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Latest Statics Show Huge Undersupply of Housing

Friday, May 10, 2013

Latest statistics (2010) show that there is a housing shortfall of around 32% across the nation. Developers simply cannot keep up with the demand.  Why is this?

For a long time Australia has had a housing shortfall.  Put very simply we don’t have enough developers building houses to keep up with the number of Australians wanting housing.  However, the chronic shortfall we are now seeing has been greatly exacerbated by the Global Financial Crises (GFC).  The GFC saw finance approvals plummet.  Finance became very hard to get.  Finance Approval rejection rates went up by 30% and the hoops that lenders were making finance applicants jump through simply made the finance process untenable.  Many developers simply could not get finance to commence their projects so they stopped building.  And this was at a time when our population was growing at an extremely high rate.  So dropping building starts and a growing population has created a huge undersupply of housing which is only predicted to get worse.

South-East Queensland Property Visit

Friday, April 12, 2013

I have returned from my trip and was extremely impressed with Mackay and it was my pick of the towns I visited (Mackay, Gladstone, Brisbane, Townsville & Toowoomba). 

 

It is just pristine.  The majority of the town is new.  New houses, new streets, new roads, new amenities, new businesses.  Every car that drove down the street was new – BMW’s, 4 wheel drives, etc.  There is significant money there. Great growth prospects.  Major export hub.  I can send you all the economic statistics about predicted growth, etc, but more importantly what I saw told the same story.

 

I spent the day in Mackay with a local builder.  He drove us to every new development and gave me a full run down on every aspect of each estate and suburb.  Funnily enough the Mackay locals are even more ‘north v south’ biased than Canberrans.  And this was clearly evident as you crossed from one side to the other.  The North is definitely the ‘better side’.  It goes even further, locals don’t want to drive any more than 10 minutes to the CBD, so anything further out than that is ‘not good’.  There are areas of Mackay that are definitely ‘investor glutted’ and you can clearly see this from driving down the streets.  There are mainly rental properties, multiple cars parked in the drive, untidy front yards, etc.  Then there are other areas that are mainly owner occupied, nice wide streets, clean front yards, BMW’s in driveways, young kids on scooters and families playing in the park.  Why is this important?

 

Resale- the locals simply won’t buy in the investor glutted areas.  So best potential re-sale is in the areas that local want to live. 

 

So what do you look for in Mackay - A mainly owner occupied area, on the northside, and only 10 minutes from town.

 

My next picks were Townsville and Brisbane.  I will report more on these areas next week.

Australian housing market “heating up” with FHBs and investors activity to pick-up: APM

Friday, April 05, 2013

The Australian housing market revival has continued into 2013 with “solid indications of rising buyer activity and increased confidence from sellers” says Australian Property Monitors (APM) in its latest market report.

“The revival of Australia’s housing markets in 2012 has been confirmed as leading indicators such as auction clearance rates point to a market heating up.

“Historically low interest rates are the fuel to this emerging fire which is no real surprise given the typical impact of low mortgage rates on buyer activity in previous housing growth cycles," says APM.

It adds that housing markets are “off and running in 2013, building on the buyer momentum generated through 2012 but now translating to more generalised and comprehensive market outcomes”.

Fairfax-owned APM has house prices up 1.5% over the three months to January to a median of $544,000 with units up 0.3% to a median of $413,000.

The Gold Coast has shown the greatest gain over this period with house prices up 2.2% though the key Gold Coast unit market has recorded no gains.

All othe capital city markets have recorded gains of 1% or more in their median house prices over the January quarter, with the unit market more patchy.

APM is confident of a return of first-home buyers in 2013, which along with investors were "significant contributors to the housing market revival of 2012".

“First-home buyer activity was largely generated by changes to various state government incentive schemes that acted to draw forward demand from this group.

“After a subdued start to the year, first home buyer activity is set to rise sooner rather than later, driven by low interest rates, a solid economy, and rising house prices and rents.

“Investor activity is also set to intensify in 2013, driven similarly by low mortgage and deposit rates, prospects of improved capital gains, and solid yields from most local markets," says APM.

APM also notes that the sharemarket is also a solid leading indicator of housing market activity, particularly in relation to prestige properties.

“With the All Ordinaries now holding above 5,000 for the first time in three years, a rising bull market will activate prestige markets that are finally showing early signs of emerging from a sustained period in the doldrums.

APM also notes an improved global economic outlook with the US housing market finally showing signs of life.

 

By Larry Schlesinger
Thursday, 04 April 2013

Housing Affordability Surges

Tuesday, April 02, 2013

Housing affordability surged in December 2012 quarter. According to the HIA-CBA Housing Affordability Index this has been driven by earnings growth, interest rate cuts and weak price increases. The Index increased by 5.5 %  in the December 2012 quarter, representing an 18.4% advance on the same period of 2011. This is the 8th consecutive quarter of increases.

HIA senior economist, Shane Garrett commented that “For regional areas, affordability is at levels last seen during the early 2000s. Affordability is on the increase in every part of the country”. “It is worth noting that affordability would be even more favourable to householders had recent RBA rate cuts been passed on fully by lenders,” says Garrett. “Despite the relative attractiveness of house purchase implied by these figures, transactions activity on the ground is very sluggish. This underlines the need for stronger interventions from the RBA in terms of interest rates and from the government with regard to the heavy taxation of home purchase.”

What does this mean for investors?  Housing affordability can be a strong signal of impending price rises.  When houses are perceived as more affordable more first home buyers are tempted into the market, more home owners consider selling and upgrading and more investors can afford to buy another property.  As more buyers enter the market, upward pressure is placed on prices, and this eventually results in price rises.

Australian housing not perceived as being in a bubble: US real estate industry boss

Monday, March 18, 2013

 

Australian house prices are high but they reflect the high cost of living, says Gary Thomas, president of the US National Realtors Association, who is currently visiting Australia.

Thomas says there is no perception among his constituency that Australian housing is in a bubble that may burst – a claim made by the likes of US economist Harry Dent and others.

The National Realtors Association is the largest trade association in the US, representing around one million US real estate agents.

 

“Australian property prices certainly are high relative to what we pay in the US, but it all depends on your average income,” Thomas tells Property Observer.
Thomas has more than 35 years’ experience in American real estate and has occupied numerous industry roles.
He operates real estate business Evergreen Realty, which has seven offices throughout Orange County, Southern California with a head office in Irvine and more than 7,000 estate agents on its books.
The most recent figures from US data provider CoreLogic showed that US home prices, including distressed sales, increased on a year-over-year basis by 9.7% in January 2013 compared to January 2012

Morgan says the US market is definitely improving with prices starting to inch up including in his home state of California and in Florida and Arizona, to name just a few.

 

“It’s kind of ironic that the recovery is occurring in the states the hardest hit,” he says.
In Southern California he says there is only 30 days’ worth of real estate inventory available to purchase at current sales rates – very low by historical standards.
Despite the lack of stock, house prices are not accelerating as they did in the boom years prior to the GFC, though they are rising at a more sustainable pace.

Among the reasons for this is that obtaining financing is still very hard with much stricter lending practices now in place.

“It’s like an inquisition” is how he describes lender inquiries into whether a borrower should receive mortgage approval.

 

By Larry Schlesinger

Thursday, 14 March 2013

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