Fixed rate demand on the rise

Posted on Thursday, March 01 2012 at 5:27 PM

Following the out-of-cycle rate rise by banks last month, more new borrowers chose fixed rate loans, according to the Australian Finance Group (AFG) Mortgage Index.

AFG reported that more new borrowers than ever before – 23.2 per cent – chose to fix rates, surpassing the previous 20.4 per cent for fixed rate loans recorded in October last year, and just 6.6 per cent in February 2011.

Also reported in the AFG Mortgage Index was the record high average new home loan in Australia at $400,000 last month, up from $385,000 in January and $382,000 in February 2011.

New South Wales led the nation with the highest average new home loan for February at $471,000, while Western Australia followed with an average of $421,000 and Victoria took third place with $409,000.

AFG general manager of sales and operations Mark Hewitt said the dynamics of the home loan market are changing in many ways, including the return of a “steady stream” of first homebuyers over the past six months.

Also changing is the Big Four lenders’ dominance in the mortgage market, with more borrowers shopping around for the best fixed-rate deal, possibly in reaction to the out-of-cycle behaviour of the major lenders last month and borrowers’ concerns about the future direction of interest rates, said Hewitt.

The major lenders’ market share dropped from 79 per cent in January down to 76.1 per cent in February, Hewitt said.

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Body corporate insurance skyrockets in far north Queensland

Posted on Monday, January 09 2012 at 4:34 PM

Body corporate insurance premiums have reportedly risen by as much as 400 per cent over the past 12 months in parts of far north Queensland, according to the House of Representatives Standing Committee on Social Policy and Legal Affairs.

The committee’s chair, Graham Perrett, says insurance has literally gone through the roof since Cyclone Yasi and the cost is making affordability an urgent issue.

“The rate of strata title insurance premium increases in northern Queensland since Cyclone Yasi has been absolutely staggering and people are concerned whether these increases will be sustained,” Perrett says.

“The cost of insuring properties in body corporates is rapidly becoming prohibitive, particularly for residents on pensions and fixed incomes. We have to be concerned about the financial and social impacts for residents and property investors, as well as the flow-on effects for regional economies in far north Queensland. This is a very serious issue that warrants further investigation.”

The committee will hold public hearings in Port Douglas, Cairns and Townsville. Details:

Monday, January 30, 2012. Port Douglas Community Hall, Mowbray St, Port Douglas, from 9am to noon.

Monday, January 30, 2012, Sebel Hotel, 17 Abbott St, Cairns, from 2.30pm to 5.30pm.

Wednesday, February 1, 2012, Reef HQ, 2-68 Flinders St, Townsville, 9am to 3pm. (Videconferencing will be available in Mackay from 1pm to 3pm, Central Queensland University, 6/G.03 Boundary Rd, Planlands, Mackay.)

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/V-Ex2fR5hgQ/body-corporate-insurance-skyrockets-in-far-north-queensland

Top rent growth performers tell two stories

Posted on Thursday, February 23 2012 at 12:36 PM

The top 10 national rental growth champions for the year to January 2012 demonstrate that there are two tales to the rental market, according to WBP Property Group’s New South Wales manager Chris Lackey.

While cautious in reading property data too closely, Lackey said Residex’s recently released Regional Australia statistics highlighting the top performing regions for rental price growth can instantly light up the eyes of investors hunting for high yielding property, however before choosing to buy in one of the top rental growth locations the underlying story needs to be well understood.

Some top 10 rental growth regions could be due to a mining-related population surge – take for example the number one performer northern Western Australia – while other regions are outperforming due to the surge of rental properties turned over to the sales market and a reduced supply of rental housing, said Lackey.

He said rental prices may be statistically growing stronger in these regions, however this is often because the same areas are seeing significant price drops and investors are “pulling money out of these areas to pay off debt elsewhere”, hence a tightening of rental supply.

This shift to a strong rental market could also be due to “the reluctance of lenders and mortgage insurers to lend in coastal areas which have suffered significant falls in demand and prices until the situation normalises”.

Lackey points to three NSW coastal and mountain regions highlighted in the top 10 list as prime examples of this trend.

He said in many of these areas, apart from the areas with mining-related rental growth, investors don’t have the confidence to jump back in yet and instead are waiting for the market to bottom.

 

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/dICrC-xW1ps/top-rent-growth-performers-tell-two-stories

Interest rates falling, but not forever

Posted on Monday, January 09 2012 at 5:19 PM

Landlords have enjoyed recent drops in interest rates and many economists predict they’ll fall further this year. But a report written by the Reserve Bank of Australia (RBA), The Mining Industry: From Boom to Bust, suggests otherwise. It indicates the mining boom could in fact result in inflationary pressure over the next few years, which means rate rises may not be too far around the corner.

“This is likely to be a challenging environment for policy as it attempts to ensure continued containment of overall demand and inflation pressures,” the report says.

“The economy is now closer to full employment and hence additional demands for labour and other inputs from the domestic economy and the distribution of mining revenues have the potential to spill over into further changes in input and non-tradeable prices.

“The boom has also been associated with a large increase in the real exchange rate, affecting trade-exposed industries.”

The report adds production and export volumes of iron ore, coal and LNG are expected to grow strongly over the coming years, with $35 billion worth of iron ore investment projects committed. This should increase Australian iron ore export capacity by a further 50 per cent between 2011 and 2015.

“Australia’s capacity to export coal in 2013 is projected to be around 20 per cent higher than it was in 2010,” it says.

“Three CSG-LNG projects in Queensland have recently received investment approval – the first CSG-LNG projects in the world to progress to this stage of development. When committed projects in Western Australia and Queensland are combined, Australia’s LNG export capacity is expected to be almost three times higher in 2016 than it was in 2010.”

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Confidence returns to resource rich states

Posted on Thursday, January 12 2012 at 12:38 PM

The mining boom has injected massive optimism back into Queensland, just 12 months after floods devastated parts of the state.

The capital city of Brisbane recorded the biggest comeback in confidence out of all the states and territories in Australia, according to the results of a Property Council-ANZ industry confidence survey.

Western Australia was another big performer, while the Northern Territory’s $30 billion INPEX Ichthys gas field project has recently sent the territory’s confidence skyrocketing.

Other factors believed to be bringing confidence back to the market include the drop in interest rates and more savings in people’s bank accounts.

Property Council chief executive Peter Verwer says property professionals have a reasonably positive view of the sector’s short-term future, but there are still plenty of reasons to be cautious.

“It’s clear that Europe’s debt woes, a slow recovery in the US and disappointment in Australia’s political leadership are making property participants nervous about Australia’s economic prospects,” he says.

“Of particular concern for property players is New South Wales. While it’s too early to say that investors have placed the state on ‘credit watch’, almost a year into a new government it’s clear there’s growing disillusionment in the state’s rate of progress.”

NSW and Victoria both showed declining confidence, as well as the Australian Capital Territory and Tasmania. However, real estate professionals showed an upswing in confidence when it comes to commercial and industrial property.

ANZ global chief economist Warren Hogan says although the commercial property market is showing signs of a multi-year cyclical upswing, the outlook still holds risk.

“Considerable uncertainties in Europe, the Middle East, the US and China threaten economic and financial market stability and will continue to weigh on investor sentiment and property yields,” he says.

“Consumer restraint, reduced workspace ratios, employer caution and potential job shedding all present significant risks to commercial property demand.

“Nonetheless, ANZ’s outlook for commercial property remains positive. Tight vacancies, limited capacity expansion and attractive yields will support growing investor interest and are laying the groundwork for a marked increase in valuations as rents rise and yields compress.”

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What interest rate rises mean for you and your investment

Posted on Tuesday, February 14 2012 at 3:09 PM

The Commonwealth Bank has become the latest lender to break ranks with the Reserve Bank of Australia (RBA) and raise rates out of cycle by 0.1 per cent.

It follows a decision by ANZ and Westpac to raise rates last week (ANZ by six basis points or 0.06 per cent to a variable rate of 7.36 per cent and Westpac by 10 basis points or 0.1 per cent to a variable rate of 7.46 per cent).

Property author and millionaire Jan Somers says for those freaking out about the prospect of a rate rise, despite the RBA keeping rates on hold this month, they should consider locking in at least 70 per cent of their loan for the ‘sleep at night’ factor.

“My philosophy has always been to fix, it’s insurance if they go up,” she says.

“If rates go down, you’d be paying extra but it’s money you’ve paid for insurance.”

Somers has always locked in at least 50 per cent of all of her loans because it means she’s less exposed if something drastic happens.

“The key to long-term investing is to cover your backside and cover those unforeseen circumstances.”

Michael Yardney of Metropole says although the rate rises are minimal, they could have a big impact on confidence.

“Many investors were thinking interest rates would drop, what’s suddenly happened is an about face. Having said that, the RBA kept rates on hold and that’s a vote of confidence. Investors should now look at their finances, because banks might restrict lending, and maybe it’s a good time to put up one’s buffers. If you’re concerned about cash flow, it might be worth considering locking at least a portion of your loan.”

Senior economist of Australian Property Monitors, Andrew Wilson, admits any slight rises could harm “early signs of increased confidence”, but 2012 should still be a recovery year.

“This won’t have a great deal of an impact on housing affordability but it will continue to make buyers and sellers cautious,” Wilson says.

“There are still competitive rates out there and mortgage providers are prepared to deal to get business.”

Director of Reality Economics Liam O’Hara agrees the latest announcement hasn’t been good for confidence and confused many investors.

“Many mortgage holders may not know the theory behind the economics but are acutely aware that the RBA sets a short-term rate that all other financial institutions adhere to, without too much fuss,” he says.

“It may become an increasing concern to those in debt when unofficial interest rate movements deviate from the stated official RBA rate, causing potential uncertainty in the investment market. In practice, the RBA’s cash rate is just a benchmark rate that banks use for pricing other interest rate products. In reality, the Australian economy, still in uncertain times, requires certainty in its policy interest rate stance, so the Australian economy concentrates on the real economic activity, not the profit concerns of a few major banks.”

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Australian Property Investor magazine releases digital edition

Posted on Tuesday, February 14 2012 at 4:35 PM

Australia’s highest-selling property magazine is now available in digital format through Zinio, the world’s largest electronic newsstand.

Readers can now enjoy reading API on their PC, Mac, iPad and Android tablet as well as other mobile devices.

API’s editor Eynas Brodie says, “We’ve been receiving an ever-increasing number of requests from readers to release a digital edition of API. Many of the requests have come from our overseas readers. It’s expensive and slow to have any print magazine sent from Australia to an overseas address and magazines often get lost in the mail. Now our overseas readers can subscribe to API and buy single copies through Zinio for immediate access at the same time as our Australian digital subscribers. No more waiting weeks for a print copy to arrive in the post.

“But it’s not just overseas readers who have been requesting a digital issue,” she says. “Quite a few of our Australian readers have asked for a digital issue as well. Many people prefer to buy all their magazines in electronic form, so their entire magazine collection can be stored on computers and iPads. With Zinio, they can log into their account from any computer or device and access all their magazines – perfect for travellers.”

API’s iPad edition contains a range of bonus content which isn’t available in the print edition, such as additional photo galleries, videos and extra editorial content. 

For more information, visit apimagazine.com.au/zinio

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Official go ahead for Inpex LNG project today

Posted on Friday, January 13 2012 at 12:57 PM

A highly anticipated $25 billion gas project for Darwin and Western Australia will be given the official nod today, as indicated in a full-page Inpex advertisment in today’s Northern Territory News, reported ABC News Online.

The Ichthys onshore processing facility will be constructed on the Blaydin Point plant in Darwin Harbour; a workers’ camp will be constructed south of Darwin, near Palmerston city.

The estimated life of the project is a minimum of 40 years, with 527 million barrels of condensate and 12.8 trillion cubic feet of gas expected for output.

Thousands of jobs will be required just for the project construction; the first gas output is expected in 2016.

The Ichthys gas subsea pipeline stretches from the Browse Basin in WA to the NT’s Blaydin Point on the Middle Arm Peninsula.

Long-term sales and purchase agreements have already been signed with utility companies in Japan and Taiwan, reported ABC News Online.

Article source: http://feedproxy.google.com/~r/API_Property_News/~3/FAzq6LzI_nI/official-go-ahead-for-inpex-lng-project-today

No price crash as predicted, growth ahead

Posted on Friday, January 13 2012 at 2:41 PM

Prices may have softened in 2011, but not to the extent of a “collapse” or “bloodbath” as predicted by some commentators, according to the Housing Industry Association senior economist Andrew Harvey.

While prices did soften in the year to November 2011 as house prices in the capital cities declined by 4.3 per cent (year on year) and unit prices in the capital cities fell by 1.1 per cent, they didn’t fulfil the doom and gloom expectations, said Harvey.

The prices in fact swung back in RP Data-Rismark’s seasonally adjusted hedonic price series for November 2011 and signalled that “the worst of the residential property market slump may now be behind us”, he said.

In reflection, Harvey said that the price softening of 2011 wasn’t entirely unexpected, particularly in an environment of “tightening interest rates, yacking by the RBA (Reserve Bank of Australia) that more rate hikes were likely, the removal of fiscal stimulus, widespread concern over the carbon tax, the perceived instability of the Federal Government, increasing volatility in the world economy, and increasingly cautious consumers in the post-GFC environment”.

“The dwelling price outcomes in the face of such a tough period demonstrates the resilience of the Australian residential property market when compared with the sector in many other open-market economies,” he said.

However the November 2011 results did vary across the states and territories, and their regions, he said.

“At present, dwelling prices are rising, steady, falling, and dropping quite sharply, depending on the local geographical market and dwelling type observed. There are certainly markets that have felt considerable pain from falling prices, such as the Gold Coast for example, but this has been the exception not the rule,” Harvey said.

Looking forward, with back-to-back interest rate cuts in November and December, dwelling price growth is likely to happen this year, he said.

“Of course, the variation across regions will continue to be marked – and what happens in Europe will matter – developments there have the prospect of being a game changer. The reality is that nobody can predict exactly how the European debt and deficit fiasco will pan out – there are simply too many variables.”

However the strong fundamentals underpinning the Australian housing market only further support the prospect for price growth in 2012, he said.

These fundamentals include the housing shortage, low rental vacancy rates, the ability of Australians to service mortgage repayments, and the surging mining sector continuing to boost a healthy job market, said Harvey.

“The bottom line is that a lack of rental properties, cheaper borrowing costs and relatively healthy employment levels are likely to combine to push up housing demand, rents and dwelling prices in 2012.”

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Steady growth in Roma despite floods

Posted on Thursday, February 09 2012 at 10:06 AM

The flood clean up has started for mining hub Roma in Queensland’s southwest after the rising water level peaked at a record 8.4 metres last Friday night.

Ironically some of the areas left untouched were the traditionally less desirable areas, according to Herron Todd White property valuer Digby Makim.

Following the third consecutive year of what’s supposed to be a ‘one in 100-year’ event, many locals have been left in shock as they pick up the phone to their insurance companies for the third time in three years.

The Maranoa Regional Council reports that 290 Roma properties were flood affected, with floodwater over the floorboards.

Makim said the areas hardest hit by this year’s flood were the traditionally more desirable pockets of Roma, while those spared were traditionally the lower priced areas in the southern and western pockets simply because these areas are more elevated.

Too early to see the effect on the property values, Makim said once he starts to see sales come through again he’ll have a better idea of the real price impact, and if the traditionally less desirable pockets would consequently experience greater capital growth and rental demand in the short term than the traditionally more desirable yet recently flood-affected areas.

The majority of Roma’s newer housing estates were spared from the flood, said Makim.

The Urban Land Development Authority’s 20-hectare housing site with 300 lots to be released over the coming 4.5 years was entirely unaffected, he said.

Following a year of “moderate growth”, despite the recent flood, Makim expects the Roma area to continue ploughing ahead with “steady growth” as a result of the major liquefied natural gas and coal seam gas projects under development, operating and proposed in the area.

However Makim said with the new land releases and housing coming online this should place a more sustainable cap on phenomenal price growth.

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