Archive for February, 2011
New property data out today from RPData show Australia recorded the biggest monthly fall in house prices since the RP Data-Rismark Home Value Index started.
“It’s the biggest fall in values that we’ve ever seen on a monthly basis so while we’re not pressing the alarm bells yet we will wait and see what the February results actually tell us” said RP Data Research Analyst Cameron Kusher.
Seasonally Adjusted, the national index fell 1.8 percent in the January quarter for capital city dwellings. Every mainland capital recorded falls in capital city prices exceeding 1 percent.
The plunge was lead by Canberra recording a 3.8 percent fall, Perth followed at 2.6 percent, Brisbane 2.3 percent, Melbourne 1.9 percent, Sydney 1.4 percent, Darwin 1.4 percent, Adelaide 1.3 percent. Hobart was the only capital to buck the trend, recording a 0.6 percent rise for the three months to January.
Property experts believe the fall is attributable to the floods in Queensland, although it is worth nothing that the two biggest falls were recorded in Canberra and Perth.
» ‘Worst ever’ property dive after disasters – News Limited, 28th February 2011.
» RPData National Media Release – January a quiet month for Australian housing markets – RPdata, 28th February 2011.
Posted in Australian economy, Australian Housing | 17 Comments »
A new survey has found First Home Buyers are selling up in droves, no longer able to afford their houses purchased with the lurer of free money from the First Home Buyers Boost.
The survey, conducted by Mortgage Choice shows 10 percent of first home buyers who have purchased within the last two years have either sold or are selling up.
If interest rates rise a further 1 percent, another 6 percent said they would sell. An additional 14 percent would flood the market if rates rise 1.5 percent.
Andrew Robb, Shadow Minister for Finance and Debt Reduction said young homeowners “got totally suckered”.
“The Government propped up the market by luring in young people but there were no warnings about what might happen within a year or two – with interest rates in particular.”
“Now young people have had a double whammy because not only have interest rates added $6000 a year to typical repayments, the cost of living is soaring, with electricity prices up nearly 40 per cent in three years, water up 27 per cent and rates up 15 per cent.”
Treasury minutes about the First Home Saver Accounts (FHSA) released under freedom of information said “The short term stimulus [BOOST] was designed to encourage people who had already been saving for a home to bring forward their purchase and prevent the collapse of the housing market. Contrary to this measure, the FHSA is designed to encourage saving over the medium to long term.”
If the first home buyers boost was designed to prevent the collapse of the housing market, one has to wonder what the government’s plan was when the stimulus finished and the unsustainable housing market built on record levels of household debt starts to collapse again. You can’t keep propping it up.
» Homeowners face tougher times ahead – The Daily Telegraph, 20th February 2011.
Posted in Australian economy, Australian Housing | 15 Comments »
More RE agents secretly pose as buyers in the media to drum up business as the number of mortgages plungeWritten by admin on February 18, 2011 – 8:42 pm
It is thought the number of Real Estate Agents secretly posing as home buyers in the Australian media has reached levels not seen since the GFC. Last fortnight it was Ben Markwell, the first time buyer who discovered buying a house would not cost much more the renting. Featuring in a Courier-Mail article under the headline of First home buyers slowly returning to Queensland property market after historical low, it was later discovered Ben is an agent for Century 21.
On Sunday, the Adelaide Advertiser featured a story titled Make dream a reality saying while it was hard to crack into the property market, “the great Australian dream can still be realised.” The article featured first home buyer Lisa Vallely who told the Advertiser that the great Australian dream is still achievable. An investigation by the Tasmanian Real Estate Trouble Blog discovers Lisa is a Real Estate Agent with Harcourts.
Recent figures from the Australian Finance Group (AFG) may paint a picture as to why Real Estate agents are currently working under cover to drum up business.
The AFG, Australia’s largest mortgage broker with a ten percent market share of the Australian mortgage market shows the number of mortgages processed in January is at the lowest level since the AFG started the index in 2004. According to the AFG, mortgages processed in Queensland fell 48.9 percent in January 2011 from the previous month. Victoria was down 39.6 percent, South Australia 33.6 percent, New South Wales 31.8 percent and Western Australia 28.6 percent. These figures are not seasonally adjusted and the holiday period is expected to be quiet, just not the quietest since 2004.
AFG figures also show the level of debt borrowed is falling, suggesting Australians are hesitant to take out larger loans. Throughout 2010, the LVR was in the 60 to 65 percent range, but in January, the average LVR fell to 54.9 percent.
» AFG: Lowest monthly sales since 2004 as floods hit national mortgage market: January figures – Australian Finance Group Limited.
Posted in Australian economy, Australian Housing | 5 Comments »
Two years ago we ran an comprehensive story on what we believed would be the effects from propping up the housing market with the First Home Owners Boost. Titled Time to pick and choose: Housing or Jobs we suggested that propping up and keeping house prices artificially high would eventually see discretionary spending fall, once the capacity to borrow for any shortfall dried up. Simply put, something has to budge in the household budget, if house prices were to continue to outstrip wages. At the time we wrote :
The housing market remains the key to the problem. The longer house prices remain artificially high in comparison to household incomes, the more households will need to spend on this expense, and hence the less money that can be spent on other goods and services underpinning domestic jobs.
Two years later and the effects is starting to take effect. Blair Speedy from The Australian newspaper reported yesterday :
IF the army is looking for somewhere to put a new shooting range it might want to consider one of Australia’s many shopping malls.
Judging by the number of lunchtime shoppers this week in Melbourne Central, one of Australia’s busiest shopping centres, they could be pretty certain they wouldn’t hit anybody.
Growth in annual retail turnover for December is now at the weakest level since 1982 and its believed the market has deteriorated further. According to Russell Zimmerman, the Executive Director of the Australian Retailers Association “The first week of sales after Christmas went quite well, but beyond then, things slowed right down.” He told the Australian, that some retailers reported falls of up to 15 percent last month (January).
Department Store Myer CEO Bernie Brookes, reported a “significant and rapid deterioration” in sales in January. Mr Brookes, a retail veteran of more than 30 years said “I’ve never seen the consumer so fragile,”
Chief Executive of the Australian National Retail Association, Ms Margy Osmond said “Clearly their [customers] attitude is now that it has to be a bargain, and it had better be the best bargain around, before they’ll spend on anything discretionary.”
According to the article published in The Australian, the retail sector contributes some $262.6 billion dollars or 19 percent of Australia’s GDP. The sector is Australia’s largest employer, accounting for 11 percent of the workforce. Retailers will now have to start cutting expenses in a bid to survive, and will do this by cutting staff hours. A “good” thing for the government is this shouldn’t show up in unemployment figures, provided employers cut hours and not positions, as a person only needs to work for 1 hour a week to be deemed employed, although the aggregate number of hours will trend down. However, for employees, any cuts in hours could threaten the ability to meet weekly expenses including mortgage or rent payments in already extremely tight budgets.
But like a good Real Estate Agent, Ms Margy Osmond sees light at the end of the tunnel and puts on a brave face. “Retail has had a tough 18 months, and things will remain challenging this year, but ultimately the sun will shine; there will be a recovery,” she said. “The basic economic fundamentals are good, we’ve got strong employment figures, confidence is particularly high in some parts of the country . . . as long as we see steady underlying economic conditions, there must be a recovery at some point.”
We don’t share the same level of enthusiasm. Once the housing market starts to correct, the negative wealth effect should see spending impacted further. Then, as we wrote in our report in 2009, “Not only do we have to cut back on spending and live with in our means, we also have to start paying down some of this mountain of [household] debt we have in our names. For every dollar a household spends in paying down debt, is one more dollar not spent in the economy supporting jobs. It’s a double whammy.”
» Store owners blue as shoppers skip retail therapy – The Australian, 12th February 2011.
Posted in Australian economy, Australian Housing, Unemployment | 11 Comments »
According to a Courier Mail article, there is less than 800 apartments for sale in high rise buildings stretching across the Gold Coast. With sales rates at their lowest since the 1990’s, some 47 sales per quarter, it is estimated current stock on the market will take at least five years to absorb. This doesn’t include new stock coming onto the market from three major projects nearing completion including Soul, Hilton and H20.
Property researcher Bill Morris said “While the rate of sale can change there is something like five or six years worth of stock.”
Despite the current oversupply of apartments vs demand, Andrew Bell from Ray White Surfers Paradise Group’s warned that there is no new developments planned for coming years saying “New stock entering the market is non-existent, There will simply be no choice for buyers on the Gold Coast over the minimum of the next five years.”
The lack of pent up demand on the Gold Coast, along with the chronic oversupply of apartments is thought to put a future ceiling on prices.
» Coast apartment sales falling flat – Courier Mail, 4th February 2011.
Posted in Australian economy, Australian Housing | 13 Comments »
According to The Age newspaper in Melbourne, Victoria’s largest home builder is selling half of its new homes in the Sanctuary Lakes Resort and Featherbrook Estates to overseas buyers. The development includes a total of 2500 lots, suggesting as many as 1,250 lots are now in foreign hands.
Mark Vujovich, General Manager of Sales and Marketing for Simonds told The Age “We have 23 agents in China operating in five provinces including all the major cities, We are introduced word of mouth through our clients and have worked hard at building relationships over there.”
» Developers court overseas buyers amid fears of greater urban sprawl – The Age, 7th February 2011.
Posted in Australian economy, Australian Housing | 9 Comments »
On this very day, the 5th of February, two years ago we reported on two Real Estate agents posing in the media as buyers saying it is never a better time to enter the market. Both had just brought their first home, and despite prices falling from the GFC, were apparently looking at buying a 2nd property as an investment. The article resulted in legal action, as one of the agents sought to silence us.
Once again the market is softening, and once again Real Estate agents are posing for the media, this time as an excited First Home Buyer, saying naturally that for first home buyers – it is never a better time to buy.
Credit for Today’s discovery comes from the Tasmanian Real Estate Trouble who reports on the article tittled First home buyers slowly returning to Queensland property market after historical low published by the Courier Mail.
The Courier Mail reports on First Home Buyers Ben Markwell, 23, and Elizabeth Brier-Mills, 22 :
Mr Markwell said they decided to buy a home at Collingwood Park when they discovered it would not cost much more than renting.
He said the first home buyer’s grant was a great incentive to people their age.
“I think people now in their early 20s are quite interested in property. They are interested in getting their first home,” Mr Markwell said.
After the writer for the Tasmanian Real Estate Trouble blog entered Ben’s name into Google, he found one Ben Markwell that just happens to look like the first home buyer pictured in the Courier Mail, only this time in a Century 21 Jacket. The blog writes :
And that’s Ben, in his regal looking Century 21 jacket. Cute isn’t he? You could just squeeze those chubby little cheeks. See in addition to being a a first home buyer, Ben is also a real estate agent for Century 21 on Brisbane’s westsiiiiiiiide. So there’s little surprise he thought the first home buyers’ grant was a great idea, and young people were interested in property and buying their first home. In the confidence game known as the real estate industry it’s important to create the impression people are buying houses, especially when buying is at record lows.
As we said on this very day two years ago “The next time you read an article in the paper about someone buying a house or investment property, be sure to run the new owner through Goggle to see if they are an agent. There is extremely good chances they are.”
Also check out the Tasmanian Real Estate Trouble Blog’s analysis of the figures used in the Courier Mail’s article.
» Tasmanian Real Estate Trouble Blog: Yes, we are open! – 5th February 2011.
» First home buyers slowly returning to Queensland property market after historical low – Courier Mail, 5th February 2011.
» FHO returning to property market CM spruik – Simple & Sustainable Forum.
Posted in Australian Housing | 4 Comments »
According to Forensic Asia Ltd.’s managing director Gillem Tulloch, the China property bubble will likely burst next year. Tulloch believes china’s banks are unable to pump out enough credit to sustain further rises in property values. He says the Chinese economy will be short 11 trillion yuan in credit required to make owning more beneficial than renting.
The Chinese government has been working in vein trying to control rampant credit lending to property speculators.
If Tulloch is correct, Australia could be one of the worst hit countries. Much of the building/property boom in China is consuming resources from Australia, causing the “1 in a 100″ year mining boom.
» China property bubble to pop this year, says analyst – Market Watch, 2nd February 2011.
Posted in Australian economy, China | 2 Comments »
The Real Estate Industry is fuming at the government for not consulting with them. The Australian reviled yesterday that in the four months since the election the Gillard Government has not contacted the Real Estate Institute of Australia (REIA) for any advice. According to the institute, they had long provided research and advice to the Federal government.
The REIA is also scathing at the decision of the government to abolish the position of dedicated housing minister, opting to spread the responsibility of the portfolio between three ministers. The government has defended the issue, with a spokesperson saying “Social housing, homelessness and housing affordability involve many complex issues and it is appropriate that they receive the focus necessary to address them”.
» Property sector turns on PM – The Australian, 31st January 2011.
Posted in Australian economy, Australian Housing | 3 Comments »