Thursday, March 31, 2011

Only a flood stopped Perth from being Worst real estate market

Perth median house prices has dropped another 1.9% over the last three monthsIf Brisbane had not experienced flooding in February, it probably would not have beaten Perth to worst performing city with a 3.3% drop in price. Perth houses according to RP Data now average $465,000. Only three capital cities boasted a rise in house prices with Canberra prices up 1.9%, followed by Sydney up 0.6%, and Melbourne up 0.1%.

Sunrise Investigates House Strike

Well it seems that the mass media are slowly picking up on the House Strike proposed by an organsiation called Prosper Australia and organised by GetUp. In this video, the spokesperson for Prosper Australia explains that the House Strike is already happening and that all this campaign really is, is give first homebuyers a voice to gather behind. We certainly are gathering, that's for sure because the most recent count on GetUp's website showed around 5,100 votes for this campaign.

Wednesday, March 30, 2011

Perth Property Last Week

Occasionally, we'll check out the REIWA snapshot of what happened in the property market last week in Perth.


Property Sales for Perth #
Last Week 998
4 weeks ago^ 1,055
Same week last year 1,273
# Contract Sales reported by REIWA members
^May have changed due to sales falling through

Top Selling Suburbs
North of the River
Scarborough 18
Perth 16
Ellenbrook 14
Morley 13
Yokine 13

South of the River
Canning Vale 20
Como 16
Byford 14
Thornlie 14
Willetton 12

Properties listed for Sale
Total* 17,988
Houses 11,519
Units 3,559
Land 2,910
*Listed on reiwa.com and other sources

Median Rent 3 months to Feb 2011
$380/wk 

Vacancy Factor
3.5%

Social Media Activism Propose House Strike

First homebuyers have been largely ignored in the last few years. In spite of a federal election, the price of housing has not been a major issue for the parties and it seems this segment of the market has not been a political problem for the parties. However, recently an online organisation has raised house prices as a subject for social media activism and from reports, it seems that members of GetUp Australia have voted this as the issue that they would most want to be addressed by the organisation.
The campaign would encourage people not to buy a house, effectively promoting a strike or embargo on purchasing a home in order to let the price of housing drop. The government can pre-empt this by bringing back a more substantial first home buyer grant. Without this organisation's activism, there already seems to be a housing strike in the greater Australian real estate market, with many buyers, including this author, holding out from buying a home. 

What will happen next? Will the government act? If you join in on this campaign, let us know in the comments below as well.

Wednesday, March 23, 2011

Mortgage Exit Fees Now Banned

Today, the Federal government finalised plans to ban mortgage exit fees to take effect from July 1 this year.

The regulation, which did not need the approval of Parliament, is intended to make it easier for home buyers to switch to another bank without the fear of being slugged up to $7,000 in exit fees. Already, ANZ and NAB have dropped exit fees even before the regulation has passed. NAB is also offering to pay people out of their existing exit fees when switching over from CBA and Westpac. A bank has apparently told the Treasury that they have lost significant business since removing exit fees. 

Friday, March 11, 2011

Least Affordable Districts in WA

A housing affordability index has been released by Bankwest showing the number of years an average person would take to pay off a house in each local council in Perth. Here are a few of the list ranked from least affordable to most affordable. Note that these are not the suburbs but the council that they belong to and this includes all local government districts in WA (not just Perth).

Affordability in WA local government areas (anything under 5 is rated affordable)

Peppermint Grove 49.9
Cottesloe 24.5
Claremont 18.8
Mosman Park 17.9
Subiaco 15.5
East Fremantle 14.7
Vincent 10.7
Perth City 10.5
Roebourne 9.6
Port Hedland 9.5
Melville 9.4
Fremantle 9.3
Stirling 8.6
East Pilbara 8.2
Victoria Park 8.2
Broome 7.6
Joondalup 7.1
Bayswater 6.8
Gingin 6.8
Augusta-Margaret River 6.6
Canning 6.6
Chittering 6.6
Busselton 6.4
Cockburn 6.2
Cambridge 16.1
Exmouth 6.1
Belmont 6
Bassendean 6
Wyndham 6
Kalamunda 5.7
Mundaring 5.7
Capel 5.5
Wanneroo 5.5
Denmark 5.4
Irwin 5.4
Serpentine-Jarrahdale 5.4
Dandaragan 5.2
Swan 5.2
Ashburton 5.1
Murray 5
Greenough 5
Albany 4.9
Gosnells 4.9
Harvey 4.8
Mandurah 4.8
Northampton 4.8
Derby 4.7
Rockingham 4.7
Boddington 4.6
Geraldton 4.6
Coorow 4.5
Dardanup 4.5
Esperance 4.4
Armadale 4.2
Bunbury 4.2
Toodyay 4.2
Waroona 4.1
Donnybrook-Balingup 4
Kalgoorlie-Boulder 3.9
Carnarvon 3.8
York 3.8
Bridgetown 3.7
Kwinana 3.7
Jerramungup 3.5
Manjimup 3.3
Collie 3.2
Northam 3.2
Narrogin 3.1
Brookton 2.9
Plantagenet 2.9
Beverley 2.7
Kojonup 2.6
Boyup Brook 2.5
Katanning 2.5
Wagin 2.5
Williams 2.5
Goomalling 2.3
Merredin 2.3
Quairading 2.3
Nedlands 22.2
Pingelly 2.2
Wongan-Ballidu 2.2
Moora 2.1
Mingenew 2
Corrigin 2
Coolgardie 1.9
Kellerberrin 1.9
South Perth 11.9
Victoria Plains 1.9
Bruce Rock 1.7
Dalwallinu 1.7
Kulin 1.7
Morawa 1.7
Gnowangerup 1.6
Lake Grace 1.6
Wyalkatchem 1.6
Yilgarn 1.6
Three Springs 1.5
Leonora 1.4
Narembeen 1.3
Dundas 1.2
Mount Magnet 0.9

Friday, March 4, 2011

What Would Make First Home Saver Accounts Work?

The Federal Government has recently made public the submissions that they received in response to the First Home Saver Accounts. AS mentioned earlier on this blog, the First Home Saver Account is a good vehicle for first home buyers in Australia to save up money for a deposit. However, currently, you need to be someone who:
  1. Will not be buying a house for the next four years 
  2. Definitely will be buying after four years 
If you do not meet both requirements, your money will go into your superannuation account, never to be seen for the next 50 years or whenever it is until you retire. So the risks are high. What if in two years time, the housing market collapses and you really, really want to buy a house? Amendments to the FSHA have been suggested but it is interesting to read some of the feedback from various institutions in response to the amendments.

In their submission, the Australian Bankers Association hoped to work with the Federal Government on implementing changes to FHSAs that: 
• improve consumer awareness, customer understanding, and up take of FHSAs; 
• provide flexibility for first home buyers; 
• lift savings for first home buyers; and 
• enhance the customer experience with FHSAs.

The Real Estate Institute of Australia was supportive of the proposed changes to the First Home Saver Account but suggested the following changes to the FSHA. 
• A cap on these accounts to be linked to movements in house prices rather than the CPI.
• That first home buyers have access to their voluntary superannuation contributions for the purchase of a home.

An interesting submission by Abacus representing credit unions showed why so few FHSA are available in the market because from the provider's perspective, the FHSAs are unappealing and uneconomical due to high complexity, substantial IT development and back office support for the product, and onerous ongoing reporting requirements. 

It will be interesting to watch this space and see how the FHSA will be modified and meanwhile, a smart first home owner who wants to play it safe should only park money that they don't need into a FHSA near them.

Tuesday, March 1, 2011

Interest Rates Steady Since Nov 2010


Glenn Stevens of the Reserve Bank of Australia released a statement today that the official cash rate will not be changed today but pressure is building for an increase in interest rates some time in the future. Here is the complete statement from the RBA:
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
The global economy is continuing its expansion, led by very strong growth in the Asian region. Commodity prices have risen further over recent months, pushing up measures of consumer price inflation in many countries.  A number of countries have been moving to tighten their monetary policy settings. Overall, though, financial conditions for the global economy remain accommodative.
Australia's terms of trade are at their highest level since the early 1950s and national income is growing strongly. Private investment is picking up, mainly in the resources sector, in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and a higher rate of saving out of current income. The effects of the natural disasters over the summer have reduced output, but production levels should recover over the months ahead, and there will be a mild boost to demand from the rebuilding efforts as they get under way.
Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend. Business balance sheets generally are being strengthened, and the run-up in household leverage has abated.
The labour market firmed in 2010, with unusually strong growth in employment and a decline in the rate of unemployment. Most leading indicators suggest further growth in employment, though most likely at a slower pace. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.
Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices. Production losses due to weather are temporarily raising prices for some agricultural produce, but these should fall back later in the year. Overall, looking through these temporary effects, the Bank expects that inflation over the year ahead will continue to be consistent with the 2–3 per cent target.
At today's meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate in view of the general macroeconomic outlook.

First Home Buyer Grants now come from Stockland

Stockland has recently announced bonus packages for first home buyers looking to buy a home in Corimbia, Newhaven or Settlers Hills. For those aiming at outlying suburbs, the package includes 

  • side and rear fencing
  • front landscaping
  • siteworks
  • flooring and 
  • blinds
The Move On Up packages are a way to entice new home buyers who are just looking for that extra incentive to make the big leap into a new home. Personally these suburbs are a little far out but it could be of some interest to someone out there.

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