Hi Everyone,
Here are some recent items which largely support what we have been saying in relation to what is likely to happen in the residential property market over the course of 2014.
We saw some very strong gains over 2013, particularly in Sydney and to a lesser extent Melbourne and if you watch the interview with Charles Tarbey, the Chairman of Century 21, you will see that they are anticipating some similar outcomes as the state capitals that have lagged behind play some catch up in price movements and we see a moderation of the rate of price appreciation in the others, particularly Sydney.
“The fundamentals remain attractive for select inner city markets and Brisbane still enjoys a lower median price than the other metropolitan markets in Australia,” Mr Smoli from Aviate Property research Group said in the report.
“Add to this comparative affordability the fact that average incomes in Queensland surpassed those of New South Wales and Victoria over the course of 2013, according to the ABS, as well as the weight of infrastructure commitments in Brisbane, including the second runway planned at Brisbane airport.”
The other article gives some statistics from a survey performed by Slater & Gordon’s Conveyancing Works, which I thing would actually vary to quite an extent depending on which State this is performed in, but isn’t actually addressed. However, I think it confirms the view we have held for some time that if you are looking to invest in the outer suburbs of the major capitals, or in regional areas that are suitable investment locations, it is better to look for a house and land proposition rather than an apartment or townhouse as the future tenant is statistically far more likely to desire this.
Lastly, it looks like the potential interest rate cut that could have been on the cards in the first half of the year may now be further away due to the latest inflation numbers that came out this week. Here is the view from AMP chief economist Shane Oliver who said employment is a lagging indicator, with the December figures reflecting the soft economic conditions and bleak outlook seen around the middle of last year.
“With more forward-looking economic indicators showing signs of improvement, for example housing approvals, retail sales and consumer and business confidence, jobs growth should start to improve by around mid-year,” he said.
Citing the recent fall in the value of the Australian dollar and increasing signs that the economy is now responding well to current policy, Mr Oliver predicted the cash rate would remain steady at least until September.
Brisbane to overtake Sydney and Melbourne
Tight supply and high demand are expected to push Brisbane’s property market ahead of Sydney and Melbourne’s markets over the next year. Read more…
Inner Sydney experiencing unsustainable prices
Parts of the Sydney property market should be approached with caution due to rapidly rising prices, according to a property research and investment firm. More>>
Buyers prefer large blocks over CBD proximity
Australian property buyers are willing to sacrifice living within reach of cities if it means owning a property with a backyard, according to new research. More >>>
Charles Tarbey
For a look at what to expect property-wise in 2014, Century 21’s Charles Tarbey joins Broker TV.
Watch it now >>
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RATES FORECAST TO FALL TO 2PC By Smart Property Investor Staff Reporter Friday, 06 February 2015 Two prominent economists have praised the Reserve Bank of Australia’s decision to reduce the cash rate and have predicted at least one more cut to come. Domain Group senior economist Andrew Wilson said the Reserve Bank had made the right decision to reduce the cash rate from 2.5 per cent to 2.25 per cent. Dr Wilson also said that another cut is likely, given that the economy received minimal stimulus from the succession of rate cuts between October 2011 and August 2013.
“We haven’t had much action from cutting from 4.75 per cent to 2.5 per cent, so I’m not sure what a 0.25 per cent improvement is going to do,” he told Smart Property Investment's sister publication Real Estate Business. “Certainly the Reserve Bank had to act – it’s really the only tool in the box that we’ve got left.” Pricing gaps across product types and capital cities are widening by Cameron Kusher 30 January 2015 The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction. The cost of Sydney housing relative to other capital cities is widening and the cost of buying a house as opposed to a unit is increasing as a record number of units commence construction. According to median selling prices over the three months to December 2014 published in the CoreLogic RP Data Home Value Index report, the gap between capital city house and unit prices has never been greater. As at December 2014, the capital city median house price was almost 20% higher than the capital city median house price. In dollar value terms, median house prices are $100,000 greater than unit prices. read more...
John McGrath ignites Sydney's "hot forever" inner ring debate by Jonathan Chancellor 1 FEBRUARY 2015 John McGrath has always been passionate about the property prospects of Sydney’s inner ring suburbs. But last week he went a little further, saying suburbs close to the city are becoming so desirable that they will be “hot forever” But last week he went a little further saying suburbs close to the city are becoming so desirable that they will be "hot forever". The high profile agent stopped short of declaring inner city property prices were immune from price falls. But the chief executive of McGrath Estate Agents told Fairfax Media these areas would always be attractive to buyers. "There is just no end of demand from overseas and local buyers who want to live in those precincts," McGrath said. |
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Sydney property bubble to pop when rates rise, says HSBCWednesday, 11 Feb 2015 | James Mitchell 0 · · A fresh round of cheap credit is further inflating Sydney’s investor-driven property prices. In a research note released yesterday, HSBC economists Paul Bloxham and Daniel Smith predict strong national housing price growth to continue at seven to eight per cent, driven by record-low mortgage rates. “We see Sydney prices rising by 9 to 10 per cent in 2015 and expect that, when rates do eventually rise, there is now a high risk that Sydney will see price falls,” the economists said. “Although we do not see a national housing bubble, we believe that growth in Sydney housing prices is currently running at an unsustainable pace and that any further growth is likely to be met by housing price declines in future years, when interest rates do begin to rise,” they said. A signal of the growing risk of overinflation in the Sydney market is the high level of investor demand, according to HSBC.
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JESSIE RICHARDSON | 10 FEBRUARY 2015 Melbourne growth to stand out in 2016: HSBC's Paul Bloxham Melbourne will see the highest price growth of any capital city next year, HSBC has forecast. In the latest HSBC Australia Downunder Digest report, HSBC Australia chief economist Paul Bloxham forecasts 4% to 8% price growth in Melbourne for 2016, after 7% to 8% growth in 2015. Bloxham expects that in 2015, Melbourne and Sydney will "continue to outpace the rest of the nation", noting that from its mid-2012 trough, Melbourne's housing prices have increased by 20%. Read more
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Commonwealth Bank posts 8pc half-year profit rise to $4.5b By business reporter Michael Janda Updated 11 Feb 2015, 5:49am
PHOTO: The Commonwealth Bank has posted its half-year results. (ABC News: Nic MacBean, file photo) The Commonwealth Bank has reported an 8 per cent rise in half-year profit to $4.54 billion. The bank's preferred cash measure of net profit, which adjusts for some accounting items, also rose 8 per cent to $4.62 billion. CBA said its improved profit came on the back of a 5 per cent increase in revenue, despite subdued conditions in the lending market. It also said it had lowered its cost to income ratio by 70 basis points to 42.2 per cent, as productivity initiatives continued to contain business expenses.
http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926
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Brisbane to overtake Sydney and Melbourne & What to expect in 2014
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