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Friday, November 20 2015

According to ANZ's Stateometer Queensland has shown the greatest improvement over the September quarter, with the annual pace of growth rising nearer to its trend rate. Queensland is alos showing the second fastest pace of employment growth behind NSW.

ECONOMIC REBALANCING BROADENS TO QUEENSLAND

The rebalancing of the national economy continues with a solid pick-up in the annual pace of economic activity in Queensland.  As the third largest economy in Australia, signs of economic momentum are encouraging, and lend further support to signs that the non-mining sectors are picking up.

The decline in mining investment in Queensland has led to a sharp contraction in state final demand. While significant, this is perhaps not representative of activity in the broader economy, which has picked up noticeably over the year. The state’s monthly data flow picked up across household, business and labour force indicators. 

SERVICES LIFTING ECONOMIC ACTIVITY

Of key importance to the rebalancing of the national economy is the role of the services sectors. These industries, typically labour intensive, have helped to lift the trend employment-to-population ratio in NSW, Victoria, Tasmania, and Queensland. These states are also the ones that are showing the strongest economic performance on the ANZ Stateometer.

Residential construction has and will continue to be important to supporting employment (in construction and several services industries). Commercial construction, outside of mining, should also play a greater role for some states, with the outlook for non-residential construction looking better in some sectors such as tourism and government-backed infrastructure. 

Posted by: Greg Carroll AT 02:15 am   |  Permalink   |  Email
Thursday, November 05 2015
Brisbane house prices still rising: HTW

Herron Todd White's November property clock notes that Brisbane house prices are still is in a rising phase. Brisbane is gaining a reputation as Australia's most affordable eastern capital with price growth potential, according to Herron Todd White.

As we noted last month Brisbane Units have however reached there peak and concens of over-suuply are building.

Posted by: Greg Carroll AT 11:14 pm   |  Permalink   |  Email
Thursday, November 05 2015

The gap between Sydney and Brisbane house prices is starting to bear fruit for developers and vendors in the Queensland capital with dozens of southern buyers taking the plunge.

For about a year the gap between Sydney and Brisbane had been expanding but evidence of southern buyers jumping was not that noticeable by agents and developers.

Now it is.

Listed developers such as Stockland and Mirvac have seen more Sydney buyers for Brisbane artments and private developers such as Tim Gurner have also recorded as much as 40 per cent of investors were from Sydney.

The latest QBE LMI Australian Housing Outlook report prepared by BIS Shrapnel indicates some concerns over a potential oversupply of apartments in Brisbane.

National Property Research Co director Matthew Gross sees the price differential between ­Brisbane and Sydney as more ­influential in driving a property boom than the fundamentals such as the state's unemployment and population growth.

"It's bizarre but it's true," Mr Gross said.



 

Posted by: Greg Carroll AT 10:06 pm   |  Permalink   |  Email
Wednesday, November 04 2015

I believe the reason most people procrastinate is FEAR. They are afraid of the risks associated with investing. They focus on all the things that could go wrong “the what ifs” and console themselves that it is much safer to nothing.

This is however untrue, as doing nothing and delaying actually increases risk and increases the problem.

If you decided you needed $2 million by retirement would you sooner have 30 years to accumulate it or 5 years?

If you start early then you have a lot of time to build to this number which means your risk level is low. You can take small incremental steps and you will be less concerned and impacted by the markets ups and downs.

Investing earlier means your investments have the opportunity to go through a number of investment cycles. Think of each investment cycle as an opportunity to double your money. The more cycles you go through the more chances to double your money.

And if things did go “pear-shaped” you still have time to start and rebuild again.

If you wait to take action until 5 years before retirement then you have a very steep hill to climb in a short space of time. To achieve your target you will need to take a more aggressive investment approach, you will be vulnerable to market volatility and if things go wrong you will not have time to rebuild. So this is a high risk approach.

The longer we delay action we are actually putting ourselves in a position where we will need to take greater risk to achieve our goals.

Yet this is actually what most people to. They delay and defer until they don’t have a choice and then take on riskier investments with promise of higher growth or higher returns. And that’s how we end up with situations like Storm Financial and Banksia where people lose everything.

As the saying goes “The best time to plant a tree was 20 years ago. The second best time is today”.

Posted by: Greg Carroll AT 09:16 am   |  Permalink   |  Email
Monday, November 02 2015

According to a new QBE housing outlook prepared by BIS Shrapnel Brisbane is predicted to be the standout performer between 2015-16 and 2017-18. The report has forecast cumulative price growth of 13.2 per cent for houses and 2.3 per cent for units.

However in other capitals the picture is not so rosy.

In Sydney house price growth will slow from 22.3 per cent in 2014-15 to 7.3 per cent in 2015-16 – and then prices will then fall 2.7 per cent in 2016-17 and another 2.3 per cent in 2017-18. Unit median prices are expected to follow a similar trajectory, with growth of 14.6 per cent in FY15 to be followed by growth of 4.8 per cent in FY16, a decline of 2.7 per cent in FY17 and a decline of 3.5 per cent in FY18.

Hobart is forecast to experience a 4.9 per cent increase in house prices and a 2.2 per cent decrease in unit prices, while Canberra house prices are expected to rise 3.4 per cent and unit prices fall 2.7 per cent. Melbourne values will climb 2.8 per cent for houses but fall 4.9 per cent for units. Adelaide house prices will go up 0.8 per cent, while unit prices will fall 0.8 per cent.

Perth is forecast to experience a decline of 2.4 per cent in house prices and five per cent in unit prices, while Darwin is expected to see falls of 2.5 per cent for houses and 5.2 per cent for units.

Contact us to get your investment plans moving

Posted by: Greg Carroll AT 02:26 am   |  Permalink   |  Email
Thursday, October 29 2015

Queensland is tipped to replace New South Wales as the most optimistic state regarding the residential property market and lead the country for price and rental growth over the next two years, according to the NAB Residential Property Survey.

The NAB Residential Property Survey found market sentiment improved notably in Queensland and was less negative in SA/NT, softened in Victoria and NSW and fell to a new low in WA.

NAB Group chief economist Alan Oster said the NAB Residential Property Index fell -7 to +10 points in the September quarter - its second consecutive fall - with the index now below its long-term average (+14 points), however it’s not all negative as the overall picture masks some big differences across individual state markets.

“The survey also suggests that yield compression will continue as capital growth outpaces rental growth in all states,” he said.

“Foreign buyers were notably more active in Victoria, where they accounted for just over 1 in 4 of all new property sales and around 1 in 7 sales of established homes.

"In established property markets, foreign buyers accounted for around 11.3% of all apartment sales and 9.5% of house sales. These ratios were significantly higher in Victoria, where foreign buyers accounted for around 1 in 5 of all established apartment sales and just over 1 in 6 houses.

The report noted expectations for national house price growth over the next 1-2 years were scaled back to 1.5% and 1.8%.

"However, this also masked a notable improvement in Queensland, which is now predicted to be the leading state for capital growth in the next few years (2.6% & 3.4%). In contrast, expectations were cut back in NSW (2.2% & 1.8%) and Victoria (1.9% & 1.9%), and remain weak in SA/NT (-0.2% & 0.5%) and WA (-0.7% & 0.4%)," it read.

"In 2016, the slowdown in average national house price growth to 2.3% is largely driven by a moderation in both Sydney and Melbourne prices growth. NAB Economics expects house price growth to decelerate in Sydney to 1.2%, while price growth in Melbourne will ease to 3%. Brisbane is tipped to see the fastest house price growth (4.5%), and the Adelaide market is expected to improve (2.4%). Perth will remain weak, although price declines are forecast to ease."

 

Posted by: Greg Carroll AT 10:21 pm   |  Permalink   |  Email
Thursday, October 29 2015
Brisbane The Favoured City For Interstate Investors: Survey

(Source: Propery Observer)

Most Australian investors believe Brisbane is a more affordable alternative to Sydney and Melbourne, according to a new survey by Property Investment Professionals of Australia (PIPA).

Chair Ben Kingsley said investors were increasingly looking outside the two largest capital cities for assets.

“Investors are seeing Melbourne and Sydney performing very well and they’re looking for alternative markets that they think they can get in before the market starts to move,” Mr Kingsley told wire service AAP.

“Sydney’s market has started to slow and Melbourne is approaching the peak of the cycle.”

“Probably over the last six months there has been some speculation in the Sydney market, and the Melbourne market is enjoying a good Spring but I suspect that will slow down into 2016,” Mr Kingsley said.

Of the investors surveyed by PIPA, 58 per cent identified Brisbane as the capital city offering the best investment prospects, well ahead of the 17 per cent that chose Melbourne.

Just 11 per cent named Sydney, while six per cent chose Perth and five per cent selected Adelaide.

About 20 per cent of investors said they had put their investment plans on hold because of concerns about a property bubble.

Tighter lending conditions were the key worry for investors, as regulators sought to slow the growth of investor lending.

Price corrections, the removal of negative gearing, long periods of vacancy and oversupply of property are concerns.

Posted by: Greg Carroll AT 07:08 am   |  Permalink   |  Email
Thursday, October 22 2015
Chinese Investment In Queensland Property Doubles

Chinese buyers nearly doubled their investment in Queensland property to almost $1 billion in 2014-15, according to The Australian.

The newspaper said Queensland’s Foreign Ownership of Land Register revealed ­investors from China spent $872.5 million buying land and property while Hong Kong investors spent $112 million.

The total of $984.5 million is more than double the $463 million spent by Chinese investors in Queensland the previous year.

China has been the top source of foreign investment in Queensland real ­estate for the past three years.

The Australian reported that Chinese buyers own 3585 parcels of land covering 237,490 hectares, while British investors own 5904 properties covering 2.2 million hectares.

Singapore has overtaken the US as the second-biggest source of foreign investment in real estate in Queensland. Singaporean investors spent $421m last financial year — nearly three times more than the year before.

Analyst Michael Matu­sik told The Australian that Chinese buyers were buying more than half the new apartments being sold off the plan in Brisbane and the Gold Coast.

Posted by: Greg Carroll AT 06:48 pm   |  Permalink   |  Email
Wednesday, October 21 2015
Why are my home loan rates going up?

Most borrowers have already or will be shortly seeing the rates on their home loan and investment lending increase. But why is the happening when the RBA has been cutting rates? There are some key factors:

  • APRA is seeking to curb investment lending growth
  • ASIC wants banks to apply tighter restrictions on lenders to make it harder for people to borrow money, particularly interest only and investment lending
  • APRA wants the banks to hold greater levels of capital

Investment and interest only lending
APRA and ASIC are seeking to cool growth in investment lending which has primarily built up in the Sydney market. But rather than take a targeted approach to the Sydney market APRA in particular has a adopted a broad brush approach applying pressure on the banks to slow their lending growth. So banks at this point have responded by changing pricing and/or policy for investment lending. The changes we have seen so far include:
 

  • A number of lenders including AMP have pulled out of investment lending altogether
  • A reduction in LVRs for investment lending - 90% is now generally the maximum - down from 95%
  • Some lender will only finance up to 80% for investment property
  • Lenders increasing interest rates for investment and interest only lending
  • Increased restrictions for SMSF lending
  • Increase restrictions to overseas and foreign investors
  • Increased restrictions on development funding

The restrictions have however seen more competitive pricing emerge for owner occupied principle and interest lending below 80% and have also seen more competitive investment lending emerge outside of the major banks.

So now the pricing landscape in terms of rates is extremely varied - there is not one rate and pricing will be specific to your situation and requirements and in most cases there will be different pricing on different loans.

The lowest priced interest rates will typically be for principle & interest owner- occupied lending below 70% LVR. The highest priced lending will be for Interest On;t investment lending above 90% LVR.

Increases in home and investment lending rates due to Capital Adequacy Requirements
Westpac has already raised it's home lend
ing rates by 0.2% and NAB, CBA, ANZ and Macquarie will most likely raise rates in the coming weeks. But that's not the end of it - there is still more to come.

The rate increase has come as a result of Westpac's need to hold more capital to protect deposit holder funds. Former CBA chief David Murray's enquiry into the financial services sectors highlighted that the major banks and MacQuarie were holding a significantly lower percentage of capital relative to the their loan book compared to the remainder of deposit taking institutions. The average risk weighting of the majors loan books sits at around 16% while the remainder of the market sits around 30-35%.  APRA wants to see that risk weighting increase to 25%. 

APRA has been steadily applying pressure to banks to increase their capital holdings to strengthen their balance sheet to market shocks. Westpac and other banks have had to go to market to raise more capital which has diluted the banks return on equity. 

Westpac chief executive Brian Hartzer said Westpac would be maintaining its return on equity target of 15 per cent. Which means further capital raisings will mean further rate hikes. This is likely as Westpac and other banks would need to raise more capital in response to pressures from global regulatory changes known as Basel IV.

So we can expect to see more rate hikes out of the majors.

This certainly creates opportunity for smaller lenders in the market who are already meeting their capital requirements and already have competitive offerings - some with rates below 4%.

With all the changes in the market now is an ideal time to talk to us to review your lending. Contact us today.

Posted by: Greg Carroll AT 06:39 am   |  Permalink   |  Email
Thursday, October 15 2015

Westpac yesterday raised it's home lending rates by 0.2% and NAB, CBA, ANZ and Macquarie will most likely raise rates in the coming weeks. But that's not the end of it - there is still more to come.

The rate increase has come as a result of Westpac's need to hold more capital to protect deposit holder funds. Former CBA chief David Murray's enquiry into the financial services sectors highlighted that the major banks and MacQuarie were holding a significantly lower percentage of capital relative to the their loan book compared to the remainder of deposit taking institutions. The average risk weighting of the majors loan books sits at around 16% while the remainder of the market sits around 30-35%.  APRA wants to see that risk weighting increase to 25%. 

APRA has been steadily applying pressure to banks to increase their capital holdings to strengthen their balance sheet to market shocks. Westpac and other banks have had to go to market to raise more capital which has diluted the banks return on equity. 

Westpac chief executive Brian Hartzer said Westpac would be maintaining its return on equity target of 15 per cent. Which means further capital raisings will mean further rate hikes. This is likely as Westpac and other banks would need to raise more capital in response to pressures from global regulatory changes known as Basel IV.

So we can expect to see more rate hikes out of the majors.

This certainly creates opportunity for smaller lenders in the market who are already meeting their capital requirements and already have competitive offerings - some with rates below 4%.

With all the changes in the market now is an ideal time to talk to us to review your lending. Contact us today.

Posted by: Greg Carroll AT 12:07 am   |  Permalink   |  Email

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