Archive for category: Knowledge Centre

ABC| 28 April 2017

http://www.abc.net.au/news/2013-04-28/victoria-increases-first-home-owner-grant/4655774

The Victorian Government has announced an increase to the First Home Owner Grant and stamp duty cuts for people purchasing new homes.

From July 1 the grant will be increased from $7,000 to $10,000 for newly constructed homes, and stamp duty for all first purchases will be decreased by 40 per cent.

Treasurer Michael O’Brien says Victorian families will be thousands of dollars better off.

“The average price of a newly constructed first home is about $400,000,” Mr O’Brien said.

“With these announcements, Victorian families will be over $16,500 better off with the combination of the increased grant and the stamp duty cuts.”

But the Real Estate Institute of Victoria’s says it is disappointed the Government is scrapping the grant for people who are buying established properties.

The institute’s chief executive Enzo Raimondo says the changes effectively mean those purchasing existing homes will be subsidising a discount for those buying newly constructed homes.

“History has shown first home buyers generally buy established [homes],” Mr Raimondo said.

“They generally want to buy close to where they work, and in Melbourne that’s inner and middle suburbs, so this is going to make it a bit more difficult for first-home buyers of established properties in Melbourne.”

Mr Raimondo says the changes just bring Victoria into line with most other states.

“A number of other states have removed the first home owners’ grant for established housing,” he said.

“Every state in Australia, with the exception of the resource states, are facing some tough economic times.

“What the Treasurer’s done is not unexpected.”

But Mr O’Brien says the advantages will be wide-reaching, with the housing construction industry also set to benefit.

“We acknowledge the housing construction industry is a really important employer of people in this state. We want to see that grow,” he said.

“We want to see more jobs and we also want to make sure we have more housing stock to meet the needs of a growing population.”

Michael Janda| ABC| 24 April 2017

http://www.abc.net.au/news/2017-04-24/housing-market-top-called-by-investment-bank-ubs/8466198?section=business

The Australian housing market has peaked in the opinion of economists from global investment banking giant UBS.

The bank’s economics team said it usually takes rising official interest rates to stop the upward phase of a property cycle, but this very lengthy boom may be different.

“While the historical trigger for a housing downturn (of RBA hikes) is missing, mortgage rates are rising, and sentiment of home buying collapsed to a [near] record low,” wrote Scott Haslem, George Tharenou and Jim Xu from UBS.

“Hence, we are ‘calling the top’, but stick to our forecasts for [dwelling construction] commencements to ‘correct but not collapse’ to 200,000 in 2017 and 180,000 in 2018.”

Currently, there are around 220,000 dwellings under construction across Australia, with building approvals over the year to February holding at 228,000, not far off recent peaks.

UBS said this is roughly 50 per cent up on the most recent trough in new dwelling supply that was reached in the third quarter of 2012, led by a more than doubling in multi-unit developments.

However, UBS said the residential building boom will top out at roughly current levels in the second half of this year, before starting to ease off next.

The bank said its forecast is supported by an international crane count, with the number of cranes on Australian high-rise sites levelling out at a peak of 548, having surged 323 per cent since late-2013.

This will weigh on economic growth, which has been boosted by the apartment building boom, and also on employment for construction workers.

“After housing activity rose consecutively for over four years, its longest ever boom, we are now calling the top and think that housing activity has already peaked at greater than 6 per cent of nominal GDP,” the economists argued.

From adding about half a percentage point to economic growth over the past two years, dwelling investment is expected to subtract around half a percentage point from growth next year.

Prices not likely to fall as boom ends

However, while UBS sees building activity dropping steeply, it does not see prices following.

“While we see a sharp correction for activity, which would not be unusual following a prolonged boom, and we still don’t expect a collapse of prices which would have a broader negative feedback loop for the labour market and economy,” the investment bank predicted.

UBS is tipping around 7 per cent annual price growth over 2017 as a whole, down from current levels around 13 per cent, and 0-3 per cent growth next year.

While home ownership is forecast to remain just as out of reach as it is currently for first time buyers, the positive news for them is that UBS is tipping rental vacancy rates to increase on the extra supply of units being completed this year, leaving rents continuing to rise more slowly than incomes.

Although generally sanguine around the risk of a housing slump, due to strong population growth and stable employment, UBS did warn that there are elevated risks of something going wrong, due to Australia’s high housing prices and record household debt.

The bank’s economists said the Reserve Bank may face some dilemmas in setting interest rates over the next couple of years.

“Given the cash rate is already at a record low, and the prospect that the RBA attempts to start normalising rates by end-18, it seems unlikely commencements would rebound, and hence dwelling investment could keep falling in 2019,” the note cautioned.

“This makes for a difficult policy position for the RBA. If it hikes too early/too much, it could turn a ‘normal’ housing correction into a slump.”

Jackson Stiles| The New Daily 2 May 2017

http://thenewdaily.com.au/money/property/2017/05/02/property-propaganda/

A senior property data expert has warned Australians not to fall for “propaganda” claiming the Sydney and Melbourne housing markets have already cooled.

Louis Christopher, head of SQM Research, said all available data contradicted rival firm CoreLogic, whose numbers last week sparked dire headlines and talk of a market crash.

Even Treasurer Scott Morrison cited CoreLogic’s numbers on Friday to argue the housing market needed a “scalpel, not Labor’s chainsaw”.

“The concern here is that we’ve actually had the Treasurer refer to the index, basically to imply that he doesn’t really need to do that much more on affordability,” Mr Christopher told The New Daily.

“It couldn’t be further from the truth. Our opinion is that the market continues to boom and APRA [Australian Prudential Regulation Authority] will likely have to step into the market later this year.

“This is being used as propaganda, as an excuse for people to hold back from taking real action in the market.”

Unlike CoreLogic, SQM Research calculated that asking prices for houses rose over the last month by 1.1 per cent in Melbourne and 2.2 per cent in Sydney, coupled with steadily falling property listings and strong auction clearance rates around 80 per cent.

Falling listings were probably a sign that vendors were “holding back” because they expected prices to rise even higher, Mr Christopher said.

This is in stark contrast to CoreLogic, which estimated that Sydney’s dwelling values fell 0.04 per cent last month, while Melbourne grew by just 0.5 per cent. According to its index, combined price growth in the capital cities was the slowest month-on-month since December 2015.

CoreLogic is the most widely cited property pricer, at least among journalists, because it reports dwelling values daily and weekly. Its data formed the basis of most headlines reporting a ‘slowdown’ or ‘peak’.

However, CoreLogic’s own research director, Tim Lawless, urged “caution” last week about over-interpreting the company’s April numbers. He told The New Daily “potentially there is some seasonality creeping into these numbers”, as the index is generally moderated in April and May.

The Reserve Bank dumped CoreLogic as a data source last year over concerns about its methodology.

Mr Christopher said while the data continued to paint a picture of a booming market, he did not rule out a “slowdown” later in 2017, especially if regulator APRA cracks down further on bank lending.

By “real action” on affordability, he meant a temporary cut to immigration; incentives for migrants to move to regional areas; and the replacement of state-imposed stamp duties with a federal land tax.

Dr Stephen Koukoulas, an economist, warned that calling the end of the boom now would be “extremely premature and arguably a bit hazardous”.

He admitted he had been caught out “badly” in years past by making too much of month-to-month CoreLogic fluctuations, and urged others not to repeat the mistake.

“If we get another month of zero, well, the story builds. But so far I don’t think we’ve seen enough concrete evidence to say definitively this is the end of the boom,” Dr Koukoulas told The New Daily.

He also warned that vested interests could use CoreLogic’s numbers for their own ends.

However, the economist agreed the markets would eventually cool, perhaps as early as the second half of 2017.

“Look, it is going to cool, it is going to slow down, because it can’t keep going at that pace. There’s the APRA changes, many rate hikes by the banks, an oversupply in Brisbane apartments and Perth’s still looking dreadful,” Dr Koukoulas said.

“But to say there will be minus signs and a genuine ‘bust’, ‘correction’ or ‘slump’, that’s not going to happen. Or at least, I’d want to be see more evidence.”

An ideal scenario would be for price growth to stagnate at zero per cent in Sydney and Melbourne for the next five years while wages grow by 2 or 3 per cent (up from the current 1.2 per cent), he said.

“There is a problem in house prices in Sydney and Melbourne – there’s no question, I don’t think. Saving a deposit is difficult, even though once you’ve got the deposit you’re okay.”

David Scutt| Business Insider| 21 March 2017

http://www.msn.com/en-au/money/homeandproperty/the-average-price-of-a-house-in-australia-has-risen-to-dollar656800/ar-BByubPx?li=AAavLaF&ocid=spartanntp

Australia’s 9.8 million residential dwellings were worth a collective $6.439 trillion at the end of the December quarter last year, according to new data released by the Australian Bureau of Statistics (ABS) this morning.

The Bureau’s residential property price index (RPPI) said that capital city prices rose by a hefty 4.1% in weighted terms during the quarter, leaving the increase on the same quarter a year earlier at 7.7%.

The quarterly increase was the largest since the June quarter of 2015.

In dollar terms, that equated to an increase in the value of Australia’s housing stock of $274.8 billion in just three months.

The average price of a residential dwelling across the country rose to $656,800, an increase of $25,400 on the prior quarter.

The total number of dwellings increased by 39,600 over the same period.

By individual capital, the ABS said that prices surged by 5.3% and 5.2% respectively in Melbourne and Sydney over the quarter, a result that fits with other alternative house price indicators.

Hobart, with prices up 4.5%, took out third spot, followed by Canberra and Brisbane with gains of 2.8% and 2.2% apiece.

Darwin was the only capital to record a drop in prices during the quarter, sliding 1.5%.