Latest Property News from Ted Hanson

Friday 30 July 2010 Quote of the week...... Life shrinks or expands in proportion to one's courage. - Anais Nin, 1903-1977 1. Are Australian house prices overvalued? Simply comparing house prices to income is not the way to measure affordability, according to research from the Economics and Market Research group of the ANZ Bank. As Mark Twain said it, "the reports of my death are greatly exaggerated". The latest ANZ Australian Housing Update questions international comparisons of house-price-to-income ratios, which have been widely used to suggest that Australian house prices are significantly overvalued. ANZ's Head of Property and Financial System Research Paul Braddick suggests that these analyses are not only dangerously simplistic but explicitly ignore a key component of the housing affordability equation - interest rates. "These arguments centre around the concept of `mean reversion' i.e. elevated house price to income ratios must revert to their long term historical average for `affordability' to be `sustainable'", Baddick says. "However, as a measure of housing affordability, house price to income ratios are very misleading as they completely ignore interest rates. "Ultimately, housing affordability comes down to debt servicing costs of which interest rates are a key driver." The report shows that mortgage interest rates in Australia in the 1980s averaged around 14%, however, since 2000 the average has been close to 7%. "This reduction in mortgage interest rates has effectively been capitalised into house prices", Braddick says. "Housing affordability and the sustainability (or otherwise) of current house price levels are extremely complex issues and drawing conclusions from simplistic aggregate metrics such as house price to income ratios is very unwise", he concludes. 2. Trees to the power of three Three trees are all that's needed to offset the average size home's annual lighting output, according to new information from Planet Ark. At today's National Tree Day launch, the environmental organisation revealed its aim for this year's event is to plant a million new native trees and shrubs. Planet Ark, in conjunction with Toyota is calling on all Australian families to give back to the environment and offset a year of their home's average lighting needs by getting involved in National Tree Day on Sunday 1 August. "A million trees are capable of absorbing the same amount of greenhouse gas emissions that are generated from the annual lighting needs of approximately 348,000 households, which is equivalent to a city the size of Adelaide," says Planet Ark spokeswoman Rebecca Gilling. "By getting involved in National Tree Day and planting a tree for yourself, one for your children and one for our country, not only are you helping grow Australia's tree population, you'll be reversing the environmental impact of your home's annual lighting needs." As Australia's biggest community tree planting event, National Tree Day and Schools Tree Day are responsible for planting 15 million native trees and shrubs by approximately two million volunteers over the years. "Over its lifetime a single tree will absorb over 268 kilograms of greenhouse gas emissions", said Toyota's Senior Executive of Sales and Marketing, Dave Buttner. "The average Australian home's annual lighting needs will emit 770 kilograms of greenhouse gases. "So get involved this National Tree Day and help create a cleaner and healthier environmental for the next generation", he urged. Find your nearest tree planting event at http://treeday.planetark.org/find-a-site or call 1300 88 5000. 3. Green Star buildings 'explode' Australia's first carbon neutral office building, Grocon's Pixel building, has been awarded the highest Green Star score ever, with a perfect score of 100, the Green Building Council of Australia (GBCA) announced this week. The Green Star environmental rating system was launched in 2003, with the first Green Star rating being awarded in 2005 to 8 Brindabella Circuit at the Canberra Airport. Announcing the certification, Chief Executive of the GBCA, Romilly Madew said that since 2005, Green Star has grown exponentially, with interest in building ratings 'exploding' in every state and territory. "We now have 3.57 million square metres of Green Star certified office, retail, education and residential space nationwide," Ms Madew said. "That the Pixel building is our 250th certification is particularly significant, as five years ago many in the industry thought a 6 Star Green Star rating was unachievable. "Today, not only are we seeing more and more 6 Star certifications across a range of building types, but we have a building that has achieved a perfect score of 100." Under the Green Star rating system 75 points is the benchmark for 6 Star Green Star rating. The Pixel building was awarded a perfect 100-point score, and gained an extra five points for innovation. "The Pixel building is a clear example of the shift within the property and construction sector. "Today, we've moved beyond the recognition that buildings are merely resource consumers, and are now working on ways to ensure buildings can be producers of resources," Ms Madew concluded. 4. Land sales drop Sales of residential land sales fell for a second consecutive quarter in March 2010, according to the latest residential land report from the Housing Industry association and property information and analytics provider rpdata.com. The HIA-rpdata.com Residential Land Report shows the volume of land sales fell in the March 2010 quarter to a level 40 per cent lower than in the March quarter last year. Meanwhile, the weighted median land value for Australia held steady in the first quarter of 2010 (-0.1 per cent), for annual growth of 6.9 per cent. Sydney remains the most expensive residential land market in the nation with a median value of $305,000. Outside the capital cities, the Sunshine Coast in Queensland remains the most expensive land market with a median value of $260,000. There are twelve markets across Australia where median land value sits at or below the $100,000 mark. The most affordable market is the Mallee region of Victoria ($72,000), followed by Murray Lands ($77,000) and the South East ($80,000) in South Australia, East Gippsland in Victoria ($80,000), and the Murrumbidgee region in New South Wales ($83,000). Rpdata.com national research director Tim Lawless, suggests the consecutive quarterly declines in land sales reflect the price sensitivity in the residential market. "The interest rate rise in March, which followed monthly increases over the December quarter last year certainly dampened market conditions, particularly amongst the first home buyer and low income segments of the market." "The continued weakness in vacant land sales is a bit of a worry considering the ongoing demand for housing remains high. "The low volumes of land sales suggest continued price sensitivity from the market and further housing pressures ahead." Mr Lawless doesn't expect any material improvement in land sales over the June quarter. "Considering the rate rises in April and May, lower consumer confidence, and lower housing finance commitments over the June quarter, we don't expect any real improvements in the vacant land figures soon". 5. Fuel fit for a king While we've found household uses for our waste in composting and grey water systems, across the pond some royal horses are turning their waste into light and heat. A Ministry of Defence spokesman has announced that manure from the 170 horses in the King's Troop would be made into pellets to generate bio-fuel, the BBC reported recently. Both the manure and bedding from the stables will be used to generate the sustainable fuel, which the regiment will use when it moves to its new headquarters next year. 6. Washed and watered Plants are perhaps the only things we like to have growing in our bathrooms, but they have trouble sometimes when we forget to water them. Luckily, Montreal-based Gau Designs have devised a way to ensure your bathroom botanicals never go un-watered again. The Zen Garden Sink comprises a polished concrete basin with a small channel leading off to the side where a plant is growing, so every time you wash your hands, runoff water drips along the sloped groove and nourishes your plant.