Archive for May, 2011
Storm clouds overshadowing the Australian Residential Property Market show no signs of abating. The rain has settled in and appears to be here for the medium term.
Today’s monthly release from RPdata shows house prices across the country fell a seasonally adjusted 0.3 percent in April. Perth lead the falls recording a 1.8 percent drop for the month, followed by Adelaide with a 1.2 percent drop.
National house prices have fallen 1.2 percent for the three months to April.
Also released today is building approvals for April. The ABS figures show total dwelling approvals fell a seasonally adjusted 1.3 percent in the month of April, contributing to an annual fall of 11.5 percent.
» RP Data‐Rismark Hedonic Home Value Index – April 2011 Results – RP Data, 31st May 2011.
» 8731.0 – Building Approvals, Australia, Apr 2011 – The Australian Bureau of Statistics, 31st May 2011.
Posted in Australian economy, Australian Housing | 6 Comments »
Kochie reveals falling property market on Sunrise and questions if Australian’s are given the truth?Written by admin on May 23, 2011 – 11:38 pm
Financial commentator and co-host of Channel 7′s Sunrise, David Koch, is considered one of the more influential people in the finance industry, appealing to much of the Mum & Dad segment.
Today, Kochie featured a story on Australia’s falling property market – yes, that’s right, falling.
In an interview with Louis Christopher, a property analyst from SQM research, Kochie explains that it is the worst period for house prices in 12 years, that house prices are falling in almost all regions around the country, the number of listings is up 70% and auction clearance rates are falling rapidly. He asks the question if home owners are being given the property price truth?
Kochie has a problem, he sees all these houses that have been up for sale for a year in his area, but then reads the weekend papers about all this good news that properties are being sold. He says “It just doesn’t match up.”
Mr Christopher explains that many of the news papers make most of their revenue from real estate advertising and will promote property in a positive way, before joking with Kochie about the fact that “property never falls”.
He tells the Australian, “I find it amazing and quite ironic that so much expense and effort has been put into cleaning up the financial planning industry, but most of the problems are actually occurring on the real estate side,”
“We need to see a similar clean-up of the real estate industry, where agents need official qualifications and reporting bodies need to be independently audited if they are going to be used in the public sphere.”
He is referring to the fact that investment advisor’s require Australian Financial Services licences and financial products require Product Disclosure Statements for investments that could be as small as $1,000, let there is no such requirement for property investments which is most people’s biggest asset and could range between the hundreds of thousands, even millions of typically leveraged dollars. Real Estate professionals can, and do say just about anything they want.
Louis told Sunrise he expects falls in house prices of between 5-10 percent this year, and in some regions between 15 to maybe 20 percent as a result of having too much household debt and by enticing first home buyers to bring forward their purchases resulting in little first home buyer activity in the market today. He will join Kochie on Sunrise again tomorrow to talk about the worst effected regions of the “property price plunge”.
Posted in Australian economy, Australian Housing | 14 Comments »
Home loan approvals have fallen to 10 year lows in Australia and is set to put further downwards pressure on house prices over the coming year. Approvals for owner occupied housing loans fell 1.5 percent, seasonally adjusted, for the March 2011 quarter.
As most buyers require loans to purchase property, home loan approvals generally lead home prices by about 6 months. This suggests house prices are expected to continue falling for the foreseeable future, as there are fewer buyers, but many more sellers. SQM Research shows stock on the market has surged 68.7% for the year to April, equating to an additional 151,000 homes on the market compared to April last year.
Posted in Australian economy, Australian Housing | 13 Comments »
Late last month we reported on news of the Gillard Government considering the scaling back of Negative Gearing in Australia. (See Negative Gearing Rort added to Endangered Species List)
The Australian has today reported on a couple trying to sell an investment property after the uncertainly brought about from these discussions. Jo Studdert of the Australian writes :
Amy and Wes Rogers are 32-year-old parents of two young boys and the owners of four investment properties, one of which they are selling because they are frightened the government may abandon negative gearing on investment properties.
“What I’ve read and heard about new taxes on property investments and the abolition of negative gearing makes you question what you’re doing,” she [Amy] says. “We’re not sure what to do now. We’re worried about this negative gearing talk and if there are changes we’ll be in real trouble.”
We are surprised someone would be so open and frank that they are in real trouble. The article is accompanied by a photo of the family and the caption “Will, Wes, Lachie and Amy Rogers, whose investments have been compromised because of talk that negative gearing may end. ”
After endless news articles of real estate agents masquerading, undisclosed as first home buyers who have just brought, and all of which are now looking for investment properties, we are naturally cautious.
But negative gearing isn’t the only problem the Roger’s family has. They can’t sell their Oakdale property in Sydney’s southern outskirts either.
But the market is working against the Rogers. The house has been on the market for more than 180 days and, although there have been many viewers, there have been no real offers and the agent has already persuaded them to drop the price by $20,000 to $290,000.
“And now they want us to drop it by another $35,000,” she says.
Now, we first found out about the Negative Gearing discussions towards the end of April, but the Rogers have had their property on the market for six months now.
It does sounds more like a propaganda campaign in support of Negative Gearing, although it could easily have the opposite effect as we all know property investors have a lot in common with lemmings. What do you think?
Posted in Australian economy, Australian Housing, Negative Gearing | 11 Comments »
The 2011 Federal Budget released on Tuesday night should come as a welcome relief for aspiring first home buyers faced with chronic affordability issues. As expected, the Government has this time bucked previous trends and decided not to meddle with the property market. Hopefully, this time, the government will leave it to market forces to sort out problem.
Market forces are already at play in the Western Australian property market. Just two days after out of touch W.A. Premier Colin Barnet told first home owners struggling to break into the market, that they need to “adjust their expectations”, state government figures from Landgate showed the W.A. property market is in its worst slump in almost two decades.
Figures from our big four banks show mortgage arrears are starting to re-surface and at a rapid pace. Westpac’s number of mortgages more than 30 and 90 days in arrears are now at levels not seen since the GFC. 90 day arrears are up 35 percent since September as households struggle to make ends meet with rising housing, petrol, food, water and energy costs. At the ANZ, 30 day arrears have jumped 41 percent since September, while 90 day arrears are up 26 percent. The CBA reports an increase of arrears of 11 percent over the March quarter (three months).
But it is not only households feeling the pinch. Data from Australia’s company watchdog, ASIC show 1,491 companies went belly up in March, up from 1,299 in February and 640 in January. The 1,491 insolvencies is the third highest figure recorded since records began. Many of those failures are expected to be in the retail, manufacturing the tourism sectors, the hardest hit from our onslaught of Dutch Disease and high levels of household debt.
Retailers have today lashed out on comments that the retail sector is showing some green shoots, saying many are on a knife’s edge with little room for any more Interest rate rises. This comes as three of the big four predict a rate rise next Month and days after ABS figures reported a shock lost of 49,100 full time jobs in April.
» First-homebuyers unrealistic: Barnett – The West Australian, 11th May 2011.
» WA’s property slump is now the worst in 20 years – The Age, 13th May 2011.
» Alarms ring on rising mortgage arrears – The Australian, 4th May 2011.
» Rising rents, cautious consumers behind rise in insolvencies – SmartCompany, 9th May 2011.
» Warning as retailers on knife’s edge – The Advertiser, 14th May 2011.
» Three of big four banks tip June rate rise – The Sydney Morning Herald, 13th April 2011.
» Shock drop in jobs – The ABC, 12th May 2011.
» Rise in CBA bad home loans – The Sydney Morning Herald, 12th May 2011.
Posted in Australian economy, Australian Housing | 1 Comment »
The ABS has today released data showing Australian Retail Sales have fallen a seasonally adjusted 0.5 percent in the month of March. The fall has come as a surprise to many economists who had expected sales to actually increase 0.5 percent.
In early April, we reported on the Net Savings Ratio which has sprung back to levels not seen in 25 years. At the time we wrote “Something has scared consumers and with such a rapid change in household savings, this could suggest there is a lot more pain ahead in terms of retail spending (and GST collection.)”. We can’t really say today’s figures are much of a surprise to us.
» Surprise drop in retail sales – Sydney Morning Herald, 5th May 2011.
» Shoppers keep tightening purse strings – Adelaide Now, 5th May 2011.
» Discretionary spending falters at expense of housing bubble – Who Crashed the Economy, 13th February 2011.
Posted in Australian economy | 10 Comments »
Figures released today from the ABS show house prices in Australia has fallen a larger than expected 1.68 percent in the March quarter, recording the biggest fall since the global financial crisis. Economists had only expected a 0.5 percent fall.
Both Melbourne and Brisbane lead the change in fortune recording a -2.5 percent change. Sydney fell 1.8 percent, followed by Adelaide & Darwin both recording 1 percent falls each. Canberra lost 0.4 percent, while Hobart recorded gains of 0.4 percent and Perth 0.5 percent.
The ABS figures follow a release from RP Data-Rismark on Friday showing capital city house prices fell 2.1 percent across the nation, the biggest fall in 12 years according to their index.
The fall in house prices is not surprising given the fall in mortgage approvals which normally leads the market by about 6 months, and the winding back of government grants used to prop up the unsustainable market the last time it started to dive. Figures from the Reserve Bank of Australia show growth in housing credit is now trickling along at the slowest pace since the start of the RBA records in 1976, some 35 years ago.
» 6416.0 – House Price Indexes: Eight Capital Cities, Mar 2011 – The Australian Bureau of Statistics, 2nd May 2011.
» RP Data-Rismark Hedonic Home Value Index, March Results – RP Data, 30th April 2011.
» Housing loan increase weakest in a generation – The Sydney Morning Herald, 29th April 2011.
Posted in ABS House Price Indices, Australian economy, Australian Housing | 15 Comments »