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Latest Property News from Ted Hanson

Friday 18 December 2009 Merry Christmas! Wishing you all the best for the holiday season. In the news this week, Aussies still want to buy houses; and looking after the little guys while you're away on holiday... 1. More loans for new housing Lending for new homes continues to increase, according to figures released this week by the Australian Bureau of Statistics. Loans for the construction of new dwellings and the purchase of newly-built homes combined increased by 5.7 per cent in October, following a rise in September. New housing loans have increased in 13 of the past 14 months. New investment housing did not fare so well, dropping by 0.6 per cent. Loans for new investment housing were down 10.5 per cent over the last 3 months relative to the corresponding period last year. During October, loans for the construction of new dwellings increased by 9.2 per cent, while loans for the purchase of newly-built dwellings dropped by 3.9 per cent. The total number of seasonally adjusted loans for owner-occupiers (net of refinancing) fell by 1.5 per cent in the month of October 2009 but was up by 37.4 per cent compared to October 2008. In seasonally adjusted terms the total number of owner-occupier loans (net of refinancing) in October 2009 declined in New South Wales (5 per cent), Queensland (0.6 per cent), Victoria (0.4 per cent), the Australian Capital Territory (1 per cent) and South Australia (3.8 per cent). The total number of loans increased by 0.8 per cent in Western Australia, the Northern Territory (7.9 per cent) and by 6.2 per cent in Tasmania. Top 2. Home comfort More than one third of Australians plan to buy a property in the next two years despite concerns over interest rates and higher living costs, according to the annual Consumer Sentiment Survey commissioned by mortgage broker, Mortgage Choice. The results indicate the country's more positive economic outlook is prompting almost half (40 per cent) of Australians to revisit their financial plans. Furthermore, 40 per cent of responding mortgage holders believed they could afford to make repayments at an interest rate of over 11 per cent. Mortgage Choice senior corporate affairs manager, Kristy Sheppard said that since the global financial crisis hit home, more borrowers are taking ownership over their financial situation and although many see rates as concerning, a high percentage are prepared for rate rises of at least five percentage points, which is much higher than is being predicted for the next couple of years. "This suggests many borrowers can comfortably repay their home loan sooner, if they put their mind and budget to it", Ms Sheppard said. "Improved sentiment from Australians around their livelihoods is also terrific to see. When compared to last year's results, job security slipped from the top of the `biggest concern' list to third place this year, behind interest rates rises and other costs of living." The survey data shows that for 2010, respondents were most concerned by interest rates (19 per cent of respondents) and other costs of living such as utility bills and clothing (17 per cent) than they were about their job security (16 per cent) and economic management at Federal Government level (15 per cent). Last year, the major personal concerns were job security (20 per cent), followed by economic management at Federal Government level (18 per cent) and other costs of living (17 per cent). This aside, almost three quarters of this year's respondents were confident the Australian economy would be strong during 2010, so much so that almost half of those without a mortgage (41 per cent) planned to take the leap into property ownership within the next two years. When asked to consider higher mortgage interest rates, 40 per cent of mortgage holders said they could afford a rate increase of more than five percentage points before they would need to consider selling their property. 17 per cent of those said they could afford `any' increase - the second most popular response. On the lower end of the scale, 14 per cent could afford four to five percentage points, 13 per cent between three and four points, 15 per cent between two and three, and 6 per cent between 1.5 and 2 percentage points. 6 per cent said they couldn't afford any rate rise before considering selling. Over half of all respondents (57 per cent) felt the global financial crisis had made investing in property seem safer than shares. Generation Y was the most comfortable investing in property, with 62 per cent believing property is safer. 58 per cent of Baby Boomers agreed and 56 per cent Generation X. Western Australia had the highest percentage of respondents who believed this to be the case, at 61 per cent. "As a housing market service provider, Mortgage Choice is pleased to see 41 per cent of respondents planning to buy property in the next two years and 43 per cent of them planning on an investment property. Hopefully, increasing demand from this buyer group will stimulate more housing construction," Ms Sheppard said. Top 3. Take a gander at George's house! No one knows exactly why George Stacy chose to construct his family home in the shape of a goose. The railway worker just came up with the concept impulsively, his wife Ollie says. "He came home one day with the idea in his mind, I have no idea how he came up with that notion". In fine Darwinian form, Stacy shot down a sacrificial goose and used the carefully prepared carcass as a scale model of his vision. This would provide a natural blueprint. For six years, the Stacys lived in an old shack above the site whilst construction was taking place. Determination was key, and without the money to build continually they had to "work a while and build a while", Ollie recalls. The result is a truly unique home featuring eight egg-shaped windows, two of which contained car lights that served as life-like goose eyes. Ollie reports that at one stage these lights would blink to passing motorists. Sandstone from the local creeks, most of it hauled to the site by Stacy's three sons, was used for the external walls. Akin to the model, the roof of the building is ribbed, with a `head' protruding about 15 feet high. There is a tail at the other end of the roof and the entire building sits within an oval `nest'. Completed in 1940, the Mother Goose building in Hazard still continues to attract attention around the world and has been featured in the New York Times and on the Oprah Winfrey Show. Although George Stacy has passed away, his monumental display of imagination and creative genius lives lives on. Not only as the `Mother Goose' building, but as concrete reminder of the magical imagination that lies within us all, just waiting for a chance to hatch out. Top 4. It's what's outside that counts If you're planning to go away for the holidays, spare a thought for your buddies who stay behind to keep an eye on the house. Just as you make arrangements to have your pets and plants cared for, it is important to ensure there is shelter and water for the variety of birds, lizards and a number of other insects and small animals that share your patch. Not only do these critters live and find food in your backyard, but they also play an important role in maintaining the biodiversity of our land. Birds, bees and butterflies help propagate the plants, while the bluetongues, skinks and frogs all love to hunt and eat garden pests. The National Parks and Wildlife Foundation, through its Backyard Buddies initiative, offers a few suggestions of things you can do to make sure your co-habitors enjoy their summer too: Install a bird bath. Your feathered friends will love to splash and cool down. You can even add a timer to your pond or birdbath to keep water fresh and clean. If water restrictions are an issue, birds love to roll around in a shallow sand bath. Make sure the bath is beyond the reach of neighbourhood moggies - spiky ground cover makes an effective and attractive natural barrier! Tadpoles are growing legs and will be looking for ponds, so keeping yours in good shape while you are away could see some new residents move in. Again, a timer is a cheap and simple way to keep water levels stable for your plants, fish and frog buddies. Add shade and plenty of leaf litter or fallen bark for your smaller visitors. Before you go, how about adding some rocks and logs in a corner of your backyard? They provide shade and shelter for lizards and other small animals while you are away, and these guys will keep your backyard free of snails and other pests while you're on holidays. Top 5. Housing starts up Housing starts increased by 9.4 per cent in the September 2009 quarter, according to figures released this week by the Australian Bureau of Statistics. The seasonally adjusted estimate for new private sector house commencements rose 8.1 per cent following a rise of 5.1 per cent in the June quarter. The estimate for new private sector other residential building Top 6. Staircase je t'aime Ever had a friend or relative go to France and bring you back a tiny model of the Eiffel Tower? Here's one sure to trump their gift - a 40-step section of spiral staircase removed from the Eiffel Tower was sold by auction recently. Part of a flight of stairs dismantled in 1983 when elevators were installed, the 7.8 metre section sold for A$136,000 in Paris to a man who also bought a piece of the Berlin Wall.

Latest Property News from Ted Hanson

Friday 11 December 2009 It is amazing what you can accomplish if you do not care who gets the credit. Harry S Truman 1. Australian PCI®: Construction falls as demand weakens The number of houses being built has grown for the past five months, but not enough to prevent the national construction industry from contracting in November, according to the latest Australian Industry Group/Housing Industry Association Performance of Construction Index (Australian PCI®). The seasonally adjusted Australian PCI® was down 3.3 points to 47.6 for November, slipping below the critical 50 point level separating expansion from contraction. Australian Industry Group Director Public Policy, Dr Peter Burn said that a slump in apartment building and a further decline in engineering and commercial construction underpinned November's results. "Despite the fall, the performance of the sector was still well above the lows of early this year", he said. The index shows that the housing sector has continued to grow, although the rate of improvement has slowed over the past two months due to a weakening in first home buyer activity. Across the sectors, the apartment activity index dropped 4.7 points to 48.5. The engineering and commercial construction indexes also fell below 50 for the month. House building grew for the fifth consecutive month, taking the sub-index to 51.1 for November. "With little price pressure, and trade availability still considerably better than it was up until late last year, it is a good time to engage in renovating an existing property or building a new home", Harley Dale said. Top 2. Investors still hungry Appetite for new apartments has been resilient, despite interest rate rises, according to a recent survey released by industry analyst and economic forecaster, BIS Shrapnel. BIS Shrapnel's Home Buyer Monitor survey, which was conducted after the November 2009 rate rise, showed that 30 per cent of all households looking to purchase a dwelling were investors. This proportion was unchanged from the previous survey in August 2009, indicating that investor appetite was unaffected by the initial rate rises. The low rate of medium and high-density dwelling construction is largely attributable to tighter lending restrictions on development projects. BIS Shrapnel says it is uncertain as to how long it will be before lending restrictions are eased and, even if some improvement were to occur in the near future, it would be some time before supply improves as most medium and high-density dwelling projects take 12 to 18 months to complete. BIS Shrapnel Senior Economist Jason Anderson says the forecast growth in rents will complicate the Reserve Bank of Australia's fight against inflation. "Continued strong growth in residential rentals will limit the potential decline in underlying inflation measures," he says. "Given that underlying inflation remains high, relative to the Reserve Bank of Australia's target range, we expect that the escalating shortage of rental properties will be a significant factor contributing to further interest rate rises. "Higher interest rates would dampen the construction of new dwellings, exacerbate the housing shortage, and thereby place upward pressure on rentals. This dilemma is set to become much more evident during 2010." BIS Shrapnel says the causes of escalating housing costs require close attention from governments at all levels. Australia is nearing the end of a decade where housing costs have risen far more sharply than the price of overall household good and services. During the 1990s, the housing component of the Consumer Price Index (CPI) was flat, and did not contribute anything to inflation over the decade. However, over the ten years since the start of the millennium, the housing component of the CPI has risen by 56 per cent, which is well above overall CPI inflation of 36 per cent. "To put this in perspective, housing costs have jumped by more than the social `bads' of alcohol and tobacco, for which average prices have risen by 55 per cent over the decade, and are transparently affected by rising government levies," says Anderson. "The burden of government charges and policies on housing are more indirect, but pervasive. Both owner-occupiers and renters are being affected and unlike cigarettes and alcohol, housing is not a service that can be picked-up `duty free'." Top 3. Impact of climate change on coastal homes Almost half a million existing Australian homes could be under water by 2100, according to a report released by the Department for Climate Change mapping the impacts of climate change on Australia's coastal communities. The report - Climate Change Risks to Australia's Coasts - is the first continental scale mapping of residential buildings at risk from climate change. Focusing particularly on risks to residential buildings from inundation and erosion, the report identifies areas at high risk and what can be done to reduce the impact Key Findings: Of the 711,000 existing residential properties close to the water, between 157,000-247,600 properties are identified as potentially exposed to inundation with a sea-level rise scenario of 1.1 metres. Nearly 39,000 properties are located within 110 metres of `soft' shorelines and at risk from accelerated erosion due to sea-level rise and changing climate conditions. The current value of existing residential buildings at risk from inundation ranges from $41 billion to $63 billion (2008 replacement value). Decisions on future development, particularly in areas highly exposed to the impacts of climate change, should not increase risk. Government roles in planning and setting benchmarks will be central to risk management, and there is a high level of public good assets in the coastal region. The rising value and number of coastal properties (as a result of this increasing supply and increasing population) in turn exacerbates risk exposure from climate change impacts. Some development and related land use decisions may need to be further constrained to ensure climate change impacts will not come with further exacerbated risks. The full report can be downloaded at: http://www.climatechange.gov.au/publications/coastline/climate-change-risks-to-australias-coasts.aspx Top 4. Average mortgage hits all-time high Mortgages in Australia have hit a new high, according to a report released this week by mortgage broker AFG. The average new mortgage arranged in Australia in November reached $367,000, the highest on record. The AFG Mortgage Index shows that mortgage sizes have been on the rise since the middle of the year, having increased by 6.4 per cent since May. Supporting recent reports of increasing property prices, average mortgage sizes have grown particularly strongly in Victoria (up 12.1 per cent since May) and New South Wales (up 10.7 per cent), but less so in WA, where they rose by 3 per cent and Queensland, where they have held steady since May. November also saw the continuing re-emergence of property investors, who accounted for one in three of all new mortgages arranged (33.8 per cent), the highest such figure all year, and well up on the one in four (24.7 per cent) figure for March when investment reached its lowest point. However, overall monthly sales of mortgages in November declined for the second month in a row, off the back of increasing interest rates and sharply declining First Home Buyer numbers. First Home Buyers accounted for just 13.7 per cent of all mortgages arranged in November, compared to 28.1 per cent at their peak in March this year. The Index also shows a slight change in the balance of lenders from banks to non-banks during the past two quarters, suggesting that second-tier lenders are becoming somewhat more competitive as global credit conditions ease. Top 5. Bots spice it up The holiday season is a time when many of us find family and friends filling our homes and crowding around the table at mealtimes. It's also a time to cast our minds back two millennia to the manger scene, or bring a futuristic edge to the table with robots that serve food. Well, serve salt and pepper, at least. Salt & Pepper Bots are little wind-up toy robots that will walk salt and pepper around the table, so they won't need to pass through 10 hands this Christmas lunch just to get to you. Top 6. No window of opportunity here Imagine not being able to open a window in your home because your neighbours are worried about you looking into their house. That's the situation facing a British couple, who recently appeared in court for breaching planning consents that forbid their bathroom window from being opened, the UK Daily Mail reported recently. When Tony and Carmen George proposed to extend their house, the neighbours objected to the window being located in a position that allowed the Georges to see into their home. The council allowed the window, but said it must remain closed at all times. When investigating a possible leak that was causing damp around the window, the Georges opened the sealed window in 2008 and received a notice from an enforcement officer. A more recent attempt to find the cause of the damp received a complaint from the neighbours, resulting in the court summons. Talk about being stuck between a rock and a hard case.

Latest Property News from Ted Hanson

Friday 04 December 2009 Quote of the Week "The difference between a Flower and a Weed is a Judgment." ~Author Unknown~ 1. House prices on the rise Australia's housing market bounced back strongly in October after a relatively flat September, according to a report released this week. The RP Data-Rismark National Capital City Hedonic Index shows that Australian home values rose by an indicative 1.4 per cent in the month of October after just 0.4 per cent growth in September. Over the first ten months of 2009, Australian home values have now risen by 10 per cent following on from their 3.8 per cent peak-to-trough falls in 2008. rpdata.com's Senior Research Analyst, Cameron Kusher, remarked that the strong growth figures show that the market is very resilient and that the 25 basis point interest rate increase during the month has not immediately impacted the market. Rismark International Managing Director Christopher Joye added that while a resilient recovery had been forecast for 2009, it was good to see such a strong growth, which reflects Australia's better-than-expected employment and growth outcomes. "We project that as mortgage rates normalise, capital growth rates will fall back to more subdued levels", Joye said. Cameron Kusher said the likeliness of further interest rate rises over the next 12 to 18 months is likely to result in more normal growth conditions over 2010. "The removal of the First Home Buyers Grant Boost and higher loan costs will also result in greater pressure on the rental market," he said. "According to our analysis of all home sales in Australia, which we have privately shared with the RBA, the median Australian home value is only four times average disposable household incomes", Joye commented. "This is inconsistent with claims that Australian dwelling prices are 6-8 times household incomes. "People forget that 40 per cent of the housing stock is not located in the capital cities. "This data implies that Australian housing is not expensive by overseas standards, and also helps explain our internationally high rates of home ownership combined with very low mortgage default rates." Joye remarked that one question exercising people's minds is the impact of higher interest rates, yet the Reserve Bank (RBA) has pointed out that when they cut mortgage rates by 40 per cent in the second half of 2008 most borrowers did not actually reduce their repayments. In the RBA's October Board Minutes, the Bank noted: "[M]any households with home loans had not sought to lower their monthly payments when mortgage rates had fallen and had instead paid down their loan balances ahead of schedule. This would reduce the vulnerability of that part of the household sector to rising mortgage rates." "The RBA suggested that this means that borrowers should be able to absorb future rate hikes as mortgage costs normalise," Joye concluded. Top 2. The Reserve Bank of Australia again raised the official cash rate by one quarter of a percentage point this week, bringing it back to 3.75 per cent. This is the third consecutive monthly increase since rates bottomed at 3 per cent earlier in the year in response to the Global Financial Crisis. Announcing the decision, Reserve Bank Governor Glenn Stevens said that with the risk of serious economic contraction in Australia having passed, the Board has moved at recent meetings to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. "These material adjustments to the stance of monetary policy will, in the Board's view, work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead", Governor Stevens said. Top 3. Protect your position This week's announcement by the Reserve Bank of another successive rate rise will lead more borrowers to move to protect their financial position and prepare accordingly for the new rate cycle ahead, according to Resi Mortgage Corporation. Resi's Head of Consumer Advocacy, Lisa Montgomery says although this rate rise may only add around $46 to monthly repayments on an average $300,000 loan*, which in isolation seems a manageable figure, the effect of these rate rises will compound as more occur. "During the decade prior to the GFC, even when interest rates were rising, Australians were spending like never before - but thankfully there now seems to have been a shift to borrowers being more aware of the implications of their spending and the options available to them", she says. "However, despite this trend, it is inevitable that there will still be some who will be caught short as more rate increases occur and as with planning for anything - protecting your position is the key." Montgomery says for many mortgage holders, now is a good time to do an audit of their home loan and its features and determine whether it is still providing them with the flexibility they may need in the future. "See if you can negotiate a better rate with your lender and if that's not possible, consider shopping around for a lender with a more valuable service proposition", she suggests. In the current climate of rising rates there are several things that each category of borrower might take into consideration: OWNER OCCUPIERS: Always allocate more funds for your current mortgage repayments which will give you breathing space for rate rises, as well as providing a slush fund for any necessary works you may have to carry out on your property. Limit discretionary spending, particularly during the festive period when budgets can blow out. FIRST HOME BUYERS: Hold off on purchasing everything new to go with the new house and instead acquire household items as you can afford to pay for them - preferably in cash. Don't rack up additional debt if you don't need to. With rental demand still high and provided your living circumstances allow for it, consider taking in someone to rent a room and help you pay your mortgage. INVESTORS: Don't take it for granted you will always have tenants to help you pay the mortgage - have a plan B ready in case the property is untenanted for any period such as having funds set aside to continue paying the mortgage or moving in yourself if your situation allows Remind yourself that repairs and maintenance costs are a necessary part of owning an investment property so allow for them in your annual budget and remember they are tax deductible and will over the long term add value to your property. Monthly repayment figures based on an average $300,000 principal and interest standard variable loan taken out over 25 years. * Monthly repayment figures based on an average $300,000 principal and interest standard variable loan taken out over 25 years. Top 4. Apartments bring down approvals October saw a large drop in the number of building approvals for units and townhouses, causing an overall drop for the month, according to figures released this week by the Australian Bureau of Statistics. Total seasonally adjusted building approvals eased by 0.7 per cent in October, driven by a 17.9 per cent drop in multi-unit approvals. On the other hand, detached house approvals increased by 5.7 per cent following an upwardly revised 1.1 per cent gain in September. Building approvals increased in three states and fell in three states in October. The number of seasonally adjusted residential dwelling approvals increased in October by 10.5 per cent in Tasmania, 9.7 per cent in Western Australia, and 4.2 per cent in Queensland. Approvals dropped by 10.2 per cent in New South Wales and were down by 4.5 per cent in South Australia and 0.3 per cent in Victoria. The trend number of approvals increased by 2 per cent in the Northern Territory and by 1 per cent in the Australian Capital Territory. Commenting on the data, Master Builders Australia Chief Economist Peter Jones said that the negative headline figure masks encouraging strength in the growth of new house approvals, but cannot hide the extreme volatility occurring around a disastrously low base in `other dwellings' approvals. "Investor-driven building of units and apartments continues to be affected by the credit crunch with approvals running at an annualised 35,000 - still 40 per cent below the peak", Jones said. "The concern is that the fragile housing recovery is still very one-dimensional, and remains hamstrung by tight lending requirements affecting investor-driven unit and apartment builders", he added. Housing Industry Association Chief Economist, Dr Harley Dale said that building approvals levels currently implied around 145,000 housing starts per year, well short of the new homes required to meet Australia's rapidly growing population. Top 5. Breaking the bank As we watch the four major banks rush to increase interest rates this week, one establishment on the other side of the world has been hit hard for not looking after the little guy. According to the New York Post, a US couple has received a blue-moon-style Christmas present after a judge - outraged at OneWest bank for what he called harsh, repugnant, shocking and repulsive behavior - cancelled their half-million dollar mortgage debt. The decision saw over AU$315,000 erased on the principal and $255,000 in interest and penalties cancelled from the bank which had received over $887.3M in the Federal bailout, yet still had a record of cold-bloodedly foreclosing on any homeowner owing money. The bank is reportedly involved in a similar case in California, where it's trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop. Top 6. The lighter side of clouds Every cloud may have a silver lining, though seeing it isn't always so simple as flicking a switch. At least it wasn't, until Silver Lining in a Box - a lamp that uses light to paint your walls with the silver lining of cloud shapes. Hand-assembled with a production process that minimises the environmental impact, it's an easy way to keep the brighter side in sight. Top