Friday, February 26, 2010

Perth worst city in January property values

Last month, when all the other cities went up, Perth median house prices dropped, albeit marginally. The median house price in Perth has dropped 0.6% in January 2010 in what is probably a small blip in the housing boom. Other cities did better with various increases in median property values.

  • Darwin increased by 4.6% ($475,000)
  • Melbourne 4.3% ($455,000) 
  • Canberra 4.3% ($489,250)
  • Brisbane 1.8% ($440,000)
  • Sydney 1.7% ($494,500)
  • Adelaide 3.2% ($379,600)
Rental yield which is a percentage of the property value was also down for Perth, recording the lowest unit yield rate of all cities in Australia at 4.2% and the equal lowest yield rate for houses at 3.8%. Darwin is the place to be if you are looking for a good rental yield, returning an average of 5.7% for houses and 5.9% for units. What are your thoughts? 

Tuesday, February 2, 2010

RBA statement regarding today's interest rate decision

At its meeting today, the Board decided to leave the cash rate unchanged at 3.75 per cent.

The global economy is growing, and world GDP is expected to rise at close to trend pace in 2010 and 2011.  The expansion is still likely to be modest in the major countries, due to the continuing legacy of the financial crisis, resulting in ongoing excess capacity.  In Asia, where financial sectors are not impaired, recovery has been much quicker to date, though the Chinese authorities are now seeking to reduce the degree of stimulus to their economy.  Global financial markets are functioning much better than they were a year ago.  Credit conditions nonetheless remain difficult in the major countries as banks continue to face loan losses associated with the period of economic weakness.  Concerns regarding some sovereigns have increased.
In Australia, economic conditions have been stronger than expected, after a mild downturn a year ago.  The effects of the fiscal stimulus on consumer demand have now faded, but household finances are being supported by strong labour market outcomes and a recovery in net worth.  Public infrastructure spending is now boosting demand, as is an upturn in housing construction.  Investment in the resources sector is strong.  The rate of unemployment appears to have peaked at a much lower level than earlier expected.
Inflation has, as expected, declined in underlying terms from its peak in 2008, helped by the fall in commodity prices at the end of 2008, a noticeable slowing in private‑sector labour costs during 2009, the recent rise in the exchange rate and a period of slower growth in demand.  CPI inflation has risen somewhat recently as temporary factors that had been holding it down are now abating.  Inflation is expected to be consistent with the target in 2010.
Credit for housing has been expanding at a solid pace, and dwelling prices have risen significantly over the past year.  Business credit, in contrast, has continued to fall, as companies have sought to reduce leverage, and lenders have imposed tighter lending standards and in some cases sought to scale back their balance sheets.  The decline in credit has been concentrated among large firms, which generally have had good access to equity capital and, more recently, to debt markets; credit conditions remain difficult for many smaller businesses.
With the risk of serious economic contraction in Australia having passed, the Board had moved at recent meetings to lessen the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.  Lenders have generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point.  Since information about the early impact of those changes is still limited, the Board judged it appropriate to hold a steady setting of monetary policy for the time being.
Interest rates to most borrowers nonetheless remain lower than average.  If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term.

- Statement by RBA's Glenn Stevens, Governor: Monetary Policy Decision

RBA keeps rates steady at 3.75%

Good news for homebuyers and homeowners. This afternoon the Reserve Bank of Australia decided not to increase the interest rate, choosing to wait and see with other economic indicators yet to come in. They will evaluate the Australian economy's reaction in the coming weeks and meet again next month to decide on interest rates. The cash rate remains at 3.75% and all banks have also decided not to increase their home loan rates.

Monday, February 1, 2010

Perth houses up 11.5% over 2009: ABS

According to the Australian Bureau of Statistics, Perth has recorded the biggest jump in house prices in December with an increase of 5.7% in December. Overall according to the ABS, Perth recorded 11.5% increase over 2009. This was compared to a national average for 2009 of 13.6%. So who's borrowing at the moment. Australian Financial Group AFG arranged 864 mortgages in WA over the month of January totalling $335m with an average home lone of $388,000.  Almost 12% of these loans went to first home buyers and 34% to investors. Whilst this may seem like a big amount, it was a drop from 1049 mortgages valued at $409m in December 2009. As we know that house prices are a lagging indicator, with the sharemarket falling dramatically in recent weeks, one would wonder whether the house prices will survive a nearly imminent increase in interest rates tomorrow by the RBA. Watch this space...

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