First home buyers edging back:

Thursday, 21 July 2011

First home buyers are slowly starting to come back into the market, although most remain coy when it comes to taking on new debt, new research has found.

According to the Australian Bureau of Statistics, first home buyers accounted for 15.4 per cent of all owner occupier finance commitments last month.

There were 8,226 new home loan commitments by first home buyers during the month of May – 17.2 per cent higher than during the previous month.

While first home buyers only make up a small portion of the market, RP data research analyst Cameron Kusher said they form an important component of the market.

“When first home buyers purchase, it actually allows for more rental accommodation in the market - it also enables existing home owners to upgrade out of their first home into a superior second home,” he said.

“The volume of first home buyers in the market has historically been quite responsive to cuts in interest rates but not necessarily as responsive to increases in mortgage rates.”

As at May 2011, standard variable mortgage rates were recorded at 7.8 per cent which were slightly above the 10-year average level.

When mortgage rates dived in late 2008, first home buyers rose from just 19 per cent of all owner occupier finance commitments when mortgage rates peaked to a peak of 28.5 per cent by May 2009.

“Clearly the First Home Owners Grant Boost provided further stimulus to the market and as mortgage rates started to rise and the Boost was wound back, we saw first home buyer numbers fall to a low in February 2011 to 14.9 per cent,” Mr Kusher said.

Mr Kusher said that it’s unlikely we will see first home buyer activity increase much more in the short-term given current housing market conditions.

He believes that consumers have become extremely ‘debt cautious’ – a trend he expects to continue for the foreseeable future.

Australians expect RBA to sit tight

Wednesday, 20 July 2011

A majority of Australians expect the Reserve Bank to keep rates on hold until 2012, new research has revealed.

According to a new survey by Loan Market Group, 40 per cent of respondents believe the RBA will keep rates on hold at 4.75 per cent for the rest of 2011, while another 20 per cent believe the Board may actually cut rates before the year is out.

Twenty four per cent believe there will be one rate increase in 2011, while another 16 per cent predict two rises.

“The interest rate landscape is an unpredictable one but with sluggish economic numbers across the board and a recent nose-dive in consumer confidence, a majority of Australians are not expecting any more rate rises during 2011,” Loan Market Group spokesperson Paul Smith said.

“This is a big change from just a few months ago when most economists were forecasting at least one or perhaps two increases by the RBA before the end of the year. Now with an emerging debt crisis in Europe and a soft domestic economy, we could see rates drop before Christmas.”

A CONTINUING flat market has created a great opportunity for buyers, industry experts say.

Valuer-General figures show the June 2011 quarter has seen a drop in sales volumes of 16 per cent when compared to the June 2010 quarter, but the slight drop in median house prices of 0.4 per cent for the quarter, is encouraging, the experts say.

The Real Estate Institute of SA president Greg Nybo said the high number of properties on the market, compared to a low number of sales was causing the market to flatten.

"There's no doubt that the property market is flat at the moment and both REISA members and consumers are noting this right across the market," he said.

"However, it is a positive sight that we're not seeing large price drops across the metropolitan region and this is important as it shows the long-term stability of our property market.

"For purchasers there is a smorgasbord of choice, so there are great opportunities available for people who do their research."

"Vendors are being more realistic with their pricing and it looks like the market will creep up, only very marginally, for the rest of the year, with things looking better in 2012 when the market gains some confidence again," Mr Moulton said.

"There are still some suburbs like Henley Beach and Golden Grove doing really well and I imagine they'll continue to do well."

The Valuer-General figures show the five suburbs with the highest median price increases compared to the same quarter last year, are all North and West of the city.

In terms of Local Government Areas, Holdfast Bay was up 21.98 per cent for the quarter and 9.76 per cent over 12 months. "There are still a range of suburbs which are holding value well, which shows that well-priced, quality housing will always be in demand," Mr Nybo said.

Jane Sutton and Broughton Snell are selling their Henley Beach home to move overseas. The strong results did not surprise Ms Sutton.

"We'd love to come back and settle down in Henley," she said. "The beach is fantastic and you feel like you're on holiday, plus it's only 20 minutes from the city."

Rate hike off the cards for now

Monday, 27 June 2011

Minutes released by the Reserve Bank from its monetary policy meeting earlier this month reveal that the central bank may have relaxed its penchant for rising interest rates – for the time being.

According to the minutes, the central bank maintains its view that the economy will grow somewhat above trend over the next few years however economic indicators over the past month had not placed any urgency on the need to move on monetary policy yet.

The board also noted the ‘dual’ forces at work within the economy.

“While there had been additional evidence of the coming strong pick-up in investment in the resources sector, activity remained quite subdued in some other important parts of the economy, partly reflecting the board’s earlier actions as well as the appreciation of the exchange rate,” the minutes read.

The board acknowledged that credit growth remained moderate while international activity was posing downside risks to the economy, particularly sovereign debt problems in Europe.

“Members judged that it would be prudent to leave the stance of policy unchanged, pending further data on international developments and on the strength of domestic demand and inflationary pressures,” the minutes concluded.

The Reserve Bank kept the official cash rate on hold at 4.75 per cent for the seventh consecutive month when it met on June 7.

Indications of a prolonged pause will be met with relief from Australian investors and home buyers who have been hit rising living costs from all angles

Investor activity on the rise

Monday, 27 June 2011

An increasing number of savvy property investors are recognising the many opportunities available in Sydney this winter, new research has found.

According to sales records from Raine & Horne Marrickville, Crows Nest and Liverpool, investor activity has surged by as much as 50 per cent over the last 12 months.

The majority of investors in Marrickville and Liverpool purchased units in the $320,000 to $450,000 price range.

Raine & Horne chief executive Angus Raine has claimed "investors are officially back" and are looking to cash in on the lack of stock and increasing rental demand.

"Australian shares have taken a hit since April on the back of global uncertainty, while in comparison Sydney real estate is enjoying the combined benefits of a lengthy period of interest rate stability, low vacancy rates, and increasing rental yields," Mr Raine said.

"This is driving more investors back to the safety of bricks and mortar, which has the potential for quality, long-term capital growth."

It’s always a good time to buy:

Tuesday, 14 June 2011

Jessica Darnbrough

Any time is a good time to buy, regardless of what house prices are doing, Yellow Brick Road’s chief executive Mark Bouris has claimed.

Speaking to Real Estate Business, Mr Bouris said property buyers should never factor real estate prices into their purchasing decision, but rather, their own financial circumstances.

“Obviously there is a lot of talk at the moment that properties are overvalued. Economists are currently saying that properties are overpriced by as much as 25 per cent. I think that is about right,” he said.

“However the reality is, this really should have little bearing on a home buyer. If they can afford the property, then they should buy it,” he said.

“Regardless of what the market is doing, it is always a good time to buy property, provided you can afford it.”