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The Sunday Telegraphy 16/05/2010
THE
Residex figures show auction clearance rates dropped by more than 10 per cent last Saturday to 62.5 per cent, down from 73.5 per cent the weekend before. The slowdown follows a buoyant start to the real-estate year with clearance rates averaging about 80 per cent in the first three months.Residex managing director John Edwards said interest rates and nervousness about high local prices and the economic crisis in
Adding to buyer woes,
Independent auction house Cooley Auctions saw clearance rates plunge from 80 per cent to 50 per cent in the first week of May alone.
"There are early signs that the heat's coming out of the market," auctioneer Damien Cooley said. "In the last week, the bidding activity hasn't been as spirited as we saw in February, March and the beginning of April." Manly mother Yoness Blackmore felt the market slowdown first-hand after her property passed at auction for $1.125 million last Saturday. The Manly home she shares with her husband, Chris, and their children, Alex, six, and Zoe, four, is the type agents dream of: a home in a popular suburb, within walking distance of shops, beaches and transport connections and with three large bedrooms and a backyard. "It was disappointing because you psyche yourself before an auction," Mrs Blackmore said. "We just timed it badly - We just didn't count on the effect of school holidays and Anzac Day. "Whether you're buying or selling, there's nothing good about it." The couple's house, still on the market, attracted two potential buyers who had in turn experienced problems selling their own properties. But a home in neighbouring Fairlight last week sold for $1.44 million - $240,000 more than the vendors paid just 11 months ago - a typical example of
"I expected people to start sitting on the fence and being more cautious when interest rate levels got to seven per cent but they're now starting to do that sooner. We can see it. Over the last couple of weeks numbers have gone down." In
"I think a lot of people are finding it hard to keep up - it really is a massive growth spurt and we don't know where it's going to go."
He said growth like that was one of the factors starting to scare potential buyers out of the market.
Mr Edwards said the drop in values in the lower end of the market recorded in the first half of the year meant the "poor were being stressed significantly" while the medium to upper areas would continue to do well.
NSW makes fresh tax grab from property market
The Australian Financial Review 13/05/10
Home owners and commercial developers in NSW have been targeted by a new tax which is expected to reap more than $90 million a year for the government, giving Treasurer Eric Roozendaal extra money to play with before the budget on June 8.
The government has proposed a new charge of 0.2 per cent on property transactions valued at more than $500,000 and 0.25 per cent for those of more than $1 million. That's on top of a $190 flat fee and means a buyer would pay an extra $200 for a $600,000 home - which is the median house price in Sydney - and an extra $1000 on a property worth $1 million.
Home loan drop raises alarm
The Australian Financial Review 13/05/10
Demand for home loans has dropped for a sixth consecutive month as rising interest rates and soaring house prices undermine borrowing by aspiring owner-occupiers.
The value of home loans, excluding refinance, issued in March fell by 1.7 per cent in March to reach its lowest point in more than a year, raising concerns the housing construction recovery may not be sustained.
The number of loans to owner-occupiers dropped 3.4 per cent in march to be down 23.2 per cent from a year earlier, and first-home buyers are leaving the market even more quickly, with their share of all owner-occupier loans dropping to a near four-year low of 16.1 per cent.
The RBA admitted last week that it was puzzled by the apparent contradiction between the plunge in new mortgages and the inexorable rise in house prices. It speculated that much of the activity was being driven by existing home owners who could buy eith little or no external finance.
News Limited Newspapers 10/05/10
Rising Interest Rates to hit renters Hard
Trade-up buyers push house prices higher
The Australian 15/02/10
DEMAND is up as home owners take the opportunity to upgrade before interest rates rise.
PROPERTY markets around the country continue to soar as home owners seek to "trade up" before anticipated interest rate hikes in the coming months.
At the weekend, Sydney auctioneers raked in more than $100 million in sales, after listing 241 properties for auction - 108 more than were on the block the previous weekend.
According to Australian Property Monitors, a waterfront home at southern Sydney's Kangaroo Point was the city's highest sale at $3.4m, while a modest house at Tuggerawong sold for $260,000, tipping sales over the $100m mark.
The auction clearance rate in Sydney was 69.7 per cent, which was up 5.3 percentage points from the corresponding weekend last year.
Home buyers were also busy in Melbourne, where agents listed 393 properties for auction on Saturday - more than twice as many as the previous weekend.
The city's clearance rate was 63 per cent - a drop of 10 percentage points from the first weekend in February.
But Victorian analysts said the result was strong for this time of year.
A three-bedroom house on Millswyn Road, South Yarra, was sold for $2.6m while a studio apartment in the Melbourne CBD was snared for the bargain price of $180,000.
Real Estate Institute of Australia president David Airey said the most activity was among owner-occupiers seizing on low interest rates to buy more expensive homes.
"Sales are dependent on buyer demand," he said.
"And there's been very strong demand, with people taking advantage of interest rates at current levels to set up loans.
"The biggest jump in the market is in the more expensive ranges - $700,000 and above - which is generally regarded as the `trade-up' market."
The "trade-up" market has driven the strongest market growth in recent months.
In the December quarter last year, the most expensive 50 per cent of suburbs enjoyed price growth of almost double the remainder of the market, according to APM.
Smaller auction markets also performed well at the weekend.
Adelaide's clearance rate climbed from 29.4 per cent on the corresponding weekend last year to 65.6 per cent.
Brisbane's clearance rate climbed to 32.3 per cent, up from 26.5 per cent last year.
AIMIA Awards
The worst of the rate rises is behind us, says Reserve
The Sydney Morning Herald 17/02/10
The Reserve Bank has reached a pivotal point in its program of rate rises, declaring the bulk of the work behind it.
After three successive rises at the end of last year the board's February minutes say future rises will be decided on a case-by-case basis depending on economic indicators each month.
Board members no longer ''regard the outlook as requiring an increase at every meeting'', the minutes say. They believe rate rises so far have given them ''a degree of flexibility'' for future decisions.
While it is good news for mortgage holders, the declaration means future rises will be painted by the bank as responses to existing conditions rather than the withdrawal of emergency settings.
Asked at a Women in Finance lunch in Sydney whether future adjustments would be linked to attempts to wind back government spending, the assistant governor Guy Debelle ducked the question.
''I can guarantee that there will be at least three hours of questioning on this topic on Friday when the governor appears before the parliamentary committee, where they will spend three hours trying to get him to answer this question in some way or the other,'' he said. ''In the interests of not pre-empting Glenn [Stevens], I think I'd prefer to leave that question to him.''
At a closed Reserve anniversary function last week Mr Stevens painted a picture of ''a lengthly period of rather low short-term interest rates'' if governments repaired their budgets. But he said his remarks were ''not intended to provide any particular message about current issues for monetary policy in Australia''.
It is understood he will tell Parliament's economics committee that he had in mind other countries with bigger needs than Australia to cut spending when he linked rates to government spending, and that any linkage in Australia would be small.
The shadow treasurer, Joe Hockey, told the National Press Club on Tuesday that the bottom line was ''the government can reduce the upward pressure on interest rates by cutting its spending, but it chooses not to''.
But when asked whether he would tighten spending further than the government, which has promised to cap real spending growth at 2 per cent a year once economic growth recovers, he replied he would not.
''I accept the framework the government has put in place where it says it will put the cap in place when we get to trend growth,'' he said. ''I accept that framework.
What I have a problem is the other end of it. My concern is as soon as we go into surplus under the Labor Party's framework, that 2 per cent cap comes off. That's my concern.''
The Treasurer, Wayne Swan, said Mr Hockey had ''endorsed the government's strict spending cap, demolishing his own year-long scare campaign''.
A National Australia Bank business survey yesterday found business confidence up seven points last month but business conditions down seven points on weaker trading and profits.
Residential 'ripe for recovery'
The Australian Financial Review 15/06/2009
Residential property prices are headed for a "sustained recovery", according to forecaster BIS Shrapnel.
Median prices are forecast to rise by 19 per cent in Sydney, Melbourne and Adelaide over the three years to June 2012 - according to BIS Shrapnel's latest report, Residential Property Prospects, 2009 to 2012.
BIS Shrapnel's senior project manager Angie Zigomanis said that conditions were "ripe for sustained recovery" with "low interest rates, solid growth in rents and housing shortages" evident in most markets.
However, the price increases will be very limited in the early days of the upswing, gaining strength once unemployment has peaked at the start of 2010-12.
"The current economic malaise will mean confidence will only recover slowly during 2009-10," Mr Zigomanis said. The outlook is predicated on the view that the first interest rate rises will not come until the start of 2011.
BIS Shrapnel expects first home buying will slow next year - after 180,000 first home buyers take the plunge in 2009 - but says the baton is already being passed to second home buyers and investors. "From here, the recovery in housing demand is expected to broaden and deepen," Mr Zigomanis said.
Sydney, Melbourne and Adelaide will show the best growth. Mr Zigomanis said that, in real terms, Sydney's median house price was 17 per cent down on June 2004 with affordability the best for a decade and enough pressure on rents to bring back the investors.
The Australia Financial Review 11/06/2009
Investors have joined the housing recovery just as signs emerge that the first home buyer mini-boom might have peaked.
The Australian Bureau of Statistics recorded a sharp rise in the value of lending to investors, which surged 8.9 per cent in April over previous month.
The latest figures also show that the number of loans to first home buyers represented 28 per cent of all owner occupied housing finance commitments - the highest proportion recorded since the ABS began compiling data on the topic almost 20 years ago. But economists and other market players believe first home buyer activity, spurred by federal grants, has passed its peak.
This week, Australia's largest mortgage broker, AFG, said that its monthly index showed first home buyer activity has slowed in the past two months while loans to property investors had increased.
"The uptick indicates that low rates, good strong rental yields and the relatively strong performance of property over equities may be contributing to growing investor confidence" AFG said.
The Australian Financial Review 03/06/2009
Australian house prices will fall further, weighed down by rising unemployment, according to an analysis by JPMorgan.
Based in the JPMorgan expectation that unemployment will rise to 9 per cent, chief economist Stephen Walters predicted house prices could fall a further 14 per cent - to be 18 per cent below the peak - by the end of 2010.
The wild cards are the institutional factors, like the first-homers boost, changing credit laws, tighter lending criteria and mortgage rates.
The first-home owners boost has stimulated demand - in April a record 17,800 first-home buyers took the money - but it tapers to an end in December.
More important is the increasingly conservative approach of the banks.
"Wary of moral hazards faced by subsidised entrants into the housing market, they are aggresively decreasing required loan-to-value ratios, and putting in place loan-application hurdles."
Debate about the future of house prices has raged since the rising interest rates of early 2008 brough the final surge to an end. The pessimists have pointed to the negative impact of joblessness and household deleveraging; the optimists have based their views on the underlying shortage, the fall in.
02/06/2009
The Reserve bank has decided, as expected, to keep interest rates on hold today as the global downturn pushes the Australian economy officially into recession.
The official cash rate remains at 3.00%.
Treasurer Wayne Swan yesterday acknowledged the economic growth figures for the first quarter of the year would show the Australian economy in a technical recession, being in a second consecutive quarter of negative growth.
However, economists still expect the official interest rates to be cut to 2.5% by the end of the year.
The Sydney Morning Herald 15/02/2010
The percentage of loans for first-time buyers in NSW has fallen to the lowest level since the first-home grant was introduced in October 2008.
Australia Bureau of Statistics housing finance figures for December show that first-home buyers accounted for less that 21 per cent of all owner-occupied home loans written, compared with 30 per cent in May 2008.
December was also the third consecutive month of falls in nnumbers of first-home buyers taking out home loans, which peaked last September, the last month where the full $14,000 was available for buying existing homes.
The outlook for the first quarter of this year is also weaker.
The boost expired fully at the end of December and early indications from mortgage brokers point to a significant fall in first-home activity.
The managing director of AFG, Brett McKeon, attributed the fall in demand for home loans from first-home buyers to the three consecutive rate rises between October and December. "The impact fo three rate rises in quick succession has had a far more dramatic effect on property buying than anything we saw during the global financial crisis.People are not moving or upgrading their family homes. They have slammed the brakes on borrowing."
Matthew Bell is an economist with Australia Property Monitors.
Jonathan Chancellor is on leave.