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National Housing Market Update

National Housing Market Update

Hi Everyone,

Here are some updates and insights into what is happening in the residential property market and some predictions for the medium term.

I listened to Tim Lawless from RP Data at the recent Self-Managed Superannuation Conference and it would be worthwhile having a look at the short video that we have attached below to give a pretty good overall summary of things that are currently

occurring in different parts of Australia and to have a look at the direction of some of the trends that property has been exhibiting in various Capitals and regions in general.

Overall, the market seems to be performing in line with the consensus views of most commentators…see articles below:

Great signs for Autumn

mcgrath_3.jpgby John McGrath

Clear evidence is emerging that the Autumn selling season will be just as strong as the Spring 2013 season in Sydney – with other markets such as Brisbane also on track for a good start to the new year.

The first auction Saturday of the season was on February 1. Sydney had 95 homes listed for auction and recorded a clearance rate of 80 per cent. That’s a very strong start to this selling season. read more...

Construction: Queensland the new powerhouse

james_2.jpgby Craig James
The good news is that residential work will lift in coming quarters and offset any retracement in engineering work.

The new powerhouse state for construction is Queensland. While the focus has been on the Western Australia in recent years, Queensland has slowly moved up the leader-board, passing NSW and then Western Australia. read more...

140303_Day View Render Adjustment-opt

Inner cities to continue to perform

Australia’s inner-city suburbs will remain a strong prospect for investors as both young families and downsizers gravitate towards apartment living, according to a 2014 property market forecast.

At the Property Council of Australia Residential Outlook 2014 yesterday, Brian White, chairman of Ray White, said the biggest recent property market trend in Australia was the move towards inner-city areas.

“We have such buoyant inner cities in Australia. I think that’s one of the biggest features that’s happened in my career, seeing the health, the vibrancy, the youth that’s come in, the families that are coming in. They’re making do with the smaller accommodation,” he said. read more…

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.”

read more...

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.

read more..

 

 

 

 

Sydney property bubble to pop when rates rise, says HSBC

Wednesday, 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.

Read more…

https://www.mortgagebusiness.com.au/breaking-news/8152-sydney-property-bubble-to-pop-when-rates-rise-says-hsbc

 

 

 

 

 

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

http://www.propertyobserver.com.au/finding/residential-investment/40049-melbourne-growth-to-stand-out-in-2016-paul-bloxham.html

 

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.

Read more…

 

http://www.abc.net.au/news/2015-02-11/cba-half-year-profit-result/6084926

 

 

 

 

 

National Housing Market Update

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“Where to the Aussie dollar”

“Where to the Aussie dollar”

Where to the Aussie dollar?

  by Dr Andrew Unterweger | 8th December 2013

This is still a quandary for most observers as it is both a volatile and highly traded currency. It is also important for investors in the Australian property market as the strength of the currency will have a significant bearing on the course the Reserve Bank of Australia takes with monetary policy in 2014.

We recently saw increased efforts by the governor of the RBA, Glen Stevens to talk the currency down , including market chatter about RBA currency intervention, rising anticipation of Fed tapering, and the Federal governments decision to reject the foreign takeover of GrainCorp

The article below from CheckRisk, the UK based investment risk analysis firm shares the view I have which seems to be at odds with the view shared by most commentators at present. I think the RBA will need to use monetary policy to maintain further downward pressure on the currency as rhetoric will not be able to do so sustainably, so I dont think interest rates will be going up for some time, and we may well be able to look forward to another rate cut in 2014.

CheckRisk believes that if the Aussie dollar were to start to rise toward parity with the USD again then the RBA will drop rates by further 0.25 per cent. This could happen as soon as next quarter and the RBA remains in an enviable position of still having room to manoeuvre when compared with the ECB and the Fed.

For the last year, the strength of the A$ has been an irritant for the RBA. But since October, a lower A$ appeared to go from a modest aspiration to the top of the “most wanted” list. At the time of the October Board meeting, the RBA said that “a lower level of the currency than seen at present would assist in rebalancing growth in the economy”. This is consistent with the RBA’s rhetoric over much of the past year.

Since then, we have seen a steady increase in focus on the A$. Consider the following timeline:

– 29 October: RBA Governor speech. “These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity.”

– 5 November: RBA Monetary Policy Decision. “A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy.”

– 8 November: Quarterly Statement on Monetary Policy reiterated the comment that “A lower exchange rate is likely to be needed to achieve balanced growth in the economy.”

– 11 November: RBA Assistant Governor Debelle speech discussing policy responses to capital flows.

“In the end I see the model in this paper as proposing capital controls to address the distortion of the exchange rate moving out of line with the fundamentals…But other potential instruments are not considered in the paper. For example, intervention in the foreign exchange market in the form of reserve accumulation, which has been used in many emerging markets. This is helpful on the way in, in terms of dampening the inflows, but it is also helpful in dealing with the outflows when they come.”

– 19 November: Minutes of the November Board meeting reiterated the earlier conclusion that a lower A$ was likely to be needed.

– 21 November: RBA Governor speech. “…foreign exchange intervention can judiciously be used in the right circumstances, be effective and useful.”

And over this period, the A$ has fallen from substantially, from US$0.97 to below US$0.92. Obviously, the RBA’s rhetoric has not been the only factor responsible for this. But surely it has contributed to that performance.

I have also included the CFS market overview for our readers to give a more global snapshot of what has transpired in other asset markets over the last month

Best Regards,

Dr ANdrew Unterweger


Where to the Aussie dollar?

http://login.brandmail.com.au/download/files/41049/1687454/5%20Nick%20Bullman_alt.jpeg The RBA could drop the official interest rate by another 25bps as soon as next quarter, according to the latest assessment by CheckRisk, the UK-based investment risk analysis firm. In its latest bulletin, CheckRisk says Australian investors have had a good year and the outlook remains positive. This has led to two interesting behavioral expectations that these returns will continue into next year and a reduction in investor perception of risk as measured by volatility and implied volatility measures, according to the research firm’s chair, Nick Bullman. “On a standalone basis Australia continues to look like a relatively lower risk environment. The RBA has dropped rates by 2.25 per cent since 2011. Rates now stand at 2.5 per cent and while expectations had been that the next move in interest rates would be a move higher, CheckRisk has long felt that the RBA would seek to reduce rates further as the main mechanism with which to ensure that Australian dollar remains competitive in global currency markets,” the bulletin says. read more…
 

Latest market update from the Economic and Market Research team at Colonial First State

Market and economic overview Australia  The Reserve Bank of Australia (RBA) left the cash rate unchanged at 2.5% at the 5 November Board meeting.  The Bank said that the Australian dollar was “uncomfortably high”, noting that “a lower level of exchange rate would likely be needed to achieve balanced growth in the economy.”  The RBA was fairly upbeat in its assessment of the non-mining sectors of the economy, suggesting that “there was mounting evidence that monetary policy was supporting activity in interest-rate sensitive sectors and asset values.”  Economic data released in November was mixed.  The Westpac consumer confidence index rose by 1.9% in November, to be around 7% above long-term average levels.  The NAB business survey showed that business confidence fell back in October, after a post-Federal election surge (to +5pts +12pts in September). Business conditions were unchanged at a below average -4pts.

read more…

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