Australia Faces Its Demons

[Mr Nice]

Disagree - what else can I say? Simplistic multiple approaches are not how banks or individuals have ever worked out affordability. What good is 3x if I have a big car loan and childcare to pay?

That's why when you get a mortgage you'll find all of those little boxes to fill in after the net pay box.

unfortunately people's situations aren't really all that unique, and when you average down all of those situations you certainly can come up with useful information.

like average number of children, just because the average is 2.2 doesn't mean there aren't families with 13, but it DOES mean that the population isn't growing organically all that much.

and when the population gets up to 5-6 children per family, you know that in so many years you are going to start having a boom.

the long term ratio of income versus house price works the same way, individual cases might vary, but as a whole, you can find the sweet spot for sustainable prices for your community at large.

[Panda]

http://www.moneymorning.com.au/reports/fir...CFUsI3wodxTNQRA

FREE Report: Why the First Home Buyers Grant is a trap that will enslave hundreds of thousands of young Aussies for years and create a home-grown sub-prime nightmare...

Edited April 11, 2009 by Panda

[Bardon]

Rental growth eases a little, says APM

16th April 2009

March Quarter figures on residential rents suggest growth in asking rents has leveled off, after double-digit increases over the past two years.

Australian Property Monitors says the cuts to interest rates have eased the pressure on landlords to seek rent increases, although vacancy rates are still at historic lows and unlikely to improve in the near future.

The Quarterly APM Rental Series for March shows that the standout performers on rents are Brisbane, Sydney and Perth.

Brisbane recorded a 3% rise in house rents in the March Quarter and a 9% rise year-on-year, while for apartments there was a 3% rise in the quarter and a 13% rise for the year. Perth rents have risen 12% for houses in the past year (including 3% in the March Quarter) and 9.5% for units. Sydney rents have increased 15% for houses and 8% for units (including 2.5% in the March Quarter).

Darwin has been a standout performer year-on-year but there is evidence in the March Quarter of its market coming off the boil. Darwin led the nation for annual growth in rents – 17% for houses and 14% for units – but there was no growth in the March Quarter for house rents while unit rents fell 5%.

It does not surprise to find rents have come back for Darwin units. There has been a lot of new supply in the Northern Territory capital but it had the highest unit rents in the nation in the December Quarter – and that did not compute. So a 5% decrease in unit rents in the March Quarter makes sense. Darwin still, however, has by far the highest rents for houses - $500 per week is typical, according to Australian Property Monitors.

The under-achievers on rental growth include Hobart, Adelaide, Canberra, Newcastle and the Gold Coast. Adelaide has shown growth, but it’s been moderate at 5% for houses and 4% for units. Newcastle and the Gold Coast have been even more mediocre on rental growth. Hobart has achieved only moderate growth for house rents and none at all for unit rents. Canberra’s market has pretty much stood still in terms of rents for both houses and units over the past 12 months.

Median weekly asking rents for houses in the major cities are (with March Quarter increase-decrease):-

Darwin $500 (no change)

Sydney $450 (no change)

Gold Coast $420 (no change)

Canberra $410 (down 2%)

Sunshine Coast $395 (up 1%)

Perth $370 (up 3%)

Brisbane $360 (up 3%)

Melbourne $350 (no change)

Adelaide $300 (no change)

Hobart $300 (up 1.5%)

Newcastle $300 (no change)

(Source: APM)

ENDS

[mattyboy1973]

Rental growth eases a little, says APM

easing is one way of putting it I suppose.

Good news for renters in sought-after suburbs

Jessica Irvine Economics Writer

April 11, 2009

Page 1 of 2 | Single Page View

THE tide has turned on Sydney's upper rental market, as properties lie vacant and landlords are forced to slice asking prices by as much as 20 per cent.

Job losses, over-stretched budgets and a flood of unsold investment properties contributed to significant falls in median new rents in some well-located suburbs in the inner-west and north over the final three months of last year, Housing NSW figures show.

While rents continue to rise across Sydney as a whole, the median weekly rent on a one-bedroom unit slumped 12.5 per cent in Balmain to $350 a week, 9.6 per cent in Stanmore to $260 and 9.1 per cent in Glebe to $300.

For two-bedroom dwellings, rents also fell by more than 5 per cent in Narrabeen (to $440 a week), Drummoyne ($450) and Petersham ($400).

http://www.smh.com.au/national/good-news-f...90410-a2wd.html

still in the early stages down here, the fhog increase has sown the seeds for a cataclysm later this year imo.

[Ruffneck]

darwin has the highest rents in australia?

clearly that is sustainable.....

[Guest DissipatedYouthIsValuable]

Aw yeeeah, there's no problems here, mate.

[Guest DissipatedYouthIsValuable]

darwin has the highest rents in australia?

clearly that is sustainable.....

That's Carnie country.

[Dubai]

Where's the Aussie contingent tonight? Maybe it's Friday and you're all out having fun rather than depressing yourselves on t'internet!

[Dubai]

er... double click

Edited April 18, 2009 by Dubai

[ImA20SomethingGetMeOutOfHere]

That's Carnie country.

Ah yes, Darwin, the city with the highest per capita beer consumption anywhere in the world and the spiritual home of alcohol-fuelled stupidity since 1869.

http://news.ninemsn.com.au/article.aspx?id=800323

http://ausmall.com.au/law/crime21.htm

[mattyboy1973]

Ah yes, Darwin, the city with the highest per capita beer consumption anywhere in the world and the spiritual home of alcohol-fuelled stupidity since 1869.

http://news.ninemsn.com.au/article.aspx?id=800323

http://ausmall.com.au/law/crime21.htm

I believe that game is known as 'crocodile roulette' - the words 'celebrating' and time - 2am - should give a clue as to the state of the victim.

[Bardon]

Ah yes, Darwin, the city with the highest per capita beer consumption anywhere in the world and the spiritual home of alcohol-fuelled stupidity since 1869.

http://news.ninemsn.com.au/article.aspx?id=800323

http://ausmall.com.au/law/crime21.htm

Yes its some town, that last bastion of ockerism. Plenty of Wolf Creek types up there, no doubt about it.

Have been through there a few times. The first time about 23 years ago, shared a house with some bikie types and their idea of fun at home was to put the ceiling fan on full bore and then throw knives and forks into it and duck for cover. I was in the casino and one of them was on a winning streak playing twos up using the system of doubling your bet if you loose that I told them about. He went to the bog and I kept the system going and lost the lot by the time he got back, left Darwin shortly after that also have faint memories of female mud wrestling in the beer garden.

I was up last year on holiday, nice place in the winter. Anyway for territroy day fireworks are legal and everyone runs amock with them. We went to this market on the beach and there was a cordoned off areas where everyone luanches rockets at each other, good family fun. My son loved it, later we were outside our hotel in a park and shooting rockets and some bushes caught fire and a small fire utility just drove up out of nowhere put it out smiled at us and we continued shooting.

My son keeps asking when we are going back.

Edited April 18, 2009 by Bardon

[Bardon]

Lets hope a TV viewer buys their house so they can put the money into my market.

Recession blocks couple's dream move to Australia

On hold: Gary and Janice Oxley outside their Barnby Dun home Picture: Steve Taylor

A SOUTH Yorkshire family's plans for a new life Down Under have been thwarted by the recession.

The Oxley family were all set to make a fresh start in Brisbane, Australia, until the collapse of the property market made their detached house in Barnby Dun, Doncaster, difficult to sell.

Now the family's plight is to be highlighted on TV on Friday when they appear on Tonight with Trevor McDonald. They are hoping publicity might help secure a sale but if not they will put emigration on hold until 2010 in the hope the housing market picks up.

Gary and Julie Oxley and their two children Adam, 15, and Zoe, 12, have been granted visas to live in Oz and were hoping to move out there by the end of last year.

They put their four-bedroom house in Oldfield Close up for sale for £220,000 last summer but got very little interest and this year dropped the price to £195,000 - but still haven't secured a sale despite the cut.

[Guest DissipatedYouthIsValuable]

Lets hope a TV viewer buys their house so they can put the money into my market.

Recession blocks couple's dream move to Australia

On hold: Gary and Janice Oxley outside their Barnby Dun home Picture: Steve Taylor

A SOUTH Yorkshire family's plans for a new life Down Under have been thwarted by the recession.

The Oxley family were all set to make a fresh start in Brisbane, Australia, until the collapse of the property market made their detached house in Barnby Dun, Doncaster, difficult to sell.

Now the family's plight is to be highlighted on TV on Friday when they appear on Tonight with Trevor McDonald. They are hoping publicity might help secure a sale but if not they will put emigration on hold until 2010 in the hope the housing market picks up.

Gary and Julie Oxley and their two children Adam, 15, and Zoe, 12, have been granted visas to live in Oz and were hoping to move out there by the end of last year.

They put their four-bedroom house in Oldfield Close up for sale for £220,000 last summer but got very little interest and this year dropped the price to £195,000 - but still haven't secured a sale despite the cut.

Crikey, mate, it's not Australia's fault the market is going down the dunny, it's the lack of Pommies!

"It started in England...."

[Bardon]

Crikey, mate, it's not Australia's fault the market is going down the dunny, it's the lack of Pommies!

"It started in England...."

Is south Yorkshire still part of England?

[Bardon]

Paddington rules the terrace house price league

Stephen Nicholls Domain Editor

April 25, 2009

WHEN it comes to terraces, Paddington is indisputably No. 1. Data from Australian Property Monitors shows there were 55 terrace sales in Paddington for the year to February, for a median price of $1.23 million, a 4 per cent fall over over the previous 12 months.

There were just eight on the list of terrace suburbs this year - though APM says terraces are to be found in 18 suburbs.

APM's head of research, Yvonne Chan, said low sales volumes due to the slower market meant exclusive suburbs, such as Woollahra, had not made the list. "We need at least 10 sales to establish a median price," she said.

After Paddington, next up in terms of median price among terrace suburbs was Bondi Junction, with 12 terrace sales for a median $900,000 (a 2.2 per cent fall).

Darlinghurst is in third place with 13 sales and a median price of $865,000 - this was a massive 17.7 per cent increase in the past year from $735,000.

The only other terrace suburb to report growth in median prices for terraces over the year was ugly duckling Redfern, where a 12 per cent jump in the median price over the year allowed it to leap from bottom rung in the terrace ladder to seventh spot. There were 11 terrace sales for median of $700,000.

Darlinghurst and Redfern rose because both suburbs attracted first-home buyers. "In 2008, the median price in Darlinghurst was quite a bit lower than it is now so back then Darlo and Redfern were cheapest for terraces in the city and east area," Ms Chan said.

Fourth was the suburb long referred to as the "next Paddington", now-trendy Surry Hills, which had 18 terrace sales for a median $792,225 - a drop of 1.5 per cent.

After Paddington, Newtown had the most terrace sales - 29 for the year.

Its $650,000 median terrace price was also the lowest among the eight terrace suburbs, although it was also the most stable, since it had exactly the same median a year earlier.

In fifth spot was Glebe (15 sales and a $770,000 median) and Darlington was sixth (13 sales and a $705,000 median).

[ParticleMan]

Many thanks to Ruffneck for the lead...

http://www.thewest.com.au/default.aspx?Men...ontentID=137346

WA has biggest fall in skilled job vacancies

22nd April 2009, 9:30 WST

Skilled job vacancies dropped 8.9 per cent in April compared to March, new data shows.

The Department of Education, Employment and Workplace Relations (DEEWR) skilled vacancies index in April was 37.1 points, 61 per cent lower than in April 2008.

Vacancies in April fell in all three occupational groups monitored by the department compared to March.

Trade vacancies declined 10.4 per cent, associate professionals fell 8.0 per cent and professionals dropped 7.2 per cent.

The fall in skilled vacancies was widespread with decreases evident in most professions monitored by DEEWR.

The largest monthly fall was in medical and science technical officers, down 25.1 per cent.

All states and territories experienced decreases in skilled vacancies in April, the largest drop being 16.9 per cent in Western Australia.

Similarly, all states and territories suffered declines in the year to April, also led by WA with a fall of 68.8 per cent.

Not long to go before Rudd hits the panic button.

If you're borrowing, fix. If you're saving, buy inflation linked assets.

Good luck.

[Bardon]

If you're borrowing, fix. If you're saving, buy inflation linked assets.

Good luck.

Yep looks like it.

Fixed rates rose last week, they know.

[ParticleMan]

Fixed rates rose last week, they know.

I'm sorely tempted to take another small side punt on ZAUWBA; the only thing stopping me is that I'm already far too close to my risk limits in this portfolio, and this would seriously squeeze me for liquidity during what's highly likely to be a fairly wild market turn (which doesn't seem a clever position to be in).

Must... resist... low hanging fruit...

[mattyboy1973]

THE best thing you can do for first-home buyers is to get rid of the First Home Owner Grant. What first-home buyers really want is cheaper houses.

All the evidence suggests that the grant is simply raising prices or keeping the bottom end of the market buoyant. What needs to happen is the market to fall; better still: crash.

Enticed by that extra $14,000 for established and $21,000 for new homes, first-home buyers have been jumping into a market that has been largely stagnant for the past year. A joint J.P. Morgan and Fujitsu Consulting Australian Mortgage Industry Report recently revealed that there has been a 30 per cent increase in the proportion of first-home buyers who now believe they can afford to enter the market, and a 29 per cent increase in the proportion of those who state the First Home Owner Grant has been of vital importance.

It seems like too good an opportunity to miss for the first-home buyer, particularly in light of the excessive increase in house prices that we have seen in the past decade. At the height of the boom all you had to do was buy a house, wait a couple of months (sometimes weeks) and you made yourself a tidy capital gain, which was great for home owners and investors, but the fervour only further priced out first-home buyers.

The boom is over, that much is clear, and while the top end of the market has retreated somewhat there just hasn't been the sort of bubble burst we have seen in the US, or even the UK. Affordability is still a very big issue. A recent survey by Galaxy found that 57 per cent of renters feared that they would never be able to own their own home.

Of course low rates have helped the first-home buyer, but it has done nothing to lower house prices, merely make a loan more affordable and enabling first-home buyers to get into even more debt. According to the J.P. Morgan and Fujitsu Consulting Report, first-home buyers have increased their average loan from $248,000 to $283,000. That's an increase of 14 per cent at a time when pretty much the rest of the developed world is deleveraging at a rate previously unseen, and house prices have tanked, or at least dropped significantly.

But Australia's different, right? Maybe, possibly. Most certainly, if you listen to property experts and real estate agents. But you don't have to be a conspiracy theorist to be concerned about the vested interests and infallibility of real estate agents.

If anything the grant has simply enlivened the housing market which is good for real estate agents, vendors and investors. As the Reserve Banks deputy governor, Ric Battellino, recently warned: "It doesn't take long for the average house price to increase by $20,000 and leave the buyers no better off. Maybe the grant should be re-titled: The Existing Home Owner and Investor Bonus."

The last thing first-home buyers need is any policy that puts a floor in the market. What they need is for the bubble to burst, and burst in a big way, thus paving the way for the possibility of getting into the market at prices that don't hock them to the hilt.

House prices will need to drop considerably to make them affordable. And unemployment might just be the catalyst. It won't take much of an increase in unemployment to start the ball rolling and, given the large amount of private debt, once the deleveraging starts it could take on a life of its own – a kind of reverse mania of what we saw during the boom.

Of course, potential first-home buyers are as vulnerable to unemployment as the next person, but possibly not as vulnerable as those who have just bought their homes – given the high debt to income they have had to incur to buy a home, they are hardly going to be able to afford mortgage payments if they become unemployed.

And for those getting in now it won't take much of a drop to lose that grant amount – a $400,000 established property only has to fall 3.5 per cent for that $14,000 to disappear.

So drop the grant, bring on market forces and let's see what the housing market does; it just might turn in favour of first-home buyers.

Stuart J. Barnett is a Brisbane-based writer.

http://www.news.com.au/couriermail/story/0...5011140,00.html

so even the RBA can see the first home owners grant for what it is

Thousands living on borrowed time

Jacob Saulwick

April 29, 2009

A GROWING number of NSW residents are on the cusp of losing their homes to banks and other lenders despite the steep fall in interest rates.

The number of repossession orders in the state dropped at the end of last year, as lower interest rates offered relief to borrowers struggling to repay loans, according to figures made public by the NSW Attorney-General's Department yesterday. But that trend reversed in January, and consumer credit advocates blame an increase in joblessness.

continues here http://business.smh.com.au/business/thousa...90428-am0w.html

[ParticleMan]

Anyone remember this?

ANZ quietly tapping the market for AUD500m, hoping that nobody notices...

http://www.anz.com/aus/shares/CPS-Offer.asp

... well look what the cat dragged this morning...

http://www.bloomberg.com/apps/news?pid=206...id=aRUOHha2RBpU

April 29 (Bloomberg) -- Australia & New Zealand Banking Group Ltd. sees no respite from bad debts for the next 12 months as the economy continues to feel the effects of the credit crunch, Chief Executive Officer Mike Smith said.

Shares of the nation’s fourth-largest lender slumped 7.4 percent, the most in more than five months, after the company reported net income dropped 28 percent to A$1.42 billion ($1 billion) in the six months ended March 31, from A$1.96 billion a year earlier. The bank’s impairment charge jumped 98 percent to A$1.44 billion.

“You’ll see bad debt rates will remain something of this magnitude for another two halves,” Smith said in an interview in Melbourne today. The credit crisis is “moving into the real economy in its effect and it has got some way to go.”

Smith, who joined ANZ in 2007 after running HSBC Holdings Plc’s Asian operations, faces an Australian economy headed for its first recession in 18 years. Larger rival National Australia Bank Ltd. reported a decline in earnings yesterday and said bad debts would spread from businesses to consumers.

National Australia Bank’s shares fell 74 cents to A$20.54 today, extending the stock’s slide this week to 7.7 percent. ANZ shares, which have rallied 30 percent since a February low, declined A$1.23 to A$15.40 in Sydney.

ANZ cut its dividend for the first time since the 1991 recession. It will pay 46 cents per share for the half year.

Gross impaired loans totaled A$3.69 billion, or 1.03 percent of net advances, the bank said.

Rising Provisions

“Arrears across a lot of their markets are picking up, so you’re seeing the impact of Australia sliding into recession,” said Sean Fenton, who manages about $324 million at Tribeca Investment Partners in Sydney. “We’re seeing the other side of the coin with bad debts accelerating, so I think that’s enough to put a halt to the bank rally.”

National Australia Bank said yesterday that first-half profit fell 0.9 percent to A$2.66 billion as bad debts rose. Cash earnings, which exclude gains from currency and interest rate movements on the bank’s debt, fell 9.4 percent.

Problems in ANZ’s markets at home have diverted Smith’s attention from Asia, where he plans to increase the bank’s business. ANZ confirmed interest in Royal Bank of Scotland Plc’s Asian assets this month and plans to open 20 branches in China by 2012.

Recession Looms

Smith declined to give an update on the bank’s interest in RBS’s Asian assets, except to say “our strategy is to expand our business in Asia and if there are relevant assets that look good we will obviously look at them.”

Smith has sold government-backed debt to protect the bank’s balance sheet and maintain profitability as the economy slows.

Australia may have followed the U.S., U.K., Japan and Europe into its first recession since 1991 after gross domestic product fell 0.5 percent in the fourth quarter.

ANZ has completed raising 87 percent of funds it plans to source in bond markets for the year through Sept. 30, it said.

Australia’s biggest lenders have sold more than $85 billion of state-backed notes since Nov. 28, when the AAA-rated government first guaranteed their funding in a bid to thaw credit markets frozen after Lehman Brothers Holdings Inc.’s bankruptcy, according to the central bank.

ANZ Bank’s Tier 1 ratio, a key measure of financial health, was 8.2 percent. The cost-to-income ratio at its Australian business, a measure of profitability, dropped 162 basis points to 36.1 percent. Net interest margin, the difference between what the bank earns from loans and pays to depositors, increased 22 basis points to 2.22 percent.

[Guest DissipatedYouthIsValuable]

Flaming Koalas! Price drops are breaking out!

[aussieboy]

Paddington rules the terrace house price league

Stephen Nicholls Domain Editor

April 25, 2009

WHEN it comes to terraces, Paddington is indisputably No. 1. Data from Australian Property Monitors shows there were 55 terrace sales in Paddington for the year to February, for a median price of $1.23 million, a 4 per cent fall over over the previous 12 months.

There were just eight on the list of terrace suburbs this year - though APM says terraces are to be found in 18 suburbs.

APM's head of research, Yvonne Chan, said low sales volumes due to the slower market meant exclusive suburbs, such as Woollahra, had not made the list. "We need at least 10 sales to establish a median price," she said.

I'm looking to trade up around this area. There's shag all stock and what does come to market sells quickly or not at all (if it's cr@p) - looking binary at the moment. The vibe has changed in the last five months: previously I would have been nervous to have put in an offer before I had sold but I'm rethinking that given the way things are moving.

Good old Darwin. My missus is just back from a trip there - apparently, the Rorke's Drift bar has closed down, which is a shame.

[Bardon]

I'm looking to trade up around this area. There's shag all stock and what does come to market sells quickly or not at all (if it's cr@p) - looking binary at the moment. The vibe has changed in the last five months: previously I would have been nervous to have put in an offer before I had sold but I'm rethinking that given the way things are moving.

Good old Darwin. My missus is just back from a trip there - apparently, the Rorke's Drift bar has closed down, which is a shame.

Good luck with your endevaours its certainly one of the nicer parts of Sydney IMO. I dont think you can go wrong trading up in fact from a cycle point of view right now is probably the optimum time to do so.

[Bardon]

City prices continue to resist global decline

30th April 2009

Median house prices rose in four of Australia’s eight capital cities in the March Quarter, according to the latest Composition Adjusted Housing Price Series from Australian Property Monitors.

The national result averaged across the capital cities was virtually no change in house prices, with a 0.1% rise recorded by APM. The market has been boosted by healthy activity at the lower end, balancing price declines at the top end.

Melbourne delivered the strongest result, with a 1.6% rise in the March Quarter. Canberra, Hobart and Darwin also recorded small increases in house prices. Sydney, Brisbane and Perth had minor declines in median house prices, with Adelaide providing the weakest result (a 1.7% fall).

In annual terms, house prices in the March Quarter were 3.7% lower than a year earlier across the eight capital cities. Darwin’s prices remain 6% higher than a year ago, while Hobart and Melbourne prices are unchanged in annual terms. The other five capital cities have prices lower than a year earlier, including Adelaide (down 2%), Sydney (down 4%), Brisbane and Canberra (down 6%) and Perth (down 7%).

Median prices for units provided a similar result to houses: nationally there was a minor (0.5%) increase across the eight capital cities, with Sydney, Melbourne, Perth and Darwin recording increases in the March Quarter, while Brisbane, Adelaide, Canberra and Hobart recorded small decreases.

Matthew Bell, Economist for Australian Property Monitors, says the March Quarter figures show “a surprisingly resilient residential property market amidst the global and domestic economic turmoil”.

“Nationally the change in median house price was slightly positive at 0.1%,” Bell says. “While some capitals recorded quarterly falls in house prices, these are not at the level we saw last September, when rising interest rates hit their peak.

“Most areas have experienced some weakness at the top end of the market. This segment has shown quarterly declines of 5% in some states. The good news is that there are signs of strength at the more affordable end. The market has seen increased activity by first home owners in the March quarter with minimal falls and even rises in median prices in the sub-$500,000 price range in some capital cities.”

Bell says “the dramatic reduction in mortgage rates from their peak of nearly 10% in August to around 5% in March” has improved affordability for many Australians looking to purchase their first property. Strong gross rental yields are also making the potential investment market more attractive to buyers.

“Home-buyers have been taking advantage of flat or falling prices in most capital cities over the past year. With interest rates likely to resume their downward path in the second half of 2009, buyers can look forward to the promise of historically low mortgage repayments for some time to come.”

Bell says rising unemployment and a weakening economy pose the greatest risk to housing but capital city median prices are unlikely to experience large falls, being cushioned by low interest rates, record government fiscal stimulus and an undersupply of housing. “Despite the likely end of the First Home Owners Boost in the May Budget, the fundamentals of the market point to residential property prices stabilising in the second half of 2009 and early 2010,” says Bell.