Latest Property News from Ted Hanson

Friday 20 August 2010 Happy with our lot… In the news, consumer sentiment rises; first home buyers pick up in QLD, NSW; and a sky-high price for penthouse… 1. Sentiment stronger than expected The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 5.4 per cent in August from 113.1 in July to 119.2 in August. Westpac's Chief Economist, Bill Evans, commented that it is now back to around the level it reached prior to the beginning of the rate hike cycle in September last year. After tumbling by 15 per cent in the wake of three consecutive rate hikes in March, April and May the Index has now recovered by 17 per cent in the last two months. "There were many reasons to expect the Index to rise in August although a 5.4 per cent increase following the 11.1 per cent increase last month is much larger than we expected", Evans said. "Clearly the most important factor was the decision by the Reserve Bank to keep its overnight cash rate steady in August. "The significance of the rate decision can be seen with the 10.2 per cent increase in the confidence of those folks who hold a mortgage compared to a 0.9 per cent reduction in the confidence of those respondents who wholly own their property." Evans noted that confidence amongst people who rent was also up by 10.2 per cent so other factors were also at work, such as unemployment figures and petrol prices. He added that uncertainty over the election result does not appear to be affecting households. "Sentiment towards housing and purchasing a motor vehicle also firmed", Evans said. The Index measuring whether now is a good time to purchase a house rose by 9.1 per cent. As with overall confidence, much of the negativity about housing and cars which built up in the wake of the recent series of rate hikes has dissipated. "All components of the Consumer Sentiment Index increased in August. The assessment of family finances versus a year ago rose a further 5.7 per cent after rebounding sharply in July from a June slump. Expectations for family finances over the next 12 months also posted a solid 6.1 per cent rise. Sentiment on the economic outlook - which has been notably stronger than views on family finances in recent months - also improved in August with an 8.6 per cent rise in expectations for the next 12 months probably reflecting the reduced threat of follow-on interest rate rises this year. "Most notably, consumers' opinions on "whether now is a good time to buy major household items" also posted a solid 3.5 per cent rise with this component index now at its highest level since July 2007", Evans said. The report concluded with a prediction that the Board of the Reserve Bank is likely to leave rates unchanged when it next meets on September 7. Top 2. Mortgage sales down Sales of new mortgages dropped almost ten per cent in July, despite a lift in some states in the number of first home buyers, mortgage broker AFG said this week. The AFG Mortgage Index published this week shows that sales of new mortgages fell by 9.1 per cent in July 2010 from the previous month and 15.1 per cent compared to July 2009. The slowing trend for mortgage sales has been consistent across most states although Victoria held up strongly until July, when sales there also dipped by 10 per cent. AFG General Manager Sales & Operations Mark Hewitt attributed the July figures to seasonal factors, such as the announcement of the federal election, school holidays during the first two weeks and a wet, cold winter in Eastern States. "That said, we did see a pick up in activity towards the end of the month, and we expect stronger figures as we move into spring", Hewitt remarked. A surprise in the monthly data was the increase in first home buyer activity, which rose to 11.1 per cent of all mortgage sales nationally compared to 9.5 per cent in June. The volume of mortgages arranged for first home buyers increased by 6.25 per cent from $192 million in June to $204 million, with large jumps recorded for QLD (23 per cent up from $30 million in June to $37 million in July) and NSW (9.8 per cent up from $61 million in June to $67 million in July). First home buying activity rose slightly in WA ($43 million in June to $45 million in July), but declined in South Australia ($6.1 million in June to $5.4 million in July) and Victoria ($51 million in June to $47 million in July). Hewitt commented that the increase in first home buyer activity confirms reports elsewhere that while mid-to-upper levels of property markets are slowing down, there is still an appetite for property around and below $500k. 3. Stop ants in their tracks Ants marching in lines through the house have long been welcomed as a sign of rain, as long as it is just an occasional visit. However, an infestation of ants can be a sign of potential structural damage to your house, as well as being a constant nuisance. If you are averse to using chemical sprays and poisons to deter the critters, let's try some age-old remedies. Old Wives' Tale #714 says that ants will not cross a line of chalk, so you could try laying down some guidelines using a stick of chalk from the local newsagent. If that doesn't have the desired effect, Old Wives' Tale #715 suggests wiping surfaces with oil from the Pennyroyal plant. Pennyroyal is a mint, which can be grown in a shady spot by the back door so that there are always leaves to crush when needed. 4. Banking on the mobile Do you use your mobile phone to make bank transactions? There has been a dramatic rise globally in the use of mobile applications over the past two years, but using mobile phones for making financial transactions lags other uses, according to KPMG. KPMG's global survey, Consumers and Convergence IV, revealed that in Australia, 19 per cent of mobile phone owners use their phone for banking. Forty-three per cent of respondents in Asia Pacific (ASPAC) say they make mobile banking transactions at least once a month, compared to 30 percent globally. One reason KPMG suggests for the result in Australia may be the lack of awareness of mobile banking offerings. Forty per cent of Australian respondents did not know whether their bank offered mobile banking compared to only 10 per cent in ASPAC and 24 per cent globally. Peter Russell, KPMG Financial Services Partner said that Australian banks have tended to let consumers find their own mobile banking solutions from the general marketplace. "As Australian banks are rushing to develop and improve applications for smart phones and the Apple iPad tablet this gap will narrow very quickly", Russell said. Australia also lagged ASPAC and global respondents when it came to the level of comfort in using their mobile phone for financial transactions. Twenty one per cent of Australians are comfortable with mobile banking compared to 40 per cent in ASPAC and 34 per cent globally. Furthermore, 70 per cent of Australians have never done any banking on a mobile device compared with 55 per cent globally and 38 per cent in ASPAC. Eighty-seven per cent of the Australian respondents had never made an investment transaction, such as selling a stock or bond, over their mobile compared with 53 per cent for ASPAC and 71 per cent globally. Mr Russell suggested that these numbers are not surprising given the maturity of mobile phone transaction activity. "We predict growth in investment transactions as business conditions improve and the functionality of mobile applications to conduct transactions improves", he said. "It is clear that mobile phone users have concerns over security and privacy with 59 percent of our Australian respondents sharing this concern," said Mr Russell. The survey covered 5,627 consumers in 22 countries. Australia had 301 respondents to the survey, which was conducted in the Australian Autumn, 2010. A copy of the report is available on the KPMG website. 5. Penthouse takes it to new heights A penthouse in one of London's most sought-after locations has well and truly raised the bar, after fetching a record-breaking AU$244.5M. Offering two floors with bullet-proof windows, six-bedrooms, a panic room and breathtaking views, the apartment at One Hyde Park in Knightsbridge has taken the title of the most expensive property in Britain, trumping the $200.1M paid for a flat in 2008, the UK Telegraph reported recently. The new owners can also look forward to 24-hour room service from a neighbouring hotel, and feel safe knowing they're being looked after by security guards trained by the SAS. 6. The lighter side of science You no longer need a lab coat, formulae to cure disease or plans to create your own Frankenstein monster to have ominous science beakers glowing around your home. Inspired by the equipment so synonymous with experimental laboratories, designer Benjamin Hubert has created a set of three lamps made from hand-blown glass in the shapes of science beakers, in forms that hang from the ceiling, rest on a table or on the floor. The beakers are lit from within by bulbs, held in place with authentic cork stoppers and a power cord that looks more like a tube leading off to another bizarre concoction.