Home Owner Mortgage Costs to Rise

The chairman of Westpac has stated that his bank will no longer use higher-priced business loans to subsidise residential property mortgages. He maintains that funding costs have skyrocketed, and the bank does no favours to anyone by pricing home loans at unsustainable rates. If the banks weren't making such outrageous profits, I suppose home owners might agree.

Google in Real Estate

The launch of Google Real Estate Search on Google Maps in Australia, the US and New Zealand was a bit of a surprise to the property home sales industry. Google have now announced they are extending the real estate facility into the UK and German markets shortly.
So what are they actually doing? They allow free uploads of sale listings and rentals, obtaining their revenue from advertising rather than from agency subscriptions or one-off payments by owners as do the existing commercial portals.
The sort of problems that one can foresee are spurious listings designed to promote a real estate agency. If you don't have to pay to list, you could put dozens of properties on Google and just respond to queries "sorry we just sold that one, but you might like ...". The biggest battle for every real estate agency is gaining contacts who want to buy or sell, and agencies will try to exploit the Google function to obtain such contacts.
Some agencies do this now on Domain and Realestate.com, by not removing properties after they are sold, to give the impression they have more properties available than they really do have. It will be interesting to see how Google copes with this problem.
Also, Google is likely to end up flooded with properties that have been sold or withdrawn, because there is no incentive to remove your listing.
Given that potential buyers have free access to properties listed on Domain and Realestate.com, it is not immediately clear why they would also go to Google, unless Google can build up significant listings of properties that are not on the commercial portals.
As for the real estate agencies themselves, they have little motivation to encourage Google Real Estate in place of the major commercial portals, because they usually recover the advertising costs of those portals from the vendor. The main losers in all this are likely to be the proliferation of minor bit players in the internet property advertising field, which might not be a bad thing

Sustainability Declaration in Queensland

A sustainability declaration (SD Form) has been introduced in Queensland. It is a compulsory checklist that must be completed by the seller when selling a house, townhouse or unit from 1 January 2010. The declaration will inform buyers about the sustainability features of a property and increase community awareness of the value of such features. The declaration identifies the dwelling’s environmental and social sustainability features in four key areas: energy, water, access, and safety.

Sounds a great idea, doesn't it? Presumably this is in response to some huge outpouring of demand from the house buying public for this new information?

However there has been much adverse comment. One researcher claims to have spent 6 hours as part of a team of 15 lawyers reviewing the Sustainability Declaration, and says their findings are frightening.
"This Sustainability Declaration doesn’t just apply to your house. It covers the shed, garages, carports, fences, masts, antennas, retaining walls, Bali huts, pergolas, and gazebos – any structure on your land.
"The legislation says “Where the buyer incurs a loss or expense as a result of a false or misleading declaration, the seller of the building is liable to compensate the buyer for any loss or expense. A compensation claim may be made through a court.” A lawyer’s picnic. Open ended compensation claims through the courts."
Here are a few of your responsibilities under this act.
Not preparing, displaying or providing a declaration - $2,000 fine for the owner, $10,000 for the estate agent, with no excuse acceptable, no mitigating circumstances. Get detected and you get done. There is no need for the prosecution to prove that you had a guilty mind, just that you didn’t have the declaration.
Needless to say Queensland advertising is filling up with professional assessors offering to write the reports for you. Meanwhile the blogosphere is filling up with outraged remarks like "I don’t recall any of this being mentioned prior to the election just a few months ago". Still I suppose it will create more employment, spawning a whole new industry of bureaucrats.

Westpac still taking stick

Gail Kelly is desperately trying to restore her image after the disastrous recent PR from an over-the top interest increase, and a rather childish banana smoothy advert. Now Gail is talking up the importance of customer service and the bank's commitment to relationships and reliability. Isn't that exactly what the original PR problems were all about?
Adele Ferguson of the SMH goes so far as to say Westpac "has been the least kind to home loan customers", with home loan variable rates consistently an average 17 basis points above the competition.
Apparently this is the first time in a decade that the net interest margins of all the big four banks has expanded. Thank you Kevin Rudd for your assistance to the banks, but what about the poor home owners trying to pay off their mortgages during a financial crisis?

"Home Loans Set to Dive"

There were reports over the weekend that house prices will soar for the next three years. I am doubtful of this. As interest rates climb, there will be some first home buyers who over-committed, and there are already reports of investors abandoning their properties and moving into shares. Of all the signs that had indicated house prices would increase, really it's only the increasing population of Sydney that remains valid. First home owners grant is over, interest rates have gone up and are clearly going to go up more, and the NSW state government is in no position to slash stamp duty on house sales. So it seems to me time for "buyer beware" in more ways than just doing building inspections.
The SMH today rather reflects my view. "End of home grant boost to hit mortgate market", says Stuart Washington, quoting a report by the Market Intelligence Strategy Centre (MISC) that predicts a $14 billion decline in mortgage value over the next year.
MISC argues that the drop in value of mortgages written next year could be largely avoided if smaller lenders obtained new sources of lending.

Pain in the Postcodes

The SMH reports that tenants are being forced out of their homes as "large numbers" of investors default on mortgage payments. It seems to me one of the most invidious aspects of NSW property law is that if a tenant is on a continuing lease they can be given just 30 days notice if a buyer wants vacant possession. If an owner wants to move in to his investment property, he must give 60 days, which is still pretty hard on the tenant. But the 30 day rule for a new owner is surely not sufficient.
Of course, if the tenant is on a fixed term lease, then that lease is unbreakable, and the property has to be sold "with sitting tenant". Ray White Beecroft property management department attends auctions of properties that they are managing to make sure that the auctioneer tells buyers of the tenant's situation.

Bathroom Renovation Problems - grout removal

The owner of the property whose patio was grossly stained with grout during bathroom renovations has been trying to obtain fair compensation from the contractor responsible, but so far the offer made is considered quite inadequate.

What would you say was fair compensation for a brick patio changed from this to this, by grout spilt and ignored by the bathroom renovation team?The owner has spent many hours of his own time and several hundred dollars on phosphoric acid substitute, to clean off the worst of the grout, as reported in earlier blogs. Yet the renovator responsible has offered little more than to repay the cost of the materials used! If there is no improved offer, the owner will be applying to the local court for fair compensation.

Fencing Problems

The problem reported earlier (1 Dec) has been neatly and effectively fixed, as shown here.











However here is a cute photo of a dog exploiting a gap in a newly installed fence.


Ray White Beecroft property management department not only manages new fence installation, but also will work with the fence company to ensure speedy rectification of problems like these.

Meadowbank Rents going up!

According to RP Data, Meadowbank units have some of the fastest growing rents in all Sydney, with median rents jumping from $320 to $380 over the past 12 months.
Of course this might be affected by the number of new, and more expensive, properties coming on the market lately along the Meadowbank riverfront. It would be interesting to see how RP Data corrects for this.

Bathroom Renovation Problems

Another example of the problems that can arise during bathroom renovations is when contractors go through the roof to install lights (as shown here, the ventilation trunking is crushed).






The lesson is to photograph everything before renovations start! Then there can be no dispute later about what damage was caused by the bathroom renovation team.

Bathroom Renovation Problems

During the bathroom renovation discussed earlier in this blog, the tilers managed to complete all the tiling without making a hole for the heated bathrail switch (as shown here - the wording saying "sw maybe")

















and had to go in through a cupboard in the living room to find where the hole needed to be made. In the process they demolished the side of the cupboard.
The owner had to draw the state of the cupboard to the bathroom renovation company's attention after they declared the job was finished! But they then turned up and did a very neat job fixing the cupboard.

McMansions explained

There was a very good article in the Sydney Morning Herald at the weekend describing how Australia evolved into the McMansion habit. It describes how people's expectations grew from small fibro cottages at the end of the second world war to the monsters we now expect as our first houses. The key factor seems to have been the willingness of banks to lend a progressively higher percentage of the value of the house. Suddenly new first home owners could have whatever size house they wanted, and all it would need would be to pay off the mortgage. And the honeymoon interest rate seemed to make that just too easy. All very fine until interest rates start going up again.

Michael Klim comes to Beecroft!

Michael Klim came to the Just For Him menswear shop last weekend promoting his product range. Here the owner, Lisa, shows off the Klim range in her superb new shop at 1/97 Beecroft Road (between the two Beecroft traffic lights).

The shop is much larger than it appears from outside. Here is a photograph of a corner of the downstairs showroom.

Interest Rates going up again

The Reserve Bank raised interest rates for the third month in a row, again by 0.25%.
So Kevin Rudd's prediction in July that official rates would rise by almost 1 per cent within the next 12 months is nearly achieved after just four months! It's looking as though his "almost 1%" was an underestimate.
Westpac caused a bit of an upset by immediately raising their rates not just by 0.25% but by 0.45%, blaming the real cost of borrowing money from abroad.

Bathroom Renovation problems - grout removal

An update on the bathroom renovation problems reported on 24 Nov. The owner continues to apply the very effective Phosphoric Acid Substitute from Aqua mix, and it is slowly removing the ingrained spilt grout on his patio. The most successful technique he has found is to mix PAS with three parts of water and pour on each stained tile, then leave it for a while and then wash the tile with high pressure water using a Karcher.




But with about 1000 tiles to deal with, it is a slow process, and there is still a lot more work needed. The owner is now negotiating compensation from Oxford Bathrooms of Thornleigh, the bathroom renovation contractor.

Fencing Problems

Noting the recent blogs about bathroom renovation problems, I have received a complaint from a local home owner about a fence that was installed between his house and a neighbour.
















The owner has a small dog, which easily goes under the gap. It made me check on the web sites of other fencing companies and this pic shows how it should be done:
















Always the question is, what did the contract call for?

Australian Houses are TOO BIG

Yesterday I reported how Australian homes are now officially the largest in the world. Greens MP John Kaye pointed out that such large houses outrank those of any other country in the world in terms of their carbon footprint as well as their size. Large houses need more energy for lighting, heating and cooling. What he doesn't mention is that a large part of the carbon footprint of a house is in the concrete that goes into making it, so again the bigger the house the more emissions from the concrete that went into building it.