Positive results for property values

As the world is starting to recover from the global financial crisis, Australian property stands strong

Business confidence data released this week by the National Australia Bank showed a significant improvement in confidence levels within the market place. The index still recorded a negative result (-4.0) for the June quarter however, it was a substantial improvement on the -24.0 result for the March quarter. This result follows many recent positive results including significant increases in consumer confidence figures and positive results for property values.

Employment remains the looming threat with the Government’s official forecast at 8.5% however, it appears that this forecast may be a little too pessimistic with the rate of increase in unemployment not as rapid as most had anticipated and many economists are now anticipating a reduced peak unemployment figure. The biggest talking point this week was arguably the Reserve Bank Governor’s speech on the challenges of economic policy. An interesting part of his speech was the following: “A very real challenge in the near term is the following: how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices. Given the circumstances – the economy moving to a position of less than full employment, with labour shortages lessening and reduced pressure on prices for raw material inputs – this ought to be the time when we can add to the dwelling stock without a major run-up in prices. If we fail to do that – if all we end up with is higher prices and not many more dwellings – then it will be very disappointing, indeed quite disturbing. Not only would it confirm that there are serious supply-side impediments to producing one of the things that previous generations of Australians have taken for granted, namely affordable shelter, it would also pose elevated risks of problems of over leverage and asset price deflation down the track.”

 These comments have had the vast majority of media outlets jumping on the possibility of a housing bubble, whilst Governor Steven’s does signal that sharp price rises coupled with a continued undersupply of housing could lead to price deflation in the future, the supply side of the equation is probably more imperative. Rpdata.com have long stated the biggest constraint to the provision of new dwellings is the availability and cost of new land and the charges imposed on new development by Local and State Government’s. The lack of suitable amenity in the outer areas of our capital cities where the majority of new housing development takes place also makes the purchasing proposition tough.

Without quality roads, transport amenity, shopping facilities, schools and health care in these areas the appeal to purchase in these locations will likely continue to remain subdued until such time as these areas are either: significantly cheaper housing options than those found throughout other regions of the city or, the provision of localised amenity coupled with the opportunity to own a brand new home at competitive prices provides the incentive to purchase.

As supply and prices in capital cities like Sydney sky rocket, areas like Newcastle and especially West Wallsend will become more favorable. With the proximity to the freeway and only an hour drive from Sydney, more and more people are going to see these areas as desirable.

Locally there is still a high demand for rental properties with an average of 10 enquiries a day for vacant accomodation in the local area. We have  a vacancy rate of zero and has been that way for some time. Sales are at a stand still as all stock has been sold. Other agents are relisting sold properties as the valuation is not coming in on finance, plus a lot are finding it difficult to get mortgage insurance.

 

www.nobullrealestate.com.au

RPData Property Pulse sourced

31/07/09

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No Bull Real Estate – Finalist REINSW Awards For Excellence in 3 Categories

We are very proud to announce that we are finalists in three categories for the Real Estate Institute of New South Wales Awards For Excellence.

1. Communications
For the most outstanding real estate website of a member firm

2. Residential Agency – Small
For residential agencies employing less than 10 people in a business conducted at a single location

3. Residential Property Management
For residential property managers working in single or multi-office firms

The REINSW Awards for Excellence aim to encourage, recognise and promote excellence and best practice in the real estate profession, and give official recognition to the industry’s top performers.

In 2009, entrants in 24 categories will be judged on the knowledge, skills and innovation.

No Bull Real Estate is very proud to have been selected as a finalist in all three categories, and would like to thank all our vendors, buyers, landlords, tenants, suppliers and clients for their support in helping us acheive these outstanding results.

 

NO BULL REAL ESTATE….our name says it all!!!!!!

 

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28/07/09

Growing confidence in the Australian economy

As other countries struggle to get a grip

on the economy, Australia is way ahead

when it comes to consumer confidence

 It was certainly an exciting week for property related data releases this week with the RBA Board having their monthly meeting, Westpac and the Melbourne Institute releasing their consumer confidence figures and the ABS releasing its housing finance data as well as the latest labour force statistics.

As expected, following the RBA Board Meeting it was announced that the official cash rate would remain on hold this month at 3%. This was the third month in a row that the RBA has made no adjustment to rates and although the Reserve Bank Governor maintained there is still scope to reduce rates, the move to leave rates unchanged was supported by the positive data which was released following the RBA’s meeting.

The Westpac-Melbourne Institute’s Consumer Sentiment figures signaled growing confidence in the Australian economy, with their index recorded at 109.4 points during July. This was the second month in a row the index was above 100 points indicating that economic optimism was outweighing pessimism.

The results were extremely encouraging given that just two months ago the index was recorded at 88.8 points indicating a strong pessimism towards the economy. The last two months has seen the index jump by 12.7% in June and 9.3% in July. Housing finance data was also released this week and it showed that finance commitments for both owner occupied and investment housing has again increased during May 2009.

During 2009, seasonally adjusted figures show that owner occupier finance commitments are up 23.5% and investment finance commitments have risen 10.9% and now match levels last witnessed during July 2008. 29.5% of all owner occupier finance commitments were taken on by first home buyers; up from just 17% a year ago.

The number of first home buyer grants issued in May and June were at record levels, suggesting that first home buyer demand is not yet winding back. Balancing the positive news, unemployment figures from the ABS show that the jobless rate has increased again and now sit at 5.8%. The Federal Government is forecasting the unemployment will rise to 8.5% by mid next year.

With the recent economic data painting a brighter picture than most economists had expected it may turn out that the rate of unemployment does not rise this high.

Locally the rental market is still suffering with the vacancy rates in our local area being zero. Some tenants are now offering to pay above market rent and are also offering to pay up to 12 months in advance.

Sales are slow, not because of lack of buyers, but because of lack of property for sale. We have virtually sold everything we have in stock. Agents in this area (not the locals) are now over quoting sale price to vendors to get them to list with that agent.

It is an old tactic called “buying the listing”. many people employing these agents could end up being disappointed with their final selling price.

www.nobullrealestate.com.au

RPData Property Pulse

10/07/09

Property still the best option

With stock prices falling dramatically,

housing prices have sustained their

value through all the turmoil.

 

The 2008-09 financial year is finally behind us and will surely go down as one of the worst (in fiscal terms) for a very long time. The S&P/ASX 200 finished 24% lower over the year and the unemployment rate has increased to 5.7% from 4.3% over the 12 months to May 2009. We have also seen consumer and business confidence remain at low levels through most of the year and the number of jobs advertised also slump.

The bright spot in the economy has certainly been the property market, over the 12 months to May 2009 Australian property values have increased by 1.6%. Keeping this in perspective, at the time of their largest falls property values declined by -3.9% from their peak meanwhile, the S&P/ASX 200 was down as much as 50.5% from its peak and as at the end of June is still 41.4% below its peak level. Australian residential property has well and truly proven to be the most resilient and least volatile asset class during the Global Financial Crisis.

Data released this week also showed that dwelling approvals had fallen 12.5% during May 2009 however, private dwelling approvals fell by just 2%. The low number of dwelling approvals continues at a time of the strongest population growth in 40 years fuelling demand for additional new housing.

Not only did dwelling approvals take a dive according to the most recent data, the HIA reported this week that sale of new homes also fell during May after increasing during the first four months of the year. During the month new home sales fell by 5.7% fuelled by a fall in detached house sales of 6.8% whilst new unit sales actually increased 6.1%.

Over the long-term the continual under supply of new housing is likely to create additional upwards pressure on property prices.

Locally the rental market is still suffering badly with a vacancy rate of only 1.5%. With the under supply of homes to accomodate the rising population, one wonders how long the government will continue with the stamp duty imposed on buyers, both for occupation by owner and investment.

 

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www.nobullrealestate.com.au

 

RP Data Property Pulse

01/07/2009