Australia vs USA property

Below is the latest chart with property prices in USA.

US Zillow Home Value Index

US real estate info

NRAS Housing Scheme

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

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

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

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

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

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

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.