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".
Monday, October 25, 2010
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.
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."
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.
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.
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.
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.
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.
Friday, October 22, 2010
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.
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.
Wednesday, October 20, 2010
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."
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."
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.
Thursday, October 7, 2010
"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.
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.
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.
Tuesday, October 5, 2010
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.
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!
Monday, October 4, 2010
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!
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.
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.
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.
Friday, October 1, 2010
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!
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!
Thursday, September 30, 2010
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.
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!
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!
Tuesday, September 28, 2010
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.
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.
Monday, September 27, 2010
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
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
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, September 13, 2010
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!
Sunday, September 12, 2010
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.
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.
Wednesday, September 8, 2010
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.
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.
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!"
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!
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!
Monday, July 26, 2010
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%.
"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%.
Wednesday, July 21, 2010
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.
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.
Friday, July 16, 2010
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.
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."
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."
Wednesday, July 14, 2010
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.
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.
Monday, July 12, 2010
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."
Thursday, July 8, 2010
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."
"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."
Thursday, July 1, 2010
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.
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.
Monday, June 28, 2010
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.
"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.
"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.
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.
Friday, June 25, 2010
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!
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!
Wednesday, June 16, 2010
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.
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.
Friday, June 11, 2010
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."
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."
Thursday, June 10, 2010
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.
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.
Wednesday, June 9, 2010
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!
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.
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.
Monday, June 7, 2010
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.
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!
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!
Friday, June 4, 2010
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:
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.
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.
Tuesday, June 1, 2010
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.
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.
Monday, May 31, 2010
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%.
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?
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?
Wednesday, May 26, 2010
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.
Tuesday, May 25, 2010
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.
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.
Monday, May 24, 2010
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.
Thursday, May 20, 2010
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.
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.
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.
Wednesday, May 19, 2010
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."
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."
Thursday, May 13, 2010
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.
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.
Tuesday, May 11, 2010
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.
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.
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.
Friday, May 7, 2010
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.
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:
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".
Tuesday, May 4, 2010
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.
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.
Monday, May 3, 2010
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".
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".
Friday, April 30, 2010
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.
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.
Watching with Interest
A thought-provoking letter in the Northern District Times by Mr Clive Troy, a Beecroft resident, says "Council moved the bulk of proposed high-rise to Thornleigh, Beecroft and Cheltenham after serious protests from people in the top end of the Shire. Has this strategy got anything to do with political ambitions related to the next state election and the seat of Hornsby?"
Maxine McKew says Strategy doesn't make sense!
Bennelong Federal MP Maxine McKew met Hornsby Shire Mayor Nick Berman and others to discuss the Hornsby Shire housing strategy. Commenting on the traffic problems, she said "The proposed redevelopment around Carlingford Court makes no sense to me". Ms McKew is Secretary for Infrastructure, Transport, Regional Development and Local Government so this issue is directly in her remit.
Meanwhile Epping State Liberal MP Greg Smith says "the garden suburb of Beecroft, the pride of the electorate, is also set for destruction in certain areas when dwellings are replaced by ugly home units".
Meanwhile Epping State Liberal MP Greg Smith says "the garden suburb of Beecroft, the pride of the electorate, is also set for destruction in certain areas when dwellings are replaced by ugly home units".
Thursday, April 29, 2010
Rudd Backflip on Foreign House Buyers
The federal government’s decision to reinstate the foreign investment guidelines has been welcomed by Australia’s real estate industry body. The Real Estate Institute of Australia (REIA) president David Airey yesterday said the government’s backflip on foreign investment guidelines was exactly what Australia needed.
Late last week, the government announced that foreign investors may only purchase new housing stock and temporary residents may only purchase existing housing for use while they reside in Australia. “We support measures that facilitate access for overseas investors to participate in the property market, however it has come to our attention that since 2008, the changes were not being effectively policed by the Foreign Investment Review Board (FIRB),” Mr Airey said.
REIA undertook a survey which showed that agents, particularly in Melbourne, were suspicious of the number of foreign entrants into the market place and whether those entrants were strictly adhering to the guidelines. “We are looking forward to working with the government to achieve an outcome that meets the expectations of the Australian community and does not place undue stress on housing affordability in Australia,” Mr Airey said
Late last week, the government announced that foreign investors may only purchase new housing stock and temporary residents may only purchase existing housing for use while they reside in Australia. “We support measures that facilitate access for overseas investors to participate in the property market, however it has come to our attention that since 2008, the changes were not being effectively policed by the Foreign Investment Review Board (FIRB),” Mr Airey said.
REIA undertook a survey which showed that agents, particularly in Melbourne, were suspicious of the number of foreign entrants into the market place and whether those entrants were strictly adhering to the guidelines. “We are looking forward to working with the government to achieve an outcome that meets the expectations of the Australian community and does not place undue stress on housing affordability in Australia,” Mr Airey said
Wednesday, April 28, 2010
Sydney Building Costs
The National Housing Supply Council estimates there is a shortfall of 178,000 properties across the country.
Meanwhile the NSW Planning Department claims there is plenty of land available for residential development in Sydney - "the highest level of released land since 1981".
So why the discrepancy? A breakdown of building costs shows it costs almost $200,000 more to build a green-field house (ie, on land not previously used for housing) in Sydney than in other capital cities, mostly due to state government taxes and the raw cost of land.
The Urban Development Institute of Australia, the developer lobby group, blames the government for not providing services, roads, public transport, and easy DA approval processes. Their spokesman asks "if you are a developer, are you going to invest where there is all this uncertainty?"
Meanwhile the NSW Planning Department claims there is plenty of land available for residential development in Sydney - "the highest level of released land since 1981".
So why the discrepancy? A breakdown of building costs shows it costs almost $200,000 more to build a green-field house (ie, on land not previously used for housing) in Sydney than in other capital cities, mostly due to state government taxes and the raw cost of land.
The Urban Development Institute of Australia, the developer lobby group, blames the government for not providing services, roads, public transport, and easy DA approval processes. Their spokesman asks "if you are a developer, are you going to invest where there is all this uncertainty?"
Friday, April 23, 2010
Unoccupied Houses
The 2006 census found that approximately 830,000 private dwellings were vacant, representing almost 10% of the total housing stock. Earlier this month, in a blog about foreign buyers, I reported how a house in my street, purchased last year by a foreign buyer, was still empty. I am pleased to report that the owner has now authorised Ray White Beecroft to put tenants in the property. Only 829,999 to go!
Tracking House Prices
A most excellent article in Sydney Morning Herald's BusinessDay explains why it is so difficult to determine trends in house prices. This blog has commented before on the danger of quoting median house sale prices, which are influenced by the nature of purchasers and the increasing size of new houses. The article reminds us how "the flood of first-home buyer properties onto the market last year would have produced a price fall on a simple median reading due to the lower average value of those properties". So as higher-value properties return to their natural proportion of the market there is bound to be an apparent but entirely artificial increase in median house values.
RP Data-Rismak seeks to distinguish homes by their attributes, comparing the trend of prices for four bedroom houses with pools and so on. Obviously this is a far more valid approach, but is greatly hindered by the paucity of sales of similar houses.
Even when the same property is sold twice in a short period the difference in price might be because house prices have gone up, but could be because the new owners did substantial renovations. Not surprisingly, the article's main conclusion is that "house price information is pretty poor".
RP Data-Rismak seeks to distinguish homes by their attributes, comparing the trend of prices for four bedroom houses with pools and so on. Obviously this is a far more valid approach, but is greatly hindered by the paucity of sales of similar houses.
Even when the same property is sold twice in a short period the difference in price might be because house prices have gone up, but could be because the new owners did substantial renovations. Not surprisingly, the article's main conclusion is that "house price information is pretty poor".
Thursday, April 22, 2010
Which Plan Next?
I liked this extract from a paper by Chris Berg, research fellow with the Institute of Public Affairs:
"The first major plan for Sydney, the 1948 County of Cumberland Plan, was supposed to be in place up to 1980. It was supplanted by a new plan in 1968, supposed to last until 2000. Then came one in 1988, another in 1994, in 1997, in 1998 and in 1999. That last plan should have lasted until 2016. It didn't. The planners imagine that the next one will last till 2036. It won't."
Makes you wonder whether the states and shires of Australia should go ahead with the latest plan, to re-zone large tracts of the capital cities of Australia for multi-storey residential development, in preparation for the federal government's anticipated population in 2050! Trouble is, once those re-zonings have been approved, they are unlikely to be reversed by the next Major Plan for Sydney. The damage to the character of our city will be permanent.
And of course the pressure to implement the latest plan "demands" that the state has the power to compulsorily acquire people's property to make way for all the new developments. And sure enough those powers are now being drawn up, or extended, and will also no doubt remain when the next plan comes out.
"The first major plan for Sydney, the 1948 County of Cumberland Plan, was supposed to be in place up to 1980. It was supplanted by a new plan in 1968, supposed to last until 2000. Then came one in 1988, another in 1994, in 1997, in 1998 and in 1999. That last plan should have lasted until 2016. It didn't. The planners imagine that the next one will last till 2036. It won't."
Makes you wonder whether the states and shires of Australia should go ahead with the latest plan, to re-zone large tracts of the capital cities of Australia for multi-storey residential development, in preparation for the federal government's anticipated population in 2050! Trouble is, once those re-zonings have been approved, they are unlikely to be reversed by the next Major Plan for Sydney. The damage to the character of our city will be permanent.
And of course the pressure to implement the latest plan "demands" that the state has the power to compulsorily acquire people's property to make way for all the new developments. And sure enough those powers are now being drawn up, or extended, and will also no doubt remain when the next plan comes out.
Is there a housing shortage?
The following is a quote from a recent government report analysing housing needs:
"A likely response by government and the private market to the emergence of a large housing shortage would be the construction of a larger number of smaller, low cost dwellings. Therefore, the trends towards larger dwellings with fewer occupants discredit the existence of a national housing supply shortage. These trends indicate that the housing market has been driven more by the demand for increasing housing quality, rather than the demand for increasing quantity. It also shows that there is significant capacity in the existing housing stock to absorb more people."
The Hornsby Shire is indeed proposing to build large numbers of small units in their five-storey residential developments. But as explained in this report, the focus of that activity is at best questionable. The report points out that the average number of persons per bedroom has fallen from 1.15 in 1976 to 0.87 in 2006. Not only do kids now expect their own room, the household also expects to have a spare bedroom for visitors.
If this is what buyers want, Hornsby Shire's proposal to build small units seems to go against the market trend.
"A likely response by government and the private market to the emergence of a large housing shortage would be the construction of a larger number of smaller, low cost dwellings. Therefore, the trends towards larger dwellings with fewer occupants discredit the existence of a national housing supply shortage. These trends indicate that the housing market has been driven more by the demand for increasing housing quality, rather than the demand for increasing quantity. It also shows that there is significant capacity in the existing housing stock to absorb more people."
The Hornsby Shire is indeed proposing to build large numbers of small units in their five-storey residential developments. But as explained in this report, the focus of that activity is at best questionable. The report points out that the average number of persons per bedroom has fallen from 1.15 in 1976 to 0.87 in 2006. Not only do kids now expect their own room, the household also expects to have a spare bedroom for visitors.
If this is what buyers want, Hornsby Shire's proposal to build small units seems to go against the market trend.
First Home Buyer concerns
According to the Bankwest/MFAA Home Finance Index, more than half of Gen Ys say they are shelving their plans for buying a home because of how much debt they would need to carry to afford a property. According to the latest Bankwest/MFAA Home Finance Index, a “two-speed” property market is emerging, with more young Australians expecting to be life-long renters. Hmmm, not convinced this is breaking news. I remember when, many years ago, I was intending to buy my first home, it seemed an impossible dream, and yes, I rented for some years before finally buying. Have times really got worse, or is it just that for a short period people really thought the world owed them a nice shiny new house when they leave school? Back to reality, Gen Ys.
How does this affect the demand for new housing? A report in 2009 makes the important point that “The formation of new households by young people is significantly influenced by the price of housing and social trends, such as the young adults remaining longer in, and often returning to, the family home”.
How does this affect the demand for new housing? A report in 2009 makes the important point that “The formation of new households by young people is significantly influenced by the price of housing and social trends, such as the young adults remaining longer in, and often returning to, the family home”.
Are Developers delaying projects?
SMH BusinessDay had a full page article about the number of projects in and around Sydney that are ready for building but have been waiting for years for the developers to start building homes. Land at Werrington has potential for 240 homes, but nothing has been done by the developers, Becton, since they bought the land three years ago. Why? Becton says it is because the state government didn't put a railway station in at UWA. Of course, if there was a railway station next door the homes would be enormously more attractive, but can that really justify the developer not building?
Becton also have a site in Waterloo, known as Sydneygate, approved in 2005 for 280 units, with 30% already sold off the plan, but apparently work has not yet started. Development consent will lapse in November.
Peter Icklow, CEO of Monarch Group, denies developers are sitting on vacant land waiting for prices to rise even further.
Tony Kelly, Minister for Planning, says "Land supply is there ... it exceeds the requirements for forecast population growth". Greenfield stock is at its highest level since 1981.
But Aaron Gadiel, CEO of the Urban Taskforce, says "the government figures are nonsense because they don't reflect where land is commercially developable".
The article specifically says that the upper north shore unit market is experiencing problems. All this seems to call into question the central tenet of the Hornsby Shire Housing Strategy - it's no good rezoning land for development if the developers don't want to build! Is there real evidence of demand for hundreds of small units in multi-storey blocks in places like Beecroft and Carlingford? If the demand isn't there then why would the developers build them?
It's worth remembering a quote from an article in 2009 - "Home builders and land developers do not have an incentive to increase the supply of housing and land to significantly above anticipated demand, as this would increase the likelihood of dwellings and lots being unoccupied, undeveloped, remaining unsold or falling in value, and therefore reducing profit."
Becton also have a site in Waterloo, known as Sydneygate, approved in 2005 for 280 units, with 30% already sold off the plan, but apparently work has not yet started. Development consent will lapse in November.
Peter Icklow, CEO of Monarch Group, denies developers are sitting on vacant land waiting for prices to rise even further.
Tony Kelly, Minister for Planning, says "Land supply is there ... it exceeds the requirements for forecast population growth". Greenfield stock is at its highest level since 1981.
But Aaron Gadiel, CEO of the Urban Taskforce, says "the government figures are nonsense because they don't reflect where land is commercially developable".
The article specifically says that the upper north shore unit market is experiencing problems. All this seems to call into question the central tenet of the Hornsby Shire Housing Strategy - it's no good rezoning land for development if the developers don't want to build! Is there real evidence of demand for hundreds of small units in multi-storey blocks in places like Beecroft and Carlingford? If the demand isn't there then why would the developers build them?
It's worth remembering a quote from an article in 2009 - "Home builders and land developers do not have an incentive to increase the supply of housing and land to significantly above anticipated demand, as this would increase the likelihood of dwellings and lots being unoccupied, undeveloped, remaining unsold or falling in value, and therefore reducing profit."
Wednesday, April 21, 2010
Converting Offices to Apartments
SMH BusinessDay reports that a number of big redevelopments are planned on the fringes of the Sydney CBD, converting older style office blocks into upmarket residential towers. Developers can make more money on strata apartment sales then they can by leasing the offices.
In the Beecroft area, there is a good example of this with the Waldorf Apartment block on City View Road, which used to be the Waldorf Hotel and was converted to up market apartments a few years ago. Ray White Beecroft have an apartment on the top floor of that block for sale, and it certainly offers a great lifestyle for a single man or someone commuting to Sydney from elsewhere. Close to the railway station, and with gym, swimming pool, bar and restaurant all part of the complex, as well as being surely a great investment!
In the Beecroft area, there is a good example of this with the Waldorf Apartment block on City View Road, which used to be the Waldorf Hotel and was converted to up market apartments a few years ago. Ray White Beecroft have an apartment on the top floor of that block for sale, and it certainly offers a great lifestyle for a single man or someone commuting to Sydney from elsewhere. Close to the railway station, and with gym, swimming pool, bar and restaurant all part of the complex, as well as being surely a great investment!
Housing Investors Take Up Slack
So says SMH BusinessDay today. "Investors are being lured back into the market through the prospect of higher rents and price growth, helping to pick up the slack from departing first-home buyers. Investors are taking a bigger share of the market, 31% compared to last year's low of 24%.investors are taking a bigger share of the market, 31% compared to last year's low of 24%. RP Data's Tim Lawless attributes this partly to investors being able to negatively gear their interest payment, whereas other buyers are being scared off by the continuing interest rate rises.
This investor interest is despite rents rising more slowly than expected, actually flat in Sydney last month, according to ANZ. Average rental yield fell across all capital cities to 3.2% in December, down from 3.48% in June last year. However Ray White Beecroft's property management department is continuing to raise rents, and having no problem renting vacated properties at higher rents than the previous tenant was paying.
This investor interest is despite rents rising more slowly than expected, actually flat in Sydney last month, according to ANZ. Average rental yield fell across all capital cities to 3.2% in December, down from 3.48% in June last year. However Ray White Beecroft's property management department is continuing to raise rents, and having no problem renting vacated properties at higher rents than the previous tenant was paying.
Tuesday, April 20, 2010
"Lots of land available"
A spokesman for the NSW housing minister, Tony Kelly, says there are 30,000 lots that were ready and serviced in Sydney, and they are waiting for developers to lodge applications and start building.
Putting that into perspective, only 13,000 new homes were built last year.
So what is going on? Mr Kelly says "Frustration is growing among developers, who say they are being held back by the high cost of land, infrastructure charges and an inability to build enough dwellings on some land blocks to achieve a 20 per cent return."
Or putting it another way, the developers want house prices to go up a fair bit more before they will resume building?
Putting that into perspective, only 13,000 new homes were built last year.
So what is going on? Mr Kelly says "Frustration is growing among developers, who say they are being held back by the high cost of land, infrastructure charges and an inability to build enough dwellings on some land blocks to achieve a 20 per cent return."
Or putting it another way, the developers want house prices to go up a fair bit more before they will resume building?
Land price surging
According to the Housing Industry Association and RP Data, land prices are growing at their fastest rate since 2004. The report blames the rise on lagging land supply, but that needs to be coupled with the rate of immigration and also foreign buyers who are now allowed open slather in purchasing Australian property without even bothering to rent it out.
How does the Rudd government justify that relaxation of foreign purchase rules, other than as a sop to the developers?
Interestingly, the article in the SMH business section says that some councils say they have large amounts of zoned land up for sale, but developers are not buying!
How does the Rudd government justify that relaxation of foreign purchase rules, other than as a sop to the developers?
Interestingly, the article in the SMH business section says that some councils say they have large amounts of zoned land up for sale, but developers are not buying!
Australian Housing Market "pushing the envelope"
CEO of Hometrack says the Australian market has been pushing the envelope in terms of leverage. "We have been willing to assess people's ability to repay a loan in a very accommodating way", he says.
Meanwhile the number of new housing starts is some 25% lower than it has been over the last decade. The value and number of new home loans were, for much of last year, at record levels, due to the various stimulae. But as interest rates have risen and the government grants have diminished, new home loans are falling in both value and number.
Comsec's chief economist places NSW at the bottom of the states in terms of economic performance.
Meanwhile the number of new housing starts is some 25% lower than it has been over the last decade. The value and number of new home loans were, for much of last year, at record levels, due to the various stimulae. But as interest rates have risen and the government grants have diminished, new home loans are falling in both value and number.
Comsec's chief economist places NSW at the bottom of the states in terms of economic performance.
Thursday, April 15, 2010
Is this why we need more immigrants?
Mr Nicholas Cowdery QC, highly respected Director of Public Prosecutions, is being forced to retire at age 65 against his wishes, because under government regulations he would lose his pension if he worked on. What a desperate waste! No doubt he will find other employment, probably in private industry where his remarkable talents will be put to good use for many more years. But he could just retire and live on his pension, swelling the ranks of those the government says need to be supported by the younger Australian working population. And that argument is used to justify the need for 300,000 immigrants each year.
Present retirement policies were set before the effect of modern health and welfare policies so dramatically increased our ability to work on beyond 65, yet we still have policies like this which force people like Mr Cowdery to leave his job long before his physical or mental age justifies it.
We really should be altering our employment and pension practices to positively encourage able bodied and willing senior citizens to go on working as long as they are able to contribute to our society.
Present retirement policies were set before the effect of modern health and welfare policies so dramatically increased our ability to work on beyond 65, yet we still have policies like this which force people like Mr Cowdery to leave his job long before his physical or mental age justifies it.
We really should be altering our employment and pension practices to positively encourage able bodied and willing senior citizens to go on working as long as they are able to contribute to our society.
Real Estate Sector Overheating
So says Gail Kelly, Chief Executive of Westpac. She is particularly concerned about what is happening in Melbourne, where prices have jumped 19% over the last year. She predicted that the Reserve Bank would raise interest rates again. The RBA prefers managed growth and wants to stop the development of housing or other bubbles.
In the meantime funding costs, that surged during the Global Financial Crisis, remain above the RBA adjustments and will not return to pre-crisis levels. Westpac is making sure that their lending rates are priced to reflect this.
In the meantime funding costs, that surged during the Global Financial Crisis, remain above the RBA adjustments and will not return to pre-crisis levels. Westpac is making sure that their lending rates are priced to reflect this.
Civic Trust Meeting on Strategy
The Civic Trust is holding an open meeting on the Hornsby Shire Revised Housing Strategy, and Beecroft's inclusion in that strategy, in the Cheltenham Recreation Club at 7:30pm tonight Thursday 15 April.
Tuesday, April 13, 2010
Foreign Property Buyers
The Australian says that "overseas buyers may be crowding locals out of the market"! "Anecdotes abound about cashed-up Chinese investors "land banking" by collecting houses, only to leave them vacant while desperate first home buyers lose out at auctions to these foreign buyers.
This situation largely results from a change implemented rather quietly, a few days before Christmas 2008, by the Rudd government relaxing Australia's previously stringent restrictions on foreign purchases of residential real estate. The Australian says that barely a year later, property prices have surged so strongly that the RBA is having to raise interest rates to dampen the buyers' desires.
Under the changes, called "administrative" by the FIRB, visitors on 12 month visas are allowed to buy one property to live in while they are here, and are no longer required to sell that property when they leave Australia. There are typically 300,000 visitors eligible under these new rules each year.
The author of this blog lives in a street where a Chinese visitor last year bought a property before auction for well over the expected price, and the property is still empty. We understand that Ray White Beecroft, the selling agent, has written to the new owner offering to put tenants in, so far without result. Meanwhile the neighbours are getting very distressed by the growing weeds in the front garden!
This situation largely results from a change implemented rather quietly, a few days before Christmas 2008, by the Rudd government relaxing Australia's previously stringent restrictions on foreign purchases of residential real estate. The Australian says that barely a year later, property prices have surged so strongly that the RBA is having to raise interest rates to dampen the buyers' desires.
Under the changes, called "administrative" by the FIRB, visitors on 12 month visas are allowed to buy one property to live in while they are here, and are no longer required to sell that property when they leave Australia. There are typically 300,000 visitors eligible under these new rules each year.
The author of this blog lives in a street where a Chinese visitor last year bought a property before auction for well over the expected price, and the property is still empty. We understand that Ray White Beecroft, the selling agent, has written to the new owner offering to put tenants in, so far without result. Meanwhile the neighbours are getting very distressed by the growing weeds in the front garden!
House Prices to Plateau?
Peter Martin, economics correspondent of the Sydney Morning Herald, says buyers are deserting the Sydney property market at the rate of 1000 a month, causing real estate professionals to predict an "exhausted market" with prices plateauing for the rest of the year.
The number of loans to buy houses fell 27% between September 2009 and February 2010.
Bureau of Statistics figures show February was the worst month for home loans since 2001!
In NSW, in February just 2293 first home buyers took out loans compared with 5941 in July 2009.
The proportion of people who believe "now is a good time to buy a dwelling" fell from 62% in December to 42% in March. 27% of those surveyed now say the wisest use for savings is to pay down debt.
The number of loans to buy houses fell 27% between September 2009 and February 2010.
Bureau of Statistics figures show February was the worst month for home loans since 2001!
In NSW, in February just 2293 first home buyers took out loans compared with 5941 in July 2009.
The proportion of people who believe "now is a good time to buy a dwelling" fell from 62% in December to 42% in March. 27% of those surveyed now say the wisest use for savings is to pay down debt.
Monday, April 12, 2010
Home Loan Situation could lead to House Price Falls?
Home loans fell in February, slumping for the fifth straight month, prompting Moody's Analytics' economist Matt Robinson in an article in Sydney Morning Herald's Business Day to suggest the extended decline may herald house price falls over the next half year.
The number of home loans dropped 1.8 per cent in February to 50,287, after January's slide was revised downward to a 7.3 per cent drop. Analysts had tipped a 1 per cent fall in February home loans, according to Bloomberg.
The picture of a lacklustre housing finance comes as the Reserve Bank embarks on a series of interest rate hikes and house prices continue to rise.
Mr Scutt of Arab Bank Australia said home prices have risen so much over last nine months they could be swaying people away from buying - and if they continue to rise, based on this data, there will be more questions about the impact of foreign buyers in the local market. The Foreign Investment Review Board currently has 50 investigations under way into suspicious purchases of local property, the government said last week.
The number of home loans dropped 1.8 per cent in February to 50,287, after January's slide was revised downward to a 7.3 per cent drop. Analysts had tipped a 1 per cent fall in February home loans, according to Bloomberg.
The picture of a lacklustre housing finance comes as the Reserve Bank embarks on a series of interest rate hikes and house prices continue to rise.
Mr Scutt of Arab Bank Australia said home prices have risen so much over last nine months they could be swaying people away from buying - and if they continue to rise, based on this data, there will be more questions about the impact of foreign buyers in the local market. The Foreign Investment Review Board currently has 50 investigations under way into suspicious purchases of local property, the government said last week.
Housing Strategy Meeting in Kilpark Park
There was a very large turnout in Kilpark Park for a meeting discussing the planned 5-story residential zoning recently included in the Hornsby Shire Housing Strategy (2010). Greg Smith gave his views, questioning the need for the foreseen massive increase in population, and advocating decentralisation away from Sydney, with frequent loud applause. A petition was circulated and seemed to be collecting lots of signatures.
Kilpark Park was an excellent setting for the meeting, a delightful tranquil setting surrounded by trees so at present houses can hardly be seen, but which will, if the Darling Street rezoning is approved, have five storey blocks of units towering over its western boundary.
Regarding Darling Street, the housing stategy states "Traffic signals at intersection of Carlingford Road with Rembrandt Street are at capacity", and "Future traffic conditions in Rembrandt Street can be improved by road widening to enable provision of an additional right turn lane". I think most people who use the present shopping centre would agree with that, but one more right hand lane will hardly compensate for the increased traffic from all those new five storey residences lining the eastern side of Rembrandt Street! The document implies that the new residents will all access their properties via the widened Rembrandt Street intersection.
Kilpark Park was an excellent setting for the meeting, a delightful tranquil setting surrounded by trees so at present houses can hardly be seen, but which will, if the Darling Street rezoning is approved, have five storey blocks of units towering over its western boundary.
Regarding Darling Street, the housing stategy states "Traffic signals at intersection of Carlingford Road with Rembrandt Street are at capacity", and "Future traffic conditions in Rembrandt Street can be improved by road widening to enable provision of an additional right turn lane". I think most people who use the present shopping centre would agree with that, but one more right hand lane will hardly compensate for the increased traffic from all those new five storey residences lining the eastern side of Rembrandt Street! The document implies that the new residents will all access their properties via the widened Rembrandt Street intersection.
Friday, April 9, 2010
Property Bubble Spurs Spending
This is from the SMH. "Surging property prices appear to be driving a spending spree with home owners taking out bigger mortgages to help fund the purchase of big-ticket items from new cars to holidays."
Regulators and economists fear the borrowing binge could leave home owners vulnerable to rising interest rates, while any reversal of housing prices could leave many with negative equity! This brings back memories of 2008 in USA!
Regulators and economists fear the borrowing binge could leave home owners vulnerable to rising interest rates, while any reversal of housing prices could leave many with negative equity! This brings back memories of 2008 in USA!
Job situation, NSW
The key to recovering from the Great Slump is of course employment. If people can't find work they can't pay their mortgage. So it's great news that Australia is creating new jobs at the rate of 1000 a day! Not so heartening is to find that NSW is only creating 200 of them. Indeed the latest employment figures show the performance of NSW is actually going backwards compared to the other states, Victoria approaching 400 new jobs per day, most of them being full time, whereas half of NSW's new jobs are part time. Even worse, the Bureau of Statistics shows that NSW actually lost 2600 jobs last month!
Craig James of Commsec predicts unemployment at 4.75% by end of the year and says "Businesses are now largely coasting, concerned about the implication of stimulus measures being withdrawn." He says that Australia's very high rate of population growth helps business, but adds that because of immigration and aging "employment needs to rise by around 25,000 per month to prevent the jobless rate from rising". One could argue that cutting immigration and helping older people to work longer would reduce the pressure to create new jobs!
Statistics show that youth unemployment is particularly bad, with 16% of 15-19 year olds unemployed. "Prolonged unemployment for young people can have life-long consequences," says Toby Hall, CEO of Mission Australia, advocating urgent steps to help school leavers transition into the workforce.
Craig James of Commsec predicts unemployment at 4.75% by end of the year and says "Businesses are now largely coasting, concerned about the implication of stimulus measures being withdrawn." He says that Australia's very high rate of population growth helps business, but adds that because of immigration and aging "employment needs to rise by around 25,000 per month to prevent the jobless rate from rising". One could argue that cutting immigration and helping older people to work longer would reduce the pressure to create new jobs!
Statistics show that youth unemployment is particularly bad, with 16% of 15-19 year olds unemployed. "Prolonged unemployment for young people can have life-long consequences," says Toby Hall, CEO of Mission Australia, advocating urgent steps to help school leavers transition into the workforce.
Rent vs Buy
An interesting article in the economist about the US economy says that houses for sale in USA now often display the "no-tricks" monthly mortgage payment. This used to be taboo, says Mr Hilton, boss of Meritage Homes, but nowadays people are looking for a place to live, not an investment, and want to compare the cost of buying the house to renting a similar place.
No tricks? Mr Hilton uses as his example "eg $1,480 per month for a three bedroom two bathroom new Harrison home". The internet tells me that an equivalent home in Pensylvania would rent for $1,600 per month, which makes buying sound a great deal. But the figure quoted equates to a $200,000 loan at average rates. In other words it looks as if he is advertising the repayments on the house alone, not the land, whereas most people want a home on land. If so, his salespeople need to stress that the purchaser will also have to buy, and presumably borrow money for, the land for the house which is often worth more than the house you put on it!
No tricks? Mr Hilton uses as his example "eg $1,480 per month for a three bedroom two bathroom new Harrison home". The internet tells me that an equivalent home in Pensylvania would rent for $1,600 per month, which makes buying sound a great deal. But the figure quoted equates to a $200,000 loan at average rates. In other words it looks as if he is advertising the repayments on the house alone, not the land, whereas most people want a home on land. If so, his salespeople need to stress that the purchaser will also have to buy, and presumably borrow money for, the land for the house which is often worth more than the house you put on it!
Thursday, April 8, 2010
Majority Oppose Rudd's "Big Australia"
A survey by the Lowy Institute has found that nearly 70% of Australians disagree with Kevin Rudd's plans for population growth to 36 million by 2050. Lowy asked what was the best target population growth for the next 40 years, and reports that 43% favoured 30 million, and 22% happy with the present size of 22 million.
Opposition immigration spokesman Scott Morrison said immigration is out of control and needed to be cut.
Opposition immigration spokesman Scott Morrison said immigration is out of control and needed to be cut.
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