Home renovations hit a post-GFC high
Home renovations hit a post-GFC high
Posted on Monday, November 24 2014 at 10:15 AM
The number of Australian homeowners undertaking renovations on a yearly basis has hit a four-year, post-GFC high, according to new research released by Westpac.
Against a
backdrop of rising house prices, residential alteration and addition projects
have more than doubled – increasing by 147 per cent since August 2010, marking
a stark turnaround from the downwards renovation trend that took place between
2002 and 2009.
The value of
household renovations has also recently risen, with $600 million in approved
residential renovations and conversions in August 2014, up 40 per cent from the
recent low point in December last year.
The increase in
the last 12 months has coincided with a further boost to house prices as low
interest rates have worked their way through the economy and homeowners have
opted to renovate rather than move.
The Westpac
Renovation Report, compiled by RP Data and Sweeney Research, has listed the
Sydney region of Mosman as the most renovated location (by value) in Australia.
Homeowners in regional Australia are also embracing the
renovation trend, with the Victorian Point Nepean region coming in second,
having had more than $41 million in residential approvals over the past year.
“Favourable market conditions across Australia means that
many homeowners have seen the value of their properties rise,” Westpac general manager
of retail banking Gai McGrath says. “As a result, one quarter of Australians
have been able to service additional borrowings to tap into this added value
and extend or improve their home further and stay in their preferred location
rather than moving to a bigger home elsewhere.”
While the majority (64 per cent) of renovators still finance
their home improvements through savings, more than one in four (26 per cent of
those aged 18-54) are choosing to finance their renovations by increasing or
topping up their home loan.
“Existing home owners who may once have looked to upgrade
into a new home are choosing instead to renovate, adding desired rooms,
features and cosmetic changes,” McGrath says.
“This can be a smart investment strategy as it means
avoiding the costs associated with upgrading to a new home, like moving
services and stamp duty.
“If you’re renovating, not only are you improving your
current surroundings and tailoring your home to suit your needs, but it can
also add value to your property if you come to sell in the future.”
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Stamping out stamp duty?
Stamping out stamp duty?
Posted on Friday, November 21 2014 at 4:03 PM
It’s not quite being stamped out completely, but buying a home has just become a little bit cheaper for those in Canberra’s housing market.
Stamp
duty has been reduced for all buyers of homes valued below $1.2 million due to
the ACT government’s tax reform package.
Stamp duty revenue will reduce over
time but in the short term it’s speculated the cuts will stimulate activity in
the housing market.
The breakdown
- A family buying a $500,000 house will pay $2450 less in
stamp duty, and $7040 less in four years’ time. - A family buying a $400,000 home saves $1700 in stamp
duty, and $5540 in four years’ time. - A family buying a $300,000 home saves $950, and more than
$4000 in four years’ time.
Deputy Chief Minister Andrew Barr says
the reformed tax is part of a stimulatory Budget aimed at keeping the economy
growing.
“With the cost of buying a house
falling because of this tax cut, more Canberrans will be able to afford a
home,” he says.
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First homebuyers stay on the sidelines
First homebuyers stay on the sidelines
Posted on Wednesday, November 19 2014 at 2:39 PM
First time buyers are continuing to stay away from the property market, according to a report by lenders mortgage insurer Genworth.
The company’s 2014 Home Grown: Mortgage Industry Perspectives report
surveys 1200 consumers and industry professionals.
Bridget Sakr, chief commercial officer at
Genworth, says participants rate the wellbeing of the mortgage market positively,
although first homebuyer participation continues to slow.
“While the overall health of the market was
seen as good, the survey suggested that first homebuyers comprise 10.5 per cent
of all lender-originated loans and 18.9 per cent of all broker-originated loans
which supports arguments that this group is finding it increasingly difficult
to enter the housing market.”
Despite this, participants felt that mortgage
broking will continue to gain popularity, particularly with first-time buyers
who are almost twice as likely to apply for a mortgage through an intermediary
rather than directly through a lender.
The study also reveals that there’s been a
shift in perceptions on what issues will have the biggest impact on the
industry.
“In 2014 we’ve seen a change in this
situation, with 37 per cent of lenders now believing that market entry by supermarket
groups would most likely have the largest impact on the market, while at the
same time downgrading the potential influence of online competitors and
superannuation funds.”
In addition, respondents
felt maintenance of the current interest rate was sensible and sustainable.
“While it’s acknowledged
that rate rises or a correction in property prices could change this
assessment, industry experts predict stable interest rates over the next year
and believe that factors, such as population growth and supply constraints, may
put a floor underneath property prices over the short term.”
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Sentiment’s still high for homebuyers
Sentiment’s still high for homebuyers
Posted on Monday, November 17 2014 at 1:20 PM
A new survey conducted by RP Data and Nine Rewards has revealed that people are still generally feeling pretty good about property, despite the fact that capital city home values have been rising for more than two years now.
RP Data’s senior
research analyst Cameron Kusher says: “Most respondents still felt as if it is
a good time to buy property, although with the current growth period having run
for so long, it isn’t a surprise to see a slight fall in the proportion of
respondents who think now is a good time to buy.”
At the national
level, a majority of the 1021 people responding to the survey felt it was a
good time to buy property, although there were some variations across the
regions. Only 52.8 per cent of Sydney respondents felt that now was a good time
to buy – a pretty pessimistic vibe compared to the Tasmanian respondents, 100
per cent of whom felt it was. Regional Queensland, too, saw some positive
sentiment, with 79.1 per cent feeling the time was right to buy.
The survey also
asked whether Australia’s housing market was vulnerable to a significant
correction, to which 68 per cent of respondents replied that it was.
Interestingly, respondents from areas where values have seen minimal growth
over recent years were most inclined to think a significant correction was a
possibility.
Survey
respondents felt that home values were likely to either increase (45 per cent)
or remain stable (43 per cent) over the coming year, with just 12 per cent
anticipating a fall.
When it comes to the
question of interest rates, 63 per cent of respondents felt that rates would
remain on hold over the six months from September 2014 to March 2015. Just two
per cent expected rates to fall.
Western
Australians clearly feel that now is not the time to put their properties on
the market, with less than half of Perth respondents saying it’s a good time to
sell, and even less from the rest of the state (34.5 per cent). Sydneysiders,
on the other hand, still feel there’s money to be made, with 78.2 per cent of
respondents from the NSW capital believing the timing’s right to sell.
Respondents
continue to believe that personal financial situation is the most important
factor when it comes to purchasing a property, with just 12 per cent citing job
security as the most important. Prospects for capital growth was the second
most popular answer to this question, with 20 per cent citing it as the most
important factor for them.
People were more
bullish about the rental markets – more than half of the survey’s respondents
(52 per cent) are expecting rental rates to rise over the coming year, with only
five per cent expecting a decline.
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Spring season listings surge
Spring season listings surge
Posted on Monday, November 03 2014 at 9:03 AM
Springtime represents new beginnings, warmer weather and usually a resurge of interest into the real estate market. Property listings are generally highest during spring season and this year is no exception according to listings results tracked by RP Data.
RP Data research
analyst Cameron Kusher says listings are increasing nationally although they
are lower in comparison with recent years.
Over the four weeks
to October 26, 2014, there were 32,706 unique new properties listed for sale
and 73,189 unique re-listed properties across the combined capital cities.
Capital city new listings account for 64 per cent of total new listings
nationally while capital city re-listings account for 37 per cent of all
re-listings nationally.
“This highlights that
capital city stock is being absorbed much quicker than stock in non-capital
city regions,” Kusher explains. “As a result, the number of re-listed
properties is much higher across the regional areas of the country.”
Across the country:
- Melbourne
stock levels are quite high. Kusher says this suggests the rise in values is
perhaps more driven by speculation than a shortage of effective supply levels. - Sydney –
there’s an ongoing rise in home values, Kusher says. Sydney is partially
fuelled by low stock levels and low mortgage rates. - Brisbane
stock levels are trending lower and in line with a moderate rise in sales and
values. - Adelaide
stock levels have reduced, although results show a sharp rise over recent weeks. - Perth
stock levels have been relatively stable now for a number of years. - Stock in
Hobart is falling as sales volumes rise. - Darwin is
experiencing a trend towards higher levels of stock available for sale. - Canberra
stock levels are also now rising as the market slows.
New listings increased recently in all capital cities
except Darwin. The total number of properties advertised for sale also
increased over this period in all cities and highlighted an increase in the
amount of residential property available for sale.
The number of available properties for sale is likely
to continue rising over the coming weeks before the inevitable slowdown during
the Christmas and New Year period.
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Sydney cracks $1 million median
Sydney cracks $1 million median
Posted on Wednesday, November 12 2014 at 10:35 AM
Sydney became even less affordable this week with SQM Research analysis showing the city’s median asking price for free standing houses now exceeds $1 million.
The
analyst’s data, which includes terraces but excludes townhouses, reveals the
median price now sits at $1,005,800.
Louis
Christopher, managing director of SQM Research, says affordability continues to
grow beyond the reach of many potential buyers.
“Right
now it would be impossible to purchase a free standing house in Sydney’s inner
ring for under a million dollars, and will become increasingly difficult to
purchase a free standing house in Sydney’s middle ring for under a million
dollars.”
SQM’s
analysis shows asking prices in the Harbour City are up 7.2 per cent on the
same time last year, and have risen 22 per cent since 2011.
Unit
asking prices in Sydney are also up for the year recording a rise of 9.3 per
cent.
In
comparison, the median asking price for detached housing and units across all
capital cities sits at $755,100 and $481,500 respectively, based on SQM’s
numbers.
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Loans for new homes creeping up
Loans for new homes creeping up
Posted on Monday, November 10 2014 at 1:35 PM
Figures from the Australian Bureau of Statistics (ABS) reveal that new home lending reached a fresh high for the cycle in the September 2014 quarter.
“From the
stimulus-fuelled period around the GFC, lending for new housing is at its
highest in 20 years,” Housing Industry Association (HIA) chief economist Harley
Dale says.
“That is a healthy
result in terms of the short-term outlook for new home construction,” he notes.
“The
demand for new housing reflects activity from first homebuyers, trade-up owner
occupiers and investors.”
“The aggregate
number of loans for first homebuyers is still very low from a historical
perspective. Policy reform is vital to turning this situation around and needs
to be aimed at the excessive and inefficient taxes and regulation levied on
housing,” Dale says.
“First homebuyer
loans reached conspicuous troughs in the early months of 2011, 2013 and 2014,
although these levels were 12 per cent higher than the record low in the early
1990s recession. Loan numbers have only lifted by 5.1 per cent from this latest
2014 trough.”
There were differing
outcomes across the housing finance spectrum in the September 2014 results. The
total number of seasonally adjusted loans to owner-occupiers fell by 0.7 per
cent. Loans for the construction of new homes increased by 3.1 per cent while
lending for the purchase of a new dwelling ticked up by 0.1 per cent. The
number of loans for existing property (net of refinancing) eased by 0.1 per
cent in September.
The (original)
number of first homebuyer loans fell by 4.8 per cent in the September 2014
quarter, while the number of trade-up buyer loans increased by 1.3 per cent.
The moving annual value of lending for construction of new investment property
was 7.1 per cent higher in September than in June, while the comparable rate of
growth for the much larger existing property component was 6.0 per cent.
In the month of
September 2014, HIA’s seasonally adjusted estimate shows increases in the
number of owner-occupier loans for new housing in New South Wales (+5.1 per
cent), Queensland (+4.9 per cent), South Australia (+8.5 per cent), the
Northern Territory (+17.8 per cent) and the Australian Capital Territory (+14.6
per cent). Elsewhere, the number of new home loans declined by: 1.6 per cent in
Victoria; 1.1 per cent in Western Australia; and 11.3 per cent in Tasmania.
When it comes to
investment housing commitments, the ABS figures show that the number of first
homebuyer commitments as a percentage of total owner-occupied housing finance
commitments rose to 12 per cent in September, from 11.8 per cent in August.
Between those two months, the average size of a loan for first homebuyers went
up by $9,800 to $310,200.
The value of
outstanding housing loans financed by authorised deposit-taking institutions at
the end of September was $1,334, 380 million, up 0.6 per cent from the month
before.
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Regional growth in Busselton
Regional growth in Busselton
Posted on Friday, November 07 2014 at 11:52 AM
Looking for the right place to buy regional? It seems Busselton is Western Australia’s best performing property market for the past year.
The Busselton
urban area saw growth of 5.9 per cent in the year to September 2014 compared to
the 12 months to September 2013.
The local
market is described as robust but price sensitive according to the Real Estate
Institute of Western Australia’s chairman of the Busselton branch, Joe White.
He says Busselton’s no longer seen as just a ‘seaside holiday town’ as it’s
experiencing growth with young families and FIFO workers choosing to stay.
“The
volumes and consistency of non-seasonal sales show the market is alive and
building activity is high as the population grows. It’s cheaper to build a new
home here than in Perth but the infrastructure gets better all the time, with
schools and shops all within proximity to a great beachfront with a village
atmosphere,” he says.
The
Forest Highway means Perth is now half an hour closer.
“And
people don’t mind the two-and-a-half hour drive up to the city on occasions for
cultural or sporting events because it’s a small price to pay to enjoy
Busselton’s coastal lifestyle,” White says.
Mandurah was the second best performer for the region with growth
of 3.8 per cent on the previous year and a median house price of $405,000.
Third
place was Albany with 3.6 per
cent growth and a median house price of $373,000.
The
only other regional centres that saw growth year-on-year were Bunbury with 2.7 per cent and Kalgoorlie-Boulder with a modest 0.4
per cent. Median prices for these two regional areas came in at $380,000 and
$341,000 respectively.
Karratha suffered the biggest disappointment, dropping 12.2 per
cent, which pulled its median price to $630,000. REIWA’s Karratha branch chairman,
Richard Naulls, says the town had seen a reduction in sale prices of about 40
per cent since January 2012.
“This
continued for the first six months of 2014 but we have seen a stabilisation in
the market since July this year, which the September quarter figures support.
More importantly, sales numbers were increasing for the quarter and continued
in October,” Naulls says.
Carnarvon saw zero growth, with median house prices remaining at
$300,000.
Geraldton/Greenough dropped back 0.7 per cent to $380,000, while
Northam dipped 2.6 per cent to $261,000 and Esperance fell 3.4 per cent to $350,000.
Port Hedland dropped by 7.6 per cent, pulling its median down to
$800,000.
Broome saw a 9.6 per cent retraction in price to $590,000.
In
comparison with regional areas, metropolitan Perth experienced growth of six
per cent for the same time period.
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NSW contracts to include buyers’ agent
NSW contracts to include buyers’ agent
Posted on Wednesday, November 05 2014 at 4:12 PM
The pending New South Wales Contract of Sale and Purchase of Land 2014 will recognise buyers’ agents as part of the property purchase process.
Jacque Parker, president of the Real Estate
Buyers Agents Association of Australia (REBAA), says the new contract, which
will replace the 2005 edition, provides the state’s first formal recognition of
these advocates in a transaction.
“Buyers’ agents are
fast becoming a secret weapon in the property market as homebuyers realise the
benefits of having a professional and fully independent advocate on their side.”
Parker says widespread recognition of buyers’
advocates, and their increasing role in transactions, is overdue and should be
taken up Australia-wide.
“As the leading industry body representing buyers’
agents in Australia, we are thrilled that our members are now legally
represented on NSW contracts and would like to see the same recognition for our
members nationally.”
The change sees insertion of buyers’ agent’s
names on page one of the contract when applicable.
Other amendments include a change to the
definition of “deposit holder” in clause one so that a buyers’ agent is able to
hold deposits where there’s neither a vendor’s agent nor a vendor’s solicitor.
Other amendments to the contract include the
introduction of e-conveyancing, extra vendor disclosure documents and special provisions
for payment by deposit bonds.
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RBA happy not to rock the boat
RBA happy not to rock the boat
Posted on Tuesday, November 04 2014 at 3:17 PM
To the surprise of almost no one, the Reserve Bank of Australia (RBA) today announced it will be keeping the official cash rate (OCR) at 2.5 per cent for the 15th month in a row.
RBA governor Glenn Stevens said in the announcement: “In Australia, most
data are consistent with moderate growth in the economy. Resources sector
investment spending is starting to decline significantly, while some other
areas of private demand are seeing expansion, at varying rates. Public spending
is scheduled to be subdued. Overall, the Bank still expects growth to be a
little below trend for the next several quarters.
He went on to say: “Monetary policy remains accommodative. Interest rates are very low and
have continued to edge lower over the past year or so as competition to lend
has increased.
“Investors
continue to look for higher returns in response to low rates on safe
instruments. Credit growth is moderate overall, but with a further pick-up in
recent months in lending to investors in housing assets. Dwelling prices have
continued to rise,” he added.
RP Data research director Tim Lawless said earlier
today: “From a housing market perspective, the RBA is more concerned about the
level of investment in housing rather than the pace of capital gains.
“In fact, the rolling annual change in capital city dwelling values has
been moderating since April this year, suggesting that some heat is coming out
of the market. Rather than pushing interest rates higher, which would have a
detrimental effect on many aspects of the economy, it’s looking more likely
that APRA and the RBA will aim to cool investor demand by tweaking the risk
appetite for bank lending to investors.
“With interest rates remaining low, probably at least well into 2015,
we expect dwelling values will continue to rise, however each city is showing
different trends, with Perth and Canberra already well through the peak of
their cycles and the annual rate of growth slowing across the Sydney and
Melbourne markets, the RBA should be less concerned about overheated housing
values,” Lawless added.
REINSW deputy president John Cunningham says the
RBA’s decision to keep interest rates on hold was down to the long run of
stability since the June 2002 to October 2003 run.
“After five out of the last eight November board
meetings saw moves up or down, the RBA has chosen not to back precedence this
cup day,” he says.
“We expect that rates will remain stable and may
even break the longest streak of steady rates ever seen in Australia.
“Again we caution those interested in purchasing
property to ensure that they review the market carefully and don’t overextend
themselves,” Cunningham adds.
The general feeling among experts seems to be
that the interest rate will not see any movement at all until at least well
into 2015.
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