Interest rates stay on hold
Interest rates stay on hold
Posted on Tuesday, July 01 2014 at 2:49 PM
Investors and homeowners can continue to enjoy historically low interest rates for now, with the Reserve Bank of Australia (RBA) leaving the cash rate on hold at 2.5 per cent.
RP Data research director Tim Lawless says the decision comes as no
surprise, with the housing market cooling.
“Australia’s housing market has seen two years of escalating property
values, so from a cyclical perspective the housing market is due for a
slowdown,” he says.
“Gross rental yields in both these cities have fallen to near historic
lows as value growth has substantially outpaced rental growth. With the heat potentially
coming out of the housing market, the RBA will find it much easier to keep
interest rates at their low setting in an effort to continue stimulating
housing construction and consumer spending. Add to the recently weak housing
market a stubbornly high Australian dollar, lower commodity prices, slowing
dwelling approvals and weaker consumer sentiment post Federal Budget and it’s
clear that the RBA is likely to hold off on rate hikes for the foreseeable
future,” Lawless says.
Mortgage Choice spokesperson Jessica Darnbrough believes the drop in
consumer confidence also encouraged the RBA to leave rates on hold.
“The latest Westpac Melbourne
Institute Index of Consumer Sentiment fell by 6.8 per cent to 92.9 – the
lowest level since August 2011,” she says.
“According to the Index, 59.2 per cent of Australians said they would
expect their family finances to worsen over the coming 12 months as a result of
the Federal Budget.”
She adds the drop in consumer confidence means rates could stay on hold
for some time. However, Real Estate Institute of New South Wales president
Malcolm Gunning is warning investors to consider locking in their interest
rates if they’re worried about future rises.
“The run of historically low interest rates will come to an end and we
encourage those who are thinking of entering the property market to factor this
into their budgets,” he says.
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Financial year produces property price rises
Financial year produces property price rises
Posted on Wednesday, July 02 2014 at 4:27 PM
Australia’s capital city dwelling values ended the 2014 financial year up 10.1 per cent, according to the RP Data Rismark Hedonic Home Value Index.
Sydney and Melbourne saw the largest gains, reflecting 15.4 per cent
and 9.4 per cent respectively.
Brisbane had the third strongest year at seven per cent, while Darwin
at 5.7 per cent and Perth at 5.2 per cent filled out the top five spots.
On a monthly basis, RP Data reports a 1.4 per cent increase in capital
city house values with all cities recording a rise except Adelaide and Darwin.
Tim Lawless, a
research director at RP Data, says this has partially reversed
last month’s 1.9 per cent fall and reflects an overall decline of 0.2 per cent in
dwelling values during the June quarter.
Lawless says this softening is a reaction to growth
earlier this year.
“The recent reduction in capital gains is likely a
correction from the strong market conditions reported over the first quarter of
the year.”
Lawless believes long-term trends are the best
indication of performance.
“It (the trend) shows that the quarterly rate of growth
peaked across the Australian housing market in August last year at four per
cent.
“Since that time the rate of capital gain has generally
trended towards a more sustainable level.”
Combining rental returns with capital gains produces a
staggering 20.2 per cent total return for Sydney investors over the course of
the year.
Melbourne, Darwin and Brisbane have also recorded a
total gross return in excess of 12 per cent during the period.
Lawless says low interest rates will continue to
support property values.
“What is more likely is that natural affordability
constraints will start to dent buyer demand, as will the low rental yield
scenario’s that are very much evident across the largest capital cities of
Melbourne and Sydney.”
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Darwin market steadies
Darwin market steadies
Posted on Monday, June 30 2014 at 10:22 AM
It’s been a booming year with annual average growth just a tick under 10 per cent, but now Darwin’s real estate market is taking a breather.
Notorious for its high entry
costs, Raine Horne Darwin general manager Glenn Grantham believes the
town’s property market has finally steadied.
“Homeowners and investors have enjoyed a number of very
good years, however values have steadied, which is giving buyers more chance to
secure a well-priced, well-located home in Darwin,” he says.
It’s about three years since the market was in favour of
buyers, according to Grantham. And from January next year, first homeowner
incentives will be further skewed towards those buying or building a new home.
“To encourage the construction of new homes in the
Territory, from the start of next year, a First Home Owners Grant of $26,000
will only be available to first homebuyers who enter into a contract to build
or purchase a new home, or commence construction of a new home, on or after
that date,” he says.
“This change to the scheme is undoubtedly aimed at getting
more new buyers to consider the brand new Palmerston suburbs such as Durack
Heights, Johnston, Zuccoli and Bellamack.”
Grantham says the window is closing fast on first
homeowners hoping to take advantage of the $12,000 grant available for
established properties in the Northern Territory.
“While the grants will be tilted towards new buyers, there
is still a window of opportunity for first-timers considering buying an
established home in an urban area to take advantage of the $12,000 that will be
on offer until the end of the year,” he says.
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Positive results for Brisbane market
Positive results for Brisbane market
Posted on Wednesday, June 25 2014 at 12:48 PM
The Brisbane market appears to be rising, with the RP Data-Riskmark Daily Home Index up 5.86 per cent in Brisbane over the past 12 months.
Coronis Realty sales director Craig Gillies says the number of sales in
the 2013/2014 financial year are up more than 54 per cent, in comparison to the
previous financial year.
“Based on the current reports and figures, the Queensland real estate
market has been experiencing moderate growth, and this is reflected by the
number of listings and sales made by our offices over the past financial year,”
he says.
The last reported median house price in the Brisbane area was $480,000,
while the median unit price was $395,000.
RP Data senior research analyst Cameron Kusher says upgraders and investors
are the main drivers of the market, currently spurred by the low mortgage rate
environment.
“It will be interesting to see whether investors start to turn their
attention away from Perth, Sydney and Melbourne and towards higher yielding
markets that are much earlier in their value growth phase, such as Brisbane,
where value growth is now becoming more evident,” he says.
Meanwhile, looking forward in terms of interest rates, the likelihood of
the Reserve Bank of Australia (RBA) cutting rates further is still seemingly
low, according to Kusher.
“Most economists have now pushed back the timing of their predicted
future rate cuts, with most now forecasting that the next movement will be an
increase,” he says.
“The RBA in its most recent decision has indicated that they see
official interest rates being on hold for the foreseeable future. The housing
market has been responding in quite a positive manner to the lower rates.
Growth in values on a quarterly basis peaked in August last year and have been
moderating since this time in line with the falls we have been witnessing in
consumer sentiment.”
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Budget release prompts calls for GST reform
Budget release prompts calls for GST reform
Posted on Thursday, June 26 2014 at 9:20 AM
South Australia’s budget highlights the need to change the GST and bring relief to property holders, according to the Real Estate Institute of South Australia (REISA).
The industry body commended
the SA Government for that acknowledging housing affordability is worsening, and raising stamp
duty or land tax would have had a further devastating effect on the property
industry.
Ted Piteo, president of the
REISA, says the budget demonstrates changes to the federal taxation system are
imperative.
“South
Australia needs a revenue stream that is constant, effective and not driven by
volatile markets and political whims.”
Piteo says a combined effort
by all state’s pushing for urgent GST reform is necessary.
He says raising the rate of
GST, or broadening its base, would bring enormous benefits.
“Before the last State Election, REISA called
for the State Government to begin working with its state and federal
counterparts on commencing a serious and constructive dialogue on meaningful
GST reform that would deliver the states a viable tax revenue stream and allow
them to abolish state property taxes that are uncertain, inefficient and
inequitable.”
Piteo says REISA wants to see state property
taxes removed with the shortfall made up by increased GST revenue.
“It’s time that these taxes were abolished
once and for all – as was promised by the Howard Government 14 long years ago
when the GST was introduced.”
He believes the changes will get South
Australians excited about buying, moving, downsizing and investing.
“It’s really a no-brainer.”
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Sydney’s inner west outperforms the market
Sydney’s inner west outperforms the market
Posted on Tuesday, June 24 2014 at 9:24 AM
Sydney’s inner west has had a better start to the year than most other areas in the city, according to a Knight Frank report.
The Knight Frank Asia Pacific Residential Review
June 2014 discusses booming areas around the Asia Pacific regions,
and lists the inner west as one of them.
It attributes improving
transport and a growing population as the main reasons for rising property
prices.
Knight Frank associate
director of residential research Michelle Ciesielski says the area is now much
more accessible, with the light rail network adding nine new stops between
Lilyfield and Dulwich Hill, connecting train and bus routes to Sydney’s inner
west.
“In the three months leading
to the maiden journey in March 2014, apartment prices in the suburbs of
Leichhardt, Haberfield, Summer Hill and Dulwich Hill averaged capital growth of
3.6 per cent, trending about the 2.3 per cent experienced across Sydney,” she
says.
“While airports, national
rail networks and interstate highways are all indispensable elements of
transport infrastructure, urban mass transit systems within a city’s boundaries
have a more obvious impact on a local residential level.”
The report adds the decision
by the Reserve Bank of Australia to leave the cash rate unchanged at 2.5 per
cent over the past few months has allowed Sydney’s property market to continue
to perform well, along with other cities around the country.
“As at Q1 2014, prices
across the eight state capital cities increased on average by 10.9 per cent
year-on-year,” the report says.
“The government, meanwhile,
has ordered a review of regulations surrounding foreign buyers into the
Australian market, with concerns surrounding the significant amount of Asian
buyers active in the new build sector.”
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High vacancies benefit tenants
High vacancies benefit tenants
Posted on Wednesday, June 18 2014 at 2:25 PM
Increased vacancy rates in rental properties throughout Australia are swinging the advantage towards tenants, according to analyst SQM Research.
The company says a
large jump in vacancies during April this year has continued into May, confirming
the rise was no anomaly.
“This result clearly reveals that last month’s jump was indicative of a
genuine increase in rental dwellings onto the market, and not merely seasonal
spike.”
SQM says the number of
residential vacancies decreased only marginally during May, coming off 0.1 of a
percentage point to record a 2.2 per cent vacancy rate nationally.
Canberra, Melbourne and Darwin were the only capital cities to record
monthly decreases in vacancy rates, but each was marginal.
Louis Christopher, managing director at SQM Research, says vacancy rates
will likely increase over the next two years, which will benefit renters.
“Rental growth so far this year has been patchy as a result of the
moderate increase in supply of available rental properties and I believe
vacancy rates will continue to gradually rise over the course of 2014, with the
longer term view that the large increases in building approvals will translate
to higher vacancy rates in 2015 and 2016.
“Overall it is going to be increasingly difficult for landlords to lift
the rent for the foreseeable future.”
This outlook is bolstered by SQM Research’s Asking Rents Index which also shows
average rents across all capital cities has remained flat at $528 per week for
houses and $416 per week for units.
SQM Research says stagnation in these figures reveals the difficulty
landlords will have in increasing their asking rents.
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More employment on the cards for northwest Queensland
Posted on Thursday, June 19 2014 at 8:46 AM
Investors and homeowners in northwest Queensland could soon benefit from a bold new plan to bring thousands of people and jobs to the region.
Investors and homeowners in
northwest Queensland could soon benefit from a bold new plan to bring thousands
of people and jobs to the region.
A North West Queensland Strategic Development
Study has been launched by the Mt Isa to Townsville Economic Development
Zone (MITEZ).
It plans for the region to
have up to 40 per cent more workers and a 25 per cent increase in population,
provided the right infrastructure and planning is implemented.
More importantly, perhaps,
the study found potential economic benefits could include broad taxation and
royalty income, greater export values and volumes flowing through Queensland’s
supply chain. This means companies could see their taxes cut by 20 per cent if
they shift from Brisbane or southeast Queensland to the northwest of the state.
“A range of measures exist
to create a more attractive environment for private investment, potential
options for incentivizing new industry and infrastructure investment in the
northwest,” the report says.
“Reduction in company
taxation to 20 per cent for approved companies, based and operating in
northwest Queensland.
“Three to five-year payroll
tax holiday for approved greenfield investments… stamp duty waiver… long-term
debt funding.”
Queensland Premier Campbell
Newman has backed the study.
“Northwest Queensland has
huge economic advantages in untapped mineral resources, tourism and
agriculture,” Newman says.
“The report confirms that
the northwest is bursting with opportunities to improve transport, electricity and
water storage to support new economic growth for Queensland in the future.”
Four key strategic
development priorities were also identified, including new mine exploration and
development, irrigated and intensified agriculture, energy generation, security
and export and supply chain productivity, efficiency and reliability.
For the full report, go to
http://www.mitez.com.au/images/docs/nwq_strategic_development_study_final_2014.pdf
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Threshold for NSW First Home Owners Grant increased
Threshold for NSW First Home Owners Grant increased
Posted on Tuesday, June 17 2014 at 2:57 PM
First homebuyers in New South Wales planning to make the most of a $15,000 grant for new property are now able to spend a little extra.
The threshold for
the grant has been increased from $650,000 to $750,000 in today’s 2014/15 NSW
Budget.
This means any
first homebuyer who purchases a new property up the value of $750,000 would be
entitled to the grant.
NSW Treasurer
Andrew Constance says the changes will take place from July 1.
“The latest
figures show the number of grants has increased significantly over the past
financial year,” he says.
“First homeowner grants
for new homes are 46 per cent higher in the four months to April 2014, compared
to the same period the year before.”
However, it will
be harder to get the $5000 New Home Grant from July 1.
It’s currently
available for those who purchase new property up to the value of $650,000 or
for vacant land up to the value of $450,000.
To clarify, the
$15,000 grant is available for first homebuyers of new property, whereas the
$5000 is available for anyone who purchases new property.
However, the
$5000 grant will soon be restricted to Australian citizens and permanent
residents only. It will also be restricted to one grant per person, per year.
“There have been
a small number of occasions where foreign, non-residents have claimed the
grant, and some instances where there have been multiple applications for a
grant from a single claimant,” Constance says.
“We want to make
sure the system is the fairest it can be, while still building on the
confidence the grant has created in the home building sector.”
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Australia’s best performing areas
Australia’s best performing areas
Posted on Monday, June 16 2014 at 1:06 PM
Properties in Sydney have performed the best of any area around the country over the past few months, according to an RP Data March 2014 Quarterly Pain and Gain report.
The report looks at areas which have made profits and losses and says
Sydney recorded the lowest proportion of any loss-making resales in Australia.
Only three per cent of properties resold made a loss. Almost 30 per cent of
properties sold in Sydney made a profit of 100 per cent or more.
Around Australia, 90.2 per cent of all resales over the March quarter led
to a profit for homebuyers and investors, with 30.6 per cent of all sellers at
least doubling their money, compared with the original purchase price.
RP Data research analyst Cameron Kusher says the areas which had the
biggest losses were the lifestyle regions and mostly the unit markets.
“As a stark example, homes purchased prior to January 1, 2007, pre-GFC,
and then sold during the June quarter of this particular year, only 7.2 per
cent of resales made a gross loss. However, for homes purchased on or after
this date, the propensity to make a loss on the sale climbed substantially,”
Kusher says.
It’s no surprise that the longer the property is held for, the more
likely it is to make a profit.
In Sydney, Perth and Darwin, the proportion of loss making sales was
highest for homes resold in less than one year. In Melbourne, Brisbane,
Adelaide and Hobart, around 30 per cent of homes resold between three and five
years after their purchase were most likely to sell at a loss.
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