•
It’d seem the stars are aligned: low rates, population growth, low vacancy rates, strong rental market and a shortage of housing in the majority of capital cities.
Since the latter 2008, the number of loans to first home buyers has outweighed substantially those to existing owner-occupiers and investors as first-time buyers rush to take advantage of the increased government grant. These numbers are set to surge in the next two months after the Prime Minister indicated that the increased grant will end June 30. In previous interest-rate cycles, lending to investors and existing home buyers increased alongside that to first-home buyers.
Partly, the reason is that investors aren’t getting the first-home-owner grant, and when you’re laying your own money down instead of the governments’, you tend to think more carefully before deciding to take the plunge. Unemployment concerns and fears about how the economy will evolve this year are also reasons why investors aren’t yet entering the market.
Consumer sentiment figures released earlier this month by the Westpac-Melbourne Institute Survey found pessimists still outnumbered optimists and, with the prospect of more unemployment, that’s unlikely to change anytime soon.
Interest rates are one of the crucial aspects investors consider. During the past month or so, several of the big banks have increased their fixed mortgage rates, even though variable rates are expected to go even lower.
Banks say it’s due to an increase in the rates in the wholesale market where they access funds. Not everyone accepts that that is the reason, but most acknowledge it’s a signal borrowing costs are near their lowest levels!!
Some economists believe fixed rates will continue to rise as banks manage their risk, and it’s just a matter of the speed at which it happens. Of course, fixed rates are not popular at the moment even with investors who traditionally use this option.
That’s not a surprise, given the cash rate is expected to fall to 2 per cent by the end of the year.
But fixed rates are a bit of a barometer of the longer term trend in interest rates, so they’re worth watching. It also pays to remember that just because the Reserve Bank of Australia cuts rates’, that doesn’t mean banks have to follow suit.
Only time can tell, whether or not property buying will be better next year!
Maybe investors are waiting for a sign that unemployment will stop rising, or for first-home buyer activity to dry up!
•
The value of Aussie homes increased in the first quarter of the year, bucking a global trend downwards!
House and flat prices in Australia increased in value by 1.6% in the first three months of the year, helped by a scarcity of supply, lower interest rates and incentives to first-home buyers.
The slight recovery in Australia “has been driven by the 40% fall in home loan rates down to 5.7%, which are now at their lowest levels since July 1968!”
March’s three-month gain follows a 0.1% rise in the three months to February in the RP Data-Rismark’s national dwelling value index, and a 3% fall in the value of “cap” city homes in 2008.
The strength of Australian housing prices is a world away - so far - from the 2.7% drop in British home prices over the first quarter, capping a year to March 17.5% plunge.
US housing didn’t fare too much better either, with prices in the top 20 cities sinking 1.9% in February, which brought the 12-month fall to 18.6%, according to the most recent S&P/Case-Shiller index, a widely followed measure.
RP Data-Rismark said the first-home buyer’s grant, ending June 30th, has acted like a catalyst for new home buying in Australia, but lower interest rates are sustaining the market’s growth.
•
Increasing rents boosted the housing component of the Consumer Price Index (CPI) by 0.9 per cent for the quarter and the overall annual increase to 5.5 per cent, that’s according to Australian Bureau of Statistics figures released this week.
The CEO of Real Estate Institute of Australia has said, “The majority of this increase in the housing component was driven by rents, which increased nationally by 1.7 per cent over the quarter and 8.4 per cent over the year. The cities where rents increased the most were Perth and Darwin with annual increases of 10.9 per cent and 13.5 per cent respectively!”
This rent increase in the recent quarter reflects low vacancy rates and the scarcity of rental properties across capital cities, combined with the decrease in building approvals and housing finance for investment.
The National Rental Affordability Scheme should hopefully relieve this figure, however the impact won’t be felt for quite some time.
“With an underlying demand for additional housing at around 200,000 dwellings per year and commencement of new dwellings of 147,000 in 2008, Australia will need to build significantly more houses than what has occurred to meet rental demand.”
Housing affordability improved since the Reserve Bank rate cuts, although there’s really been very little flow-on benefit to those in the rental market.
“With lower interest rates and greater affordability, now would be the time for those within the rental market to seriously consider purchasing their own home.”
•
The rich list has been announced and the top performers for both houses and units were areas of NSW.
RP Data released its top price growth suburbs, recording the greatest increase in median house and unit prices during the 12 months to December 2008.
North Sydney suburbs were the standout performers for both houses and units with median house prices appreciating 47.4 per cent in McMahons Point and unit prices growing 49.8 per cent in Greenwich.
The NSW list comprised mainly areas outside of Sydney including Dubbo, Jindabyne, Queanbeyan East and Brunswick Heads.
Victoria was a different story with just one area outside of the metro area making the list. Irymple in Mildura was the regional victor experiencing a median unit price increase of 35.3 per cent.
The Victorian results mainly comprise of areas in the Melbourne Statistical Division with both the top performers – Portsea’s median house price increase was 38.6 per cent to $1,455,000 and Dallas’ median unit priced leaped to $222,500, that’s an increase of 48.3 per cent!!
The QLD market showed many areas outside of the Brisbane area as strong performers in capital growth.
Their state’s top performers are houses in River Heads at Hervey Bay with prices increasing 43.1 per cent and units in North Lakes increasing by 47.3 per cent.
South Australia’s winners are dominated by areas of Adelaide with only Port Hughes, Roseworthy and Owen outside of the capital city location.
The standout performers for houses is Teringie (49.5 per cent) and for units Underdale (47.8 per cent).
The strong growth results around Adelaide aren’t a surprise given that it remains mainland Australia’s most affordable capital city market and has been an excellent performer throughout 2008.
Perth dominated the WA list. Which is surprising given the poor performance overall of the Perth market during the last 12 to 18 months.
Homes in Coolbinia stood out, with a median price increase of 43.1 per cent. Units, the port side suburb of South Hedland saw the greatest increase jumping 44.4 per cent to $455,000.
Outside Perth, the list is exclusively populated by areas linked to the mining and resources sector.
For Tassie, the top performer for houses is Campania, recording a 46.3 per cent growth, and units saw Hobart taking top spot with 35.7 per cent!
Northern Territory winners are almost entirely located within Darwin, with Virginia recording the strongest growth in houses (30.9 per cent) and The Gardens topping the list in units (39.0 per cent).
Throughout ACT, the strongest performing suburbs were within close proximity to the city centre – Franklin’s houses recorded a 25.6 per cent increase and Campbell’s units 49.7 per cent!
•
You may know it, buying properties within 10km of capital cities is generally a good investment, but where ARE the most affordable areas?
There’s some suburbs within 5km of capital city centres where the median unit price is $200,000 and the gross rental yield 5.33%?
You don’t have to buy far from the city centre to pick up a bargain!
And it’s not a bad strategy for identifying best value properties to find ones located in affordable suburbs within a 10 kilometre radius of the city!
For some cities, the inner circle can be more or less, depending on the size of the city, however, generally it’s a good rule of thumb because it’s these areas that are more likely well serviced by transport, have social and retail amenities close by AND benefit from strong rental demand!
Below are the five most affordable suburbs for houses and units within a 5km radius of Melbourne City.
Melbourne - houses
|
Suburb
|
Council area
|
Number of sales
|
Median price
|
Annual change
over 10 years |
Median weekly rent
|
Gross rental yield
|
|
Braybrook
|
Maribyrnong
|
73
|
$345,200
|
15.45%
|
$250
|
3.77%
|
|
Maidstone
|
Maribyrnong
|
114
|
$435,000
|
14.24%
|
$300
|
3.59%
|
|
West Footscray
|
Maribyrnong
|
138
|
$447,000
|
13.62%
|
$320
|
3.72%
|
|
Kingsville
|
Maribyrnong
|
26
|
$451,000
|
11.77%
|
$330
|
3.80%
|
|
Footscray
|
Maribyrnong
|
168
|
$453,750
|
13.06%
|
$320
|
3.67%
|
Melbourne - units
|
Suburb
|
Council area
|
Number of sale
|
Median price
|
Annual change over 10 years
|
Median weekly rent
|
Gross rental yield
|
|
Williamstown Nth
|
Hobsons Bay
|
12
|
$218,500
|
0.24%
|
n.a.
|
n.a.
|
|
Footscray
|
Maribyrnong
|
155
|
$240,000
|
14.42%
|
$270
|
5.85%
|
|
Carlton
|
Melbourne
|
249
|
$246,000
|
2.60%
|
$390
|
8.24%
|
|
West Footscray
|
Maribyrnong
|
96
|
$269,500
|
15.06%
|
$210
|
4.05%
|
|
Braybrook
|
Maribyrnong
|
28
|
$275,000
|
9.85%
|
$310
|
5.86%
|
|
|
|
|
|
|
|
|
•
FIRST-home buyers are flooding into the market thanks to falling interest rates and slumping home prices.
But investors are shunning cheaper homes because they fear prices could fall further.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,25014496-5013926,00.html
•
Today’s cut will save a mortgagee with a typical 30-year, $300,000 home loan about $170 in monthly repayments if the lender passes on the full amount. Over the life of the loan, the savings will total about $61,272.
”There was a significant deterioration in world economic conditions late in 2008,” said RBA Governor Glenn Stevens in a statement accompanying the cut. ”The effects on household and business confidence of the financial turmoil following Lehman’s collapse, and continuing strains on major financial institutions, saw a significant downturn in demand around the world.”
The RBA has now lopped four full percentage points off its cash rate since it changed tack and began cutting rates last September. The cash rate has not been this low since 1960, according to Bloomberg data.
The rate reduction comes hours after the Federal Government announced a $42 billion stimulus plan aimed at keeping the economy out of a recession. The spending includes some $12.7 billion in cash payments and $28 billion on new infrastructure projects including roads and schools.
“What they have done is certainly enough, put together with the fiscal package,” said Michael Blythe, chief economist for the Commonwealth Bank. ”Policy setting in Australia is very stimulative, although we are quite likely to see rates lower” in the first half of 2009.”
Double boost
The central bank said it had taken into account the additional government spending.
”The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad,” the RBA said in its statement.
Today’s RBA cut matched market expectations.
The Australian dollar initially jumped, rising from 63.5 US cents to 64 US cents after the RBA move. The benchmark ASX200 share index was recently 1.2% up for the day, easing from 1.4% higher shortly before the RBA release.
More cuts to come
The fact the RBA assessed the likely impact of today’s stimulus package indicates the bank may have been considering a bigger cut, said JP Morgan economist Helen Kevans.
Ms Kevan expects another 50 basis point cut when the RBA board next meets in March to complete the central bank’s current easing cycle.
Today’s RBA’s rate cut follows the Federal Government’s revision of growth forecasts for the economy. The Rudd Government expects Australia’s growth to slow to 1% this fiscal year to 0.75% next year - one of the few economies to continue to expand.
The RBA said Australia remains relatively strong.
”Australia’s financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers,” the RBA’s Stevens said.
”Nonetheless, the combination of last year’s financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand.”
The Reserve Bank indicated it had more scope for cutting rates as inflation eases.
”Inflation has begun to moderate and, given recent developments, it is likely to continue to decline,” the RBA’s statement said.
Consumer prices fell by 0.3% in the December quarter, its first reduction since 1997, according to statistics released last week.
Three-year bond futures fell 0.085 points to 97.035, while 10-year bond futures shed 0.045 points to 95.870.
•
Despite everything, Australians do buy in Bali -attracted to the beauty, lifestyle and people.
The holidays are well and truly over. Surely, everyone will be back at work on Monday . . . if they’ve still got a job. With the financial situation so grim, many people will wish they could move to a tropical island to see out the rest of the year.
What about Bali? OK, so there’s been the Schapelle Corby and Bali Nine dramas, terrorist attacks, executions, threats of reprisals, security warnings, rapes and murders, even a rabies scare and a booze shortage recently but Australians do buy property there.
“There’s a whole heap of Australians,” says Charles, a Sydney caterer who bought land in Bali several years ago and intends to build a villa.
“I just fell in love with the island, the people, the scenery and the fact it offers such a relaxed lifestyle . . . and no one’s going to deny having cheap household help can swing the deal.”
This opportunity to live in the lap of luxury, complete with staff, at a relatively affordable price has transformed the Bali tourism market in the past decade - particularly around Seminyak, a haven for upmarket restaurants.
Some love it so much, they want to own a place in Bali for holidays, to rent out and eventually live in. Despite the 2002 and 2005 bombings, by last September, when Domain visited, agents said buyers were more concerned about movements in the dollar than terrorism.
Phone calls this week, though, revealed the financial crisis has had an impact and some luxury villas have had price drops of 30 per cent.
“We have a number of foreign owners who have lost money in the stockmarket and they need liquidity,” says Mike Pugh of Exotiq Real Estate in Seminyak.
Last year, when the Australian dollar was strong, nearly half his sales were to Australians.
“Especially when it went above 90 [cents to the US dollar] we had a mad rush of people coming to buy,” he says. (This week, it was 66 cents.)
Even now, some of the villas - especially with the price drops - look appealing. Particularly if you’re still employed or have a healthy redundancy cheque. Most of the foreign buyers in Bali are so rich they don’t need to borrow from a bank, which is fortunate since it’s impossible to get a loan either within Indonesia (unless they marry a local) or at home. There are also restrictions for foreigners buying freehold, though they can easily buy leasehold. Many keep quiet about their purchases for tax reasons.
“Bali is a cash market and there are no subprime mortgage meltdowns here and there are no bankruptcies or foreclosures, the only problems are that some of the developers have got their initial funding from foreign banks, which is proving difficult for some,” Pugh says.
Mira Sawitz of Jones Lang LaSalle says the financial crisis has had an impact.
“Inquiry is slowing down and clients who were hot prospects have decided to postpone their decision to buy anything,” she says.
Read the full article here: http://www.domain.com.au/Public/Article.aspx?id=1232818695940&index=NationalIndex&headline=Your%20own%20slice%20of%20paradise
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Dreams become a reality sooner thanks to Castran Gilbert’s hands on approach!
Why?
Castran Gilbert’s company Principals’, get involved with all the “behind the scenes” aspects of any new project!
From interior design, floor plans, to choosing which bank to finance the project, the Principals’ aim to take the pressure off the developer by offering educated advice ensuring developers make the most from their investment. This also sees the developer’s project gets to the marketing stage quicker!!
Testimonials
At Castran Gilbert we recognise the importance of pre-selling!
It instils confidence and allows you, the developer, to finance other projects sooner!
Here’s what a few of clients have to say.
Anton Wilson: This is my 3rd pre-sold project since dealing with Castran Gilbert. Their sales team pre-sold 220 apartments giving my company on this latest project more than $50 million in sales revenue …I’m sold on Castran Gilbert!!
Peter Arundel: I first dealt with Castran Gilbert in 1991 with them pre-selling a project of mine in South Yarra within just a couple of weeks! As a developer, this made me feel confident in the project seeing their ability to pre-sell!
Martin Tissot: My latest project has seen another 100% Castran Gilbert pre-sell! They gave me the confidence they could pre-sell then actually did it!! Their huge volume of pre-sales allowed me a construction start and also financed my next project …I have never had so much success since dealing with Castran Gilbert!!
Adding to these testimonials, recently one of our clients went to 1 of the 4 major banks to finance a project and on discovery that Castran Gilbert were involved, the bank proceeded to inform them Castran Gilbert is their preferred selling agent…the bank signed off immediately on the project!!
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Sydney will be reinvented as a high-density metropolis serviced by mass-transit subways under a transport blueprint being developed by senior state and federal government bureaucrats.
Powerful new legislation underpinning a proposed metro network costing $13 billion will enable transport and planning officials to reshape the inner suburbs of Sydney, paving the way for apartment towers as high as 15 storeys as well as large-scale retail and office blocks.
To justify the multibillion-dollar investment, tens of thousands more people would have to live and work within walking distance of the proposed Parramatta Road metro stations, according to planning officials behind the overhaul.
Heritage inner-west suburbs such as Glebe, Leichhardt, Rozelle and Camperdown are to be among the first to face radical changes should both the $8.1 billion West Metro underneath Parramatta Road and the $4.8 billion CBD Metro go ahead.
Read the full article here: http://www.domain.com.au/Public/Article.aspx?id=1231003979729&index=NationalIndex&headline=Get%20ready:%20high-rise%20suburbs%20coming