Australian Housing recovery stalls

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

Hopes for a recovery in the housing sector have been dashed by fresh data showing new home sales were flat in July.

Australian Housing MarketThe volume of new home sales increased 0.1 per cent in July, following a 0.5 per cent increase in June, the Housing Industry Association said today.

“Housing finance figures point to an emerging recovery in trade-up buyer and investor numbers, but looking beyond first time buyer related activity we’re not as yet at a point where we can talk of a broad based recovery in private new home demand,” HIA chief economist Harley Dale said in a statement.

States showed a wide variation in results with house sales dropping 4.4 per cent in Victoria, 11.6 per cent in South Australia and 3.1 per cent in Western Australia.

In NSW they increased 9.8 per cent and vaulted 10.2 per cent in Queensland. “Throw into the mix approvals processes that are bogging down the recovery and a slow start to the Social Housing Initiative and we are looking at a moderate rather than strong lift in building starts through the second half of 2009,” he said.

The Federal Government had hoped that the First Home Buyers grant, along with record low interest rates, would jumpstart the housing industry and provide a catalyst for the economy in coming months.

The First Home Buyers grant boost is set to reduce to $14,000 from $21,000 by the end of September. The Reserve Bank is widely expected to begin raising interest rates from its current level of 3 per cent, possibly as early as October.

“In a change of forecast, we have dragged forward the expected timing of the RBA’s first rate hike to October, from February,” said JP Morgan economist Stephen Walters in a statement.

However, in the wake of more evidence that Australia’s economy “apparently has skated through the financial crisis without sustaining much damage, the case for an earlier tightening has become irresistible,” he said.

Are property sales building momentum?

Posted on April 17, 2009 by peter 
Filed under Australia Real Estate News · Tagged: , , ,

Well, what do you know – there’s life in the property market again. After years of Australia languishing in the doldrums, the heady combination of falling prices, record low interest rates and generous financial incentives to take the first step onto the property ladder are enticing buyers in droves. In fact, attend a Saturday morning showing for a property in the first-home buyers’ domain of $600,000 or less and you could be forgiven for thinking the boom is back.

So should you join the throngs at the auctions? The external factors are certainly appealing. Interest rates are at 45-year lows and tipped to fall further yet. This means it’s now at least $800 a month cheaper to pay off and own a $400,000 property. What’s more, nowadays $400,000 probably gets you a bit more.

Nationally, prices have fallen by just under 3 per cent in the past year, RP Data states. And you may get a particularly good deal in Perth and along the eastern seaboard at the moment.

Then there’s the enhanced first-home buyers’ grants. Until June 30, the base grant of $7800 has been doubled to $14,000 for buying an existing property and tripled to $21,000 for new ones. This assistance provides significant impetus to get in now – and let’s hope the success of this stimulus measure will persuade the government to extend it.

Meanwhile, the situation for prospective investors is also better than it’s been in years. Thanks to the steady rent increases generated by a dearth of properties in recent times, along with the price stagnation, yields are looking attractive again. In fact, positively geared properties ? so long the Holy Grail of investors ? are a real possibility.

Just remember that whatever is going on in the broader market, the time to buy is when you are ready, not before. Ensure you have a decent deposit, you borrow an amount you can service with no more than one-third of your before-tax income and that you can cope with rapid interest rate rises. After all, we’ve seen recently how fast things can turn.
Happy hunting,