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      News & Media

       

      Keep up to date with relevant information, with all things property. Whether buying or selling or simply wanting to know, BresicWhitney weekly will keep you informed.

       

      LOCATION, location, transportation is fast becoming the Sydney real estate mantra.
      The Daily Telegraph 05/06/2010
       
      Traditionally, water views, a northeasterly aspect and golf course frontage could add hundreds of thousands to the bottom line but now a "good location" means being walking distance from a train.
      Sydneysiders, it seems, will do anything to avoid relying on the city's congested roads.
      UTS property expert Vince Mangioni said transport infrastructure could help values as the price of petrol rose and congestion worsened. "People have to get to work," he said.
      A survey of valuers and agents found being in walking distance of a train station could add 20 per cent to the value of a property, but backing on to the rail line, or facing a major highway, could drive prices down up to 20 per cent.
      The median house price for the suburbs of Chatswood, North Ryde, Marsfield, Macquarie Park and North Epping rose by 18.6 per cent in the year to March 2010, above the 14.7 per cent overall Sydney rate, Australian Property Monitors economist Matthew Bell said.
      "For units, the rise was 23.3 per cent, well above the overall Sydney rise of 10.4 per cent. I think the unit result is quite striking," he said.
      "After schools and security, transport is the most important factor, ahead of shopping, employment and recreation."
      Hornsby's median price surged from $536,000 to $727,000 in 12 months.
      "Hornsby has always been at the fork on the Strathfield line and with the changes in the train line we're starting to benefit with a lot of people moving into Hornsby," Laing and Simmons Hornsby director Matt Effenberg said.
       
       Buyers Spooked as rates bite

       The Sunday Telegraphy 16/05/2010

      THE Sydney housing market has shown the first signs of slowing as climbing interest rates and sky-rocketing prices scare off potential buyers.

      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 Europe had caused the sharp drop."It's normal for clearance rates to slow at this time of year, but we've suddenly had a 10 per cent fall since the last interest rise," he said.

      Adding to buyer woes, Sydney property prices have risen by 17 per cent in the 12 months to April this year, an "astonishing" figure according to Mr Edwards. The average annual growth rate for Sydney is 6.7 per cent.

      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 Sydney's sharp price growth. Property news, gossip, sales results: Page 111s seen in some parts of the city. The two storey weatherboard house at 24 Arthur St was bought for $1.2 million in June last year and sold for $1.44 million on Tuesday, representing a rise in value of 20 per cent, more than three times the Sydney average. Selling agent for both homes Georgi Coward of Cunningham Property said she was amazed the Blackmore's Darley St home had passed in as it ticked so many boxes. But the signs of a changing market were everywhere. Ms Coward said: "People aren't jumping onto properties as much."

      "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 Sydney's south, a small two bedroom brick home with no view in Kyle Bay sold last week for $1.13 million, almost three times the $418,000 paid for the property in 1997. "Is that crazy or what?" said selling agent Sasha Tavic from McGrath St George.

      "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.

       

       

      House prices set to stall, say experts

      News Limited Newspapers 10/05/10

      REAL estate experts are bracing for the housing market to finally slow down, as the effects of the latest interest rate rise filters through to buyers.
      Despite six interest rate rises in the past eight months, the demand for housing has outweighed the extra costs. Buyers have continued to push house prices up to 20 per cent higher in many cities in the past year.
      However, evidence is now starting to show that a slowdown is under way.
      Australia's largest real estate group Ray White, reported a sluggish March quarter with turnover up only 8 per cent compared with last year.
      This is the smallest increase since the global financial crisis and the reduced activity has continued in to April, Ray White joint chairman Brian White says.
      "Judging by our April results, it looks as if the interest rate increases are having an impact on activity," he says. "With the additional interest rate hike, it would be the first time that the Australian market has not shrugged off the pattern of increases in the past.
      "At last, it would appear that the ambition of the Reserve Bank to slow down the residential activity has been achieved."
      Independent interest rate monitor RateCity says about 27,000 households have already missed mortgage repayments and thousands more are expected to fall behind after the latest interest rate rise.
      The number of securitised home loans more than 90 days in arrears has rapidly increased from 0.05 per cent in January to a current rate of 0.6 per cent, RateCity says.
      However, there is still optimism out there, with a Bankwest and Mortgage and Finance Association of Australia survey finding 76 per cent of people surveyed believed house prices will continue to rise this quarter.

       

       Rising Interest Rates to hit renters Hard

      News Limited Newspapers 26/04/10
       
      INTEREST rate rises during the next two years is going to hit tenants hard as the cost of escalating mortgage payments is passed on to tennants.
      TENANTS can expect to pay out an extra $5 billion or more in the next two years as landlords push up rents to cover spiralling mortgage costs.
      Property analyst Residex and the country's biggest real estate chain Ray White say the Reserve Bank's lifting of interest rates is flowing straight through to the rental market.
      A shortage of available properties and increased population are adding to the rate pressure, with weekly rents expected to rise between $40 and $100 in the next two years.
      "Every force in the marketplace will be driving rents higher,'' Ray White director Ben White says.
      "The mortgages of rental property owners are becoming more expensive, so it's inevitable that this will result in rents going up,'' White says.
      There are about 2 million rental properties in Australia and if rents increase an average of 7 per cent it will push them up by about $20 a week this year, according to Ray White. However, property analyst Residex paints a bleaker picture.
      It expects rents to rise more rapidly, predicting Sydney will be hardest hit, with rents expected to be $108 a week higher in two years, while Melbourne rents are expected to be $71 a week more expensive by 2012.
      Rents in the other states are all forecast to be higher by more than $40 a week within the next two years, Residex chief executive John Edwards says.
      A rise of $50 a week is forecast in Hobart; $47 in Adelaide and $46 in ACT.
      "It's a perfect storm because while rents are rising, tenants are suffering but in most cases the increases in rents won't be enough to cover the higher mortgage repayments,'' Mr Edwards says.
      Although landlords can offset some losses against other income tax through negative gearing, they can only claim back an amount equivalent to their marginal tax rate.
      And the expected rise in rents will increase the number of tenants in ``rental stress'' by about 50 per cent, according to Martin North, director at Fujitsu Consulting.
      North expects the number of people who struggle to pay their rent to increase from 44,000 to 66,000.
       

       

      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.

       

       
      Melbourne’s fever pitch bound to drop
       
      The Australian Financial Review 11/03/10
       
      Few analysts expect the market to keep the current fevered pace but exactly how and when it slows is a tough call to make, particularly for bidders losing out at auction, week after week.
      “The current residential market is unsustainable, but as none of the fundamentals of the market are changing in the short term we don’t see how the current imbalance between supply and demand will change,” says Real Estate Institute of Victoria chief executive Enzo Raimondo.
      His city’s house price boom is now a national property phenomenon.
       
      Melbourne led the country in house price growth last year, with the median price jumping by at least 14 per cent. Then it burst into the New Year with 4 per cent growth in median prices in January, according to Rismark RP Data, and with a weekend turnover exceeding $1 billion.
       
       If the boom continues, Melbourne’s median house price will exceed Sydney’s by the end of the year.
      For many, particularly in the harbor city, that would seem to overturn the natural order. But it is only 30 years since Sydney house prices jumped ahead in 1980.
       
      By 1979, after decades of huge house price growth, the Melbourne median was $46,000 compared with Sydney’s $42,000.
      Then Sydney took off. For two decades the price gap widened. But in the last decade, as Sydney’s population growth weakened and its house hold earnings came back to the pack, so did house prices.
       
      APN economist Matthew Bell believes Melbourne prices could outstrip those in Sydney.
      “It could easily happen,” Bell says. “It’s about the same size, and it has strong population growth. So there is no real reason why Melbourne prices could not be higher than those in Sydney.”
       
      But property markets overshoot.
      Sydney did and in October 2003 came to a dead halt. For the rest od the decade, the median price hardly moved and many houses in the outer suburbs were sold at a loss.

       

      Housing prices front and centre for RBA policy
       
      The Australian Financial Review 11/03/10
       
      Commentary from the Reserve Bank of Australia provided evidence that strong house price growth is concerning the central bank and influencing interest rate moves.
       
      Commonwealth Bank of Australia chief economist Michael Blythe said: “There is very good reason why the RBA keeps talking about the housing sector as it clearly is an issue for them.”
      The most recent reading of the RBA’s preferred measure of house prices released by the Australian Bureau of Statistics sparked concerns that house orices are growing too quickly and the low level if interest rates may be fuelling a house price bubble.
       
      Established house prices in Australian capital cities rose by 5.2 per cent in the December quarter and by 13.6 per cent over 2009. The data showed Melbourne house prices rose almost 20 per cent over 2009.
       
      In the statement accompanying the RBA’s March interest rate rise, Mr Stevens wrote: “Credit for housing has been expanding at a solid pace, and dwelling prices have risen significantly over the past year.”
      Mr Blythe said strong auction clearance results in Sydney and Melbourne recently pointed to solid house price growth in early 2010.
      Data from RP Data-Rismark for January showed a 1.8 per cent monthly rise in house prices.
       

      AIMIA Awards

      Moon Communications Group has been recognised for its work with BresicWhitney by winning a Highly Commended Award at the 16th Annual AIMIA awards.
       
      Receiving the award as one of five finalists in the ‘Best Classifieds, News, Media or Reference’ category, Moon was up against some of the country’s leading digital agencies.
       
      While it was nudged out of a first place at the events night in Melbourne on Friday, March 5, Moon’s Managing Director Anouk Darling said the team was still “excited and honoured to be recognised at these prestigious awards, particularly amongst such strong competition.”
       
      The Award nominations recognised Moon’s outstanding work in developing BresicWhitney’s new online look, which included a cutting edge brand website and functionality to match its high-profile offline reputation.
       
       “We essentially created a lifestyle portal rather than a typical property agent website, allowing users to engage with BresicWhitney on a more personal and emotional level,” Darling said.
       
      Initially engaged just to review BresicWhitney’s online brand, Moon undertook
      workshops, user interviews, extensive competitor analysis across Australian, US and
      UK markets, examined information architecture and technical solutions. 
       
      It then developed an over-arching brand strategy, driving the design of the new
      website away from the traditional estate agent landscape, and turning the space into
      a unique lifestyle destination. Keeping with the lifestyle theme, the site includes a syndicated live feed of event and venue content from the Time Out Sydney magazine website.
       
       

      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. 

       

      Rate increases will test buyers’ enthusiasm
       
      The Australian Financial Review 29/10/09
       
      Australian house prices had their strongest quarterly growth since 2003, driven by a strong recovery in high-end residential values, according to Australian Property Monitors.
      But the buoyant growth would be tempered in 2010 as the Reserve Bank of Australia pushes up interest rates, according to APM and other industry experts. Most impressive of all in the September quarter was the executive property market. Having suffered most in the downturn, prices in the top 30 per cent of suburbs rebounded a strong 6.1 per cent in the quarter.
       
      Sydney, which is the country’s largest housing market, saw half of its most expensive suburbs grow by nearly triple the rate experienced in the least expensive areas.
       
      “In addition, sellers who sold properties into the booming first-home owner market over the past year have used sale proceeds to upgrade to more expensive homes and units, placing even more pressure on upper end markets.”
       
      Mr Bell said price growth had slowed in the first-home buyer sector and it was expected to remain well below the rest of the market until next year.
       
      Macquarie Capital Advisors’ Rod Cornish said the boost in high-end residential prices was linked with business conditions, particularly in the finance sector.
      “It’s picked up because confidence has picked up. We’re seeing people come back into the upper end as well, particularly after significant price falls,” he said.
       
      But whether Australia’s house price growth can be sustained depends on how quickly mortgage rates rise over the next six months, said APM, a subsidiary of Fairfax Media, publisher of The Australian Financial Review.
       
      But the rises in house prices over the June and September quarter this year needed to be seen in context, he said.
       
      “The market is in recovery, rather than rude health. This argument applies most to Sydney, which suffered declines over the course of 2008. In that context, this evidence doesn’t add to the argument for higher interest rates. Housing markets are not experiencing excessively strong growth,” he said.
       
       
      Flight to quality recoups losses and then some
       
      The Australian Financial Review  29/10/ 09
       
      Sydney’s median house prices are at historic highs after two consecutive quarters of growth above 3 per cent, APM figures show. Over the September quarter, the median house price rose 3.6 per cent, surpassing March 2004 results and is now 2 per cent above pre-global financial crisis levels. Unit prices have continued to rise since September 2008, recording a 2.6 per cent increase over the third quarter and are now up 8.4 per cent in the year to date. But the majority of the strength is “simply recovering the heavy falls seen in late 2008”, he added.
       
      “The number of sales has been down compared to previous periods. What is less known is a lot of people who own those homes are concerned if they put them on the market people will draw the wrong conclusions.”  However, Mr McGrath said he had certainly seen a resurgence in interest for properties above the $2 million mark.
       
      “People perceive 2010 will be a strong growth year and are getting in ahead of the curve.  We’ve found a lot of our clients have made enormous money off the sharemarket rises. So a lot of smart investors came back into the market and made 50 per cent of their money. Buying a new home is often where they’ll take those profits and invest it,” Mr McGrath said.  “ It’s the old-fashioned flight to quality.”

       

       

      Boost’s end may hit values
      The Australian Finacial Review 21/09/09
      House Prices at the bottom end are expected to fall next year as first-home buyers retreat and interest rates start to climb.
      Properties worth less than $500,000 bought using the first-home owners’ boost will be the hardest hit, with other segments of the market expected to remain buoyant, valuers said.
      From September 30 the federal government will reduce its assistance from $14,000 to $10,500 and finally back to $7,000 at year’s end.
      MKM Capital national valuations manager Peter Cross said the phasing out of the boost to the first-home owners’ grant would have a marked effect.
      “Traditionally this is a time of the year where the market goes gangbuster. Houses under $500,000 will stat to contract from December 31 because the boost will be phased out completely and everybody goes on holidays."
      More than 70 per cent of first-home buyers acquire existing properties and prices gave surged in the traditional first-home buyer hot spots, driven by low interest rates and government incentives.
      Australia and New Zealand Banking Group economist Alex Joiner does not agree that the value of entry-level property is set for a fall, saying house prices will remain static as robust employment counters interest rate rises next year and the end of the first home buyers’ boost.
      National Australia Bank said the NAB First-Home Buyers survey showed almost half of existing property owners believed that prices of properties under $500,000 would fall when the higher first-home owners’ grant finishes at the end of the year.
      The survey found only one in four respondents were aware that the grant was being wound back on September 30.
       
      BresicWhitney Moves West  
                                                                  
      03/08/09
       
      BresicWhitney Estate Agents have announced they will open a second office in the Inner West suburb of Glebe.
       
      As the agency continues to dominate in other city fringe locations, the decision to expand into the Inner West demonstrates the view that high traffic areas such as Glebe, Newtown, Alexandria and Annandale are growing closer toward other Inner City hot spots such as Surry Hills, Paddington, Darlinghurst and Redfern.
       
      The move will also highlight to the market our commitment to the Inner West fringe suburbs.
       
      The office is scheduled to be officially open and running in early 2010.
       
      Visit our careers section to view the employment opportunities within the new Glebe office.
       

      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.

      Investors take over from first home buyers

      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.

       Prices Face Pressure: Analyst

      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.

      RBA Leaves Cash Rate Unchanged

      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.

       

      First-timers dropping out of mortgage market

      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.

       

       

       

       

       

       

      Buyers spooked as rates bite
      The Sunday Telegraph 16/05/2010