So much uncertainty

More job losses on the way and many people sitting back waiting to see what happens, it comes as no surprise that there are mixed opinions about what is going to happen with interest rates next.

The Reserve Bank meets again next Tuesday to decide whether interest rates will be changed. The ASX cash rate futures are suggesting a 45% chance that the official cash rate will fall another 25 basis points.

If the financial markets are correct (and most economists seem to agree) the official cash rate is likely to remain unchanged in May. The major banks have also lifted their fixed rate mortgages in the past weeks, suggesting that interest rates may now be approaching the bottom of the cycle.

Data released this week from the Housing Industry Association (HIA) reported that sales of new houses increased for the third successive month, jumping by 4.2 percent in March. Clearly the first home buyers boost is having a positive impact on the new home market however, the most recently available building approvals and building commencements data shows both indicators continuing to trend downwards.

These recent results suggest the downward spiral may at least flatten and potentially reverse however, Australia still has a dramatic undersupply of housing. Although an undersupply of housing may seem like a bad thing, it has placed a floor under property values and helped to ensure that the Australian property market has not seen the dramatic falls of upwards of 20% witnessed in the USA and some European markets.

Speculation is now rife that the First Home Buyers Boost boost will remain for new houses only, which is strongly supported however, removal of Government red tape on new development would go a long way towards boosting new housing levels. The high cost of new development thanks to government charges and levies as well as a bureaucratic system which sees the time periods for development approvals continually increasing are the greatest deterrent for developers looking to bring new dwellings to the market. A removal of some if not all of these barriers should assist a recovery of new dwelling commencements.

The big R word

With the prime minister now admitting we are in a recession, it isnt surprising that this now falls into line with what the governer of the Reserve Bank is stating.

In a speech given this week RBA governor Glenn Stevens declared that long-term growth prospects for the economy were sound in the face of the deep global downturn. He also suggested that Australia was well placed to capitalise when the eventual recovery emerged. Demonstrating the contrast in views the International Monetary Fund this week suggested Australia faces a recession which is likely to be of a similar depth as the downturn in the early 1990’s.

The IMF made these comments with consideration to the fact that the cost of living is falling at a rate slower than anticipated, coupled with rising unemployment. The official estimate from the IMF suggests the Australian economy will contract by 1.4% this year, with the unemployment rate anticipated to reach 6.8% by December. During the recession of the early 1990’s the economy shrunk by 1.7% and unemployment peaked at 10.9% in December 1992.

Whilst the economy is shrinking it certainly seems unlikely that unemployment rates will get to levels above 10% as seen during the recession of the early 1990’s.

Auction clearance rates are certainly showing signs of a recovery over recent times with clearance rates in the two largest auction markets, Sydney and Melbourne sitting above 60% for a couple of months now. Meanwhile, clearance rates in Brisbane are trending upwards and have been above 30% for most of 2009 whilst rates in Adelaide are also beginning to trend upwards.

To see some well priced properties for sale go to www.nobullrealestate.com.au

RP Data sourced

Is there a return coming growth?

After property value falls of 2.9% nationwide during 2008, 2009 has bought some good news with a number of capital city markets now showing positive growth

In terms of property value growth performance, 2008 was a poor year with most regions of Australia seeing falls in property values. In the context of the overall economy both nationally and globally the Australian property market got off relatively lightly with value falls of just 2.9%. Markets in the US and Europe saw property values plummet by up to 20% whilst the Australian share market was down more than 40% from its peak.On a national basis sales volumes have plummeted. Keeping in mind that December and January are usually slow months, sales volumes during January 2009 were 64% down on the 10 year average and 53% lower than volumes at the same time during the previous year. This data highlights that low consumer confidence and economic uncertainty has resulted in fewer property transactions.

With the new year comes rejuvenated hope with regards to the performance of investment classes. The latest data shows that within some capital cities throughout Australia, property values have actually increased during the last 3 months. On a national basis property values have increased by 0.1% indicating a flat market. It’s certainly too early to call a wholesale recovery of the market but these are encouraging first steps. Importantly, the possibility of significant gains through 2009 are likely to be tempered by low consumer confidence and rising unemployment. However, the two largest capital city markets, Sydney and Melbourne, have shown slight positive growth and this is an encouraging sign given these two cities tend to lead the national markets direction.On a quarterly basis, Brisbane has seen the greatest falls at 2.2% over the quarter whilst the greatest increase in values was witnessed in Darwin at 6.2%. Darwin continues to record strong value growth following on from its very strong performance during 2008. Adelaide on the other hand, was the only other capital city market apart from Darwin to record positive growth through 2008 however, values in Adelaide have now fallen 1.5% during the quarter. Property values in Perth appear to have slowed their rate of descent after falling by 7.3% during 2008, the last 3 months has seen falls of just 1.0%.

When looking at values throughout the nation, houses in Sydney remain the nation’s most expensive sitting at $559,363 and the cheapest houses are found in Hobart where the median price is $295,000. Perhaps the most interesting movement in house values during recent times has been the rapid increase in Darwin house values. At the start of 2008, Melbourne house values were 7.5% more expensive than Darwin’s and Brisbane’s median house was 8.6% more expensive than Darwin’s. As at the end of Feb-09, Darwin’s median house value is 2.7% greater than Melbourne’s and 6.1% greater than Brisbane’s. Although this may seem expensive, Darwin continues to provide the country’s best gross rental yields so whilst yields are so strong, it is logical that price growth is likely to remain robust.Across the unit market, the most expensive units are found in Perth ($445,367) and the most affordable units are located in Hobart ($243,000). Units in Perth have been the nation’s most expensive for some time now, overtaking Sydney in May 2006. The result is unsurprising given the quantity of unit development located on or close to the waterfront on the Swan River and coastal areas. Generally, these units have been constructed with a strong focus towards the owner occupier market and prices reflect such an offering.

Even though values have started to show some growth in capital city areas we don’t anticipate that growth in values will be dramatic through 2009, overall we believe it will be a fairly flat year in terms of growth. However property investment in Australia has demonstrated it resilience during 2008. When global share markets and global property markets were tumbling dramatically, Australian property values fell by less than 3%. It’s important to remember that property is generally held for at least 5 years and that any decline in value is only relevant if the owner sells or is looking to refinance. A good example is, if you bought the median house in Melbourne in February 2003 (towards the end of the last boom) you would have paid $328,567. As at February 2009, Melbourne’s median house sits at $452,072 which is a value increase of $123,505 over six years or annual average growth of 5.5%. If you compare this to the S&P/ASX 200 index, the share price index sat at 2,801 during February 2003, at the end of February 2009, the index sat at 3,345, representing an annual average change in the S&P/ASX 200 index value of just 3.0%. Sure share prices were at record highs but the volatility of the market has seen share values fall dramatically and rapidly. What this demonstrates is that property as a long-term asset class has outperformed the share market and has seen far less price volatility.

Is there a return of growth coming ?

After property value falls of 2.9% nationwide during 2008, 2009 has bought some good news with a number of capital city markets now showing positive growth

In terms of property value growth performance, 2008 was a poor year with most regions of Australia seeing falls in property values. In the context of the overall economy both nationally and globally the Australian property market got off relatively lightly with value falls of just 2.9%. Markets in the US and Europe saw property values plummet by up to 20% whilst the Australian share market was down more than 40% from its peak.On a national basis sales volumes have plummeted. Keeping in mind that December and January are usually slow months, sales volumes during January 2009 were 64% down on the 10 year average and 53% lower than volumes at the same time during the previous year. This data highlights that low consumer confidence and economic uncertainty has resulted in fewer property transactions.

With the new year comes rejuvenated hope with regards to the performance of investment classes. The latest data shows that within some capital cities throughout Australia, property values have actually increased during the last 3 months. On a national basis property values have increased by 0.1% indicating a flat market. It’s certainly too early to call a wholesale recovery of the market but these are encouraging first steps. Importantly, the possibility of significant gains through 2009 are likely to be tempered by low consumer confidence and rising unemployment. However, the two largest capital city markets, Sydney and Melbourne, have shown slight positive growth and this is an encouraging sign given these two cities tend to lead the national markets direction.On a quarterly basis, Brisbane has seen the greatest falls at 2.2% over the quarter whilst the greatest increase in values was witnessed in Darwin at 6.2%. Darwin continues to record strong value growth following on from its very strong performance during 2008. Adelaide on the other hand, was the only other capital city market apart from Darwin to record positive growth through 2008 however, values in Adelaide have now fallen 1.5% during the quarter. Property values in Perth appear to have slowed their rate of descent after falling by 7.3% during 2008, the last 3 months has seen falls of just 1.0%.

When looking at values throughout the nation, houses in Sydney remain the nation’s most expensive sitting at $559,363 and the cheapest houses are found in Hobart where the median price is $295,000. Perhaps the most interesting movement in house values during recent times has been the rapid increase in Darwin house values. At the start of 2008, Melbourne house values were 7.5% more expensive than Darwin’s and Brisbane’s median house was 8.6% more expensive than Darwin’s. As at the end of Feb-09, Darwin’s median house value is 2.7% greater than Melbourne’s and 6.1% greater than Brisbane’s. Although this may seem expensive, Darwin continues to provide the country’s best gross rental yields so whilst yields are so strong, it is logical that price growth is likely to remain robust.Across the unit market, the most expensive units are found in Perth ($445,367) and the most affordable units are located in Hobart ($243,000). Units in Perth have been the nation’s most expensive for some time now, overtaking Sydney in May 2006. The result is unsurprising given the quantity of unit development located on or close to the waterfront on the Swan River and coastal areas. Generally, these units have been constructed with a strong focus towards the owner occupier market and prices reflect such an offering.

Even though values have started to show some growth in capital city areas we don’t anticipate that growth in values will be dramatic through 2009, overall we believe it will be a fairly flat year in terms of growth. However property investment in Australia has demonstrated it resilience during 2008. When global share markets and global property markets were tumbling dramatically, Australian property values fell by less than 3%. It’s important to remember that property is generally held for at least 5 years and that any decline in value is only relevant if the owner sells or is looking to refinance. A good example is, if you bought the median house in Melbourne in February 2003 (towards the end of the last boom) you would have paid $328,567. As at February 2009, Melbourne’s median house sits at $452,072 which is a value increase of $123,505 over six years or annual average growth of 5.5%. If you compare this to the S&P/ASX 200 index, the share price index sat at 2,801 during February 2003, at the end of February 2009, the index sat at 3,345, representing an annual average change in the S&P/ASX 200 index value of just 3.0%. Sure share prices were at record highs but the volatility of the market has seen share values fall dramatically and rapidly. What this demonstrates is that property as a long-term asset class has outperformed the share market and has seen far less price volatility.

Will the banks ever put people before profit?

As people still find it difficult to make ends meet, and the government doing all it can to stimulate spending, the banks dont seem to want to help

The Reserve Bank again cut the cash rate this month by 0.25% with the cash rate now sitting at 3%, the lowest they have been since 1960. Unfortunately the big four banks haven’t passed on the full rate cut with the National Australia Bank not passing on any cut and the other three major banks passing on a cut of just 0.10% rather than the full 0.25%. Locally some of the building societys and credit unions are passing on just a little bit more at a discount of 0.15%

Market expectations as at market close on the 7th April 2009 show an expectation that the cash rate will bottom at 2.37 percent in October this year. Just how much of the further anticipated 0.6% cut gets passed on is anyone’s guess however, if this week’s action -or lack thereof- by the banks is any indication, it appears unlikely the full benefit would be passed on. This is on top of banks now charging loyalty fees for using third party banks ATM’s.

It also seems apparent that gone are the times where we see big cuts by the RBA, it appears they will now be taking a more measured approach to any further rate cuts. It isn’t all bad news though, interest rates are still lower than they have been in more than 45 years and with petrol prices down from last year’s peak, the average home owner is enjoying having slightly more disposable income than they did during mid 2008.

Whilst there has been uproar about the banks not passing on rate cuts, anyone with a mortgage must remember that nothing is certain and you always need to account for potential changes to interest rates. When working out whether or not to purchase one must always include sensitivity for increases in interest rates and should have a trigger point at which time they lock in their rates. Remember, good budgeting at the time of property purchase can help overcome most fluctuations in interest rates.

Consumer sentiment figures released this week by Westpac-Melbourne Institute show that during April, sentiment increased by 8.3% to 92.7 points. Although the index remains below 100 points suggesting pessimists still outweigh optimists it is a further positive sign that the market is showing an improvement in health.

With news of share price increases, property value increases and an improving Australian dollar over recent weeks it is unsurprising to see a lift in confidence. Looming increases in unemployment are likely to see pessimism in the market outweigh optimism however, it is encouraging to see sentiment improving from its recent low.

To see some interesting articles about our local area go to www.nobullrealestate.com.au/articles.php

RP Data Sourced

Will the banks ever put people before profit?

As people still find it difficult to make ends meet, and the government doing all it can to stimulate spending, the banks dont seem to want to help

The Reserve Bank again cut the cash rate this month by 0.25% with the cash rate now sitting at 3%, the lowest they have been since 1960. Unfortunately the big four banks haven’t passed on the full rate cut with the National Australia Bank not passing on any cut and the other three major banks passing on a cut of just 0.10% rather than the full 0.25%. Locally some of the building societys and credit unions are passing on just a little bit more at a discount of 0.15%

Market expectations as at market close on the 7th April 2009 show an expectation that the cash rate will bottom at 2.37 percent in October this year. Just how much of the further anticipated 0.6% cut gets passed on is anyone’s guess however, if this week’s action -or lack thereof- by the banks is any indication, it appears unlikely the full benefit would be passed on. This is on top of banks now charging loyalty fees for using third party banks ATM’s.

It also seems apparent that gone are the times where we see big cuts by the RBA, it appears they will now be taking a more measured approach to any further rate cuts. It isn’t all bad news though, interest rates are still lower than they have been in more than 45 years and with petrol prices down from last year’s peak, the average home owner is enjoying having slightly more disposable income than they did during mid 2008.

Whilst there has been uproar about the banks not passing on rate cuts, anyone with a mortgage must remember that nothing is certain and you always need to account for potential changes to interest rates. When working out whether or not to purchase one must always include sensitivity for increases in interest rates and should have a trigger point at which time they lock in their rates. Remember, good budgeting at the time of property purchase can help overcome most fluctuations in interest rates.

Consumer sentiment figures released this week by Westpac-Melbourne Institute show that during April, sentiment increased by 8.3% to 92.7 points. Although the index remains below 100 points suggesting pessimists still outweigh optimists it is a further positive sign that the market is showing an improvement in health.

With news of share price increases, property value increases and an improving Australian dollar over recent weeks it is unsurprising to see a lift in confidence. Looming increases in unemployment are likely to see pessimism in the market outweigh optimism however, it is encouraging to see sentiment improving from its recent low.

To see some interesting articles about our local area go to www.nobullrealestate.com.au/articles.php

RP Data Sourced

Lowest rates in 49 years

The Reserve Bank Board (RBA) has just announced an interest rate cut of 0.25% bringing the official rate down to 3.00%. this is the lowest rate Australia has seen for 49 years.

Some of the banks have already expressed that they will find it hard to pass on the cut as they are still having difficulty borrowing.

The RBA did not cut in March, saying it wanted to wait and see the impact of earlier rate cuts and federal government fiscal stimulus initiatives in the economy.

Growth is at the lowest it has been for a long time and it was almost certain that rates would be cut.

Borrowing is still hard to do, as many banks aren’t even doing pre approvals, but concentrating on formalising existing pre approvals. The days of 100% borrow are over, as the banks now are only lending up to 90% value.

Rents are up, prices for sales are steading….time to buy.

Go to http://www.nobullrealestate.com.au/ to see some well priced properties for sale

Lowest rates in 49 years

The Reserve Bank Board (RBA) has just announced an interest rate cut of 0.25% bringing the official rate down to 3.00%. this is the lowest rate Australia has seen for 49 years.

Some of the banks have already expressed that they will find it hard to pass on the cut as they are still having difficulty borrowing.

The RBA did not cut in March, saying it wanted to wait and see the impact of earlier rate cuts and federal government fiscal stimulus initiatives in the economy.

Growth is at the lowest it has been for a long time and it was almost certain that rates would be cut.

Borrowing is still hard to do, as many banks aren’t even doing pre approvals, but concentrating on formalising existing pre approvals. The days of 100% borrow are over, as the banks now are only lending up to 90% value.

Rents are up, prices for sales are steading….time to buy.

Go to http://www.nobullrealestate.com.au/ to see some well priced properties for sale

Recent sale prices in West Wallsend

Below is a list of recent sales for West Wallsend. These figures are available through Lands Titles Office, but should not be relied upon without clarification from another source.

37 BROWN ST
WEST WALLSEND
$210,000
463 m²

72 BROWN ST
WEST WALLSEND
746 m²
$250,000

81 BROWN STREET
WEST WALLSEND
970 m²
$235,000

35 CARRINGTON ST
WEST WALLSEND
415 m²
$280,000

7 COUNCIL ST
WEST WALLSEND
525 m²
$224,950

31 LAIDLEY ST
WEST WALLSEND
424 m²
$263,000

32 LAIDLEY ST
WEST WALLSEND
1,144 m²
$387,000

27 O’DONNELLTOWN ROAD
WEST WALLSEND
4.1 ha
$442,000

16 TERALBA RD
WEST WALLSEND
594 m²
$320,000

14 WALLACE ST
WEST WALLSEND
1,012 m²
$250,000

16 WALLACE STWEST WALLSEND
506 m²
$225,000

44A WALLSEND RD
WEST WALLSEND
506 m²
$230,000

To see properties for sale go to http://www.nobullrealestate.com.au/

Price growth showing in the positive again.

After property value falls of 2.9% nationwide during 2008, 2009 has bought some good news with a number of capital city markets now showing positive growth

In terms of property value growth performance, 2008 was a poor year with most regions of Australia seeing falls in property values. In the context of the overall economy both nationally and globally the Australian property market got off relatively lightly with value falls of just 2.9%. Markets in the US and Europe saw property values plummet by up to 20% whilst the Australian share market was down more than 40% from its peak.

On a national basis sales volumes have plummeted. Keeping in mind that December and January are usually slow months, sales volumes during January 2009 were 64% down on the 10 year average and 53% lower than volumes at the same time during the previous year. This data highlights that low consumer confidence and economic uncertainty has resulted in fewer property transactions.

With the new year comes rejuvenated hope with regards to the performance of investment classes. The latest data shows that within some capital cities throughout Australia, property values have actually increased during the last 3 months. On a national basis property values have increased by 0.1% indicating a flat market. It’s certainly too early to call a wholesale recovery of the market but these are encouraging first steps. Importantly, the possibility of significant gains through 2009 are likely to be tempered by low consumer confidence and rising unemployment. However, the two largest capital city markets, Sydney and Melbourne, have shown slight positive growth and this is an encouraging sign given these two cities tend to lead the national markets direction.

On a quarterly basis, Brisbane has seen the greatest falls at 2.2% over the quarter whilst the greatest increase in values was witnessed in Darwin at 6.2%. Darwin continues to record strong value growth following on from its very strong performance during 2008. Adelaide on the other hand, was the only other capital city market apart from Darwin to record positive growth through 2008 however, values in Adelaide have now fallen 1.5% during the quarter. Property values in Perth appear to have slowed their rate of descent after falling by 7.3% during 2008, the last 3 months has seen falls of just 1.0%.

When looking at values throughout the nation, houses in Sydney remain the nation’s most expensive sitting at $559,363 and the cheapest houses are found in Hobart where the median price is $295,000. Perhaps the most interesting movement in house values during recent times has been the rapid increase in Darwin house values. At the start of 2008, Melbourne house values were 7.5% more expensive than Darwin’s and Brisbane’s median house was 8.6% more expensive than Darwin’s. As at the end of Feb-09, Darwin’s median house value is 2.7% greater than Melbourne’s and 6.1% greater than Brisbane’s. Although this may seem expensive, Darwin continues to provide the country’s best gross rental yields so whilst yields are so strong, it is logical that price growth is likely to remain robust.

Across the unit market, the most expensive units are found in Perth ($445,367) and the most affordable units are located in Hobart ($243,000). Units in Perth have been the nation’s most expensive for some time now, overtaking Sydney in May 2006. The result is unsurprising given the quantity of unit development located on or close to the waterfront on the Swan River and coastal areas. Generally, these units have been constructed with a strong focus towards the owner occupier market and prices reflect such an offering.

Even though values have started to show some growth in capital city areas we don’t anticipate that growth in values will be dramatic through 2009, overall we believe it will be a fairly flat year in terms of growth. However property investment in Australia has demonstrated it resilience during 2008. When global share markets and global property markets were tumbling dramatically, Australian property values fell by less than 3%.

It’s important to remember that property is generally held for at least 5 years and that any decline in value is only relevant if the owner sells or is looking to refinance. A good example is, if you bought the median house in Melbourne in February 2003 (towards the end of the last boom) you would have paid $328,567. As at February 2009, Melbourne’s median house sits at $452,072 which is a value increase of $123,505 over six years or annual average growth of 5.5%. If you compare this to the S&P/ASX 200 index, the share price index sat at 2,801 during February 2003, at the end of February 2009, the index sat at 3,345, representing an annual average change in the S&P/ASX 200 index value of just 3.0%. Sure share prices were at record highs but the volatility of the market has seen share values fall dramatically and rapidly. What this demonstrates is that property as a long-term asset class has outperformed the share market and has seen far less price volatility.
www.nobullrealestate.com.au

RP data Sourced