Property Market Australia

NRAS Housing Scheme

2009-07-24T18:49:00.000-07:00

National Rental Affordability Scheme (NRAS) has been introduced to reduce rental costs for low income households through the provision of tax incentives to increase the supply of affordable housing for rent to eligible tenants for a period of up to ten years. The Government will provide $622.6 million over four years for the provision of 50,000 affordable rental properties across Australia. An annual incentive of $6,000 per property for up to ten years can be claimed via a refundable tax offset for complying institutional property investors. State and Territory governments have agreed to provide annual support of at least $2,000 per annum per property. To access the NRAS Scheme, investors must rent properties to eligible tenants at 20 per cent below the market rate of rent for equivalent properties in the area.

Mortgage demand climbs

2009-02-05T19:22:00.000-08:00

After 1 per cent rate cut there is a surge in demand for home loans. Some mortgage websites are running hot with 200 per cent increase in inquiries. According to mortgage comparison website www.helpmechoose.com.au first homebuyers now account for 40 per cent of those inquiries but interest is growing across the board. The official cash rate is now at 3.25% and it is the lowest level since early 1964.

Raising equity

2008-11-21T22:21:00.000-08:00

Many listed companies are raising equity capital to improve their balance sheets. Shareholders of many companies are willing to take the short-term pain of having their shares diluted by new issues to protect their investments and ensure that the companies are more conservatively geared in a difficult market. "The only certainty that will turn equity markets around is this process of capital raisings," said Angus Gluskie, a fund manager at White Funds Management. "It's a small price to pay." But it will only work as long as investors will supply companies with cash, amid falling equities prices.

Australand low profit

2008-08-10T17:46:00.000-07:00

Australand property group has posted a very low profit of $25.55 million for the six months to June 30 2008, down 79 percent on the previous period. The slowdown in the New South Wales residential market forced the company to write down a combined $34.7 million on the value of some projects. Few days later Australand announced that 87 percent of eligible institutional investors had taken up their entitlements to its debt issue at 60 cents a share, raising $364 million. "We are pleased with the support we received," said managing director Bob Johnston. But after trading halt since the company reported steep fall in first-half profit earlier on, Australand shareprice is down by 32 percent to $0.66.

City Pacific

2008-03-09T17:08:00.000-07:00

City Pacific (CIY) requested trading halt for its shares after half their value was lost on Monday. Shares fell to 97.5 cents on concerns the Queensland based loan provider will not be able to repay the bulk of a $240 million loan facility which is due next month. The share price plunge also forced City Pacific to seek permission to stop redemptions in its $960 million First Mortgage Fund. The chief executive Phil Sullivan described this as "unbelievable." He added that "We played it clean and straight". The company removed the fund's application form from its website. City Pacific told the ASX it would be in negotiations with three parties interested in buying or refinancing some of its assets.

Homes price drop

2008-01-24T15:46:00.000-08:00

There is plenty of glum when reading about property market in USA. It is interesting to note that the National Association of Realtors reported that sales of single-family homes fell by 13 percent in 2007, the biggest decline since a 17.7 percent drop in 1982. The median price of a single-family home fell to $217,800 in 2007, down 1.8 percent from 2006. Lawrence Yun, the Realtor's chief economist, said it was likely the country has not experienced a decline in home prices for an entire year since the Great Depression. The Bush administration brokered a deal with the mortgage industry to freeze the rates on certain subprime mortgages for five years, hoping that will prevent a further cascade of mortgage defaults. The administration and leaders of the House of Representatives also agreed Thursday on an economic stimulus plan in an effort to keep the economy from tumbling into a recession. It will be interesting to see will home prices in Australia will ever get closer to median price in United States?

Fincorp Collapse

2007-08-29T23:13:00.000-07:00

Thousands of investors lost close to 300 million dollars in Fincorp Group of Companies. Former executives of failed property group, have contradicted the claims of founder, Eric Krecichwost, that he had not had any involvement in the company's day-to-day operations after he left in July last year. Former chairman, Peter Pengilley, told liquidators, KordaMentha, that Mr Krecichwost attended several board meetings last year and was, in essence, still running the group. Fincorp went into administration in late March 2007 owing its 8000 investors and bank lenders $296 million.

Housing Recovery

2007-06-08T01:09:00.000-07:00

Close to 66000 people gained approval for a housing loan in the month of April. It is a 2,2 per cent rise and the fifth straight month of growth. "There has been quite an acceleration in housing finance commitments over the course of the past few months, which points to housing activity contributing to already strong economic growth," said Mr Stephen Roberts a research director for Grange Securities. However other data shows that housing affordability has hit 23 year low. And the monthly loan repayment on a typical first home mortgage rose to $2387 from $2352. The Housing Industry Association is calling for an inquiry into new housing costs and increasing tax burden on new home buyers. As an example in Sydney, almost $125,000 in indirect taxes is paid on a typical new house and land package.

Higher Housing Costs

2007-03-13T01:39:00.000-07:00

While the average annual adult wage has increased from $38,000 to $56,00 in last ten years the cost to service mortgage payments has gone up at a much faster pace.
In Victoria family needs to earn almost $110,000 a year in combined income to afford the mortgage payments on an average-priced Melbourne home worth $391,000.
In Sydney, where the median-priced home is $520,000, the houshold require a combined income of $145,000 to keep up with their mortgage payments.
In 1996, South Australian households only needed an income of about $30,000 to keep up with mortgage repayments on a median-priced $110,000 home.
But that figure more than doubled to $79,554 in 2006 for a median-priced home worth $285,100.

Housing Market for 2007

2007-01-04T19:57:00.000-08:00

Prices for houses in NSW and Victoria are expected to decline further in 2007 due to the slowing demand from deteriorating home loan affordability caused by three interest rate rises last year. The Real Estate Institute of Australia predicts growth in Sydney and Adelaide will remain flat, slow in Perth, Melbourne, Brisbane and Canberra, but gain momentum because of interstate migration and strong commodity prices in Queensland. The rental demand outstripped supply in every capital city last year with the rents increasing on avarage by whopping 9.8 per cent.

Super funds rip off

2006-11-26T19:58:00.000-08:00

Superannuation members in Australia are losing up to $2 billion a year in unnecessary superannuation accounts, an Australian Consumers Association study has found. According to recent report "the research shows that more than 13 million superannuation accounts are completely unnecessary". The report recommended unclaimed super be aggregated in a fund administered by the Federal Government, rather than left to the funds management industry to profit from.

Property Trends

2006-11-12T14:59:00.000-08:00

John Edwards, chief executive of Residex on current property price trends: "We are at the end of a normal housing cycle and at the start of a new one. Everyone in Sydney thinks house prices' growth in the last decade before this downturn was huge. The reality is the rate of growth was quite normal. People only invest in an asset if it provides an acceptable rate of return. If homes don't provide an acceptable rate of return it means rental returns go through the roof. We've seen rent returns as high as 20 per cent in previous downturns. We focus too much on capital growth. Housing is an asset like any other asset sector. We may live in it, but it's an asset." Edwards says Australia's housing market, including that of greater Sydney, is "in an upward trend. All measures are past the worst."

Westpoint Collapse Aftermath

2006-07-20T23:07:00.000-07:00

A long list of failures in consumer protection contributed to the financial devastation faced by thousands of mostly elderly investors as a result of property developer Westpoint Corporation collapse. It is the biggest property group failure since Estate Mortgage almost a generation ago. It has caused misery to 3500 investors who lost more than $300 million. Most had invested at least $50,000 but it was not uncommon for people to have $200,000, $300,000 or $400,000 invested.

Westpac Green Loans

2006-06-19T21:54:00.000-07:00

Westpac will take up the costs of its environmental and energy savings initiatives, rather than pass them on to customers. Westpac's EcoNomical Living Program is offering discounts and rebates to home loan customers for investments in solar heating and electricity systems, rainwater tanks and even worm farms. Farmers can access Westpac's dollar for dollar loan accounts for environmental purposes.

General Property Trust

2006-05-01T20:50:00.000-07:00

Property group GPT will add the $621 million Highpoint shopping centre in Melbourne's west to its retail portfolio as it seeks to diversify its assets. The group is also still considering an $800 million joint venture hotel fund together with Babcock and Brown which has purchased the Sofitel Wentworth hotel in Sydney for $150 million. GPT has forecast distributions to rise to 27.5c per security in 2006, from 24.4c last year.

Bad Debts Increase

2006-04-11T23:15:00.000-07:00

Residential mortgage loan arrears are at their highest level since 1996 according to ratings agency Standard & Poors. S&P said loans that were behind by 30 days or more rose to 1.21 per cent at the end of January. Increasing numbers of low-doc loans, which have a higher default rate were balmed for the increase.

Property investing down

2006-01-04T21:01:00.000-08:00

The number of investor home loans has dropped in Victoria in the last twelve months by close to fifty per cent says AFG Mortgage, reflecting the bullish share market, household debt concerns and the glut of unsold inner city apartments. AFG said that investor loans made up just 11.5 per cent of all home loans last month, less than half the national average of 25 per cent and almost fifty per cent down on December 2004.

Financial Literacy

2005-12-08T15:19:00.000-08:00

A survey of 3500 adult Australians about their financial literacy by ANZ has found that most Australians are responsible with debt and that two per cent of adults with borrowings felt "out of control" about money. ANZ said it would make the research available to other financial institutions, regulators and consumer groups.
From Sunday Herald Sun

House Prices in Decline

2005-11-07T21:45:00.000-08:00

John Symond, managing director of Aussie Home Loans, predicted that real estate prices in NSW and Victoria would fall by between five per cent and 10 per cent. Symond advised owners of investment properties making plans to sell to do so now. Symond also warned that first-home buyers who had borrowed almost the full value of their property were vulnerable to defaulting on their loans if interest rates rise next year, as some forecasters predict.

Perth Property Prices Up

2005-11-06T21:49:00.000-08:00

Data published by Australian Property Monitors suggests that nationwide, average house prices remain fairly stable. The APM composition adjusted measure quoted by the RBA shows that Australia wide, prices fell by 0.8 per cent in the September 2005 quarter, but increased by 0.5 per cent over the year to September. Separate data compiled by Residex and quoted by the RBA show a similar trend. APM found that the median house price in Sydney dropped by 1.5 per cent over the September quarter and fell by 4.3 per cent over 12 months. House prices in Sydney are down by 8.9 per cent from the peak recorded in the March 2004 quarter, according to APM.
House prices are also in decline in Canberra (down by two per cent over the last quarter). However, house prices increased by more than two per cent in Perth in the last quarter, with prices for flats jumping by six per cent.

Home Loan Loss Doubles

2005-11-05T21:51:00.000-08:00

The size of the average home loan loss suffered by banks - based on claims paid by lenders mortgage insurance company PMI in Australia and New Zealand - doubled to $44,000 in the nine months to September 2005, up from $22,000 in the nine months to September 2004. The incidence of loans in default is no worse than reported by PMI in recent quarters, with the ratio steady at a tiny 0.13 per cent of the almost one million home loans on which PMI provides mortgage insurance. And the ratio of loans in default to claims paid on such loans is also trivial, with fewer than five per cent of loans in default – all of 56 individual loans – leading to claims being paid.