by Colin Brinsden | AAP

A pick-up in mortgage inquiries for the first time in two years could be an early indicator that house prices will recover in future months.

Research by lending data provider Veda shows that while overall consumer credit demand remains soft, home loan inquiries rose 1.5 per cent in the year ending March – the first annual rise since the 2008-2009 global financial crisis.

"Turning points in mortgage inquiries usually occur one to three quarters ahead of turning points in house prices," Veda head of consumer risk Angus Luffman said this week.

"This is a trend to watch, particularly if you are hoping for a future pick-up in house prices."
However, in the three months to the end of March there were significant differences in mortgage demand between states.

Western Australia surged by 7.6 per cent, but NSW plunged by 7.6 per cent after stamp duty exemptions expired at the end of last year.

Overall credit demand fell by 4.8 per cent in the year to March, with credit card applications tumbling by 8 per cent and personal loan applications down 1.4 per cent.

"Australian households have spent the post-GFC period firmly in saving rather than spending mode, and the results show consumers are still cautious about taking on credit," Mr Luffman.

He said weakness in credit card demand reflected a rise in debit card usage and the introduction of responsible lending laws in 2011, which added more steps to the application process.

It also highlights Australia’s two-speed economy, with applications dropping sharply over the year in South Australia (down 12 per cent), NSW (11.3 per cent) and Victoria (8.8 per cent).

However, declines were less severe in the mining states of Queensland (down 1.6 per cent) and Western Australia (down 4.2 per cent).

Read more

Vendors no longer have to offer as deep discounts as last year to secure sales of their properties, new data released by Australian Property Monitors reveals.

The amount of discounting required peaked in winter and/or spring in mid- to late 2011, according to APM, with the most discounting required between June and November last year in all capitals.

In Sydney, Brisbane, Perth, Darwin and Hobart discounting has reached its lowest level in a year in early 2012, according to APM researcher Clinton McNabb. However, there has been a slight rise in required discounting in all but two capitals – Melbourne and Canberra. 

Melbourne, Adelaide and Canberra vendors now offer less of a discount than they did in mid-2011, but more of a price reduction than in April last year. 

Brisbane vendors have consistently had to offer the deepest discounts to secure sales, except for in July last year, when Perth vendors offered discounts of 10.4%, compared with Brisbane’s 10.3%. 

Property Observer

The Reserve Bank has cut interest rates by 0.5 per cent today.
The 50 basis point fall comes on the back of evidence the economy is struggling with weaker-than-expected inflation figures released late last month.

The official interest rate is now 3.75 per cent.
It is good news for mortgage holders who were earlier this year hit with out-of-cycle rises by many lenders.

"This is quite a heavy cut and the Reserve will be hoping that it has maximum impact," says Domain property expert Carolyn Boyd.

Each 0.50 per cent drop in interest rates slices about $120 off the monthly interest cost of an average Australian mortgage.

All eyes will be on the financial institutions to see if they follow suit, says Boyd. It is possible lenders could pass on a smaller proportion of the official drop to their own customers.

At least one bank will hold off announcing a decision for more than a week with the ANZ Bank set to release its move next Friday, the second Friday of the month.

If lenders do make cuts, Boyd says it is a smart idea for borrowers to maintain their current repayment levels.

"Many institutions don’t automatically adjust repayments down in line with lower rates, and if you think yours might, you should speak with them and ask for your repayment amounts to be kept as they are," says Boyd.

"It is inevitable that rates will rise again in the future, so this is a golden opportunity to pay some extra money off your loan if you can afford to do so."

Source: domain.com.au

Jason Andrew, director of Jason Andrew Auctioneers, said that when it comes to marketing spend, most sellers want to commit to as little as possible. And it’s understandable. After all, why would anyone want to spend money unless they absolutely have to in the current economic environment?

“[Agents will] suggest the most basic ‘bare bones’ package as the holy grail of marketing mediums; photos, signboard, internet and maybe a few small print ads,” Mr Andrew said.

Jason Andrew Auctioneers recently took a random sample of 180 auctions and split them into two categories. The first category comprised properties where the marketing campaign was less than $5,000 in total. There were a total of 125 properties in this group and the average number of groups inspecting during a five week campaign was 12.08.

The second category comprised properties where the marketing campaign was greater than $5,000. There were only 55 properties in this category, but the average number of groups inspecting during the campaign was 41.16.

Over the 180 auctions, where the marketing spend was greater than $5,000, there was 67% more traffic, and 3.5 times the average number of inspections. Greater spend, more inspections.

“We have an obligation to our vendors to obtain them premium prices, not just market value. Why should they miss out because of an agent’s inadequate skill to overcome their reluctance to marketing challenges?

Ultimately, every seller needs to have the following equation clearly demonstrated (with solid hard data) to them; more inspections equal greater levels of competition, equalling a better price.”

Getting into the property market for the first time is tough, there’s no doubt, but there are many factors impacting on why people view this as a major problem.

High expectations

Gen Y are living at home longer than ever before. They are saving longer and accruing bigger deposits. Interest rates are low. So why can’t they afford to buy? 

In many cases it’s not that they can’t afford to buy property, it’s that they can’t afford to buy what they want. Expectations are too high. Many people expect be able to buy a reasonable property in a desirable location close to the lifestyle amenities they want. This, obviously, is very difficult. There is a sense of wanting to have it all straight away. Australian households are paying more than they can afford for housing, with more than 740,000 renters and over 380,000 mortgaged home owners reporting significant financial stress. Sometimes you just have to take baby steps. 

This aversion to moving out of the inner city (where the lifestyle amenities are) is going to lead to a generation of renters, and the Aussie dream of home ownership will be sacrificed for lifestyle. This of course, will push up rents because of the simple rules of supply and demand. 

More than 75% of Australians live in and around our major cities along the eastern and south-eastern coastal areas. And that’s where they want to stay. The limited land available in these locations, along with a growing population of buyers and immigrants, naturally puts pressure on Australia’s metropolitan prices.

Small will become the new big

That leaves two options: a bigger property in an outer-ring location, or a (much) smaller property that is more centrally located. Gen Yers are willing to sacrifice space for location, so will more and  more opt to live in high-density housing (apartments, etc.) that are located close to where they work and play than a bigger place further out.

Governments will need to help out

If affordability issues are pushing people to the ‘burbs, governments will need to create business activity centres where people can work close to home in the outer areas. Lack of infrastructure is still a problem in many outlying areas, and this is preventing people from wanting to relocate to outer-ring suburbs.

In addition, the federal government should be looking at introducing a flexible and secure savings scheme for first-home buyers that is tax free and places no limits on the entry or exit time frames and amounts held in the account. This would go a long way to assist first-home buyers.

Banks need to drop interest rates

Banks will also need to play their part in solving the affordability crisis. The Reserve Bank does its bit to keep rates low and try to stimulate the economy but it’s up to individual banks to pass on those rates to consumers. The GFC, the lending crisis in the US and the experience in parts of Europe have left our banking sector overly cautious when it comes to lending. It’s harder now to get a loan than it has been in a long while. Although I don’t agree with the former US approach of basically handing out an unsecured loan to anyone who asks, if lending criteria were loosened up a bit more people would be able to jump into the property market much more easily.

We have to remember however that, overall, interest rates are a lot lower than they were 20 years ago. Gen Y didn’t live through that. They don’t understand the pressure of the threat of losing your family home to the bank. 

Housing isn’t that expensive

Speaking of the rest of the world, on international standards, housing is Australia is still relatively affordable. 

If affordability was a real issue, then why do we have so many investors continuing to buy up residential property?  Again, the issues lies with first-home buyers, not the market overall. 

Growth is good!

We want our economy to grow and we want our property market to grow with it. It’s good for the whole country. Many people are doing very well investing in property and will continue to do so. Ultimately, people need to lower their expectations, bite the bullet and start off with a property they can afford while still making a good purchase decision in terms of potential for capital growth. There are lots of great, affordable properties out there. You just need to be prepared to live in one of them!

By Melissa Opie
Property Observer

After tough market conditions in 2011, many Queenslanders are wondering if and when the market will bounce back.  According to the recent median data released by the Real Estate Institute of Queensland, there is now reason to believe that the last quarter of 2011 marked a turning point in Queensland’s property market.

Medians on the rise

Both the house and unit sectors are showing healthy signs of recovery, with many areas across the state posting median price increases in the December quarter.  As 2011 progressed, so too did confidence levels in the Queensland property market, with prices beginning to strengthen.  Many regions have seen their most robust results since prior to the floods and Cyclone Yasi that unfortunately dominated the beginning of 2011.

Over the December quarter, the median house price in Brisbane recorded a negligible fall of 0.2%, to $499,000, marking the lowest fall in Brisbane’s house price since September 2010.   Unit and townhouse median prices increased 2.0% in the December quarter reaching $400,000.  These healthy results indicate that Queenslanders are feeling more optimistic about the future, resulting in a positive impact on the property market.

Confidence creeping back 

It appears that first home buyers and investors alike are rediscovering the healthier property market.  As we move into 2012, REIQ accredited agencies are reporting improved levels of enquiry, with first home buyers and investors especially taking a keen interest in the more affordable unit and townhouse market.

In addition, the number of first home buyers is on the rise, with the latest ABS figures revealing they represent approximately 20% of the market (the highest proportion for more than two years).  This is likely driven by the softening of property prices over the past two years, as well as the relatively low interest rate environment, making property more affordable than it has been in recent years.

We therefore anticipate more positive news on the Queensland property market in the months ahead as the November and December rate cuts flow through our wider economy.

Read more

The Reserve Bank has kept interest rates on hold today.
The move was expected given there has been little change in the global outlook and in Australia’s own economy since the Reserve Bank met last month.
Rates will remain at 4.25 per cent for the next month. Some experts have, however, predicted a rate cut could come later in the year.

"Many economists are betting on a May rate cut unless we see an improvement in the economy," says Domain property expert Carolyn Boyd. "However, the Reserve Bank has so far indicated it is reasonably comfortable with where rates are."

The move follows back-to-back rate cuts in November and December last year, and a decision to keep rates on hold in February and March.

Each 0.25 per cent drop in interest rates slices about $60 off the monthly interest cost of an average Australian mortgage.

Australia’s housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 31 November 2011 home values across the combined capital cities. The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent.

Read the full press release…

Held each year at 8:30pm on the last Saturday in March, Earth Hour is a WWF initiative symbolising the collective power of individuals, businesses and governments to reduce our impact on this planet.

From its beginnings in one city in one country – Sydney – Earth Hour has grown to millions of people in over 5000 cities across 135 countries.

A truly global community committed to creating a more sustainable future!

www.earthhour.org.au

Have fun and get to know your neighbours over a cuppa, bbq, or street party! It’s a way to build stronger relationships with the people who live around you and to remember to look out for each other, especially the elderly, vulnerable and disadvantaged. Visit www.neighbourday.org

Source – Brisbane City Council – Living in Brisbane – March Edition 2012