Population-growth-has-never-been-this-high

As the world economy recovers,  

Australia is seeing a population boom that  

continues to put pressure on housing

 

 

Population expansion is a fundamental key to the property market as it brings on more demand for housing. According to the ABS, Australia’s population expansion has hit a new record with an increase of 439,000 new residents over the year to March 2009. To provide a little perspective, in real numbers Australia’s population growth has never been this high. The higher the population growth, the more homes need to be built to accomodate the increase. In percentage terms, the population growth has not been at this level since the baby boom. Unfortunately, there is a major difference between housing demand and housing supply; to put it in simple terms there is simply far too few new homes and units being constructed to provide accomodation for our growing population. Rental markets around the country have shown large increases in rental rates over the last three years. However, over the last three months rental rates have peaked and in some areas have fallen. Rental rates will most likely start to increase again due to a shortage of rental housing and a pull back of first home buyer demand coupled with record levels of population growth. With vacancy rates remaining at historic lows across the capital cities, any relieif for renters is likely to be short-lived. Demand for rental accomodation has temporarily eased as many renters have taken advantage of the improvement in housing affordability brought about by both low interest rates and the boost to the First Home Buyers Grant. Locally there are still very few homes for rent and the rent being asked is still increasing in the regional areas. Sales are still going strong with anything hitting the market going under offer very quickly. many agents are experiencing a great shortage of stock to sell. Some agents have even closed their doors due to a lack of property to sell. If an agency depends on sales alone, they could end up in trouble. 

 

 

 

  www.nobullrealestate.com.au

 

 

 

25/09/2009

Confidence hits new highs

As the first Home Buyers Grant

is heading towards a wind back,

many buyers in the market are

second and third home buyers

as opposed to first home buyers.

Non-first home buyer loan commitments increased over the month of August this year as upgraders stepped up their activity. Consumer confidence and business confidence hit new highs this week with both of these key indicators increasing over the last month.

In data released this week, housing finance commitments fell over July as first home buyer showed the first evidence of pulling back on purchases. Interestingly, despite total housing finance volumes declining, the value of both owner occupier finance and investor finance increased for the sixth consecutive month; reinforcing the idea that buyer activity is rippling through into the middle and upper end of the price line.

The improvement is likely to have a positive effect on both the residential and commercial property markets as there is strong correlation between confidence and market activity. Rental rates across the country increased by 36% over the last three years up to March 2009. Since this time weekly rents have peaked, with every capital city apart from Darwin recording declines in weekly rental rates over the last three months.

The recent fall in rental rates can be attributed to a decrease in demand as more renters looked to buy, taking advantage of low interest rates and the boost to the First Home Buyer Grant. Such low vacancies as well as the low supply of dwellings across the nation will continue to place upwards pressure on rents over the longer term. With vacancy rates across the nation’s capital cities generally below 5%, it is highly likely the recent fall in weekly rents will be short lived.

Locally we are finding there are still many applications on vacant rentals, but are seeing the quality of those applications are poor. Many applicants are listed on tenant databases and are not showing affordability for the property they are applying for. It is becoming more difficult for landlords to find good tenants that can demonstrate that they can pay the rent and look after the property.

 

www.nobullrealestate.com.au

11/09/2009

Demand in property high

As stock levels are still very low, it comes as no surprise that leading economists are all saying the same thing, that new housing stock is desperately needed.

In a speech given recently, Mr Stevens, the Reserve Bank governer agreed with others that the fall in interest rates together with the extra grants for first-home buyers has resulted in a large pick-up in demand for property.

A very real challenge in the following term is how to guarantee that the ready availability and low cost of housing finance is translated into more houses and units, not just higher prices,’ he said. The scheme has also been extended until the end of September, and then it will start to wind back ,halving from October until December.

Glenn Stevens said in a major speech in Sydney that property prices need to be kept under control and that means more supply is required. He added that the global outlook had improved and emphasised the role of business and consumer confidence in helping to lift the current economic conditions.

The low cost of finance available and a reduced supply of new housing in the market threatens to create a property bubble in Australia. In contrast to many other countries, house prices are tending, if anything, to rise, and the rate of arrears on the majority of mortgages remain very low by historical and international standards,’ said Stevens.

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,’ Stevens said. The real estate market in Australia has held up well during the current global economic downturn, which economists have attributed to the government’s increased first home owners grant, amoung other things.

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,’ he added. He also explained that the value of loan approvals has risen by about a third since the low point in the middle of 2008, but it is the upcoming months that will be crucial for the Australian market. Locally there is still a strong number of buyers who are having difficulty with finance.

Most can get the finance from the bank, but are then having difficulty with mortgage insurance. Many examples of small defaults of $50 and $70 from overlooked phone accounts from 3 and 4 years ago is enough to stop the best applicant for finance. Buyers really need to be in a strong financial position with no bad history at all.

www.nobullrealestate.com.au

04/09/2009