Viewing by month: October 2011

Housing finance approvals up for August

The Australian Bureau of Statistics last week released data regarding housing finance commitments for the month of August 2011.  These are generally considered to be reasonably good indicators of the state of the residential property market as they represent the aim of the population to engage with the housing market, either through the purchase or construction of a dwelling.  

According to the ABS, the total value of dwellings financed in August rose 1.1 per cent (trend) compared with July 2011, with the seasonally adjusted series rising 1.0 per cent in August.   

The total value of owner occupied housing commitments rose 1.3 per cent in August 2011 (trend), with increases recorded in commitments for the purchase of established dwellings (up 1.4 per cent) and the purchase of new dwellings (up 2.6 per cent).  Commitments to finance for the construction of dwellings fell by 0.1 per cent.  

The ABS also noted that the total value of housing commitments for investment purposes rose 0.6 per cent in August compared with July 2011. 

The first home buyers group also showed increased activity – the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 15.3 per cent in August 2011, from 14.9 per cent in July 2011.  The ABS recorded that the average loan size for a first home buyer also rose by $900 across the month to $283,900. 

While not large increases, these improvements in the levels of housing finance commitments are a positive step nonetheless for the residential property market.  It will be interesting to see the data over the coming months as it begins to take into account the possibility of a rate cut by the RBA, or at least the waning likelihood of a rate rise, while simultaneously reflecting concerns for global markets. 

For more details regarding the data, please visit the ABS website. 

To talk to an experienced property professional about your housing finance needs, please drop by a CENTURY 21 Real Estate or CENTURY 21 Home Loans office, located in hundreds of locations Australia wide. 

3 comments | Posted by Charles Tarbey on 25/10/2011 at 2:49 PM | Categories:

A review of the spring selling season so far

We’re now just over halfway through the traditionally busy spring selling season which places us well to see how the residential market is faring so far.  A guest column by CENTURY 21 Chairman and owner, Charles Tarbey, recently appeared on Property Observer, the independent news website for investors and astute buyers, in which he considered spring sales activity up to this point, and gave his thoughts on what he expected to see in the real estate market for the remainder of 2011.

In the column Charles acknowledged that any expectations the real estate industry would usually hold based on historical trends had essentially been thrown out the window this year.  Thanks to continued interest rate uncertainty and heightened concerns for global financial markets the residential market has experienced a slowdown over 2011 and based on the sales activity seen in September, the spring selling season doesn’t look to be much different. 

Charles referred to data from CENTURY 21 offices nationwide, which showed that although properties are certainly on the market and buyers are looking, many are reluctant to make a purchase.   While the number of properties listed is up on this time last year, the number of listings converted into sales is down. 

Having said this, Charles noted that there continue to be areas where properties are selling successfully – which include in locations where there is little property available and no land releases planned.  The $400,000 to $800,000 price range is also doing well. 

In terms of vendor discounting, Charles acknowledged that this is a reality for those selling at the top end of the market and in coastal regions.  However he also noted that such price discounting could see this end of the market come back strongly as buyers realise the purchase opportunities available. 

For the rest of spring, and indeed the remainder of the year, Charles wrote that activity will depend mostly on consumer confidence and interest rate certainty.  If the Reserve Bank elects to cut interest rates at its November meeting, this could be the news buyers are after to settle on a purchase decision.

Charles’ full column can be read on the Property Observer website. 

For more information surrounding market activity in your area, please drop by your local CENTURY 21 office to speak with a property expert. 

1 comments | Posted by Charles Tarbey on 25/10/2011 at 2:49 PM | Categories:

Positive results for home values in August

The RP Data-Rismark Hedonic Home Value Index for August brought some good news for home owners when it was released recently.   

Reporting on the ‘total return’ of Australia’s housing, which is calculated by combining monthly gross rental and capital returns, the Index saw dwellings in Australia’s capital cities achieve upwards ‘total return’ growth of 0.2 per cent in August.  According to RP Data-Rismark, such a return was the result of strong rental growth rates combined with the slowing decline of dwelling values.

While the Index also saw dwelling values fall by -0.4 per cent, this was the lowest seasonally-adjusted decline seen in the national housing market since April of this year. 

RP Data’s senior research analyst Cameron Kusher commented that a notable result was the “resilient performance” of home values in the Sydney residential market.  Sydney was the best performing capital city, with dwelling values down by -0.1 per cent (seasonally adjusted) over the three months to August.   RP Data-Rismark also found that Sydney’s total return over the past year, including rents, was up by 5 per cent. 

Melbourne’s results were also significant, according to Kusher, with home values rising in raw terms in August after declining over the previous four months.  He noted that Melbourne would be an interesting location to watch over the spring selling season. 

In terms of rental performance, RP Data and Rismark found Darwin to have the highest rental yields, with gross rental yield of 5.3 per cent for houses and 5.8 per cent for units. 

For more information about home values and rental rates in a particular location of interest, please feel free to stop in at any of the CENTURY 21 offices around the country to speak with a dedicated real estate professional. 

0 comments | Posted by Charles Tarbey on 10/10/2011 at 9:17 AM | Categories:

Interest rates on hold for October, but a cut may be on the cards

Last week saw the Reserve Bank of Australia elect to keep the official cash rate on hold at 4.75 per cent.  This was the tenth consecutive month that the decision has been made to keep rates steady. 

Despite this prolonged period of rates on hold, 2011 has certainly been a rollercoaster year in terms of interest rate predictions.  Not long ago economic conditions suggested that the only question regarding a move by the Reserve Bank to increase the official cash rate was not ‘if’ but ‘when’.  Yet it seems that the RBA is now edging towards reducing rates, given global economic conditions, the softening of growth prospects for the Australian economy, as well as improving inflation. 

In his statement that followed the decision last week, RBA Governor Glenn Stevens made mention of “unsettling conditions” in global financial markets which he said have led to “reduced confidence, which could result in more cautious behaviour by firms and households in major countries.”

Governor Stevens also noted that while Australia’s terms of trade are high and the resources sector is attracting strong investment, which provide good reason to expect solid economic performance in the medium-term, the outlook for Australia’ s near-term growth is “unlikely to be as strong as earlier expected, due both to local and global factors, including the financial turmoil and related effects on business confidence.”

Inflation, a key measure that the RBA relies on when setting interest rates, also looks to be easing which provides further scope for a cut to rates.  The recently released TD Securities – Melbourne Institute Monthly Inflation Gauge for September rose by 0.1 per cent over the month (it decreased 0.1 per cent in August and rose 0.3 per cent in July), while rising 2.8 per cent over the year to September, which was lower than the 2.9 per cent increase seen in the year to August. 

Governor Stevens indicated that the official consumer price index which is set to be released by the Australian Bureau of Statistics later in the month, may also show easing inflationary pressures, and could be more consistent with the 2 – 3 per cent target the Board has been working within.  Should this inflation data show an improved outlook, the RBA would have more room to adjust rates to “provide some support to demand, should that prove necessary.”

The Bank is set to meet again to set rates for November on Melbourne Cup Day.  I’m sure that along with enjoying race-day celebrations, prospective home buyers and investors will also be closely monitoring for a rate cut, which, if it eventuates, we may see evidence of through increased buyer activity in the residential market before Christmas. 


0 comments | Posted by Charles Tarbey on 10/10/2011 at 9:17 AM | Categories:

Understanding consumer confidence measures

There are a number of factors which are frequently discussed when it comes to forecasting conditions in the residential housing market. 

Interest rates are one such factor and have generated much discussion in Australia over the course of 2011.  As the official cash rate set by the Reserve Bank of Australia has a decidedly significant impact on the borrowing (and therefore buying) behaviour of Australians, it is watched quite closely by market commentators and prospective purchasers. 

Another less understood measure is that of the level of consumer confidence, which is also quoted quite widely when commentators are considering the housing market. 

I recently read a blog by Tim Lawless at RP Data entitled ‘What does the recent improvement in consumer confidence mean for the Australian housing market’ which I thought provided a clear explanation regarding the relationship between levels of consumer confidence and the performance of the housing market.

In the blog Tim explains the importance of a positive consumer mindset – “for a prospective buyer to make a high commitment purchase decision like buying a home they need to have a base line level of optimism about their job security, their ability to service a mortgage and the prospects for the housing market.”

According to Tim, there has been an 84 per cent correlation between consumer confidence levels and national residential property sales volumes since the start of 2008 – this gives you some idea about why commentators monitor consumer confidence so closely. 

So what do these measures mean for would-be home buyers?  Essentially, it is important to understand that measures of consumer confidence can give you some guidance as to how fellow prospective-purchasers in the market may be inclined to act. When levels of confidence are high, this correlation figure suggests that so too will market activity be up. 

When you are in a favourable financial position and have sought the appropriate professional advice (e.g. from your real estate agent or mortgage broker/lender), it can therefore be helpful to monitor such measures when you are looking to make a property purchase to get some idea about the state of the market.

For further information about the state of the market in your particular locations of interest, please don’t hesitate to stop by one of the hundreds of CENTURY 21 offices around the country to speak to an expert real estate professional. 

0 comments | Posted by Charles Tarbey on 04/10/2011 at 12:52 PM | Categories:

Know your potential property costs before buying

There is no doubt that the upfront cost of purchasing a property can be expensive, especially taking into account the additional legal costs and taxes that are often involved.  What many people don’t realise however is that the various repairs that a property could require may make a purchase quite expensive in the future.   

According to Archicentre, the building advisory service of the Australian Institute of Architects, up to 75 per cent of the thousands of people buying a property each week in Australia are flying blind on their financial future.  Ian Agnew, Architecture State Manager Queensland, said that the vast majority of properties are purchased without any independent inspection. 

“The financial reality of having purchased a LEMON can kick in dramatically when people move in and discover a range of issues in their new home which can include the need to restump the property, deal with termites, structural faults or expensive plumbing or wiring replacement as an urgent safety issue,” commented Mr Agnew.

Mr Agnew continued on to say that the usual approach to funding repairs is to extend a mortgage, which can add tens of thousands of dollars to the cost of repairs when interest is added. 

When you’ve found a property that you love, it can be quite hard to step away from it even if you know that it has issues that could prove to be costly in the future.  Having said this, it is incredibly important to have a property inspection conducted well before the auction date and signing of contracts to arm yourself with all of the available information needed to make an educated decision.  

These investigations have the potential to save you from having to make significant further outlays by ensuring you are aware of major faults in properties of interest that could prove expensive to fix.   

In addition, it is important to ensure you choose a properly qualified and experienced professional to carry out such pre-purchase inspections.  If you require guidance as to an appropriate company to hire, it can often be of value to ask your real estate agent to recommend a company they (or other clients) have previously worked with successfully. 

For any further information about conducting a pre-purchase inspection on a property of interest, please don’t hesitate to contact one of the hundreds of CENTURY 21 agencies around Australia. 

0 comments | Posted by Charles Tarbey on 04/10/2011 at 12:51 PM | Categories: