Australia Property

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(17-05-2014, 12:20 AM)BlueKelah Wrote: Ok I should let the value buddies know this local news, relayed to me by a property agent whom I was discussing the housing market and direction with...

Westpac bank one of the biggest lenders has now shut it's doors to new lending to those that do not have a demonstratable yearly income, as they have reached 50% of their loan portfolio on these type of loans already. This mainly affects many speculators who are aussie PR(quite a big group which you usually see at the auctions in sydney/melbourne) who use overseas cash to buy their first property then leverage on that to get the 2nd or 3rd investment property. They usually do not have any income or they do not want to declare income derived from overseas which is taxable.

If a big bank like that is closing its doors, it means they know something investors dont Big Grin

So I would say despite attractive valuations on property counters and projected good returns from current/future projects, gotta be careful.

It is normal for any country , bank to impose on this to discourage over excessive speculation on property.
“risk comes from not knowing what you’re doing.”
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Pressure on renters to ease as residential vacancies rise

The number of properties for lease jumped 0.3 per cent in April to 2.3 per cent. Source: TheAustralian

DIFFICULT conditions for renters could be easing, with the number of residential vacancies at the highest point in a decade. The number of properties for lease jumped 0.3 per cent in April to 2.3 per cent, or 66,120 vacancies, with Melbourne and Canberra reporting the highest rates at 2.5 per cent.

The SQM Research report found the increase came at a time when asking rents have remained “relatively flat”, with a 1.5 per cent decrease in asking rents for houses and a 1.7 per cent increase in asking rent for apartments in the past 12 months.

Louis Christopher, managing director of SQM Research, said that while the rental market was still fairly tight, it was becoming easier for renters and was likely to get easier still.

“Particularly in NSW, the strong rise in construction approvals mean we will see more supply, most of it being complete in 2015 and 2016,” he said.

“It’ll mean a tougher time for landlords as they try to lift rents.”

But the good news won’t reach renters in Sydney or Melbourne, with apartment rents rising 3.4 per cent and 3.5 per cent respectively, and houses recording small increases of 1.1 per cent in Sydney and 0.8 per cent in Melbourne.

Charlotte Lewis and two friends had been looking for a rental in inner Sydney since February, finally moving into a property last week. She said they had inspected five properties every weekend and applied for dozens, but most agents would not even return calls.

“Two agents got back to us and said they were looking for families,” she said.

“It’s very frustrating for single professionals, it’s very tough.”
$40m buy signals end to Harry Triguboff’s spree


Buy signals end to Triguboff’s spree
Harry Triguboff’s Meriton has bought a site in Sydney’s Mascot but the company’s buying spree is coming to an end. Source: News Corp Australia
BILLIONAIRE Harry Triguboff’s Meriton has spent more than $40 million picking up another site in Sydney’s Mascot, but says his buying spree is coming to an end.

The 7820sq m parcel at
1-5 Kent Street marks the 12th purchase since January last year, with the group spending more than $600m on sites as it aggressively built its land bank.

The pace of Meriton’s site acquisitions would ease as the tougher economic conditions ahead dampened the housing market, Mr Triguboff said.

The slowdown in mining as the growth engine of the economy, the tough federal budget and increasing levels of apartment development would keep a lid on the heady price rises of the past year, he said.

Meanwhile, China’s housing market had come off the boil, which “is not good for us”, Mr Triguboff noted. He also expects the next interest rate move to be a cut rather than a rise, though this would be after a period of unchanged rates.

Minutes from the Reserve Bank’s last meeting, released this week, confirmed expectations that the central bank was unlikely to move the cash rate from the historic 2.5 per cent low until it better understood the direction of inflation and employment. Mr Triguboff noted that a quarter of a per cent rise or fall would have little impact on buying decisions given the low level of rates.

Rent growth for apartments had also eased as more supply came on to the market, with Mr Triguboff expecting rents to fall by about 5 per cent over the next six months. However, this was unlikely to affect Chinese purchasers, who were interested more in capital gain, he said.

“We expect interest rates to come down and bring the dollar down, and this will make our properties more attractive to the Chinese,” he said.

In its latest purchase Meriton expects to start work on a ­
250-unit project late next year or early 2016. The property, sold by Knight Frank, has a tenant in place until November 2015.

Last month Meriton purchased a Sydney CBD office building at 234 Sussex Street for about $60m with a likely hotel conversion in mind.
Size rules (shoebox) could hurt apartment market

Duncan Hughes
491 words
24 May 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Property investors are being warned banks might refuse financing for increasingly popular micro apartments being built around capital cities, ­particularly Melbourne and Sydney.

It comes as property professionals' row among themselves about how to accurately measure property and call on state and federal governments to provide national standards.

Richard Wakelin, chief executive of Wakelin Property Advisory, a property consultancy, believes cookie-cutter apartments less than 50 square metres are not cutting it with lenders.

"Banks' rules about apartment sizes are arbitrary but they are excluding micro-student apartments.

"They are also knocking out some perfectly good smaller older-styled apartments," he said.

Apartments of between 40 and 50 square metres are being popularly ­marketed as accommodation for overseas students and investments for self-managed super funds.

Margaret Lomas, founder of Destiny Financial Solutions, a property ­investment advisory group, reckoned the tastes and lifestyle needs of the ­post-baby boomer generations are changing and that there is demand for small apartments.

"But the legacy opinion of the banks is that anything under 50 square metres is a risk because it might not have good resale prospects if there was a mortgagee sale.

Some banks are considering under 50 square metres but under 40 is still very difficult," she said.

Ms Lomas advised investors or home buyers to have lending available when purchasing.

The issue is biggest in Victoria where there is disagreement between developers and surveyors about whether apartments are measured from the inside, outside or mid-point of the perimeter wall.

That means a buyer could purchase the property at an advertised size larger than a surveyor's measurement used by the bank for assessing the loan.

Developers and estate agents usually measure from outside, resulting in a larger size than that considered by surveyors and banks, which typically measure from the inside.

Major developers claim they are happy to agree with industry-wide standards if introduced at the same time for all companies to avoid ­providing a marketing advantage to a competitor.

Banks have also called on the government to back national standards.

Buyers who have their loan ­application to the bank refused run the risk of delays while they find another lender, higher interest rates or losing their deposit, according to industry ­specialists.

Developers are concerned about a wave of breached contracts as buyers use it as an excuse not to complete on apartments that are worth less than their sale price, they claim.

Lawyers said they were unaware of any litigation but claim the huge increase in small investment ­apartments, some smaller than 35 square metres, could cause problems.

Mr Wakelin also warned that banks are becoming "very uncomfortable" about apartment sales where any car parking spaces are not on the same title as the unit.

"Check with your lawyer that it is or that there is a clause specifying that dealing with the unit is restricted," he said.

Fairfax Media Management Pty Limited

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$100m of units sell in 2 hours

Mercedes Ruehl
662 words
26 May 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Luxury apartment developer Fidcorp sold $100 million worth of stock in two hours over the weekend, defying predictions of an autumn and winter cool down.

The $145 million development, known as Eve Apartments, is Fridcorp's first outside of Melbourne and is located in Sydney's inner-city suburb of Erskineville.

The developer sold 141 apartments off the plan on Saturday. Two-bedroom, two-bathroom apartments were selling for about $800,000.

Fridcorp founder Paul Fridman said more than 5000 parties had registered for the project.

"You wouldn't see this in Melbourne and in fact never in 17 years have I seen anything like this," Mr Fridman said.

"My gut instinct is there is more demand than supply and it will continue to be that way for some time."

Demand from buyers in Sydney was strong across the board. The preliminary auction clearance rate was 76.2 per cent for 1075 auctions, compared with 69.9 per cent the week before, according to initial figures from RP Data.

Despite lower clearance rates over the last month, the market still appears "remarkably" strong heading into winter, RP Data housing market specialist Robert Larocca said.

"It was quite a stunning increase in stock levels this week," Mr Larocca said.

"To have 1000 auctions both in Sydney and Melbourne suggests strong seller sentiment. We tend to see a reduction in stock through the winter period and that is not entirely apparent right now."

A preliminary auction clearance rate of 66.1 per cent was recorded last week across 2714 auctions in Australia's capital cities, according to RP Data.

This compared with 66.6 per cent the week before. and 67.1 per cent this time last year.

Mr Larocca said demand from buyers was sufficient to ensure that the clearance rate was unaffected by the more than 50 per cent rise in homes on offer at auction compared with this time a year ago.

"This is also a sign of a relatively healthy economy," Mr Larocca said.

Melbourne's initial auction clearance rate was 61.7 per cent from 1182 auctions. Melbourne has never had two consecutive weekends of more than 1000 auctions in May, said David Morrell, a buyers' advocate at Morrell & Koren.

"I went to one auction that had six bidders and the property sold for $600,000 over the reserve. Then the next two auctions I went to after that didn't get a single bid," Mr Morrell said.

"For something that ticks all boxes the appetite is as good as it has ever been but I think vendors' expectations in general are a bit high in Melbourne," Mr Morrell said. For example, Victorian era homes were popular at the moment among buyers, with two Victorian homes exceeding their reserves by more than $500,000 at the weekend, he said.

Australian Property Monitors' Andrew Wilson said this coming weekend would be the real test of the market's momentum, with a record number of auctions predicted again for Melbourne and Sydney.

"Just when it looked like affordability barriers had started to form, the market found another level," Dr Wilson said.

"All this may be vendors getting in before winter and the Queen's birthday weekend in June. Melbourne will have over 1000 auctions this coming weekend again," he said.

The Reserve Bank of Australia said in the May board meeting minutes last week that while price inflation had eased in recent months and auction clearance rates had edged back, other indicators, such as turnover, first home owner grants and loan approvals for new housing, remained high.

Canberra and Perth are expecting a record number of auctions so far this year, RP Data says. Canberra recorded a clearance rate of 50.9 per cent , in Perth there was a clearance rate of 45.2 per cent and in Brisbane a preliminary clearance rate of 49.5 per cent was recorded.

Fairfax Media Management Pty Limited

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Has housing boom run out of steam?

HAS the housing downturn already begun? Or does it reflect a statistical anomaly?

Possibly a bit of both, but there are certainly some significant headwinds facing the Australian housing market.

Nominal dwelling prices are down 1.7 per cent in May, following a fairly modest April outcome. Growth has been particularly weak in Melbourne where prices have fallen by 3 per cent in the month to date to be 4.2 per cent below their March peak.

In Sydney, prices have also slowed — albeit to a lesser extent — and are now at their lowest level since late March. Prices in the other three mainland capitals have declined to such an extent that it is fair to conclude the house price boom was entirely isolated in Melbourne and Sydney.

Real dwelling prices — which account for the effects of inflation — show that over the past year-and-a-half prices in Brisbane and Adelaide have been growing at a rate that is slower than household income growth. Perth prices have also been fairly well contained over the past six months.

So why is this taking place? Well, there are a few reasons, some based on the fundamentals and others based on the statistical nature of the daily dwelling price series.

First, the decline could be seasonal. Since RP Data created their daily index in 2009, dwelling prices have fallen, on average, by around 0.7 per cent in May. In May 2013, dwelling prices fell by 1.2 per cent nationally.

Over the past five years the run from June to September has been fairly strong for dwelling prices. So that will be the period that will provide a firmer answer on whether prices have begun to deteriorate or whether the recent declines are a temporary phenomenon.

Second, it may reflect an internal adjustment to the series. Since the daily data is not revised, the series incorporates revisions via the latest outcomes. If prices have been overstated for a period then the series will be adjusted via pushing down new price data. For all practical purposes this will appear as though prices are falling.

The effect of this can be significant. When the data were released monthly they were subject to significant revisions. Between 2007 and 2010, initial monthly estimates of Melbourne price growth were typically revised downward by around 1 percentage point Perth prices on the other hand were consistently understated and revised upwards to a similar degree.

Prices in Adelaide were typically the most accurate, reflecting the more timely reporting of new settlements by their Valuer-General. Reporting in both Sydney and Brisbane was also reasonably good.

There are also some economic justifications for why prices might have slowed or even begun to tumble.

First, lending activity by owner-occupiers and investors has lost considerable momentum in recent months. On a trend basis, new loan approvals to owner-occupiers fell by 0.1 per cent in March — the first decline since March 2012. Investor lending, on the other hand, rose by 0.4 per cent in the month, although the pace of growth has slowed rapidly in recent months.

Since prices are largely determined by the number of loan approvals — think of it as a proxy for demand — this suggests that the top of the market could be in sight.

Second, auction clearance rates have slowed noticeably in recent months. Last weekend the clearance rate in Melbourne was just 62 per cent, although the Sydney clearance rate remains at a fairly elevated level.

The clearance rate has traditionally been a fairly good leading indicator for house price growth which, combined with housing loan approvals data, suggests that momentum has definitely slowed in recent months.

Third, the market might be responding to soft wage growth and elevated unemployment. Speculation has driven the Sydney and Melbourne markets over the past year, but history suggests that speculation can only drive a market for so long. Eventually price gains are tied to income growth, and many Australians are feeling the pinch.

Fourth, to the extent that this daily measure incorporates new information — most likely via auction results — some recent weakness could reflect a loss of confidence following the May budget. Measures of consumer confidence have plummeted over the past month, and although that might reflect an overreaction, the public outcry towards the budget continues.

Momentum in the housing market has certainly slowed in recent months, of that much we can be sure, but there are a couple of statistical quirks in the data that make it unclear whether the downturn has fully begun. Certainly prices have fallen in May — even accounting for seasonality — but we cannot ignore the possibility that there is an internal adjustment being undertaken, particularly in Melbourne. However, even if that is the case it suggests that previous price gains have been overstated.

Nevertheless, statistical quirks will quickly give way to genuine price falls if clearance rates continue to trend down and investor activity continues to moderate. If that eventuates — and I’m confident that it will — then dwelling price growth will quickly follow suit.
New home sales jump 2.9pc in April
AAP MAY 29, 2014 11:18AM
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NEW home sales continue to soar, serving as a key support for Australia’s economic growth.

Sales were up 2.9 per cent in April, figures released by the Housing Industry Association today show.

Detached house sales rose 1.8 per cent from the previous month while multi-unit sales were up 9.3 per cent.

This comes after data on yesterday showed strong growth in housing construction was helping to alleviate the pain from the wind down in mining investment and engineering construction.

“The recovery in new home building is a key plank in Australia’s economic growth,” HIA chief economist Harley Dale said.

Momentum in new home building activity would carry over into the June quarter, Dr Dale said, while new home sales and building approvals would “provide crucial insight to the growth prospects for the broader economy in 2014-15”.

Foreign buyers claims mostly false, RBA says

May 30, 2014

Clancy Yeates
Banking reporter

The Reserve Bank says foreign investors' share of the housing market has remained steady over the past two decades.

Foreign investors may be helping to push up the prices of some Australian homes, but are probably not crowding out first home buyers, the Reserve Bank says.

Amid anecdotal claims some local buyers are being priced out of the market by cashed-up overseas investors, a new submission from the central bank examines official data on the topic.

It says foreign investment in residential housing was at most 5 to 10 per cent of market turnover, and last year the government approved $17 billion in property investment from overseas, with most of the money funding the purchase and construction of new homes.

As foreign investors' share of the market has remained fairly steady over the past two decades, the Reserve concluded overseas buyers were not the main reason for price rises over the period.

However, it conceded extra investment from foreigners could contribute to price rises because there were ''rigidities'' in the supply of housing that meant there were not enough new homes being built to meet demand.

''Given this sluggishness, part of any increase in foreign housing demand may spill over into higher dwelling prices, though the data suggest that this has not been into the parts of the market where Australia's first home buyers are typically concentrated,'' the RBA said.

The comments are contained in a submission to the House of Representatives economics committee inquiry into foreign investment in residential real estate, which has become a hot topic after anecdotal reports of overseas buyers outbidding domestic buyers at auctions.

Treasurer Joe Hockey has asked the committee to examine current rules, which limit foreign investment in real estate to new dwellings but allow temporary residents to buy established homes to live in while they are in Australia.

The Reserve said foreign investors tend to be focused on parts of the market where there were few first home buyers.

According to official data, foreign buyers typically bought expensive properties, with an average purchase price for existing homes of $1 million in 2012-13.

This is more than many first home buyers spend, indicating that they are unlikely to be competing with foreign investors.

The Reserve also noted that higher foreign investment in real estate had been linked to the influx of students from Asia into Australia, part of the economy's integration with the region.
Property is a herd instinct market. Not too sure why it isn't obvious that 5-10% transaction can affect the pricing of the other 90%, including property stock (existing inventory not stock market).

We are witnessing the reverse from Singapore to HK to China with even lower transaction volumes.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

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