Tuesday, February 21, 2012
Friday, February 17, 2012
A POSITIVE SPIN ON THE PROPERTY MARKET
Before I launch into my market commentary for the month I would like to make a couple of small announcements. I have just launched my new website www.joshuawygoda.com. Please check it out and let me know what you think. On this page you will find links to my Blog, my Facebook page, my Twitter page and my YouTube channel. In addition to this monthly update I regularly post property related information to these other portals. Please feel free to subscribe to any or all of them.
Onto the market. . .
Much has happened since my last newsletter but probably the biggest news that is relevant to my world is what has happened with interest rates.... The Reserve Bank left rates on hold and the banks have independently of the RBA increased their standard variable home loan rates. There has been a lot of negative press recently and everyone is asking the question: What is going to happen to the property market?
Let's look at the positive signs which are applicable to the Sydney market:
1. Transactions are up on last year. As you all know the year started off extremely well with more enquiry and more properties being sold than this time last year. In fact transactions are up by some 25% compared with the same period last year.
2. More cashed up qualified buyers. There is little doubt that a rate cut would have helped but I do not think it will stop people from buying. Furthermore I haven't really noticed any drop in buyer numbers at Open House Inspections or the level of enquiry over the last week. There still seems to be more genuine buyers around than last year.
3. RBA dropped Interest Rates in November and December last year. Everyone seems to have forgotten about this but I am still seeing the impact of these rate cuts. The demand for home loans across Australia reached an eight-month high in December, new figures have revealed.
According to the Australian Bureau of Statistics, the number of property loans taken out during the month stood at 48,453 – a month-on-month rise of 2.3 per cent.
4. Good deals on fixed rate loans. Some economists are still predicting further rate drops this year and although the banks increased their standard variable rates, 3 year fixed rates are still extremely attractive. In fact, at the same time as the ANZ increased their variable rate they actually dropped their 3 year fixed rate to 5.99%. I also noticed Citibank advertising 1, 2 and 3 year fixed rates at 5.99%.
5. “Sydney's housing pushes ahead...” This was the title of RP Data's latest press release on 31 January (Click HERE to see the full release) . In short Sydney was the best performing capital city in December 2011 and also the best performer for the last quarter of 2011.
6. Rents are up and vacancy rates are low. Rents in Sydney have increased over the past 12 months by an average of 7.4% with suburbs such as Cremorne increasing by a reported 11.7%. This is great news for investors. I also read a report that because of rising rents and a shortage of rental accommodation, renters are deciding to buy, increasing the number of buyers in the market place.
7. Unemployment rate has fallen. Australia's unemployment rate has fallen to 5.1% for the second month running on the back of very strong total jobs growth of 46,300 persons and, importantly, an unchanged participation rate. This is clearly a positive for buyer confidence
8. Positive signs for the US economy. Unemployment levels have fallen to their lowest level since March 2008 and data on January housing construction confirming a pickup in that sector with an acceleration in the number of homes under construction.
Monday, February 13, 2012
Friday, February 10, 2012
Monday, February 6, 2012
RP Data Press Release 31 January 2012. Sydney’s housing pushes ahead...
...while other markets remain soft
RP Data – Rismark Home Value Index Release
The preliminary capital city dwelling value index result for December was -0.2% (s.a.) following an upwardly revised +0.4% rise in dwelling values in November (was +0.1%). Revised regional house values for November increased from +0.3% to +0.5%. Sydney housing has been the nation’s best performer with dwelling values up 0.4% in December and by 0.7% over the quarter (s.a.).
In the generally seasonally weak month of December, the preliminary RP Data-Rismark Home Value Index result for capital city dwelling values was -0.2 per cent (s.a.). Low sales volumes in December mean that this number will likely see a more significant revision than normal.
The November result from the RP Data-Rismark index for dwellings in capital cities has revised up from +0.1 per cent (s.a.) to +0.4 per cent (s.a.) based on additional sales information. This marks the largest month-on-month improvement in Australian home values since May 2010.
The RP Data-Rismark ‘rest-of-state’ index, which covers Australia’s regional markets, has also revised up in November from +0.3 per cent to +0.5 per cent (s.a.). This is the most significant increase in regional house values since November 2010.
Over the December quarter, Australia’s capital city home values declined by -0.5 per cent (s.a.).
RP Data’s director of research Tim Lawless, said, “The December quarter was the year’s smallest quarterly decline. According to our index, capital city home values fell by -1.5 per cent (s.a.) in the March quarter, and by a further -0.8 per cent (s.a.) in each of the June and September quarters. This rate of decline had decelerated to -0.5% by the final quarter of 2011.”
In 2011, Australian capital city dwelling values experienced a capital loss of about three and a half per cent. Regional house values fared a little better, correcting by around three per cent. This compared to the 14-15 per cent decline in Australian shares. Adding in rents, the gross total return to Australian property investors was slightly less than one per cent over 2011.
Rismark’s managing director Ben Skilbeck said, “The month of December is characterised by a significant lull in activity and the preliminary index results have likely been influenced by some more volatile Melbourne and Perth estimates. We expect to get better clarity on the monthly movements as more information is reported.”
“Sydney currently has the largest volume of reported sales in December. In seasonally-adjusted terms, Sydney dwelling values rose by 0.4 per cent in the month of December. In the December quarter, Sydney dwelling values are up a total of 0.7 per cent (s.a.)” Mr Skilbeck said.
RP Data’s Tim Lawless observed that rental markets continued to strengthen in December.
“Weekly rents across the capital cities were up 1.0 per cent over the December quarter and are now 6.3 per cent higher than at the same time last year.”
“These higher rental rates combined with the slide in property values have improved investors’ yields. The average capital city dwelling is now offering a gross rental return of 4.6 per cent after a consistent trend upwards since mid-2010 when the typical capital city dwelling was yielding just 4.1 per cent. Darwin and Canberra are the highest yielding locations for property investors while Hobart, Brisbane, and Sydney provide gross yields that are better than average,” Mr Lawless said.
On the outlook for the year ahead, Rismark’s Ben Skilbeck commented, “We expect that the RBA’s interest rate cuts in the final two months of 2011 will lend further momentum to housing activity as transaction volumes pick up over February and March after the seasonally slow months of December and January. If financial market pricing for substantial additional RBA rate cuts proves accurate, we could see a stronger-than-expected bounce-back in housing conditions.”
“Housing affordability in Australia has experienced a striking improvement in recent times. While disposable household incomes on a per household basis rose by five per cent over the year to September 2011, Australian dwelling values have declined by 3.4 per cent since September 2010. As a result of the RBA’s rate cuts borrowers can now get fixed- and variable-rate home loans as low as 5.9 per cent and 6.14 per cent. Rismark’s research shows that disposable incomes per household have risen about 15 per cent further than Australian dwelling values since the end of 2003. This helps account for the decline in Rismark’s national dwelling price-to-income ratio, which is as low as its been since 2003” Mr Skilbeck said.
RP Data’s Tim Lawless added, “While global uncertainty and a stagnant local labour market could weigh on the consumer’s mindset, we are nevertheless observing improvements in monthly housing finance commitments. RP Data’s leading indicators on average selling times and vendor discounts are also starting to look healthier. There is no doubt that additional interest rate relief in 2012 would afford a very welcome cushion to the housing market.”
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