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The value of Aussie homes increased in the first quarter, bucking a global trend downwards!
House and flat prices in Australia increased in value by 1.6% in the first three months of the year, helped by a scarcity of supply, lower interest rates and incentives to first-home buyers.
The slight recovery in Australia “has been driven by the 40% fall in home loan rates down to 5.7%, which are now at their lowest levels since July 1968!”
March’s three-month gain follows a 0.1% rise in the three months to February in the RP Data-Rismark’s national dwelling value index, and a 3% fall in the value of capital city homes in 2008.
The strength of Australian housing prices is a world away - so far - from the 2.7% drop in British home prices over the first quarter, capping a year to March 17.5% plunge.
US housing didn’t fare too much better either, with prices in the top 20 cities sinking 1.9% in February, which brought the 12-month fall to 18.6%, according to the most recent S&P/Case-Shiller index, a widely followed measure.
RP Data-Rismark said the first-home buyer’s grant, ending June 30th, has acted like a catalyst for new home buying in Australia, but lower interest rates are sustaining the market’s growth.
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Increasing rents boosted the housing component of the Consumer Price Index (CPI) by 0.9 per cent for the quarter and the overall annual increase to 5.5 per cent, that’s according to Australian Bureau of Statistics figures released this week.
The CEO of Real Estate Institute of Australia has said, “The majority of this increase in the housing component was driven by rents, which increased nationally by 1.7 per cent over the quarter and 8.4 per cent over the year. The cities where rents increased the most were Perth and Darwin with annual increases of 10.9 per cent and 13.5 per cent respectively!”
This rent increase in the recent quarter reflects low vacancy rates and the scarcity of rental properties across capital cities, combined with the decrease in building approvals and housing finance for investment.
The National Rental Affordability Scheme should hopefully relieve this figure, however the impact won’t be felt for quite some time.
“With an underlying demand for additional housing at around 200,000 dwellings per year and commencement of new dwellings of 147,000 in 2008, Australia will need to build significantly more houses than what has occurred to meet rental demand.”
Housing affordability improved since the Reserve Bank rate cuts,although there’s really been very little flow-on benefit to those in the rental market.
“With lower interest rates and greater affordability, now would be the time for those in the rental market to consider the purchase of their own home.”
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The rich list has been announced and the top performers for both houses and units were areas of NSW.
RP Data released its top price growth suburbs, recording the greatest increase in median house and unit prices during the 12 months to December 2008.
North Sydney suburbs were the standout performers for both houses and units with median house prices appreciating 47.4 per cent in McMahons Point and unit prices growing 49.8 per cent in Greenwich.
The NSW list comprised mainly areas outside of Sydney including Dubbo, Jindabyne, Queanbeyan East and Brunswick Heads.
Victoria was a different story with just one area outside of the metro area making the list. Irymple in Mildura was the regional victor experiencing a median unit price increase of 35.3 per cent.
The Victorian results mainly comprise of areas in the Melbourne Statistical Division with both the top performers – Portsea’s median house price increase was 38.6 per cent to $1,455,000 and Dallas’ median unit priced leaped to $222,500, that’s an increase of 48.3 per cent!!
The QLD market showed many areas outside of the Brisbane area as strong performers in capital growth.
Their state’s top performers are houses in River Heads at Hervey Bay with prices increasing 43.1 per cent and units in North Lakes increasing by 47.3 per cent.
South Australia’s winners are dominated by areas of Adelaide with only Port Hughes, Roseworthy and Owen outside of the capital city location.
The standout performers for houses is Teringie (49.5 per cent) and for units Underdale (47.8 per cent).
The strong growth results centred around Adelaide aren’t a surprise given that it remains mainland Australia’s most affordable capital city market and has been an excellent performer throughout 2008.
Perth dominated the WA list. Which is surprising given the poor performance overall of the Perth market during the last 12 to 18 months.
Homes in Coolbinia stood out, with a median price increase of 43.1 per cent. Units, the port side suburb of South Hedland saw the greatest increase jumping 44.4 per cent to $455,000.
Outside Perth, the list is exclusively populated by areas linked to the mining and resources sector.
For Tasmania, the top performer for houses is Campania, recording a 46.3 per cent, and units saw Hobart taking top spot with 35.7 per cent!
Northern Territory winners are almost entirely located within Darwin, with Virginia recording the strongest growth in houses (30.9 per cent) and The Gardens topping the list in units (39.0 per cent).
Throughout ACT, the strongest performing suburbs were within close proximity to the city centre – Franklin’s houses recorded a 25.6 per cent increase and Campbell’s units 49.7 per cent!
Victoria
Houses
|
Suburb
|
Number sold
|
Median price
|
12-month growth
|
|
Portsea,
|
35
|
$1,455,000
|
38.6%
|
|
St Andrews
|
11
|
$500,000
|
34.7%
|
|
Echuca South
|
17
|
$410,000
|
34.0%
|
|
Eaglemont
|
25
|
$1,205,000
|
30.6%
|
|
St Andrews Beach
|
12
|
$520,500
|
29.5%
|
Units
|
Suburb
|
Number sold
|
Median price
|
12-month growth
|
|
Dallas
|
10
|
$222,500
|
48.3%
|
|
Caulfield East
|
12
|
$352,500
|
39.9%
|
|
Mount Evelyn
|
13
|
$344,000
|
36.9%
|
|
Irymple
|
12
|
$194,500
|
35.3%
|
|
Melton West
|
19
|
$238,000
|
32.6%
|
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You may already know it, buying properties within 10km of capital cities is generally a good investment, but where ARE the most affordable areas?
There’s some suburbs within 5km of capital city centres where the median unit price is $200,000 and the gross rental yield 5.33%?
You really don’t have to buy far from the city centre to pick up a bargain!
And it’s not a bad strategy for identifying best value properties to find ones located in affordable suburbs within a 10 kilometre radius of the city!
For some cities, the inner circle can be more or less, depending on the size of the city, however, generally it’s a good rule of thumb because it’s these areas that are more likely well serviced by transport, have social and retail amenities close by AND benefit from strong rental demand!
Identified below are the five most affordable suburbs for houses and units within a 5km radius of Melbourne City.
Melbourne - houses
|
Suburb
|
Council area
|
Number of sales
|
Median price
|
Annual change
over 10 years |
Median weekly rent
|
Gross rental yield
|
|
Braybrook
|
Maribyrnong
|
73
|
$345,200
|
15.45%
|
$250
|
3.77%
|
|
Maidstone
|
Maribyrnong
|
114
|
$435,000
|
14.24%
|
$300
|
3.59%
|
|
West Footscray
|
Maribyrnong
|
138
|
$447,000
|
13.62%
|
$320
|
3.72%
|
|
Kingsville
|
Maribyrnong
|
26
|
$451,000
|
11.77%
|
$330
|
3.80%
|
|
Footscray
|
Maribyrnong
|
168
|
$453,750
|
13.06%
|
$320
|
3.67%
|
Melbourne - units
|
Suburb
|
Council area
|
Number of sale
|
Median price
|
Annual change over 10 years
|
Median weekly rent
|
Gross rental yield
|
|
Williamstown Nth
|
Hobsons Bay
|
12
|
$218,500
|
0.24%
|
n.a.
|
n.a.
|
|
Footscray
|
Maribyrnong
|
155
|
$240,000
|
14.42%
|
$270
|
5.85%
|
|
Carlton
|
Melbourne
|
249
|
$246,000
|
2.60%
|
$390
|
8.24%
|
|
West Footscray
|
Maribyrnong
|
96
|
$269,500
|
15.06%
|
$210
|
4.05%
|
|
Braybrook
|
Maribyrnong
|
28
|
$275,000
|
9.85%
|
$310
|
5.86%
|
|
|
|
|
|
|
|
|
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The Australian real estate market is being flooded by first-home buyers thanks to falling interest rates and slumping house prices.
Read the full article here: http://www.news.com.au/heraldsun/story/0,21985,25014496-5013926,00.html
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Today’s cut will save a mortgagee with a typical 30-year, $300,000 home loan about $170 in monthly repayments if the lender passes on the full amount. Over the life of the loan, the savings will total about $61,272.
”There was a significant deterioration in world economic conditions late in 2008,” said RBA Governor Glenn Stevens in a statement accompanying the cut. ”The effects on household and business confidence of the financial turmoil following Lehman’s collapse, and continuing strains on major financial institutions, saw a significant downturn in demand around the world.”
The RBA has now lopped four full percentage points off its cash rate since it changed tack and began cutting rates last September. The cash rate has not been this low since 1960, according to Bloomberg data.
The rate reduction comes hours after the Federal Government announced a $42 billion stimulus plan aimed at keeping the economy out of a recession. The spending includes some $12.7 billion in cash payments and $28 billion on new infrastructure projects including roads and schools.
“What they have done is certainly enough, put together with the fiscal package,” said Michael Blythe, chief economist for the Commonwealth Bank. ”Policy setting in Australia is very stimulative, although we are quite likely to see rates lower” in the first half of 2009.”
Double boost
The central bank said it had taken into account the additional government spending.
”The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad,” the RBA said in its statement.
Today’s RBA cut matched market expectations.
The Australian dollar initially jumped, rising from 63.5 US cents to 64 US cents after the RBA move. The benchmark ASX200 share index was recently 1.2% up for the day, easing from 1.4% higher shortly before the RBA release.
More cuts to come
The fact the RBA assessed the likely impact of today’s stimulus package indicates the bank may have been considering a bigger cut, said JP Morgan economist Helen Kevans.
Ms Kevan expects another 50 basis point cut when the RBA board next meets in March to complete the central bank’s current easing cycle.
Today’s RBA’s rate cut follows the Federal Government’s revision of growth forecasts for the economy. The Rudd Government expects Australia’s growth to slow to 1% this fiscal year to 0.75% next year - one of the few economies to continue to expand.
The RBA said Australia remains relatively strong.
”Australia’s financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers,” the RBA’s Stevens said.
”Nonetheless, the combination of last year’s financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand.”
The Reserve Bank indicated it had more scope for cutting rates as inflation eases.
”Inflation has begun to moderate and, given recent developments, it is likely to continue to decline,” the RBA’s statement said.
Consumer prices fell by 0.3% in the December quarter, its first reduction since 1997, according to statistics released last week.
Three-year bond futures fell 0.085 points to 97.035, while 10-year bond futures shed 0.045 points to 95.870.
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Stephen Nicholls from the Sydney Morning Herald discusses buying property in Bali, read about it here: http://www.domain.com.au/Public/Article.aspx?id=1232818695940&index=NationalIndex&headline=Your%20own%20slice%20of%20paradise
Paul Castran has also discussed it here: http://www.paulcastran.com.au/2009/02/03/buying-your-ow…ce-of-paradisebuying-your-own-slice-of-paradise/
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Interesting article in the Herald Sun stating the difference in clearence rates between now and last year, heres an extract:
On the last Saturday of major sales activity in 2007, 1132 properties went to auction, according to the Real Estate Institute of Victoria (SHS, December 15).
Last month, as the industry filed its final big weekend of sales results for 2008, 609 auctions were staged, more than 500 fewer.
Almost one in two properties taken to auction failed to sell under the hammer between last October 18 and December 13, excluding Melbourne Cup weekend when the clearance rate returned to 66 per cent.
Yet private sale numbers have barely shifted.
There were 639 private sales reported to the REIV in the week before Christmas 2008 — 683 private sales were reported in the same week in 2007.
Private sales represented about 52 per cent of all sales reported to the REIV between December 7 and December 13, 2008. A year earlier, private sales made up about 37 per cent of all property sales between December 9 and December 15.
Read the full article here:
http://www.news.com.au/heraldsun/story/0,21985,24924678-5013926,00.html
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VICTORIAN property values have plummeted about $40 billion in the past six months.
Melbourne’s median house price of $450,000 mid-2008 is now down to $427,500, according to estimates.
And house price expectations across Australia have sunk to an all-time low, a new report says.
Victoria’s $800 billion residential property market has dropped 5 per cent - or $40 billion - overall since July, according to BIS Shrapnel calculations prepared for the Herald Sun.
The trend has opened the door for potential borrowers desperate for cheaper housing.
Read the full article here:
http://www.news.com.au/heraldsun/story/0,21985,24881569-5013926,00.html
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HUNDREDS, if not thousands, of people at risk of homelessness will gather outside strangers’ front doors across Melbourne this month.
More people search for a rental property in January than in any other month, according to rental trends data to be released today by realestate.com.au.
Melbourne’s average rental rate has risen in recent years.
In October 2005, tenants paid $277 on average to rent a house and $258 for a unit, based on RP Data statistics.
By October last year, average rental rates had jumped to $361 for a house in Melbourne and $326 for a unit. That’s an increase of about 33 per cent in three years.
Caroline James from the Herald Sun has written an interesting article which can be viewed here: http://www.news.com.au/heraldsun/story/0,21985,24868648-5013926,00.html
Mark