November 2011 Newsletter
Welcome to our November Newsletter.
We are seeing property valuations coming in lower than expected over the past month. This is not only in Queensland but other states too. So if you are thinking of refinancing or buying a property it would be worth your while to ask us for a free Comparative Market Analysis (CMA) from Residex.
A CMA lists recent comparative sales in the surrounding area and gives you a good indication on the likely current value. The CMA normally costs $75 so it’s excellent value. Call us if you’d like a copy.
There is a lot of speculation in economic circles about interest rates and whether they’ll drop again. Westpac are expecting a full percent drop next year but more sober heads are suggesting either a 0.25% drop around March 2012 or none at all.
One of the key factors will be the fall out from the European financial meltdown. There are a lot of investors pulling out of Europe and heading to less risky areas. This will mean the cost of raising capital will rise sharply for those affected countries - and will likely flow on to Australia to a lesser extent.
Even if the RBA does drop rates again it is unlikely that the majors will pass all of it on to borrowers. Stay tuned for this one...
One last thing; due to popular demand we have re-introduced our Australian Residential Property stats this month. These stats are from rpdata.com and are published by The Adviser magazine. See the first news article below for more information.
Enjoy the read.
Richard.
All the latest state by state house and unit prices, quarterly and annual growth percentages, rental yield and weekly rental incomes.
The property market remains relatively flat, but recent data show the number of new home sales is on the rise.
Australia's economic growth rate has moved higher, but it may be too early to embrace the figures, Westpac has indicated.
Renovations are the only source of growth for the housing industry this year, it has been claimed.
The top end of the market around behind the putting green won’t you? It’s fair enough to say that aspiration is the cornerstone of any effective capitalist system and when you are living in the country that features in the term “The Great Australian Dream”, you just know that one of the benchmarks of success will be your abode. Every town has enviable real estate that drives most of us to sweet reverie so in the coming pages we are going to visit some serious property.
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Australians are among the wealthiest people in the world, far surpassing those in the United States.
Designed to let you become the expert, Residex Report contains expert commentary from John Edwards which is specific to each state, an economic summary of what is happening around the globe and comprehensive house and unit data for every suburb in the state or territory.
The Federal Government's State of Australian Cities report has found housing undersupply in Sydney is "particularly severe", with only 6,700 new homes started in the last quarter compared to 14,700 in Melbourne.
More than half of potential first homebuyers polled in a new survey have said a lack of affordability would make them consider becoming lifelong renters.
First home buyers are heading back to the market in droves, new figures suggest.
RP Data's newest Property Pulse has shown a surge in the popularity of high density living. Analyst Cameron Kusher said units have outperformed houses in both value and sales volumes.
The carbon tax is weighing on consumers' minds, with Gen Y showing the most concern over the levy.
Melbourne's vacancy rate has hit 'equilibrium' as national vacancies edged up slightly in September.
Source: RP Data
Source: Australian Broker News
The property market remains relatively flat, but recent data show the number of new home sales is on the rise.
There is no doubt the property market has been uninspiring of late; however, there may be some light at the end of the tunnel. New data from the Housing Industry Association (HIA) show the number of new homes being sold is starting to edge higher, climbing 1.1 per cent in August following declines of eight per cent in July and 8.7 per cent in June.
HIA chief economist Harley Dale says problems abroad are preventing Australians from investing in property, both old and new. That said, in the case of those who are financially able to build a new home, now is a very good time to contemplate doing so, Dr Dale says. His assertion is supported by the data.
The latest statistics from RP Data show that 45.1 per cent of Australian dwellings are now worth at least double their original purchase price. Australia’s residential housing market is now worth an estimated $4.56 trillion – almost four times the value of the Australian equities market – which makes it a very lucrative investment for those who can afford to enter the market.
“Strong value growth in property over recent years has been the catalyst for most regions enjoying quite strong levels of equity,” RP Data research director Tim Lawless says. Over the five years to June 2011, capital city home values grew by approximately 30 per cent and provided a significant wealth boost to most home owners during this period.
According to RP Data’s Equity Analysis Report, only 3.7 per cent of Australian homes are currently valued at a lower amount than the price at which they were purchased. At the other end of the spectrum, about 45 per cent of Australian homes are worth more than twice what their owners originally bought them for.
Areas with the highest proportions of homes to have doubled in value are typically located in regional markets where values have moved from a low base and the housing market has seen long-term improvements in housing values. “The Melbourne metro area is the exception,” he says. “It is the only capital city to fall within the top 10 list of regions enjoying the largest proportion of homes with more than 100 per cent equity accumulation.”
Source: Australian Broker News
Australia's economic growth rate has moved higher, but it may be too early to embrace the figures, Westpac has indicated.
The Westpac - Melbourne Institute Leading Index, which tracks the likely pace of economic activity over the next three to nine months, grew to 4.5% in August. The result puts the Index above its long-term trend of 3.3%. Westpac chief economist Bill Evans has warned, however, that it may be too early to predict robust economic growth.
"The growth pattern in the national accounts of a large negative for Q1 followed by a large positive has imposed a degree of volatility on the Index. Accordingly it is too early to embrace the current signal from the leading Index that growth will surge above trend in early 2012," he commented, adding that the signal nevertheless "deserves respect".
Growth in corporate profits and productivity led the surge, aided by an uptick in building approvals. Despite the results, Evans said Westpac expected growth momentum for the second half of the year at an annualised pace of around 1.5%, a pace below trend for the economy.
Evans said some of the key aspects of the forecast were expected to be weak consumer spending and ongoing sluggishness in residential and non-residential building. He maintained the bank's view that the RBA will cut interest rates in December, but said a rate cut in November "is becoming increasingly likely".
Source: Australian Broker News
Renovations are the only source of growth for the housing industry this year, it has been claimed.
Final figures released yesterday by the Australian Bureau of Statistics show residential building fell 4.1% in the June quarter. Meanwhile, major alterations and additions increased 2.6% in volume for the quarter. Housing Industry Association chief economist Harley Dale said the figures show "a tale of two halves" in home building activity.
"Renovations activity, both in terms of major jobs which we received an update on ... and smaller jobs valued at less than $10,000, is the source of growth in the housing industry post in 2011," Dale said.
Dale commented that the results indicate reticence on the part of households to move or upgrade, with many homeowners choosing to stay put and make improvements to their existing home.
"This situation reflects an inherently more cautious household sector post the GFC, together with the excessive taxation of new housing and very high stamp duty incurred when moving home," Dale remarked.
Source: Australian Broker News
Australians are among the wealthiest people in the world, far surpassing those in the United States, it has been reported.
In spite of gloomy economic sentiment and the growing likelihood of an RBA rate cut, a new Credit Suisse report claims Australians have the highest median wealth in the world, and the second highest average wealth in the world. News Ltd has reported that Credit Suisse found Australian adults have a median wealth of $217,559. The figure is nearly four times that of the median wealth of US adults.
The majority of Australians' wealth is tied up in property, with the country seeing one of the highest home ownership rates in the world. Credit Suisse indicated that property accounts for 65% of Australian wealth.
The research comes as recent ABS figures showed a growing disparity between the wealthiest and poorest Australians. The ABS reported that the wealthiest 20% of Australian households have an average net worth of $2.2m, while the average net worth of the poorest Australian households is only $32,000. The richest 20% of households hold around two-thirds of Australia's total household wealth, while the poorest 20% hold around 1%.
Source: Australian Broker News
A government report on Australian capital cities has singled out Sydney for housing undersupply.
The Federal Government's State of Australian Cities report has found housing undersupply in Sydney is "particularly severe", with only 6,700 new homes started in the last quarter compared to 14,700 in Melbourne. Urban Taskforce CEO designate Chris Johnson claimed a lack of housing was driving people away from Sydney.
"The report found that Melbourne is growing faster than Sydney, having increased its population by more than 600,000 between 2001 and 2010 while Sydney's grew by less than 450,000 over the same period," Johnson said.
While the report identified Sydney, Melbourne and Perth as areas of rapid population growth, Johnson said it neglected the fact that average population growth in Sydney for the last four years was only half that of the preceding five years.
"The City of Sydney is not fulfilling its potential as a hub for compact, pedestrian-friendly living," he claimed.
Johnson criticised the government for a failure to commit funds to new road projects for the city in light of the report.
Source: Australian Broker News
More than half of potential first homebuyers polled in a new survey have said a lack of affordability would make them consider becoming lifelong renters.
The RAMS survey of more than 300 prospective first homebuyers found 52% would consider renting for the rest of their lives if they found housing was unaffordable. Sixteen per cent of the respondents said they were actively considering becoming lifelong renters, while 36% said they would consider the option if they felt they could never realistically buy.
The survey polled Australians aged between 20 and 49, who indicated they were considering buying their first home within the next 12 months. While the majority of respondents said they would at least consider becoming lifelong renters, 48% said they were determined to buy no matter what. RAMS CEO Melos Sulicich claimed the result showed many Australians were unwilling to give up on home ownership despite affordability concerns.
"We see many first time buyers that make very careful decisions about whether to buy property and others who consider it a life achievement, but all tend to be quite determined," he said.
Source: Australian Broker News
First home buyers are heading back to the market in droves, new figures suggest.
The AFG Mortgage Index for October has shown a 40% spike in first homebuyer activity for the month, with first time buyers comprising 16.4% of all loans processed by the aggregator. The result represents the largest first homebuyer participation since September 2009.
First homebuyers were most active in NSW, accounting for 21.1% of all loans. Queensland and WA also saw strong first homebuyer participation, at 17.9% and 17.3%, respectively.
Fixed rate loans have also seen an uptick during the month, comprising 20.4% of all loans processed. The numbers echo those released by Mortgage Choice, which showed fixed rate products represented nearly 20% of all the broker's approvals for October.
AFG general manager of sales and operations Mark Hewitt commented that competitive discounting among lenders helped to woo first homebuyers back to the market.
"Buyers are reaping the benefits of one of the most competitive mortgage markets we’ve seen in years. Discounted fixed rate loans appealed to all buyer types, but especially first home buyers and those looking to refinance. We have been slightly surprised with the popularity of fixed rates given it has been generally predicted variable rates would decrease and we would now expect the proportion of fixed rate loans to fall, following the cut in variable rates announced [this month]. Non-major lenders are doing increasingly well in this environment and hopefully [the RBA rate cut] will further support a market recovery which is still in its very early stages," Hewitt said.
Non-majors saw their best share of the mortgage market than at any time over the past year. Deals from non-major lenders represented 21.1% of all home loans. The lenders proved even more popular with first homebuyers, accounting for 30% of first time buyer loans. Investors were also active in the market, with investment loans comprising 35.6% of all new mortgages.
Source: Australian Broker News
RP Data's newest Property Pulse has shown a surge in the popularity of high density living. Analyst Cameron Kusher said units have outperformed houses in both value and sales volumes.
Capital city unit sales accounted for 33.5% of all sales, up from 28.2% if sales 15 years ago. The proportion was even higher in Sydney and Melbourne, where unit sales accounted for 42.8% and 33.8%, respectively. Kusher pointed out that unit values had also performed strongly.
“One important point worth mentioning is that over the 12 months to September 2011, the change in capital city unit values (-1.1%) has outperformed that of capital city houses (-4.1%) – a trend that has been replicated over the past five years with house values increasing at an average annual rate of 4.8% and unit values increasing by a greater 5.9% for the same period," he said.
Kusher said the trend toward units coincided with dwindling affordability, with demand for high density living set to grow.
"Melbourne in particular has done a much better job at providing new higher density housing over recent years than we have seen in the other major capitals. Should other cities follow this lead, a greater supply will likely lead to improvements in housing affordability with developers having to offer competitive pricing to secure sales," he said.
Source: Australian Broker News
The carbon tax is weighing on consumers' minds, with Gen Y showing the most concern over the levy.
A new poll by Loan Market has found 39% believe the carbon tax is the economic factor most likely to negatively impact their finances next year. Gen Y respondents were even more wary, with 51% nominating the carbon tax as the most worrying financial factor.
Loan Market COO Dean Rushton said the tax trumped fuel and utility prices and interest rates to top consumers' list of concerns. Thirty per cent of respondents listed rising utility costs as a worry, while 21% nominated interest rates and only 10% tipped fuel prices. Rushton said the RBA's recent rate cut had alleviated consumers' worries over interest rates.
"There is no doubt in that they will need to cut further to continue to shore up confidence in the current global environment," he said.
Melbourne's vacancy rate has hit 'equilibrium' as national vacancies edged up slightly in September.
New data from SQM Research shows the national vacancy rate climbed 0.1% during the month to 1.9%. All capital cities apart from Perth saw a rise in vacancies, with Melbourne leading the way. The vacancy rate in Melbourne has now reached 3%, a level SQM has claimed is "equilibrium" for the city.
The company pointed out that the national vacancy rate has remained fairly stable for several consecutive months, and said this could be an indirect result of a lack of buyer interest in the housing market. SQM Research managing director Louis Christopher said he expected the national vacancy rate to remain stable.
"Vacancy rates nationwide have been staying in a fixed range for a long time now and I do not anticipate a move one way or the other for the foreseeable future.
As stated in our last update, Melbourne is the one exception with vacancy rates now at 3%. It is very possible we will see Melbourne vacancies continue to rise from here as there is, even at this point in time, new stock still just being completed now," Christopher said.
