Australian Loan Demand Slumps...

[Icantbelieveitsnotbutter]

With Aussie banks under the cosh on funding, we now see the knock on effects with loan demand down 5.9% in Feb, and double that in Western Aus.

Over the years I've been told about the net immigration and other factors nailing down long term demand to create sustainability and support to the boom (though there is no shortage of land....).

So anyone got any local annecdotes to support the seeming picture of slowdown from the banks?

[ruisort7]

With Aussie banks under the cosh on funding, we now see the knock on effects with loan demand down 5.9% in Feb, and double that in Western Aus.

Over the years I've been told about the net immigration and other factors nailing down long term demand to create sustainability and support to the boom (though there is no shortage of land....).

So anyone got any local annecdotes to support the seeming picture of slowdown from the banks?

Aus banks don't seem to shutting their doors to borrowers like in the UK. Are they really under the cosh? Do they get their money from somewhere different?

I'm not challenging your statement, just wondering.

[Bardon]

Aus banks don't seem to shutting their doors to borrowers like in the UK. Are they really under the cosh? Do they get their money from somewhere different?

I'm not challenging your statement, just wondering.

Credit is tightening and the housing market is slowing this is excatly what the reserve ws tryiong to chieve with raising rates. Dont forget that Perth went gangbusters and probably overshot. Residex say that after a bad start to 08 eastern states is now stronger. Do you see what is happening to rents it is very, very strong. Iron Ore double last month coal just tripled and the forecast is that demnd will increase from Asia.

I am overall bullish about the general economy, entry level house prices wont drop much if at all high end is alredy coming back a bit but nothing like the HPC that will unfold in UK>

I think the biggest -ve impact in the credit market is being felt in the ASX there is a lot o fbig haircuts and more big ones to come this could spread nd cuase big problems for all including housing. So the credit crunch is more apprent in the ASX than in property at this early stage.

[ruisort7]

I think the biggest -ve impact in the credit market is being felt in the ASX there is a lot o fbig haircuts and more big ones to come this could spread nd cuase big problems for all including housing. So the credit crunch is more apprent in the ASX than in property at this early stage.

And it should stay that way unless the early stage progresses. Interesting to see.

http://business.theage.com.au/experts-fear...80416-26lt.html

[Bardon]

And it should stay that way unless the early stage progresses. Interesting to see.

http://business.theage.com.au/experts-fear...80416-26lt.html

One thing is for sure there wont be much upside in prices this year. It will be interetsing to see how the credit crunch unfolds and if there are any more big casualties I think it will effect sentiment at the least. But on the bright side there is still a lot of good news on the economic and employment front.

[ruisort7]

One thing is for sure there wont be much upside in prices this year. It will be interetsing to see how the credit crunch unfolds and if there are any more big casualties I think it will effect sentiment at the least. But on the bright side there is still a lot of good news on the economic and employment front.

Yes, and people still seem to be splashing the cash around like nobody's business, even if the latest credit card figures suggest a slight easing in the madness. I can't remember the figure I read for the amount of interest paid each month - credit card interest rates have risen as well recently - but it was staggering. (I have a deep personal hatred of giving banks/cards my money, so tend to only use them occasionally.)

With official interest rates at a peak - the RBA said inflation is likely to be around 4% next week but has turned a corner - it really does depend on the rates at which banks can keep raising funds. There's a definite slowdown happening in most cities, but the 'c' word is nowhere in sight, that's for sure.

Of course, the other threats to the economy involve, ironically mining. The first is the imbalance caused by the WA and Qld, the fact that the high rates people in Vic and NSW pay is down to the mining boom in these states. The second is the great worry about China deciding to do something about its own inflation, and I fear that that will come without any warning whatsoever.

[Bardon]

Yes, and people still seem to be splashing the cash around like nobody's business, even if the latest credit card figures suggest a slight easing in the madness. I can't remember the figure I read for the amount of interest paid each month - credit card interest rates have risen as well recently - but it was staggering. (I have a deep personal hatred of giving banks/cards my money, so tend to only use them occasionally.)

With official interest rates at a peak - the RBA said inflation is likely to be around 4% next week but has turned a corner - it really does depend on the rates at which banks can keep raising funds. There's a definite slowdown happening in most cities, but the 'c' word is nowhere in sight, that's for sure.

Of course, the other threats to the economy involve, ironically mining. The first is the imbalance caused by the WA and Qld, the fact that the high rates people in Vic and NSW pay is down to the mining boom in these states. The second is the great worry about China deciding to do something about its own inflation, and I fear that that will come without any warning whatsoever.

Here is some recent info on terms of trade and it is strongly suggesting as they increase whcih they are then so should inflation so not sure if we are at the top yet... I understand your concerns regards the C word nd I have done more than my fair share of worrying about things in the past but right now I'm smelling the roses,

have a great weekend

Its long but certainly comprehensive, I was taken back a bit as they have mentioned my company in the article.

--Can we talk about the Australian economy for just a moment today? First, some nitpicking. Today's Australian has a headline that reads, "Credit card debt slows to 13-year low." That would lead you to believe that something good has happened in the economy. But has it?

--A look at the actual numbers from the Reserve Bank yesterday tells a slightly different story. Total credit card debt actually grew at 9% in February, from $39.5 billion to $43.25 billion. Interest-bearing debt grew by 9% to $31 billion. Even worse, the average interest rate Aussies pay on credit card debt leapt from 17.6% to 19.4%.

--Thanks to the rise in rates, credit card interest rates are 20% higher than this time last year. And it means, with current balances, Aussies are paying about $500 million in interest on stuff they already bought. Is it too late to buy into the Visa IPO?

--By the way, today's Daily Reckoning turned into a rather in-depth look at the fundamental trends in the Aussie economy. If you want the share market news and some trading analysis, we recommend you amble on over to Money Morning. Today's DR has a big task: to determine Australia's role in global economy history. If that's not your style, go straight to the weekend and pass our passionate discussion of the terms of trade.

--But before passion, something more mundane. What is so annoying about the credit card headline?

--Well, it suggests that credit card debt has actually declined. It hasn't. It's just growing less fast. This is like those ridiculous announcements that periodically emanate from the bowels of the U.S. Government about the size of the Federal deficit.

--In the months that the deficit grows less fast than the month before, you see headlines like, "Deficit shrinks." Of course it's deliberate deception (a lie, if you like). If a tumor grows less fast it doesn't mean it's less dangerous. It's still cancer (nearly all debt is malignant). And growing less fast isn't really a qualitative improvement.

--The goods news for Glenn Stevens is that high interest repayments on credit cards will eat into domestic consumption. The bad news is that the higher rates actually led to lower repayments according to the latest RBA figures. Repayments in February fell by 7.9% from $18.21 billion to $16.71 billion. That was for the month, by the way.

--You may have felt cheated that we did not spend more time, as we promised, digesting the hard truths published in the Reserve Bank's Financial Stability Review last month. But one chart did come to mind in light of yesterday's credit card news. It's the climb in household interest repayments as a percentage of disposable income.

--Not surprisingly, it's on the rise. Granted, the combined number includes many older homeowners who are willing to carry higher debt loads later in life. But the simple truth is that paying interest on debt is not a good way to accumulate wealth. Never has been. Never will be. Simply not possible to get rich by spending the bank's money.

--Let's put it this way: unless wages rise (something that would probably cause the Reserve Bank to put up rates again), Australians on the margin of the boom will have to use their credit cards to finance essential consumption, and they will pay dearly to do so. Either that, or they will have to reduce consumption. "If we do not discipline ourselves," the old saying goes, "life will do it for us."

--But there are congratulations in order. So congratulations Australia! You're getting a $30 billion raise.

--Reserve Bank economists now reckon that the recent coking and thermal coal deals inked between Aussie sellers and overseas buyers will haul in another $30 billion to the economy this year. That is not the kind of news the RBA wants to hear while it's busy putting out inflationary bush fires in the economy. But facts are facts.

--Thirty billions dollars in coal and iron ore earnings, where will it go? To producers? To investors? To mining service companies like Walter Diversified Services (ASX:WDS)?

--While you think on that, let's talk about "terms of trade" for a moment. "Terms of trade" is one of those terms of the trade that gets throw around by economists all the time. But what does it mean?

--The simple definition is this: it's the ratio between export prices to import prices. If you get more for what you sell and pay less for what you buy, your terms of trade improve. And guess what people? Thanks to this particular moment in history, Australia gets a lot more for what it sells and pays a lot less for what it buys (except for crude oil).

--The chart below is taken from a 2005 Reserve Bank research paper called "Long-Term Patterns in Australia's Terms of Trade," by Christian Gillitzer and Jonathan Kearns. If you'd like to read the whole thing, you can find it here.

--But we'll save you the trouble and tell you what it means in laymen's terms. The chart shows that the terms of trade exploded in the 1950s as Aussie exports of wheat and wool increased export earnings. Today's terms of trade ratio, by the way, is around 130, where those two dots on the right margin are. Will the index go to 1950s levels? And if it does, what will it mean for domestic spending in Australia?

--In a speech given in February of last year, RBA assistant governor Malcolm Edey showed how an improvement in the terms of trade can lead to a rise in national income and, gulp, domestic demand. Think inflation.

--"One of the consequences of the strong global economy, and particularly the growth of Chinese industrial demand," he said, "has been sustained upward pressure on a range of commodity prices. Over the past three years this has lifted Australia's terms of trade by around 30 per cent, the largest cumulative increase that we have experienced since the early 1970s."

--"It is not hard to appreciate that this provides a significant boost to incomes and spending. With exports representing about a fifth of GDP, each 10 per cent increase in the terms of trade adds about 2 per cent to the value of national income," he concluded.

--Whose income, though? This is the key question. Will the rise in export earnings lead to more spending (and if so, by who?). The answer will help determine if and how big future interest rate rises are.

-- According to today's Age, "While senior Reserve Bank and Treasury officials forecast last month that Australia was heading for a boost of 10% to 15% in the terms of trade in 2008-09, the Posco deal suggests the rise could be more like 20% to 25%. Next year could see the terms of trade - the ratio of export prices to import prices - overtake the record levels of the Korean War boom in 1951."

--That's interesting. Yesterday we mentioned that the current rise in Chinese steel production (and growth in Aussie exports of iron ore and steel) happened during the great post-war expansion in Korea and Japan, when both countries effectively industrialised and built up their manufacturing bases.

--Base metals demand grew in both countries, driving them south to Australia, where Lang Hancock was flying over the Pilbara in 1952, noting that all that red earth might just possibly be iron ore. The rest, as they say, is history. But as they also say, the past is prologue. China is coming south these days too, looking to build out its industrial and manufacturing base with Aussie coal, base metals, and minerals (heck, let's throw uranium and LNG in there too.)

--Here are two scary charts for the RBA that suggest the terms of trade may improve even more in coming years, leading to more inflationary pressure in the economy via business spending.

-- First, when the terms of trade spiked in the 1950s, commodity prices were in a secular downtrend. What Australia was selling went up in price, while the general trend in prices for manufactured goods was down. Aussie ore went to Japan and Korea and came back, eventually as cheap manufactured goods.

--Today, real commodity prices appear to have bottomed from a 200-year low around 2003. It was certainly a 20-year low. Whether the price of real commodities keeps going up, we'll have to see. But you have a situation where the price of manufactured goods continues to go lower (more global producers) at the same time the price of raw materials is going up.

--As the chart above shows, Australian export prices are rising faster than commodity prices, while Australia's import prices are declining faster than world manufacturing prices.

--Why that exactly would be the case is a bit of mystery. The paper's authors suggest that, "Australia's traditional mineral exports had been high value-to-bulk commodities such as copper, lead and zinc. Japan's prominence in Australia's commodity exports at the time is illustrated by the fact that by 1969/70 Japan imported 65 per cent of Australia's metal ores, coal, gas and petroleum exports."

--The simpler explanation is that what Australia is exporting today-iron ore, coking coal, zinc, copper, and gold-is in greater demand than wool and what were 50 years ago, as reflected by higher prices. If anything, a recovery in the agricultural sector (rice and wheat especially) would deliver an even bigger boost to the terms of trade.

--If China is the new Japan (and our theory of great post-war periods of industrialisation suggests that it is), then you see why the trend is sustainable and the terms of trade will grow even more. Export income should grow as export prices (and production volumes grow). They will only grow, of course, if business investment picks up. Business investment is the big driver of all wage and income growth, though. So if business investment grows, wages are going up.

--Do you see why inflation is largely out of the Reserve Bank's hands now? It can control domestic consumption. But it cannot control foreign consumption of Australia's mineral exports. That's the demand driving business investment and Aussie wage growth.

--On the import side, it's easy to see in a picture why Aussie import prices have been falling even faster than the average price of global manufactured goods: we're getting more stuff from Asia and less from Europe. Shipping costs are much lower. But prices are lower in the aggregate because low labour costs in Asia have led to a big decline in the price of manufactured goods globally. Wage and price disinflation from Asia, you could say.

--So what does it all mean, dear reader? It means export earnings will grow for commodity producers unless they run into the brick wall of rising energy costs, labour market constraints, or infrastructure bottlenecks, all three of which are possible.

--There are other factors too. Rising global energy prices affect producers and prices. That could crimp global demand, Asian production, and thus Aussie resources. It's also possible that rising food and fuel prices trump falling prices for manufactured goods and lead to greater Aussie inflation. After all, food and fuel make up a greater portion of the household budget than DVDs and toasters.

--Plus, 60% of Aussie GDP is consumer spending. If export earnings benefit mostly industrials and manufacturers, and they represent just 26% of all economic activity, then the effects of a huge boost in the terms of trade might be muted. Consumers will be hit hard by rising food and fuel prices while businesses, flush with export earnings, will hoard cash for the duration of the credit crunch.

--And of course there's the possibility we could have big trouble in big China. We have speculated that China's long-term ambitions in Australia are…ambitious. But China itself a seething bundle of internal contradictions.

--It is 1.2 billion people growing with great energy. But demographically, Chin is also getting old quickly and facing the health challenges that come from running an economy at breakneck speed without regard for workplace safety or the environment. It is a closed system trying to unleash the energy of economic growth but remain static politically.

--Trying to move while standing still is neat trick. The only way we've ever seen it done is in a rocking chair, where you find motion and stasis at the same time. China's very attempt to industrialise right now may put the raw materials it needs to do so out of its strategic reach. This means price pressures on global energy and minerals.

--It leads us to a world of energy haves and energy have-nots and of agricultural haves and have-nots. Where it takes us is anyone's guess. For Australia, for right now, it looks like it's taken us higher and higher and straight into what we hope is a great weekend for you and your family. Until next week…

[Bardon]

Housing Crisis to Continue Into Next Decade

http://www.anz.com/documents/economics/Hou...pril%202008.pdf

[ruisort7]

Thanks for those last two posts. The second one I don't buy, to be frank. I think it's too staightforward, like all of those reports are in any country, and it ignores emotional issues, such as quality of life, which influence population growth. There's certainly a great deal of pressure, but past performances etc etc ...

The previous post was interesting, in particular the (unanswered) question about where the money is going, into the general economy/nation or a very few hands. If the former, then that spells big trouble for interest rates and a huge problem in terms of an unbalanced society that's waaaayyy too big for me to ponder. What I did find interesting about it was, in reference to an earlier comment I made about China's approach to its inflation, if China does cut its spending, that may actually be the best thing for Australia.

[ruisort7]

And now this:

The Reserve Bank of Australia has followed its central bank counterparts in the US and the UK as a white knight for banks struggling to fund their structured mortgage products, making an unprecedented $1.1 billion two-day intervention in the markets to buy bunches of mortgages.

The RBA does not comment on particular counterparties and so it is left for the market to speculate on both the type and the size of its latest plunge. There can only be two explanations though for its spending $780 million on securitised mortgages yesterday - on top of Friday's $320 million - and neither is pretty.

The first is that the Bank is injecting liquidity into this mortgage market to breathe life into the sector and encourage banks to keep lending to one another. This is the house line.

The second explanation is that the central bank is taking securities from an individual bank's balance sheet and giving it cash - a "bail-out'' in other words. Ironically, most of the second-tier banks rallied on the stockmarket yesterday.

The RBA had stirred speculation of a bank bail-out on Friday when news got out that it had stepped into the market to repurchase residential mortgage-backed securities (RMBS) but the official line has been "the RBA is restoring liquidity''.

Liquidity is not just something that is simply restored. It would seem a particular institution is swapping its mortgage securities for cash, or treasuries. As as the case with a repo, the institution promises to reverse that swap in a year. It is secured lending by the central bank.

The US Federal Reserve kicked off this trend early last month after it offered Wall Street banks its own treasuries in return for asset-backed securities (read, spliced and diced mortgage products nobody wanted).

Today, the Bank of England officially launched a 50 billion pound program of its own. The aftermath of the sub-prime crisis is credit markets in stasis. Banks that do not have large depositor bases are finding it hard to fund their mortgages on commerical paper markets.

The RBA has spent $2.35 billion buying mortgages since last October when it quietly broadened the securities it would accept under its repo program, though the last couple of days is a radical escalation.

There is an eligible collateral list which the RBA provides but the bank would not comment yesterday on whether the big repo related to a party on this list.

Most of the RMBS are issued by Adelaide, Suncorp or Macquarie. All three are banks and players in the securitisation and other wholesale funding markets. Macquarie moved to exit its mortgage business last month which meant, one, no one wanted to buy it ,and two, it was having trouble funding it.

As for the RBA, to suddenly put more than 5% of the bank balance sheet in mortgages on a one-year term with a repurchase condition ... that is strange.

[Bardon]

Thanks for those last two posts. The second one I don't buy, to be frank. I think it's too staightforward, like all of those reports are in any country, and it ignores emotional issues, such as quality of life, which influence population growth. There's certainly a great deal of pressure, but past performances etc etc ...

The previous post was interesting, in particular the (unanswered) question about where the money is going, into the general economy/nation or a very few hands. If the former, then that spells big trouble for interest rates and a huge problem in terms of an unbalanced society that's waaaayyy too big for me to ponder. What I did find interesting about it was, in reference to an earlier comment I made about China's approach to its inflation, if China does cut its spending, that may actually be the best thing for Australia.

Yes I understand your comment about the ANZ report, I was a bit surprised that they actually countered the IMF report in the summary that was strange and makes you wonder about the motivation. One of the suggestions about where the money is going actually suggested my company which took me by surprise but they certainly know that we are undervalued.

Audition clearnce rates down big time here right now. Lets see what the CPI figures do tomorrow and if my company gets awarded a major project that we are expecting. I take it that you are aware that our offshore territories have just been offically increased.

[Bardon]

Canberra's hot market starts to cool

By Bob Wilson, 21st April 2008

The nation's capital has been blessed in recent years by a confluence of events which led to a high demand for property. The ACT was the third fastest growing state or territory economy in FY2007, according to an ANZ Property Outlook report in January. The 5% rate of growth was driven by strong government administration and defence sectors and underpinned by solid population growth.

But more recent data suggests the ACT economy is coming off the boil. State Final Demand contracted sharply in the September quarter, falling 1.9%. Employment growth has also stalled, with the numbers employed falling 0.5% in the year to November 2007. The combined impact of rising interest rates and the backwash from the US sub prime mortgage debacle has put pressure on the demand side in Canberra, according to the April edition of Herron Todd White's Month in Review.

HTW also identified a steady increase in new land releases, something Canberra had not seen for a few years. The ACT government's own Land Development Agency last year provided about 2,000 new building blocks in an accelerated land release in the Brindabellas Bonython estate, Tuggeranong. The Land Development Agency was also steadily releasing land in Forde, Franklin and Dunlop in 2007. HTW observed that private land developers also appeared to be active.

HTW says Canberra's well-performing suburbs in the inner north and inner south still continue to perform, with little sign of the pressure affecting the mortgage belt. However, while HTW says the market has been strong, aided by the ACT government's stamp duty concession, there are signs that supply is beginning to outstrip demand. And there is evidence of buyer resistance, reflected in a general slowdown in sales, with homes taking longer to sell.

As recently as December 2007, there was still confidence about for the Canberra housing market, with the Australian Financial Review reporting high auction clearance rates and Australian Property Monitors predicted growth prospects of 9%+ for 10 Canberra suburbs. However, RPData's Property Pulse report thinks Canberra's price growth will cool in 2008 after a strong run in 2006 and 2007.

"With the Rudd government mooting less government spending in 2008 in an effort to curb inflation, there is likely to be lower levels of demand for housing in Canberra this year," researcher Tim Lawless says.

More recently, Lawless identified an increase of new real estate listings across all Australian states and territories. In the ACT, new and existing listings totalled 1,024 compared with 556 for the same time in 2007. While new listings can be seen as reflecting high market confidence and vendor confidence, they can also mean more vendors are pushing into the market now, fearing conditions will be worse later in the year.

The warning signs are there, both in the slowing economic signals identified by ANZ economists and in the so-far unknown impact of Federal Government purse tightening. The Rudd Government, driven to find the revenue to fund its promised tax cuts and other policy initiatives, will poke into every corner. Commonwealth agencies have been instructed to cut spending and senior bureaucrats have warned that thousands of jobs could go in agencies like Centrelink, the ATO and the ABS - even the weather bureau.

Already the $46 million upgrade of Constitution Avenue in Canberra has been scrapped, which in turn put the $55 million redevelopment of the RSL National Headquarters on hold while traffic conditions are reviewed. Cuts totalling $640 million have been flagged and, naturally enough, the higher-paid echelons of the public service are under the spotlight.

That said, however, there are solid fundamental reasons for the ACT commanding the second highest median house prices in the nation ($460,000 as of September 2007). Unemployment is a low 2.6% and higher disposable incomes than for those in other capital cities result in repayments on the average mortgage, at 25%, being much lower than the national average of 37%. So affordability is seen as less of a problem in Canberra and, while the Canberra housing market may have peaked for now, its residents will probably fare far better through what will probably be a short-term correction.

[Bardon]

Not sure about this one either

Senior Economist, Jason Anderson from BIS Shrapnel, says, "House hold income growth in Queensland has been significantly higher than NSW or Victoria over the past 3 years, which, together with an extended phase in rents and reduced vacancies, translates to a positive outlook for good positive growth for Queensland. It adds up to still being a very strong fundamental environment in terms of property price growth over the course of this year and into 2009". BIS Shrapnel forecasts, Brisbane is projected to show the best growth over the next 3 years and, by 2010 will be the leading long-term growth average of Australian capital cities. BIS Shrapnel research also shows that Brisbane, which of course represents a barometer for the whole SE Queensland region, is showing an imbalance between supply and demand and as a result, is set to affect prices. Jason Anderson believes the Brisbane capital will soon face a direct shortage of housing, especially for renters.

[Bardon]

Haha...got to say though that Residex have a good track record in predicting house price growth....

Property poised to bounce back

April 20, 2008 12:00am

PROSPECTIVE homebuyers should buy now before Sydney prices start to climb again with signs of a recovery in the housing market looming, property insiders claim.

New figures released this week by property analysts Residex reveal Sydney property values have risen by more than six per cent in the past year despite talk of a continuing slump due to rising interest rates and low levels of affordability.

While gains have mostly been in the more affluent suburbs, overall Sydney has recorded a growth in median home values of 6.39 per cent in the year to the end of March, 2008.

Head Residex statistician John Edwards predicts Sydney values to increase by six to eight per cent this year.

"For the next couple of years there will be growth, particularly in the unit sector,'' Mr Edwards said.

"If you can afford to buy you must do it now because it's not going to get any cheaper.

"There are sellers out there being tapped on their shoulders to sell by their banks, and there will be bargains to be had, even in the middle to upper socio-economic suburbs.''

Macquarie Bank chief economist Rod Cornish said he does not expect prices to drop by the 30 per cent figure recently reported, and instead predicts a slower recovery this year.

"What would have been quite a reasonable year will be pushed out by rising interest rates, and so I predict this year to be reasonably subdued,'' Mr Cornish said.

"We started to see some growth in the second half of last year, but that has petered out a bit due to interest rates.

"But with the potential for rates to be cut next year, we have good indicators for growth next year.''

The best-performing suburbs, according to Residex, were Whale Beach, where the median value grew by more than 25 per cent to $3.792 million in the year to March, followed by the inner city suburb of Chippendale, where a 25 per cent rise pushed values to $638,500.

The eastern beachside suburb of Bronte was third, with a 24.4 per cent hike to a median of $2.208 million.

At the other end of the scale, the south-western suburbs of Raby, Leumeah, The Oaks and Macquarie Links topped the worst-performing suburbs list with drops in median values of between five and eight per cent.

"It's what we would expect at the start of a housing cycle,'' Mr Cornish said.

The unit sector recorded gains, with Sydney apartments increasing in value by 6.18 per cent to a median of $402,000.

Regional NSW showed more modest growth. House values rose by 4.57 per cent but dropped 0.2 per cent during March.

Best performers were headed by Broken Hill (27 per cent) on the back of the minerals boom, followed by the northern towns of Byron Bay (23.1 per cent), Kingscliff (21.8 per cent), Tweed Heads West (20.4 per cent) and Brunswick Heads (19.6 per cent).

[Bardon]

This is raw data draw your own conclusions

Improved Melbourne market keeps auction clearance rates steady

Monday, 21 April 2008

Mike Preston

Improved results for vendors in Australia’s biggest residential auction market, Melbourne, offset a small fall in auction clearances in other states over the weekend.

In Melbourne, 65% of 561 properties sold over the weekend, an improvement on the 63% clearance rate for the weekend before, according to Real Estate Institute of Victoria figures.

Sydney saw a decline in clearance rates from 56% to 54%, but a big jump in the number of properties for auction – 270 this weekend compared to 203 last weekend – meant that overall number of properties sold by auction increased, Australian Property Monitors data shows.

In Brisbane 36% of 48 properties up for auction were sold, down from 40% last weekend, while in Adelaide the clearance rate fell from 61% to 53%.

[ruisort7]

This is raw data draw your own conclusions

Improved Melbourne market keeps auction clearance rates steady

Monday, 21 April 2008

Mike Preston

Improved results for vendors in Australia’s biggest residential auction market, Melbourne, offset a small fall in auction clearances in other states over the weekend.

In Melbourne, 65% of 561 properties sold over the weekend, an improvement on the 63% clearance rate for the weekend before, according to Real Estate Institute of Victoria figures.

Sydney saw a decline in clearance rates from 56% to 54%, but a big jump in the number of properties for auction – 270 this weekend compared to 203 last weekend – meant that overall number of properties sold by auction increased, Australian Property Monitors data shows.

In Brisbane 36% of 48 properties up for auction were sold, down from 40% last weekend, while in Adelaide the clearance rate fell from 61% to 53%.

My friend in Melbourne says there's a strong split developing in the city. A lot of suburbs are doing very, very badly (or well, if you're looking to buy), while a few are bubbling along. I guess this has always been the case; the difference seems now that it's happening so much faster and the swings are more dramatic, it's almost impossible to comprehend.

Interesting takes: yes, 65% is not very good, but it's better than 63%! And 54% is lower than 56%, but the numbers are up! Always look on the bright side of life, eh?

Inflation at 4.3. Glenn's going to have to trust himself that the turnaround he sees coming is still on track. He's been pretty good so far, so I don't think there's much to worry about - except that extra 2.5 million square kilometres off Qld isn't going to help him keep a lid on things. Might have been better off Victoria (with apologies to Tas).

[Bardon]

Mortgage-stressed borrowers just got more bad news on interest rates.

The key March quarter consumer price inflation figures came in at an annual rate of 4.2%, more than the 4% expected by economists. The pace accelerated from 3% for the final three months of 2007.

Rate not coming down and maybe more raises to come

[ruisort7]

Mortgage-stressed borrowers just got more bad news on interest rates.

The key March quarter consumer price inflation figures came in at an annual rate of 4.2%, more than the 4% expected by economists. The pace accelerated from 3% for the final three months of 2007.

Rate not coming down and maybe more raises to come

Yep, Glenn's got a bit of a white knuckle ride coming soon, but I don't think there's a raise coming, I reckon he's got it right ... 99% sure anyway! Interesting that the the media is talking about chances of rate rises; just that talk alone should have an effect on behaviour.

[Bardon]

ITS NOT ONLY DEBT THAT IS GETTING BIGGER

Despite the problems of affordability, we keep on building bigger and bigger houses.

The average new house in Australia has grown 35% to 239 square metres in the past two decades, according to the latest data from the Australian Bureau of Statistics.

The average new apartment has also grown substantially, reaching 141 square metres, a rise of 34% since the mid-Eighties.

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Housing market shakes after rate

THE Reserve Bank's interest rate noose has tightened on Melbourne's housing market, cutting almost $40,000 from prices so far in 2008. But in an unexpected twist it's some of Melbourne's best inner suburbs that have choked on rates rises, while outer areas are booming. According to latest Real Estate Institute of Victoria statistics, Melbourne's median house price fell from $472.250 in December to only $432,000 at the end of March, although the average home still costs $54,500 more than in March, 2007.

However, while prices in inner South Melbourne fell by more than 9 per cent, and were even down by 4 per cent in bayside Brighton, which is Melbourne's second most expensive suburb with a median house price of $1.675 million, it was a different story on Melbourne's fringes, which had eight out of 10 of the top 20 growth suburbs. Popular Mornington Peninsula beach destination Blairgowrie, about 65 kilometres from the centre of Melbourne, led with an 18.4 per cent March quarter increase. Blairgowrie has a median house price of $610,000, an increase of $95,000 since December. Second was Berwick, a first home buyer's area more than 50 kilometres south-east of the city, where prices increased 13.6 per cent, from $350,000 to $397,000. Third was upmarket Sanctuary Lakes, a Greg Norman golfing estate 25 kilometres south-west of the CBD, where prices rose by 13.3 per cent, from $490,000 to $555,000.

On the flip-side of the market, prices in well to do Hawthorn were down 6.1 per cent, and the popular investment suburb Elsternwick suffered a 22.2 per cent cut. REIV chief executive officer Enzo Raimondo said that while the March quarter figures confirmed that four successive rate rises over eight months had cut house price, it appeared the greatest impact had been in more expensive suburbs. “This is highlighted by the fact that most of the suburbs with highest growth rates are not in the inner city” he said. Mr Raimondo said the Berwick increase, and increases in other areas such as outer eastern Ringwood, where prices were up by 6 per cent, were evidence of the surprise trend. But he said the overall affect of rising rates on Melbourne house prices should sent a clear message to the Reserve Bank that no more rate rises were necessary. “It appears the RBA's strategy has had the desired effect on residential property, and any further increases should not be necessary in the short term.” He said present conditions pointed to a short-term outlook that was totally different to last year's bullish market. That meant “stable” prices, with auction clearance rates expected to hover in the low to mid-60 per cent range.

During 2007, Melbourne's weekend auction clearance rate only fell below 82 per cent on two occasions.

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The bleak findings follow several recent reports predicting Australia's property bubble is about to burst and that property prices will fall by as much as 25 per cent.

http://www.theage.com.au/news/planning/wea...ge#contentSwap2

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Prices stall as market cools

April 27, 2008 12:00am

BRISBANE'S housing market is cooling, with more properties flooding on to the market, stemming price rises and pushing up the time it takes to sell.

According to RP Data there were 7864 properties in Brisbane for sale last week, up more than 3400 at this time last year.

Last week, 1647 new properties came on to the market, 500 more than in the same time last year.

Australian Property Monitors' Michael McNamara said properties in Brisbane were now on the market for 60 days and the delay was lengthening. The average discount on properties was about 5 per cent.

"Heat doesn't come out of the market overnight but as sure as anything, we know that it is slowing down," Mr McNamara said.

"We should see those days-on-market and discounting figures start to deteriorate in the middle of the year."

Mr McNamara said current sales were a flow-on from last year's strong selling season. "Last season's vendors, who probably sold for more than they expected, are this season's cashed-up buyers," he said.

"But once last year's cashed-up buyers move out of the system, which is happening now, what we should have left is a market that adjusts its sights and that most likely will be reflected in flat and possibly even softer house prices."

Dean Yesberg, principal of Ray White South Brisbane and Ray White CBD Residential, agreed that the number of days for properties being on the market had blown out, particularly in the past five months.

"In regards to auctions, 32 days is the average length of time for properties to be on the market," he said. "With a property that's for sale – on the market with a price – in the inner-city we're looking at 75 to 90 days on the market."

Mr Yesberg said it was because buyers who had more choice took longer to make decisions.

"In reality, the first three weeks of a property being on the market is the most important because that's when you get the most number of inquiries from buyers and you get the best buyers.

"In this market, sellers have to be realistic with their prices otherwise buyers, who are faced with a lot more choice in the current market, will move on.

"If properties are priced too high at the outset, you'll see them remain on the market for a longer period."

Mr McNamara said it wasn't a clear-cut case of supply and demand. He said with interest rate rises, prospective home buyers weren't keen to risk as much debt as they had in the past, while lenders weren't prepared to lend as much.

"When you take money out of the system, and that's what the credit crunch is doing, that's less funds to be spent on homes," he said.

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Forget the hype... is it really wizard in Oz?

Sunday April 27, 2008

By Rachelle Stewart

Better weather, hustle and bustle, more money - the reasons Kiwis cross the Tasman are familiar and oft-heard. And there's no sign of those claims disappearing any time soon. Latest Statistics New Zealand figures show that an average of 100 Kiwis packed up and moved to Australia each day last month, 3081 in all.

In the year to March 31, 30,219 people crossed the Tasman, close to the record figure of 31,938 recorded in 2000/01. And a Fairfax-Media Nielsen poll released yesterday shows a massive 10 per cent of us are considering making the switch across the ditch in the next year. Dr Stephen Burnell, head of economics and finance at Victoria University, said the obvious reason is more money. "People can work in Australia and get a far better income as well as a great lifestyle. " The more skilled you are, the more international your marketplace is and the further you can go."

The number of Kiwis leaving for Australia last year was 28,000 more than those heading in the opposite direction, the highest difference since 1988. According to the latest Australian Census, Kiwis were the second largest overseas-born group there after the British, 2.1 per cent of the population.

BRISBANE BOUND

Deirdrie Bushett smiles as she packs up the contents of her Auckland apartment - she's going on an adventure. Bushett and new husband Bruce are leaving for Brisbane - fulfilling the long-held "dream" held at bay by her high-pressure HR job.

http://www.nzherald.co.nz/section/1/story....jectid=10506432

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But he said the overall affect of rising rates on Melbourne house prices should sent a clear message to the Reserve Bank that no more rate rises were necessary. “It appears the RBA's strategy has had the desired effect on residential property, and any further increases should not be necessary in the short term.”

Crazy me thinking their remit was to tackle inflation and the economy in general.

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But he said the overall affect of rising rates on Melbourne house prices should sent a clear message to the Reserve Bank that no more rate rises were necessary. “It appears the RBA's strategy has had the desired effect on residential property, and any further increases should not be necessary in the short term.”

Crazy me thinking their remit was to tackle inflation and the economy in general.

yes i think most dont realise that they are rasing rates to curb economic and price growth