New Blog on Local Issues

It's good to see that the Beecroft Cheltenham Civic Trust has started a blog, to enable them more rapidly to report on major issues affecting Beecroft and Cheltenham residents.
The blog's address is BCCT2119.blogspot.com, if you want to be kept informed on issues like the M2 Widening Project and the Hornsby Shire Housing Strategy, I suggest you become a follower of their blog.

Selling the family silver continued

For a great read, go to:

http://www.dailytelegraph.com.au/news/nsw-act/eric-roozendaal-flees-his-dud-power-deal/comments-e6freuzi-1225971781002

78 comments all with one recurring theme - condemning the labour state government for shamelessly selling off taxpayer assets in the dying days of their time in power!

About the most charitable comment was this one:
"Since parliament will not meet again until after the election, why do election conventions not apply here. Election conventions ensure that no major decision is made that will bind the next government. Even though the election has not yet been called, the convention should apply." Surely that convention should also have applied to the recent signing of the contract for the M2 Widening Project.

Three months ago this blog posted a letter from Richard Talbot on this topic, and it seems everything he forecast is coming to pass.

Kirkham Bridge Update

According to the BCCT, Transurban does plan to close the Kirkham Road bridge over the M2! The closure would be "at least six months", but a lot of Beecroft and Cheltenham residents are doubtful about that promise, remembering what happened with the Copeland Road bridge across the railway. What is most worrying is the statement "Hornsby Council has been unsuccessful in their attempt to get the operators to establish alternatives". There should be no discussion on this, the approved plan calls for single lane working, why are the authorities seemingly powerless to enforce that plan?
Closure could happen as soon as January 2011, and it has been suggested that the required "public consultation" will be initiated late in December with submissions closing early in January. Democracy? Come on Kristina, you signed off on this project when you were Planning Minister, now enforce what you signed off on!
Meanwhile everybody should be writing to their MP, State and National, to the RTA, and to Transurban and anyone else, to make clear our concern at what would be a gross abuse of democracy.

No Mandate to Sell Electricity

Taxpayers are suddenly waking up to the fact that one of our biggest remaining assets has been quietly sold off! Presumably the money will be used to pork barrel before the election in a last ditch attempt to sway the more gullible members of the electorate!

Empty Nesters

The number of couples living without children at home is about to outstrip those with kids, for the first time in a very long time. The Australian Bureau of Statistics report showing this says the ageing population and increasing number of empty nesters will contribute to a steep rise in households without children.

Swan's Bank Reforms

Perhaps the best comment on the long-awaited bank reforms was by Terry McCrann in the daily telegraph. "It takes a very special kind of stupid to craft something that is both pointless and destructive."

Better Homes Realty

In November Better Homes was advertising a property in Cheltenham Road for $700,000 prior to auction, but after it was passed in they increased the price to a more realistic $875,000. I thought that method of conning would-be buyers into paying for building surveys was actually against the law?

Sales Agreements

In October I reported on a McGrath exclusive sales agreement that requires vendors to give thirty days notice of terminating the agreement. What the vendor telling me this didn't know was that, once you give that notice, McGrath remove the sign from outside the property and take the listing off the internet! Meanwhile the agency agreement is still in force and the owner can't risk signing up with anyone else!

PS Soon after posting the above, McGrath sent the vendor a letter releasing him from the agency agreement, but including the phrase "if the property is purchased by somebody that has been introduced by McGrath (agency name) during the period (dates of the original contract) or within the next 90 days commencing (date of this letter) a commission fee of (commission in the contract) will be payable on completion of the sale."
Taken to its extreme, this allows McGrath to claim the full commission if anybody who entered their office over this entire seven month period ever buys the property at any time into the distant future!
The only redeeming feature is that the paragraph does not specify to whom the commission is to be paid, so the vendor would meet this 'obligation' by paying commission to the agency that negotiates the sale!
Even without that flaw in the wording, I am assured that this sort of open ended 'payment for nothing' clause would never be enforced by a court, but it has caused deep distress to the vendor.

Rates on Hold this Month

The Reserve Bank has left the official cash rate on hold at 4.75%. Given the dramatic fall in value of house sales that followed the unexpected rise in November, this is good news indeed for owners of houses in Australia.

Green Offset in Hornsby Shire Planning

Greens Councilor Andrew Martin of Hornsby Shire Council writes an interesting letter for the Monthly Chronicle, on the topic of Green Offsets used by the Council when assessing Development Applications. He is concerned that several established areas of Blue Gum High Forrest have been "offset" for relatively small sums, $10,000 or $20,000, which of course are trivial in relation to the enhanced value of the development once the trees are removed.
Under the Green Offset policy, the DA is approved on the understanding that the removed Blue Gum will be replaced with perhaps four sapplings in another area. But Clr Martin points out that the result is a gradual removal of vegetation from building plots into existing already vegetated reserves, which will adversely change the character and quality of our suburbs forever.

Questions about M2 Financing

Here is an interesting comment off the internet, relating to the recently announced new financing for the M2 Widening project:
“Out of $740 million of new loans given by banks to Transurban, $465m are only for refinancing old M2 debt, leaving just $275 m for a project which costs $550 m to build. Where will the other $275 m come from? Transurban already sits on a mountain of debt which is continuously being rolled over (or should we say tolled over), but not paid back."

National Broadband Network Justification "weak"

An international study finds that the benefits claimed for the NBN have been "grossly overstated". Evidence to support claims made for fibre-to-the-home networks was "surprisingly weak". The study says, "All else equal, faster is better. But faster technologies don't always triumph, witness passenger hovercraft, maglev trains, and supersonic airliners."
South Korea is cited as the world leader in providing fibre to homes, and national productivity dropped from 7.6% to 3.8% since their program was begun. The study finds this drop in productivity might have been partly because of "the massive increase in online gaming, facilitated by the high speed broadband."
When launching the NBN, Kevin Rudd predicted 78% of productivity gains. The basis for this appears to be a paper from Australia's Communications Department referring to gains of 59% to 78%, available from all forms of new technology, from biotechnology to containers, not just fibre broadband. Rather selective use of statistics, Kevin!

Kirkham Bridge - Transurban Position

Apparently the RTA and Transurban have advised that they don't have authority to demolish the Kirkham road bridge, their present approval covers single lane working over the bridge during the span extensions. It seems they are considering options, including demolition as a way to speed up the work, but would need extensive community consultation and a major planning approval process, before they could take up that option.

M2 Upgrade Conditions of Approval

This document, signed on 21 October 2010 by NSW Department of Planning, is available on the net at http://www.hillsm2upgrade.com.au/files/101021_M2%20Upgrade_Conditions%20of%20Approval.pdf.

It talks at length about the project's effect on waterways and wildlife, but makes no mention at all of disruption to the lifestyles of the people who use the Kirkham Road bridge over the M2 between Kirkham Road and Beecroft Road. Obviously if the bridge is completely closed even for a few days that would seriously inconvenience school kids who walk to and from school, and commuters who walk from home to the railway and bus stations in Beecroft.

One would like to think that the lack of information indicates that there is no intent to interrupt access to that road bridge. So why the rumours?

Section 5, "Community Information, Consultation and Involvement", requires the project to establish and maintain a website for provision of electronic information associated with the project. This will include a copy of each current strategy, plan, program or other document required under this approval.

A telephone number is to be provided on which complaints and enquiries about construction and operation activities may be registered, along with a postal address and an email address. These shall be published in a newspaper circulating in the local area prior to the commencement of construction and prior to the commencement of project operations. The details shall also be on the website mentioned in Section 5. So far as I can tell none of this has yet happened, so work cannot yet commence.

Section 5.4, Community Consultation, requires the project to prepare and implement a Community Communication Strategy for the project. The specification for this document is extensive, and so far as this blog can determine no such document has yet been published. So again presumably work cannot yet commence.

Section 6.3 requires a major Project Management Plan for the widening of the Norfolk tunnels. If there was a plan to demolish the Kirkham Road Bridge, which would be even more disruptive than widening the tunnels, then that must surely have been mentioned in great detail in this document. One therefore is forced to assume that no such plan exists.

As soon as any more information is uncovered, this blog will post it.

Australian Home Price reports

An article by Nick Gardner in the Sunday Telegraph says that property investors are being advised to hold off from putting money into Australian homes, given low yields and limited prospects for capital gain. He quotes Shane Oliver of AMP Capital as saying commercial property is a better bet than residential.

If home owners and investors lose faith in the housing market, then there could be a surge in properties being offered for sale. Indeed arguably this is already under way. Ray White Beecroft, tracking statistics in the Beecroft and Cheltenham areas, notes there are more properties listed for sale in the area than at any time in the last two years. The last dramatic rise in listings was in October 2008, at the peak of the Global Financial Crisis, when many people had to offload investments to pay margin calls and other debts.

But rents are going up dramatically, and as Ray White Development Marketing Group explained in the recent RWB Investment Seminar, an investment property becomes more attractive to the individual investor in these conditions, getting tax relief on interest and negative gearing on the income. Finance the property on an Interest Only mortgage, and use income to pay off your household debts.

The article finishes on an optimistic note. "The situation is less of a problem for buyers looking for a home, with experts saying that as long as buyers choose a property that they will be happy to live in for a few years, they will have time to ride out any fluctuations in house prices, and should not be put off buying."

Kirkham Bridge Roadworks Plans

The Northern District Times had an article on 31 October saying the Murray Farm/Kirkham Road bridge over the M2 in Beecroft "may be reduced to one lane of traffic for 20 months while it is lengthened" as part of the M2 widening.
Transurban and the RTA confirmed to the newspaper that this is one of the options being considered for when the project begins in January 2011, but the decision has not been finalised and a variety of measures are being considered. The residents of Beecroft and Cheltenham are entitled to know what the other options are. The latest report, from the BCCT, implied that they have heard the bridge might be demolished and not replaced for "at least six months".
Does it make any sense at all to be starting a Half a Billion Dollar project when such factors have not yet been decided? Before the NSW government signed the contract authorising this work to begin, the local residents should have been given full and open facts about their intentions, and where those intentions are not yet firm, the government, and the RTA, should have listed all possible options. And that list must be exclusive, so the contractor can't come up later with a new cheaper but more destructive, option. Nor should the contractor be able to charge the taxpayer for selecting a more expensive but less disruptive option.
An RTA spokesman apparently said "The impact of the proposed bridge closure on local traffic is still being assessed." This blogger can find no word on this in the earlier RTA and M2 Project documentation.
The spokesman went on, "Consultation with residents has not yet started and will be carried out before any decision is made."
The statements available so far are ambiguous, and could be read as meaning work on the bridge won't start for six months, and might be limited to minor lane closures. But the actual wording was that "it will be at least six months before a replacement bridge is constructed."

Kirkham Bridge

The M2 Upgrade Environmental Assessment document issued by the NSW Roads and Traffic Authority says under the heading "Adjacent road network - Activities undertaken within the adjacent road network are listed in Table 53", and that table shows
"Kirkham Street/Kirkham Street Lengthening of bridge spans over M2 Motorway." Clearly that does not cover demolishing the bridge, so presumably that reading of the RTA statements must be incorrect. But what are the RTA's plans as they affect residents of Beecroft and Cheltenham?

M2 Project intentions for Kirkham Road Bridge

Dear Fellow Resident,
This is an extract from an information sheet from the BCCT:

Beecroft-Cheltenham Civic Trust President Michael Stove’s media release below, raises real concerns about the integrity of our suburbs. The loss of the bridge across the M2 Tollway, linking Murray Farm Road and Beecroft Road, as below, is unacceptable. The Trust has contacted Greg Smith SC MP, NSW Member for Epping, to lead our representations to the appropriate NSW Minister, to reduce the huge impediment that the M2 augmentation will place upon our suburbs.

The attached photo has been sent to local media. I will keep you posted!

Regards,

Colin Johnston
Secretary, Beecroft-Cheltenham Civic Trust

This is the media release by Mr Stove:

Bridge demolition will divide Beecroft

Michael Stove the President of the Beecroft-Cheltenham Civic Trust said residents were very concerned by Transurban’s intended demolition of the Murray Farm Road Bridge, ahead of the widening of its M2 Tollway.

“Transurban has not provided residents with detailed information” Mr Stove said at a weekend gathering of concerned residents and local Councillors at the bridge.

Transurban’s media message is the M2 project ‘aims to provide efficient and integrated transport for the community of Sydney’s North-West’,” Mr Stove quoted. “Murray Farm Road bridge is a key link in Beecroft – its demolition is not transport integration”, Mr Stove said.

He added: “Beecroft will be a suburb divided. How do our students get to local schools, our elderly get to doctors and chemists? There will be no local link from Beecroft Road to the Murray Farm Road area of Beecroft.”

“Our community has to put up with M2 construction, with loss of greenspace and local amenity. It is unacceptable that Beecroft residents will also be cut off from shops, services, friends and neighbours by Transurban’s ill-considered bridge demolition.” Mr Stove also noted: “Transurban advises The start of major work is expected to commence in late 2010 and is expected to take approximately two years to complete. It will be at least 6 months before a replacement bridge is constructed.”

Mr Stove commented that there is an engineering solution which should be pursued by Transurban, instead of subjecting our residents to months of inconvenience.

Contact:
Michael Stove:
President, Beecroft-Cheltenham Civic Trust
0401 991 927

Sales Soft

Interest rate rises sent a tremor through the property market yesterday with softer auction clearance rates reported. Clearance rates were 54.6%, down on the 57.5% last weekend.

Buyers Fooled by Low Quotes

Posing as a potential buyer, a Sunday Telegraph reporter phoned 85 real estate agents and asked for a price guide on a property. Almost one in three of those agents turned out to have significantly underquoted.
The NSW Minister for Fair Trading responded "A blitz on under-quoting and dummy bidding earlier this year uncovered no evidence of under-estimating prices." One wonders how the OFT failed to find any evidence at all, when the Telegraph found one in three agents doing it.
She also said "The onus should be on the buyer to do their price research instead of relying on real estate agents." Thanks Virginia. All the buyer wants is that the agent be required to tell something approaching the truth, isn't that the definition of Fair Trading?
The problem is the conflict under which the agent operates. If he underquotes to the owner, he won't get the listing. So the agent puts an optimistic price on the agency agreement, just to get that precious listing, and then starts "conditioning" the vendor to accept less.
Meanwhile the agent quotes below the likely price to prospective buyers, to persuade them to invest in a building survey before going to the auction. Having made that investment, buyers are more likely to bid up rather than throw away that initial expense.
There is an easy answer for this. Vendors have to display the contract at the sale property during Opens. Why not also require them to display the Sales Agreement?

Commonwealth Bank Ups the Ante

In a move almost forcing a government response, the Commonwealth Bank followed the RBA's announcement of a .25% rate rise with an immediate .45% rise! The banks say they have to do this because of the cost for them to borrow money, but then they declare huge profits so it's hard to accept their argument.

There is much debate between the politicians on how to prevent this, but no action. Wayne Swan said last month that he was "looking at tougher powers to increase banking competition".

Banks are not like retail shops. Bank customers can't just walk into the shop next door when the shop they normally use raises its prices. Bank customers own mortgage for many years and moving to another bank involves large fees that are difficult to quantify in advance. There is no point moving your account unless you can be sure the other bank is going to keep their rates lower for long enough to cover those moving fees.

Surely the simplest solution is just to forbid banks from charging more than the actual cost of doing the paperwork when mortgage holders move their accounts elsewhere. Then a bank would have to try to retain its customers, instead of just milking them.

Interest Rates Up

Rather against expectations, Reserve Bank increased interest rates today. It will be interesting to see how this affects house prices.

"Solar Flare-up will burn Every Pocket"

According to the Sun-Herald, NSW households will pay an extra $600 on their electricity bill over six years to cover the $2 billion cost of the Kineally government's failure to cancel the solar power scheme when concerns were first raised.

Apparently so far the government has refused to admit when it first became aware of the problem, although Country Energy was telling officials in May that the target had already been breached. The government "dithered until August" before holding its review, which only reported last week. There seems to have been no reason why the 60c tariff could not have been cut back then, or at least a sunset clause could have been put on the duration for which the 60c tariff would be paid. Instead because the government did nothing for five months, NSW taxpayers are now saddled with this enormous and quite unnecessary problem in addition to all the unavoidable factors that are forcing up energy costs.

And lots of honest and respectable businesses are likely to be forced into bankruptcy by their inability to sell the stocks of solar panels they built up, in good faith, to meet the government's promulgated solar panel program.

I am all for green policies, but this one seems to have done as much harm as the Federal government's aborted home insulation program. The cost of paying the excessive tariff is likely to delay investment in the cheaper and cleaner generating plants that NSW desperately needs.

Banning "Offers Over" Property Advertising

The Minister for Consumer Affairs in Victoria intends to ban the use of ‘price plus' in real estate advertisements, to protect consumers against agents underquoting property prices.

Rather than banning the practice, they should just make such adverts legally enforceable. If an agent advertises "Offers over $700,000", then the owner should not be able to refuse an offer of $701,000. Perhaps the law could allow the vendor a week or so delay while the agent tries to attract higher offers, but if none is received then the property should have to go to that first bidder.

Agents like to use the "offers over" method of price advertising because if you put a fixed price people usually bid under it. You might list the property for $750,000, and potential buyers think they know where they stand, but then may choose not to bid because they can't go as high as the listed price. However the vendor might be happy to accept anything over $700,000. How can the agent explain this to potential buyers if "offers over" are not permitted?

To advertise "Offers over $700,000" when the owner has stated that nothing under say $730,000 will be accepted is clearly deceptive and needs to be stopped. But I see nothing wrong with advertising that property as "Offers over $730,000" with hopes that a bidding auction can be started ending at or above the $750,000 the owner really wanted.

Keneally acts to bring down electricity costs

Kristina Keneally says she will cut electricity bills by delaying infrastructure. Smacks of the NSW government's policy for roads and rail! Now we are to be exposed to power cuts as well as jammed roads and packed trains.

Apparently Energy Australia has given in to government pressure and agreed to defer spending. Why not? They will be able to charge more next year for doing the same work more urgently.

It seems the government's long term plan is to do nothing and prepare to blame the Liberal government next year for both increased electricity bills and power cuts. And of course in the same paper the government brags of having made a surplus because of increased house sales and tax revenue (sales tax and the new ad valorem tax). Is it fair to say you have made a profit by not spending on essentials?

NSW Solar Panel Scheme slashed

In a blog on 7 October I forecast that the NSW government would have to cut the 60c tariff they had set on solar panel systems on people's houses. And indeed today they have done so, effective midnight yesterday!

To put it nicely, this will throw the solar industry into turmoil.

Just as with the sudden cancellation of the Federal government's much reviled home insulation program, this sudden brake on solar panels is going to hurt a lot of people who have invested in the equipment and supplies involved in the scheme. With the home insulation, many entrepreneurs had stockpiled warehouses full of batts, and were left with unsellable stock. Now, solar panel stockists are going to be left with warehouses full of unsellable panels. And part of that problem is that the cost of panels is going down all the time, so those stocks will become increasingly unsellable.

Given the hazards associated with the insulation scheme one can sympathise with the decision to make an immediate cut. But this decision about solar panels could surely have been done a bit more sympethetically, perhaps phasing down the 60c tariff progressively? But most importantly the NSW government should never have allowed the 60c tariff to apply in perpetuity! In yesterday's announcement they confirm the high tariff will continue to be paid, apparently indefinitely!

It just seems strange that a scheme reported in the papers as being so obviously flawed was allowed to continue for nearly a month without any transition phase, and is now suddenly dropped.

Population Big Enough

A poll published by the Australian National University finds that the majority of Australians believe the country has enough people already. "Australians would prefer natural growth to increased immigration."
The report found that "Concerns were mainly about infrastructure and the economy, rather than cultural diversity." The report listed house prices, road congestion, and overcrowding in cities as the driver for those concerns.

NBN Takeup 11% in Tasmania

An article in The Australian reports that telcos will be provided with $3Billion ($300 per customer) to lure households into connecting up into the National Broadband Network. Results in the first trial, in Tasmania, suggest it might take even more than this!
The NBN project originally planned to run the new fibre cable to the street outside each house, with a total budget of $43 Billion. Now, recognising that many (most?) homes wouldn't pay to connect across their front lawn to the road, the NBN is proposing to wire up to the house. It is not clear whether their budget includes the cost of remediating pavements, drives and gardens in each of the 10,000,000 houses involved.
But that still leaves a large cost in wiring and equipment inside the house, to access the new network. The latest proposal is that telcos will contribute $300 towards that, but of course that extra money had to be paid for by the Federal Government.
In Tasmania apparently about 50% of households consented to having the connection provided, but only 11% have subscribed to the new high speed (and high price) services that will be available.
Mr Turnbull recently called the NBN "reckless and imprudent".

Councils lapping up your rates

The Daily Telegraph today has an excellent report on where your rates go - and most of the money doesn't go to benefit the ratepayer. The average household pays $998 every year. Of this the report claims $820 goes on bureaucrats and workers. Of course the councils also tax the public with special rate rises, parking fees, fines, and user charges, so there should be lots of money available for the ratepayers. But no, the latest Department of Local Government data shows, per person, $30 goes to health and environment, $83 on recreation, $65 on community services.

The key point in the report is that councils could merge to reduce costs and share services. But which public servant wants to volunteer to become unemployed? Oh no, wait, they wouldn't be sacked, but they would be put on the temporarily unassigned roster and have nothing to do all day, instead of feeling important managing their swollen departments.

Genia McCaffrey recently told the NSW Councils they need to modernise. "You can do it yourself or have it thrust on you," she said, hopefully prophetically.

Gillard Plan to Cut Electricity Bills

The latest scheme by the Federal Government is to make the electricity retailers replace old electrical appliances in all our homes. The proposal is that the retailers be banned from passing the costs on to consumers in higher electricity bills, though I cannot imagine the retails agreeing to that - or at least if they agree it will be because they have worked out how to pass on the costs, which would of course be enormous. And of course the consequence of the activity would be to reduce demand for electricity, which will guarantee the retailers oppose the plan. Rather smacks of Rudd's proposal to tax the miners, relying on the miners generosity and public spiritedness. It will be interesting to see how the proposal survives what can be expected to be a major advertising campaign by the electricity retailers.

Apparently the proposal was received in July, but not released until after the election. The report in the Daily Telegraph explains this delay as:
"Sources said the Federal Government had refused to release the report during the election campaign for fear of igniting debate with the Coalition over family electricity bills."

M2 Upgrade Concerns raised in NSW Parliament

Greg Smith, Liberal member of NSW parliament for Epping, raised the community's concerns about the M2 Upgrade in Parliament last Friday. Summarising his excellent speach, why put the community through so much disruption and inconvenience, and indirectly tax road users to the tune of $550M, for an upgrade that will be rendered obsolete by the North West Rail Link?

M2 Upgrade - Bus performance indicators

Extract from Hansard 19 October.
Ms CATE FAEHRMANN (Greens): I direct my question without notice to the Minister for Transport. Why did the Government take no action to ensure that performance indicators were included for the M2 expansion that required an increase in bus services and bus patronage rates?
The Hon. JOHN ROBERTSON: I will take that question on notice.

Over-regulation of the NSW Real Estate Industry

Another quote from the REINSW website:

The State Government recently introduced the Residential Tenancies Act 2010 (uncommenced as at October 2010), a highly prescriptive piece of legislation with 227 sections. When you consider that equivalent Acts in the ACT and Western Australia have 120 sections, it is clear that real estate professionals in NSW are over-regulated.

(And elsewhere in the REINSW website)

The property industry is one of the most heavily regulated by NSW Fair Trading. There are 236 sections in the Property, Stock and Business Agents Act 2002, compared to just 130 in the legislation governing car dealers.

The government claims it is protecting the interests of consumers. But how can real estate professionals be expected to deliver tailored service in a highly prescriptive regulatory environment?

That’s why REINSW, in its Real Agency policy, is calling for the relaxation of inhibitive regulation.

Rather than trying to control the many processes of our complex industry, the government should focus instead on the desired outcome – the delivery of a high quality service, with an adequate safety net in the form of mandatory professional indemnity insurance.

Rental Situation in NSW

The following is an extract from the blog of Tim McKibbin, CEO of REINSW, the Real Estate Institute of NSW.

NSW rental vacancies stuck in 'Groundhog Day'

As rental vacancies fell in most parts of Sydney in August, it is clear that NSW continues to face an accommodation crisis for frontline workers.

REINSW believes that this will be a major NSW election issue in 2011.

The overall rental vacancy rate in Sydney fell 0.1% to 1.5% for August 2010, with falls also recorded in the city’s inner and middle suburbs.

What we are seeing are only marginal changes in the rental vacancy rate month to month, with no long-term recover in sight.

It is clear that the trend points towards a continuing crisis in rental accommodation, which is certain to start seriously affecting our frontline industries including teachers, fire, health, ambulance and police.

Exclusive Sales Agency Agreements

The Real Estate Industry of New South Wales provides a standard sales agreement that is used by most real estate agencies. This standard 'REINSW Sales Inspection Report and Auction Agency Agreement' form provides for an exclusive sales agency agreement, usually for 90 days. If the property is to be put to auction, the agreement may also stipulate an intended auction date but the auction date does not influence the duration of the exclusive contract.

Under this agreement the vendor can terminate the agreement immediately after the 90 days.

McGrath use their own form, which is subtly but very significantly different. Their exclusive period is for 90 days after the auction. Typically the auction might be six weeks into the contract, so McGrath sign vendors up for well over five months.

Under McGrath's special contract, a vendor wishing to get out of the contract earlier has to give 30 days notice in writing AFTER the first 90 days are over. So the very first time a vendor can get out of a McGrath exclusive agency agreement is after four months.

Aussies keen to crack property market

Belinda Luc of Real Estate Business reports:
More than half of Australia's renters are struggling to get into the property market, new research has found.
According to the Bankwest/Mortgage and Finance Association Home Finance (MFAA) Home Finance Index, just 19 per cent of renters are happy to keep renting in a bid to maintain their lifestyle, while the rest are keen to crack the property market.
Bankwest Retail chief executive Vittoria Shortt said rising rents were the reason so many Australians wanted to buy.
“There has been a strong shift in the desire of first time buyers to get onto the property ladder since the March Bankwest/MFAA Home Finance Index,” Ms Shortt said.
“First time buyers also changing their expectations, and are prepared to make trade-offs to enter the property market, like looking further away from the city centre or for a smaller property."

Ad Valorem NSW State Tax hitting home sales

The NSW government quietly imposed a new tax on home sales in July, called the "ad valorem" tax. Already the tax, applicable on all sales above $500,000 (so on all sales in Beecroft and Cheltenham) has affected 13,000 property purchases, adding an average of $1,150 to each purchase.

Over the same period, the NSW property market has fallen 2.07%, the worst quarterly fall since the GFC! Residex Chief Executive John Edwards says "this Government is crucifying the property market." There are many experts talking about a crash in house prices, and one wonders if Kristina's new tax could be a trigger for this. The Liberal Party has promised to abolish the tax when they win power in March 2011, but will the damage already be done?

You have to question the logic of such new taxation on the Government's house sale cash cow. On the average Beecroft / Cheltenham house, Stamp Duty is about $35,000, so the new Keneally tax is adding about 3% to revenue, which is only marginally above the lost revenue from the drop in sales. If house prices start to fall, there could be a cascading general loss of confidence as people see their equity, and their prospect of capital gains, plunging.

Housing Market "flat".

According to the Australian Bureau of Statistics, the value of investment housing commitments fell by 3.9 per cent in August 2010, seasonally adjusted.
Real Estate Institute of Australia president David Airey said while investment housing had been "the bright spark" of housing finance earlier this year, this is no longer the case.
"We are seeing the cumulative effect of six increases in official rates between October last year and May this year and concerns about further increases in the months ahead, particularly from first home buyers and investors" Mr Airey said.

Apartments with Balconies but no car spaces?

On 4 October I reported how one developer was seeking permission to cut the cost of apartments by deleting the requirement for car parking for residents or visitors. Now the City of Sydney is taking the opposite path, imposing new standards that must force up the cost of new apartments. Their new draft development control plan will require new apartments to have balconies!
The developers responded unenthusiastically. Aaron Gadiel of Urban Taskforce said "last month the City of Sydney published its 562 page draft of a 'simplified' local environmental plan. That plan would be the most complicated planning regulation that any council has come up with. Now the council has developed an additional 873 page DCP."
He concluded his remarks by saying "with this kind of complexity, no wonder so many developers have been forced interstate."

Housing shortage to worsen

This is a direct extract from Real Estate Business that you can find at http://www.rebonline.com.au/:
According to the Housing Industry Association's (HIA) National Outlook report, housing starts are forecast to decline by a further 4 per cent as federal stimulus for housing construction starts to wind back.
"The fact remains we are not building enough homes to match demand, and going forward our national housing shortage is expected to worsen," HIA chief economist Dr Harley Dale said.
"Renewed weakness in new home starts in 2011 would mean there were only two years in ten when starts have risen. That is an appalling result, which highlights the challenge Australia faces in addressing a large and growing housing shortage that will place considerable further pressure on rental markets."
The report found that by calendar year, housing starts are forecast to increase by 24 per cent in 2010 to a level of 171,442, before dropping by 9.5 per cent in 2011 to a level of 155,155.
"Stimulus measures drove a short-lived recovery in new home building and helped Australia avoid a recession. However, if we want to address Australia's housing shortage then the Federal Government needs to lead from the front on a range of policy areas including further investment in skills and training, reform of the tax system, an end to excessive regulation, increased land supply, reduced planning delays, and ensuring greater competition in the banking sector so there's adequate finance for development," Mr Dale said.

"Bigger Australia Certain"

A report by the Centre for Independent Studies examined 36 different scenarios and found that the population of Australia would increase under all of them except when migration was cancelled, births forbidden, and people not allowed to grow older. Not a surprising conclusion. Did their scenarios not include plague, nuclear war, of armageddon?
The report concludes that "even if" migration were cut in half, to 70,000 a year, the population will still reach 29,000,000 by 2050. The study seems to say "well, that's it mate, just put up with overcrowding."
But my take on that report is that it seems to make cutting migration an absolute imperative! If home grown population increase is so huge, and our infrastructure so stretched, then why are we considering letting anyone else in from outside?
There's an interesting article in the Economist reporting that the number of people in each household in America is increasing, as the economy encourages families to stay together longer. In Sydney, with its high house prices and the large houses that we are building, this trend is likely to happen here, so fewer houses would be needed to house whatever population we end up with.

Trust needs to speak out now

An interesting letter in the Northern District Times, by Lesley Goldberg, commented on the failure of the Beecroft Cheltenham Civic Trust to speak out actively in defence of the Beecroft Shopping Village, against the Hornsby Shire Council and NSW government plan to rezone it for five story mixed development. Richard Talbot, who resigned from the Trust in protest, described the BCCT committee as a "council cheer squad".

Domestic Solar Installations Cost Blowout

If you want to install solar panels and take advantage of the NSW government's Clean Energy enterprise, you probably need to hurry. It looks like it's going the way of the home insulation scheme! Another great Green Plan but equally ill-administered and financially unviable.

The domestic solar scheme allows households to install panels on their roofs then sell electricity from those roof panels back to the state at a very attractive price, then draw back coal-fired mains electricity at a third of that price! Apparently the scheme is one of the most generous in the world. The trick is that the system is funded by the power generator utilities, not by the state, which means that other uses of electricity will find their bills going up to pay for it

According to the Daily Telegraph new solar connections are being made nine times faster than expected. One suspects that outrage from consumers when they see their bills will lead the NSW government to can this scheme too.

This smacks of the funding scheme that is planned for the M2 Upgrade, where the contractor, Transurban, will be funding the construction and recouping his costs from increased road tolls. In theory it's cash-neutral for the NSW government, like they intended the Cross City and Lane Cove Tunnel projects to be. It would be nice to see the contract for the M2 upgrade and find out what liabilities will accrue to the tax payer if things don't go as planned.

Big Drop in Home Lending

The Daily Telegraph reports that "the traditional spring surge of new home buyers has failed to materialise, raising fresh doubts over the predicted revival of Sydney's wilting property market. The number of new mortgages actually fell 0.3%, compared to 10% spring increases seen in other years.
Compared to September 2009, new mortgage sales declined by 20%.
These figures released on Monday just might have influenced the Reserve Bank in their decision to leave interest rates on hold for another month.

RBA leaves Rates on Hold

Slightly against the expectations, the RBA has left interest rates on hold this month. It remains to be seen whether the banks will follow the treasurer's directive to comply!

The apartments we had to have but nobody wants

A damning indictment of the move to high rise apartments is to be found in the Sydney Morning Herald of October 2-3, page 9. "Even free furniture is not tempting buyers."
Apparently after destroying the character of much of once-beautiful Ku-ring-gai to meet the government's insistence on provision of masses of new apartments, the only flaw in the government's plan is that many of those new apartments remain empty! The expected rush of baby boomers wanting to downsize from their empty nests to smaller premises without the hastle of a garden has just not materialised.
One commentator reports that sales have mostly been to "overseas buyers looking for investment." Such buyers mostly just want to park money in Australian real estate, and often aren't very worried if the property can't be rented. An apartment can be left empty without drawing objections from neighbours, whereas an empty house needs at least to have the garden tended. And of course putting a tenant into a small apartment invites damage and loss of value, because tenants aren't as caring as those who rent a house.
It is interesting to go back through the history of the Ku-ring-gai government-forced development. An article by Sue Wellings in The Age, 14 December 2009, predicted exactly what the SMH now reports. She wrote a well reasoned explanation of why she thought the demand just was not there for the apartments the government says we have to have.
So is that what will happen to Beecroft Shopping Village? Is Hornsby Shire going to destroy our lovely village atmosphere by building multi-storey dwellings, only to find that they can't find people to live in them?
Great policy!

Does public transport mean you don't need a car?

Greg Woodhams, NSW vice president of the Planning Institute of Australia, believes apartments in inner and middle ring suburbs don't need to have all the parking spaces usually mandated by councils, if they have good public transport available. But good public transport just means people will leave their cars at home and go to work by bus or train. It doesn't mean they won't want to have cars. People use cars to go out at night, to go shopping, and to go away for the weekends. Good public transport to work is not sufficient.
Consequently, if Greg has his way, the local streets will be jammed full of resident's cars during the day as well as at night.
Residents of Beecroft and Cheltenham are already well aware of this problem. Every day floods of cars arrive to park in Hannah Street and other streets within walking distance of the station, anywhere where parking is not restricted. Yes, Beecroft has excellent public transport, buses as well as the train, but still people need cars. The problem is that the local residents, many of them elderly, therefore need to park within the shopping village because the streets around are choked with commuter cars all day long. If Hornsby Shire Council allows the village redevelopment to go ahead without increased parking spaces to cope with the extra residents, then the village will die because locals won't be able to drive in, do their shopping, and drive home. At present the signs are that the redevelopment will significantly reduce available parking, not increase it.

Apartments without garages

Oakstand Property Group has applied to Woollahra Council to build apartments with no provision for car parking! "Let all the new residents park on the street, the locals won't mind," is their justification.
The reason is that providing car parking adds some $70,000 to the cost of the unit, and of course buyers will be delighted with the cheaper price of the apartments. The developer says the new cheaper apartments "will walk out the door." If only one could assume the buyers will walk, and not bring cars to clog the local streets!
One can only hope that Woollahra Council recognises their responsibility to the existing residents in and around the proposed new development! Parking in the area is already a nightmare, and if allowed this new scheme would have disastrous effects for many years to come. This prospective windfall for developers needs to be stamped on at once!
Residents of Beecroft and Cheltenham have already expressed grave concerns about Hornsby Shire's proposal to rezone the Beecroft Shopping Village with no obvious adequate provision for car parking. The planning documents provided showed one level of underground car parking for each new five storey mixed use block, with between three and four levels of apartments and one to two levels of shops and offices. That clearly implies shoppers will have no parking provided as part of the new developments.

M2 Upgrade Controversy Heating Up

The Transurban/RTA's ''road user cost-benefit analysis'' estimated widening the M2 would increase average vehicle speed by 40 km/h in typical stop-start conditions.

But Dr John Goldberg - a former principal scientist with the CSIRO's National Measurement Laboratory, now at the University of Sydney - recently tabled an analysis (which has been peer-reviewed) that disagrees. John predicts that widening the tollway from four lanes to six gives only a 50 per cent chance of the average traffic speed increasing by more than 10 km/h.

A spokesman for Transurban responded that the reference to 40 km/h in the company's analysis was a ''standard speed, used for all road projects assessed in NSW''. Doesn't sound like rigorous scientific methodology!

Doubts about National Broadband Network

Carlos Slim, who became the richest man in the world by monopolising Mexico's phone market, has savaged the Labour government's proposal to spend $43 billion on a national broadband network (NBN). He isn't knocking the need for a high speed national network, but questions the cost, and the viability of adopting today's technology at a time when technology is advancing so fast. He believes any network should, for instance, include a good WiFi element.
Another issue that is being talked about but not clarified is whether the quoted price for the NBN is a total price, including remediation work to streets and property after the installers have done their work.

Migration dropping, babies booming.

Bureau of Statistics figures show annual population growth has slowed from 2.2% to 1.8%. Over the year to March, 241,400 people migrated to Australia, compared to 320,300 in the same period last year. However in the same period a record 303,500 babies were born in Australia, up 3.1% over last year. and the number of deaths falling. Overall the annual growth in population remains well above the long term average, concentrated in WA (2.3%) and Queensland (2.2%) with NSW expanding by just 1.6%.
An economist at CommSec, Savanth Sebastian, commented on how this will affect Australia. "More people means greater demand for houses, roads, schools, hospitals, and a raft of retail goods." More challenges for Kristina!

Public Delighted by Barangaroo?

Developers of the Barangaroo project say the public is delighted by the plan. But really, could anyone want this??

Opposition to the Barangaroo Lend Lease proposal

Reading the newsletter of the Barangaroo Action Group, I found a number of excellent arguments against the proposal, including this one:

1 - A single developer undertaking the whole development results in lack of competition and places in the hands of one corporate entity the timeframes for the construction, which will be dictated by that one entity’s commercial interests. As such, residents and city workers will be living in a construction site for up to 15 to 20 years, while an unacceptable high density development spreads over the whole site, much as Lend Lease’s Jacksons Landing project has done.

The same argument could be used against the proposed commercial upgrade of the M2. If Transurban is allowed to manage this $550M project, what guarantees will the NSW government have, and what penalties will be available, to enforce timescales and standards?

Regarding the proposed huge hotel in Barangaroo, Lend Lease promise that it will remain a hotel, but such promises are seldom kept - like the divided carriageway of the M2 over Clilworth Reserve, which Transurban now intends to fill in as part of the widening project. A number of news articles have implied that Lend Lease anticipates the hotel failing when they will seek approval to convert the building into prime appartments, making another obscene profit.

Selling the family silver

This interesting letter was in the Sun Herald:

Dear Sir

Another community-owned icon is about to bite the dust. Queensland Rail National is to be sold-off; Commonwealth Bank, Qantas, State Bank, GIO, NRMA Insurance - we once owned them all & they were substantial publicly-owned assets performing a vital honest broker role for our community.
No doubt our electricity & water infrastructure, schools & hospitals will one by one come under attack from the same lobbyists & corporate opportunists who make mega bucks out of spruiking such deals.
These community assets have been built up over generations of Australians who have fought wars to protect our way of life & they'd be rolling in their graves to see what's become of such icons.
Selling out Australia's future for a few silver coins is not in Australia's best interests.

Yours sincerely

Richard Talbot

House Price Statistics

An interesting article in the Northern District Times explains the differences between figures used by people predicting a house price crash, and those expecting stability and even continuing growth.
Jeremy Grantham, a US investment banker, says Australian property is a time bomb, alleging the house price ratio compared to disposable income is 7.5 times, around double what it should be.
Rismark disputes this, blaming foreign hedge funds for shorting Australian bank shares in anticipation of a housing bubble bursting. Rismark calculates the house price ratio as 4.6, by using all properties in Australia, not just the cities. Of course, this really reflects the fact that most people don't want to live in rural areas despite cheap housing.
The deputy governor of the Reserve Bank, Ric Battellino, supported Rismark's view, agreeing that city house prices are "quite elevated" but if you look across the whole country prices are not that different to thos in other countries. He says that house prices in Australian cities are not high relative to the incomes in the cities.

Owner-builder Training Changes

People in NSW wanting to build or renovate their own house will from next month have to undertake a course taking at least a week and costing $800 or more. The course includes a 700 page manual. At present about 1000 permits are awarded each month, after an online training course taking four hours. The number of people taking the new course is probably going to be significantly less!

M2 Widening Benefits Challenged

John Goldberg, a former principal scientist at the CSIRO and now at University of Sydney has questioned the validity of statistics used to justify the $550M project to widen the M2 through Beecroft and Cheltenham.
Mr Goldberg told the Sydney Morning Herald that he had studied all the traffic densities and the corresponding speeds and concludes that it would be a break-even proposition to get more than 10 km/h increase in average speeds. Transurban have claimed a 40 km/h increase, an estimate that Mr Goldberg says is "wildly out".
He also challenges their estimates for cost-benefit ratios for travel times, accidents, and vehicle operating costs. The company's analysis concluded "the project is economically worthwhile with benefits for the community being estimated to be 3.4 times greater than the costs." Mr Goldberg has reached very different conclusions. He believes the benefits will be only 0.27 times the cost, far below the threshold required for major road projects under the state's environmental laws.
Of course the NSW government and RTA are probably not unduly perturbed about the cost benefit of the project, because Transurban will be funding the work themselves and recovering the cost by increased tolls on road users, a rather neat way of new indirect taxation.
Meanwhile the residents of Beecroft and Cheltenham stand to have two years of massive construction work, and lose much of the delights of the Chilworth Reserve when the present quite tasteful two flyovers are replaced with a ten lane monster highway.

Housing Sales Up

According to Alison Bell of the Daily Telegraph, home and mortgage sales jumped 11% in August as homebuyer confidence strenghened and mortgage delinquencies stabilised.
As expected, the Reserve Bank kept interest rates steady this month. However banks are incurring extra costs borrowing money from abroad so individual bank mortgage rates might rise anyway.

Levels of Household Debt

There's an interesting article by Jonathan Chancellor about how the level of household debt in Australia has risen from 50% of household disposable income in 1980 to 150% now. One wonders to what extent this is just a shift in our outlook on life, with people now comfortable to borrow freely.
A good sign is that the number of repossession actions lodged in the NSW Supreme Court is well down on the last few years.
Deutsche Bank feels that concerns about Australian house prices are ebbing, suggesting a steady moderation in price pressures.

"Prices up, vendors selling at a loss"

That eye-catching headline is from today's Sydney Morning Herald. The article by Jonathan Chancellor gives examples of recent sales where properties have gone for well below the earlier purchase price. One such property sold for $1.25M after being bought in 2007 for $1,635,500, a 23% price fall over the last three years. The successful selling agent explains that this was because the original purchaser overpaid when he bought it. I wonder how many recent first-home-buyers are wondering about their futures.

From the same edition of the SMH, this article by Simon Johanson discusses the nature of growing Sydney house prices under the headline "Property apocalyptics predict bubble trouble", and talks around the prospect for a collapse. Simon makes the point I mentioned in my last blog, that "no one wants a sharp plunge in house prices". Any politician putting forward plans deliberately to drive prices down could find very few supporters. But then, nobody wanted the collapse that hit America two years ago.

Home Affordability

In SMH's daily "Decision 2010" columns there is an article on home affordability.
It makes the point how Kevin Rudd's doubling of the first home owner grant boosted house prices, with the average loan during Rudd's truncated time in office rising from $230,000 to $290,000. The problem with this, of course, is that now the grant boost has been removed, those house prices must slip back, leaving new home buyers stressed by increasing interest rates and facing negative equity.
No matter, Tanya Plibersek says, the grant kept builders in work. But if that was the only objective, the grant should have been restricted to new construction, and not used just to boost the prices of existing homes.
The report makes the point that "about 70% of Australia's 9 million or so dwellings are owner occupied, so increased housing affordability is not really the priority of the majority". Indeed most home owners would be very upset by any plan which proposed very swiftly to reduce house prices, if it involved them getting less money when they sell their homes. 70% of voters would say "by all means cut sales and land taxes, but don't threaten the sale value of my asset!"

RTA backs down on Motorway Extension

According to the SMH today, the Roads and Traffic Authority "has been forced to back away from a plan to build a four-lane extension of the M5 motorway through Sydney's inner west, after state and federal ministers indicated they would not support the project".

The NSW state Roads Minister David Borger said the government had heeded the community's call: "I queried the benefits of proposals that appeared to carve through suburbs for the sake of route convenience instead of securing new more direct routes to hubs of economic activity like the airport and the port."

That observation puts one in mind of the ten lane carriageway the RTA is planning to drive through Chilworth Reserve in Beecroft, and the proposed tunnel under Pennant Hills Road joining the eastern end of the M7 to the southern end of the F3, both for the sake of route convenience. What Sydney clearly needs is a direct route road built to conduct traffic from the NW corner of the M7 directly onto the F3 further north, taking all the interstate traffic completely away from Sydney. It seems inevitable that such a road will be built eventually, so why spend all this money on short term paliatives, the building of which involve huge inconvenience and disruption to the local residents?

One piece of good news is that the M5 expansion had been shortlisted as a "nationally significant priority project" yet has been varied by public pressure. The M2 widening project was also listed, by Kristina Keneally in her previous position in the State government, but clearly politicians will respond if the people protest enough.

Back in May Kristina "personally deleted" the proposed extension of the F6 motorway from the government's transport plan, because the state doesn't have the money." (Sub-text - the State government seems to have fluffed several submissions to Federal government for funding, so money we should have received went to the other states.)

The reason the M2 widening project is still going ahead is because State is granting Transurban a licence to do the work at their cost, in return for being allowed to charge increased tolls for an extended period. Let's hope Transurban doesn't run out of money half way through the construction phase!

Trends in Sydney House Sales

There is a good article in SMH Business Day today, comparing auction success rates around Australia. Sydney and Melbourne account for 80% of the overall capital city market, 26,000 for Melbourne and 20,500 in Sydney during 2009. In Melbourne auctions account for 30% of sales, in Sydney 20%. It must be remembered that Melbourne has a higher proportion of units than Sydney, and has more houses than any other state capital.

"The most obvious recent trend has been the weakening of weekend auction success rates since late April in both cities. Detecting price movement trends has been harder."
In February and April 75% of properties sold under the hammer, July's auction clearance rate was 61%.

Housing Strategy Submissions - analysis

The following post is a precis and discussion on a post copied from another blog:

Council's findings on the submissions are in
https://businesspapers.hornsby.councilsonline.com.au/Open/2010/PL_07072010_AGN.PDF

It includes: "Submissions raised objections to the Strategy (or aspects of the Strategy), provided constructive feedback on how it could be improved, indicated support for the Strategy, and suggested other precincts for inclusion." This statement might seem to imply that there was a fairly even distribution between these four categories of respondents. However another council document says only 2% of submissions were in favour of the proposal.

Individual precinct analyses are at:
http://www.hornsby.nsw.gov.au/uploads/documents/Housing_Strategy_Attachment_2.2.pdf
This reports 443 form letters and 168 individual letters were received regarding Beecroft. Of the 168 individual letters relating to Beecroft, 13% (ie 20 letters) were in favour, 4% suggested alterations (the report doesn't say whether they were for or against) and 83% (140 letters) were against. Of the 443 form letters received only 3 (less than 1%) supported the proposal and 440 were against. So of the 611 submissions, at least 580 (95%) were against the proposal.

So the statement in the main report should really read:
"The overwhelming majority of submissions opposed the Strategy. A small number provided feedback on how it could be improved, and a trivial number supported the Strategy."

This puts a slightly different slant on Beecroft resident's views on the council's proposals. Despite that, Beecroft is still to be rezoned for 5 storey mixed development.

Stamp Duty cuts for Pensioners

Under the latest NSW state budget people over 65 will not pay stamp duty when selling an existing property and buying a newly constructed home costing up to $600,000.
The objective was to allow retirees to downsize while staying in the area they now live in. However for elderly residents in Beecroft and Cheltenham, this will have little effect as there is little prospect of any new constuction homes coming available for less than $600,000. Adding the development contribution cap of $20,000 imposed by NSW state government, there seems little prospect of any developers going out of their way to build to suit this market.

Rent Freeze ends

The NSW State Government has refused to bow to pressure to extend its promise not to gouge from last year's $30 pension increase when calculating public housing rentals. Last September under pressure from the Federal Government, the states had agreed not to include the increase in single pensions in rent calculations.
Charmaine Crowe, policy co-ordinator for the Combined Pensioners and Superannuants Association, argues: "A single pensioner in public housing pays at least $3770 in rent per annum. That's comparable to what a pensioner owning a house pays in land rates and home maintenance. Yet the pensioner in public housing has a pension cut of 25%, while the home-owning pensioner keeps the entire amount."

M2 Widening Project - Noise barrier height

I found a really well prepared presentation on the noise problems associated with the proposed widening of the M2. A key element of the presentation covers the noise barriers, and in particular the height of them. The number of trucks using the M2 doubled in 2006 when the M7 opened. The report suggests some 47,000 cars and 7,300 trucks are using the M2 now, and the number of trucks is forecast to rise by 25% over the next ten years.
The noise barrier height is perhaps the critical factor in shielding the neighbourhood from the noise of these trucks, and the existing commonly used 2.4m high barriers are just inadequate. With truck exhausts typically 4.5m high, or more, those barriers achieve very little. A 4.8m barrier would seem to be essential.
Where the motorway is below the level of adjacent houses, such as where it crosses Chilworth Reserve, even higher barriers might be needed.
Of particular concern to residents must be the likelihood of the barriers being removed totally during periods of the two year construction program.

Clearance rates down this month

RP Data reports the national auction clearance rate as 56%. According to their research director "the most surprising factor is that volumes remain so bouyant despite clearance rates trending down for 11 weeks now."

What if nobody comes?

The following thought-provoking quotation is taken off the internet:

"The estimated population growth target for Sydney (1.1 million by 2031) is completely unrealistic and there is the danger that planning is done for assumed developments which can never happen. The result will be to upset the lives of many residents who are forced to move out of their homes to make room for high-rises which will become future slums. We can even have the situation that houses are demolished by developers but then the land is left vacant because finance cannot be found in the next financial melt-down."

The same concern applies to Hornsby Shire's Housing Strategy - if they rezone Beecroft and other precincts to 5-storey to meet government targets, and the Federal Government then changes the population prediction, will those rezonings be cancelled?

The same website make this proposition:

"The Federal government has appointed a Population Minister, who will research into the population carrying capacity of Australia. This process including public consultation will take
one year. Until this report is out, all activities in relation to Housing Policies should be suspended."

Buying off the Plan

Under new legislation about unfair contract terms, coming into effect today, people buying properties "off the plan" will have greater protection from developers trying to make last minute changes to the final delivered property, such as reduced room space or inferior light fittings.

New views on house prices

Figures from RPData show typical house prices rose 0.7% in May, giving an annual growth of 11.4%. Most analysts suggest the residential property market is cooling down, as interest rates bite.
One recent study into Sydney home borrowers referred to "the extreme difficulties faced by many households who have struggled to meet their mortgage repayments in recent years." The study recommends that borrowers should receive more independent advice when signing up for a mortgage.

M2 Widening - Speed Limits

I particularly liked this extract from Michael Stove's BCCT submission relating to road noise:

"Speed limits must be kept low to reduce noise and pollution. There is no real need for the speed limit on this part of the M2 to be set at 100kph; a level of 80 kph would be adequate and safer. Apart from any other considerations, peak traffic levels probably mean that a speed of even 80 kph is in real terms unlikely to be achieved."

Several years ago the RTA introduced a trial of narrower lane markings in the west lane between Lane Cove Road and Beecroft Road, giving three lanes at very low cost and rapid implementation. The narrower lanes mandate an 80kph speed limit, which Michael's comment above suggests is no bad thing. The RTA narrow lane trial seems to have been entirely successful, only hampered because it terminates in the two (wider) lanes between Beecroft Road and Pennant Hills Road.

Extending the narrow three lanes solution along to Pennant Hills Road could be done very quickly and without damaging the Chilworth Recreation Reserve. The construction cost and time savings of avoiding the proposed eight lane flyover there would be enormous.

The RTA document rejects this narrower lane marking solution as an alternative to widening the road for reasons that seem very debatable. The "narrow lane / reduced speed / low cost / fast implementation" solution should be re-considered, at least on the Beecroft Road to Pennant Hills Road section westbound.

M2 Widening - BCCT Submission

The Beecroft Cheltenham Civic Trust has put in a most excellent submission opposing the M2 Widening Project. You can read it on http://www.2119.org.au/ by clicking the link at
"The BCCT formally objected to the project due to a number of issues. Please follow this link to view of full submission."
The submission covers noise, effect on vegetation, effect on volunteer work in the area, and perhaps above all "The proposal is not a real solution to the problem it purports to address."
Regarding the Beecroft Rd to Pennant Hills Road section of the M2, the submission rejects the damaging proposal to use Allerton Road for access, and suggests instead the existing and unused access road to the south of the Penant Hills Golf Course. All users of Chilworth Recreation Reserve must applaud that suggestion, if indeed the widening of this section does have to take place. But the submission stresses the long term permanent damage that the widened road would have on the Reserve.

Hornsby Shire Housing Strategy - Carlingford Out but Beecroft Still In?

Hornsby Shire reports revisions to the Shire Housing Strategy, removing Carlingford from the plan, but there is no indication that Beecroft will also be spared.

The mayor, Nick Berman, said the revised plan would still allow the council to meet its allocated target without having to allow 20 storey buildings. "There would still be some medium density blocks close to railway stations," Cr Berman said.

It's not obvious how the planners can delete so many planned new dwellings and still meet their target.

A meeting to discuss these amendments is to be held in council chambers, 296 Pacific Highway, 6:30 pm on Wednesday 7 July.

US Housing Market hits record lows

The housing market in USA "has never been so bad, at least since records started in 1963". Apparently 588,000 home owners faced with negative equity walked away from their homes in 2008, which is allowed in USA, but now apparently Fannie Mae is threatening to take legal action to recoup the outstanding mortgage debt of those poor people. What a mess! Apparently there are now eight months worth of new and existing homes on the market, and of course more foreclosures will add to that.
One wonders what will happen in Australia when first home owners find it's not as easy as they thought to pay a mortgage and all the other costs of home ownership. But for the moment Australian housing markets seem as good a place as any to park money. There are not many good alternatives visible worldwide at the moment!

House Price Rises to Slow

According to BIS Shrapnel, rising interest rates and weaker first home buyer activity will lead to slower house price growth this year. However they say that house prices will not fall, and rents will continue to rise.
Meanwhile figures from the Bureau of Statistics show that lending to property investors rose 11% in the first four months of the year, as investors shy away from the stock market and look for somewhere to park their money. According to BIS Shrapnel, "real estate looks a safer bet than the stockmarket". If you stick your money into a term deposit, you have to pay tax on the interest.

Freedom of Information Law Change July 1

Doing internet searches into RTA freedom of information topics after reading an article in SMH 28 May, I found a great blog on the topic, http://foi-privacy.blogspot.com/ by Peter Timmins. Some good reading there!
A note of caution about the new laws was in a comment on the blog "the changes that this legislation has the potential to make is significant and welcome". Note the word "potential". As The Greens Lee Rhiannon said in welcoming the new laws, "their strength will be largely determined by how well they are championed from on high."

Developer Levy clamp anger

Concern over the State Government budget decision to cap developer levies is causing Sydney councils to pull approvals on new subdivisions, and ban new development applications! This will create havoc with the state's metropolitan strategy which expects councils to house another million residents.
Western Sydney Region of Councils says the decision to cap developer levies at $20K would bankrupt many councils unless either rates rise 300%, or development is halted. Not a difficult decision for existing residents to take! After all, it seems only Kevin Rudd and the developers want his proposed "Big Australia". The recent revolts all around Sydney about housing strategies involving high rise high density units demonstrates the strategy is not wanted by the general public, and huge increases in rates will make it even more unpopular.

State Budget stamp duty cuts

Stamp duty will be cut for the next two years for people buying off-the-plan dwellings, up to $600,000. For people over 65, downsizing by buying a newly constructed home, will also pay no stamp duty so long as the new home is worth no more than $600,000.
Good news, but not very relevant for people in Beecroft or Cheltenham, not much available round here under that amount!

Developer Levy Capped by NSW Government

The state government has imposed a $20,000 cap of developer contributions per lot, effective yesterday, but the levies are only imposed on "essential infrastructure". So far this phrase has not been defined, which makes it rather hard for developers to plan. Even so, the developers are happy with the new rules, because some councils had been imposing levies of $50,000 or more per house.
A spokesman for the Planning Minister says "guidance would be provided to councils within weeks".
Genia McCarrery, head of the Local Government Association says capped levies would result in huge rate increases, particularly in growth areas. Councils would have to spread the cost of developing new land over all the households in the municipality.

Stimulus puts Homes on Hold

Tradesmen working on school building projects around the country are being blamed for the unexpected fall in housing construction over the last six months. New housing investment fell by 4.3% in the December quarter.
But surely the stimulus package was meant to create new jobs, not just divert labour from housing projects onto the high profit school construction activity.

The Great National Broadband Network

Apparently the Tasmanian government has estimated that only 16% of homes will take up the high speed internet system now being installed in Tasmania, the first state to receive the fabulous new $43 billion fibre-optic network of which the Rudd government is so proud.
There are also questions being raised about whether the cost quoted by Stephen Conroy includes the costs of restoring roads and pavements ripped up during the installation, or whether local government will be expected to make good after the installers leave! Given the already parlous state of most local government finances, that little detail certainly needs to be clarified pretty quickly!

M2 Upgrade Project through Beecroft

The M2 Upgrade intentions are described in www.hillsm2upgrade.com.au/files/environmental_assessment
Detailed descriptions of the project's intentions are available.
This blog only addresses the Beecroft and Cheltenham precincts. The overall plan for the Beecroft area is summarised here. Expanding the Beecroft and Cheltenham bit, you see:
Reading the EA, you find details of the intentions for the viaducts over Chilworth Recreational Reserve here: The intention is to build a new lane out on the south side, and to fill in the gaps between the present bridge structures, to give the following result:

At the same time, the tunnel south of the Beecroft M2 access will be widened, as shown:

Two years in construction, starting end 2010! Submissions must be in by 21 June.

Heavy Rain around Beecroft

Devlin's Creek underpass under the M2 motorway was in full flood this morning after heavy overnight rain. The tree, which wasn't there yesterday, shows that the water was obviously much higher during the night!Surprisingly, so far Ray White Beecroft has received only one phone call about flooding in the many properties they have under management.

M2 Widening Project submissions close 21 June

Did you know that submissions on the M2 Widening Project close on 21 June?

The plan includes providing a third lane each way between Pennant Hills Road and Beecroft Road. This was achieved to the south of Beecroft Road by taking out the bike lane, but this doesn't seem to be an option for the road over Chilworth Reserve.

Someone not on the council tells me that the intention is to do this new widening by filling in the space between the two existing viaducts over the reserve. That sounds like major work! Yet the exhibitions now available don't explain this, and don't appear to give any estimate for the time this major construction work will take, or what times the work will be undertaken. Anyone who lives in the area will be dreading extended night construction work!

The wider carriage way is likely to be less well shielded by the sound barriers originally provided, so the traffic noise will presumably be significantly higher even if no more traffic is attracted to the road by the extra lanes.

But surely more significant is the extensive evidence from many independent studies that the whole plan is flawed. All it will do is suck more traffic from the North West down into this road, which is already saturated as it nears the city.

Two years ago the Beecroft-Cheltenham Civic Trust made a submission on this issue, including "The Trust would also oppose any widening of the existing carriageway because of the high impact on local amenity". One would have expected this to have been followed by a major campaign to inform everyone of the evolving state of the project, but I haven't heard anything. Did I miss it?

To learn more, go to http://majorprojects.planning.nsw.gov.au/, and enter M2 Upgrade in the "search projects" box. Click M2 Motorway Upgrade, and at the bottom of the page is where you can record your submission.

Property Slump hits Queensland Budget

Property researcher Michael Matusik claims property sales in Queensland are 10% lower than last year, and 40% lower than the year before. The Bligh government budgeted to receive $1.82 billion from stamp duty this year, but the actual figure is likely to be significantly less.
Properties on millionaire's row on the Gold Coast have crashed, with prices falling as much as 50%.

The Population Debate

There was an interesting debate on television a couple of nights ago, with Dick Smith and three others offering views on Kevin Rudd's dream of a Big Australia, allowing the population to grow 50% over the next 30 years, or whatever.
As with the recent debate about 5 storey development of Beecroft Shopping Centre, the main debate is about "where shall we build the new high rise buildings.
But to me the most pertinent point was Dick Smith asking "why are we doing this?"
One of the answers was that we were providing a service to the rest of the world, offering accommodation to all those desperate people who wanted to come and enjoy the many blessings of Australia. But as Mr Smith asked, why should the people of Australia give up all that they now enjoy in order to please the tiny fraction of the rest of the world who we can, according to Kevin, find houses for.
Of course the developers are keen to build the houses this next wave of settlers will require, but in the process those who now live in Australia will find themselves with ever more congested streets and trains. Do we really want this?
Dick Smith questioned availability of water and food, and the developers responded that technology would cope. Water tanks at every house to collect rain water, genetically modified food, and other exciting innovations can surely cope? But still one is left wondering, why?

Multi-Storey Ku-ring-gai

Now the details of the destruction of Ku-ring-gai are published. The mayor of Ku-ring-gai sums it up as "a recipe for disaster that will change Ku-ring-gai for ever". Sacrificed in the cause of Kevin Rudd's Big Australia.

High Rise Forced Zoning has Started!

The state government has approved a plan for 4500 high rise (about six storey) dwellings along railway tracks in six north shore suburbs. Residents of those suburbs campaigned hard against the developments, but their concerns were overridden by state and federal plans to cope with Australia's surging population.
The suburbs involved are all in the Ku-ring-gai council area, at Roseville, Lindfield, Gordon, Pymble and Turramurra. St Ives is also likely to be included later. 5500 new dwellings have already been approved.
Full details of the plan will be released today.

Buyers Staying Home

Auction clearance rates have been down over the last few weeks, but according to the SMH nobody is predicting house prices plummeting. According to BIS Shrapnel, after a year in which median prices jumped 20% a period of no growth is likely for the June and September quarters.

Optimism killed by threat of rate rises

According to the Australian, we are becoming pessimistic about the economy because of the lack of benefits in the budget and fear of higher interest rates.
Westpac consumer sentiment index for May plunged 7%, the second consecutive montly fall, reflecting a growing concern that the strength of the Australian economy might not be maintained.

Developers Shun Sydney

According to the Australian, big residential developers are pinning their hopes of future profits on Melbourne, Perth, and Adelaide. While researchers tip Sydney due to an undersupply of housing and rising prices, but the city's costs are high including a new state tax, so the undersupply looks set to worsen.
Stockland annonces it has spent $250 million on five development sites in WA and Victoria since last June, with capacity for 4750 homes and an end value of $1.22 billion.
Stockland managing director Matthew Quin notes that many people are downsizing, asking themselves "do I need the big house, the five bedrooms, the formal dining room that only gets used once a year, or do I have less debt and a life?" He makes the very interesting point that "on a per-square-meter basis, Australia was relatively affordable compared with the rest of the world"! He sees reducing the product size as the way to provide affordable housing.

Levies stifling Development

Blacktown council has rezoned the Riverstone and Alex Avenue precincts for 15,000 new homes, serviced by six new schools, parks, playing fields and the Richmond train line. But developers are saying they doubt the houses would be built under present market conditions.
The CEO of the Urban Development Industry Association NSW, Stephen Albin, says "these release areas are an important case study in demonstrating the difference between rezoning land and actually bringing houses to market."
"Local council development levies are likely to be $50,000 a lot, and state infrastructure levies another $17,000," says Urban Taskforce, another developer group. "The levies are too high and the cost of trying to consolidate the different land holdings is too great to make development viable."
Brad Hazard, NSW opposition spokesman for planning, said "the NSW housing crisis is real but Tony Kelly's Riverstone solution is anything but real. Effectively the rezoned land will take years to become viable as a serious development site."
A spokesman for Mr Kelly said that the construction of the new dwellings will happen "potentially over two decades, which allows insfrastructure and growth to be staged."

New Land Transfer Tax courtesy of NSW government

NSW government seems to have hoped nobody would notice their new property tax!

Just in case you didn't hear about it, Tony Kelly, the Minister for Lands, released details of this new tax buried in a press release focusing on security measures for land transfer documents!
Needless to say the announcement has outraged property groups, branding it "just another stamp duty increase" while the opposition calls the timing and method of the release "sneaky".

I don't see why politicians encourage such adverse reactions by blatantly sneaky announcements, they cannot really hope that the details will be ignored. It just gives the papers and the radio and the blogs :-) something more to write about. But wait - maybe that's the idea, letting us get excited about the sneaky release prevents us talking about the actual details of the tax. Subtle!

Glen Byers of the Property Council of Australia pointed out that the tax was introduced "without consultation, without explanation, at a time when the investment climate in NSW is fragile". The new tax will add $1500 tax for a typical $1.2M Beecroft property. They haven't yet said when it will be introduced, but apparently the revenue will be counted in the State budget on June 8.

Council to lose planning powers

NSW government is moving to strip Cessnock Council of its control over planning, to hasten development of new homes. Under the Lower Hunter Regional Strategy, 20,000 dwellings are to be built in the area over the next 20 years. NSW Planning Minister Tony Kelly justifies the action because the council is taking too long with land releases and development processes.
Interestingly the council responds by saying that they approved thousands of lots last year and are waiting for Mr Kelly's department to approve them.
More interestingly, the government's plans for major housing developments in the lower Hunter have been frustrated by resident action groups, which successfully stopped several developments! Hornsby residents should take note of all this.

First Home Saver Accounts shunned

According to David Crowe in the AFR, aspiring home-buyers have shunned the Federal government's first-home saver accounts out of concern at its complex rules. When introduced in 2007, Mr Rudd expected to attract $4 billion in savings in 400,000 accounts, but actual takeup has been only $60 million by 16,000 savers. One credit union spokesman says "the cost outlays have exceeded the take-up. The restrictions on it are very cumbersome".
Young people must surely have been put off to find that, if they invested savings in the scheme but then failed to buy a qualifying house, the money they had put in was transferred to super, and lost until they are 60!
For the treasurer, this means a windfall saving of some $800 million of anticipated expenditure not taken up by young people. So Mr Crowe suggests the government probably won't change the rules very soon.

Locals "still have no voice"

An article in the Sydney Morning Herald describes how the Ku-ring-gai Planning Panel has had its life extended. The panel was created in 2008 by the NSW Government to take away Ku-ring-gai Council's planning powers.
Meanwhile medium density development continues to anger locals who find their heritage and bushland being "trashed" by bulldozers. Certainly the examples described in the article seem fully to justify the word "trashed". One resident in Roseville is quoted as saying "the most offensive thing to me about all this is the residents have had absolutely no say whatsoever in what has happened to their neighbourhood".
All food for thought to those wondering how to change our futures for the better.

Councils fighting developers!

Three councils have joined forces to investigate taking legal action against the Barangaroo develpment! There is a Barangaroo Action Group which has asked the Environmental Defender's Office to find legal means to stop the project. When you compare what was originally proposed, the award winning design below:with what is now proposed:

it isn't hard to see why people think the developers are having a lend of us.

It's worth visiting the Barangaroo Action Group and reading their objectives - which include seeking open and proper planning processes, ensuring commercial interests don't outweigh aesthetic and environmental issues, and making the NSW public aware of issues that will affect Sydney for decades to come. Echoes of recent developments in the Beecroft area! The Barangaroo Action Group invites new members including "concerned citizens from outside the Barangaroo area".

Interest Rates

The central bank lifted its cash rate by a quarter of a percentage point to 4.5 per cent, its highest level since the end of 2008. The move was tipped by a majority of economists after surges in consumer price inflation and house prices in the March quarter.
An interesting comment wsa made on one of the related chat pages, by someone suggesting foreign buyers are pushing up house prices - "Interest rate rises only punish hard working (Australian) families - they don't deter overseas buyers because they don't borrow here". And indeed they make it more attractive to put their money into Australia.

Property values "started falling"

The Sunday Telegraph property feature headlines "Rate Rises take toll on property values" and says property values have started falling in Sydney as the impact of five interest rate rises starts to bite. According to Residex, over 100 suburbs experienced price falls in the last quarter.
However some north shore suburbs experienced price increases of up to 7.5% over the same period.
Residex CEO John Edwards blames high auction clearance rates for creating false hype and cautions that auctions are not the best way to measure price growth. Only about 20% of homes in Sydney sell under the hammer. Ray White strongly support auctions, but agree that most houses offered for sale at auction sell either before (typically 20%) or in the week or so after (typically 50%). So yes, the bid price achieved at the auction is not necessarily a good guide to the house value, you need to include the price at which the property actually sold. But certainly the auction does generate hype, which is why Ray White promotes auctions as the way to achieve the best sale price.
In all the discussion about inflated Sydney house prices, I liked this quote as part of the problem "a tax regime in Australia that favors asset purchases over wage income has enhanced the upward rise".

Immigration Figures

The Northern District Times Opinion page has been debating the immigration issue. A letter by Mr Peter Ross in the 14 April edition said that the US takes in a million migrants, implying this justifies Australia taking in a mere 300,000. Several letters this week make the obvious point that the US has a population of 309 million, whereas Australia has only 22 million, so we are taking five times as many immigrants per head of population.
Admittedly USA's total area of 9,629,091 sq km is not that much larger than Australia's 7,692,024 sq km, but anyone who has flown over America's endless verdent plains and Australia's endless deserts will recognise the huge difference in habitable land available.
Meanwhile in the same issue of the NDT Greg Smith makes the point that he is now 62 yet intends to continue working in politics well into the future. This blog has earlier stressed the need to take advantage of the resources of the active and able elderly, as an alternative to retiring them and bringing in people from abroad to support their retirement.