Category Archives: ljgrealestate

Factor’s driving continued Chinese investor interest in Australian property

The continued appreciation of the yuan could put pressure on the Chinese Government to ease the capital outflow restrictions which have impacted investment in Australian commercial property.

The issue for China is that the yuan is up massively over the last 12 months and that has been driven by the new capital control regulations which have been very effective in turning around the outflow of capital.

However that appreciation could see Chinese goods becoming less competitive and that is not what the Chinese will want to see.

If that is the case then it seems clear that some tinkering with those new capital outflow regulations, and among them those pertaining to real estate transactions, will occur and that will help to both stabilise the yuan at a level that is acceptable to China, and of course benefit Australian commercial property.

According to a report from London based Pictet Wealth Management, China’s total capital outflow was estimated at US$166 billion in 2017, down 78% from US$761 billion in 2015 and 67% from US$500 billion in 2016 as a result of the new regulations.

China’s initial tightening of capital outflow rules in 2016 followed a fall of nearly 7% in the value of the yuan against the USD which had been the largest depreciation since 1994.

The foreign exchange turnaround, he said, had seen the yuan appreciate 10.4% against the USD over the 12 months to December.

But more importantly if we look at the movement over the last two months from December when  1 USD bought 6.62 yuan and then last week when 1 USD bought 6.29 yuan we see an appreciation of 5.2% in just six weeks.

That is a huge appreciation of the yuan on top of the significant rise over the last 12 months, and, if it continues, then it must be troubling for at least some sectors of the Chinese manufacturing industry which of course is a hugely significant contributor to capital inflow.

The sheer weight of Chinese capital seeking offshore property investment remains very significant with Australia still the number two destination in the world behind the US for Chinese investors.

We need to keep in mind that while investment outflows from China have been curbed, Chinese investors are adjusting to the new rules and fine tuning their investment strategies.

To date in the new year we have seen little change in interest from Chinese investors, if anything, what may have restricted sales volumes, has been as much about the lack of quality stock in increasingly tightly held markets.

That has been particularly the case in the retail sector, while falling vacancy and incentive levels have been very encouraging for office market landlords.

A further factor driving continued Chinese investor interest in Australian property were regulations aimed at curbing Chinese domestic real estate activity in restricting developers’ ability to raise finance for their projects.

On the one hand we have the regulations restricting developers from seeking off-shore opportunities and on the other hand also being restricted in their activities at home.

It is a difficult time for property developers on the domestic front, who, under the centralised banking system, already face limited options for funding new projects.

It is not inconceivable then that the further restrictions on their ability to raise finance through debt and equity, may have them looking offshore where finance for their projects may prove easier to come by. Source CBRE

SINOAUSTLJGREALESTATE

Best Regards Linda & Carlos Debello “Your Local Property Sales & Management Specialist” LJ Gilland Real Estate Pty Ltd PO BOX 19 ZILLMERE 4034 0413 560 808 (Mob 2) 0409 995 578 (Linda) http://www.ljgrealestate.com.au/index.php?lan=ch Chinese website https://www.facebook.com/ljgrealestate

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Benefits buying home on elevated block

ljgrealestate

No uphill battle: The benefits of buying a house on an elevated block – Real Estate

REAL ESTATE
No uphill battle: The benefits of buying a house on an elevated block
Feb 10, 4:15 PM
Chris TolhurstProperty reporter
I’ve owned four properties in NSW and Victoria and they’ve all had one factor in common – each has been positioned high on a hill.

Why favour elevated land?

For one thing, a hillside location is almost always flood-free. Across the world, storms and floods account for about three-quarters of weather-related disasters, and in the era of climate change they’re becoming more common. According to insurance group Munich Re, an expert on global and local risk solutions, the number of storm and flood disasters across the globe has jumped from about 200 in 1980 to more than 600 in 2016.

A home on the hill ticks also boxes from a lifestyle…

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BUSINESS INSIDER

Real recession is becoming a distant memory in Australia — and that could spell trouble, even in the good times
Paul Colgan · Feb 11, 1:45 PM
Here’s something to try at work today. A thought experiment.

Look around at the people you work with. Consider the experience of the people across the company and think about how many of those people have, in their working lives, ever managed a business during a recession.

For many Australian workplaces, particularly young companies, there answer will be zero.

After more than 25 years of continuous economic growth, anyone who is under 45 hasn’t worked through a full-blown contraction in the economy.

And consider: Matt Comyn, the new CEO of Australia’s biggest financial institution, the Commonwealth Bank, is 42.

Now Comyn has seen many brutal economic episodes in his career, from the dot-com bust and the period after September 11, and of course the period around the global financial crisis which resulted in severe cutbacks in Australia’s banking system, to the Eurozone crisis of 2011. Locally, he’s seen the impacts of the mining downturn on the affected parts of the economy, the pressures experienced by the tourism sector when the Australian dollar soared, and the decline of the manufacturing sector. There’s plenty of experience, both institutionally for the bank and in sector-specific terms for Comyn himself.

But this knowledge and experience is not as well baked into to the hundreds of thousands of other businesses that have formed in the past two and a half decades.

Localised contractions such as those in the car industry, the media sector, and that in finance after the GFC are ugly and painful for the people involved, but different from the all-consuming nature of a nationwide downturn characterised by soaring unemployment, business closures, and bankruptcies.

A downturn would create a sudden demand for a broad and deep pool of expertise in managing this kind of problem and the reality is that pool in Australia is small and shrinking. Also, the tools for dealing with a modern recession — data-driven decisions, offshoring, managing millennials — are vastly different from the last time Australia had a proper crunch. We’ll come back to that.

The Australian economy is the strongest it has been in years. Growth looks relatively balanced, job creation is solid, house prices have stabilised or are falling slowly, and it looks like the disinflationary pressures of recent years are abating. Around the world, the global economy is gathering pace, offering further support to Australia’s trade-reliant economy.

But there is a small but ever-present risk of a severe external shock plunging the country into a recession it can do nothing about. The biggest of those risks remains some kind of hard landing in China, but times like last week when global markets were in a tailspin, do invite questions about whether Australia’s business leaders would know what to do in an economic crisis visited on the nation from abroad.

Cost-cutting in this environment can’t be limited to stopping the flower deliveries for reception and stocking the kitchen with home brand tea.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said: “The main danger for business leaders after a long period of continuous overall economic growth is that a degree of complacency sets in resulting in excessive risk taking – which could take the form of taking on too much debt or overinvestment.”

That said, one thing Australian executives have proved themselves very adept at is managing costs. Although the economy has seen a record-making run of expansion, risk-averse, conservative strategy has been at the core of Australian corporate behaviour for years, restraining the “animal spirits” that the RBA so desperately wanted to see in the non-mining economy when it was slashing rates after the end of the investment boom.

As a result, Oliver said, there was little evidence of risky levels of exuberance among executives, “maybe because various industries have had their own tough times (like manufacturing and tourism when the Australian dollar was sky high, mining only recently and of course retailing) and a constant run of scares globally (like the GFC and the 2011-12 Eurozone and US debt crises) have kept CEOs level headed – mostly.

“But it could change as the global growth rebound gathers pace and that benefits Australia.”

At the same time, the helpful restraint that has characterised much of corporate Australia could work against some companies in the event of a downturn, not just because businesses may not be as healthy as they might otherwise be, but because leaders may be incapable of seizing opportunities to rebuild and reform.

Gregory Robinson, managing partner at Blenheim Partners, an executive search and board advisory firm in Sydney, says that cost management has been “almost a DNA requirement to be a senior executive in Australia”.

However, he says: “There are a couple of concerns with this. Firstly, why is management still focusing on cost cutting in arguably solid economic conditions? Secondly, how much fat is left in the organisation to cut before they hit bone? And finally, is leadership equipped to seize opportunity if there is a significant downturn?

“The big question to ask is: does Australian management have the appetite to take risk in tough economic circumstances when tightening the belt would be seen as the safer bet and the expected norm? Based on our recent studies, Australian business leadership throughout years of economic growth consistently takes the more conservative approach. Therefore if the recession comes, that conservatism could ramp up, only perpetuating the situation.”

‘Zombification’
Business Insider spoke to an independent consultant who has helped organisations deliver efficiencies when faced with challenging economic conditions, both in the UK and more recently in Australia. He asked to remain anonymous because of the sensitive nature of his work.

One problem he identified in corporates from operating in long periods of expansion was “the reluctance to have tough performance management conversations in times of high profit margins, resulting in a long term ‘zombification’ of departments.”

This is the “fat and happy” problem: companies avoid the smaller tough decisions because departments are making money while slowly becoming an organisational albatross.

“If you take that thought a step further, it’s actually really unfair to the individuals concerned that they are not told that their performance is sub-par, only to find out when it’s far too late and a redundancy cheque is handed to them. There will be a lot of people who are very confused as to why they got the chop,” the consultant said.

He outlined some of the management skills that are indispensable in a downturn, which are summarised below in full, because it’s quite a list.

Mental toughness: You’re going to have to make some hard decisions and very quickly which will impact a lot of families.
Leadership: The remaining workforce will need to be led out of the change into a future they all buy in to. I once worked for a UK company that fired around 500 people in November. The CEO gave a speech at the Christmas Ball that didn’t even mention this. Weak.
Analytical skills: Pareto [the 80:20 rule that 80% of results come from 20% of the causes] is your friend coupled with a good understanding of which spend is realistically addressable; there’s no point looking at a software licence agreement as an opportunity to cut costs, no matter how large it is, if you’ve only recently renewed it and you’ve got no best alternative that’s palatable.
Data capability: If you’re not measuring the right metrics today, how will you know which parts of the business to prune and which to feed? Feelings?
The ability to deploy rapid tactical digitisation and automation: Everyone has a strategic plan for this but, what if you could fastrack the initiatives that reduce staff numbers and improve customer experience? Do those first and much, much quicker than you’d planned.
Culture: Are you working in an organisation where the size of your organisation chart is directly proportional to your perceived value rather than outcomes delivered? You’ve got deep-rooted issues to address if so as everyone will be fighting tooth and nail to stop the cuts from hitting their teams.
To go back to the start, it might be worth asking if these are capabilities that would be at hand in a crisis.

The global economy is in excellent shape and Australia will reap the benefits of this for some time. As my colleague Jim Edwards at Business Insider UK recently noted, we are living something of a golden age.

“Or, to put it more sharply,” he wrote, “‘we are approaching the end of a Golden Age’” – because no one I talked to thinks this is going to last.”

So as the pool of people who have worked, managed, traded and coped through Australian recessions before continues to shrink, now might a good time to think about how to be ready for the downturn that will, at some point, hit.

Robinson, whose work in executive placement gives him an insight into the skills bases of Australian leaders and what boards are looking for in bosses, said: “As a nation we have not experienced adversity for a long time. The GFC was mild in Australia compared to many other parts of the world. We may be better served now, during a time of economic stability, to encourage boards and business leaders to depart away from the ‘cost cutting our way to success’ philosophy to a more concerted growth strategy.

“This may require a change in organisational culture to inspire a growth agenda… Alternatively , if we choose to follow the traditional cost cutting path we need to question if we have the capacity to actually save ourselves through a prolonged downturn and are we missing an ideal opportunity for growth now?”

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BUSINESS INSIDER
Real recession is becoming a distant memory in Australia — and that could spell trouble, even in the good times
Paul Colgan · Feb 11, 1:45 PM
Here’s something to try at work today. A thought experiment.

Look around at the people you work with. Consider the experience of the people across the company and think about how many of those people have, in their working lives, ever managed a business during a recession.

For many Australian workplaces, particularly young companies, there answer will be zero.

After more than 25 years of continuous economic growth, anyone who is under 45 hasn’t worked through a full-blown contraction in the economy.

And consider: Matt Comyn, the new CEO of Australia’s biggest financial institution, the Commonwealth Bank, is 42.

Now Comyn has seen many brutal economic episodes in his career, from the dot-com bust and the period after September 11, and of course the period around the global financial crisis which resulted in severe cutbacks in Australia’s banking system, to the Eurozone crisis of 2011. Locally, he’s seen the impacts of the mining downturn on the affected parts of the economy, the pressures experienced by the tourism sector when the Australian dollar soared, and the decline of the manufacturing sector. There’s plenty of experience, both institutionally for the bank and in sector-specific terms for Comyn himself.

But this knowledge and experience is not as well baked into to the hundreds of thousands of other businesses that have formed in the past two and a half decades.

Localised contractions such as those in the car industry, the media sector, and that in finance after the GFC are ugly and painful for the people involved, but different from the all-consuming nature of a nationwide downturn characterised by soaring unemployment, business closures, and bankruptcies.

A downturn would create a sudden demand for a broad and deep pool of expertise in managing this kind of problem and the reality is that pool in Australia is small and shrinking. Also, the tools for dealing with a modern recession — data-driven decisions, offshoring, managing millennials — are vastly different from the last time Australia had a proper crunch. We’ll come back to that.

The Australian economy is the strongest it has been in years. Growth looks relatively balanced, job creation is solid, house prices have stabilised or are falling slowly, and it looks like the disinflationary pressures of recent years are abating. Around the world, the global economy is gathering pace, offering further support to Australia’s trade-reliant economy.

But there is a small but ever-present risk of a severe external shock plunging the country into a recession it can do nothing about. The biggest of those risks remains some kind of hard landing in China, but times like last week when global markets were in a tailspin, do invite questions about whether Australia’s business leaders would know what to do in an economic crisis visited on the nation from abroad.

Cost-cutting in this environment can’t be limited to stopping the flower deliveries for reception and stocking the kitchen with home brand tea.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said: “The main danger for business leaders after a long period of continuous overall economic growth is that a degree of complacency sets in resulting in excessive risk taking – which could take the form of taking on too much debt or overinvestment.”

That said, one thing Australian executives have proved themselves very adept at is managing costs. Although the economy has seen a record-making run of expansion, risk-averse, conservative strategy has been at the core of Australian corporate behaviour for years, restraining the “animal spirits” that the RBA so desperately wanted to see in the non-mining economy when it was slashing rates after the end of the investment boom.

As a result, Oliver said, there was little evidence of risky levels of exuberance among executives, “maybe because various industries have had their own tough times (like manufacturing and tourism when the Australian dollar was sky high, mining only recently and of course retailing) and a constant run of scares globally (like the GFC and the 2011-12 Eurozone and US debt crises) have kept CEOs level headed – mostly.

“But it could change as the global growth rebound gathers pace and that benefits Australia.”

At the same time, the helpful restraint that has characterised much of corporate Australia could work against some companies in the event of a downturn, not just because businesses may not be as healthy as they might otherwise be, but because leaders may be incapable of seizing opportunities to rebuild and reform.

Gregory Robinson, managing partner at Blenheim Partners, an executive search and board advisory firm in Sydney, says that cost management has been “almost a DNA requirement to be a senior executive in Australia”.

However, he says: “There are a couple of concerns with this. Firstly, why is management still focusing on cost cutting in arguably solid economic conditions? Secondly, how much fat is left in the organisation to cut before they hit bone? And finally, is leadership equipped to seize opportunity if there is a significant downturn?

“The big question to ask is: does Australian management have the appetite to take risk in tough economic circumstances when tightening the belt would be seen as the safer bet and the expected norm? Based on our recent studies, Australian business leadership throughout years of economic growth consistently takes the more conservative approach. Therefore if the recession comes, that conservatism could ramp up, only perpetuating the situation.”

‘Zombification’
Business Insider spoke to an independent consultant who has helped organisations deliver efficiencies when faced with challenging economic conditions, both in the UK and more recently in Australia. He asked to remain anonymous because of the sensitive nature of his work.

One problem he identified in corporates from operating in long periods of expansion was “the reluctance to have tough performance management conversations in times of high profit margins, resulting in a long term ‘zombification’ of departments.”

This is the “fat and happy” problem: companies avoid the smaller tough decisions because departments are making money while slowly becoming an organisational albatross.

“If you take that thought a step further, it’s actually really unfair to the individuals concerned that they are not told that their performance is sub-par, only to find out when it’s far too late and a redundancy cheque is handed to them. There will be a lot of people who are very confused as to why they got the chop,” the consultant said.

He outlined some of the management skills that are indispensable in a downturn, which are summarised below in full, because it’s quite a list.

Mental toughness: You’re going to have to make some hard decisions and very quickly which will impact a lot of families.
Leadership: The remaining workforce will need to be led out of the change into a future they all buy in to. I once worked for a UK company that fired around 500 people in November. The CEO gave a speech at the Christmas Ball that didn’t even mention this. Weak.
Analytical skills: Pareto [the 80:20 rule that 80% of results come from 20% of the causes] is your friend coupled with a good understanding of which spend is realistically addressable; there’s no point looking at a software licence agreement as an opportunity to cut costs, no matter how large it is, if you’ve only recently renewed it and you’ve got no best alternative that’s palatable.
Data capability: If you’re not measuring the right metrics today, how will you know which parts of the business to prune and which to feed? Feelings?
The ability to deploy rapid tactical digitisation and automation: Everyone has a strategic plan for this but, what if you could fastrack the initiatives that reduce staff numbers and improve customer experience? Do those first and much, much quicker than you’d planned.
Culture: Are you working in an organisation where the size of your organisation chart is directly proportional to your perceived value rather than outcomes delivered? You’ve got deep-rooted issues to address if so as everyone will be fighting tooth and nail to stop the cuts from hitting their teams.
To go back to the start, it might be worth asking if these are capabilities that would be at hand in a crisis.

The global economy is in excellent shape and Australia will reap the benefits of this for some time. As my colleague Jim Edwards at Business Insider UK recently noted, we are living something of a golden age.

“Or, to put it more sharply,” he wrote, “‘we are approaching the end of a Golden Age’” – because no one I talked to thinks this is going to last.”

So as the pool of people who have worked, managed, traded and coped through Australian recessions before continues to shrink, now might a good time to think about how to be ready for the downturn that will, at some point, hit.

Robinson, whose work in executive placement gives him an insight into the skills bases of Australian leaders and what boards are looking for in bosses, said: “As a nation we have not experienced adversity for a long time. The GFC was mild in Australia compared to many other parts of the world. We may be better served now, during a time of economic stability, to encourage boards and business leaders to depart away from the ‘cost cutting our way to success’ philosophy to a more concerted growth strategy.

“This may require a change in organisational culture to inspire a growth agenda… Alternatively , if we choose to follow the traditional cost cutting path we need to question if we have the capacity to actually save ourselves through a prolonged downturn and are we missing an ideal opportunity for growth now?”

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Filed under ljgrealestate

BUSINESS INSIDER

Annual house price growth in Sydney is now falling in real terms
David Scutt · Feb 11, 5:40 PM
Residential property prices continue to fall in Sydney.

According to CoreLogic, prices in Australia’s largest and most expensive housing market fell by a further 0.2% last week, extending the losses over the past month to 1%.

The continued weakness came despite a noticeable lift in the city’s preliminary auction clearance rate last week, rising to 68.7% from 63.1% a week earlier.

Clearly, one week does not make a trend when it comes to price movements in the city.

With prices going backwards in Sydney, it saw annual price growth in the city slow to just 0.7% in nominal terms.

Taking into account inflation over the same period, prices in Sydney have now fallen over the past year.

Like the price movements recorded in Sydney during the week, many of the prevailing themes were seen across Australia’s remaining four mainland state capitals were also much the same.

CoreLogic said prices were flat in all locations, including Melbourne.

Over the past month, prices in capitals fell, albeit not to the same degree seen in Sydney.

In Melbourne, Adelaide and Perth they fell by 0.2%, with Brisbane the relative outperformer with a decline of only 0.1% reported.

Combined with Sydney’s 1% drop, it saw prices nationwide fall by 0.5% in average weighted terms.

Thanks largely to recent weakness in Sydney and Melbourne, price growth over the past year slowed to 2.8%, well below the double-digit percentage increases seen less than one year ago.

Of the mainland state capitals, prices in Melbourne grew by 7.7% over the year, outpacing gains of 2.4% and 2.1% in Adelaide and Brisbane respectively.

Perth, as has been the case for some time now, saw prices drop by 2.7% over the year.

Reflecting recent price movements across the capitals, the amount of housing stock up for sale continued to increase, rising by 1.1% to 100,659 from the same week a year earlier.

In Sydney, there were 23,365 residential properties up for sale, up 21.3% on one year earlier. In Melbourne and Canberra, where price growth is also slowing, total stock up for sale increased by a smaller 2.2% and 7.4% respectively.

Outside of the southeastern mainland capitals, the amount of stock up for sale decreased in all other cities, led by a sizeable decline in Hobart which fell by 38.4%.

In data released last week, CoreLogic found that it took an average of 40 days for a property to sell in Australia’s capital cities in December, up from 37 days one year earlier.

In Sydney, Australia’s largest and most expensive housing market where prices are now going backwards, it took an average of 42 days to sell, up sharply from 34 days in December 2016.

While not to the same degree, the average Melbourne sale time also lengthened, rising to 33 days from 29 days 12 months earlier.

In line with other housing market indicators such as house prices, auction clearance rates and housing finance growth, the increase suggests these once-hot markets have cooled over the past year, significantly in the case of Sydney.

CoreLogic said it was reasonable to expect that the number of days it takes to sell a property nationally will trend higher over the year, especially in the southeastern capitals.

“This is likely to occur in Sydney and Melbourne given that both cities have experience rapid rates of sale and strong growth in dwelling values over recent years,” it said.

“Vendors in those cities were market conditions are softening will need to be realistic about their pricing expectations. As properties take longer to sell, buyers will be more inclined to negotiate on asking prices and vendors may face higher competition from other properties listed for sale as inventory levels rise.”

NOW WATCH: Money & Markets videos
Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

BUSINESS INSIDER
Annual house price growth in Sydney is now falling in real terms
David Scutt · Feb 11, 5:40 PM
Residential property prices continue to fall in Sydney.

According to CoreLogic, prices in Australia’s largest and most expensive housing market fell by a further 0.2% last week, extending the losses over the past month to 1%.

The continued weakness came despite a noticeable lift in the city’s preliminary auction clearance rate last week, rising to 68.7% from 63.1% a week earlier.

Clearly, one week does not make a trend when it comes to price movements in the city.

With prices going backwards in Sydney, it saw annual price growth in the city slow to just 0.7% in nominal terms.

Taking into account inflation over the same period, prices in Sydney have now fallen over the past year.

Like the price movements recorded in Sydney during the week, many of the prevailing themes were seen across Australia’s remaining four mainland state capitals were also much the same.

CoreLogic said prices were flat in all locations, including Melbourne.

Over the past month, prices in capitals fell, albeit not to the same degree seen in Sydney.

In Melbourne, Adelaide and Perth they fell by 0.2%, with Brisbane the relative outperformer with a decline of only 0.1% reported.

Combined with Sydney’s 1% drop, it saw prices nationwide fall by 0.5% in average weighted terms.

Thanks largely to recent weakness in Sydney and Melbourne, price growth over the past year slowed to 2.8%, well below the double-digit percentage increases seen less than one year ago.

Of the mainland state capitals, prices in Melbourne grew by 7.7% over the year, outpacing gains of 2.4% and 2.1% in Adelaide and Brisbane respectively.

Perth, as has been the case for some time now, saw prices drop by 2.7% over the year.

Reflecting recent price movements across the capitals, the amount of housing stock up for sale continued to increase, rising by 1.1% to 100,659 from the same week a year earlier.

In Sydney, there were 23,365 residential properties up for sale, up 21.3% on one year earlier. In Melbourne and Canberra, where price growth is also slowing, total stock up for sale increased by a smaller 2.2% and 7.4% respectively.

Outside of the southeastern mainland capitals, the amount of stock up for sale decreased in all other cities, led by a sizeable decline in Hobart which fell by 38.4%.

In data released last week, CoreLogic found that it took an average of 40 days for a property to sell in Australia’s capital cities in December, up from 37 days one year earlier.

In Sydney, Australia’s largest and most expensive housing market where prices are now going backwards, it took an average of 42 days to sell, up sharply from 34 days in December 2016.

While not to the same degree, the average Melbourne sale time also lengthened, rising to 33 days from 29 days 12 months earlier.

In line with other housing market indicators such as house prices, auction clearance rates and housing finance growth, the increase suggests these once-hot markets have cooled over the past year, significantly in the case of Sydney.

CoreLogic said it was reasonable to expect that the number of days it takes to sell a property nationally will trend higher over the year, especially in the southeastern capitals.

“This is likely to occur in Sydney and Melbourne given that both cities have experience rapid rates of sale and strong growth in dwelling values over recent years,” it said.

“Vendors in those cities were market conditions are softening will need to be realistic about their pricing expectations. As properties take longer to sell, buyers will be more inclined to negotiate on asking prices and vendors may face higher competition from other properties listed for sale as inventory levels rise.”

NOW WATCH: Money & Markets videos
Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Leave a comment

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THE ECONOMIST

The Economist house-price indices
Feb 9
Graphic detailCharts, maps and infographics
Our interactive guide to housing data across the world

Graphic detail
FINANCIAL media focus most of their attention on stocks and bonds, but the world’s biggest asset class is actually residential property. With an estimated value of about $200trn, homes are collectively worth about three times as much as all publicly traded stocks.

The charts above track housing-market indicators across 27 economies, as well as for 20 cities in America, in some instances going as far back as 1970. The first two metrics are price indices, one expressed in nominal terms and another adjusted for inflation. The second two measure valuation: one compares house prices with their long-run relationship with individual incomes, and the other with the historical ratio of home values to rents. If house prices climb faster than either earnings or rent payments for a long period of time, a financial bubble may be forming.

On this basis, house prices appear to be on an unsustainable path in Australia, Canada and New Zealand. Ten years ago they reached similarly dizzying heights against rents and incomes in Spain, Ireland and some American cities, only to endure a brutal collapse. Check back in three months’ time for our latest update.

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THE ECONOMIST
The Economist house-price indices
Feb 9
Graphic detailCharts, maps and infographics
Our interactive guide to housing data across the world

Graphic detail
FINANCIAL media focus most of their attention on stocks and bonds, but the world’s biggest asset class is actually residential property. With an estimated value of about $200trn, homes are collectively worth about three times as much as all publicly traded stocks.

The charts above track housing-market indicators across 27 economies, as well as for 20 cities in America, in some instances going as far back as 1970. The first two metrics are price indices, one expressed in nominal terms and another adjusted for inflation. The second two measure valuation: one compares house prices with their long-run relationship with individual incomes, and the other with the historical ratio of home values to rents. If house prices climb faster than either earnings or rent payments for a long period of time, a financial bubble may be forming.

On this basis, house prices appear to be on an unsustainable path in Australia, Canada and New Zealand. Ten years ago they reached similarly dizzying heights against rents and incomes in Spain, Ireland and some American cities, only to endure a brutal collapse.

Leave a comment

Filed under ljgrealestate

REAL ESTATE Buying off-the-plan property is going to get more complicated in July Outside of that Australia has thousands of smaller developers. They can be mums and dads That cottage industry is going to have to be very prudent with how they manage their cash flow.

ljgrealestate

Feb 1, 9:00 AM

A federal government plan to plug a multibillion-dollar revenue hole will make life harder for off-the-plan buyers and mum and dad developers, property experts have warned. When GST (1/11th of the purchase price) is paid on a newly built property, it’s the developer’s responsibility to pay the Australia Tax Office some time after settlement. This leaves a loophole for unscrupulous developers to unnecessarily wind up a company and declare bankruptcy, freeing them of their obligation to pay the ATO the taxes it’s due. It’s nicknamed “phoenixing” and it’s thought to cheat Australian taxpayers of $3 billion each year. The plan to tackle “phoenixing”? From July 1, it’ll be the buyer’s responsibility to ensure the ATO gets paid. “New home buyers and off-the-plan buyers are going to become tax collectors, and the kicker is, it has to be paid before the property settles. “You’re going to still…

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https://www.mortgagebusiness.com.au/breaking-news/11896-property-values-fall-nationwide-in-january

https://www.mortgagebusiness.com.au/breaking-news/11896-property-values-fall-nationwide-in-january

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