Industry Market Wrap - 26th June 2009

This week�s biggest property related story was probably BIS Shrapnel�s release of their three year forecasts for property prices. Within the release they forecasted that capital city price growth over the next three years would range from 11% in Darwin to 19% in Sydney, Melbourne and Adelaide. Their forecasts have come in for much criticism however (as we will study later in the Pulse) the forecasts reported by the media did not take into consideration the fact that these figures include inflation. Although many have suggested these forecasts are quite bullish, in real terms we are talking about increases of between 5% and 9%. The media headlines also don�t mention when in that three year period the growth will happen. I don�t think anyone would believe the next year to year and a half will see strong price growth given the economic climate but given the undersupply of dwellings in Australia and the cyclical nature of our market it may be the case that property prices will rebound in the second half of the three year period. Dwelling commencements data was also released during this week with the statistics showing that the trend estimate dwelling commencements for the March 2009 quarter fell by 8.5, following an 8.4% fall in the previous quarter. Many economic commentators as well as Government Departments have highlighted Australia�s ongoing shortage of housing estimated to be somewhere between 40,000 and 80,000 too few dwellings. In order to cater for our booming population it is imperative that dwelling commencements improve to provide housing for those in need and to minimise affordability issues that arise due to this shortage. Given this result it is unsurprising to see Government incentives for purchases of new houses however, it may be more effective to slash the restrictive charges on new development and inject money into the timely deployment of critical infrastructure in and around these new housing areas on the outskirts of our capital cities. RP Data - June 2009

Buying At Auction - May 27, 2009

Auctions can be fun, frenetic and financially dangerous. With several hundred thousand dollars or more on the line, the tension in the room can be palpable. The stakes are high for vendors and buyers, so you need to make sure you understand the process, because it is a battleground that takes no prisoners. Real estate agents will take a property to auction for a number of reasons. Usually, it is because the market is booming and they feel confident of extracting a higher price. Sometimes, however, the auction may be forced as part of a deceased estate or liquidation. Home buyers on the other hand may attend an auction because they have decided on a property and are prepared to compete to lay claim to it. Others are undecided and some are hoping that the auction may turn in their favour and they get a bargain. How does an auction work? An auction is usually held in an Auction Room hired for the occasion or on-site at the property itself. Before you bid, you need to register with the auctioneer, giving your name, address and telephone number. You will be required to show proof of identity such as a driver�s licence, passport or credit card. This is to ensure that once you have placed a bid, you are responsible for it and can�t skip the scene. You may be given a number to display that you hold up during bidding. The auctioneer starts proceedings by explaining the contract, terms of the auction and a description of the property. Bids are then invited from the floor. Some people may ask a real-estate agent or other person to represent them if they can�t attend but they must notify the auctioneer in writing. Make sure that before you bid, you gain all necessary, termite, building, structural and engineering reports as well as crucial legal title information. Ninemsn May 2009

First Home Buyers Boost Extended! - May 2009

Last night the Federal Government announced that the current First Home Owners Boost scheme will continue in its current format until October 1, 2009. This means that those buying existing homes will receive $14,000 and those buying new homes $21,000. Adjustments to the scheme from October 1, 2009 will see the First Home Owners Boost scheme halved. Which means those buying existing homes will receive $10,500 and those buying new homes $14,000. As of December 1, 2009 the First Home Owners Boost scheme will cease and the existing $7,000 grant will continue to be available to all first home buyers. Economist for Australian Property Monitors, Matthew Bell comments, "This decision will continue the stimulus to both the housing construction and development sector, as well as the sales activity at the more affordable end of the property market. First Home Buyers now have some extra time to consider their potential purchase of a home to take advantage of the Boost. As always, first home buyers should carefully take into account their ability to meet mortgage payments in the future when interest rates inevitably rise, as well as their employment situation in a tough economy. The gradual removal of the boost should minimise any price falls in the more affordable end of the market associated with the end of the Boost, and continue to stimulate sales activity in the generally slower winter market." Domain May 2009

Residential Property Values Bounce Back in March Quarter 09 - May 2009

Australia's housing market has continued to defy the sceptics during the first quarter of 2009 with the indicative capital city RP Data�]Rismark National Dwelling Value Index up 1.6 per cent in the three months to end March 2009. (This result compares the monthly index values at end March 2009 with end December 2008.) Most of the growth in residential property values has come in February (+0.9 per cent) and the March indicative estimates (+0.6 per cent). The month of January was flat. Australia's residential property market has proven to be consistently resilient and follows on from modest circa 3 per cent falls in the value of capital city homes during 2008, which was primarily a result of mortgage rates peaking at 9.6 per cent in August 2008. As the market improves further we would expect the construction industry to ramp up new dwelling commencements in a much needed attempt to remedy Australia's large housing shortage. There have also been some misplaced concerns that the boost to the First Home Buyers Grant has artificially driven price growth across the entire housing market. While the Grant has certainly helped spark demand, the key driver of the housing market's resilience has been the fall in mortgage rates to 40 year lows. It is important to remember that first-time buyers represent less than 30 per cent of all property sales. Sydney The quarterly data reveals Sydney is now one of the best performing capital cities in terms of value growth, with houses up 2.4 per cent in value and units up 2.5 per cent over the first three months of 2009. A return to modest growth has been a long-time coming for Australia�fs largest city. In fact, housing values are still $16,000 lower now than they were back at the 2004 peak highlighting the lackluster performance of the last four years. Rental yields in Sydney are now the third highest in the nation after Darwin and Canberra. The improvement in rental yields is due to several successive years of strong rental growth coupled with relatively flat property values resulting in improved rental returns for landlords. RP Data May 2009

Homes Most Affordable In Five Years - April 2009

The Australian dream of owning a home is more affordable now than it has been for five years following lower interest rates and greater government subsidies, a report says. The Housing Industry Association and Commonwealth Bank First Home Buyer Affordability index improved by 39.2 per cent to 153.6 points in the December quarter from 110.3 index points for the September quarter. First home buyers last had housing this affordable in the March quarter 2003, according to the index. HIA chief executive Chris Lamont said lower mortgage rates and the boost to the first home owners scheme made it easier to buy a house. "For would be first home buyers, conditions have improved significantly and clearly many Australians are taking up the opportunity to get into home ownership," Mr Lamont said in a statement. "Cuts with interest rates and the first home owners grant have made a large impact." The Reserve Bank of Australia (RBA) lowered the cash rate by three percentage points to a six-year-low of 4.25 per cent in the last four months of 2008. And the central bank cut the cash rate another one percentage point to a 45-year-low of 3.25 per cent on February 3 in a bid to cushion the domestic economy from a possible recession. Commercial banks have lowered their standard variable mortgage rates by an average 3.75 percent points in response since September last year. Repayments on an average home loan fell by 26 per cent to $2,056 a month by the end of the December, from $2,796 the previous quarter. In mid-October, the federal government doubled the first home owners grant to $14,000 for established dwellings and tripled it to $21,000 for newly built homes until June 30. Households would need an income around $70,000 to buy a modest home, the report said. "Previously, a household would have to be earning in the order of $85,000 to afford a modestly priced home without going into severe mortgage stress," Mr Lamont said. "The improvement in housing affordability means those on a more modest income can now contemplate a home of their own." Buying a home was more affordable in all capital cities and regional areas during the December quarter, the report said, with the largest improvement occurring in Perth, Brisbane and regional Western Australia. Ninemsn, April 2009

Buying a house: what to look for inside the house - April 2009

Buying a home can be a bit like buying a carton of eggs. You never know what you're going to find when you look inside � bits might be missing, cracked, old, broken or rotten. So you have to check carefully to make sure you are getting what you pay for. First-home buyers usually visit a few properties before making a final decision and this can be a test for the memory, so take a digital camera and a pen and paper. Take photos and notes about the features, colours and negative and positive points of each residence. Then, when reviewing the properties in the comfort of your home, tick them off against your wish-list. There are some tried and tested things you should check for on the inside of the house. Mainly you want to identify anything that might be an extra cost, ranging from minor replacements to serious structural work. Here are a few nasty surprises to keep an eye out for: Turn the taps on in the kitchen, bathroom and laundry to check the water pressure, performance and drainage. Check for dirty water. You might like to leave the tap running for a minute and it can't hurt to drink the water for a taste test. Check the hot water system. Is it big enough for your needs? A family will need more hot water than a couple. Also check for leaks, rust and age. Replacing a busted hot water system can be expensive and is not the sort of thing you can put off. If it is gas, check for the system's last servicing. Good insulation can save hundreds on heating and cooling bills. A quick visit through the manhole should give you some idea of its condition. Also check for cavity wall insulation. Are there major cracks in the walls or do the doors stick? This can be a sign of subsidence. This can be an extremely expensive problem to fix and is usually not covered by house insurance. Be extra cautious if the house has been recently painted as it could be masking serious problems. Take a torch to shine on the paintwork in dimly lit rooms to see if there are any obvious structural defects that are not clearly visible in the dark or have been painted over. Check for damp. Feel the walls and look for signs of peeling or bubbling paint. Watermarks are a dead giveaway, as is mould. Fixing damp can sometimes run well into the tens of thousands of dollars. If freshly painted, rely on your sense of smell. Bathrooms often have mould. Mould can't just be painted over. A serious problem will usually involve installing a new ceiling/wall and better ventilation. Check all the windows. Do they open and slide easily? Do they have cracking paint? This could be a sign of rot. Press your finger into the wood. If it's soft, it is rotten. Tap the walls to do a preliminary termite check. You can get instruments which measure humidity behind the walls as this is often a sign of infestation. Termites are not usually covered by house insurance so make sure you also get a professional in if you decide to buy the house. Good storage, like built-ins and sheds, can save you over time whereas a lack of storage is bound to cost. Are there any unusually shaped, difficult to furnish rooms? Make sure there are sufficient power points and that they are at your preferred height and position in the room. New points will cost money. Check for Internet access. Check that the toilet is on the same level as the bedrooms for easy access. If it is a two-storey house, it is nice to have a toilet on both levels. Check the location of bedrooms. Parents often want children to be on the same level as them. Do you like the wall colours? Repainting can be expensive if you employ a professional. However, if you don't mind painting yourself, try to look past the psychedelic paint job, as it can be a relatively inexpensive project that can add value to your home. Old-fashioned electricity switches can point to old wiring. Visit the house on a rainy day to check for leaky rooves, walls or ceilings. Are there cracked tiles or loose grout in the bathroom or kitchen? Check for fly and mosquito screens. In summer, these will be a must and are likely to cost up to $1000. If you intend renovating, check to see if there are floorboards under old carpets, and their condition. People sometimes do insane, cheap things like staple the carpet to the floor and use industrial glue for their tiles. Both these things will add significant expense and time to floor polishing costs. Carpet should be easy to raise without many rusted nails or staples. Kitchens and bathrooms are the most expensive rooms in the house to renovate so pay close attention to the age and quality of cupboards, benches, plumbing fittings and tiling. In old houses in particular, check for holes in floorboards and cracks and fissures that let in vermin and cockroaches. Measure spaces in kitchens and laundries to make sure your appliances such as refrigerators, washing machines, dishwashers and microwaves fit. Failure to fit could cost a couple of thousand dollars in replacements. Make sure your furniture fits in the rooms. Check for the materials used in cupboards and benches. Good materials will last a lot longer. Check out the floor coverings. Will they need to be replaced and if so, when? Does the house have central heating or air conditioning? If so, how old are they? Check to make sure they are functioning well. By Sarah Mills ninemsn Money

Rents Are Going Up & Up & Up - March 09

With median values falling in many areas of Australia during 2009, one strong aspect of the property market has been the exceptional growth in weekly rental rates across houses and units. Across the mainland capital cities all property types across each city recorded growth in weekly rental rates through 2008. On average, rents increased by $41/week for houses and $35/week for units, indicating very strong rental growth. Darwin has been the standout performer in terms of rental growth during 2008 and surprisingly it was also the best performer in terms of property value growth over that period. Weekly rents for Darwin houses climbed by $70/week (18%) and unit rents climbed by $60/week (19%). Although Darwin�s property values recorded the greatest increase through 2009, it is interesting to note that Darwin maintains the country�s best rental yields at 6.25% for houses and 6.44% for units. Just behind Darwin was Sydney where median house rents increased by 18% over the year and unit rents climbed by 14%. Following close behind Sydney was Melbourne where rental rates for houses increased by 17% and units increased by 14%. Adelaide and Canberra were the two cities which underperformed. Adelaide house rents climbed 5% during 2008 and unit rents increased by 4%. Canberra�s median weekly rental for houses increased by 4% and units by 6%. It is important to note that along with Darwin, Adelaide was the only other capital city market to record positive value growth during 2008. As this growth is likely to slow during 2009, we would anticipate further rental growth for Adelaide during the year. Throughout Australia�s Local Government Areas (LGA�s) some regions performed particularly strongly during 2008 in terms of rental growth. Across houses the top three positions are held by mining and resource areas with Belyando and Broadsound LGA�s in the Central Qld mining areas and Port Hedland located in Pilbara Region of WA. Belyando and Port Hedland in particular, have seen astronomical growth in rents through 2008, largely driven by a shortage of supply of housing within these regions. Outside of the mining and resource areas it has been the more affluent areas of inner Sydney and inner Perth which have witnessed strong increases in weekly rental rates. This has occurred despite the fact that many of these areas have recorded value falls and have been hampered by a slow rate of sales coupled with significant increases in property listings during the latter part of 2008. The results show that quality inner city property will continue to witness strong long-term demand for both owner occupation and rental occupation. Across the unit markets, the list is almost exclusively populated by inner city areas and high quality waterfront precinct close to CBD�s. The two exceptions are Kalgoorlie-Boulder which is a mining area in WA which has seen strong housing demand result in a significant increase in weekly rents and Bassendean located to the east of the Perth CBD. The other interesting point to note is that the list is dominated by suburbs within Sydney and Perth, with Kalgoorlie-Boulder and Darwin the only LGA�s located outside of these areas. Throughout 2009 it is anticipated that rental growth will continue to be strong, although it may not be as strong as that witnessed during the last 12 months. Rental vacancy rates throughout the country remain tight and although the Government is offering up attractive incentives for first home buyers currently, many are still not in a financial position to purchase. The tightness of the rental market is highlighted within recent data from the Real Estate Institute of Australia (REIA) which shows that vacancy rates throughout all Australian capital cities except Perth (2.4%) and Canberra (2.3%) sit at levels below 2%. Recent estimates from ANZ bank suggest that nationally underlying demand for housing sits at 180,000 new dwellings annually, in the year to Sep-08 approximately 150,000 new dwelling commencements occurred (an under supply of 30,000). This ongoing under supply, with commencements likely to start trending downwards as have approvals, is likely to result in tighter rental markets and additional upwards pressure on rental rates. This will be particularly felt in capital city markets and in particular, desirable inner city locations. Rp Data - 19th March 2009

To Rent or Buy? - February, 2009

When it comes to property, the age-old issue has been should you rent or should you buy? In the past there was a strong argument put forward that investing the money you might have used as a deposit and in mortgage repayments in other assets such as shares could prove a better option. Given the market meltdown that advice might well be questioned right now although if you feel the sharemarket is close to bottoming then perhaps it still holds. Nevertheless, for many Australians, owning your own home still has strong support, not least because of the psychological value. As Paul Ahearne, managing director of financial advisory firm Locumsgroup observes, Australia is one of the few countries where the word renting is always preceded by �just�! But what if you were to buy a property and rent it out rather than live in it? That way you would have a foothold in the property market while enjoying some tax advantages. Certainly the trend to remain living with your parents - and probably pay less than a commercial rent - offers many Australians the opportunity to get into the property market without too much pain. Two factors are working in your favour here � house prices are coming down and vacancy rates for rentals are very low. Another plus is that while your principal residence does not enjoy tax relief on interest payments, an investment property does. And you can also amortise your establishment costs. But an investment property does have downsides. For instance, if you buy a property to rent out, you will not qualify for the First Home Owners Grant (FHOG) of $14,000 � or up to $24,000 for a new property if you live in NSW. Nor will you be able to claim the grant at some further time down the track when you actually do buy your first prinicipal residence. Another negative is that any capital gain you make on the investment property will be subject to tax. If you wanted to take advantage of the FHOG and not pay capital gains tax, then you might consider living in the property as your main residence for the first year and then renting it out. You can live away from what has been your main residence for up to six years and it will still be capital gains tax exempt providing you don�t claim another property as your main residence. However, you should be aware that the anti-avoidance provisions (known as Part IV A) of the Tax Act may prevent you from obtaining tax benefits if that is the sole or dominant purpose for entering such a transaction. Make sure you get good tax advice before pursuing such a strategy. Nevertheless, with the property market flattening, now might offer some good opportunities for potential buyers. Whether you live in the property or rent it out depends on you. ninemsn Money

Tax break for homeowners struggling to pay mortgage - February, 2009

Property investors struggling to pay off their mortgages can reduce the amount of tax deducted from every pay cheque by claiming their deductions through the PAYG tax system, rather than waiting until the end of the year. This can be particularly useful if, like Money reader Jake, you are finding you have significant cash-flow problems. �Help! I do not want to sell my investment unit as I will make a loss on it but I am finding it increasingly hard to balance my budget on a weekly basis,� Jake writes. Like many investors, Jake wants to hang in there for the long term to enjoy the capital gains he expected when he became a real-estate investor, but at the moment he is finding it hard going. �The rental income is relatively good and steady,� Jake writes, �but I am locked into a fixed-rate mortgage and with rising living costs, plus a dip in my partly commission-based salary, I am struggling to make the mortgage payments.� Well, Jake, help is at hand because with a bit of effort you will be able to boost your regular cash position by paying less tax every pay day. Many people invest in negatively geared property, that is a property where the expenses, including interest on your loan repayments, are higher then the rental income. They are prepared to do this in the belief they will be more than compensated by capital gains over the longer term. Jake�s unit cost $320,000 and he borrowed $300,000 over 30 years, with interest fixed for the first three years at 8.5%. His interest-only monthly mortgage payments amount to $2125 or $25,500 a year. His rental income is $275 a week, equating to $14,300 a year, leaving him with a shortfall of $11,200 a year. On top of this the unit costs him another $300 a month for expenses such as rates, agents� fees and repairs and maintenance, adding up to $3600 a year. (For a full list of what you can claim as a landlord, see the Australian Taxation Office�s website at www.ato.gov.au). The relatively new unit also yields depreciation and building allowances of about $12,000 a year. So, all up, Jake�s unit produces a shortfall of $26,800 a year after rent, which he can claim as a tax deduction when he lodges his tax return. However, instead of waiting until after the end of the tax year, Jake can apply to the ATO to have the tax deductions on his salary varied downwards to take account of the losses on his investment. To do this he will have to lodge a PAYG income tax withholding form with the ATO. Once he has done this, he can have the fortnightly tax payments his employer deducts from his salary reduced, resulting in more cash in his pocket. Jake now earns $70,000 a year, down from $75,000 last year. His tax on this is $618 each fortnight, the ATO website�s calculator estimates. Once he has his PAYG tax varied, Jake�s income will fall to $43,200 ($70,000 less $26,800 losses on his unit) and his tax will fall to $282 each pay day. This means he will have an extra $336 take-home pay a fortnight, easing his cash-flow problem. The relevant forms can be found on the ATO website (type �withholding tax� into the search function). Jake can either lodge a hard copy form or an electronic version on the internet. The forms change each year and the ATO will only process forms for the correct year. One thing Jake must ensure is that he does not overestimate the shortfall on his property. The granting of a variation does not mean that the ATO has accepted the tax treatment of the income and deductions in his application. Jack�s actual tax liability will be determined when he lodges his income tax return and if he has claimed too much relief he will find himself repaying a lump sum. Also if his income rises again during the year, Jack will likely face a tax bill instead of a refund when he lodges his return. Money Magazine's

Help for homeowners doing it tough - 1/8/08

The cost of buying or renting a place to live has risen so much that more & more people are struggling to find affordable accomodation where they want to live & work. Overall in Australia, families now require almost 25% of their median income to meet rent payments, up from 23% a year ago. Home buyers are forking out 38% of their household income to meet loan repayments, the highest level ever recorded by the Real Estate Institute. And with Australian Bureau of Statistics data showing a big drop in new housing approvals, the situation will get worse before it gets better as a shortage of accomodation keeps driving up prices and rentals. Despite a new federal government, there is still no comprehensive plan in place to address this growing social & economic problem but some initiatives should help. Certainly the First Home Saver Account scheme, to be launched in October, will help those saving for a home deposit. Account deposits will attract a government co payment equal to 17% of your contribution. Those who make the minimum $1000 deposit will receive $170, up to a maximum of $850 if your contribution is $5000 or more. Earnings will be taxed at a flat 15% regardless of the owner's marginal tax rate. Article taken from Money Magazine July 2008 by Pam Walkley.

House prices fall in most capital cities - 1/8/08

Australian house prices fell in a majority of capital cities in the last few months as high interest rates brought about the weakest housing market in four years. National house & unit prices could dive by 10% next year as a prolonged real estate slowdown sets in, online real estate data group Australian Propert Monitors (APM) said. Median house prices fell in 5 of Australias 8 capital cities in the 3 months to June 30, according to APM's figures. Sydney kept the title of having the most expensive median price for units, at $366,622, marginally ahead of Perth & Canberra. Source: The Daily Telegraph 31.7.08

Substation funds surge - 2/7/08

A POWER substation to cater for the growing needs of Sydneysiders will be built at Greystanes netting Holroyd Council $12.5 million. In a deal between power supplier TransGrid and council, a substation will be built on 3.5ha in Hyland Road Regional Park at Greystanes. It will be on land occupied by a rifle range and a pigeon fanciers' club which will be relocated elsewhere in the park. Work will start in 18 months with completion due in 2012. The substation would be "state of art", looking more like a series of office buildings than an "old style" substation. Mayor John Brodie announced the development on Monday, saying it was a good deal for Holroyd. He said the money would be used on a range of "wish-list" projects. "How we spend the money is to be decided by all councillors but currently we have $60 million dollars 'wish list' capital works which we cannot fund," Cr Brodie said. The list includes a youth centre at Guildford, upgrade of picnic equipment at Central Gardens, cycleways, improvements to park and sporting facilities and a community centre for Pemulwuy. Negotiations between TransGrid a State Government corporation which supplies electricity to EnergyAustralia and Integral Energy and council started last November. TransGrid approached council after identifying the site as ideal because of the existing power network near the park. Cr Brodie said council was pleased that TransGrid had agreed to work with council on an outcome that would benefit the community. "Council has been assured that the substation would be screened with mature trees and shrubs and would look 'just like any other building'," he said. TransGrid's general manager Peter McIntyre told the Advertiser the substation would initially supply electricity to the greater Parramatta area, eventually linking with the Sydney CBD. "This substation will go a long way to meeting ongoing energy needs supplying power-intensive appliances such as airconditioners and plasma televisions, whilst maintaining a reliable electricity supply going into the future," Mr McIntyre said. Parramatta Advertiser 2/7/08

Warning on Fast Home Sales - 23/05/08

RESIDENTS under mortgage stress in western Sydney have been warned to be wary of a new breed of online entrepreneurs who are offering quick money for homes. One organisation, advertises on its website for houses where owners are behind in repayments, facing repossession, or need debt relief. It offers online quotes and promises owners the sales take "days, not months". The proceeds, it says, are free of selling fees normally paid to real-estate agents. But the federal Government is concerned the new trend could lead to sharks exploiting vulnerable homeowners who are under pressure, resulting in sales at below market value. Newly elected Blaxland MP Jason Clare has written to Consumer Affairs Minister Chris Bowen raising the alarm over the practice and asking him to investigate. Statistics show that Blaxland, which takes in south-western Sydney, is the electorate experiencing the most housing stress in Australia because of higher interest rates and falling prices. Mr Clare said he wanted to ensure sellers got a fair deal and were not being ripped off. "These guys are obviously targeting the most vulnerable - people struggling to keep their heads above water. Their website targets people behind in their repayments, people who have lost jobs and people getting a divorce,: he said. "The key question is: are they paying a fair price? That's what we need to know. For this business to work they must be buying them for less than they are worth. (But) how much less? "My advice is be very careful, and go in with your eyes wide open ... get an independent valuation of your property." Mr Clare said he was also concerned that Express Homebuyers was offering $1000 for tip-offs on potential sales. He said: "We have enough problems in our area without this." Express Homebuyers carries the same name as a US company that operates a similar scheme and has profited from the meltdown in the American housing market resulting from the sub-prime mortgage crisis. It says it acts on behalf of a network of private investors and is seeking homes in the Sydney region, the Blue Mountains and Central Coast. "The Express Homebuyers way is to give you a fast house sale with no hassles so that you can move on with your life," the company says. It offers a post office box in St Ives as its address However, calls by The Sunday Telegraph to the company were not returned. Home repossessions in Sydney have more than doubled in the past three years to more than 3500 a year, according to Supreme Court figures. And the big increases have been in western Sydney, particularly the Canterbury-Bankstown and Fairfield-Liverpool areas. Since September, 2004, house prices have fallen across Blaxland by between 6 per cent (in Cabramatta) and 26 per cent (in Old Guildford), according to Australian Property Monitors. The average fall in Blaxland is 16 per cent - the largest of any electorate. At the same time, mortgage stress is at the highest level in Australia. Of those people buying a home, 49.4 per cent face mortgage repayments representing more than 30 per cent of gross income, 2006 census data shows. Written by Tony Vermeer - The Daily Telegraph.

RBA leaves interest rates on hold - 7/5/08

As expected the Reserve Bank of Australia has left official interest rates on hold at 7.25 percent. The decision had been widely expected by economists despite recent economic data that shows inflation is running at its highest rate since 1991, at 4.2 percent annually. Source: NineMsn Money Stuart Fagg Read Nine Network business and finance editor Ross Greenwood's take on today's decision. Moreover, data released yesterday put the annual inflation rate at 4.3 percent, well above the RBA's target. While the RBA has not changed the official cash rate, economists expect the commercial banks to continue raising their mortgage rates. On average, retail banks have raised rates close to 0.5 percent independently of the central bank so far this year, and more rises are expected. While some recent ecomonmic data has suggested a slowdown in the economy, there are also concerns that inflation will remain high and force the RBA to potentially lift the cash rate later this year. Indeed, economists believe the case for another rate rise may be building. RBA governor Glenn Stevens, speaking after the decision, said if demand fails to slow or ongoing inflation affects wage and price settings, the inflation outlook may need to be revised.

Will house prices rocket or collapse? - 7/5/08

Written by Sarah Mills from Ninemsn Money. House prices are the soft spot in Australia's economic psyche. Fuel and food prices might rise, but nothing has the emotional impact of the prospect of losing one's house. Owning a house on a quarter acre remains the Great Australian Dream and losing it, the Great Australian Nightmare. It is partly for this reason that banks have lowered underwriting standards and valuation practices in the past decade, adopting a "borrowers will alter their consumption patterns to retain home ownership in times of hardship" approach, based on a poverty-line benchmark. As a result, Australians are very highly geared on heavily inflated property prices (the result of constrained land supply and high immigration), a precarious position that brings the nightmare, rather than the dream, closer to reality.

Rising prices hit white collar workers - 5/5/08

Increased food and petrol prices, and rising interest rates are creating a new class of "white collar battlers", welfare groups warn. The Salvation Army has told News Ltd newspapers it has seen a 58% rise in crisis clients in the past six months, many of whom don't fit the usual profile of those in need. "Now we have a whole new class who are simply not coping," News Ltd quoted the Salvos' Major Phil Maxwell as saying. "First home buyers who have bought into their dream & woken up to a very harsh reality, young families, people with secure employment who find their costs exceed their income". The number of those seeking help had grown so sharply the charity was having to turn some people away, Major maxwell said. The NSW Council of Social Service said financial pressures were pushing some white collar workers to the brink. "We're seeing different people who are really struggling, people who have white collar jobs, people with full time jobs," News Ltd quoted the council's Alison Peters as saying. "It is really concerning".

Ray of hope in house prices - 5/5/08

Those numbers, to be released by the Australian Bureau of Statistics at 11:30am, are expected to show no growth from the previous quarter. While stagnant housing prices won't trigger a much sought-after rate cut when the Reserve Bank meets tomorrow, today's number is likely to signal that previous rate rises are having some effect. The quarter-on-quarter housing price figure is expected to be zero, down from 3.2% growth last month, according to 17 analysts surveyed by Bloomberg. The year-on-year figure is likely to fall slightly, to 11%, down from 12.3% in the previous quarter, according to Bloomberg. "With (the recent) rate rises and decline in real-estate activity, we expect no growth in this quarter,'' said NAB economist David de Garis. That is important for larger economic questions because housing markets are right at the forefront of interest rate rises, he said. "Over time, if house prices are rising, it supports consumer spending as people use their house as equity (for further purchases),'' he said. "If they're flat or declining, it's diminishing.'' Mr de Garis said stagnant house prices bolster the case for the RBA to leave rates unchanged when it meets Wednesday to make a decision. And unmoved prices underscore the impact of the RBA because housing market fundamentals suggest demand for homes should actually be higher. "The lower (housing) numbers are another indication that high interest rates are biting," he said. The average variable rate is close to 9%, he said. The increase stems not just from the RBA, which has raised rates 100 percentage points in the past year, but a 40 percentage point jump piled on by banks, which blame higher funding costs arising from the global credit crisis. "All of this is impacting the household sector, which is comparatively heavily leveraged," Mr Roberts said. So although lower housing figures don't spell relief for struggling mortgage holders, they at least signal the squeeze on wallets is on hold, for now.