Property Prices

<html><body><div class="page" title="Page 1">
<div class="section">
<div class="layoutArea">
<div class="column">
<div class="page" title="Page 3">
<div class="section">
<div class="layoutArea">
<div class="column">
GUEST OBSERVER
It is yet too soon to gauge the true impact of recent macro-prudential measures on the housing market, but recent reads on prices suggest the market could already be close to its peak.
According to CoreLogic’s hedonic price measure, property prices fell in May, including in the major boom cities of Sydney and Melbourne – prices fell for both detached houses and units, although the latter fell by more. Declines were not uniform, however, with dwelling prices rising in both Brisbane and Adelaide.
Mortgage lending has cooled only slightly, but is expected to be weighed down as lenders look to stem the flow of interest only loans (with the biggest impact likely to be seen in investor credit). Mortgage credit rose by a steady (albeit subdued) 0.5% m/m in April, as investor credit actually outpaced owner-occupied credit modestly.
Looming headwinds from prudential tightening, combined with rising housing supply, affordability constraints and modest wages growth (which looks set to continue), validate our expectation for the housing market to cool from here.
That said, while the risks have certainly compounded, we continue to expect an orderly conclusion to the long-running housing boom in major markets, with the profile also helped by additional policy announcements of late to support first home buyers.
Our national forecasts for houses in 2017 are 7.2 percent in 2017 and 4.3 percent in 2018. Unit prices are forecast to rise 6.8 percent in 2017, but will fall modestly in 2018 (-0.4 percent).
Forecasts for 2017 anticipate additional modest growth in coming months, suggesting a degree of downside risk.
Dwelling investment dropped by a greater than expected 4.4 percent in Q4, occurring despite a pipeline of construction projects that is close to record levels – although weather related disruptions may have contributed to the result.
However, it is possible that supply is being constrained by other factors, including deliberate delays by developers in response to rising settlement concerns. Capacity constraints and tighter credit availability are other possible explanations.
Declines were seen across both new and used dwellings (down 4 percent) and alterations &amp; additions (renovations, down 5.2 percent). Growth in dwelling investment over the year was also soft at -2.5 percent y/y.
New building approvals have come off from their highs, but have held steady at higher than expected levels in recent months.
That might suggest the housing construction boom has a little further to run (despite recent declines in dwelling investment), although our economic modelling still points to significant downside risks to the outlook. Overall, dwelling investment is expected to be flat in 2017 (revised down due to very weak Q1 outcome), before turning modestly negative (-0.4 percent and -2.5 percent in 2018 and 2019 respectively). 
Hints that housing prices are starting to peak will be welcome by the Reserve Bank who remain concerned about elevated household debt. While it is early days, this is consistent with our view that housing prices will slow from here, particularly given further tightening in credit growth as banks are forced to cut back on interest only loans. No rate hikes are likely however until mid- 2019.  
Alan Oster is group chief economist, National Australia Bank, and can be contacted <a href="https://business.nab.com.au/author/alan-oster/">here</a>.
 
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

jchancellor-FAypfDUnLy

Property market could already be close to its peak: Alan Oster

<html><body>
GUEST OBSERVER
Property prices will rise next year, despite some plateauing in recent weeks.
The late 2015 Melbourne property market has been a remarkably balanced affair in terms of the relative power of buyers and sellers. Supply has been strong, with a record number of 1000-plus auction weekends. But there has also been enough buyers out there to soak up the supply. Only just though, as evidenced by the lack of price movement since the end of winter.
After the strength of the market over the preceding three years, it is tempting to extrapolate this result as the turning point downwards for the market. But I suspect there is some more capital growth to come off the back of residual momentum.
Come late February 2016, when the property auction market reopens, I expect buyers will once again outnumber sellers.  This is a common seasonal characteristic of the early autumn market, just as there tends to be a glut of sellers in the late spring market. 
Buyers are typically ‘ready and keen’ to buy sooner in the calendar year after the long summer holidays than sellers.
There are of course headwinds for the market: a strong pipeline of new properties, especially apartments, adding to supply; tighter prudential lending rules making borrowing slightly more expensive and scarce; overseas buyer demand is moderating after a strengthening of foreign investment rules; falling rental yields; and, not least, the impact of three years’ capital growth on affordability.
On the other hand, interest rates remain at a historically low level and an interest rate rise is a distant likelihood. Even with softer rental yields, prospective investors enjoy an unusually small ‘funding gap’ – the difference between their borrowing costs and the net rental return.
Allied to this, participation in the market is likely to be supported by the relatively benign economic conditions: stable unemployment, low inflation and reasonable consumer confidence.”
Winter Blues?
The outlook becomes more uncertain in the second half of 2016.
By June 2016, it will be 15 quarters, or just under four years, since the start of the latest upswing in Melbourne property prices. That’s an impressive run. It is almost inevitable that there will be a pause or even a downturn at some point in the not too distant future. 
However, should it turn out that we are not at the bottom of the Reserve Bank’s cash rate interest rate reduction phase – which may be the case given that few of us would have predicted even a year ago that the cash rate would go as low as today’s 2% – then price growth may persist, albeit modestly, across 2016.”
Where will prices be in 2026?
Although fun to crystal ball gaze into 2016, thinking about where prices will be in ten years’ time – in 2026 – is more worthwhile.
Ultimately, if you’re planning to invest in property next year, it should be with the intention to stick with that asset for at least seven years and ideally ten.  Over that longer time frame, prices are far less volatile and more predictable than they are year-to-year.  Choose a great asset and I can’t tell you whether it will rise or fall in value next year, but I’m very certain it will double in value after 10 years.
By great assets I mean established one- and two-bedroom apartments and two-bedroom period-style houses on quiet, attractive residential streets in inner suburban Melbourne that are proximate to transport, village-type shopping strips, schools and health facilities. Select older-style architecture and all units should have dedicated off-street parking and be in blocks containing no more than around 20 apartments.
What to avoid in 2016
Whilst it is difficult to call when the market will turn, there are certain parts that should be avoided in 2016.
The Federal Government has been vigorous over recent months in putting in place and policing measures that address widespread non-compliant property purchases by non-residents. Whilst a small proportion of buyers overall, overseas buyers were sufficiently concentrated in some school-belt Melbourne eastern suburbs to push prices beyond fair value.  We anticipate that there may be a pullback in prices in suburbs such as Balwyn, Box Hill and Mont Albert in 2016, as these markets adapt to a fall in demand.
The high rise multi-apartment sector in our CBD and surrounds will almost certainly struggle under the weight of a massive pipeline of new properties expected to flow into the market over the next 12 months. It’s hard to have a good word to say about a sector where so many buyers are marketed a dream and sold a nightmare. 
But let me try: If making money is not your goal and you want to be in the city, then you may be able to buy an affordable high rise apartment in 2016. But make sure you buy it second hand.  You’ll probably secure a 20%-plus discount on the price of new apartments because you’re not paying for a developer’s marketing costs and you’re dealing with a vendor who cannot sell it to overseas buyers because it isn’t new.
Paul Nugent is a director of <a href="https://www.wakelin.com.au" target="_blank">Wakelin Property Advisory</a>, an independent firm specialising in acquiring residential property for investors.
</body></html>

Further growth for Melbourne property prices in early 2016: Wakelin's Paul Nugent

<html><body>
<img src="https://counter.theconversation.edu.au/content/64877/count.gif" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The Sydney property market creates shocks that spill over to other capital cities, and Hobart is one of the worst affected, new research from the University of New South Wales shows.
The study looked at all eight Australian capital cities. Perth and Darwin’s housing market appeared to be the least affected by shocks originating in other capitals.
“We shouldn’t think of Australian housing markets as being completely isolated. It’s not the case that whatever happens in Sydney doesn’t have any implications for what happens in other housing markets,” says Associate Professor Glenn Otto, the author of the research.
<a href="/images/2016/09/06/Screen%20Shot%202016-09-06%20at%2012.18.13%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/06/Screen%20Shot%202016-09-06%20at%2012.18.13%20PM.png" alt="">
Professor Otto examined data on median house prices and rents, from the early 1980s till 2015, released quarterly by the Real Estate Institute of Australia.
He modelled how variations in capital gains and rental returns in each of the cities affected returns in other cities, over twelve month periods.
“You historically don’t see a big share of Brisbane or Melbourne type shocks spilling over to other markets,” Professor Otto noted.
The spillover effects to different capital city housing markets have been increasing over time since the mid 1990s and account for about 40 to 50% of the variance in forecast property returns to houses and units.
“From time to time you’ll get predictions that we’ve built too many units in the Melbourne housing market and there’s an oversupply and its specific to these markets, so we’ll see some price correction.
“The thing I was interested in was, looking at the historical data, was to what extent that correction won’t be specific to the particular market but also will feed through to other markets,” said Professor Otto.
The research also examined the split between houses and units. Although there wasn’t a huge difference in results for the two different dwelling types, the cities most affected by shocks in terms of units were Brisbane and Hobart and for houses it’s Canberra and Hobart.
Professor Otto is now planning to research what causes these spillover effects and what that can tell us about volatility in Australia’s housing market.
“Australian cities are quite isolated so we wouldn’t necessarily expect people to be picking up and moving between cities in response to changes in property prices, but what we might see is investors thinking about where they want to buy and sell property.
“To that extent investors may be becoming an increasingly important part of the housing market, maybe that’s one mechanism by which we can see this kind of effect of one city being transferred to another city,” Professor Otto said.
The research was funded by an Australian Research Council Linkage Project Grant.
Jenni Henderson is assistant editor, Business and Economy, The Conversation and can be contacted <a href="https://theconversation.com/au/team#jenni-henderson" target="_blank">here</a>.
</body></html>

Sydney property market price shocks spread to other capital cities

<html><body>
GUEST OBSERVER
With plenty of hype around US property agent Jonathan Tepper’s predictions that Australian property prices will fall by 50 percent, here are ten reasons I think the Aussie property bubble won’t burst. 
1. Australia has high credit quality
Australia and the US are two completely different markets. Australia has higher quality home loans thanks to stricter lending criteria and requirements, which means borrowers who are approved for loans can generally afford to service them. In contrast, banks in the US at the time of the GFC were lending to people who hadn’t provided paperwork and couldn’t service the loan – a recipe for disaster.
2. Not as many foreclosures
Borrowers in the US weren’t required to stump up a deposit to get a mortgage. To make matters worse, banks had no recourse so a borrower could walk away from a property without being sued. In contrast, Australians can no longer borrow 100% of the property value, and lenders can seek financial retribution if a borrower defaults. Australian borrowers are therefore less likely to default on their home loan, resulting in fewer foreclosures.
3. You need to compare apples with apples
A major problem with Tepper’s examples is that he was talking about the US as a whole and not comparing apples with apples. We need to compare prominent cities with other prominent cities, like Sydney with New York, which didn’t have much of a collapse during the GFC. No one would compare Logan in Queensland with Manhattan, would they? It just doesn’t make sense.
4. Financial bodies are closely monitoring the market
Down under, the Australian Prudential Regulation Authority is keeping a close eye on the market and responding swiftly. For example, last year when APRA found there were too many investors driving up the Australian property market, it brought in new regulations that required lenders to reduce their investor loan books. The banks responded quickly and as a result we haven’t seen a major drop in the property market.
5. We have a strong employment market
For a 40-50% property collapse to occur, there need to be massive job losses and foreclosures – but we are seeing the opposite in Australia, as unemployment has dropped to around 6%.
6. There’s a limited amount of land available
The US is covered coast to coast with property, whereas in Australia we are restricted to areas around the coast where there is water and amenities, so we have a limited amount of properties available. We also have record migration at the moment, which will underpin prices for land.
7. Continued property demand from foreign investors
The Australian market is also being propped up by continued investment by overseas buyers from countries like China.
8. The market is similar to 2003
If you compare the percentage of disposable income today to what it was in 2003, it is somewhat similar. Back then, the RBA increased the official cash rate and prices slowed down. However, prices still moved along with inflation – they didn’t drop. So we’ve seen this happen before and we are just as leveraged now as we were then.
9. The RBA has room to move
The good news is today the Reserve Bank of Australia still has 2% to play with, so if the market did start to collapse the RBA could push the official cash rate to 0%, which would help homeowners get through the tough period financially.
10. We have negative gearing
The US didn’t have negative gearing when the GFC occurred – and still doesn’t today. But tax benefits Down Under drive behaviour as many investors are willing to lose a portion of their wages for the benefit of capital gains and bringing down their taxable income. Even if negative gearing concessions were to be slashed, property prices are unlikely to drop by 50%.
So where will the Australian property market go?
Property clearance rates are improving from last year despite predictions the market would keep dropping, so I’m still tipping prices will go up by 3-4% and will keep up with inflation. 
Watch this space…
STEVE JOVCEVSKI is a property investment and home loan negotiator at <a href="https://mozo.com.au/" target="_blank">Mozo.com.au</a>.
</body></html>

Ten reasons the property bubble isn't going to burst: Mozo's Steve Jovcevski

<html><body>
The housing market concluded 2015 with a whimper, with national house prices falling again at the national level in December. However, strong price growth in the first half of the year meant that prices were still up solidly over the past year.
But the current environment of subdued demand is likely to see price growth remain sluggish as we move into 2016.
<a href="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.25.42%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.25.42%20AM.png" alt="" width="891" height="258"> 
Prices fell across the key markets of Sydney and Melbourne in December in seasonally adjusted terms. Prices in Sydney have now fallen for three consecutive months – the first such run in nearly five years. 
Prices are being driven by softer demand and sentiment in the housing sector. Tighter regulation and higher interest rates have contributed to auction clearance rates falling from their recent peak. As clearance rates dipped further in December, to a three-year low in Sydney, house prices have been correspondingly soft (Figure 1). 
<a href="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.28.46%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.28.46%20AM.png" alt="" width="806" height="580">
Falling prices were prevalent across most of the smaller capitals too in December. However, one brighter spot was Brisbane, which experienced rising prices over the past two months. This is consistent with our belief that Queensland’s economy has turned the corner, supporting housing sentiment. In addition, the absence of earlier price growth to the extent of Sydney or Melbourne means that there is less room for unwinding over the near term (Figure 2). 
<a href="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.28.57%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.28.57%20AM.png" alt="" width="797" height="547">
<a href="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.31.55%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/01/11/Screen%20Shot%202016-01-11%20at%2010.31.55%20AM.png" alt="" width="780" height="552">
 
Cherelle Murphy is co-head of Australian economics, ANZ and Daniel Gradwell is economist. They can be contacted <a href="https://bluenotes.anz.com/authors/our-economists/" target="_blank">here</a>.
</body></html>

Australian house prices finished 2015 on a whimper: ANZ Research

<html><body>
Australia is a nation full of highly confused real estate consumers. They’re befuddled because there is so much conflicting data on matters relating to residential property, especially on prices.
The confusion arises because of the widespread acceptance of anything labeled “research” as fact. Media these days is driven by under-resourced journalists and there’s a growing tendency to recycle press releases as articles, without the scrutiny that once was common in the industry.
Back in the day, publishing a press release (which, by definition, is someone’s propaganda) verbatim was a sacking offence. These days it’s mainstream journalism, especially in real estate. Most of the online “news” services that send out daily bulletins consist almost entirely of contributed material. The journalistic content is close to zero. 
Any press release from a name research company featuring price data will be published without question. If the press release says Sydney prices are still soaring, that will be the headline in multiple media outlets, including some of our biggest newspapers.
The problem is that price statistics are often very rubbery figures. One of the ways we know this is by comparing price data from multiple sources. The differences and contradictions are quite stark. 
Recently I wrote a report which focused on the latest price data for the eight capital cities from four different research sources. The areas where they disagreed were far more numerous than the ones where they were broadly in concert.
Two sources claimed Sydney prices were still growing at an annual rate around 11 percent, while the other two said the annual growth rate was down to 1.2 percent and 2.6 percent.
One source said Darwin house prices were unchanged while another recorded an 8 percent decline. Two sources said Canberra apartment prices were rising and the other two reported they were falling. All four agreed that Darwin apartment prices were falling but the rate of decline ranged from 0.2 percent to almost 10 percent.
Annual price growth for Melbourne houses ranged from 7 percent to 15 percent. One said the capital city average was 2.7 percent annual growth in house prices while another claimed it was 8.2 percent.
There are myriad other examples.
We know that different research companies have different methodologies and parameters, but consumers are entitled to think that the movement of prices in a particular location is a mater of fact: when media reports one week that they’re rising and the next that they’re falling, confusion is understandable.
It seems no one in media has noticed the discrepancies.
And now we have the Reserve Bank revealing that it disregarded price data from one of its regular sources. Apparently a change in methodology resulted in the research entity overstating price growth in Sydney and Melbourne.
At the time those figures were published, I challenged them because I thought they were clearly wrong. They contradicted known trends in the market and also conflicted with data from other more credible sources. 
But media outlets across the nation published those erroneous figures as fact. There were numerous headlines declaring the fading Sydney boom had been reactivated somehow, miraculously, in contradiction of all previous data.
Inevitably this was accompanied by observers shouting about bubbles, affordability crises and young Australians priced out of the market, doomed to a lifetime of renting.
Worse, one of the big-name global ratings agencies rushed out a warning about the re-inflation of the Australian house price bubble, based purely on a single month’s price figures from one research source. It says something about the credibility of the ratings organisation that the basis for them issuing international press statements was so flimsy.
The message for real estate consumers is to take real estate statistics with several grains of salt. It’s alarming how many people base investment decisions on published data from a single source, reported verbatim by an unquestioning media.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a>
</body></html>

terryryder-YECXbqmri2

Property price statistics are often rubbery figures: Terry Ryder

<html><body>
EXPERT OBSERVER
There are 3 key drivers of property prices.
<div>
(i) Supply - the rate of construction and the properties listed for sale on the market;</div>
<div> </div>
<div>
(ii) Interest rates - the cost of borrowing; and</div>
<div> </div>
<div>
(iii) Population growth - immigration, natural population growth (births minus deaths), and interstate migration.</div>
<div> </div>
<div>Or, as depicted in his infographic:</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-JfAMyhsEwDU/XsC1SuAaGqI/AAAAAAAA1xE/oWHfOVu6Wt4Dg29nArHLDV26HjXIy8SaACNcBGAsYHQ/s640/FIN.jpg" width="640" height="360" data-original-height="445" data-original-width="791"></div>
 
<div>Source: Tim Boyle, Finalytics</div>
 
<div>People often state that the unemployment rate is critical, but this argument isn't backed up by any hard statistics. In fact the last couple of times the unemployment rate spiked housing prices soared the following year, as pointed out by Stuart Wemyss of ProSolution, Game of Mates author Dr. Cameron Murray, and others:</div>
 
<div class="separator"><img src="https://1.bp.blogspot.com/-mGeIhomU-Rw/XsDARe3SG3I/AAAAAAAA1xg/AF7pCtVj6yImNusAc2_soCsN-9f2dwlHQCNcBGAsYHQ/s640/A3.jpg" width="640" height="366" data-original-height="423" data-original-width="738"></div>
 
<div>There's also an enormous fiscal stimulus washing through, comfortably dwarfing anything we've seen in recent decades. </div>
 
<div class="separator"><img src="https://1.bp.blogspot.com/-SwOd64SloIQ/XsDAdNa9cVI/AAAAAAAA1xk/IA2iutyq4sE-ulOJVokqdP6KWZMNVqNCwCNcBGAsYHQ/s640/Stim.jpg" width="640" height="638" data-original-height="738" data-original-width="739"></div>
 Boyle's 3 drivers today In that context, here's what's happening with Boyle's 3 key drivers today. Supply is extremely tight at the moment. Dwelling construction is plunging towards 70-year lows and vendors aren't listing either. <img src="https://1.bp.blogspot.com/-ituPSwbTdvU/XrNkMZcBltI/AAAAAAAA1lM/lSj4XGqL1Gcc-lP5wKWKzjVlXG5YWXJ-gCNcBGAsYHQ/s640/CL2.jpg" width="640" height="386"> 
<div>Source: CoreLogic</div>
 Lending rates, meanwhile, are at the lowest level in modern history. <img src="https://1.bp.blogspot.com/-HHbGid402-g/XrNlXdwQxnI/AAAAAAAA1lc/Fd54mmUYX1kJWedMT-5JdHyEbCZFOZD3ACNcBGAsYHQ/s640/CL3.jpg" width="640" height="398"> 
<div>This effectively allows borrowers to take on bigger mortgages, as I showed in my recent post on lending trends. ANZ have just noted the same thing: <div class="separator"><img src="https://1.bp.blogspot.com/-bGysfQwD18o/XsDAo9GSxRI/AAAAAAAA1xs/Vx2-pm8vZHE32TUM-20dz-8UmDRRD4DyQCNcBGAsYHQ/s640/ANZ1.jpg" width="640" height="448" data-original-height="801" data-original-width="1143"></div>
 The big unknown factor at this stage is population growth.
</div>
<div> </div>
<div>My base case expectation or scenario is that within the next few months the powerful interests such as the Property Council, Australia's universities, the airlines, Tourism Australia, and big business at the top end of town will have forced the government's hand to reopen the borders, albeit with a period of enforced quarantine.</div>
 
<div>As for the thesis that things will be totally different after COVID-19...well as a gallant but struggling home-schooler I reckon that's total garbage! People can't wait to get back and out to spend, socialise, travel, go to work, and holiday again.</div>
 It's just the way we're designed, we're pack animals. 
<div class="separator"><img src="https://1.bp.blogspot.com/-r9TZrsC6zMw/XsC1SYxsobI/AAAAAAAA1xA/_k9XLZBNywgB_0ApBK_96zfH9-jzlSPNACNcBGAsYHQ/s640/JT.jpg" width="640" height="308" data-original-height="361" data-original-width="747"></div>
<div> </div>
<div>And moreover, Australia will likely be seen as one of the safest and most desirable countries on earth in which to live.</div>
<div>
 PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
</div>
</body></html>

pwargent-M4siyDbqQY

The three drivers of property prices: Pete Wargent

<html><body>
With another federal election now passed all the political rhetoric about infrastructure will be buried until the next election in three years’ time. Sadly, in Australia our elected governments are only interested in the one thing – taxes.
Since the early 1980’s politicians have conveniently discussed the construction of a high – speed rail link along the east coast where typically nothing has happened, although you can be guaranteed that it will be mentioned again prior to the next federal election. In 2013 the High Speed Rail Study Phase 2 Report estimated that a conventional High Speed Rail Express trip from Sydney to Melbourne would take 2 hours and 44 minutes (about the same time it takes to check into an airport). Sydney to Brisbane would take 2 hours and 37 minutes. Again these reports end up in the too hard basket.
Sydney is now recording the highest prices ever recorded with no signs of easing as the official cash rate keeps going down and this will be the case for easily the next decade. What is urgently required is a high – speed rail link from Sydney to Newcastle and Sydney to the Southern Highlands then to Wollongong. This is the only feasible way that property prices will ease given it’s now urgently required that these three cities are inter – connected.
In 2013 CoreLogic reported that the number of Australian suburbs with a median home value in excess of one million dollars was 264. Their latest data now indicates that this has now jumped to 570.
To provide a frightening case study in June 1992 I sold a home in Ourimbah Road Mosman for $320,000. Every two years I provide the owners with an updated weekly rental and value as the subject property is in a Superannuation Fund. In 2002, our estimated value was $775,000 to $800,00 with a rental of $600.00 to $700.00 per week. In 2006, our estimated value was $1,150,000 to $1,250,000 and the rental $900.00 to $925.00 per week. In 2014, our estimated value was $1,550,000 to $1,600,000 and the rental $1,500.00 to $1,600.00 per week. This week I assessed the property for 2016, our estimated value was $2,300,000 to $2,500,000 and the weekly rental was now $1,800.00 to $2,000.00 per week.
Little wonder the retiring Reserve Bank of Australia governor Glenn Stevens had plenty to say this week on the Australian economy in his farewell speech. Ultimately, low interest rates could only do their job when “someone somewhere has both the balance sheet capacity and the willingness to take on more debt and spend.” Obviously aimed at the federal government to start building better infrastructure in Australia. Private sector debt in Australia for companies equates to 125 per cent of GDP where the government’s debt sits at 40 per cent of GDP.
It’s quite simple that the Sydney property market needs to expand to Newcastle, Hunter Valley, Southern Highlands and Wollongong. Our federal government is spending money on public servants and social services with very little going into new infrastructure which would then drive development, employment and ease the ever growing property prices. Sydney in this instance would be the perfect test case to identify that if you get all the market machinations right you can ease property prices.
The only problem with this is that nobody wants to push and prod the elected governments of the day into direct action. It’s high time politicians became accountable instead of prime ministers claiming the mantle as being the infrastructure prime minister. In a report on High Speed Rail I read: “fast trains to connect the eastern seaboard cities of Melbourne, Canberra, Sydney and Brisbane are feasible, practical and profitable today. The project can be done for about $30 billion, about a quarter of the cost estimated on old paradigms in 2013. And it can be done in less than seven years, not the 30 to 35 years previously suggested.”
“The trains could be the 21st century equivalent of the Snowy Mountains Scheme, and would need little or no direct government funding.”
So one needs to ask the question – why then is nothing happening? Unfortunately, the answer may well be that Australian politicians have no train of thought.
<h5>MOSMAN – 2088</h5>
Number of houses on the market this time last year – 47
Number of houses on the market last week – 42
Number of houses on the market this week – 51
Number of apartments on the market this time last year – 41
Number of apartments on the market last week – 41
Number of apartments on the market this week – 44
<h5>CREMORNE – 2090</h5>
Number of houses on the market this time last year – 2
Number of houses on the market last week – 7
Number of houses on the market this week – 10
Number of apartments on the market this time last year – 18
Number of apartments on the market last week – 17
Number of apartments on the market this week – 16
<h5>NEUTRAL BAY – 2089</h5>
Number of houses on the market this time last year – 2
Number of houses on the market last week – 7
Number of houses on the market this week – 8
Number of apartments on the market this time last year – 25
Number of apartments on the market last week – 20
Number of apartments on the market this week – 20
ROBERT SIMEON is a director of <a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> and has been selling residential real estate in Sydney since 1985. 
He has also been writing real estate blog <a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> since 2000.
</body></html>

robertsimeon-hRNTwJyXkQ

Blame our governments for high property prices: Robert Simeon

<html><body>
Generalisations about property markets are a major source of misleading information for investors.
The worst examples usually emanate from economists who speak about “the Australian property market” as a single homogenous entity. 
A statement such as “Australian house prices rose 7 percent last year” implies there was 7 percent growth across the nation, when it reality there were a few locations with double-digit growth, some with minor movement, many where prices hardly moved at all and others where prices went backwards, in some cases a lot.
We’ve had three years of empty rhetoric about property prices “soaring” and bubbles emerging, all based on a long-overdue revival of the Sydney market and action in some parts of Melbourne.
Even speaking about what happened or will happen to prices in a single major city is too much generalization to be of any use to buyers and sellers.
The entity described as “the Sydney property market” is a place with over 700 suburbs, with markets ranging from $370,000 units in Liverpool to $900,000 houses in Rouse Hill to top-end locations like Mosman where the median house price is $3 million.
Distilling all of that and more into a statement such as “Sydney property prices rose 3.6 percent in May” is the hallmark of lazy, incompetent analysts whose primary interest is publicity rather than being useful to consumers.
A study of the latest Market Monitor from the Real Estate Institute of Queensland provides plenty of evidence that generalised single-figure numbers to describe a large city are both pointless and misleading.
The report finds that the median house price in the Brisbane City LGA rose 6.1 percent in the past year. That’s the figure that 99% of media would report, indicating that Brisbane has a solid market but one that isn’t booming the way Sydney did until recently.
But Market Monitor delves deeper and provides figures for individual suburbs, revealing there are plenty of places which did a lot better than the generalised figure and a few where median prices were in reverse.
Middle ring areas in the Brisbane Southside precinct did well in the past year, including Coorparoo (up 11 percent), Holland Park West (up 12 percent), Macgregor (up 17 percent), Sunnybank Hills (up 12 percent), Eight Mile Plains (up 10 percent), Mansfield (up 11 percent), Wishart (up 15 percent) and Robertson (up almost 20 percent).
Similar areas on Brisbane City’s Northside have also out-performed, including Banyo (up 17 percent), Grange (up 16 percent), Hendra (up 13 percent), Wooloowin (up 16 percent), Sandgate (up 17%) and Mitchelton (up 11 percent).
In contrast, there is evidence of falling values in upmarket areas like Hamilton, Ascot, St Lucia, Teneriffe and Hawthorne, all suburbs with median house prices above $1 million. But the median price for New Farm (median house price $1.5 million) is up 15 percent.
The report also shows the impact of over-building of inner-city apartments, with the median unit price down 1.4 percent in the CBD, down 4.5 percent in Fortitude Valley and down 1.7 percent in West End. Median weekly rents have fallen in the past year in several of the inner-city unit markets, according to the REIQ data.
Heading south to the Logan City part of Greater Brisbane, the generalised figure indicates the median house price has risen only 4 percent in 12 months. But suburbs with annual growth above 8 percent include Browns Plains, Heritage Park, Loganlea, Waterford and Waterford West. Logan Central, Forestdale and Woodridge all had annual growth in the 13-15% range.
Logan City’s opposite number in Brisbane’s far north is the Moreton Bay Region, which has emerged recently as the No.1 rising market in the metropolitan area. Most suburbs in this LGA have median house prices in the $300,000s and $400,000s – and affordability is a major driver here. 
The generalised figure says house prices have risen 5% in 12 months, but many suburbs have done better, including Albany Creek, Banksia Beach, Bongaree, Burpengary East, Caboolture, Clontarf, Ferny Hills, Narangba, Toorbul, Warner and Woody Point - all of which recorded annual growth between 8 percent and 12 percent. Upmarket Newport on the Redcliffe Peninsula also grew 12 percent.
On the Gold Coast, house prices rose 5.8 percent on average, but there are 20 residential suburbs with growth between 10 percent and 20 percent.
By contrast, the apartment market is under-performing, with the median unit price in Surfers Paradise largely unchanged, while the medians for Broadbeach, Labrador and Mermaid Beach all dropped 5 percent in the past 12 months.
Surfers Paradise, Broadbeach and Mermaid Beach all have median unit prices considerably lower than five years ago, while Labrador and Southport are unchanged.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a>
</body></html>

Three years of empty rhetoric about property prices “soaring": Terry Ryder

<html><body>
Generalised commentary masquerading as analysis is the curse of the real estate consumer.
Much of what appears in mainstream media about residential real estate discusses Australia as a single market. That’s an early clue for consumers that the commentator has shallow knowledge.
If you’re reading something from an alleged expert and they’re talking about what’s happening with “the Australian property market” or forecasting trends with “Australian housing prices”, turn the page because you’ve tuned into a charlatan.
Too much has been written about “the Australian property boom” and “the national affordability crisis”.
A core problem is that so much of the commentary comes out of the Sydney and the situation in our biggest city dominates the thinking and attitudes of commentators. We have outcry about a national problem that generally does not exist and “solutions” that will slug the whole nation to fix issues isolated to a small section of the national geography.
The 20 million Australians who don’t live in Sydney must wonder what the fuss is about. Any resident of Perth, Adelaide or Darwin would be bemused by the ongoing debate about soaring prices, affordability catastrophes and the need for major national action.
Many of the worst culprits for generalised and usually misinformed commentary are based overseas. Often they’re major international organisations or ratings agencies which seek to manufacture publicity by making dire warnings about Australian real estate based on generalised national statistics pumped up by the strength of the Sydney market.
There are plenty of local pontificators making the same mistake, most of them economists who should never be consulted for comment on residential real estate, a subject that’s not within their area of expertise, if indeed they have one.
Anyone who thinks Australian has had a national property boom recently should compare the price growth statistics for the capital cities in 2016 with the results in 2002 and 2003.
Back in 2002/2003, the last time we had a genuine nationwide boom, every capital city had sharply rising prices. In 2003, according to the ABS, house prices grew at least 13 percent in every one of the eight capital cities, including four where prices rose by more than 20 percent.
The ABS figures for last year have a very different look about them.  Only Melbourne and Sydney managed double-digit growth and only just. Two cities, Perth and Darwin, recorded falling prices, while Brisbane, Canberra and Adelaide managed only moderate (4 or 5 percent) rises. Hobart rose 8 percent, according to these numbers.
When you compare this with that genuine boom at the start of the century, it’s apparent that even Sydney’s growth was tame compared with back then. Melbourne, meanwhile, has mostly been below 10 percent with its annual house price growth in the past four years, only recently bursting out into double digits (and now leads the nation, according to most sources).
Now the growing chorus among the generalised pontificators is that “the Australian property boom is over”.
If they’re talking about Sydney, they’re probably right. But out there in the heartland beyond the biggest cities, different things are happening, including places where markets are rising, even as Sydney is subsiding.
They include regional New South Wales, which now has far more rising markets than Sydney does.
The same is true of regional Queensland, which has many ascendant markets (as well as a few that you might still want to avoid), much more so than Brisbane at the moment.
Melbourne is less advanced than Sydney in its growth cycle, so has more time to run with price growth than Sydney does.
Both Hobart and Canberra have sparked to life recently on the back of improving local economies and are likely to continue heading in the opposite direction to Sydney.
Adelaide’s market is quite busy but is unlikely to deliver strong price growth, other than in selected pockets, because it lacks the economic and population growth impetus of other major cities.
Perth has been going backwards throughout the four years that Sydney has been advancing – and now, as Sydney fades, Perth is showing the early signs of recovery.
Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/">hotspotting.com.au</a>. You can <a href="mailto:%20%3Cscript%20type='text/javascript'%3E%20%3C!--%20var%20prefix%20=%20'ma'%20+%20'il'%20+%20'to';%20var%20path%20=%20'hr'%20+%20'ef'%20+%20'=';%20var%20addy38821%20=%20'ryder'%20+%20'@';%20addy38821%20=%20addy38821%20+%20'hotspotting'%20+%20'.'%20+%20'com'%20+%20'.'%20+%20'au';%20document.write('%3Ca%20'%20+%20path%20+%20'/''%20+%20prefix%20+%20':'%20+%20addy38821%20+%20'/'%3E');%20document.write(addy38821);%20document.write('%3C//a%3E');%20//--%3E/n%20%3C/script%3E%3Cscript%20type='text/javascript'">email him</a> or follow him on <a href="https://twitter.com/hotspotting">Twitter.</a>
</body></html>

Property Prices

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Property Prices

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News