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".