RP Data Article for friends and clients of LJ Gilland Real Estate Pty Ltd as at 1st October 2012

Aussie borrowers saving, which is not great news for housing market: RP Data’s Tim Lawless

By Tim Lawless
Monday, 01 October 2012

Page 1 of 3

The Reserve Bank’s bi-annual Financial stability review is always a good read for anyone interested in domestic and overseas economic conditions. The review is focused on assessing Australia’s financial system and any potential risks to financial stability. Working to ensure a strong financial system and efficient payments system is one of the key objectives of the Reserve Bank, so its commentary and analysis in this publication provides an important insight about how the RBA is reading domestic and global economic conditions.

For the time poor (or less interested!) a must-read is the ‘Household Balance Sheets section, which starts on page 37. One of the central themes running through the report is that Australian households are very much focused on saving; borrowing has slowed and is now more in line with income growth and households are choosing to repay their debt more quickly than required. The bank is very much supportive of the higher household savings ratio (households, on average, are currently saving about 9.5% of their disposable income), and in fact is actively encouraging Australians to save, save, save!

Aussie borrowers saving, which is not great news for housing market: RP Data’s Tim Lawless

By Tim Lawless
Monday, 01 October 2012

Page 2 of 3

The RBA attributes the higher savings rate to a number of factors.

Firstly, there is a large cohort of the population who are actively seeking to rebuild their wealth post-GFC (real net worth per household has declined by 11½ % from its peak in 2007).

Secondly, there has been a decline in the consumer appetite for risk, which has resulted in a significant reduction of direct household exposure to equities (down from 18% in 2007 to 8.5% in 2012). In contrast, bank deposits as a proportion of total household assets have risen from 18% to 25% over the same period.

With regards to the housing market, the RBA has reiterated that dwelling values have stabilised over recent months and its view of future growth in home values is relatively sedate:

“While prices nationally have stopped falling in recent months, any future recovery is unlikely to produce housing price growth much faster than income growth, as was seen through much of the 1990s and 2000s, because that earlier period was one of adjustment to the structural decrease in nominal interest rates and liberalisation of the banking system.”

Importantly, mortgage arrears appear to have peaked and have retracted slightly from their 2011 high, which was just above 0.6%, to move below 0.6%. The rate of mortgage arrears is low by international standards but high based on the historical levels recorded in domestically.

Aussie borrowers saving, which is not great news for housing market: RP Data’s Tim Lawless

By Tim Lawless
Monday, 01 October 2012

Page 3 of 3

The rate of mortgage arrears is highest in key areas of south-east Queensland, with the RBA highlighting the Gold Coast, Sunshine Coast and Ipswich as regions where arrears rates have deteriorated. It is important to note that although mortgage arrears are comparatively high across these regions, the rate remains below 1.5% of all securitised mortgages.

The RBA also highlights that some areas of Melbourne may start to see higher rates of arrears over the short term.

“Although arrears rates on housing loans in Victoria are currently quite low, there is some chance they could rise, due to a potential oversupply of property in some segments, particularly inner-city Melbourne apartments and houses at the south-eastern fringe.”

From a financial stability perspective, the Reserve Bank is of the opinion that the residential mortgage portfolios of the larger banks are geographically diversified enough that there isn’t likely to be any level of distress on the financial system related to mortgage defaults or distress.

In summary, the latest Financial Stability Review provides a positive assessment of the Australian banking sector and household balance sheets. The international economy continues to provide some worries, however the RBA points out that that the banking sectors in areas outside the eurozone are continuing on a gradual recovery. For Australian banks, international funding pressures appear to have eased and domestic deposits as a funding source are continuing to increase.

The RBA is very much satisfied with the level of household savings and is openly encouraging households to continue their prudent behaviour. That’s not great news for the retail sector or housing market, as greater savings implies less spending.

“Ongoing consolidation of household balance sheets would be desirable from a financial stability perspective, as it would make indebted households better able to cope with any future income shock or fall in housing prices.”

Tim is national research director of RP Data

“The housing market within Brisbane is considered to be nearing the bottom with no obvious signs of recovery.”
Brisbane property market stuck in a downswing as investors seek unit bargains: WBP Property Group

By Larry Schlesinger
Thursday, 27 September 2012

Page 1 of 2

There are some signs of a recovery in the Brisbane property market, but it still remains firmly in a downswing , with investors seeking bargains in the unit market as new apartment projects are completed, says WBP Property Group.

WBP places the Brisbane housing and unit market at five o’clock on the property clock.

  • At 12 o’clock the market is at its peak (demand exceeds supply)
  • At 3 o’clock the downswing has set in (an evenly supplied market)
  • By 6 o’clock it has bottomed out (an oversupplied market).
  • At 9 o’clock the market is rebounding (supply tightening)

“The housing market within Brisbane is considered to be nearing the bottom with no obvious signs of recovery,” says WBP.

The valuation and advisory firm says that while recent changes in state government legislation, in particular stamp duty concessions, have improved sales activity and enquiry, Brisbane market conditions will remain as they are until the end of the year.

“Potential buyers and investors are keeping an eye on the effects of the mining boom, which continues to fuel growth, and also public sector job cuts announced by the Newman state government.

WBP says future market factors to watch out for include changes in pricing within the commodities sector and cost cutting within the government.

Looking more closely at the unit market, WBP notes that there are a number of new unit developments in Brisbane that are nearing completion and due to settle.

“Many purchasers who have bought off the plan have seen prices come off from original date of contract. Investors still remain wary as to when the bottom will be and are on the lookout for a bargain buy,” says WBP

“This market trend is due to continue till the end of the year and perhaps into 2013.

“The Queensland government has introduced a $15,000 concession for first-home buyers looking to buy a new property.

“The unit market in the sub $400,000 range still continues to be strong amongst professionals looking for lifestyle, inner-city locations,” it says. End of article.

Information For Clients, Friends & Associates of LJ Gilland Real Estate Pty Ltd as follows:-

Please keep a look out for our website translated to Chinese.

Online residential listings rise 1.5% in August to 373,510, led by Melbourne, Sydney and Canberra

By Jonathan Chancellor
Wednesday, 05 September 2012

Vendors appear hopeful of better fortunes this spring selling season with the total number of residential properties listed for sale online rising 1.5% over August to reach 373,510, according to figures from SQM Research.

This contrasts starkly with the same time last year, when listings fell 3.8% from 377,213 in July 2011 to 362,740 in August 2011.

Sydney and Melbourne both recorded “substantial” 5.9% increases in monthly residential properties listed for sale, to reach 31,310 and 51,194 listings respectively.

Click to enlarge

SQM Research managing director Louis Christopher described market conditions as a little better than this time last year, "but it doesn’t mean we are going to head into a big property boom”.

"If rates stay on hold, that will be conducive to stimulating the housing market, and we are likely to see continued market recovery, but there are many X-factors at play,” he told news.com.au.

Christopher says rising rents (up 7% annually over the past five years) are good news for investors, but they have been offset by declining house prices.

He expects there will be further seasonal rises in stock levels as the spring selling season enters full swing.

Click to enlarge

While residential stock on market in Sydney is just 0.9% higher than a year ago at 31,310, Melbourne has the highest year-on-year increase of all the mainland capital cities, with stock up 14.1% to 51,194 in August.

In August last year there were 44,859 properties listed for sale in Melbourne.

The other notable increase was Canberra, where stock on market increased by 8.8% over the month to 3,758 online listings. This is up 13.6% up on August 2011.

“Canberra’s large monthly increase may well signify a downturn for that market as federal budget spending is cut,” noted SQM research.

Bucking the monthly trend of rising stock levels was Perth, which recorded the largest monthly decline of 1.8% to 18,053. Residential listings were down 10.7% on the same time last year when there 20,207 listings.

Residential stock levels have declined in Perth, Darwin and Brisbane – which all benefit from Australia’s mining boom

Darwin residential listings are down 23.3% over the 12 months to August to 1,282 while Brisbane listings are down 4.7% to 28,666.

“Increasingly the market is segmented. It is becoming difficult to discuss just one national housing market and in my opinion, that will be to base line story for the remainder of 2012,” said Louis Christopher, managing director of SQM Research.

While Hobart stock on market declined by 1.7% over August to 4,388 properties listed for sale, there are 24.1% more properties for sale than a year ago. At this time last year there were 3,536 listed for sale in Hobart.

Have you seen the new video explaining advertising options on realestate.com.au? It could be a great listing tool to use in your presentations?

http://sellingguide.realestate.com.au/video/why-list-online

Also, here is the link to the Selling Guide website specifically set up for our sellers.

http://sellingguide.realestate.com.au/

Best regards,

Linda & Carlos Debello

http://www.ljgrealestate.com.au

http://twitter.com/GillandDebello

http://au.linkedin.com/in/lindajanedebello

http://gillandrealestate.wordpress.com/

http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253

Confidential email:- The information in this message is intended for the recipient name on this email. If you are not the recipient please do not read, copy distribute or act upon the message as the information it contains may be privileged. If you have received this message in error, please notify the writer by return email. Thank you very much for your assistance in this matter and your co-operation.

Advertisements

Leave a comment

Filed under Uncategorized

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s