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2010 property: Melbourne , Sydney
Sydney Morning Herald 31/01/2011
Melbourne and Sydney led house price gains across the country in 2010 although the pace of the increase tapered off towards the end of the year, according to a real estate research group.
Among the major cities, Melbourne's median house prices rose 8.4 per cent in 2010 and 1.1 per cent, seasonally adjusted, in the final three months of the year, to $505,000, RP Data/Rismark said.
Sydney's house prices rose 6.6 per cent for the year and 0.9 per cent for the quarter to a median level of $525,000, the researcher found.
Mining state capitals Perth and Brisbane both reported quarterly and annual price falls.
Nationwide, city home prices rose 0.2 per cent in December, seasonally adjusted, to a median price of $475,000, reversing the previous month's 0.2 per cent decline, according to the data.
“Almost all of the growth in capital city home values was experienced in the first quarter of 2010, when dwelling values grew by 3.6 per cent,” said Rismark managing director Christopher Joye.
“The RBA's four interest rate hikes in 2010, which were topped up by a fifth via the banks, conspired to snuffle out capital growth during (2010)," Mr Joye said. “Indeed, the capital city housing market very clearly peaked in May 2010, and remains below this point today.”
Nationally, home prices rose only 4.7 per cent in 2010, RP Data/Rismark said.
A survey of residential property by National Australia Bank released last week forecast home prices will fall slightly during 2011, amid poor affordability and the prospect for more interest rate rises.
The Reserve Bank is widely expected to keep its key interest rate on hold at 4.75 per cent tomorrow when it meets. Private sector economists, though, say inflation pressure will probably mount later this year in part because of the rekindled mining boom. An upsurge in prices may prompt the RBA to lift official rates again, possibly as early as May, they predict.
In the quarter,
Among the other cities covered,
In addition to interest rates rises, affordability may also hold back the demand needed to keep prices rising, said Mr Tim Lawless, RP Data's research director.
“Affordability is quite a pressing issue in the market place,” he said.
“If you look at the broader market, interest rates and house pricings provide a fairly challenging scenario for new buyers into the housing market,” he said.
US-New Zealand property valuation group Demographia said last week that
“With such strong growth last year in Melbourne and Sydney, there will be some portion of the market place that is waiting for prices to come back or halt for some time until incomes catch up,” Mr Lawless said.
“That may be potentially what we see in the next 18 months,” he said.
No end in sight for renters
Sydney Morning Herald 25/01/2011
On the upside, all cities except
The latest figures reveal that across the nation vacancy rates in December were 2.2 per cent, up from 2 per cent the same time in 2009.
Louis Christopher, the head of the data company that put the figures together, SQM Research, says the easing is likely to be short-term and he expects to see it get tougher for renters in most cities as the number of rentals remaining vacant for three or more weeks drops during the year.
There's more expected this year, further adding to the rental pool. Christopher is predicting the Victorian capital won't have any growth in the asking price for rentals this year. If there's any move upwards it will possibly be just 1-2 per cent, he says.
Vacancies in
"Between 3 to 4 per cent, it is a market in equilibrium," he says. "At over 4 per cent it starts to become an oversupplied market." Even better for renters, not so handy for investors.
The figures were compiled prior to the devastating
Looking at the overall picture, Christopher says in December, the Australian region that experienced the tightest vacancy rate was Mackay in
The area that had the highest vacancy rate was Wyndham in southwest
Across the nation, SQM Research reckons rents will increase 3-5 per cent this year.
So what's keeping things tight? Christopher says it's a combination of factors. One is first home buyers haven't been diving into the market recently, preferring to rent instead. "Since we do have a bit of an affordability problem ... many would-be first home buyers are renting out in an affordable location first so they can save, so they're moving out to the outer ring to rent," says Christopher.
There are signs that first home buyers could start to return this year - but that could depend on interest rates and what happens with house prices.
It's in the outer ring suburbs that things are particularly tough, says Christopher. "Bonnyrigg [in
Vacancy rates in December 2010
National 2.2 per cent
Interest rates pressure forces house sales
The Australian 01/12/2010
A SURVEY commissioned by one of Australia's largest mortgage brokers has found that almost one in 10 home buyers believe the latest round of interest rises could force them to sell up.
Home loans stable, rates may cap gains
AAP 10/11/2010
AN improvement in home lending in September shows loans have stabilised, but the recent interest rate rise is likely to cap any increases, economists say.
Australian housing finance commitments for owner-occupied housing rose 1.3 per cent in September, seasonally adjusted, to 48,333, the Australian Bureau of Statistics said today.
The median market forecast was for a 1.2 per cent rise in housing finance commitments in the month.
Total housing finance by value rose 1 per cent in August, seasonally adjusted, to $20.386 billion.
JP Morgan economist Ben Jarman said the most recent consecutive monthly improvement in home loans wasn't surprising.
He said the data reflected a time when the Reserve Bank of Australia (RBA) had left interest rates on hold.
"We think home loans have basically stabilised and the upside from here is probably capped by those rising interest rates," Mr Jarman said
“We think those rate hike reprieves would have been particularly important for households."
The RBA raised the cash rate to 4.75 per cent at its most recent board meeting on November 2.
Mr Jarman noted that first home buyers continued to make up a low percentage of home loans being taken out.
"Clearly there is still a bit of a hangover from all the activity that happened in 2009, when all those buyers hit the ground over that period," he said.
"But generally it seems in the last few months that investors and owner occupiers have filled that gap.
"The big test going forward is going to be rising interest rates, so the RBA hiking last week will obviously take some of the wind out of the sails here."
Economists expect more rate rises in 2011.
ICAP economist Adam Carr said the housing finance numbers were strong despite the recent rate rise.
"Interest rates are still around average levels," he said.
"Despite recent rate hikes, and despite the fact that we will get more rate hikes next year, the economic fundementals support increased lending activity."
However, he said he did not expect that data to influnece the RBA's December interest rate decision.
"I don't think we have a smoking gun for a rate rise in December," he said.
"But that very much depends on what the banks do."
The Commonwealth Bank has raised the interest rate on its variable mortgage products by 45 basis points, almost double the RBA's 25 basis point move.
National Australia Bank, Westpac and ANZ have yet to decide on wheter they will lift their rates by more than the RBA's moves.
A 25 basis point rate rise adds about $50 to the monthly repayments on a 25-year, $300,000 mortgage.
Macquarie Group associate economist Ben Dinte said the housing finance commitments were stabilising at a very low level.
"No suggestion of a sharp upswing, it's just stabilising," Mr Dinte said.
"With a second round of interest rates (rises) beginning in November and potentially continuing into 2011, its unlikely we're going to see housing finance commitments improve considerably in the year ahead," he said.
The RBA would be looking at the housing finance data to get a gauge on how households are reacting to a higher level of interest rates, Mr Dinte said.
"It does tend to provide a leading indicator in building permits and residential construction.
"These are areas the Reserve Bank will want to see stay at relatively subdued levels, given the amount of strength that they expect to be coming through in terms of mining sector investment.
"So, again, it's a story of making room for the mining boom, whereas the Reserve Bank would be happy to see these measures of household activity subdued," Mr Dinte said.
Rate rise will keep buyers at home
The Australian Financial Review 03/11/2010
The interest rate increase by the Reserve Bank of Australia will hit the property sector where it hurts - financing, affordability and supply.
The sector is still grappling with sluggish construction levels, severe undersupply and tight lending conditions in the wake of the economic downturn, while investors continue to confront high property prices.
The central bank's decision to raise interest rates a further 25 basis points to 4.75 per cent adds about $50 per month to the repayments on a $300,000 mortgage, the Housing Industry Association says.
"Jaw-boning about interest rates rising before Christmas has already had the intended impact of an actual rate rise," Mr White said.
"The anticipation alone of a rate increase has already had a significant impact on the residential property sector, with buyer interest restrained."
"The non-resource states, such as NSW and Victoria, are experiencing stable asset prices and subdued credit growth," Mr Gadiel said. " These states are dependent on new home contruction and this interest rate rise will dampen economic activity in this sector.
"The lack of new home production will, in time, push home prices up, which will probably trigger further interest rate rises from the bank."
"[Yesterday's] decision by the RBA eill almost certainly soften the housing sector further, resulting in fewer buyers and continuing weakness in housing finance, clearance rates and building approvals," he said.
Growth expected to slow, rents to rise
The Australian Financial Review 06/10/2010
Real estate agents are hoping the housing market will get a boost from yesterday's interest rate reprieve, but with rates expected to rise again, the residential property sector is tipped to keep on slowing.
Macquarie real estate strategist Rod Cornish said previous interest rate hikes had made the housing market decelerate.
The property sector has had a difficult year, with consecutive interest rate rises and the withdrawal of government stimulus packages.
RP Data research director Tim Lawless said homeowners could absorb another rate rise.
But if there was more than one rate rise house prices would be affected.
"Higher interest rates will further dampen the Australian residential property market," he said.
Mr Lawless said rate hikes had helped cool rapidly rising home values, but the prospect of higher interest rates was not all bad.
Investor landlords would benefit.
"Higher interest rates are likely to create additional demand from renters in what is already a very tight rental market.
"We are already seeing the first signs of higher weekly rents and with more prospective buyers choosing to rent rather than own, the upwards pressure on rents is likely to increase yields for investors," he said.
The Sunday Telegraphy 16/05/2010
THE
Residex figures show auction clearance rates dropped by more than 10 per cent last Saturday to 62.5 per cent, down from 73.5 per cent the weekend before. The slowdown follows a buoyant start to the real-estate year with clearance rates averaging about 80 per cent in the first three months.Residex managing director John Edwards said interest rates and nervousness about high local prices and the economic crisis in
Adding to buyer woes,
Independent auction house Cooley Auctions saw clearance rates plunge from 80 per cent to 50 per cent in the first week of May alone.
"There are early signs that the heat's coming out of the market," auctioneer Damien Cooley said. "In the last week, the bidding activity hasn't been as spirited as we saw in February, March and the beginning of April." Manly mother Yoness Blackmore felt the market slowdown first-hand after her property passed at auction for $1.125 million last Saturday. The Manly home she shares with her husband, Chris, and their children, Alex, six, and Zoe, four, is the type agents dream of: a home in a popular suburb, within walking distance of shops, beaches and transport connections and with three large bedrooms and a backyard. "It was disappointing because you psyche yourself before an auction," Mrs Blackmore said. "We just timed it badly - We just didn't count on the effect of school holidays and Anzac Day. "Whether you're buying or selling, there's nothing good about it." The couple's house, still on the market, attracted two potential buyers who had in turn experienced problems selling their own properties. But a home in neighbouring Fairlight last week sold for $1.44 million - $240,000 more than the vendors paid just 11 months ago - a typical example of
"I expected people to start sitting on the fence and being more cautious when interest rate levels got to seven per cent but they're now starting to do that sooner. We can see it. Over the last couple of weeks numbers have gone down." In
"I think a lot of people are finding it hard to keep up - it really is a massive growth spurt and we don't know where it's going to go."
He said growth like that was one of the factors starting to scare potential buyers out of the market.
Mr Edwards said the drop in values in the lower end of the market recorded in the first half of the year meant the "poor were being stressed significantly" while the medium to upper areas would continue to do well.
NSW makes fresh tax grab from property market
The Australian Financial Review 13/05/10
Home owners and commercial developers in NSW have been targeted by a new tax which is expected to reap more than $90 million a year for the government, giving Treasurer Eric Roozendaal extra money to play with before the budget on June 8.
The government has proposed a new charge of 0.2 per cent on property transactions valued at more than $500,000 and 0.25 per cent for those of more than $1 million. That's on top of a $190 flat fee and means a buyer would pay an extra $200 for a $600,000 home - which is the median house price in Sydney - and an extra $1000 on a property worth $1 million.
Home loan drop raises alarm
The Australian Financial Review 13/05/10
Demand for home loans has dropped for a sixth consecutive month as rising interest rates and soaring house prices undermine borrowing by aspiring owner-occupiers.
The value of home loans, excluding refinance, issued in March fell by 1.7 per cent in March to reach its lowest point in more than a year, raising concerns the housing construction recovery may not be sustained.
The number of loans to owner-occupiers dropped 3.4 per cent in march to be down 23.2 per cent from a year earlier, and first-home buyers are leaving the market even more quickly, with their share of all owner-occupier loans dropping to a near four-year low of 16.1 per cent.
The RBA admitted last week that it was puzzled by the apparent contradiction between the plunge in new mortgages and the inexorable rise in house prices. It speculated that much of the activity was being driven by existing home owners who could buy eith little or no external finance.
News Limited Newspapers 10/05/10
Rising Interest Rates to hit renters Hard
Trade-up buyers push house prices higher
The Australian 15/02/10
DEMAND is up as home owners take the opportunity to upgrade before interest rates rise.
PROPERTY markets around the country continue to soar as home owners seek to "trade up" before anticipated interest rate hikes in the coming months.
At the weekend, Sydney auctioneers raked in more than $100 million in sales, after listing 241 properties for auction - 108 more than were on the block the previous weekend.
According to Australian Property Monitors, a waterfront home at southern Sydney's Kangaroo Point was the city's highest sale at $3.4m, while a modest house at Tuggerawong sold for $260,000, tipping sales over the $100m mark.
The auction clearance rate in Sydney was 69.7 per cent, which was up 5.3 percentage points from the corresponding weekend last year.
Home buyers were also busy in Melbourne, where agents listed 393 properties for auction on Saturday - more than twice as many as the previous weekend.
The city's clearance rate was 63 per cent - a drop of 10 percentage points from the first weekend in February.
But Victorian analysts said the result was strong for this time of year.
A three-bedroom house on Millswyn Road, South Yarra, was sold for $2.6m while a studio apartment in the Melbourne CBD was snared for the bargain price of $180,000.
Real Estate Institute of Australia president David Airey said the most activity was among owner-occupiers seizing on low interest rates to buy more expensive homes.
"Sales are dependent on buyer demand," he said.
"And there's been very strong demand, with people taking advantage of interest rates at current levels to set up loans.
"The biggest jump in the market is in the more expensive ranges - $700,000 and above - which is generally regarded as the `trade-up' market."
The "trade-up" market has driven the strongest market growth in recent months.
In the December quarter last year, the most expensive 50 per cent of suburbs enjoyed price growth of almost double the remainder of the market, according to APM.
Smaller auction markets also performed well at the weekend.
Adelaide's clearance rate climbed from 29.4 per cent on the corresponding weekend last year to 65.6 per cent.
Brisbane's clearance rate climbed to 32.3 per cent, up from 26.5 per cent last year.