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Get free tools & tips Tell a colleague about us Who else uses Express Commission?In September 2010 Express Commission provides commission advance s to leading residential, commercial, and industrial real estate agencies and business brokers across Australia. Our clients are based in every state of Australia and include both independent agencies and members of Australia’s most successful real estate groups including:
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Express Agent News 8 Oct 2007 issue Selected article shown below. See all articles for this issue.
Industry News
Brisbane and Perth steam ahead as house prices hit record highs Property buyers snapped up houses in Brisbane and Perth, largely ignoring the August rate rise according to a Residex report. For the first time, house prices in Brisbane have pushed through the $400,000 barrier to $403,500, while Perth has exceeded its previous highs - property values jumped by 2.02% to $504,500 in the three months ending August. House values in the ACT rose 1.40% to $425,500. Melbourne houses added 3.72% in capital growth to $425,000, while Darwin climbed by 3.79% to $389,000. Sydney houses managed a slight increase of 0.21% to $559,000. "This month will go down in Australia's history as the month when a typical house in two capital cities exceeded half a million with three other capital cities having typical housing cost in excess of $400,000," said John Edwards, CEO of Residex. Strong demand for units boosted capital growth in the ACT by 5.08% to $336,500 in the three months ending August, while Darwin surged by 7.57% to $293,500. Units in Sydney attracted steady demand with unit values rising by 1.97% to $387,500 in the same period. Rental returns across the country continued to climb due to high demand and tight supply of rental properties. Rent for Brisbane houses climbed by 11.86% in the 12 months ending August to $330 per week, while units earned $295 per week, or an increase of 13.46%. Investors in Perth saw house rents increase by 30.61% to $320 in the same period, Sydney rents rose by 21.62% to $450 and Melbourne climbed by 20% to $330 per week. Unit investment owners in Perth enjoyed the country's biggest rental increase of 36.36% to $300 per week, ACT surged by 22.73% to $405, Melbourne rose by 23.40% to $290 and Sydney gained 18.75% to reach $380 in the 12 months ending August. Sales activity has also picked up across all cities, led by the unit market in the ACT with a 58% increase in the medium-density sales activity. Shortage of housing stock points to price and rent rises Building approvals fell more than expected in August, by 1.7 per cent to 12,751, seasonally adjusted, from a downwardly revised 12,974 units in July. In the year to August, approvals fell 0.1 per cent. Westpac senior economist Matthew Hassan said the decline was mainly due to the apartment sector while the house sector showed signs of moderate growth. Unit/apartment approvals fell 3.1 per cent while house approvals rose 0.9 per cent. Mr Hassan said the August interest rate rise and credit market turmoil would probably show up in this month's figures. "While there may be some more promising signs emerging in the private housing component, approvals continue to point to a subdued situation overall in August, especially given the pace of population-driven demand growth and the magnitude of housing shortages in most states," he said. "With August's 25 basis point interest rate rise and financial market turmoil still to impact, a strong recovery looks unlikely short-term." And in its latest housing snapshot, ANZ also predicts that a lack of stock, higher interest rates and builder margin compression will continue to delay recovery, and drive rent and house prices higher. Master Builders Association chief economist Peter Jones said higher interest rates and poor affordability were preventing the much-needed housing recovery. "A lack of housing stock and low vacancy rates means there is only one way for rents to move in the next 12 months," he said. Housing Industry Association chief economist Harley Dale said building approvals were in their longest downturn in history, heading towards four years of weakness. But HSBC chief economist John Edwards said there could be a recovery in a year, regardless of further rate rises. "Most of the volatility is in unit dwellings," he said. "Private houses, which give a better sense of the trend, continued to improve. We've had a three-year downturn in housing construction as well as a big fall in unemployment and rising incomes, and a very very big increase in immigration. "This all points to a boost in residential construction." He said interest rates were likely to stay on hold until next year. "I think inflation (figures on October 24) will be firm, but they won't be all that high," he said. "In July and August, petrol prices fell. So you won't get much in petrol prices. While food prices will pick up, most of it won't be in the September quarter." Services sector activity was stronger in September. The Australian Industry Group-Commonwealth Bank Performance of Services Index rose 4.8 points to 56.4, above the 50 level that separates expansion from contraction (www.aigroup.asn.au) Mortgage stress at an all time high. Sydney’s Centre for Policy Development (CPD) invited me to launch Professor Steve Keen’s paper “Deeper in Debt”. http://cpd.org.au/paper/deeper-debt It should serve as a wake up call for economists, policy makers and for those in the mortgage industry. Broadly, ever-rising debt levels relative to wages are not sustainable. If we think that rising inflation is the main beast that creates unstable economies we should seriously consider the implications of persistent and ongoing rapidly rising debt and the asset price speculation that follows. It often goes un-championed that front and centre of the housing affordability debate is the rise and rise of cheap and easy loans. That is why Professor Keen’s paper is so important in the debate. We don’t need another Cleveland, Ohio, a city that has been ravaged by the effects of the US sub-prime mortgage crisis. As is outlined in Professor Keen’s paper, whilst house prices have increased by 2.5 times since 1996, mortgage debt has increased by five times. The implication? Not surprisingly, the latest mortgage industry study by JP Morgan and Fujitsu Consulting found that there has been a disturbing acceleration in interest repayments relative to disposable income. In other words more of us are now geared up to the eyeballs than ever before. Sadly, there have been more writs of possession issued by The NSW Sheriff's Office in the first half of this year than there was in the entire year of 2005. Average credit card balances were equivalent to one month’s disposable income in 1997. Five years down the track balances are now three months’ disposable income. The national economy and Australian households in general seem to be utterly dependant on debt. Speculating on what happens if there is a credit crunch makes me nervous and I am not the only one. There is no doubt that at the very least slowing debt will result in more subdued property markets in the future, but if debt continues to grow rapidly and unchecked the burning questions are, how vulnerable have we left our nation’s economy? And will we have irrevocably changed the complexion of Australian family life? Do you have any feedback on this article or ideas for a topic that you would like us to cover in future editions? |
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