Housing market experiences growth
Housing market experiences growth
Posted on Wednesday, December 11 2013 at 4:22 PM
The Australian housing market will continue to improve into 2014 as figures for the September quarter show an increase in the weighted average median house price, according to the Real Estate Institute of Australia (REIA).
Data from the Bendigo Bank/REIA
Real Estate Market Facts shows an increase of three per cent in the
weighted average capital city median house price in the September quarter and a
9.5 per cent increase compared to the same time last year.
A rise of 2.2 per
cent was also reported for the weighted average capital city median price for
other dwellings.
There was good
news for property investors in some centres as well, according to REIA president
Peter Bushby, with the median house rent for three-bedroom houses in Sydney,
Melbourne, Brisbane and Darwin increasing over the September quarter.
“For the next
year we expect interest rates to stay relatively low and continue to assist the
market. We expect continued steady improvement in activity in most markets and
generally a more positive year ahead provided there are no left-field global
issues that emerge,” Bushby says.
The report found
the weighted average median house price for eight capital cities was now
$562,503 with Sydney, Melbourne, Brisbane and Hobart contributing to the
increase. However, Perth recorded the biggest drop, falling 3.8 per cent.
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Steady as she goes on rates
Steady as she goes on rates
Posted on Tuesday, December 03 2013 at 1:43 PM
The Reserve Bank of Australia (RBA) has left the official interest rate unchanged at 2.5 per cent again this month.
The move was largely anticipated by economists and shows
that the domestic economic outlook is at least stable for the moment.
Angus Raine, chief executive officer of Raine Horne,
points out that the strong performance of many capital city property markets is
helping to boost confidence.
“News that some markets took a breather in November will be
noted by the RBA, however it’s fair to attribute some of this trend to the
disruptive impact of the festive season, horse racing carnivals and the like,”
Raine says.
The past year has been a solid one for real estate markets,
which is one of the desired outcomes of the RBA’s downward cash rate trend.
A string of economic indicators in recent months have also
been steady or positive, including business and consumer confidence measures
and contained inflation data.
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Australian housing affordability improves
Australian housing affordability improves
Posted on Wednesday, December 04 2013 at 4:21 PM
A joint Real Estate Institute of Australia (REIA) and Adelaide Bank report shows national housing has become more affordable.
The
Housing
Affordability Report says households nationally are spending less of
their income on housing.
“The September quarter of 2013 recorded an improvement
in housing affordability with the proportion of income required to meet loan
repayments decreasing 1.2 percentage points to 29.8 per cent.”
Compared to the same quarter of
last year, the figure has fallen 3.5 per cent.
The
study shows all states and territories have seen a steady decline in the
proportion of family income needed to meet loan repayments since the September quarter
in 2012.
Interest
rates were cut by the Reserve Bank during the study period, which would
contribute to the result.
The
ACT remained the most affordable state or territory in which to buy a home,
while New South Wales continued to be the least affordable.
Peter
Bushby, president of the REIA, says Tasmania saw the biggest improvement.
“All
states and territories recorded improvements in affordability over the quarter
– the largest in Tasmania, where the proportion dropped by 1.6 percentage
points to 24.6 per cent.”
The
news wasn’t all positive, however, with the report highlighting a drop in first
homebuyer participation.
Bushby
says the results demonstrate the direct impact of pulling back grants by state
governments.
“As
we expected, due to the changes in the First Home Owner Grant introduced by the
Victorian Government, the number of loans to first homebuyers in the state had
the biggest quarterly drop across the country.
“The
consequences of the availability of the grant to those only purchasing new
dwellings are abundantly clear in NSW and Queensland – the number of loans to
first homebuyers in these states is 46.7 per cent and 34.5 per cent lower than
it was a year ago.”
For
renters, affordability worsened slightly on
a national level over the September quarter of 2013 with the proportion of
income required to meet rent payments increasing 0.1 percentage points to 25.6
per cent.
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Housing outlook mixed
Housing outlook mixed
Posted on Thursday, December 05 2013 at 3:26 PM
The housing market outlook for 2014 is expected to bring mixed results, according to the latest report from Australian Property Monitors (APM).
The State
of the Market report considered factors that impacted the market in
2013 and found declining economic activity would moderate house price growth in
the year ahead.
The findings suggested
underperformances from Sydney, Melbourne, Adelaide and Canberra would be offset
by continued strength in Perth and a solid re-emergence of the Queensland markets.
Despite lower interest rates
being “a bonus to mortgage holders the impact on housing markets will be muted
by concerns over job security and continued low income and profit growth” the
report stated.
In addition, the APM report found
the prospect of a modest performance by the stockmarket would also act to subdue
prestige property buyer, particularly in Sydney.
“Within a fluid and uncertain
economic outlook, it’s expected the national median house price will likely
increase by between three and five per cent in 2014 bolstered by solid
early-year contributions from Sydney, Perth, Darwin, Brisbane and Hobart with
more modest inputs from Melbourne, Adelaide and Canberra,” the report states.
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Building approvals hit record highs
Building approvals hit record highs
Posted on Tuesday, December 03 2013 at 5:22 PM
Figures released by the Australian Bureau of Statistics reveal Australian building approvals reached record levels in October.
Craig James, the chief economist at CommSec,
says the numbers show the industry is on the move.
“In trend terms, the value of building approvals
hit a record high of $7.61 billion in October, with residential building also
at record highs.”
He says the release
flags construction’s increasing importance in a moving national economy.
“Housing construction is taking over from mining as the driver of
economic growth.”
The number of apartment approvals also hit record highs in the month.
Dwelling approvals fell by 1.8 per cent in
October after rising by 16.9 per cent in September, with approvals now up 23.1
per cent over the year.
“Given the volatility in the data, the trend is
clearly your friend, and the trend data not only shows apartment building at
record highs, but the value of all building – residential and commercial – at
record highs.
“Simply, supply (construction of new homes) is
lifting to meet demand, putting downward pressure on prices.”
James says the results should compel the Reserve
Bank of Australia to keep interest rates on hold.
“In short, no change in interest rate settings
is required.”
The results support comments from Michael Knox, the director
of strategy and chief economist with RBS Morgans, who believes the Australian
economy is in a “growth recession” because past policymakers overestimated the
sustainability of the mining boom.
Knox
says interest rates will remain low for the next two to three years at least,
and this bodes well for property.
“It
is the housing sector that, for the first time in half a generation, we will be
relying upon to get us out of this growth recession.”
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Positive signs for housing recovery
Positive signs for housing recovery
Posted on Friday, November 22 2013 at 11:47 AM
A recent meeting of the Reserve Bank of Australia (RBA) board has revealed conditions in the housing market are continuing to strengthen.
In minutes released by the RBA it was noted that nationally,
dwelling prices were above their late 2010 peak, with prices over the three
months to October increasing significantly in Sydney.
Furthermore the board stated “housing turnover and loan
approvals had picked up noticeably”.
The RBA says improved conditions in the established housing
market were providing an impetus to dwelling investment, with
residential building approvals increasing over the year.
“Approvals increased notably in September, driven by a pick-up
in high-density approvals, which tend to be quite volatile from one month to
the next,” according to the board.
In addition, the RBA felt developments in the established
housing market and the increase in new dwelling activity seen to date were
among the expected effects of the low level of interest rates.
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Sharp rise in first homebuyer applications
Sharp rise in first homebuyer applications
Posted on Tuesday, November 26 2013 at 10:04 AM
Western Sydney suburbs make up 70 per cent of the top 20 suburbs claiming the First Home Owner Grant (FHOG) in New South Wales, according to Treasurer Mike Baird.
The take-up of
the FHOG in the top 20 suburbs had almost tripled in the past three years,
increasing from 780 in 2011 to 2042 in 2013.
The increase has
contributed to a 66 per cent rise in the total number of FHOG for new homes in
NSW in 2013.
According to Baird, new housing lots,
particularly in Sydney’s northwest and southwest growth centres, have been
unlocked and the infrastructure provided to support growth in these areas.
“We funded new infrastructure for up to 120,000
new homes in our last two budgets. Since the June budget, the number of new homes
released by this infrastructure has jumped to 134,325, with over 92,000 of
those homes in Western Sydney,” he says.
“The good news is
housing supply is finally rising to meet demand but there is much more work to
do.”
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Housing critical as our population doubles
Housing critical as our population doubles
Posted on Wednesday, November 27 2013 at 3:40 PM
The Australian Bureau of Statistics (ABS) has released projections indicating strong demand for housing will continue to be a feature of the economy, according to the Housing Industry Association (HIA).
The latest figures from the ABS indicate Australia’s population is set
to double to 46 million by 2075.
Bjorn Jarvis, the director of demography at the ABS, says the numbers indicate
a ‘likely’ scenario for the populace doubling, “but under our high and low
scenarios it could be as early as 2058, or after 2101.”
According to the projections, Perth’s resident numbers could overtake
Brisbane’s in 2028, at three million people, and then 10 years later, the
Australian Capital Territory could pass Tasmania.
“Melbourne and Sydney should be neck and neck by 2053, with 7.9
million people each.”
Jarvis says by 2040, Western Australia’s population is projected to
almost double in size, while Queensland will have gone from 4.6 million people
to 7.3 million, and the Australian Capital Territory will have grown from
375,000 people to 586,000.
Jarvis also predicts the ageing population will continue to impact the
demography as a result of sustained low fertility and increasing life
expectancy.
“In 2012 Australia’s median age was 37 years old; by 2040 it could be
40.5 years,” he says.
The numbers prove we need more emphasis on housing supply from
policymakers, according to the HIA.
Geordan Murray, an economist at the HIA, says housing policy over the
past decade hasn’t been given the priority it deserves.
“Even the lowest projections show Australia’s population nearing 26
million by 2020 and 29 million by 2030.
“Housing these people will require a considerably higher average build
rate than what has occurred over the last 20 years and that won’t happen
without a concerted and cooperative focus on policy reform.”
Cameron Shepard, the national president of the Urban Development
Institute of Australia, says the quality of life in our cities will be
threatened if infrastructure and housing provision don’t keep up with
population growth.
“Our population is going to grow enormously over the coming decades,
which will bring fantastic economic benefits for Australia and provide new
opportunities for our society.
“It is essential, however, that we manage that growth sustainably, by
ensuring we are well prepared to provide the new homes, roads, schools, public
transport and other community infrastructure that those additional people will
need.”
Shepard says failure to ensure supply will result in problems with affordability,
quality of life and productivity.
“The ABS figures clearly show that as a nation we need to be putting
more resources into planning and managing the growth of our cities, not less.
“Australia already suffers from a chronic housing shortage of several
hundred thousand dwellings.”
Bernard Salt, a demographer and partner at KPMG, says dealing with the ageing population will be
most important.
“As with most countries,
Australia will need to find ways of delivering services to an older population.
“This will include housing,
health services as well as pensions.
“The emphasis over the coming decade or two will be on
lifestyle for the 60s and early 70s segments.”
Salt believes the population is unlikely to decentralise en masse.
“The inner and middle distance suburbs with access to
large job markets will come under scrutiny as desirable places in which to
live.”
Salt says the issue of efficiency will come into play
when services are required for a larger population.
“We need to find a way of delivering infrastructure
that is affordable but that does the job.
“Do we really need railway lines with all the bells
and whistles?”
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It’s time to factor in interest rate rises
It’s time to factor in interest rate rises
Posted on Friday, November 22 2013 at 11:50 AM
Alex Parsons, chief executive officer of financial comparison website RateCity, says there’s an established trend of fixed interest rate rises, and borrowers must now start allowing for rate increases in all mortgage decisions.
“Borrowers should prepare for the eventuality of
higher interest rates in the future and make sure they could comfortably afford
to service the loan if rates increased to the historical average of around seven
per cent or even higher.”
Parsons’ comments come on the back of RateCity data showing 188 fixed
home loan interest rates have risen between September and mid November this
year, including 88 in a single two-week period.
RateCity says about half of all four and five-year
fixed rate home loans, and more than one third of three-year fixed rate home
loans, have seen rates increase during the past two months.
The website says there’s now an established trend for an increase in longer-term rates.
“Movements in fixed rates are common and
based on a number of variables, but the trend is definitely to longer term
rates drifting up,” Parsons says.
RateCity notes shorter-term fixed rates have remained
largely unchanged, with one-year fixed rates as low as 4.29 per cent.
“We have seen a lot of competition in the
shorter term fixed rates.
“While they are also subject to the same
market forces as longer terms, they’re a lower risk way for institutions to
offer hot rates to attract new customers.”
Parsons says an important factor to consider
when taking a fixed-rate loan is the interest rate to which the facility reverts
once the fixed interest period is over.
“Most fixed rates revert to a variable rate option at the end of the
fixed period, which depending on the rate cycle, could be more than one
percentage point higher and can mean having to fork out thousands of dollars
more per year to service the same loan.”
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Brisbane market on the move
Brisbane market on the move
Posted on Friday, November 22 2013 at 3:00 PM
More than $80 million worth of residential property was sold in Brisbane in October by Place real estate, says chief executive officer Damien Hackett.
The record sales month is an indication Brisbane’s property market is strengthening
especially in the sub $1 million price bracket, Hackett says.
In addition to the strong sales figures in the inner east and inner
north, the real estate agency has also found time on the market for listed
properties has significantly reduced while auction clearance rate have increased.
“The number of days homes in the sub $1 million price bracket were
sitting on the market in October was 41, which is far less than the average for
the six-month period from January to June, which was 68,” Hackett says.
“Essentially, the strength in the market that we are witnessing in
Brisbane is contrary to recent reports that suggest the recovery is only taking
place in Sydney. The Brisbane market is exceptionally strong, and we expect to
see it only improve from hereon in, with all the fundamentals lined up for a
solid 2014.”
Hackett added that the Brisbane market was benefiting from pent up buyer
demand that has been building since the city’s floods in 2011.
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