Gandhi's Shoe As Gandhi stepped aboard a train one day, one of his shoes slipped off and landed on the track. He was unable to retrieve it as the train started rolling. To the amazement of his companions, Gandhi calmly took off his other shoe and threw it back along the track to land close to the first shoe. Asked by a fellow passenger why he did that, Gandhi replied, 'the poor man who finds the shoe lying on the track will now have a pair he can use.'
1. Safe as houses The housing market in Australia, although subdued, has held up well and should continue to do so because of borrowers' ability to service their loans, according to the Reserve Bank (RBA). In a speech to the Urban Development Institute of Australia in Brisbane this week, Deputy Governor Ric Battellino remarked that while prices have fallen on average by 3 per cent across Australia, this is soft compared with countries such as the US and the UK, where prices have fallen in the order of 20 per cent. The housing market in Australia, although subdued, has held up well and should continue to do so because of borrowers' ability to service their loans, according to the Reserve Bank (RBA). In a speech to the Urban Development Institute of Australia in Brisbane this week, Deputy Governor Ric Battellino remarked that while prices have fallen on average by 3 per cent across Australia, this is soft compared with countries such as the US and the UK, where prices have fallen in the order of 20 per cent. "We continue to believe that the market here will hold up better than overseas", Battellino said. "There are a number of reasons why this is likely to be so, but perhaps the most important is that we did not have the same deterioration in lending standards that occurred elsewhere. "By and large, the great bulk of Australians who took out housing loans have been able to
afford the repayments. "Notwithstanding some rise over the past year, the 90-day arrears rate on housing loans is only 0.5 per cent, which is broadly in line with its long-run average and well below that in
countries such as the US and UK. On an average mortgage, loan repayments are now $7,000 a year less than they were six months ago. "This is a very large reduction, equal to about 8 per cent of average household income", he stated. Mr Battellino said that the majority of households have elected not to spend the money that has been freed up, choosing instead to maintain high repayments and move ahead of schedule in repaying their loans. "This will give them breathing space if they do subsequently find themselves in circumstances where their repayments are interrupted", he suggested. 2. Australian house prices resilient Australia's residential property market may experience some weakness over the next twelve months, but will remain resilient, according to a new quarterly report released this week by ANZ Economics. The Bank's Property Outlook March 2009 reports that since peaking in early 2008, the national median house price has fallen by 3.9 per cent and weak sentiment, a deteriorating economic environment and rising unemployment present further downside risks. Australia's residential property market may experience some weakness over the next twelve months, but will remain resilient, according to a new quarterly report released this week by ANZ Economics. The Bank's Property Outlook March 2009 reports that since peaking in early 2008, the national median house price has fallen by 3.9 per cent and weak sentiment, a deteriorating economic environment and rising unemployment present further downside risks. "However, there remain strong reasons to expect that we will avoid a US-style house price collapse", say report authors. "Principal among these is the significant, pre-emptive and effective policy action taken to date, plus the fact that unlike our developed world counterparts, Australian policy authorities have ample ammunition in store should further stimulus be required." Since August last year, the Reserve Bank has cut the official cash rate by a massive 400 basis points. Of this, 375 basis points have been passed through to the standard variable mortgage rate for new and existing mortgage holders. In contrast, over the period to December, US authorities cut official rates by 500 basis points with only just 15 basis points flowing through to existing borrowers. The relative potency of monetary policy in Australia and the resultant dramatic improvement in Australian housing affordability will be key factors supporting house prices in the year ahead, says the report. In stark contrast with the oversupplied US housing market, the ongoing tightening of the Australian housing demand/supply balance will also provide substantial support to prices and (eventually) building activity. The extension to the first homebuyer grant has boosted demand at the lower end of the market while tight rental conditions, rising rents and improved yields will increasingly encourage new homebuyers and investors back into the market. ANZ's Economics Team predicts that with further official rate cuts expected, home borrowers should be able to access mortgage interest rates of less than 5 per cent by the middle of the year (a far cry from the standard variable rate of 9.6 per cent in August last year). "Combined with rising property yields, this will see positive gearing opportunities emerge for residential investors. "Moreover, ongoing volatility and uncertainty in global equity and other asset markets will further highlight the relative security of the Australian housing sector. "In contrast, with sub-prime mortgages representing just over 1 per cent of the Australian market (compare a peak of over 15 per cent in the US) and full recourse lending, mortgage delinquencies and foreclosures remain at historically low levels and a lack of forced sales
provides considerable downside protection to house prices. The authors conclude by saying that, on balance, though risks remain to the downside, they still believe Australian house prices will experience a relatively soft landing. "Peak to trough, we expect the median national house price to fall by around 6 per cent, which while significant, pales next to the 50 per cent+ (and counting) collapse in equities", they predict. 3. Cheaper renovations on the horizon Renovation costs in Australia are expected to drop considerably in the next six months, an architectural body predicted this week. A recent quarterly cost guide from Archicentre, the building advisory service of the Australian Institute of Architects, shows that residential building construction costs have not changed appreciably in the last quarter. Renovation costs in Australia are expected to drop considerably in the next six months, an architectural body predicted this week. A recent quarterly cost guide from Archicentre, the building advisory service of the Australian Institute of Architects, shows that residential building construction costs have not changed appreciably in the last quarter. General Manager of Archicentre David Hallett expects this to change, however, as a substantial slowdown in the planning of new commercial projects around Australia will see many tradespeople moving from commercial to residential over the next six months. "This will result in more competition in the new home and renovation markets and we could see a drop in the costs of custom designed homes and renovations of 5 per cent to 15 per cent in some states," David Hallet said. "Coupled with rapidly reducing interest rates we are seeing the best climate for residential construction for many years," Mr Hallet added. The Archicentre cost guide is a free guide to help homeowners who are either renovating or building new homes assess quotes to ensure they are getting a reasonable price. For new house and major renovations, the cost structure is approximately as follows: - Materials - 46 per cent
- Labour - 33 per cent (this can rise a further 5-15 per cent in country areas).
- Fees, levies, permits, GST - 21 per cent
Mr. Hallett said that whilst construction costs will come down, the savings could be soon wasted by poor planning and failing to obtain competitive prices. "Some renovators are paying between 60 per cent to 80 per cent more for their renovations because they have poorly planned renovations and fail to tender their projects. Australians on average spend $7 billion a year on major renovations. "Once you add the cost of interest onto the amount over the normal period of a home loan, the amount lost can run into tens of thousands of dollars on the average renovation of around $100,000. Mr Hallett said that one of the biggest mistakes people make is to get a quote only on the structural part of the renovation failing to recognise that around 50% of the cost is to be found after lock up in fittings and finishing. "Whilst tendering provided a good guide to the cost of the project choosing the cheapest quote was not necessarily the right decision. "It is also vital that the builders' credentials are checked out to ensure they are registered, have appropriate insurance, are able to show examples of their work and importantly are able to complete the project on time. "Tendering is not rocket science, it is carefully documenting and specifying the entire project so everything can be costed accurately and planned. "For the builder the provision of tender documents including the type of contract to be used and the specification of fittings and finishes provides an opportunity to provide an accurate costing. "A contract also includes dispute resolution processes and is a major step in limiting the legal disputes which can arise if there is not accurate paperwork", he concluded. 4. New homes continue good run Sales of new home sales improved again in February, particularly in Queensland and New South Wales, according to the latest survey by the Housing Industry Association (HIA). Sales of new home sales improved again in February, particularly in Queensland and New South Wales, according to the latest survey by the Housing Industry Association (HIA). Total new home sales increased by 3.9 per cent in February 2009. Detached home sales increased by 4.7 per cent in the month, to be up by 8 per cent over the three months to February. Pre-contract sales of apartments and home units fell for the fifth consecutive month in February (down 3.4 per cent). Sales of detached new homes increased by 21.7 per cent in Queensland and were up by 11.1 per cent in New South Wales and by 4.2 per cent in Western Australia. Sales fell moderately in Victoria, down by 5.6 per cent following a 24 per cent lift over the previous two months. Sales fell by 3.9 per cent in South Australia after a jump of 25 per cent in January. Detached home sales were up over the three months to February 2009 in New South Wales, Victoria and South Australia. 5. America's most expensive house Even in death, Aaron Spelling's legacy is still causing a stir. The notorious American, who holds a record as the most prolific television producer, notched up another record recently when his widow Candy Spelling put their 4.7acre Holmby Hills residence on the market. With a price tag of over AU$220M, it immediately became the most expensive residential listing within the US. The LA Times reports that "The Manor" - which looks like a French chateau and is slightly larger than the White House - isn't just the most expensive house, it's also the largest in LA. Among the list of extravagances are a grand foyer, library, gym, media room, gift-wrapping room, wine cellar with tasting room and a parking lot that can accommodate 100 vehicles. 6. Kitchen-safe recipe book Some people have an innate ability to construct culinary masterpieces with no recipe in sight. On the other side of the coin, collections of recipes can consume books and shelves, taking up space and often not ever being used. The Demy is a `kitchen-safe' digital recipe reader with a high-resolution colour touchscreen that stores all your own recipes, and plugs into your computer meaning you can fill it to the brim with others you find. Small and splash resistant (so you can keep it on hand while cooking), it features cooking timers, a conversion tool, and a list of ingredient substitutions so you don't have to run to the store mid-way just because you forgot one thing on the list. | |
No comments:
Post a Comment