Thursday, September 27, 2018
Tuesday, September 25, 2018
Monday, September 24, 2018
http://ljgrealestate.com.au/rental/3-leelaben-place-eight-mile-plains-ql...
http://www.facebook.com/pages/LJ-Gilland-Real-Estate-Pty-Ltd/169194919788253
http://www.ljgrealestate.com.au
Sunday, September 23, 2018
Overall, it’s hard to see a scenario where Australian housing values could fall off a cliff. For this to happen we would need to see a material about face in labour market conditions, a global shock or a material rise in interest rates – none of which seems to be a likely outcome at the moment.
Without a doubt, housing risks are heightened relative to a year ago. Dwelling values are slipping lower nationally (down 2% since peaking in September last year), mortgage rates are edging higher (up by around 15 basis points from three of the four major banks announcing a rate rise in September) and mortgage arrears have moved off their record lows (but still only around 0.6% of all mortgages are 90+ days in arrears). All this against a backdrop of record high levels of household debt (the ratio of disposable income to household debt reached 190% in March this year), increasing levels of housing supply and rising domestic and global uncertainty.
It should come as no surprise that some commentators are forecasting a substantial reduction in dwelling values. We saw similar forecasts during previous downturns from the likes of Steven Keen, Harry Dent and Jeremy Grantham as well as many others. The most recent dire prediction to get mainstream airplay was from Martin North predicting a 40-45% fall in dwelling values; albeit with only a 20% chance of this occurring. Since airing on 60 Minutes, the segment titled ‘Bricks and Slaughter’ has seen the two primary experts featured, Martin North and Louie Christopher, clarifying their televised comments which were apparently presented in an unbalanced context: a presentation of the worst case scenario with no regard for the most likely outcome.
If we look at the current downturn in Australian housing, the trajectory of decline is actually quite unremarkable.
Australia’s largest housing market, Sydney, has seen values fall by 5.6% since peaking in July last year; a trajectory that is straight down the middle of previous downturns. During the GFC, Sydney dwelling values fell by 7.0% in the space of twelve months, and the downturn before that (2003-2006) saw values fall 7.1% over the same number of months.
Australia’s second largest city, Melbourne, has seen values falling since November last year. Since that time the market is down a cumulative 3.5% and the descent has generally been milder relative to previous downturns.
CoreLogic Historic Periods of Peak to Trough Decline
Even in markets where values have been falling consistently for more than four years on the back of a material weakening in economic and demographic conditions, we haven’t seen values fall by anywhere near 40%. Perth dwelling values peaked in 2014 and have fallen by 12.6% and in Darwin where conditions have been even tougher, dwelling values are down 21.8%.
Recently released housing value forecasts from Moody’s Analytics certainly paints a less gloomy picture of housing markets over the coming years. While, growth is forecast to be subdued relative to previous years, the forecast is for a relatively mild downturn, with national house and unit values returning to mild positive annual growth by the middle of 2019.
CoreLogic Annual Change In National House Values
The Moody’s Analytics forecasts are based on an econometric model which uses CoreLogic’s Hedonic Index data as a base to forecast from. Their upbeat assessment of dwelling values is based on rising business investment, particularly in the non-mining sector, a rise in infrastructure spending, above trend jobs growth, and ongoing low interest rates.
Of course the outlook for housing conditions is varied across the regions. By the end of 2019, Moody’s is expecting every capital city except Hobart (-2.4%) to record a positive annual change in house values, with year on year rises ranging from 4.5% in Canberra and Adelaide to a 0.9% rise in Perth dwelling values. Forecasting the movement in asset values is challenging at the best of times. With so much uncertainty at the moment it’s even harder. Several wildcards remain that could have a negative impact on the direction of housing values.
Households are more sensitive than ever to interest rate movements due to the record level of household debt. Roughly 70% of household debt is housing related, which implies small changes to mortgage rates could have an amplified impact on household balance sheets. Further out of cycle movements in mortgage interest rates could have a negative impact on the market. On the flipside, if the RBA decides to cut the cash rate further (a possible scenario of economic conditions weakened and housing price falls accelerated), this would likely see a rise in housing activity and help to place a floor under housing prices.
There is also the potential for changes to property taxation policies that could have a further dampening effect on investment demand. Based on the value of new housing finance commitments, investors still comprise around 41% of mortgage demand, down from 55% in mid-2015. Investor concentrations remain well above their long term averages across New South Wales (49% of housing finance commitments) and Victoria (41% of housing finance commitments), implying Sydney and Melbourne would have more to lose if investor activity were to drop more substantially. Investors are already being disincentivised by falling prices, mortgage rate premiums and low rental yields; additional disincentives from tax reform could see demand reduce further, creating some slack in the overall demand composition for Australian housing.
In balance, even with mortgage rates edging higher, we are still in the lowest mortgage rate environment since the 1960’s. Population growth remains strong and maintaining a consistent migration policy seems to have support from both sides of politics which will continue to support demand for housing. Labour markets are reasonably healthy with unemployment holding at 5.3% and likely to trend lower, underemployment at the lowest rate since May 2014 and jobs growth above the long term trend. 
Thursday, September 20, 2018
Tuesday, September 18, 2018
Monday, September 17, 2018
DOMAIN
Experts dispute report with claims of 40 per cent house price fall in 12 months
Experts have questioned claims of a 40 per cent drop in Australia’s house prices, made over the weekend on 60 Minutes.
Martin North, the founder of Digital Finance Analytics, said ballooning household debt, compounded by sliding prices in Sydney and Melbourne, would cause house prices to fall fall 40 to 45 per cent in the next 12 months.
“We’ve got a debt bomb a debt crisis and at some point it’s going to explode in our face,” he said.
60 Minutes – The Debt Bomb That No One Wants To Talk About https://t.co/yHcXLyhYAzpic.twitter.com/6o3M7pVTRt
— Martin North (@DFA_Analyst)
September 16, 2018
Experts have rubbished the claims made on Sunday night, saying the very worst case scenario was presented.
“Look, anything’s possible,” Grattan Institute fellow Brendan Coates scoffed. “But the real question is what’s likely, and a 40 per cent fall in the next 12 months is not likely.”
AMP Capital chief economist Shane Oliver said the doom-saying was all too familiar. “[40 per cent] seems to be a common number that pops up in these crash calls,” he said.
Note: I DO NOT believe the Australian housing market is going to crash. Syd & Melb are significantly overvalued but I take the view the overvaluation will likely unwind over a longer period of time. #60minutes 1/
— Louis Christopher (@LouiChristopher)
September 16, 2018
I stated in my interview with #60minutesthe risks as well as the safety valves that are still present in the market. E.g strong local economies, strong population growth, banks very unlikely to fail, etc. The program covered my comments on the risks and overvaluation only. 2/
— Louis Christopher (@LouiChristopher)
September 16, 2018
Anyway, I think I have said what I wanted to say here. It was largely the @DFA_Analyst show afterall! 45% down the next 12 months?! Ok, over to you, Martin!
— Louis Christopher (@LouiChristopher)
September 16, 2018
Mortgage stress and falling prices were the primary factors of concern on the program, which claimed the number of foreclosures was rising, and the banks were obfuscating the real numbers.
Market Economics managing director Stephen Koukoulas said this was a weak claim.
“There’s a whole lot of reasons to suggest prices are going to be weaker for a shorter amount of time, but it’s remarkably orderly,” he said. “People aren’t rushing in to hand over their keys.
Unfortunately, Martin has rejected my very generous offer
My open letter and offer to DFA’s Martin North – Skin in the game on house prices https://t.co/5on4A0W9X8— Stephen Koukoulas (@TheKouk)
September 17, 2018
Dr Oliver said mortgage stress was actually a relatively low risk area for the Australian housing market.
“There’s a lot of talk about people in mortgage stress, but from what I’ve seen, mortgage stress is a lot lower than in 2011 when rates were much higher,” he said. “I’ve been watching this for at least 15 years.
“There’s no doubt people are in mortgage stress, but it doesn’t seem to be as big of a problem as the reports suggest.”
Domain economist Trent Wiltshire said claims about mortgage arrears trending slightly upward were accurate, but needed to be viewed in context.
“Mortgage arrears have increased a little bit but this is due to Western Australia and the Northern Territory, which are recovering from a downturn in mining,” he said.
Politicians, regulators and the banks were preparing for a house price fall, but something catastrophic would need to happen if a two-fifths drop were to eventuate, Mr Coates said.
“They’re worried about China falling into a hole, a trade war waged by President Trump,” he said.
Mr Wiltshire said such an event could cause unemployment to spike, which would be an actual cause for concern.
“But even then, the RBA and the government have tools to fight this like they did in the GFC,” he said.
For house prices to fall to the levels Mr North predicted, an unemployment spike would need to come hand in hand with rate rises, which the Reserve Bank would be “mad” to level on the market, Mr Coates said.
Prices will fall over the next few years, but Dr Oliver said the more likely outcome is a further drop of 10 per cent over more than a year.
“Top to bottom that’s about 15 per cent in Sydney and Melbourne. I think we have a couple of years of declines in front of us,” he said.
Sunday, September 16, 2018
Saturday, September 15, 2018
Thursday, September 13, 2018
Monday, September 10, 2018
Friday, September 7, 2018
Thursday, September 6, 2018
Wednesday, September 5, 2018
Monday, September 3, 2018
Housing Conditione 4-9-2018
“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment, which has slowed market activity, especially among investors,” CoreLogic head of research Tim Lawless commented.
“Fewer active buyers has led to higher inventory levels and reduced competition in the market. Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply.”Sydney and Melbourne’s housing slump could continue for up to two years, economists have predicted.
A survey of 30 Australian economists and property experts by finder.com.au has suggested the downturn in Australia’s two largest cities could hang around for up to two years, with 20 months the average prediction.
Within that, however, more experts (56 per cent) believe Sydney’s downturn will last two or more years, compared with the 50 per cent of panellists who predict a similar outcome for Melbourne.
“While the out-of-cycle rate movements aren’t promising for first home buyers, this may be offset by a cooling market as now could be the time for them to get in while prices are low,” insights manager Graham Cooke said.
“For many would-be home buyers, a lower sales price represents a saving that could outweigh the costs of a higher interest rate, so first-time buyers may experience some cushioning against rising rates.”
He noted that panellists’ outlook for housing affordability has improved thanks to these falling prices, with 43 per cent of respondents describing it as positive and 52 per cent neutral.
However, 43 per cent of respondents also consider the outlook for household debt to be negative.
Research house CoreLogic observed that the housing market correction has now ticked into its 11th consecutive month, with the national home value index tracking 0.3 of a percentage point lower over August.
“Weaker housing market conditions can be tied back to a variety of factors, foremost of which is the tighter credit environment, which has slowed market activity, especially among investors,” CoreLogic head of research Tim Lawless commented.
“Fewer active buyers has led to higher inventory levels and reduced competition in the market. Collectively, these factors have been compounded by affordability challenges, reduced foreign investment and a rise in housing supply.”
CoreLogic’s analysis echoes that of finder.com.au, highlighting the weakest-performing regions of Sydney and Melbourne.
“Stronger market conditions across Australia’s more affordable areas are likely attributable to a rise of first home buyers in the market as well as changing credit policies focused on reducing exposure to high debt-to-income ratios,” Mr Lawless said.
“In the higher-value cities like Sydney and Melbourne, we’re seeing typical dwelling prices remain more than eight times higher than median household incomes, suggesting tighter credit conditions for borrowers with a high debt-to-income ratio will likely impact on demand more in these cities over others.”
To finder.com.au’s Mr Cooke, borrowers should be prepared for higher interest rates after Westpac hiked rates last week due to overseas funding pressure.
“We expect this trend to continue, with the remaining of the big four and other lenders likely to follow suit in the coming days,” the insights manager said.
“Mortgage holders should brace themselves for higher interest rates — it’s not a matter of if, but when.”
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