cash rate will rise from its current level of 4.5 per cent to 4.75 per cent in the September quarter and then to 5 per cent by the end of the year.
It expects the Reserve to have pushed cash rates to 5.5 per cent by June next year. Westpac's latest forecast is for the cash rate to hit 5 per cent by the end of the year and to reach 5.5 per cent by September next year.
The Commonwealth Bank is more bearish. It expects the cash rate to be 5 per cent by the end of the year and 6 per cent by the end of 2011.
risk.
Its view is that the strength of the Asian economy is the real determining factor for Australian monetary policy, not what is happening in Europe.
The National Australia Bank has a similar view. It is forecasting a cash rate of 5.25 per cent by the end of the year and 6 per cent by the end of 2011.
Its latest commentary says: "The key driver of our upward forecast is the additional income generated by sharply higher forecasts for the terms of trade - up 18 per cent over 2010. That, in turn, flows over into additional investment, profits and consumption."
Mortgage market data from a number of sources over the past couple of weeks shows an increase in the take-up of fixed-rate home loans.
Article Courtesy of JOHN KAVANAGH
Domain.com.au |
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| INTEREST RATES ON HOLD |
The Reserve Bank has opted to hold interest rates steady at its board meeting today.
"This will be welcome news to mortgage holders who have been hit by six rate rises since late last year," says Domain.com.au blogger and property writer Carolyn Boyd. “It will give everyone a bit of breathing space.”
Borrowers across the country have been hoping for the good news after being told by the Reserve Bank Governor, Glenn Stevens, that rates were near normal levels. Each 0.25 per cent interest rate rise adds another $50 to the monthly cost of an average mortgage. Australian mortgage holders are already paying about $300 more per month in repayments than they were in September last year.
Despite Australia facing a desperate shortage of properties, which has been putting pressure on prices, the heat appears to have come out of some of the larger metropolitan markets. The property market is still strong but there is not the frenzy that was around a few months ago. That perhaps shows the rate rises already handed out by the Reserve Bank are starting to bite.
Article courtesy Domain.com.au |
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| Henry Review Positive |
The Property Council of Australia has described
the government’s response to the Henry review as
positive for the real estate sector.
PCA chief executive Peter Verwer believes that the Henry report indicates Treasury understood the key issues. ‘‘The government’s response, on balance, has been very positive,’’
he said. Treasurer Wayne Swan has ruled out a number of the review’s recommendations, including changes to concessions on capital gains tax and negative gearing. On the subject of changes to negative gearing, Verwer said ‘‘Swan has rejected that and Henry himself said there were more important things’’.
With respect to Henry’s recommendation of abolishing stamp duty in favour of a broader land tax base, Mr Swan said he would make further announcements on this in coming months. The review criticised property stamp duty as being
a highly inefficient source of revenue. Deloitte tax partner Max Persson, who specialises in property, said Dr Henry had recommended expanding the land tax base as a replacement
because conveyancing stamp duty was relied on by the states so heavily. This would mean non-taxable landholders such as charities and churches would be taxed on commercially used
land they owned.
Dr Henry suggested that over time, land tax should apply to all land, but Mr Swan said it would not be levied on the family home. ‘‘That would increase the land tax base, which could give the states another source of funding which would
allow them to eliminate conveyancing stamp duties,’’ Mr Persson said.
Negative gearing and discounts to capital gains tax, areas where the government rejected any changes, encouraged the construction of housing stock and investment into rental properties. Dr Henry recommended the Coalition of Australian Governments should review other impediments to
construction, such as planning and zoning issues, development approval processes and the use of infrastructure charges to increase housing supply. He highlighted these measures as key
issues to housing affordability.
Mr Verwer says the council would engage with the government to ensure change to inefficient state taxes was part of a second wave of reform. He said a new infrastructure fund, financed
by a tax on mining profits, was also positive for the property industry, as was the increased superannuation guarantee and a reduction in the company tax rate. ‘‘This will help insure that state governments can spend money on infrastructure in a more strategic manner,’’ he said. ‘‘By increasing the superannuation guaranteed contributions, it is good for the funds manager and real estate businesses.’’
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| Interest Rates Up Again |
Australian mortgage holders will have to dig deeper for their repayments after the Reserve Bank board decided today to lift interest rates by 0.25 per cent.
The increase will be of little surprise to mortgage holders, who have been bracing themselves for a higher interest bill after repeated warnings by the Reserve Bank Governor, Glenn Stevens, that rates are on their way up. Today's 25 basis point rise takes the official rate to 4.25 per cent.
"This is now the fifth increase since September and means average Australian mortgage holders are now paying about $250 a month extra for their mortgages than they were in the middle of last year," says Domain.com.au blogger and property writer Carolyn Boyd. "The property market has been running hot and the Reserve Bank will be hoping that today's increase will take a little bit of that momentum away"
The rate has many more rises to go before it reaches the most recent peak of 7.25 per cent, which it hit two years ago, in March 2008.
Until today's decision, mortgage holders on variable interest rates were paying about 6.75 per cent to their banks. The rates that borrowers pay to their financial institutions are expected to normalize at about 7.5 per cent to 7.75 per cent by year's end.
Courtesy of Domain.com.au |
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| FIRST NATIONAL SAYS NATIONAL PLANNING NEEDED |
Media Release 23 March 2010
First National Real Estate CEO, Ray Ellis, supports the call from the Australian Local Government Association for a national planning authority but says Australia’s problems with its planning processes go far beyond the single issue of coastal climate change planning and require a major overhaul.
“It’s very myopic to just consider this one issue in isolation of what is happening in other areas of the property market around this country,” Mr Ellis said.
“In Queensland, they are working off two year old planning approvals, while NSW planning approvals have dropped dramatically in recent times.
“And, while Victoria has just posted strong planning approval figures for some years, this is a result of a minister wielding a big stick rather than systemic structural changes.”
Mr Ellis agreed that the confusion created by inconsistent sea level rise predictions makes planning and development increasingly difficult on coastal regions, but more importantly have the potential to impact negatively on the property market in general.
“Home owners and other property market pundits need certainty around property prices so that they can make decisions based on facts and consistent information,” Mr Ellis said.
“It’s all well and good to say that the responsibility for planning rests with state and local government, but ultimately, a consistent, unified and national approach needs to be considered in the property market.
“This is unsustainable and I can’t think of any other industry that would operate with this level of uncertainty and confusion.”
Issued by: First National Real Estate
For further information Ray Ellis, CEO, First National Real Estate, on (03) 9418 9129.
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| Interest Rates Up |
The Reserve Bank has lifted its key interest rate for the first time this year, a move likely to unleash another round of mortgage pain on borrowers across the country.
The central bank raised the cash rate by 25 basis points to 4 per cent.
That comes on top of three consecutive months of interest rate rises at the end of 2009.
The widely expected rate rise will add about $46 to the average monthly payment for a typical 25-year, $300,000 mortgage if it is passed on in full by commercial banks.
The move will put pressure on the estimated 250,000 first-home owners who have entered the market in the past 18 months, lured by government grants and 50-year low interest rates.
The Reserve Bank has made it clear in recent months that it would raise its interest rates to more ``normal'' levels as the economy rebounded from last year's slowdown.
Signs of that recovery include a falling jobless rate, rising home prices, and the latest retail sales data - up 1.2 per cent in January to a record $20.15 billion - out earlier today.
The latest official rate rise is aimed at keeping the economy from excessive growth that might spark higher inflation.
Domain.com.au
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| Shortage of Housing Supply |
The recent release of the Government's Intergenerational Report(IGR) highlights the seriousness of the supply issues facing the
Australian property market. With the population predicted to increase to 35.9 million people by 2050, more than 7.1 million new dwellings will be required.
In 2009, just 130,000 new homes were constructed in Australia – the lowest construction rate since 2003. While the Global
Financial Crisis (GFC) certainly restricted activity, a systemic failure by Australian governments to address land supply is the
fundamental problem.
At least 180,000 new dwellings need to be constructed each year for the next forty years to meet the level of demand faced.
At current rates of construction only 5.2 million homes will be built by 2050, a shortfall of nearly 27%.
First National Real Estate called for more land releases in a 10 February media release distributed to national and capital city newspapers, as well as to local regional newspapers through the network’s member offices.
‘This country is facing one of the worst housing shortages in its history with no foreseeable easing of the situation in the near future’ said Chief Executive Ray Ellis.
Mr Ellis made the call following forecasts that Housing Affordability is to decline further as strong demand and the ongoing lack of newly built homes keeps house prices increasing.
‘This is in addition to recent ABS figures that show the prices of established houses rose again in the December quarter, in keeping with our own members’ experience, as outlined in our recent 2010 Property Outlook’ Mr Ellis said.
Commonwealth leadership is required to break through the many supply impediments. Many serious social and economic challenges are faced such as:
• Where will the necessary dwellings be located?
• How will they be adequately serviced by appropriate amenities and infrastructure?
• Will these dwellings be affordable and appropriate for a more environmentally concerned society?
• How will the energy demands of the population be met?
The Federal Government has pledged to link
federal infrastructure funding to state and local
governments for nationally consistent and
appropriate land release and building approvals
processes.
However, land supply issues, high levels of
taxation on new housing at all levels of
government, and a slow and highly constrained
buildings approval process continues to prevent the building industry from providing an adequate level of housing.
Overcoming such structural barriers will require the coordinated effort of all levels of government to ensure shelter is both adequate and affordable for years to come.
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| Rates On Hold |
Australia's borrowers have been given a reprieve, with the Reserve Bank surprising pundits by leaving interest rates on hold - for now.
The RBA left its key cash rate unchanged at 3.75 per cent after its monthly board meeting. The outcome snaps a run of three consecutive monthly increases that began in October, and added as much as $185 to a typical $300,000 home loan.
Even with today's pause, though, analysts expect the central bank will soon resume its series of rate rises as the economy recovers from last year's trough.
Australia was the only rich economy to avoid shrinking last year, with more than 135,000 jobs added in the final four months of last year.
House prices - an issue that the RBA watches closely - are also accelerating, with national costs jumping 5.2 per cent in the final three months of 2009, the fastest pace since 2003.
Still, not all the readings are bullish, including today's NAB monthly business survey which showed a drop in confidence. ANZ survey of job advertisements, out yesterday, also reported a drop last month.
Courtesy Domain.com.au
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| KEEP HOMES SAFE DURING HOLIDAYS |
First National Real Estate has some great advice for those looking to get away for a vacation – make sure you look after your home and leave it well protected and cared for.
“Nobody likes returning home from a relaxing holiday to find dead plants, over-stuffed mail boxes, or even worse, their beloved treasures stolen or broken after a burglary,” Andrew Thomas from Cremorne First National Real Estate said.
“Anyone considering heading off for a well-deserved rest should start now to plan some simple, cost effective measures to ensure their peace of mind while they are away.”
In Australia, millions of homes are broken into at least once a year and even more are the target of an attempted break-in.
“Unattended homes and cars act as green lights for burglars, which is why it’s important to take as many precautions as you can to ensure you don’t return from your holiday to find you’re a victim of crime,” Andrew said.
Security – a top priority
Purchasing light timers is a cheap, fast and easy way to create a home security system. Be sure the timing is staggered so that your lights don’t come on at the same time each day. Timers are available from hardware stores and also allow you to switch TVs or radios on at various times during the day.
For those with home security systems, it is still advisable to purchase timers, as well as alert the security company of your absence and expected return date. Park any left-behind vehicles in the driveway to create an illusion of someone being home.
“People can also rely on the tried and true method of relying on your neighbours, family or friends,” Andrew said.
“They are often willing to keep an extra watchful eye on your home while you are away and are a great place to leave any spare keys.”
Installing a burglar alarm is also a good idea if you have the time and the budget.
“Burglar alarms are still one of the best deterrents as they make it that much more difficult for your home to be accessed,” Andrew said.
“But be sure to display notices about the alarm system prominently on the doors and windows.”
Locking doors and windows is one area that is often over-looked in a family’s rush to be on their way.
“It’s always an idea to appoint one person responsible for checking all the locks on doors and windows prior to departure,” Andrew said.
“If possible, fit deadlocks to main doors and windows, as again, they are major hurdles for would-be burglars to overcome.”
Another good idea is to create a lived in look, easily achieved by leaving a pair of shoes at the back door, water in a pet’s bowl or hanging some towels on the washing line.
“Ask a trusted neighbour, family or friend to collect your mail each day, and ask if they would mind regularly adjusting curtains and blinds or parking their car in your driveway or outside your home to suggest activity,” Andrew said.
Finally, install sensor lights at all external doorways, which are another inexpensive deterrent as well as being useful throughout the year.
Vital “Others”
Turn off stoves and unplug dishwashers, coffee pots and other small appliances before you leave, as an added safety measure from electrical fires. Also consider unplugging larger appliances like television sets and computers so that potential storms don’t cause power surges and start a fire.
Put away and secure items like ladders, tools and gardening implements, as they can assist in forced entries as well as become dangerous items that can cause damage to your home in high wind situations.
If possible, hire someone to care for your lawn, flower beds, vegetable garden and pool for prolonged stays away from your home – even if it’s the son or daughter of a friend, neighbour or family member.
Issued by: First National Real Estate
For further information Andrew Thomas, Principal from Cremorne First National Real Estate, on 02 9904 1234.
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| First Home Buyers Grant To Be Capped |
The Federal Housing Minister, Tanya Plibersek, announced that each state government could cap the first-home buyer grant – already reduced from $14,000 to $10,500 for existing homes and from $21,000 to $14,000 for new homes from October 1 and set both to fall further to $7000 from January 1.
In NSW, that upper limit will be $750,000, while the halving of stamp duty on any property up to $600,000 will also be wound back at the end of the year.
Despite those retractions of benefits, it's still a good time to enter the housing market, says an economist at Australian Property Monitors, Matthew Bell.
"If first-home buyers are looking to maximise their long-term wealth, they'd definitely be advised to put their money to work on an asset that is likely to rise in value [such as a property]," he says.
"Even through the worst of the global financial crisis, house prices in Australia fell by only minus 4.2 per cent in the year to March 2009 and have already recovered all of those losses.
And with strong population growth and an undersupply of dwellings, property prices long-term still look like a good bet."
Affordable options
SQM Research's Louis Christopher says first-home buyers shouldn't disregard suburbs a bit further out from the city, which are obviously cheaper.
"And it's not true that capital values will increase by more in the inner city," he says.
"A number of those suburbs in the outer ring, in the north-west and west, have outperformed the more prestige ones in terms of capital values.
"Some houses in the more expensive suburbs fell by up to 20 per cent in the downturn."
The median house price in Sydney now sits at $606,000, says an analyst at RP Data, Cameron Kusher.
The median unit price is $457,000. If you want to go really cheap, there's always the outer west. The cheapest median-priced houses are in Willmot in Blacktown, for $202,000.
The cheapest Sydney local government area is Penrith, at $335,000, followed by Blacktown at $340,000 and Liverpool at $379,000.
"It's still the great Australian dream to buy a house as that's the way most of us were brought up," Kusher says.
"But it's important not to overstretch yourself. The number of first-home buyers was down to a quarter of the market in August, compared to a peak in March of over 30 per cent, and that number will now continue to dwindle."
Rising interest rates will play a huge part in that, Bowring says. "If mortgage rates go to 5.6 per cent, then to 7.6 per cent, that puts an extra $800 a month on to a mortgage of $450,000.
That's $200 a week. Most 25-year-olds would be hard-pushed to find that."
Closer to the city
Many first-timers do prefer to be in the city, or not too far out from it.
First-timer Christy Liang, 25, for instance, has just bought her first home in Pyrmont for $1,168,000 through agent Matt Carvalho of BresicWhitney.
“The grant saved me some money for furniture,” the PhD student says. “But it does worry me in the long term if interest rates rise, although this is a good property that will keep its value.”
Yet not too far from the city, it is still possible to find affordable houses, Bell says.
Within 10 kilometres, he earmarks the inner west's Sydenham, with a median price of $525,000, and St Peters, at $575,000.
Just 10 kilometres out, in the south, there's Rockdale at $550,000 and 10-15 kilometres out there's Macquarie Park at $488,000 and Marsfield at $530,000 in the north; Silverwater in the west is at $456,000.
“You can still find housing under $600,000 in the middle-circle suburbs,” Bell says.
Tips from the top for first time buyers
1. Try to save a deposit of 10 per cent before you buy, Aussie Home Loans boss John Symond says. It's always possible to borrow on a deposit of just 5 per cent but more gives you a better safety net. Shop around for the best home loan — and then try to pay it back as soon as possible.
2. It's great also to have saved up six months' worth of repayments, to cover you for any emergency, mortgage broker Justin Doobov says.
3. Do your sums on an interest rate of 7-8 per cent, RP Data analyst Cameron Kusher says. And factor in the possibilities of having a child and wanting to give up work, or losing your job, warns Doobov.
A two-bedroom property also gives you the option of taking in a lodger to help share the mortgage if you have problems.
4. Don't buy the first place you see, Symond says. There are so many research tools now available, information and pricing guides on the internet and there's no excuse for not asking questions.
Make sure it'll hold, or increase, its value for a resale or have rental potential.
5. Consider buying an apartment, with a median $149,000 cheaper than a house, Kusher urges. You can always build up your equity in that and move to a house later. Or how about a rundown house that you can fix up yourself? But beware of money pits, the renovators' delight.
6. Choose a property close to a train station, buses, main roads or motorways and good-quality amenities, is Kusher's advice.
7. Think about not only what will suit you now but also what will suit you in five years, Symond says.
8. Take your time — and keep an eye open for mortgagee sale bargains, financial planner Andrew Bowring says.
9. If you're forced, by price, to buy in the outer ring but want to live in the city, there's nothing to stop you renting out your place and renting something for yourself closer in, advises Doobov. There could be tax benefits for investment properties.
10. And, once you've bought, don't start furnishing it extravagantly, especially not on credit, Doobov says. That can become a big money trap.
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| Affordability Slides while Confidence Glides |
Housing affordability has declined for the second straight quarter as house prices recover from the modest falls of the past 18 months in combination with rising interest rates and strong consumer sentiment. That’s good news for home owners and not so good news for those trying to break into the market as government stimulus phases out.
With auction clearance rates generally accepted as the barometer of market health, the Australian property market appears poised, as suggested in First National’s 2009 Property Outlook, for continued growth. More than 70 per cent of auctions have sold under the hammer in the past 15 weeks, according to RP Data.
In a significant sign of strength, just as auction volumes are ramping up (1,670 auctions scheduled nationally last weekend) so too are
the clearance rates. Clearly, vendor and market expectations are aligned and, despite rising interest rates, Australians remain confident.
Despite a housing affordability slip of 3.3 per cent in the September quarter, Australians still view interest rates as historically low and,
with an improved employment environment as well as encouraging economic data, seem to recognise that affordability is still better than that of the past decade.
Credible economic commentary has now shifting to the view that Australia is coming out of the Global Financial Crisis (GFC) but anecdotal reports indicate consumers are still experiencing delays arranging mortgages with many providers. A snapshot of the brave new Australian banking world perhaps reveals why. Like a storm passing through a caravan park, the GFC has reshaped the
Australian home loan environment.
• RAMS is now owned by Westpac
• Wizard is now owned by Aussie
• Aussie is now 33% owned by CBA
• St George is now owned by Westpac
• CBA now owns Bankwest
• The ‘Big 4’ banks now write over 92% of our home loans compared to 60% before the GFC
• The margin between the RBA cash rate and the variable rate available to bank customers is now approximately 2.1% compared to approximately 1.1% before the GFC.
• NAB has purchased approximately 35% of all mortgage broking groups
• Most lenders now require borrowers to contribute 10% of the property value compared to 5% (or even 0%) before the GFC.
The one element of banking that has weathered the storm with characteristic resilience is the profits generated by the ‘Big 4’. Profits
and extraordinary revenue margins have combined with increased market share to deliver total profits of $15.8 billion for the sector,
despite the increase in bad debts.
• CBA - $4.4 billion • NAB - $3.7 billion
• WBC - $4.5 billion • ANZ - $3.3 billion
With chronic new housing stock shortages and little prospect of a near term solution, affordability – while still at ten year highs –
seems back on a slippery slope. Predictions are for two 25 basis point increases before year end. And, while one bank attempts to appear generous by reducing its fees, the almost doubling of the margin between the RBA’s cash rate and variable rates available to real world consumers reveals that the overall operating model remains unchanged – profits before people! |
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| PROPERTY RECOVERY IN BANKS’ HANDS |
As the First Home Owners’ boost starts to phase out, First National Real Estate says the banks will determine whether the current property market revival will be sustained for any length of time.
“We expect there to be a drop off in first home buyer activity once the Federal Government initiatives come to an end,” Principal of Cremorne First National, Andrew Thomas said.
“But, there is also the potential for the middle market, which is already showing encouraging signs of recovery, to be reignited, effectively making up any drop off.
“With prices stabilising and consumer confidence high, the only thing that could stop the recovery continuing and strengthening, would be the banks increasing their variable rates either with, or ahead of, the Reserve Bank increasing their rates.”
In August, banks were quick to raise the fixed rates ahead of the Reserve Bank’s announcement it would hold interest rates until at least early in 2010. But as pressure mounts on governments to rein in their support of the banks, there is speculation the banks will increase their rates early to offset any potentially negative impact from this move.
If first home buyers stop buying, there is potential for the emerging property recovery to stop or even reverse unless other market segments are stimulated.
“There are signs throughout our network that second and third home buyers, including investors, are taking advantage of current conditions, helping push prices up as they go,” Andrew said.
“But, the threat of rising interest rates may impact on this promising trend.”
Since the grant and boost were introduced in September last year, more than 59,000 Australians have taken advantage of the highest levels of housing affordability, since 2002.
For eligible first home buyers entering into contracts between 1 October 2009 and 31 December 2009, the first home buyers boost will be reduced from $14,000 for existing homes and $21,000 for new properties to $3,500 and $7,000 respectively.
“However, state-based initiatives and assistance packages are still available for home buyers and we would encourage purchasers to seek the services of a reputable agent to help them maximise any assistance available through these state-based schemes. It is also important to talk to as many lenders as possible, to show the banks that they cannot take home owners for granted,” Andrew Thomas said.
Issued by: First National Real Estate
For further information Andrew Thomas, Principal from Cremorne First National Real Estate, on 02 9904 1234
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| INVEST IN SOME ADVICE SAYS FIRST NATIONAL |
As investors return to the property market, Cremorne First National Real Estate, Principal, Andrew Thomas, says wise investing which maximises returns on investment requires research and patience as well as expert advice.
“The property market has turned a corner and for as long as property remains undervalued and offers strong yields, it will continue to outperform many, if not most, other asset classes, making it an attractive option for investors,” Andrew, said.
“The key is to buy well by talking to people who know the industry and the Lower North Shore area, and to make sure the property is the right one and is being bought at the right time.
“Property can yield great returns when it is bought as part of a long term investment strategy and residential property is the highest performing asset class over the last two decades, returning nearly 12 per cent in the 20 years to September 2008.
“Current property conditions came about as a result of an almost perfect storm for investors which has produced low prices, rates at their lowest levels for decades and affordability at its best for more than a decade.”
Andrew Thomas advised investors to take their time and make sure the right location has been selected by considering factors which will impact price growth in each area, such as demand and supply.
“Across Australia there is a shortage of supply and that is no different for the Lower North Shore region.
“This is keeping vacancy rates low which is then driving very strong rental growth.”
Another tip is not to overcapitalize when trying to rent or sell the investment property.
“An investor can make their property look more upmarket without spending a fortune by giving the property a fresh coat of paint and fixing up unsightly cracks for a smooth, pristine look and finish,” Andrew Thomas said.
“They can also obtain other tips about presentation on the firstnational.com.au website.”
But the best piece of advice offered is to build a relationship with a local real estate agent who has vast experience and information on the property industry as well as property values in the region, trends and local knowledge.
“First National Real Estate agents have first hand in-depth experience of what is going on in that area,” Andrew said.
“In addition, as a network we use the latest technology and innovations to keep clients informed about what is happening in local areas, including a website that allows the user to search for a property anywhere in Australia.
“We have products that have the ability to generate meaningful market intelligence reports, communicate more effectively with client databases and streamline property management processes for improved efficiency.
Issued by: First National Real Estate
For further information Andrew Thomas, Principal from Cremorne First National Real Estate, on
02 9904 1234
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| RBA Leaves Interest Rates |
After a meeting of the central bank's board, the RBA left its cash rate at 3 per cent, a 49-year low - the same rate that has applied since its last cut in April in response to a slowdown in the economy.
The RBA has slashed 425 basis points from interest rates since September in an effort to shield Australia from the worst effects of the global recession.
When it announced its ''no-change'' decision on rates today, the RBA board was probably encouraged by tentative signs of a pick-up in domestic demand in recent weeks.
Retail sales grew more than expected in May, revealing shoppers' willingness to spend a chunk of the Federal Government's latest round of stimulus payments. The spending boost has in turn helped keep the Australian economy expanding - unlike almost every other developed nation.
Also, an index of the performance of the services sector, the largest part of the Australian economy, expanded in May for the first time in 15 months, according to a report out last week.
Investors and analysts predict official interest rates will reverse course within a year, with markets pricing in a half-percentage point increase to 3.5 per cent by July 2010.
Author: Chris Zappone
Date: July 7, 2009
Article courtesy Domain.com.au
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| Both Vendors & Buyers Prove To Be Confident Consumers |
The release of recent excellent consumer confidence figures confirms what real estate agents across the country have been seeing for months according to First National Real Estate. “We have been saying for the last few months that we believe the Australian market has turned the corner, and this latest surge in consumer confidence proves we were right” said First National Real Estate CEO Ray Ellis.
Released last week, the Westpac-Melbourne Institute Index of Consumer Sentiment recorded its largest jump in 22 years. First National Real Estate is Australia’s largest independent real estate network with more than 500 members throughout Australia as well as New Zealand and are firmly of the opinion that property has been leading this positive sentiment. “It does not matter if you are buying or selling, when housing affordability is this good, everyone wins and everyone feels confident. The market is always about confidence” says Mr Ellis. “The latest BIS Shrapnel research that suggests up to a 19% increase in house prices by 2012, indicates this confidence should continue into the future”.
First National Real Estate first noticed the turn around towards the end of last year but since then have seen quite spectacular results for the beginning of the year, with some members recording record clearance rates. This national sentiment has also been seen locally. “Certainly the First Homebuyers’ Grant helped” said Andrew Thomas, Principal from Cremorne First National Real Estate, “but now we are beginning to see movement in every part of the market. That is clearly about confidence.”
“Vendors feel they can now confidently set a price and certainly our members have always found that a well informed vendor can set a realistic price and get the result they want. We have been able to help many people sell their homes to first home buyers and then successfully trade up into a property that would have been unrealistic last year” said Andrew.
Issued by: First National Real Estate
For further information contact Andrew Thomas from Cremorne First National 02 9904 1234.
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| END OF YEAR SIGNALS END OF HOME OWNING OPPORTUNITIES |
First home buyers and investors should purchase before the end of the financial year to maximize the opportunities that have been created for them, according to the local First National Real Estate office.
“Property will just keep on improving and first home buyers wanting to secure their own property shouldn’t put it off, or they risk missing out on an opportunity that may not be seen again for another 40 years,” Mr Ellis said.
“The economic tide has started to turn and Australians are currently enjoying the most affordable housing levels for almost half a century, up a whopping 32%, and interest rates are at an historic low.
“But these advantageous conditions may not continue for much longer as we operate in a very volatile industry and things are prone to change at any time, especially given the current rates of uptake for the first home buyers grant boost, increasing building activity and the return of investor confidence.”
According to recent ABS statistics, Australians are taking up the first home buyer grant at a rate of more than 12,500 a month, builders have reported signs of more second and third home buyers and investment loans rose to 4.7% in March.
“Investors coming back into the market may be a stabilising factor in house prices and potentially even signal an increase, which is not good news for those still waiting for bargains,” Andrew Thomas from Cremorne First National said.
“The key to home ownership success lies in confidence, the confidence to put your property on the market, to build that home you have always dreamed of or to purchase your ideal property investment.
“While we have seen some movement in our area from first home buyer grants, there are still buyers waiting for more encouraging news on the side of the economy.
“But already there is strong sentiment that the global financial system is starting to pick up and we have experienced a significant shift in investor sentiment.
“Economic data is improving every day and we are edging closer to a full recovery. While that’s great news for our economy, it doesn’t bode too well for first home buyers and investors who are seeking more for their money.
“The end of the financial year may well be the end of financial gains if first home buyers and property investors put off their decision any longer” said Andrew.
Issued by: First National Real Estate
For further information contact Andrew Thomas, Cremorne First National. 029904 1234.
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| Boost Scheme to Continue |
The Federal Government announced that the current First Home Owners Boost scheme will continue in its current format until October 1, 2009. This means that those buying existing homes will receive $14,000 and those buying new homes $21,000.
Adjustments to the scheme from October 1, 2009 will see the First Home Owners Boost scheme halved. Which means those buying existing homes will receive $10,500 and those buying new homes $14,000.
As of December 1, 2009 the First Home Owners Boost scheme will cease and the existing $7,000 grant will continue to be available to all first home buyers.
Economist for Australian Property Monitors, Matthew Bell comments, "This decision will continue the stimulus to both the housing construction and development sector, as well as the sales activity at the more affordable end of the property market.
First Home Buyers now have some extra time to consider their potential purchase of a home to take advantage of the Boost. As always, first home buyers should carefully take into account their ability to meet mortgage payments in the future when interest rates inevitably rise, as well as their employment situation in a tough economy.
The gradual removal of the boost should minimise any price falls in the more affordable end of the market associated with the end of the Boost, and continue to stimulate sales activity in the generally slower winter market."
Domain.com.au |
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| Reserve Bank Interest Rate Announcement |
The Reserve Bank (RBA) has decided not to cut interest rates leaving the official cash rate at 3.00%.
The official cash rate remains unchanged at the current level in response to signs of a stabilising world economy. However, the RBA remains vigilant, maintaining enough scope on rates to manoeuvre in anticipation of forecast rising unemployment later in the year. Any future action will also need to factor the reluctance of the major banks to pass on rate cuts in full to mortgage holders.
Despite the caution, the May budget is expected to deliver further stimulus to the economy and resilient housing activity presents opportunities for home buyers and investors to take advantage of record low interest rates, strong rental yields and median prices well below the peak of 2004.
Source Domain.com.au |
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| Reserve Bank Announces Interest Rate Cut |
The Reserve Bank (RBA) has cut interest rates by 0.25 of a percent (25 basis points) taking the official cash rate to a historic low of 3.00%.
Domain.com.au spokesperson Anthony Ishac comments, "The RBA has responded to deteriorating market conditions with a conservative 25 basis point cut, bringing the cash rate down to a 49 year low. The areas of most concern are worsening retail sales and rising unemployment. Despite this action, the major banks have already signalled that this and any future cuts may not be passed on in full to mortgage holders".
Domain.
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| Prestige end of market takes a hit |
Sydney's prestige property markets, which are usually associated with water frontage, magnificent views or urban acreage, were once thought to be safe havens during an economic downturn. The argument was that the absolute scarcity of these properties would protect their values from falling significantly, while the more common generic housing would suffer losses due to its abundance in the suburbs. The theory held true until recently when a series of events conspired against the premium sector of the market. These ranged from margin calls becoming commonplace, share portfolios toppling and almost halving in value, company profits hitting rock bottom, and executive bonuses being much lower than expected.
The result has been that owners who enjoyed the benefits of very high incomes, where there was plenty to go around for luxury homes and holiday havens, now cannot continue to service such high levels of debt. Further compounding the situation is the fact that demand for expensive homes has virtually come to a halt in some areas.
In Sydney, the median price of the city's top 10 percent of properties has fallen by almost 20 percent, from $1.6million in December 2007 to $1.29million in December last year. The magnitude of the fall has not been as great in the other capital cities, however the trend is certainly national.
In contrast, first-home buyers are very active at the affordable end of the market. Houses priced about $350,000 have fallen in value between 1 percent and 2 percent over the 2008 calendar year - a pretty good performance when compared with the top end of the market.
The more affordable end of the market is likely to see some positive growth during the first half of 2009 as first home buyers compete for strategically located stock within their budget.
The outlook is not as positive for wealthy property owners. Without any real improvements in business conditions in sight, it is likely that demand for prestige homes will remain relatively low. This segment of the market is forecast to be one of the weakest (along with tourism-driven markets) during 2009.
Before there are any improvements in the premium end of the market, we will need to see a return to stronger economic conditions and a boost in business confidence.
Source : The Sun-Herald
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| Interest Rates Cut |
Today's cut will save a mortgagee with a typical 30-year, $300,000 home loan about $170 in monthly repayments if the lender passes on the full amount. Over the life of the loan, the savings will total about $61,272.
''There was a significant deterioration in world economic conditions late in 2008,'' said RBA Governor Glenn Stevens in a statement accompanying the cut. ''The effects on household and business confidence of the financial turmoil following Lehman’s collapse, and continuing strains on major financial institutions, saw a significant downturn in demand around the world.''
The RBA has now lopped four full percentage points off its cash rate since it changed tack and began cutting rates last September. The cash rate has not been this low since 1960, according to Bloomberg data.
The rate reduction comes hours after the Federal Government announced a $42 billion stimulus plan aimed at keeping the economy out of a recession. The spending includes some $12.7 billion in cash payments and $28 billion on new infrastructure projects including roads and schools.
"What they have done is certainly enough, put together with the fiscal package,'' said Michael Blythe, chief economist for the Commonwealth Bank. ''Policy setting in Australia is very stimulative, although we are quite likely to see rates lower'' in the first half of 2009.''
Double boost
The central bank said it had taken into account the additional government spending.
''The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad,'' the RBA said in its statement.
Today's RBA cut matched market expectations.
The Australian dollar initially jumped, rising from 63.5 US cents to 64 US cents after the RBA move. The benchmark ASX200 share index was recently 1.2% up for the day, easing from 1.4% higher shortly before the RBA release.
More cuts to come
The fact the RBA assessed the likely impact of today's stimulus package indicates the bank may have been considering a bigger cut, said JP Morgan economist Helen Kevans.
Ms Kevan expects another 50 basis point cut when the RBA board next meets in March to complete the central bank's current easing cycle.
Today's RBA's rate cut follows the Federal Government's revision of growth forecasts for the economy. The Rudd Government expects Australia's growth to slow to 1% this fiscal year to 0.75% next year - one of the few economies to continue to expand.
The RBA said Australia remains relatively strong.
''Australia’s financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers,'' the RBA's Stevens said.
''Nonetheless, the combination of last year’s financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand.''
The Reserve Bank indicated it had more scope for cutting rates as inflation eases.
''Inflation has begun to moderate and, given recent developments, it is likely to continue to decline,'' the RBA's statement said.
Consumer prices fell by 0.3% in the December quarter, its first reduction since 1997, according to statistics released last week.
Three-year bond futures fell 0.085 points to 97.035, while 10-year bond futures shed 0.045 points to 95.870.
Article Courtesy Domain.com.au 4/2/09 |
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| Make Sure Your Home is Secure |
If you’re heading off soon for a well-deserved summer holiday, First National Real Estate recommends you plan some simple and cost effective security measures to make sure your home and property stay safe while you’re away.
In Australia, around a quarter of a million households are victims of at least one break-in a year, according to the latest figures available from the Australian Bureau of Statistics, and even more are the target of an attempted break-in.
“Many people leave their homes and often their cars unattended when they head off on their annual holidays and it can be a green light for burglars,” said Andrew Thomas of Cremorne First National. “It’s important to take as many precautions as you can to ensure you don’t return from your holiday to find you’re a victim of crime.”
Home security tips from Cremorne First National Real Estate include:
· Security alarm. If you have the time – and the budget – before you go away, install a burglar alarm. This is still the best deterrent. For most burglars, an alarm simply makes your home too difficult to try and enter. Be sure to display notices about the alarm system prominently at doors and windows.
· Lock all doors and windows. It sounds obvious, but people in a rush to head off can easily forget to close a window or secure a door. If possible, fit deadlocks to main doors and windows, as again these are a major hurdle for a would-be burglar.
· Create a lived in look. While away, make sure your home still looks “lived in”. Leave a pair of shoes at the back door, water in the dog’s bowl and hang some towels on the washing line. Make sure a trusted neighbour or family member collects mail and regularly adjusts curtains and blinds. If possible, ask a friend or neighbor to regularly park in your driveway or outside your home, to suggest activity.
· Set timers. Timers are available from hardware stores and allow you to switch your TV or radio on at various times during the day and some lights on at night. Tune your radio to a talkback station so there’s the sound of many different voices. If someone is snooping around, it will make it harder for them to know if someone is inside the house.
· Sensor lights. These are anther inexpensive deterrent that are useful throughout the year. Install them at all external doorways.
· Secure the shed and garage. Put away and secure items like ladders, tools and gardening implements as these can assist in forced entry and make sure the garage is locked. Store away any valuable outdoor items, such as bicycles and the barbecue.
· Turn down the phone. An endlessly ringing phone can be a give-away that there’s no-one home. Turn down the volume, and make sure the voice message gives no clue that you’ve gone on holidays.
· Spare keys. These should be left only with a trusted family member, friend or neighbour. Don’t keep them under a flower pot or a door mat. A burglar will easily find them.
Our 550 offices around Australasia have helped people buy or sell thousands of homes around the country this year. We’d like to think that by taking some simple precautions, all homes will stay safe during the summer holiday season.”
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| Rate cut due tomorrow |
The Reserve Bank board will cut at least three-quarters of a percentage point from interest rates when it meets again tomorrow December 2, and may even cut by a full point. They opted for the bigger cut to bring about "a further meaningful reduction in rates paid by borrowers and assist confidence among consumers and businesses". The aim is to bring rates "quickly to a neutral position". Should economic conditions deteriorate further, and especially if the United States is declared in recession during the next fortnight, a bigger cut of a full percentage point is likely.
A cut of one percentage point, if fully passed on, would reduce the standard bank variable mortgage rate from about 7.7% to 6.7%, cutting repayments on a $300,000 mortgage by an extra $200 a month. Monthly repayments would have dropped $570 from when mortgage rates were at their peak at 9.6% in August.
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| Rates cut to 5.25% |
Rates cut to 5.25%
The Reserve Bank cut its key interest rate for the third month in a row as it attempts to prevent Australia's economy stalling.
The central bank trimmed three-quarters of a percentage point - or 75 basis points - off its key cash rate, reducing it to 5.25%, the lowest level since December 2003.
For a typical 25-year, $250,000 home loan, today's cut if passed on in full by lenders will save the borrower $112.63 a month in payments or some $33,791 over the life of the loan.
The move, announced after today's monthly board meeting by the RBA, exceeded economists' predictions of a 50 basis-points cut.
Today's cut brings the RBA's cuts to 2 percentage points since the central bank reversed course in September, retreating from a 12-year high rate of 7.25%.
The RBA will be hoping that the big commercial banks will repeat last month's feat of passing on all of the official rate cut to borrowers.
Lower lending costs help spur the economy by encouraging more individuals and businesses to purchase houses or make other investments, stoking demand that in turn prompts more orders.
Almost all the latest economic figures point to a sharp slowdown in demand as the effects of the global financial crisis spread to Australia. Falling commodity prices are already dimming the outlook for the mining and export sectors.
Retail sales shrank 1.1% last month from September, the largest drop since April 2005, as consumers start to pull back on spending.
House prices, another measure of the economy's health, fell 1.8% in the September quarter, the sharpest slowdown since the 1970s, according to some reports.
Job ads, one indication of future employment opportunities, also slumped last month and are now about 10% lower than this time last year.
Author: Chris Zappone
Date: November 4, 2008
Publication: Sydney Morning Herald (subscribe)
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| Rates Cut By 1% |
The Reserve Bank slashes its benchmark interest rate by 100 basis points to 6 per cent.
The Reserve Bank has stunned financial markets by announcing a full-percentage point cut - double what analysts had tipped - saying financial markets had taken a "significant turn for the worse.''
Australia's official lending rate was lowered for a second consecutive month, although it is unclear how much of the 100 basis-point cut will be passed on to mortgage-holders and other borrowers as banks struggle to raise funds in overseas money markets.
The Reserve Bank cut its key cash rate from 7% to 6%, double the 50 basis-point cut expected by markets. The move follows a 25 basis-point cut by the RBA in September, lowering the lending rate from a 12-year high.
The RBA said the Australian economy now faced the prospect of slowing growth, while inflation would also subside.
''The recent deterioration in prospects for global growth, together with much more difficult market conditions even for creditworthy borrowers, now present the risk that demand and output could be significantly weaker than earlier expected,'' Reserve Bank governor Glenn Stevens said in an accompanying statement. ''Should that occur, inflation would most likely fall faster than earlier forecast.''
"Overall, my guess remains that the RBA's cash rate is on the way from 7% to 6% to 5% and towards 4%," said Rory Robertson, Macquarie interest-rate strategist, before the RBA announcement. "The RBA seems likely to cut its cash rate all the way back to 4.25% within two years.''
One reason for the steep cuts to come is that clogged credit markets overseas mean that only some of the RBA's rate reductions are likely to be passed on by commercial banks, Mr Robertson said.
Commercial banks announced cuts to their variable home loan rates within minutes of last month's RBA rate move, but the signals this month have suggested consumers and business borrowers are likely to receive only part of today's rate and possibly not for some days.
Prime Minister Kevin Rudd and Treasurer Wayne Swan have both sought to head off some of the criticism of the banks from any delayed rate cuts on their part, saying it is important the country's banks remain as strong as possible during a period of extreme market turmoil that has already claimed some of the largest US and European banks.
Opposition Leader Malcolm Turnbull, however, says that the banks remain highly profitable in a market of shrinking competition and can afford to follow the RBA's rate cuts.
Just prior to today's RBA decision, the benchmark S&P/ASX200 share index was down about 0.5% at 4519 points, clawing back a drop of as much as 3.3% earlier in the day. Overnight, European and US markets plunged on worries that the global economy with wither.
The initial response was for stocks to jump about 2%, to trade 1.4% higher for the day.
The Australian dollar, which has plunged more than 10 US cents in the past couple of trading days, was recently at 70.37 US cents, down from 71.97 just prior to the RBA's shock move.
Author: Chris Zappone
Date: October 7, 2008
Publication: Sydney Morning Herald (subscribe)
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| Chance to slash mortgage |
The Reserve Bank has handed you a huge opportunity. And I mean - at a conservative estimate - tens of thousands of dollars huge.
There were months of media speculation about whether the commercial banks would pass on a Reserve Bank rate cut. When it came, they virtually fell over themselves to do so.
Assuming yours delivered the full 25 basis points, your required repayments will soon drop by about $17 a month for each $100,000 you have borrowed, or $43 for each $250,000.
With cost pressures seeming to grow by the day, that's welcome news. It gets better, though.
The cut takes the Infochoice benchmark variable rate (IBVR) - a weighted average rate that reflects the discounts people commonly receive on the quoted standard variable rate - from 9.3 per cent to 9.05 per cent.
That means you will now pay almost $13,000 less in loan interest over the life of a $250,000 home loan, $25,818 less on a $500,000 loan and $38,726 less on a $750,000 one (25-year term).
But here's where the enormous opportunity lies: if you can manage to leave your repayments at their current level, you will keep from the bank - and for yourself - far more. For example:
* What is now a $43 overpayment on a $250,000 mortgage will save you $17,000 in loan interest.
* What is now an $86 overpayment on a $500,000 mortgage will save you nearly $35,000.
* And what is now a $129 overpayment on a $750,000 mortgage will save you just under $52,000.
In all three cases you will also repay your loan a whole year early.
Bear in mind, too, that this is the effect of maintaining your repayments when there has been just one rate cut. Some economists are predicting more like four in the next year in a bid to stimulate economic growth and buffer Australia from the global credit crisis.
How would a full 1 per cent fall change the figures? If the IBVR moved from 9.3 to 8.3 but you held your repayments steady, you would save $49,408 in interest on a $250,000 loan, $98,305 on a $500,000 loan and $147,773 on a $750,000 loan.
Yes, that much. And remember, it's not cost you one cent beyond what you are used to paying.
The reason keeping your repayments at the same level when rates fall is so powerful is that, immediately, less goes towards interest and therefore more to paying down your principal. The lower the rate drops, the more dramatic the effect.
So maintaining repayments come what may is one of the smartest ways to beat debt. With your mortgage outlay, if at all possible, the only way should be up.
What do you do to make sure you get the savings on offer? Nothing. Unless you say otherwise, your bank is unlikely to reduce the amount it debits for your monthly repayments. They are typically much quicker to adjust direct debits for rate rises because they are out of pocket if they don't.
Of course, for you to get the full benefit of what will now be extra repayments, your bank will need in future to cut its interest rates at pace with the RBA. And with profits squeezed courtesy of the credit crunch, none will commit to that.
Still, every little bit helps.
Author: Nicole Pedersen-McKinnon
Date: September 7, 2008
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| Interest rate cuts to continue |
| The Reserve Bank has cut interest rates by 0.25 percent, kicking off what is expected to be a prolonged period of rate reductions. Economists had widely expected the decision, although some had predicted the Reserve Bank would move more aggressively and cut rates by 0.5 percent. However, further cuts remain on the cards with several economists calling for three further cuts in the coming year. |
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| Double trouble to hit home in mortgage belt |
Australia's biggest mortgage lender said yesterday it would raise rates by 0.14 percentage points from Monday, and ANZ announced its rate would rise by 0.15 percentage points.
The Commonwealth's rise will add $30 a month to repayments on a $300,000 home loan.
And with the credit crisis flaring again, the bank warned that the 0.51 percentage points it has added to home loan rates - on top of Reserve Bank increases - are only meeting half its higher funding costs.
The bank's "top-up" increases have added more than $100 a month to repayments on the average mortgage. Its rate rise comes in the same week BankWest raised mortgage rates, and a week after St George's 0.2 percentage-point increase.
Commonwealth's standard variable rate of 9.58 per cent is the third highest of the major banks behind St George's 9.67 per cent and ANZ's 9.62 per cent.
But some smaller lenders are charging even more. Citibank's standard variable rate, for example, is 9.79 per cent.
The Commonwealth's group executive for retail banking, Ross McEwan, said the cost of funding was more than 1 per cent higher than it was before August 2007.
The good news for borrowers is that the Reserve Bank is less likely to raise rates again this year if banks do it themselves.
Author: Jacob Saulwick
Publication: Sydney Morning Herald
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| Difficult Market for Renters |
According to a recent article in Domain news renters find themselves in what can be described as the tightest residential rental market for a long time, competition is intense.
The latest statistical release on the residential rental market shows that vacancies are at a 25-year low.
Domain lists some tips that may help you secure the right property.
Firstly, consider your search criteria. Factors include location, features and price. If you can't find exactly what you want, then look in the neighbouring suburb or for a slightly different type of property. Various property websites can help, such as domain.com.au or realestate.com.au. where you can register and list your criteria, you will then be notified immediately when suitable properties are listed.
If you are interested in a property, make sure you have all the information you need to apply for it, such as personal identification, referees and details of prior rentals. Written references, with contact details from previous estate agencies, may help speed up the process.
Application for Tenancy forms can be downloaded from our website under 'forms'. It is important you complete the application form in full. If a landlord has a number of applications, they will often leave the incomplete one at the bottom of the pile.
In this current market it is not uncommon for 10 or more applications to be received.
Don't be afraid to apply for more than one property. However, if you are accepted, immediately withdraw any other applications.
Visiting agencies in the area where you want to live and introducing yourself is a good way to make you stand out from the crowd when you come to make your application.
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| Property a safe bet |
Investors looking for a sound alternative to the stockmarket would be wise to consider residential property according to the Real Estate Institute of New South Wales (REINSW).
Today’s CPI figures showed rents increased by 6.4% in the past year, the fastest annual growth since the early 1990s. This indicates property investors are realising excellent returns on their investment as demand for housing far outpaces supply against a background of soaring demand and limited supply for housing.
“What started on Wall Street and is now spreading internationally is a stark reminder of the vulnerability of the sharemarket,” said REINSW President Steve Martin. “It illustrates how factors beyond an investor’s control have a severe impact on their share portfolio.
“With property there is far greater control and, after all, everyone has to have a place to live whereas not everyone needs to, or wants to have, a share portfolio.”
There has been a rental drought for residential property in much of New South Wales for over a year now. This has affected Sydney in particular, with vacancy rates falling to historically low levels of less than 1%.
“Tenants sorely need property investors to come back into the market and help meet the shortfall in the supply,” Mr Martin said. “For investors, the reassuring news is that residential property provides a regular and stable income.” |
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| Home loan rate set to rise again |
| Home loans are set to rise again by another 0.25% over coming months. This is in addition to the latest increase being forced by major banks after the Reserve Bank lifted official cash rates last week. |
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| New Tenancy Laws |
Tenants face swift eviction if they fall behind in their rent and many will have to pay water charges currently borne by landlords, under the first big overhaul of NSW's tenancy laws in 20 years.
But tenants' rights will also be boosted. If landlords default on their mortgages and their properties are repossessed, tenants will be guaranteed at least 30 days' notice to move out.
And for the first time, renters who need to move out of a share house or a relationship will be able to be apply to have liability on their part of the lease waived.
The changes are partly about "encouraging investment and people back into the property market", the Fair Trading Minister, Linda Burney, told the Herald.
"Encouraging investors back into the market should help to reduce Sydney's rental squeeze," Ms Burney said. The rental vacancy rate in Sydney is just 1.5 per cent, and this adds to the housing affordability crisis.
The State Government will release its plans for public comment today - after several years of reviews - before introducing legislation early next year.
The tenancy tribunal now confronts more than 20,000 cases involving rent arrears every year, and the Government wants to cut its workload.
Under the changes, tenants who fall behind in rent would have "the onus placed on them to apply to the tribunal" if they wished to contest their eviction - rather than landlords having to justify their case. The tribunal could make a decision on the application swiftly without need for a hearing.
(source SMH) |
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| Lack of freestanding houses? |
New freestanding houses are becoming harder to find in NSW, as more people turn to townhouses or apartments.
Only about one detached house is approved for every townhouse, multi-unit or apartment each month, the latest housing approval figures show. In the 1980s, the ratio was three to one.
The ratio of freestanding homes in NSW is the lowest of any state or territory, excluding the ACT. In Queensland there are two detatched houses for every multi-dwelling property approved. In Victoria the number is more than three, and in Western Australia it is six.
Despite NSW housing the largest population, it approves fewer freestanding houses than each of these three states. In Victoria almost twice as many detached homes were approved in July, 2808, compared with 1415.
Last month's rise lifted mortgage rates to their highest level in a decade.
No change is expected this time. National accounts are expected to show a slowing in the pace of economic growth. |
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| Interest rate rise |
| Surprisingly strong economic growth has increased the chance of another interest rate rise. But the betting on a move before year's end is still less than 50:50 (source: The Age) |
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| The State of the Market |
Sydney’s property market recovered marginally in 2006 after two difficult years. There was a 0.6 per cent increase in established house prices in the 12 months to December 2006 and the median house price sat at $520,300.
Evidence of a two-tier property market is particularly strong in the harbour city. Blue-ribbon real estate goes from strength to strength well insulated against interest rate rises and buoyed by the strong national economy. Suburbs in the city’s south-west, west and north-west struggle to
maintain value amid reports of increasing mortgagee repossession sales.
Overall, Sydney is expected to continue a slow recovery in 2007, experiencing only a very minor increase in prices. There are concerns, however, that the weight of negative sentiment and affordability constraints will see the median house price slip further in the coming 12 to 18 months, hitting $495,000 before beginning a more sustained and solid recovery. With Sydney homes still overvalued by around 5 per cent, it is likely further stabilisation will need to continue. Well-located inner city and prestige harbourside suburbs should continue to outperform the
overall market. Over 1000 homes worth more than $2 million each sold during 2006 and similiar is expected in 2007. Top suburbs such as Point Piper and Darling Point; Palm Beach, Bayview, and Woollahra; and Paddington continued to hold their own. However, increases in sales and prices in
blue-ribbon real estate in areas such as Manly and Double Bay, surprised most economists. Outer western suburbs should also maintain the trend of 2006 and continue to struggle. While many affluent suburbs recorded double digit annual price growth, suburbs such as Campbelltown
and Strathfield saw a drop in value of close to 10 per cent. Other hard-hit suburbs include
Lakemba, Macquarie Fields, Bankstown, Hoxton Park and Rooty Hill.
Unit prices are likely to remain flat although some harbour and beachside suburbs should be clear performers. Good demand should continue for prestige and unique apartments. Unit prices for most suburbs were in negative growth territory in 2006. This may ease as investors begin
to return to the market on the back of good buying opportunities, particularly in the western suburbs, and in the expectation of strongly improving rental returns over the long term. This is a great opportunity for buying investment property, in these regions, in 2007.
For renters, the outlook is grim. With a severe shortage of properties, rents are on the increase – up just over 7 per cent in the 12 months to December 2006 for units, and 6.4 per cent for houses. With a record low vacancy rate of about 1.5 per cent around the state the expectation is that rents will continue to increase in 2007. Some predictions suggesting a 10 to 20 per cent increase in rents for Sydney houses during the year.
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| Sydney Property Market |
Sydney’s property market recovered marginally in 2006 after two difficult years. There was a 0.6 per cent increase in established house prices in the 12 months to December 2006 and the median house price sat at $520,300.
Evidence of a two-tier property market is particularly strong in the harbour city. Blue-ribbon real estate goes from strength to strength well insulated against interest rate rises and buoyed by the strong national economy. Suburbs in the city’s south-west, west and north-west struggle to
maintain value amid reports of increasing mortgagee repossession sales.
Overall, Sydney is expected to continue a slow recovery in 2007, experiencing only a very minor increase in prices. There are concerns, however, that the weight of negative sentiment and affordability constraints will see the median house price slip further in the coming 12 to 18 months, hitting $495,000 before beginning a more sustained and solid recovery. With Sydney homes still overvalued by around 5 per cent, it is likely further stabilisation will need to continue. Well-located inner city and prestige harbourside suburbs should continue to outperform the
overall market. Over 1000 homes worth more than $2 million each sold during 2006 and similiar is expected in 2007. Top suburbs such as Point Piper and Darling Point; Palm Beach, Bayview, and Woollahra; and Paddington continued to hold their own. However, increases in sales and prices in
blue-ribbon real estate in areas such as Manly and Double Bay, surprised most economists. Outer western suburbs should also maintain the trend of 2006 and continue to struggle. While many affluent suburbs recorded double digit annual price growth, suburbs such as Campbelltown
and Strathfield saw a drop in value of close to 10 per cent. Other hard-hit suburbs include
Lakemba, Macquarie Fields, Bankstown, Hoxton Park and Rooty Hill.
Unit prices are likely to remain flat although some harbour and beachside suburbs should be clear performers. Good demand should continue for prestige and unique apartments. Unit prices for most suburbs were in negative growth territory in 2006. This may ease as investors begin
to return to the market on the back of good buying opportunities, particularly in the western suburbs, and in the expectation of strongly improving rental returns over the long term. This is a great opportunity for buying investment property, in these regions, in 2007.
For renters, the outlook is grim. With a severe shortage of properties, rents are on the increase – up just over 7 per cent in the 12 months to December 2006 for units, and 6.4 per cent for houses. With a record low vacancy rate of about 1.5 per cent around the state the expectation is that rents will continue to increase in 2007. Some predictions suggesting a 10 to 20 per cent increase in rents for Sydney houses during the year.
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| Sydney Property Market |
Sydney’s property market recovered marginally in 2006 after two difficult years. There was a 0.6 per cent increase in established house prices in the 12 months to December 2006 and the median house price sat at $520,300.
Evidence of a two-tier property market is particularly strong in the harbour city. Blue-ribbon real estate goes from strength to strength well insulated against interest rate rises and buoyed by the strong national economy. Suburbs in the city’s south-west, west and north-west struggle to
maintain value amid reports of increasing mortgagee repossession sales.
Overall, Sydney is expected to continue a slow recovery in 2007, experiencing only a very minor increase in prices. There are concerns, however, that the weight of negative sentiment and affordability constraints will see the median house price slip further in the coming 12 to 18 months, hitting $495,000 before beginning a more sustained and solid recovery. With Sydney homes still overvalued by around 5 per cent, it is likely further stabilisation will need to continue. Well-located inner city and prestige harbourside suburbs should continue to outperform the
overall market. Over 1000 homes worth more than $2 million each sold during 2006 and similiar is expected in 2007. Top suburbs such as Point Piper and Darling Point; Palm Beach, Bayview, and Woollahra; and Paddington continued to hold their own. However, increases in sales and prices in
blue-ribbon real estate in areas such as Manly and Double Bay, surprised most economists. Outer western suburbs should also maintain the trend of 2006 and continue to struggle. While many affluent suburbs recorded double digit annual price growth, suburbs such as Campbelltown
and Strathfield saw a drop in value of close to 10 per cent. Other hard-hit suburbs include
Lakemba, Macquarie Fields, Bankstown, Hoxton Park and Rooty Hill.
Unit prices are likely to remain flat although some harbour and beachside suburbs should be clear performers. Good demand should continue for prestige and unique apartments. Unit prices for most suburbs were in negative growth territory in 2006. This may ease as investors begin
to return to the market on the back of good buying opportunities, particularly in the western suburbs, and in the expectation of strongly improving rental returns over the long term. This is a great opportunity for buying investment property, in these regions, in 2007.
For renters, the outlook is grim. With a severe shortage of properties, rents are on the increase – up just over 7 per cent in the 12 months to December 2006 for units, and 6.4 per cent for houses. With a record low vacancy rate of about 1.5 per cent around the state the expectation is that rents will continue to increase in 2007. Some predictions suggesting a 10 to 20 per cent increase in rents for Sydney houses during the year.
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| Market Update: Whats ahead for 2007? |
We are now well into 2007. Home owners and investors are looking to the property markets for direction, but are confused by the mixed messages in the press as the market seems to be moving in so many different directions.
You will get a much clearer perspective if you stand back and take a big picture view.
Despite three interest rate increases last year there is still demand from first home buyers and there is particularly strong demand at the upper end of our property markets. At the same time other buyers are being squeezed by the interest rates rises and decreasing affordability.
Our markets are behaving normally – this is all part of the property cycle.
This year our markets will have to contend with a number of factors that will ensure we keep receiving mixed messages.
Just some of what lies ahead this year includes a number of elections, the fear of further interest rate rises and a severe shortage of rental properties in every capital city. Some investors will quit real estate, lured by the stock market and the special concessions for superannuation which ends on June 30 and others will take advantage of the markets by taking a counter cyclical approach.
Over the medium term strongly rising rentals will attract more investors back into our property markets and the housing shortage will encourage builders and developers to boost construction.
The recent Australian Bureau of Statistics (ABS) figures show that prices grew in all capital cities other than Sydney over the last 12 months.
The Sydney property market was hit the hardest by the end of the property boom on the east coast of Australia in 2003 and much has been written about how many Sydney property values fell by over 15% since the peak of the boom. In fact it is the only city where there have been significant price reductions in the wake of the boom.
Despite its strong underlying fundamentals such as low supply, low vacancies and better migration numbers, Sydney property prices were virtually unchanged over the last year. At least the figures confirm that the city has arrested its declining market since 2003.
Like other states, Sydney's housing market has been fragmented. The more affluent suburbs have recorded the highest annual growth in the median house prices according to Patrick Bright, director of Property Buyers Agent EPS Property Search. Record house prices were set in 35 Sydney suburbs during 2006, including $22 million for a home in Vaucluse. There were 20 houses sold for $10 million or more in 2006, including two above $20 million.
With record low vacancy rates, strong rental growth and the prospect for capital growth, smart investors will begin searching the market for opportunities later in 2007, looking for a recovery in Sydney in 2008.
Along the way there will be some challenges the market will have to face. NSW is returning some of the worst economic indicators in the nation with modest economic growth now revised down to a mediocre 1.5% and poor unemployment figures. The continual negative press received by what looks like an impotent State Government is not helping perceptions about the economy or the property market.
News item courtesy Domain.com.au
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| Bargains at the bottom of the market |
Bargains at the bottom of the market and more gains at the top. The Sun-Herald's property reporter Michelle Singer previews the year ahead.
"We have seen the worst and that seems to be behind us," says high-profile Sydney real-estate agent John McGrath.
"The market won't go boom overnight but it will start improving. I think it's a good time for buyers to be looking but not panicking."
While the average Sydney property price has remained stagnant for the best part of 12 months, industry experts are unanimous in thinking the market's performance will be reliant on whether or not interest rates rise.
But the bottom line, says the McGrath Estate Agents founder and director, is that buying should be a priority for those weighing up the idea, given that on average Sydney property prices are 8 per cent down on what they were during the 2002-2003 boom.
"In 2006 influential factors on the market included three interest rate rises, a buoyant stockmarket and petrol prices," McGrath says. However, agents, auctioneers, analysts and researchers are predicting a different market in 2007, with buyers returning to the fold.
The top end
The prestigious end of the market didn't suffer during 2006, and it remains the only area to have forged ahead thanks to record-breaking sharemarket returns, large executive bonuses and a widespread lack of stock. In Sydney more than 1000 homes worth more than $2 million each sold last year. Dyson Austen prestige valuers director Simon Feilich says 2007 signals more of the same for blue-ribbon real estate.
"The same drivers will influence the market: a strong equity market, the resources boom, strong company profits, dividends, sharemarket profits and bonuses. All those ingredients will continue to fuel that market," Feilich says.
"Anything near the water - whether the harbour or the beaches - has been strong and we've seen the increase in demand for prestige units that have been exceptionally large in size or are in A-grade positions that can't be replicated."
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| Climate-Proofing the Home Insulates Value While Improving Lifestyle Quality |
Home-owners considering renovations should ensure all alterations and additions incorporate as many sustainable housing features and technologies as possible, according to First National Real Estate NSW.
“We see this as the area where renovations will substantially add value to a home,” First National Real Estate national manager marketing communications Stewart Bunn said.
“Homes that are, in effect, climate-proofed through design and energy and water saving technologies are going to have an edge. Buyers are far more aware of environmental impacts and problems and this is beginning to shape the choices some people make about where they will buy a home and what they want to buy.”
Although the NSW Government has mandated stringent sustainability targets for new homes and multi-unit residential developments and, since the beginning of October, for major renovations, Mr Bunn said home-owners should thoroughly research how far they can go towards making their home sustainable.
“The Government’s Building Sustainability Index mandates practical measures to be incorporated in renovations such as energy efficient lighting, insulation for new floors, ceilings and roof, and solar, heat pump or gas energy for any new hot water system,” he said. “These all make very important contributions but home-owners and builders can go much further. Stretching the renovation budget to include even more advanced technologies will add real value to a home as well as contributing to lifestyle quality and significant energy savings for the owner.”
In addition to requirements under the Sustainability Index, other features home-owners can consider range from construction materials to advanced water storage and recycling systems.
“It is critical to work with an architect or builder who has a track record in green housing design and construction, as well as consulting with your local council to understand what you are legally able to do in your area,” Mr Bunn said.
Advanced sustainability housing features can include:
· Construction materials and insulation. New walls and ceilings must be insulated under the Building Sustainability Index regulations. However, there are alternative materials such as mud bricks and straw bales that can provide both durable and innovative construction and outstanding thermal insulation. “If you are thinking about creating new walls and rooms, research the options that are available, including renewable materials,” Mr Bunn said. “They can add design interest and depth while delivering a strong sustainability credential to the home.” External blinds, shutters, overhanging eaves, shading and screening that allow in winter sun and provide total shade in summer should also form a key part of insulation planning.
· Wastewater systems. Local regulations regarding the use of household waste water vary, and it is important to talk with your local council, as well as your architect and plumber if want to incorporate a wastewater system into your renovated home. “The NSW Government is looking at options for encouraging more recycling of water from household areas such as the laundry and bathroom,” Mr Bunn said. “However, in many areas and particularly in rural and regional NSW, it can already be an important way to provide water for the garden or for flushing toilets. Increasingly advanced systems are now available that can provide basic treatment for some household waste water and all house-holders should look carefully at what the options area.”
· Rainwater tanks. Like new wastewater treatment systems, rainwater tanks have come a long way. There are now tanks that can be fitted under verandahs and decking, thin and sleek modular tanks than can be fitted to rear or side walls, virtually disappearing from view, and a range of above and below ground interconnecting tanks that provide very substantial amounts of water. “Depending on your budget it is increasingly possible to effectively drought-proof your home and this can only be regarded as a good investment,” Mr Bunn said.
· Features and finishes. “Everything from the paint you use on internal and external walls, to kitchen cabinets and fabrics for carpets and curtains, to how the garden is landscaped can now be measured against sustainable housing criteria,” Mr Bunn said. “Do your homework as thoroughly as possible and find the right suppliers and designers to talk to.”
First National Real Estate NSW said home-owners should now begin to look at their property as a long term investment for the future in an environmental sense.
“More and more, home buyers will be asking, where was this made? How much water storage is available?, What timbers have been used? What are the heating and cooling requirements?” Mr Bunn said. “Home-owners will need to start installing sustainable designs and technologies to improve the value of their home, as well as to begin enjoying the benefits of eco-housing.”
First National Real Estate has 184 offices in NSW and over 450 offices around Australia.
Issued by: First National Real Estate NSW
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| Shortage of Rental Property |
The latest Real Estate Institute of Australia statistics show that rental vacancy rates have fallen in almost all capital cities as renters scramble for accommodation and force up rents.
These lower vacancy rates are due to a severe shortage of rental stock as new investors are currently avoiding the property markets as well as poor housing affordability forcing many would–be home purchasers to turn to the rental markets.
These dual forces have pushed up rentals. This finally delivers good news for landlords, some of whom have had to drop the rentals for their investment properties over the last few years to meet the market.
Leading independent property consultancy Metropole Property Management reports its lowest vacancy rates on record, with a queue of prospective tenants every time a property is open for inspection.
Vacancy rates fell in Sydney by 0.6%; to 2%.
Apartments recorded the strongest growth in the quarter.
With little new investor stock likely to come on the rental market over the next year and affordability unlikey to ease with the prospect of another interest rate increase later in the year, rents in our capital cities are likey to continue rising strongly over the next 2 years.
Melbourne and Sydney rentals are likely to rise by between 6% and 8% for the next two years, while Brisbane rental increases could be stronger – up to 10% over the next 12 months.
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| 'Shortage of Rental Stock' |
The latest Real Estate Institute of Australia statistics show that rental vacancy rates have fallen in almost all capital cities as renters scramble for accommodation and force up rents.
These lower vacancy rates are due to a severe shortage of rental stock as new investors are currently avoiding the property markets as well as poor housing affordability forcing many would–be home purchasers to turn to the rental markets.
These dual forces have pushed up rentals. This finally delivers good news for landlords, some of whom have had to drop the rentals for their investment properties over the last few years to meet the market.
Leading independent property consultancy Metropole Property Management reports its lowest vacancy rates on record, with a queue of prospective tenants every time a property is open for inspection.
Vacancy rates fell in Sydney by 0.6%; to 2%.
Apartments recorded the strongest growth in the quarter.
With little new investor stock likely to come on the rental market over the next year and affordability unlikey to ease with the prospect of another interest rate increase later in the year, rents in our capital cities are likey to continue rising strongly over the next 2 years.
Melbourne and Sydney rentals are likely to rise by between 6% and 8% for the next two years, while Brisbane rental increases could be stronger – up to 10% over the next 12 months.
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| 'Shortage of Rental Stock' |
The latest Real Estate Institute of Australia statistics show that rental vacancy rates have fallen in almost all capital cities as renters scramble for accommodation and force up rents.
These lower vacancy rates are due to a severe shortage of rental stock as new investors are currently avoiding the property markets as well as poor housing affordability forcing many would–be home purchasers to turn to the rental markets.
These dual forces have pushed up rentals. This finally delivers good news for landlords, some of whom have had to drop the rentals for their investment properties over the last few years to meet the market.
Leading independent property consultancy Metropole Property Management reports its lowest vacancy rates on record, with a queue of prospective tenants every time a property is open for inspection.
Vacancy rates fell in Sydney by 0.6%; to 2%.
Apartments recorded the strongest growth in the quarter.
With little new investor stock likely to come on the rental market over the next year and affordability unlikey to ease with the prospect of another interest rate increase later in the year, rents in our capital cities are likey to continue rising strongly over the next 2 years.
Melbourne and Sydney rentals are likely to rise by between 6% and 8% for the next two years, while Brisbane rental increases could be stronger – up to 10% over the next 12 months.
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| Interest Rates Increase |
Australia's central bank has raised its benchmark interest rate by 25 basis points to 5.75 per cent, the first increase in 14 months, in a bid to keep inflation in check.
The move adds $14 a week to the average variable mortgage repayment.
Since many investors had anticipated the rate rise, its impact on markets is likely to be muted, said Westpac chief economist Bill Evans.
But higher interest rates would also encourage a stronger Australian dollar, hurting the already struggling Australian manufacturing sector. A rising dollar makes exports pricier to foreign consumers while imports become more competitive in the domestic market.
Among the world's most actively traded currencies, the Australian dollar is the world's best-performing in the past month, gaining about 6.25 per cent against the US dollar, according to Bloomberg data.
He called the interest rate rise a "double whammy'' on cash strapped consumers, coming to terms with escalating petrol prices.
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| Investment Market Improves |
The abolition of vendor tax in NSW has just begun to make an impact on the cautious investment market.
The lifting of the 2.25 per cent duty in August has sparked buyers and sellers into action and reinvigorated Sydney's softening property market.
Property prices have steadied and with vendors expectations more realistic, now is a good time to get in. Cremorne First National has seen a significant increase in demand for investment properties in the months prior to Christmas and this trend has continued over the past month.
Neutral Bay and Cremorne will always be good investment areas because of the direct transport services into the city and the proximity to the Harbour.
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| 'Strengthening Market' |
The NSW Real Estate market was regaining strength and seeing an increased demand for property as housing becomes more affordable.
NSW has returned to a buyers' market, which will continue due to the soft prices generated by the increasing range of property becoming available.
In NSW, the median sale price of a house had declined by 1.7 per cent to $471,000 for the quarter, however sales volumes rose by 19.6 per cent to 21,595 in the same period.
These latest figures show that the state's decision to abolish a vendor tax on investment properties resulted in large numbers of both established home buyers and first home buyers returning to the market.
The direct effect of the vendor tax's abolition has been property investors having the opportunity to sell their asset without penalty and thereby increasing the stock of available of properties on the market.
The vendor tax abolition and the return of the land tax threshold, was having a positive impact on the demand for property.
The NSW Government's unpopular 2.25 per cent tax on the sale of investment properties was scrapped in August.
The Government also reinstated a new tax-free threshold for land tax on investment properties just one year after it was abolished.
The REI report also showed that the most affordable area in Sydney is Campbelltown, while the highest median house price recorded across Sydney in the quarter was in Mosman.
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| Opportunities for Buyers |
A report jointly released by the Real Estate Institute of Australia (REIA) and Mortgage Choice said growth in median house prices for houses and other dwellings had slowed considerably. In the June quarter, Sydney median house prices were $495,000, 3.1 per cent lower than the March quarter and down 3.9 per cent on a year earlier. Sydney prices had flattened in the September quarter of 2004 and were now moving downward, the report said. REIA president Ian Wells said the slowdown in growth began about 18 months ago following the surge in median prices in 2001. "now in most capital cities, growth in median prices for houses and other dwellings has slowed considerably," Mr Wells said. Mortgage Choice National Corporate Affairs manager Warren O'Rourke said the fall in prices presented opportunities for buyers. "it is a buyer's market so potential purchasers should be focused on working their market research into a long-term property investment strategy," Mr O'Rourke said."although capital gains are rising at a slower pace, the right property choice and loan can provide any consumer with good gains over the long term."
The report also said the trend in median prices for other dwellings had been flat in Sydney, Melbourne and Canberra since the end of 2003.
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| fundraiser for mosman prep |
cremorne first national are delighted to be offering a commission free sale of residential property, excluding advertising costs to the successful bidder in order to raise funds for Mosman Prep school white boards. If you wish to participate, register your interest on ebay.com.au from 16th August, 2005. Bidding closes midnight 26th August 2005.
conditions:-
vendor will be responsible for advertising and any other associated costs prior to commencement of marketing
valid for residential property in the following suburbs only: 2088, 2089, 2090, 2060, 2061, 2065, 2093 and 2095
non transferable (other than immediate family members)
if you wish to discuss this further, please contact us on 9904 1234. |
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| Housing sector to plateau |
| The national housing market is expected to continue to plateau in 2005 and will stay at that level as Australia's overall economic prospects remain healthy. And a recent lift in building approvals is unlikely to alter the Reserve Bank of Australia's (RBA) stance on interest rates. The Australian Bureau of Statistics said approvals rose 4.5 per cent to 13,213 units in May, seasonally adjusted, from 12,638 units in April. Citigroup managing director Paul Brennan said the recent rebound in building approvals seemed to be driven by demand from owner-occupiers. "Today's readings on households were stronger than expected, although the data are still consistent with our view that an orderly consolidation in household finances is underway with the RBA staying on hold," Mr Brennan said. National Australia Bank chief markets economist Rob Henderson said the data was an indication of the economy's current modest but healthy condition. |
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| house prices to fall? |
| Sydney house prices could fall by up to 7 per cent over the next three years because of higher interest rates, economic forecaster BIS Shrapnel has said. That would mean Sydney's June median price of $500,000 would fall to $465,000 by June 2008, BIS said in its latest property report. The forecaster has based its predictions on expectations the standard variable home loan rate will rise to as high as 9 per cent by the second half of next year, from 7.3 per cent now. BIS is out of step with others who believe at most the Reserve Bank of Australia will raise interest rates one more time this year and by only a quarter of a percentage point. They are also less pessimistic about the property market's prospects. |
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| first time buyers |
| Three years ago they were waiting on the sidelines, but the president of the Real Estate Institute of NSW, Rowen Kelly, says first-time buyers will dominate the property market this winter. "First-home buyers were among the few winners in last year's State Government mini-budget, with increased levels of exemption from stamp and mortgage duty," Kelly says. "Since then, all the market influences have worked in their favour, creating opportunities for keen buyers." Since State Government incentives increased last year, there has been a 25 per cent increase in market share of first-time buyers in NSW. With steady interest rates expected over the next few months and almost no competition from property investors, Kelly expects the percentage of first-time buyers in the market to increase even further. |
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| Interest rate hold |
| Home-owners face no immediate rise in their mortgage repayments after the Reserve Bank kept interest rates at 5.5 per cent. Analysts had expected the Reserve Bank to leave the official interest rate at 5.5 per cent, following relatively benign inflation figures last week and lower than expected producer price index results. Business surveys in recent weeks have also pointed to a slowing economy, while building approval figures showed a 6.8 per cent slump in March. That followed the last interest rate rise. Commsec chief equities economist Craig James said home owners would escape another rate rise for some time. "Homeowners can breathe a sigh of relief and probably for another couple of months," he told Sky News. Despite leaving rates on hold, analysts believe the central bank is likely to lift rates at least once more this year. |
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| Interest rates |
Recent interest rate hikes are expected to take their toll on an already flat housing sector with new figures showing an industry plateau, Australia's peak real-estate group said yesterday.
Figures released by the Real Estate Institute of Australia (REIA) showed the quarterly Australian weighted average median house price was $371,853 in the December 2004 quarter.
While this is up from $364,803 in the September quarter and the December 2003 price of $362,734, the median prices for other dwellings - flats, units and townhouses - flattened substantially compared with the high rates of growth experienced in 2003. |
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| interest rates to rise |
Home owners received further confirmation that interest rates would rise within months, probably by half a percentage point to take the official rate to 5.75 per cent. The government MP who grilled Reserve Bank of Australia (RBA) chief Ian Macfarlane on interest rates warned home owners to brace for a jump in their mortgage repayments.
Bruce Baird, the chairman of the House of Representatives economics committee, said Mr Macfarlane had made it clear rates were on the way up - and soon. "The governor didn't indicate definitely whether they were going up but he certainly gave strong hints," Mr Baird told the Ten Network. "From my point of view, I thought it was likely that it was going to happen, probably small incremental gains." It was possible that Mr Macfarlane was floating the idea as a tactic to rein in inflation, said Mr Baird. |
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| Interest rate rise |
the reserve bank has signalled interest rates will soon rise in a hawkish statement on monetary policy today.
the board did express some concern at australia's continuing love affair with debt, with growth in the sector now at 12 per cent.
"nevertheless, the growth of credit to both the household and business sectors remains high, with aggregate credit growth still running at an annual rate of 12 per cent over the six months to december 2004," it said.
"the overall strength in demand for credit, combined with the fact that interest rates remain slightly lower than the average of recent years, continues to suggest that the current policy setting is not inhibiting growth in the economy."
the bank said it expected the current account deficit to hit 6.75 per cent of gdp when the december quarter figures were released on march 1. |
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| Investment on the rise |
Investors are returning to the housing market and falling deeper in debt, but the Reserve Bank is still tipped to leave interest rates on hold.
The value of lending to housing investors rebounded by 8 per cent in November to $5.6 billion, more than reversing a 6 per cent slump in October.
It was the largest increase for 13 months. However, investor borrowing was still almost 19 per cent lower than a year earlier, when the market was whipped to frenzied levels by the expectation of strong capital gains, low interest rates and generous tax breaks.
Owner-occupiers are also returning to the market. Their borrowings grew by 4.2 per cent during the month to $7.9 billion. |
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| House prices to stabilise in 05 |
Price tags on Australian residential properties will stabilise this year, with market watchers saying the days of skyrocketing house prices are well and truly over.
Prices are tipped to ease only modestly this year, far from the hefty days at the height of the property boom in 2001-2003 when prices were up about 20 per cent per annum in Sydney and Melbourne.
"(Overall house prices) will be a little bit down and that is a Sydney and Melbourne phenomenon - the two biggest markets will affect the national figure."
Australian interest rates have remained on hold for over a year at 5.25 per cent after the Reserve Bank of Australia lifted the official cash rate twice at the end of 2003.
Economists say the next rate move will likely be a hike rather than a cut, but are divided about the timing.
BIS Shrapnel senior property analyst Angie Zigomanis said by year end interest rates would start to rise, likely impacting on house prices.
He said inflationary pressures would start creeping through in 2005 and as a result the Reserve Bank would have to start acting.
"There might be a couple of rate rises towards the end of 2005 but by (mid) 2006 the Reserve Bank will be a lot more aggressive in terms of combating inflation," Mr Zigomanis said.
"While prices will be flat or grow mildly (this year), 2006 will potentially see some house price falls."
While the property market may not be as attractive to investors as it once was, most market watchers say there is still money to be made, if you know where to look.
According to the HIA, medium density housing in middle suburbs - areas half way between city fringes and the CBD - offer the best investment and are the most sought after by the cashed-up baby boomers.
Mr Tennent said in 2004 house prices rose about 10 per cent following a 19 per cent rise in 2003, 18 per cent in 2002 and 16 per cent in 2001.
"People tend to think if we don't achieve 20 per cent we have suddenly got a housing crisis," Mr Tennent said.
"If you go up 60 per cent in three years and then you go down by five per cent you are still a net gainer.
"There is (still money to be made) in very select types of property."
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| Housing sector cooling |
The Australian Bureau of Statistics released figures showing the value of all loans for homes and units fell to $15.234 billion, reversing September's 1.8 per cent rise.
The fall was driven by an 8.1 per cent slump in finance for dwellings to be rented out or resold.
Mr Costello said investor finance was now down 32 per cent over the year, while loans for owner-occupied dwellings had fallen 7.8 per cent.
"For about the last two years I've been indicating that you shouldn't expect the housing market to continue increasing at the rate that it was, and what's more, if it did continue increasing at that rate that would be unsustainable," he told parliament. "So to see a slowing in relation to housing finance, particularly a slowing in relation to investor finance is something that the government has been looking for. It is not unwelcome. It indicates that there is a slowdown in that sector ... and it shows that one of the hot spots of the economy which we've been warning about for some time is now coming off in an orderly and a measured way, which will provide some durability in the sector over the medium term." |
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| Sydney median price change |
Despite the release of figures this week that show the median sale price for a house in Sydney has fallen for the first time in four years, some sellers still have unrealistic expectations, says Rowen Kelly, president of the Real Estate Institute of NSW.
Kelly was commenting on REI figures for the September quarter which report a median house price in Sydney of $500,000, compared with one of $520,000 for the June quarter.
Vendors who haven't adjusted their price expectations to reflect these new market realities are having difficulty selling, he says. "Some sellers are still expecting their property's price to increase at the pace we were experiencing 18 months ago. This is not the case."
One of the reasons for the market slowdown is that speculative investors, who helped push property prices up at such a rapid rate, are no longer participating in the property market. "The buyers looking at the market at present are more likely to be first-home buyers or established home-owners looking to upgrade now the market has stabilised," Kelly says. "These people aren't willing to buy a property above market value." |
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| Low jobless rate to lift property sector |
Low unemployment may trigger a surge in the property market, says
Rowen Kelly, president of the Real Estate Institute of NSW, after
figures released this week showed the rate of unemployment had
dipped to 5.3 per cent.
Kelly says with the overall Australian economy enjoying a prolonged period of expansion there has been a corresponding increase in business and consumer confidence, which will flow through to the property market.
"Individual finances are healthy and people are feeling optimistic about their own economic future. This is good news for the property market because property has traditionally been Australia's favourite means of wealth creation," he says.
With property market sentiment improving, Kelly predicts that over the next six months market activity will return to pre-boom levels as both vendors and buyers demonstrate their increased confidence.
"For the first nine months of this year we saw a definite slowdown in sales, with buyers being extremely cautious and many vendors misreading the market and overvaluing their properties," he says. "Between now and the end of next March we are likely to see the market start moving again with more interest from buyers and more properties being sold."
As well as the low unemployment rate and the strong economy, Kelly points to low interest rates and improved incentives for first-home buyers as contributions to increased market confidence.
Further, the Reserve Bank governor, Ian Macfarlane, said this week that any interest rate adjustments might be a year or more away, which, Kelly says, is likely to further fuel buyer interest.
With buyers returning to the market, there has been increased optimism among vendors. "As buyers are becoming more evident so vendors are feeling confident about the market as well," he says.
Although the Sydney market is highly segmented, with some areas likely to perform strongly and others taking longer for activity levels to increase, the overall outlook for the next 12 months is positive.
Kelly says this increased interest from buyers will continue as long as the economy stays strong. "But any property buyer must consider that, like any market, the real estate market runs in cycles, experiences highs and lows and is influenced by a variety of factors including interest rates, migration and the local and global economies."
This column is supplied by the Real Estate Institute of NSW.
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| Home Loan Affordability |
The REIA Home Loan Affordability Report stated that home affordability has slumped to its lowest level since 1990. Despite low interest rates and flat house prices! So this data seems odd in the face of evidence of a slow down in the housing market.
It appears the average homeowner is increasing their mortgage to fund their lifestyle. So at some stage this has to stop, other wise there will be no ability for the community to deal with periodic slow downs in the housing market or the employment market. |
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| Confusing Statistics |
| The Australian Bureau of Statistics have declared that house prices have experienced a sharp decline, the first price fall in four years. Two days earlier the REI had reported something entirely different. Why are they different? They are different because the ABS figures are an index and the REI figures are a median price. Both get their data from exactly the same source! Meetings are under way shortly for both to agree on the method of statistics and maybe we will see the end to conflicting head lines. |
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