Australian home sales climb to thirteen month high

Posted on May 5, 2009 by peter 
Filed under Australia Real Estate News · Tagged: , , ,

house-salesNew home sales rose to their highest level in 13 months in March, as the first-home buyers grant buoyed demand.

Total new home sales rose by 4.2% last month to 8210, accelerating from the 3.9% growth pace in February, according to the Housing Industry Association. The increase marked the third month of gains.

”It is clear that in the first quarter of 2009 the project home building market was buoyed by the First Home Owners Boost for new dwellings together with very low variable mortgage rates,” said HIA Chief Economist Dr Harley Dale in a statement.

”The First-Home Owners Boost for new dwellings is clearly lifting residential building activity and securing jobs within the Australian economy,” he said, calling for an extension of the program past its June 30 cut-off.

Federal Government leaders, including Prime Minister Kevin Rudd, have hinted they intend to scale back incentives for first-home buyers, announced as part of the first round of stimulus spending aimed at reversing the economic slump. The current grant rises to as much as $21,000 if the purchase is for a newly built residence.

Among the states, detached home sales jumped 4.1% in March, led by New South Wales, where they increased 15.2%.

”While the rate of growth in sales reflects to an extent the low base from which a recovery is emerging,” the HIA report said, ”there is no doubt that the previously mentioned triple boost from low interest rates, stimulus to first-home buyers, and builder discounts have injected some life into a previously moribund new home building market, especially in Sydney.”

Sales of detached houses also jumped 14.6% in Victoria and 7.3% in Western Australia, the HIA said.

Low interest rates and the first-home owners’ boost are having a targetted effect, spurring house sales but leaving multi-unit sales ”at very weak levels,” the HIA said.

Sales of apartments rose 4.7% in March, following a flat February and four straight months of falls, HIA said.

”This reinforces the fact that while investor enquiries have increased in recent months, actual building activity in the residential investment space is still heading south, a concerning sign for low and lower middle income rental households.”

Australian interest rate remains unchanged

Posted on May 5, 2009 by peter 
Filed under Australia Mortgage and Finance News · Tagged: , , , ,

The Reserve Bank of Australia held it’s monthly meeting today and decided to freeze interest rates, leaving the official cash rate unchanged at 3.00%.

The RBA said confidence remained fragile but there were some signs economies around the world were stabilising.

RBA governor Glenn Stevens said Australia’s economy was poised to benefit from the significant cuts to interest rates made so far, combined with the Federal Government’s fiscal stimulus. “Market and mortgage rates are at very low levels by historical standards and business loan rates are below average, reducing debt-servicing burdens considerably,” he said.

“Much of the effect of these changes is yet to be observed. “The stance of monetary policy, together with the substantial fiscal initiatives, will provide significant support to domestic demand over the period ahead.”

Domain spokesman, Anthony Ishac commented, “The official cash rate remains unchanged at the current level in response to signs of a stabilising world economy. However, the RBA remains vigilant, maintaining enough scope on rates to manoeuvre in anticipation of forecast rising unemployment later in the year. Any future action will also need to factor the reluctance of the major banks to pass on rate cuts in full to mortgage holders”.

Most economists had not expected interest rates to come down again.

“In pondering the cash rate level … the RBA board will likely be persuaded by both international and local developments since the April decision to leave the cash rate unchanged,” said HSBC chief economist John Edwards yesterday.

“The downturn in China has been arrested. In a number of other major economies, including the US and Japan, the rate of deterioration is slowing.”

Earlier today, building approvals posted a stronger-than-expected 3.5 per cent jump for March above the market expectations of a 2.3 per cent rise.

Economists said the building sector could be recovering.

“It had been expected for some time that the tight rental market, low interest rates and soaring population growth would translate to stronger building activity, and it now appears to be taking hold albeit from a very depressed level,” said Commsec chief economist Craig James.

“It is important to remember that it does take awhile to for approvals to follow the improvement in economic conditions.”

US mortgage rates lowest in nearly 40 years

Posted on May 2, 2009 by peter 
Filed under US Mortgage and Finance News · Tagged: ,

mortgage-ratesLong-term mortgage rates this week reached the lowest level since at least 1970, falling for the third consecutive week.

Freddie Mac’s weekly rate report said the average 30-year, fixed-rate mortgage fell to 4.78 percent, matching a low set April 7. It is the lowest rate on such mortgages since Freddie Mac started keeping track in 1970.

Adjustable-rate mortgages also eased, but one-year, adjustable-rate mortgages are averaging rates nearly the same as 30-year fixed rates, at 4.77 percent.

Freddie Mac said borrowers who refinanced their mortgages in the first quarter reduced their combined mortgage payments by about $2.5 billion over the coming year.

UK housing recovery? maybe not

Posted on May 2, 2009 by peter 
Filed under UK Mortgage and Finance News · Tagged: ,

In March, the number of homes sold in the UK jumped by 40% from the previous month, (according to figures from HM Revenue & Customs). There were 60,000 property sales worth at least £40,000 each, compared with 43,000 in February. The figures seemed to indicate that the slump in home sales seen in the past 18 months may have been coming to an end. Even when the figures were adjusted for seasonal trends, they still showed a rise from 54,000 to 61,000, a jump of 13%.

house_prices_30_apr09However, come April and it was back to bad news. In April, UK House prices fell by 0.4%, reversing some of the rise seen in March, (according to data supplied by the the Nationwide).

The Nationwide’s figures show that the pace of decline in house prices slowed, but the typical home still cost 15% less than a year ago. The price of the average property in the UK was £151,861 in April.

Figures from the Land Registry relating to March, also published on Thursday, showed different price shifts in different parts of England and Wales. The figures suggested typical property prices rose by 1.8% in the North East of England in March compared with February, but fell by 2% in the same period in the West Midlands.

The Nationwides’s Figures showed that prices fell 3.1% in the quarter to the end of April, compared with the previous quarter.

This was less of a decline than than the 4.1% fall, using the same measure, seen a month ago.

The building society surprised many homeowners last month when it announced that prices rose by 0.9% in March compared with February.

But it warned at the time against reading too much into the change, saying that it was not a sign that the market had turned.

In a speech a week ago, Matthew Wyles, chairman of the Council of Mortgage Lenders (CML), said that the mortgage market remained “highly dysfunctional” and that 2009 would be a tough year.

Melbourne real estate in a flux

Posted on May 2, 2009 by peter 
Filed under Australia Real Estate News · Tagged: ,

propery-boom-bustRecent data from the Real Estate Institute of Victoria (REIV) reveals that residential property in the more affordable Melbourne suburbs are appreciating faster than those in traditionally affluent areas such as Toorak, Canterbury and Camberwell.

The REIV’s quarterly house price figures show that fifteen of Melbourne’s “top 20″ growth suburbs for the first three months of the year had a median price below $500,000.

Real estate industry executives say this is because of falling interest rates and first home buyers’ grants.

Suburbs with the fastest growing prices included Mount Martha, up 16.3 per cent to $500,000, Keysborough, up 12.9 per cent to $390,000, Epping, up 8.1 per cent to $303,000, and Boronia up 6.9 per cent to $355,000.

However, the overall Melbourne median house price fell 3.1 per cent to $410,000.

Prices for the cheapest 25 per cent of houses also fell, down 1.4 per cent, while the most expensive 5 per cent of houses dived 12.9 per cent.

That compares with data yesterday from rival analyst RP Data-Rismark, which is used by the Australian Stock Exchange, and which showed Melbourne houses rose 2.4 per cent to $426,423.

REIV chief executive Enzo Raimondo said the institute collected its data directly, and the results reflected about three-quarters of total sales.

He said the figures showed that while the first home buyers’ boost was clearly working to stimulate activity, it was not dramatically inflating prices, as some industry commentators had suggested.

“Everybody’s saying that the first home owners’ grant is pushing up prices but I think what’s happened is it’s helped activity, not necessarily driven prices up,” he said. “Growth actually slowed in all the parts of the market, whereas last time it was only the top.”

The number of transactions in the first three months of this year was about the same as in the December quarter, at just over 12,000 — even though January is traditionally very quite in real estate because of school holidays.

He said the financial crisis meant people were reluctant to sell their homes and stock levels were extremely low compared with the 2007 real estate boom.

Mr Raimondo said stock levels and transactions could drop further if governments removed their first home owners’ boosts as suggested after June 30.

The Federal Government has doubled its grants to $14,000 for existing homes and tripled them to $21,000 for new homes, while the State Government is offering $3000 for existing homes or $5000 for new homes.

However, Prime Minister Kevin Rudd last week suggested the boosts would expire as planned on June 30. Developers are calling for the boosts for new homes to stay, arguing that it is better to direct money towards construction than to owners of existing homes.

But Mr Raimondo said the removal of grants for new and existing homes would mean a drop in economic activity and employment.

“It’s going to affect transaction numbers, it’s going to affect competition, it’s going to affect how many people are going to be employed in real estate after June,” he said.