Once again, APRA turns up late to the house party https://www.afr.com/companies/finan...ns-up-late-to-the-house-party-20211116-p599al The regulator is now taking timid steps to cool a red-hot property market, which has been fuelled by an unprecedented borrowing binge. But what took it so long? Karen Maley Columnist Nov 19, 2021 Finally, the banking regulator has awoken from its long slumber and decided to do something about soaring house prices, and the accompanying surge in mortgage debt. Unfortunately, the Australian Prudential Regulation Authority’s new-found zeal for subduing the housing market comes too late. Because while it prevaricated, conducting lengthy consultations and agonising over potential unforeseen consequences, the country has experienced its biggest housing boom in a decade. According to CoreLogic figures, the median Sydney house price climbed by a blistering 30.4 per cent over the year to October, while Melbourne recorded a 19.5 per cent jump in house prices. It’s not as though the magnitude of the surge in house prices caught people by surprise. In April, National Australia Bank chairman Phil Chronican argued that imposing restrictions or limits on lending would be “a rational response” to the surge in house prices driven by ultra-low interest rates. And the country’s big four banks have all conceded that the frantic competition in the mortgage market is putting an intense squeeze on their interest rate margins. But APRA sat on its hands as lending for owner-occupiers ballooned to a point where it was 21 per cent higher in September compared with a year ago, and 49 per cent higher than pre-COVID-19 levels in February 2020. And it’s likely that APRA would have dawdled even longer had federal Treasurer Josh Frydenberg decided not to turn up at the meeting of the Council of Financial Regulators and voice his concern that not enough was being done to prevent people from loading up with too much mortgage debt. Huge household debt burden APRA took the hint and last month unveiled new rules that would force banks to test whether new customers could afford their home loan repayments at an interest rate 3 percentage points higher than the actual loan rate. Previously, banks had added 2.5 percentage points – known as a “serviceability buffer” – onto the rate of a loan when assessing a customer. And last week, APRA raised the possibility that it could impose tougher restrictions on higher-risk loans if it deemed they posed risks for the financial system. Unfortunately, APRA’s timidity in tackling rising mortgage debt levels has left the country saddled with an outsized household debt burden. Even before the latest run-up in home loan borrowing, Australia already boasted one of the highest ratios of household debt compared to gross domestic product in the world. Our household debt (mainly home loans and some consumer credit) stands at 120 per cent of GDP. The only country with a higher household debt-to-GDP ratio is Switzerland (133 per cent). Of course, this means that Australia’s property market is extremely exposed to rising interest rates, which could weigh on future economic growth. That’s because countries such as Australia where households are carrying high levels of mortgage debt will suffer a greater hit to consumer spending if interest rates were to rise back to more normal levels. Australian households are also carrying a hefty debt burden in comparison with their income levels. According to figures from the Organisation for Economic Co-operation and Development, our household debt stands at 210 per cent of net disposable income. The only countries with higher household debt-to-income ratios are Switzerland (222 per cent), the Netherlands (230 per cent), Norway (246 per cent) and Denmark (259 per cent). Borrowers beware But as Reserve Bank governor Philip Lowe noted this week, the debt of Australian households is rising at a faster clip than their income. “I would be worried if household debt continues to grow at, say, double-digit rates, and income grows at 4 or 5 per cent,” he told a gathering of economists. “Households in Australia already have high levels of debt relative to our income. “We’re building up medium-term risks if we’re in a world where household debt is persistently increasing at 10 per cent a year, and incomes are growing at 4 or 5 per cent. That’s problematic.” Lowe also pointed out that home loan borrowers should be factoring in the likelihood of higher interest rates. “What the Reserve Bank is trying to do ... is to get us back to full employment, inflation back to roughly 2.5 per cent, and interest rates normalised. So, we’re trying to get interest rates up over time,” he said. “We’re in no hurry, we’re patient. But if we’re successful, interest rates will go up. And people who are borrowing today need to remember that. “So, there’s a balance to be struck here. We don’t want to see credit growth being at elevated levels for a long period of time.” In a research paper, How Risky is Australian Household Debt?, published last year, three Reserve Bank economists, Jonathan Kearns, Mike Major and David Norman looked at the economic risks resulting from high household debt levels. Building on previous research which found that Australian households curtail their spending in normal times when they have relatively high levels of debt, the Reserve Bank economists looked at what would happen in periods of extreme stress. “We find that the potential decline in consumption in response to a severe downturn in the Australian economy could be large, and possibly larger than commonly assumed in past bank stress tests,” they wrote. “This is especially true if the consumption response of households to changes in their wealth is non-linear (that is, larger when wealth is declining than when it is rising).” And they note that “the sensitivity of consumption to severe shocks appears to have increased over the past decade or two, as indebtedness has risen”. But, as Lowe signalled this week, there’s also an issue whether highly geared borrowers will be able to afford to keep up with their mortgage payments as interest rates revert to more normal levels. Some economists argue that bloated household debt levels will limit the Reserve Bank’s ability to raise interest rates in future. But Lowe believes that interest rates can move higher. Asked where interest rates were likely to peak in the next cycle, and what the neutral rate (which supports full employment while keeping inflation steady) might be, he replied: “Well, let’s hope the answer is at least 2.5 per cent, because that’s what we want to deliver you on inflation, on average. “So, a 2.5 per cent cash rate would be zero real [after adjusting for inflation].” But he was “hopeful that we can do better than that. The economy should be able to generate at least 1 per cent labour productivity growth, I hope. “So, all else constant, that suggests a positive real interest rate ... and perhaps 3.5 per cent or 4 per cent.” Given that home loan rates tend to be about 1.8 percentage points higher than the official cash rate, this suggests that people will eventually be confronted with interest rates of between 5.3 per cent and 5.8 per cent. The big uncertainty is whether large numbers of borrowers will struggle if their repayments rise sharply. The optimistic view is that people will be able to afford to keep up with their mortgage repayments because the Reserve Bank will only raise interest rates if the employment market is buoyant and wages across the economy are growing by at least 3 per cent. The risk, of course, is if people take advantage of stronger wages growth to borrow even larger amounts, stoking a further rise in house prices. The combination of even higher debt levels, and rising interest rates, would undoubtedly cause a severe escalation in mortgage stress, especially if it were to be accompanied by a weakening in house prices.
How much does a house deposit cost compared to the average wage? Melissa HeagneytwitterSenior Journalist Nov 22, 2021 https://www.domain.com.au/news/how-...smh&utm_medium=link&utm_content=pos5&ref=pos1 Home buyers looking to get into Australia’s pricey property market would need to save more than a year’s pay to scrape together a deposit on a house in any capital city, with deposits in some locations costing up to three times annual incomes. Even to purchase an apartment, buyers would need more than a year’s pay in expensive capitals and close to a year of income in more affordable cities. House prices have soared on the back of low interest rates, while wage growth has been sluggish until recently, amid an uncertain economic outlook. Buyers are now being pushed harder towards government assistance schemes or the Bank of Mum and Dad to get into the property market sooner, experts say. The biggest deposit needed is in Sydney, where those looking to buy a house at the median price of $1,499,126, on Domain data, would need $299,825 for a 20 per cent deposit. That is more than triple the average yearly wage in NSW, which is $91,743.60 for full-time workers, according to the latest Australian Bureau of Statistics figures. Melbourne house prices jumped to a $1,037,923 median in the September quarter, meaning buyers need to save $207,584 for a deposit – more than double the average Victorian annual wage of $91,036.40. City Median house price, September quarter 2021 20 per cent deposit Annual earnings, by state Sydney $1,499,126 $299,825 $91,743.60 Melbourne $1,037,923 $207,584 $91,036.40 Brisbane $702,455 $140,491 $85,628.40 Adelaide $667,888 $133,578 $81,634.80 Canberra $1,074,187 $214,837 $99,247.20 Perth $598,601 $119,720 $97,744.40 Hobart $698,212 $139,642 $79,076.40 Darwin $640,068 $128,013 $88,150.40 Source: Domain, ABS Unit deposits have also reached high levels, figures showed, with some more expensive than the average annual wage. A deposit on the median Sydney unit would cost about $160,000 and Melbourne $115,000, compared to the average wage in each state of about $91,000. In Brisbane, buyers would need all but $6307 of a year’s wages to save a unit deposit, or all but $1305 in Canberra and $10,112 in Adelaide. Unit deposits compared to incomes City Median unit price, September quarter 2021 20 per cent deposit Annual earnings, by state Sydney $802,475 $160,495 $91,743,60 Melbourne $576,879 $115,375 $91,036.40 Brisbane $396,609 $79,322 $85,628.40 Adelaide $357,615 $71,523 $81,634.80 Canberra $489,710 $97,942 $99,247.20 Perth $363,653 $72,731 $97,744.40 Hobart $532,284 $106,456 $79,076.40 Darwin $359,903 $71,981 $88,150.40 Source: Domain, ABS Economists say the road to property ownership has become much harder to travel, particularly over the past two years when prices have boomed as Australians have been stuck at home during the coronavirus pandemic and taking advantage of cheap debt to bid for more spacious accommodation. Figures last week showed that, even though wage growth has picked up slightly, it remains far below the pace of house price growth. “The deterioration of affordability has been quite noticeable over the past 12 months but it’s been building on top of what’s been happening since 2017,” AMP Capital chief economist Shane Oliver said. So much financial pressure is being added to buyers, particularly first-time buyers, that Australia could soon have a property market that only the privileged few are able to get into, with help from the Bank of Mum and Dad. “That’s the direction we’re heading,” Dr Oliver said. “Obviously it’s grossly unfair that it’s coming to this. “If you’re lucky, you have a good Bank of Mum and Dad you can borrow from, or get a gift, but it’s not entirely fair to think that is the solution.” While schemes like the Federal Government’s First Home Loan Deposit Scheme allowed buyers to get a mortgage with a 5 per cent deposit, they were still left with an “enormous amount of debt” and a longer time to pay it off. Buyers agents say buyers are now more reliant on help from their parents, or are going back to the banks to ask for more money while interest rates remain so low. Homebuying hopefuls are faced with the prospect of large deposits. Aus Property Professionals director and buyers agent Lloyd Edge said Sydney buyers were asking parents to act as guarantors on loans, to use the property equity which they had built over some years. “Some people are moving back in with their parents – and that includes couples with young children who are moving back home – to allow them to save for a deposit,” Mr Edge said. It was no surprise, he said given the amount of money needed to buy a property in today’s market. “Back in the 1980s buying a house was around four times the average wage, now it’s around 12 times,” Mr Edge said, referring to Sydney housing. In Melbourne, buyers were going back to banks or to mortgage brokers to see if they could qualify for a larger loan, Buyer’s agent Wendy Chamberlain said. But it could also backfire, with the Australian Prudential Regulation Authority changes to loan assessments meaning some people were now not able to borrow as much, she said. Others were going to the Bank of Mum and Dad to get a cash gift to help buy a home. “They go bank guarantor or they can get an advance on their inheritance to get into the market – they’re the lucky ones,” Ms Chamberlain said.
The only reason I can think of, out West it's too far for people to come so they avoid. From Perth to Adelaide I think its 3 days comfortable drive off the top of my head. The Nullabor I think was a days drive. Yeah, remoteness seems to be what puts people off. I like it here, trouble is winter just a tad to cool for my liking in Perth. They call Perth "Dullsville", I can relate to that if you weren't into outdoors. Also they call WA "wait awhile", yeah, that's bs, more waitawhile goes on in Sydney and Melbourne. As for Adelaide, that place has nothing going for it imo except being an old folks home.
https://www.afr.com/wealth/investin...orce-young-savers-into-shares-20211122-p59b0c Soaring property prices force young savers into shares Sally Patten BOSS editor Nov 22, 2021 Soaring property prices are helping fuel the boom in share investing among young Australians as Millennials and Generation Z seek to accumulate a deposit for a house Kate Howitt, portfolio manager of the Fidelity Australian Opportunities Fund, said it was “inherently fantastic” to see young people participating in capital markets, adding they had little option to investing in shares because of low rates of return on bank deposits and galloping house prices. “I think you have to have some sympathy [with young people],” she said. “Since the financial crisis, you’ve had unconventional monetary policy that has depressed interest rates. It’s harder and harder to get any kind of income return. We typically think that that’s a problem for retirees who can no longer roll over an attractive term deposit. “But it’s an issue for young people who are starting out and trying to build a nest egg. The old story is, you put money in the bank, and it compounds until you can go into the housing market.” The game has changed “The housing market has run away from them,” she said. “They can’t get anything from putting it into the bank and what are they supposed to do to try to build some capital?” Matthew Leibowitz, founder and chief executive of online trading platform Stake, argued that sky-high property prices meant young people who wanted control over their savings had no choice but to invest in shares. “People want to make their own money, and they can’t do in the property market,” he said. “The game has changed. Ultimately, you want control, and we just have to accept that.” Aleks Nikolic, a so-called “finfluencer” whose moniker is “Broke Girl Wealth” on Instagram and Tik Tok, said she recognised that putting money in the bank would not be sufficient if she wanted to buy a house, prompting her to start investing in shares. “I wasn’t going to be able to have the lifestyle that my parents had by sticking money in a term deposit,” she said. I started investing because I saw it as a vehicle to wealth.” Mr Leibowitz said it was appropriate that young Australians take control over their savings, saying it was not the role of Stake to judge what clients did with their money. ‘It’s their decision’ While he recognised the importance of education, he said Stake’s responsibility was to ensure investors had the appropriate tools to make sound decisions. He noted there were lots of sources of information available. “You have to provide people with something they want. We don’t determine or have an opinion on how people should invest. It’s really their decision. We obviously have to provide that platform. We focus a lot on education. I see [our] responsibility as making sure people have got the tools to make the right decisions,” Mr Leibowitz said. Ms Howitt said the biggest source of pressure on professional investors to invest client money in an ethically and environmentally sustainable way was not from Millennial investors but European institutional clients. But even without client pressure, investors such as Fidelity would need to pay attention to climate and the environment to maintain returns, she said. Analysis by Fidelity predicts that in the 2040s returns from emerging market assets would be about 6 per cent. However, if the region failed to decarbonise, investors could suffer losses. “If we can see that there’s a difference between a 6 per cent [return] and a negative return, then we need to be doing what we can do to get that better outcome,” Ms Howitt said.
https://www.smh.com.au/national/nsw...-you-have-a-lot-of-money-20211124-p59bs3.html Is Sydney still affordable in 2021? ‘Only if you have a lot of money’ By Josh Dye November 27, 2021 Until five months ago, Katherine O'Regan was being paid to promote Sydney as an attractive, liveable city. Then she quit, packed up and left town, joining thousands of other Sydneysiders ditching the city for the quiet life. Katherine O’Regan says she doesn’t miss much after swapping Sydney for Lake Macquarie.Credit:Jessica Hromas Ms O'Regan, the former head of the Sydney Business Chamber, is among those growing increasingly concerned about Sydney's liveability and affordability. As a "self-classified urbanite", she surprised herself by accepting a job on the Central Coast, initially rationalising the decision by telling herself she'd only be away from Sydney a couple of days a week. "What I end up doing is spending very little time in Sydney as I explore more of the Lake Macquarie lifestyle," she said, noting she only returns about once a month. Affordability and cost of living concerns have long dogged Sydney, and the dizzying rise of house prices hasn't helped. The nation's most recent internal migration data showed record numbers of people leaving capital cities for the regions, including almost 40,000 people exiting Sydney in the 12 months to March. Committee for Sydney chief executive Gabriel Metcalf said there’s an ironic paradox about the emerald city. "Sydney is one of the most liveable cities in the whole world – but only if you have a lot of money." These affordability concerns feed into the looming debate about overseas migration, set to be a flashpoint during next year's federal election. A recent survey conducted for the Herald showed 58 per cent of voters supported the idea of restarting migration at a lower level than before the pandemic, when 160,000 people permanently entered the country each year. Mr Metcalf, a migrant himself, hopes the nation keeps an open mind. “It is part of the DNA of Australia to accept people from all over the world and I hope that never changes,” he said. “There is plenty of room for Sydney to grow in ways that enhance liveability, as long as we plan to put the growth in the right places, and we invest in the necessary infrastructure.” The majority of voters back the idea of reducing migration levels.Credit: Sydney is often painted as a contrast of two cities. While residents in the wealthier east and north are blessed with green space, harbour views and sea breezes, those in the west and south-west face baking-hot summers and longer commute times. Last week The Sun-Herald revealed western Sydney residents rated their suburbs as worse places to live than people in other parts of the city. The 2021 Australian Liveability Census included 10,766 respondents from NSW, and western Sydney gave itself 64 out of 100, compared with the national average of 68 and other parts of Sydney at more than 70. Social researcher Mark McCrindle worries Sydney suffers from “a legacy of arrogance” of being Australia’s premier city – a title it risks losing when Melbourne becomes the most populous city by 2027. “Congestion, commute times and increased traffic [are] really a proxy for the population overshooting the planning – that’s the opinion of Sydneysiders regardless of where they live,” he said. Earlier this year, Sydney tumbled in the global liveability rankings when The Economist positioned the city at number 11, down from third in 2020. Stories of people like Ms O'Regan packing up and leaving town show "locals are voting with their feet", Mr McCrindle said. "Now there’s a premium in saying 'I used to be in Sydney, but now I’m in the Southern Highlands or Mudgee.' There’s something enlightened about leaving. We’re almost the mugs that are still stuck here." Four things to fix Mr Metcalf says it's worth making "pretty big changes" to fix Sydney's issues, starting with abolishing tax incentives that make real estate a haven for investors. "The declining rate of homeownership in Australia is the smoking gun that proves the current settings are not working," he said. Mr Metcalf also nominates three ways state and local governments can improve affordability and liveability. The first is building higher density housing in neighbourhoods with high liveability, such as around train stations. "That allows you to create maximum housing opportunities with minimal footprint," he said. The second is allowing medium density housing such as duplexes in predominantly single-family neighbourhoods. Lastly is ensuring new greenfield developments are “built to be walkable” with good public amenity – so narrow streets, smaller blocks, wide footpaths and lots of trees. Mr McCrindle says there's nothing inherently wrong with people leaving cities for regional areas. "If the reason people are leaving Sydney is a pull factor – because they love Mudgee or the lifestyle of the Central Coast – that’s awesome, and they're going to add value there. [But] if it’s a push factor ... because of affordability and liveability, that’s a problem. That’s Sydney’s legacy." Ms O’Regan says her decision to leave Sydney had been “a bit of an awakening”. She’s come to treasure riding her bike to the beach and exploring the bushy surrounds. "I think I was getting quite wound up and on that treadmill of Sydney's go-go-go [mindset]," she said. "I can’t say I miss an awful lot."
Homeowners to face higher insurance costs due to construction boom By Jennifer Duke November 29, 2021 https://www.smh.com.au/politics/fed...due-to-construction-boom-20211125-p59c29.html Homeowners are being told to prepare for big jumps in insurance payments, with soaring construction costs leaving experts warning households are at risk of being under-insured. A shortage of labourers and building materials exacerbated by a surge in construction due to government grants have driven up prices during the coronavirus pandemic, with data showing house construction costs have risen almost 9 per cent to a record high over the past 12 months. Surging costs for timber and other supplies will start to push up insurance premiums.Credit:AP/Rogelio V Solis Timber, board and joinery costs were up 12.2 per cent on Australian Bureau of Statistics data while metal products lifted 8.8 per cent as aluminium window and door costs were boosted by rising international freight expenses and production shortages. Due to high demand for home building, the ABS said builders were able to pass these costs on to consumers. These costs would have a knock-on effect for homeowners wanting to ensure their insurance would cover replacing their property, Compare The Market general insurance expert Stephen Zeller said. “Prices today aren’t the same as they were a year ago, meaning consumers could potentially be under-insured,” Mr Zeller said. Rising premiums could add to cost of living pressures, which are shaping up as a federal election battleground with petrol prices at record levels and borrowers bracing for interest rates rises. “Labour shortages are another matter to consider. Even if consumers have adequate insurance to rebuild, a shortage of builders could mean the construction time is extended. When you review your policy it is worth considering whether it gives you adequate access to temporary accommodation,” he said. Mr Zeller said many households had chosen to invest in their homes during the pandemic, including undertaking significant renovations. In some cases, he said engaging a valuer to provide a full assessment of the property’s rebuilding costs would be worthwhile. “It’s especially important that home improvers review their insurance policies to reflect the added value and increased cost of a rebuild,” he said. “With the rising cost of materials, it is quite possible that under-insurance is a big problem for many,” he said. “Anecdotally we know some premiums increases can be over $100.” Prime Minister Scott Morrison has said the government's Homebuilder scheme has created $18 billion worth of work. The CoreLogic measure of residential construction costs, the Cordell Construction Cost Index, shows a 3.8 per cent increase in the three months to September across the country. The consumer price index, which covers a range of goods and is a measure of broader inflation, increased 0.8 per cent over the same period. The increase in construction costs is the biggest in more than 20 years and the largest market-driven increase on record, with the last rise in costs of this size due to the introduction of the GST. CoreLogic attributed the price rises to supply chain disruptions and increased construction activity, driven by a surge in demand from the property boom and government grants. CommSec senior economist Ryan Felsman said construction activity would probably remain high over the next 12 to 18 months as builders worked through a backlog of HomeBuilder grant-fuelled projects. The federal government introduced the grants in June last year to help offset the coronavirus pandemic-induced downturn. “Builders are reporting shortages for key materials, such as steel, timber, PVC pipes, electrical equipment, concrete, bricks and tiles – all driving up costs,” Mr Felsman said. “Tradie shortages have emerged due to border closures with sub-contractor rates lifting, causing some construction delays. “Supply chain issues and rising labour cost pressures are likely to persist into 2022 until skilled inbound migrant workers return and pandemic demand-supply frictions subside.” The latest Seek employment report recorded a 7.5 per cent increase in jobs advertised in trades and services over October. A spokeswoman for the Insurance Council of Australia said insurers often had no option but to provide a cash payment that would not fully cover the cost of replacing what had been damaged or destroyed due to policyholders not ensuring their cover was high enough. “This leaves the policyholder to make up the difference or in some cases walking away from a property they cannot afford to rebuild,” she said. While insurers provide online calculators to help estimate the sum to insure, she warned customers might not always accurately estimate the replacement value or choose to insure at a lower sum. “This is particularly important as the cost of rebuilding increases because of supply chain constraints, labour shortages or activity in the building sector,” she said.
Sydney, Melbourne property markets cope with listings surge Martin Kelly Reporter Nov 28, 2021 https://www.afr.com/property/reside...rong-as-sydney-melbourne-cool-20211128-p59ctj Sydney’s property market performed strongly over the weekend, coping with a surge in listings as buyers continue to bid aggressively and pay record prices. The Canberra and Brisbane markets are red-hot while Melbourne clearance rates declined marginally in a market where auction volumes rose 14 per cent. CoreLogic said 4261 homes went under the hammer this week, the first time national auction numbers have exceeded 4000, making it the biggest seven days since the business started keeping records in 2008. Matt White’s property in Caulfield North, Melbourne, was passed in on a vendor’s bid of $2.95 million. It’s up for sale with a price of $3.25 million. Eamon Gllagher “Demand hasn’t quite kept pace with the surge in auctions held, with the preliminary clearance rate continuing the softening trend seen since early October, slipping further this week with 71.4 per cent of the results collected so far selling,” CoreLogic said. Wet weather meant 5 per cent of Sydney auctions were postponed, although the 1577 that went ahead was still the most held in Sydney since November 2014. The clearance rate was 71.4 per cent, down just 2 per centage points on last week despite a 16 per cent rise in listings. In Melbourne, where 1891 auctions were held – 14 per cent more than the previous week – clearance rates slipped from 72.7 per cent last week to 68.5 per cent. Once again the city’s standout sale was in the inner bayside suburbs, this time Middle Park, where a four-bedroom home at 76 Armstrong Street sold for $9.8 million. It followed a series of stunning results in neighbouring Albert Park. Just weeks ago, two grand properties in St Vincent Place, Albert Park, sold for just over $11 million each, while earlier this year Rich Lister Grant Petty paid $9.9 million for a nearby house after an action-packed Zoom auction. But not all auctions in the southern capital were successful. A 4-bedroom home at 3 Newington Grove at Caulfield North was passed in on a vendor’s bid of $2.95 million and is now on the market at $3.25 million. The so-called Canberra bubble, where both the residential and commercial property markets have been bullish this year, shows no sign of bursting. Canberra recorded the week’s top auction clearance rate of 88 per cent, despite having a record 184 properties up for auction. Adelaide also had more properties auctioned than ever before at 299, resulting in a slightly lower clearance rate of 78.7 per cent over the previous week. Brisbane remains ‘incredibly’ strong In Brisbane, interstate buyers are playing a larger role than ever before, helping drive price increases in family suburbs close to the city. A case in point was the sale on Saturday of 3 Empress Terrace, Bardon, for $2.07 million to a Sydney family. Agent Judi O’Dea from Ray White estimated that southern buyers accounted for around 25 per cent of bidders on properties she’s sold since July. She said the Brisbane market – which recorded a 74.5 per cent clearance rate on 256 properties this week – still has impetus. and finding quality stock remained an issue. There were seven registered bidders on the property and three bidders. “The auction went very quickly, straight up over the reserve,” Ms O’Dea said. “It opened at about $1.68 million and that first bidder was the person who bought it.” Celebrations after the sale of 3 Empress Terrace in Bardon, Brisbane, for more than $2m. Madeline Begley Vendor Deb Lindner runs the property styling business Mink Home and said the market was “incredibly, incredibly” strong and showed no sign of slowing. “It’s certainly not what we were expecting in the middle of last year, we thought the sky was going to fall in, but the market’s been so hot,” Ms Lindner said. “Normally our business can be seasonal, often in winter we get a bit of a slump. But we just didn’t have that this year, it’s just consistent week in and week. “Stuff is selling very quickly, and it feels like it’s a crescendo here and that’s why I chose to sell my property.” “I’m hearing that things are starting to cool in Sydney and Melbourne, but we’re not seeing that here. In fact, we’re getting a lot of Sydney and Melbourne buyers buying sight unseen.”
The impression I've gained, this being the perfect opportunity to sell your substandard properties. Dumb money is tripping over themselves to buy in this hot market, like a fish feeding frenzy most anything sells quickly. If one owns something substandard, why wouldn't you sell? Buyers beware.
https://www.smh.com.au/business/the...forgets-who-suffers-most-20211130-p59ddk.html Opinion When house prices soar, everyone forgets who suffers most Ross Gittins Economics Editor December 1, 2021 One of the darker arts of politics involves manoeuvring to ensure that election campaigns focus on issues that favour my side over yours, regardless of whether these are the issues most likely to be pertinent to the nation’s needs over the next three years. Because the pollies believe us all to be self-centred, they never try to appeal to the greater good. If the world worked the way it should, you’d expect housing affordability – and what each side was promising to do about it – to be a big issue in the coming campaign, but I doubt it will be. Housing affordability is unlikely to be a big election issue.Credit Peter Braig The Libs won’t want to draw attention to it, and though Labor will make noises about how terrible it is for young people, it’s unlikely to have any serious proposal to take the heat out of house prices. It did take a plan to discourage negatively geared property investment to the last election, but now believes this contributed to its defeat, so has dropped it. As I’ve said before, since home-owning voters far outnumber would-be home-owning voters, neither side wants to be seen as doing anything that stopped homes becoming ever-more valuable. But if you think that’s all there is to the issue of housing affordability, it just shows how narrowly the politicians – and the media – have shaped our perception of the issue. In all the agonising over house prices and home ownership – which has gone on for as long as I’ve been a journalist – we always forget the renters. If you define housing as having a place to live rather than to own, renters also suffer when house prices soar. The relationship between house prices and rents is far from one-to-one but, even so, rising house prices usually mean rising rents. Our thinking is still heavily influenced by the Great Australian Dream.Credit Danny Smith The more the number of people moving from renting to owning is restricted by high house prices, the more the growing number of renters puts upward pressure on rents. Rents are rising much faster than prices in general, or than wages. Our thinking is still heavily influenced by the Great Australian Dream, which sees renting as a temporary state while young couples save the deposit for a home. In truth, many of the roughly one-third of households living in rented accommodation have never had high enough incomes to afford a home of their own. So, many people will live all their lives in rented accommodation and their proportion is growing as many middle-income couples who, in former times, would have moved on to home ownership, now do so at a much later age – or go into retirement as renters. The value of the age pension is based on the implicit assumption that retirees own their home. If so, living on the age pension is tolerable. If not, having to rent privately pushes age pensioners below the poverty line. That’s particularly true of single, usually widowed pensioners. The age pension is based on the premise that retirees own their own homes.Credit:Glenn Hunt For many years, the federal government dealt with the problem of people on very low incomes by funding the states to provide a lot of what used to be called “housing commission” accommodation, now called public housing. Trouble is, the rise of neo-liberalism has made government ownership of housing deeply unfashionable. As the Grattan Institute’s Brendan Coates reminds us in a paper issued this week, the national stock of about 430,000 public housing dwellings has barely grown in 20 years, while the population has increased by 33 per cent. Whereas in 1991 public housing accounted for about 6 per cent of all housing, it’s now less than 4 per cent. Some of this is made up by government-subsidised “community housing”, but not much. In public housing, rents are capped at 25 per cent of tenants’ incomes. By contrast, Coates says, the typical low-income private renter pays 37 per cent of their income. Public housing remains in drastically short supply.Credit:Luis Enrique Ascui When the Hawke-Keating government turned away from public housing, it shifted to paying rent assistance to people on social welfare. But these payments have failed to keep up with private rents. The Morrison government says spending on social housing is up to the states. But compared to the feds, the states have a lot less money to spare. Anthony Albanese’s Labor has proposed setting up a $10 billion “housing Australia future fund”, the earnings from which would be used to finance the building of additional public housing. Coates proposes a fund twice that size, which he calculates would provide 3000 extra housing units a year, in perpetuity. Which, he says, would cost the taxpayer very little. He also wants the feds’ rent assistance to be indexed to the cost of renting. The point is that when people on low incomes become unable to afford private rents, the next step is homelessness. If, under pressure from all us affluent home owners, neither side of politics is willing to make home ownership more affordable by removing the many tax breaks that make it so attractive as a form of investment, then the least they – and we – can do is reduce the housing pain of those who really struggle to rent a place.