Mathew Quinn, the Managing Director of Stocklands, advised yesterday that the average size of a four-bedroom house has dropped 20 per cent since 2007 while three-bedroom houses have shrunk by 26 per cent over the same period, as living areas, media rooms and hallways disappeared in more compact designs.
Before this change, Sydney houses were amongst the most expensive in the world, and this was in part because they were the biggest in the world. According to Mr Quinn the average new home grew 10 per cent to a world record 215 square metres in the decade to 2009. Clearly this must have contributed to the sky high cost of Sydney housing!
The concrete used in housebuilding gives off a lot of carbon dioxide as it sets, so the trend to smaller houses will bring environmental benefits both during building and later, with lower energy consumption for heating and cooling the smaller houses.
Showing posts with label property prices. Show all posts
Showing posts with label property prices. Show all posts
Thursday, August 11, 2011
Tuesday, June 14, 2011
Sydney House Prices "On the Way Up"
According to the Sydney Morning Herald, Sydney house prices rose over the April quarter and as auction clearance rates have recently consolidated, homeowners can expect house prices to rise over the May quarter.
The latest Australian Property Monitors research has revealed that Sydney house prices rose 1.1 per cent over the April quarter. This followed a fall in house prices of 0.6 per cent over the March quarter.
The biggest contributor to the April rise in house prices came from the top 25 per cent of the market, which increased by 5 per cent. The upper-middle price sectors rose by 1.7 per cent while the bottom 50 per cent of the market recorded no rise in median house prices over the April quarter.
The report continues:
Sydney median house price growth will continue to be driven by the influence of the underlying housing market fundamentals.
Rising incomes as a consequence of low unemployment and emerging shortages of skilled labour will provide buyers with increased incentive, capacity and confidence in the housing market. The Bureau of Statistics reports that Sydney's April unemployment rate was 5 per cent compared to 5.7 per cent a year ago; 42,280 jobs have been created over the past year in Sydney and NSW annual private sector incomes have increased by 4 per cent.
Increased demand for labour will be driven by the unprecedented resources boom driving through an estimated $380 billion investment in mining over the next five years.
The benefits of this strong economic growth will ripple throughout Australia, especially Sydney, as it re-energises as the commercial centre of Australia.
Growing population and increased immigration to meet skill shortages will continue to fuel demand for housing in a city already constrained by a tight rental market and chronically low levels of new home building.
According to the Real Estate Institute of NSW, the rental vacancy rate for suburbs within a 10-kilometre radius of the CBD fell 0.2 per cent to only 0.9 per cent in April. Sydney just has too many people and not enough houses, with no relief in sight.
Official interest rates are expected to remain on hold in the short-term as key measures of economic growth and inflation continue to remain within the Reserve Bank's neutral policy band. Mortgage interest rates and lending costs for new borrowers are currently under downward pressure as competition between banks intensifies as a consequence of dwindling credit growth.
With incomes rising, a shortage of housing and the pressure off interest rate rises in the short term, the fundamentals are signalling increased home buying activity in Sydney through 2011.
The latest Australian Property Monitors research has revealed that Sydney house prices rose 1.1 per cent over the April quarter. This followed a fall in house prices of 0.6 per cent over the March quarter.
The biggest contributor to the April rise in house prices came from the top 25 per cent of the market, which increased by 5 per cent. The upper-middle price sectors rose by 1.7 per cent while the bottom 50 per cent of the market recorded no rise in median house prices over the April quarter.
The report continues:
Sydney median house price growth will continue to be driven by the influence of the underlying housing market fundamentals.
Rising incomes as a consequence of low unemployment and emerging shortages of skilled labour will provide buyers with increased incentive, capacity and confidence in the housing market. The Bureau of Statistics reports that Sydney's April unemployment rate was 5 per cent compared to 5.7 per cent a year ago; 42,280 jobs have been created over the past year in Sydney and NSW annual private sector incomes have increased by 4 per cent.
Increased demand for labour will be driven by the unprecedented resources boom driving through an estimated $380 billion investment in mining over the next five years.
The benefits of this strong economic growth will ripple throughout Australia, especially Sydney, as it re-energises as the commercial centre of Australia.
Growing population and increased immigration to meet skill shortages will continue to fuel demand for housing in a city already constrained by a tight rental market and chronically low levels of new home building.
According to the Real Estate Institute of NSW, the rental vacancy rate for suburbs within a 10-kilometre radius of the CBD fell 0.2 per cent to only 0.9 per cent in April. Sydney just has too many people and not enough houses, with no relief in sight.
Official interest rates are expected to remain on hold in the short-term as key measures of economic growth and inflation continue to remain within the Reserve Bank's neutral policy band. Mortgage interest rates and lending costs for new borrowers are currently under downward pressure as competition between banks intensifies as a consequence of dwindling credit growth.
With incomes rising, a shortage of housing and the pressure off interest rate rises in the short term, the fundamentals are signalling increased home buying activity in Sydney through 2011.
Thursday, May 26, 2011
Immigrants saved Australia from Financial Crisis
An article by George Megalogenis provides a thought-provoking explanation for why Australia survived the Global Financial Crisis. In America, England, Spain, and so many other developed countries, it was the crash in house prices that triggered the collapse of the banks. But, as GM says, in his final two years as Prime Minister, John Howard initiated a flood of mainly Asian immigrants, such that Australia had the world's fastest population growth rate when the financial crisis hit in 2008.
"Take Howard's immigrants out of the equation and a recession would have been more likely. One of the things that set our economy apart from those of the United States and the United Kingdom was the behaviour of the property market. While their house prices collapsed - creating a vicious cycle of mortgage stress, reduced spending, and job losses - large scale immigration kept our house prices rising because supply was lagging demand. Ordinarily shortages would be read as a case of market failure, and they are. But they also played a valuable role in maintaining the confidence of Australian households to keep consuming while the rest of the developed world turned turtle."
"Take Howard's immigrants out of the equation and a recession would have been more likely. One of the things that set our economy apart from those of the United States and the United Kingdom was the behaviour of the property market. While their house prices collapsed - creating a vicious cycle of mortgage stress, reduced spending, and job losses - large scale immigration kept our house prices rising because supply was lagging demand. Ordinarily shortages would be read as a case of market failure, and they are. But they also played a valuable role in maintaining the confidence of Australian households to keep consuming while the rest of the developed world turned turtle."
Wednesday, May 18, 2011
House Prices "will be flat for ten years".
According to Jessica Darnbrough in the latest Real Estate Business magazine:
"Property price growth will be subdued for the next 10 years," an industry commentator has claimed. Speaking to Real Estate Business, BIS Shrapnel’s managing director Robert Mellor said property prices will grow by no more than 5 per cent each year.
“These are not boom conditions,” he said. “People have to get used to the fact that over the next 5 to 10 years, strong growth will be in the order of five per cent, while weaker years will see just 2 to 3 per cent growth.”
Mr Mellor said Australia is unlikely to see the rapid growth of previous years again anytime soon. “That growth was stimulated by various incentives, and as we are unlikely to see incentives return, we won’t see extraordinary growth return either."
"Property price growth will be subdued for the next 10 years," an industry commentator has claimed. Speaking to Real Estate Business, BIS Shrapnel’s managing director Robert Mellor said property prices will grow by no more than 5 per cent each year.
“These are not boom conditions,” he said. “People have to get used to the fact that over the next 5 to 10 years, strong growth will be in the order of five per cent, while weaker years will see just 2 to 3 per cent growth.”
Mr Mellor said Australia is unlikely to see the rapid growth of previous years again anytime soon. “That growth was stimulated by various incentives, and as we are unlikely to see incentives return, we won’t see extraordinary growth return either."
Wednesday, April 13, 2011
Incentives Hurt Housing Market
A stimulating article on the back page of the Australian on Monday 11 April by David Uren starts by saying "Demand for homes is falling and the supply is rising." Interesting items in the article include: "First home buyer grants, variable rate mortgages and capital gains tax concessions all served to destabilise housing markets." "The Australian housing market is in a worse state than is widely understood. Demand is falling, supply is rising, and the monthly turnover is drifting lower." "There were a record 260,000 properties advertised for sale in the four weeks to 3 April, 24.1% more than a year ago when the market was booming." Monthly sales peaked in May 2010 at 37,500, and by December 2010 were down to 27,500. That translates to over nine months supply of houses on the market. Later David argues: "Australia's property investors are driven by capital gain, not by rental yield. With the increasing weakness in the capital gain outlook, investors are deserting the market." The point about variable rate mortgages is interesting. "People are encouraged to enter the market during periods of low interest rates without fully appreciating the interest rate risk they are taking on."
Thursday, March 17, 2011
John McGrath Hates Underquoting
John McGrath's blog of 12 April 2010, responding to a question about underquoting, says:
"Hey Sonja, I agree, it's a pet hate of mine too. Guides should reflect the Agent's opinion and the Vendor's expectation. I hope it wasn’t a sale connected with our firm but if it was please let me know so I can look at it right away. John McGrath."
John, you should check out the 14 Allerton sale last month. Quote price $900,000, sale price $1,117,000, 24% over guide! Yet a comparable house next door sold a year ago for $1,116,000 so luckily for Wayne this one sold below market price.
While you are at it, John, check out all the other recent Wayne Vaughan sales:
8 Dennistone Rd Eastwood 20% over guide.
17 Railway Ave Eastwood 19% over guide.
55 Eastview Ave N Ryde 19% over guide.
74 Ray Road Epping 14% over guide.
24 Angus Avenue Epping 12% over guide.
He almost got 1/17 Pinner Close N Epping right, only 9% over guide.
Wayne is in good company though, Betty Ockerlander of Better Homes clocked up:
41 Stanley Rd Epping 18% over guide.
30 Surrey St Epping 17% over guide.
28 Cecil St Dennistone E 16% over guide.
Come on, OFT, protect the buyers. Let's see some prosecutions to stamp out this pernicious practice. Unfortunately the maximum fine is only $22,000, which is less than the commission, but the OFT can take away the licence of repeat offenders.
Wayne is now being investigated by OFT, so will have to be careful not to sell any of his present under-quoted listings for the correct market price, or he could lose his licence. An interesting problem for an agent, trying to persuade buyers to settle below market price!
"Hey Sonja, I agree, it's a pet hate of mine too. Guides should reflect the Agent's opinion and the Vendor's expectation. I hope it wasn’t a sale connected with our firm but if it was please let me know so I can look at it right away. John McGrath."
John, you should check out the 14 Allerton sale last month. Quote price $900,000, sale price $1,117,000, 24% over guide! Yet a comparable house next door sold a year ago for $1,116,000 so luckily for Wayne this one sold below market price.
While you are at it, John, check out all the other recent Wayne Vaughan sales:
8 Dennistone Rd Eastwood 20% over guide.
17 Railway Ave Eastwood 19% over guide.
55 Eastview Ave N Ryde 19% over guide.
74 Ray Road Epping 14% over guide.
24 Angus Avenue Epping 12% over guide.
He almost got 1/17 Pinner Close N Epping right, only 9% over guide.
Wayne is in good company though, Betty Ockerlander of Better Homes clocked up:
41 Stanley Rd Epping 18% over guide.
30 Surrey St Epping 17% over guide.
28 Cecil St Dennistone E 16% over guide.
Come on, OFT, protect the buyers. Let's see some prosecutions to stamp out this pernicious practice. Unfortunately the maximum fine is only $22,000, which is less than the commission, but the OFT can take away the licence of repeat offenders.
Wayne is now being investigated by OFT, so will have to be careful not to sell any of his present under-quoted listings for the correct market price, or he could lose his licence. An interesting problem for an agent, trying to persuade buyers to settle below market price!
Saturday, March 5, 2011
Property Choice Keeping Prices Down
An article in today's Sydney Morning Herald says "prices remain under pressure as discounting increases to secure sales".
Auctioneer Damien Cooley is quoted as saying, "The majority of sellers are becoming a lot more realistic about what their home is worth".
Auctioneer Damien Cooley is quoted as saying, "The majority of sellers are becoming a lot more realistic about what their home is worth".
Friday, February 25, 2011
Australians struggle to enter property market
The following is extracted from today's Real Estate Business:
Australia’s housing affordability problem shows no sign of abating, according to recent figures.
Data from the Australian Bureau of Statistics found residential construction work done fell by 1.1 per cent in the December 2010 quarter.
New residential building work done fell by 1.7 per cent in the December 2010 quarter, following the 5.2 per cent decline in the September 2010 quarter.
On a more positive note, work done on major alterations and additions is again growing, turning in a 2.5 per cent increase for the December 2010 quarter to be up by 6.3 per cent over 2010.
Housing Industry Association senior economist Andrew Harvey said renovations continue to be popular as Australians increasingly look to improve their existing homes rather than face the mounting transaction costs, such as stamp duties, that they will incur if they trade-up to another property.
“Unfortunately Australia’s high property transactions costs do not help the problem of Australia’s undersupply of housing, nor the affordability problems faced by both prospective home owners and those in the market for rental property,” Mr Harvey said.
“Recently the OECD found that Australia has the fourth highest transactions cost on property in the developed world and this situation causes major inefficiencies in terms of locking owners into their existing properties.
"Australian governments need to turn their attention to removing stamp duties on new homes so as to better encourage annual levels of new home building that will help ease the pressure on prospective home owners, particularly young Australians who are really struggling to enter the housing market."
Australia’s housing affordability problem shows no sign of abating, according to recent figures.
Data from the Australian Bureau of Statistics found residential construction work done fell by 1.1 per cent in the December 2010 quarter.
New residential building work done fell by 1.7 per cent in the December 2010 quarter, following the 5.2 per cent decline in the September 2010 quarter.
On a more positive note, work done on major alterations and additions is again growing, turning in a 2.5 per cent increase for the December 2010 quarter to be up by 6.3 per cent over 2010.
Housing Industry Association senior economist Andrew Harvey said renovations continue to be popular as Australians increasingly look to improve their existing homes rather than face the mounting transaction costs, such as stamp duties, that they will incur if they trade-up to another property.
“Unfortunately Australia’s high property transactions costs do not help the problem of Australia’s undersupply of housing, nor the affordability problems faced by both prospective home owners and those in the market for rental property,” Mr Harvey said.
“Recently the OECD found that Australia has the fourth highest transactions cost on property in the developed world and this situation causes major inefficiencies in terms of locking owners into their existing properties.
"Australian governments need to turn their attention to removing stamp duties on new homes so as to better encourage annual levels of new home building that will help ease the pressure on prospective home owners, particularly young Australians who are really struggling to enter the housing market."
Wednesday, February 9, 2011
New Legislation will impact Buyers
This post is taken straight from Real Estate Business:
The National Consumer Credit Protection Act has come under scrutiny, with industry pundits arguing the new laws will negatively impact both buyers and sellers.
RE/MAX WA managing director Geoff Baldwin is concerned that the newly introduced NCCP Act will negatively impact any borrower over the age of 35, and could potentially impact those who are selling to upgrade.
“Effectively the new responsible lending obligations on banks and brokers depict that a borrower should have the capacity to repay the loan in full at retirement age without selling their owner occupied property,” Mr Baldwin said.
“These changes mean that a borrower aged, say 55 can no longer take out a loan over 30 years but will be restricted to a much shorter term unless they can demonstrate that they will have superannuation or other assets they can sell to finalise the loan at retirement.”
According to Mr Baldwin, the impact that these legislative changes could have to the property market has been totally underestimated.
“There has been little or no public education or communication to ensure people are aware of how they may be affected,” he said.
“Obviously this would mean much higher repayments and in many cases it will disqualify people and exclude them from the market."
The National Consumer Credit Protection Act has come under scrutiny, with industry pundits arguing the new laws will negatively impact both buyers and sellers.
RE/MAX WA managing director Geoff Baldwin is concerned that the newly introduced NCCP Act will negatively impact any borrower over the age of 35, and could potentially impact those who are selling to upgrade.
“Effectively the new responsible lending obligations on banks and brokers depict that a borrower should have the capacity to repay the loan in full at retirement age without selling their owner occupied property,” Mr Baldwin said.
“These changes mean that a borrower aged, say 55 can no longer take out a loan over 30 years but will be restricted to a much shorter term unless they can demonstrate that they will have superannuation or other assets they can sell to finalise the loan at retirement.”
According to Mr Baldwin, the impact that these legislative changes could have to the property market has been totally underestimated.
“There has been little or no public education or communication to ensure people are aware of how they may be affected,” he said.
“Obviously this would mean much higher repayments and in many cases it will disqualify people and exclude them from the market."
Monday, November 22, 2010
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."
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."
Friday, October 29, 2010
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.
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.
Monday, October 18, 2010
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.
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.
Wednesday, October 13, 2010
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.
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.
Tuesday, October 12, 2010
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."
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."
Friday, October 8, 2010
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.
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.
Monday, October 4, 2010
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.
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.
Wednesday, September 22, 2010
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.
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.
Monday, August 16, 2010
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.
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.
Monday, August 9, 2010
"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.
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.
Friday, August 6, 2010
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!"
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!"
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