Silent night….silent market

The residential property market normally becomes relatively inactive during the festive season, and we are already seeing the number of properties advertised for sale falling away each week. The market won’t spark back into life until late January when the holiday season starts to wind down.

Leading into 2009 it is encouraging to note that residential property values appear to have stabilized. The three months ending October ‘08 saw dwelling values nationally increase by 0.3% – in essence a flat market.

Another encouraging sign is that affordability has shown some signs of improvement. Data released by Fujitsu Consulting shows that mortgage stress has eased, falling by 23 percent over the last four months. This is great news for first home buyers where demand has been building for many years.

Improving affordability of housing, coupled with the boost in the first home owners grant are a strong incentive for first home buyers to become active. Another motivator must be the fact that weekly rental rates have risen by more than 30% over the last three years, making the gap between rental rates and mortgage payments smaller and smaller.

Auction clearance rates remain well below average across the nations capitals. Across the capital cities, only Melbourne recorded an auction clearance rate which was greater than 50% during the last week and current clearance rates are well below established benchmarks. It should be kept in mind, however, that auctions clearance rates are more reflective of the upper end of the market where sale by auction is much more common.

Affluent markets are struggling to attract buyers due to the current economic conditions and supply levels have crept up in recent months.

Newcastle has seen a vacancy rate of 1.6%, only 0.2% better than last month. Rents have been increased at an alarming rate and it is becoming more and more common to see rents above $400 per week. We are experiencing tenants getting together to share accomodation so they can afford the rent. Activity in sales has been contanct through December, but enquiry for this week has been minimal. Most people are waiting till 2009 before selling or buying.

We would like to wish all our friends, clients & subscribers a very Merry Christmas and a safe and happy New Year. Jon & Edith

RP Data Property Pulse sourced

Silent night….silent market

The residential property market normally becomes relatively inactive during the festive season, and we are already seeing the number of properties advertised for sale falling away each week. The market won’t spark back into life until late January when the holiday season starts to wind down.

Leading into 2009 it is encouraging to note that residential property values appear to have stabilized. The three months ending October ‘08 saw dwelling values nationally increase by 0.3% – in essence a flat market.

Another encouraging sign is that affordability has shown some signs of improvement. Data released by Fujitsu Consulting shows that mortgage stress has eased, falling by 23 percent over the last four months. This is great news for first home buyers where demand has been building for many years.

Improving affordability of housing, coupled with the boost in the first home owners grant are a strong incentive for first home buyers to become active. Another motivator must be the fact that weekly rental rates have risen by more than 30% over the last three years, making the gap between rental rates and mortgage payments smaller and smaller.

Auction clearance rates remain well below average across the nations capitals. Across the capital cities, only Melbourne recorded an auction clearance rate which was greater than 50% during the last week and current clearance rates are well below established benchmarks. It should be kept in mind, however, that auctions clearance rates are more reflective of the upper end of the market where sale by auction is much more common.

Affluent markets are struggling to attract buyers due to the current economic conditions and supply levels have crept up in recent months.

Newcastle has seen a vacancy rate of 1.6%, only 0.2% better than last month. Rents have been increased at an alarming rate and it is becoming more and more common to see rents above $400 per week. We are experiencing tenants getting together to share accomodation so they can afford the rent. Activity in sales has been contanct through December, but enquiry for this week has been minimal. Most people are waiting till 2009 before selling or buying.

We would like to wish all our friends, clients & subscribers a very Merry Christmas and a safe and happy New Year. Jon & Edith

RP Data Property Pulse sourced

Silent night….silent market

The residential property market normally becomes relatively inactive during the festive season, and we are already seeing the number of properties advertised for sale falling away each week. The market won’t spark back into life until late January when the holiday season starts to wind down.

Leading into 2009 it is encouraging to note that residential property values appear to have stabilized. The three months ending October ‘08 saw dwelling values nationally increase by 0.3% – in essence a flat market.

Another encouraging sign is that affordability has shown some signs of improvement. Data released by Fujitsu Consulting shows that mortgage stress has eased, falling by 23 percent over the last four months. This is great news for first home buyers where demand has been building for many years.

Improving affordability of housing, coupled with the boost in the first home owners grant are a strong incentive for first home buyers to become active. Another motivator must be the fact that weekly rental rates have risen by more than 30% over the last three years, making the gap between rental rates and mortgage payments smaller and smaller.

Auction clearance rates remain well below average across the nations capitals. Across the capital cities, only Melbourne recorded an auction clearance rate which was greater than 50% during the last week and current clearance rates are well below established benchmarks. It should be kept in mind, however, that auctions clearance rates are more reflective of the upper end of the market where sale by auction is much more common.

Affluent markets are struggling to attract buyers due to the current economic conditions and supply levels have crept up in recent months.

Newcastle has seen a vacancy rate of 1.6%, only 0.2% better than last month. Rents have been increased at an alarming rate and it is becoming more and more common to see rents above $400 per week. We are experiencing tenants getting together to share accomodation so they can afford the rent. Activity in sales has been contanct through December, but enquiry for this week has been minimal. Most people are waiting till 2009 before selling or buying.

We would like to wish all our friends, clients & subscribers a very Merry Christmas and a safe and happy New Year. Jon & Edith

Some confidence returning

It has been an interesting and encouraging week of data releases. The Westpac-Melbourne Institute Index of Consumer Sentiment has recorded a 7.5% lift in consumer confidence. The latest index figures are a 12% improvement over the last two months and are now up 16% over the last two months.
Housing finance figures were also released this week from the Australian Bureau of Statistics showing the number of finance commitments by owner occupiers rose by 1.3% during October.
The total value of housing finance commitments was up 1.9% over the month. Also, in a speech delivered by the Reserve Bank Governor, Glen Stevens, the unprecedented prospect of a January rate cut was hinted at.
The Reserve Bank board normally take a break during January, however the pressing economic conditions may prompt a January meeting where interest rates are cut again. The consensus amongst economists is now that the official cash rate is likely to fall to around 3%, providing for an average variable mortgage rate of around 5.6%.As we approach the Christmas season the number of properties advertised for sale is starting to slump. Listing advertisements are not likely to pick up again until mid to late January as the market takes a festive season break.

Some vendors are rushing now to try and get their properties on the market for Christmas. As the holiday season approaches, we are finding that enquiry for property has dropped off again. Internet views of property have also dropped dramatically in the last week as well.

Some information sourced from RP Data

First home buyers encouraged by lower rates

The Reserve Bank has slashed interest rates to a seven year low and there is more to come.

The aggressive cuts in interest rates from the Reserve Bank have virtually eliminated six and a half years of rate increases in the space of five months, bringing the official cash rate back to levels not seen since May 2002. Such a dramatic cut in interest rates has not been seen in almost 20 years.The latest cut takes the official cash rate down to 4.25% and the average standard variable home loan rate is likely to fall to between 6.8% and 6.9% considering the Commonwealth Bank of Australia and National Australia Bank passed on the rate cuts in full.

The good news for mortgage holders, or those looking to buy into the property market, is that rates are set to go even lower. The financial markets are factoring a 90% expectation that rates will fall another 100 basis points after the February RBA board meeting. The Sydney Futures Exchange (SFE) is indicating a particularly bullish assessment of how low interest rates may go. The yield curve for 30 day interbank cash rate futures is showing the official cash rate could fall as low as 2.8% by the middle of next year. Most of Australia’s leading economists aren’t quite as bullish, suggesting the official cash rate will bottom between 3.0% and 3.5% by mid-2009.

Over the last ten years the average standard variable mortgage rate has been about 1.8% higher than the official cash rate. More recently the difference has risen to about 2.65%. So, with the official cash rate likely to bottom around 3.0% we can expect the average standard variable mortgage rate to go as low as around 5.6% by the middle of next year.
Since interest rates peaked back in July there has been an annual saving of approximately $8,100 per annum on the interest component of a $300,000 mortgage – that’s more than $150 per week. Together with the declines in home values recorded since the beginning of 2008, the net result has been an improving level of affordability.

In all likelihood it will be the first home buyers segment that takes the most advantage of affordability improvements and it is likely to be this market segment that shows the first signs of any recovery. Demand has been building amongst these buyers and the recent falls in interest rates together with the doubling and tripling of the first home owners grant is improving affordability levels amongst this group of buyers. The latest housing finance statistics from the ABS shows that first home buyers as a proportion of all buyers are at their highest level since March 2002. Anecdotally we are already seeing a lift in activity amongst the lower priced segments of the market after the doubling and tripling of the first home owners grant together with the previous rate cuts. To date though, we are yet to see this increased level of market activity translate into actual buying behavior. It is likely the latest cut will provide further encouragement for buyers to venture back into the market; however we are not likely to see an increase in sales figures until first quarter ’09, as the market normally remains quiet during the Christmas and New Year period. The most significant obstacle is still the fact that consumer confidence remains very low. Consumers are still very cautious about future economic conditions, which means potential buyers are still hesitant about venturing into the market. The largest concern is likely to be job security, with unemployment expected to rise over the coming months.

Locally there has been an increase in activity from first home buyers. Although hesitant to decide on any particular property, those that are moving forward are having difficulty with the banks getting the money. The banks are wanting extra information from borrowers more than ever before. Any slight problem in the borrowers application is seeing many being decline finance. The West Wallsend area has some classic examples of lower priced homes, but although more inspections are taking place, not many are moving forward to being sold. There are many stories of offers being made, only to have them withdrawn because of slight problems with pest and building inspections. Many are waiting for the holiday season to end before buying.

Some information provided by RP Data Property Pulse

First home buyers encouraged by lower rates

The Reserve Bank has slashed interest rates to a seven year low and there is more to come.

The aggressive cuts in interest rates from the Reserve Bank have virtually eliminated six and a half years of rate increases in the space of five months, bringing the official cash rate back to levels not seen since May 2002. Such a dramatic cut in interest rates has not been seen in almost 20 years.The latest cut takes the official cash rate down to 4.25% and the average standard variable home loan rate is likely to fall to between 6.8% and 6.9% considering the Commonwealth Bank of Australia and National Australia Bank passed on the rate cuts in full.

The good news for mortgage holders, or those looking to buy into the property market, is that rates are set to go even lower. The financial markets are factoring a 90% expectation that rates will fall another 100 basis points after the February RBA board meeting. The Sydney Futures Exchange (SFE) is indicating a particularly bullish assessment of how low interest rates may go. The yield curve for 30 day interbank cash rate futures is showing the official cash rate could fall as low as 2.8% by the middle of next year. Most of Australia’s leading economists aren’t quite as bullish, suggesting the official cash rate will bottom between 3.0% and 3.5% by mid-2009.

Over the last ten years the average standard variable mortgage rate has been about 1.8% higher than the official cash rate. More recently the difference has risen to about 2.65%. So, with the official cash rate likely to bottom around 3.0% we can expect the average standard variable mortgage rate to go as low as around 5.6% by the middle of next year.
Since interest rates peaked back in July there has been an annual saving of approximately $8,100 per annum on the interest component of a $300,000 mortgage – that’s more than $150 per week. Together with the declines in home values recorded since the beginning of 2008, the net result has been an improving level of affordability.

In all likelihood it will be the first home buyers segment that takes the most advantage of affordability improvements and it is likely to be this market segment that shows the first signs of any recovery. Demand has been building amongst these buyers and the recent falls in interest rates together with the doubling and tripling of the first home owners grant is improving affordability levels amongst this group of buyers. The latest housing finance statistics from the ABS shows that first home buyers as a proportion of all buyers are at their highest level since March 2002. Anecdotally we are already seeing a lift in activity amongst the lower priced segments of the market after the doubling and tripling of the first home owners grant together with the previous rate cuts. To date though, we are yet to see this increased level of market activity translate into actual buying behavior. It is likely the latest cut will provide further encouragement for buyers to venture back into the market; however we are not likely to see an increase in sales figures until first quarter ’09, as the market normally remains quiet during the Christmas and New Year period. The most significant obstacle is still the fact that consumer confidence remains very low. Consumers are still very cautious about future economic conditions, which means potential buyers are still hesitant about venturing into the market. The largest concern is likely to be job security, with unemployment expected to rise over the coming months.

Locally there has been an increase in activity from first home buyers. Although hesitant to decide on any particular property, those that are moving forward are having difficulty with the banks getting the money. The banks are wanting extra information from borrowers more than ever before. Any slight problem in the borrowers application is seeing many being decline finance. The West Wallsend area has some classic examples of lower priced homes, but although more inspections are taking place, not many are moving forward to being sold. There are many stories of offers being made, only to have them withdrawn because of slight problems with pest and building inspections. Many are waiting for the holiday season to end before buying.

Some information provided by RP Data Property Pulse

First home buyers encouraged by lower rates

The Reserve Bank has slashed interest rates to a seven year low and there is more to come.

The aggressive cuts in interest rates from the Reserve Bank have virtually eliminated six and a half years of rate increases in the space of five months, bringing the official cash rate back to levels not seen since May 2002. Such a dramatic cut in interest rates has not been seen in almost 20 years.The latest cut takes the official cash rate down to 4.25% and the average standard variable home loan rate is likely to fall to between 6.8% and 6.9% considering the Commonwealth Bank of Australia and National Australia Bank passed on the rate cuts in full.

The good news for mortgage holders, or those looking to buy into the property market, is that rates are set to go even lower. The financial markets are factoring a 90% expectation that rates will fall another 100 basis points after the February RBA board meeting. The Sydney Futures Exchange (SFE) is indicating a particularly bullish assessment of how low interest rates may go. The yield curve for 30 day interbank cash rate futures is showing the official cash rate could fall as low as 2.8% by the middle of next year. Most of Australia’s leading economists aren’t quite as bullish, suggesting the official cash rate will bottom between 3.0% and 3.5% by mid-2009.

Over the last ten years the average standard variable mortgage rate has been about 1.8% higher than the official cash rate. More recently the difference has risen to about 2.65%. So, with the official cash rate likely to bottom around 3.0% we can expect the average standard variable mortgage rate to go as low as around 5.6% by the middle of next year.
Since interest rates peaked back in July there has been an annual saving of approximately $8,100 per annum on the interest component of a $300,000 mortgage – that’s more than $150 per week. Together with the declines in home values recorded since the beginning of 2008, the net result has been an improving level of affordability.

In all likelihood it will be the first home buyers segment that takes the most advantage of affordability improvements and it is likely to be this market segment that shows the first signs of any recovery. Demand has been building amongst these buyers and the recent falls in interest rates together with the doubling and tripling of the first home owners grant is improving affordability levels amongst this group of buyers. The latest housing finance statistics from the ABS shows that first home buyers as a proportion of all buyers are at their highest level since March 2002. Anecdotally we are already seeing a lift in activity amongst the lower priced segments of the market after the doubling and tripling of the first home owners grant together with the previous rate cuts. To date though, we are yet to see this increased level of market activity translate into actual buying behavior. It is likely the latest cut will provide further encouragement for buyers to venture back into the market; however we are not likely to see an increase in sales figures until first quarter ’09, as the market normally remains quiet during the Christmas and New Year period. The most significant obstacle is still the fact that consumer confidence remains very low. Consumers are still very cautious about future economic conditions, which means potential buyers are still hesitant about venturing into the market. The largest concern is likely to be job security, with unemployment expected to rise over the coming months.

Locally there has been an increase in activity from first home buyers. Although hesitant to decide on any particular property, those that are moving forward are having difficulty with the banks getting the money. The banks are wanting extra information from borrowers more than ever before. Any slight problem in the borrowers application is seeing many being decline finance. The West Wallsend area has some classic examples of lower priced homes, but although more inspections are taking place, not many are moving forward to being sold. There are many stories of offers being made, only to have them withdrawn because of slight problems with pest and building inspections. Many are waiting for the holiday season to end before buying.

Some information provided by RP Data Property Pulse