US and Australian market trends

Two different banking systems has shown how Australia’s housing market has been able to weather the financial storm

The latest figures tracking the performance of the US housing market came out this week, with the First American Core Logic House Price Index (HPI) release revealing US housing prices fell 11.5 percent as of March ‘09 compared to a year ago, a slight improvement from an 11.7 percent annual decline as of February.

Two trends are becoming evident in the US market: price declines are slowing in the states that have had the highest declines over the past three years; however, declines are accelerating in states that have been experiencing only moderate decreases during that same period. Thirty-three states (out of fifty) have exhibited acceleration in the rate of price declines in the last three months.

Since U.S. home prices peaked in July 2006, national home prices have declined 22.3 percent on a cumulative basis and are currently down to the lowest price level in more than five years. Australian market values, in comparison, have been exceptionally resilient.

The April figures for the RP Data-Rismark House Value Index will be released this week. Based on last month’s figures (to March ’09) Australian property values increased by 1.6 percent over the first three months of the year. Overall, Australian dwelling values are just 2.5 percent or $11,800 lower than the February 2008 peak.

Clearance rates in Australia’s auction markets have improved substantially since the start of 2009. In Melbourne, Australia’s largest auction market, clearance rates were averaging 60% during 2008. Over the past month clearance rates have been around the 80% mark. In Sydney, auction clearance rates have moved from a ‘08 average of 40%to consistently achieve 60% or greater since the first week of February.

The total number of weekly listings has remained below the 12 month average suggesting new stock additions are very controlled and total stock on market has remained consistent suggesting a healthy rate of absorption.

Locally stock levels are very low with many agents reporting that they are having difficulty replacing stock. Currently first home buyers are still snapping up anything that is priced below $300,000. As time gets closer to October 31, it will be interesting to see how the activity changes as the grant is wound back.

http://www.nobullrealestate.com.au/

RP Data Property Pulse

US and Australian market trends

Two different banking systems has shown how Australia’s housing market has been able to weather the financial storm

 

The latest figures tracking the performance of the US housing market came out this week, with the First American Core Logic House Price Index (HPI) release revealing US housing prices fell 11.5 percent as of March ‘09 compared to a year ago, a slight improvement from an 11.7 percent annual decline as of February.

Two trends are becoming evident in the US market: price declines are slowing in the states that have had the highest declines over the past three years; however, declines are accelerating in states that have been experiencing only moderate decreases during that same period. Thirty-three states (out of fifty) have exhibited acceleration in the rate of price declines in the last three months.

Since U.S. home prices peaked in July 2006, national home prices have declined 22.3 percent on a cumulative basis and are currently down to the lowest price level in more than five years. Australian market values, in comparison, have been exceptionally resilient.

The April figures for the RP Data-Rismark House Value Index will be released this week. Based on last month’s figures (to March ’09) Australian property values increased by 1.6 percent over the first three months of the year. Overall, Australian dwelling values are just 2.5 percent or $11,800 lower than the February 2008 peak.

Clearance rates in Australia’s auction markets have improved substantially since the start of 2009. In Melbourne, Australia’s largest auction market, clearance rates were averaging 60% during 2008. Over the past month clearance rates have been around the 80% mark. In Sydney, auction clearance rates have moved from a ‘08 average of 40%to consistently achieve 60% or greater since the first week of February.

The total number of weekly listings has remained below the 12 month average suggesting new stock additions are very controlled and total stock on market has remained consistent suggesting a healthy rate of absorption.

Locally stock levels are very low with many agents reporting that they are having difficulty replacing stock. Currently first home buyers are still snapping up anything that is priced below $300,000. As time gets closer to October 31, it will be interesting to see how the activity changes as the grant is wound back.

http://www.nobullrealestate.com.au/

RP Data Property Pulse

Affordability improving

As unemployment still weighs heavy on many peoples mind, there has been little concern with first home buyers, who are still snapping up property.

The HIA-CBA First Home Buyer Affordability Report released this week found that first home buyer affordability improved by 14.6% during the first quarter of 2009 and now sits at a seven year high. These results are unsurprising given the impact of the First Home Buyers Grant Boost coupled with the lowest interest rates in more than 45 years.

Although some speculate that the boost to the First Home Buyers Grant will create Australia’s own sub-prime market, these concerns seem quite unwarranted with most banks and lending institutions having tightened their lending criteria and requiring a history of savings as well as a deposit of at least 5% and in most cases 10% in order to be eligible for a home loan.

Whilst the impact of the First Home Buyers Grant Boost has been positive it is likely that the low interest rate environment, property value falls through 2008 and escalating rental rates is significantly contributing to first home buyers purchase decisions.Westpac and the Melbourne Institute released their Consumer Confidence Index this week and the index recorded its second largest fall in ten years.

The index now sits at 88.8 points well below 100 points which indicates that consumers are more pessimistic than optimistic, as they have been for the last 16 months. The results suggest that last week’s Federal Budget did little to convince consumers that they should be optimistic. The overall tone of the Budget with its forecast of a record deficit, rising unemployment and an economy which continues to slow would have done little to boost the confidence of consumers. The index is showing a high degree of volatility on a month to month basis during the last 12 months.

This is not unexpected given the uncertainty around global financial markets and conflicting reports on an almost daily basis about the prospects of Australian markets. Evidence has shown a sustainable increase in sales volumes within the Australian housing market will be led by an improvement in consumer confidence. Locally there is less and less stock available under $300,000. First home buyers are looking at anything on the market and are buying properties that are in very average condition. Agents are listing properties for far more than they are worth, just so they can get the listing, and beat the other agent to the job. this is called “buying the listing”. If you would like to know more on this issue, just send through a comment and I will get back to you. www.nobullrealestate.com.au

RP Data Property Pulse

Affordability improving

As unemployment still weighs heavy on many peoples mind, there has been little concern with first home buyers, who are still snapping up property.

The HIA-CBA First Home Buyer Affordability Report released this week found that first home buyer affordability improved by 14.6% during the first quarter of 2009 and now sits at a seven year high. These results are unsurprising given the impact of the First Home Buyers Grant Boost coupled with the lowest interest rates in more than 45 years.

Although some speculate that the boost to the First Home Buyers Grant will create Australia’s own sub-prime market, these concerns seem quite unwarranted with most banks and lending institutions having tightened their lending criteria and requiring a history of savings as well as a deposit of at least 5% and in most cases 10% in order to be eligible for a home loan.

Whilst the impact of the First Home Buyers Grant Boost has been positive it is likely that the low interest rate environment, property value falls through 2008 and escalating rental rates is significantly contributing to first home buyers purchase decisions.Westpac and the Melbourne Institute released their Consumer Confidence Index this week and the index recorded its second largest fall in ten years.

The index now sits at 88.8 points well below 100 points which indicates that consumers are more pessimistic than optimistic, as they have been for the last 16 months. The results suggest that last week’s Federal Budget did little to convince consumers that they should be optimistic. The overall tone of the Budget with its forecast of a record deficit, rising unemployment and an economy which continues to slow would have done little to boost the confidence of consumers. The index is showing a high degree of volatility on a month to month basis during the last 12 months.

This is not unexpected given the uncertainty around global financial markets and conflicting reports on an almost daily basis about the prospects of Australian markets. Evidence has shown a sustainable increase in sales volumes within the Australian housing market will be led by an improvement in consumer confidence.

Locally there is less and less stock available under $300,000. First home buyers are looking at anything on the market and are buying properties that are in very average condition. Agents are listing properties for far more than they are worth, just so they can get the listing, and beat the other agent to the job. this is called “buying the listing”. If you would like to know more on this issue, just send through a comment and I will get back to you.

www.nobullrealestate.com.au

RP Data Property Pulse

What a Federal Budget!

With many people expecting the first home buyers grant to be wound back on existing dwellings, it comes as a surprise to many that the grant has been extended across the board

The big news this week was the announcement of the Federal Budget. In its most basic form, the budget is likely to provide some clarity to potential buyers about how the government will treat them in the new financial year.

Leading up to the budget there was a great deal of speculation about the future of the boost to the First Home Buyers Grant; what (if any) incentives or concessions might be introduced for non-first home buyers and investors and how the government expects the national economy to travel over the next year. The budget has provided more certainty to the market which is likely to have a positive flow on affect.

Many were expecting that the Government would maintain the $21,000 boost for new dwellings and wind back the grant for existing dwellings to $7,000. The logic being that it makes sense to focus the greatest stimulus on areas of the housing market that will provide the greatest benefit to the economy.

A focussed stimulus on new dwellings would have a substantial multiplier effect, creating jobs and stimulating demand for buildings products and services as well as home appliances, furnishing and providing benefits to a wide range of other peripheral industries. In addition, more new dwelling sales will assist in alleviating the chronic housing undersupply Australia is facing.

Another announcement in the budget that is likely to impact on the property market is the $22 billion allocated to infrastructure spending. The key benefactors of the infrastructure fund will be regions located along the Eastern Seaboard, particularly South East Queensland. Perhaps the greatest and most immediate requirement, however, is to establish much needed linkages between the outer fringes of the nations metro areas where the large proportion of Australia’s population growth is concentrated.

Many of these regions are in desperate need of transport infrastructure improvements and public transport options. This is where the most affordable land is located, yet few people desire to live where travel routes are congested or are substandard.

The extention of the F3 freeway to Branxton is very welcomed by many in the Hunter region, as it opens up a far greater gretaer area for residential living. Many areas of the Greater Newcastle area are becoming favourable for people to live in and this gives greater access for many families

http://www.nobullrealestate.com.au/

www.twitter.com/nobullbroker

RP Data Sourced

What a Federal budget!

With many people expecting the first home buyers grant to be wound back on existing dwellings, it comes as a surprise to many that the grant has been extended across the board

The big news this week was the announcement of the Federal Budget. In its most basic form, the budget is likely to provide some clarity to potential buyers about how the government will treat them in the new financial year.

Leading up to the budget there was a great deal of speculation about the future of the boost to the First Home Buyers Grant; what (if any) incentives or concessions might be introduced for non-first home buyers and investors and how the government expects the national economy to travel over the next year. The budget has provided more certainty to the market which is likely to have a positive flow on affect.

Many were expecting that the Government would maintain the $21,000 boost for new dwellings and wind back the grant for existing dwellings to $7,000. The logic being that it makes sense to focus the greatest stimulus on areas of the housing market that will provide the greatest benefit to the economy.

A focussed stimulus on new dwellings would have a substantial multiplier effect, creating jobs and stimulating demand for buildings products and services as well as home appliances, furnishing and providing benefits to a wide range of other peripheral industries. In addition, more new dwelling sales will assist in alleviating the chronic housing undersupply Australia is facing.

Another announcement in the budget that is likely to impact on the property market is the $22 billion allocated to infrastructure spending. The key benefactors of the infrastructure fund will be regions located along the Eastern Seaboard, particularly South East Queensland. Perhaps the greatest and most immediate requirement, however, is to establish much needed linkages between the outer fringes of the nations metro areas where the large proportion of Australia’s population growth is concentrated.

Many of these regions are in desperate need of transport infrastructure improvements and public transport options. This is where the most affordable land is located, yet few people desire to live where travel routes are congested or are substandard.

The extention of the F3 freeway to Branxton is very welcomed by many in the Hunter region, as it opens up a far greater gretaer area for residential living. Many areas of the Greater Newcastle area are becoming favourable for people to live in and this gives greater access for many families

http://www.nobullrealestate.com.au/

www.twitter.com/nobullbroker

RP Data Sourced

Fixed or variable…that is the question

As we approach June 30- the cut off point for first home buyers boost, figures are starting to show a return of growth in all sectors. Is this the beginning of rate rises?

Following the Reserve Bank Board meeting this Tuesday, the official cash rate has remained unchanged at 3 percent. The question now is does this signal the end of rate cuts?

Rhetoric emanating from the United States this week suggests that economic conditions may be improving with the head of the US Central Bank Ben Bernanke suggesting the US economy may begin to strengthen by late 2009. A stabilisation of world economies (should they occur) would certainly seem to suggest that Australia is nearing the bottom of the rate cutting cycle.

Current markets for cash rate futures suggest that the cash rate will bottom in November at 2.48 percent, a further cut of approximately 50 basis points. The market is also signaling that the cash rate will rise quite rapidly thereafter with interest rates anticipated to be above their current level by June 2010 and reaching 3.55 percent by October 2010.

Retail trade data which was also released this week shows that on a seasonally adjusted basis retail trade increased by 2.2 percent in March following falls of 2.0 percent in February and an increase of 0.5 percent in January. Department stores (13.2 percent) and clothing and soft goods retailers (6.4 percent) were the greatest benefactors of the increase in retail trade.

Obviously the numbers are impressive however, putting them in perspective, the March numbers are likely to have been boosted thanks to the Government Stimulus payments which saw people’s propensity and ability to spend increase. Building approval data released this week showed the first monthly increase in approvals since September 2007 with the trend estimate for dwelling approvals increasing by 0.4 percent in March 2009.

Despite this slight increase, building approvals are still well below historic levels and both approvals and commencements need to increase dramatically as the under supply of Australian dwellings continues to increase.

www.nobullrealestate.com.au

RP Data Sourced

Fixed or variable…that is the question

As we approach June 30- the cut off point for first home buyers boost, figures are starting to show a return of growth in all sectors. Is this the beginning of rate rises?

Following the Reserve Bank Board meeting this Tuesday, the official cash rate has remained unchanged at 3 percent. The question now is does this signal the end of rate cuts? Rhetoric emanating from the United States this week suggests that economic conditions may be improving with the head of the US Central Bank Ben Bernanke suggesting the US economy may begin to strengthen by late 2009.

A stabilisation of world economies (should they occur) would certainly seem to suggest that Australia is nearing the bottom of the rate cutting cycle. Current markets for cash rate futures suggest that the cash rate will bottom in November at 2.48 percent, a further cut of approximately 50 basis points.

The market is also signaling that the cash rate will rise quite rapidly thereafter with interest rates anticipated to be above their current level by June 2010 and reaching 3.55 percent by October 2010.Retail trade data which was also released this week shows that on a seasonally adjusted basis retail trade increased by 2.2 percent in March following falls of 2.0 percent in February and an increase of 0.5 percent in January.

Department stores (13.2 percent) and clothing and soft goods retailers (6.4 percent) were the greatest benefactors of the increase in retail trade. Obviously the numbers are impressive however, putting them in perspective, the March numbers are likely to have been boosted thanks to the Government Stimulus payments which saw people’s propensity and ability to spend increase.

Building approval data released this week showed the first monthly increase in approvals since September 2007 with the trend estimate for dwelling approvals increasing by 0.4 percent in March 2009. Despite this slight increase, building approvals are still well below historic levels and both approvals and commencements need to increase dramatically as the under supply of Australian dwellings continues to increase.

www.nobullrealestate.com.au

RP Data Sourced