Real estate


Australia ‘ahead of its time’ in global recovery

Australia ‘ahead of its time’ in global recovery

Australia’s property market is recovering with vigour thanks to the strengthening employment sector, according to CB Richard Ellis.

The company’s executive director of research for the Pacific Region, Kevin Stanley, said the employment base in Australia had already recovered from the downturn with rates of growth now returning to trend.

According to Mr Stanley, the improvement in employment confidence will help buoy rental growth across the nation’s capital cities over the next 12 months.

“The one thing that stands out is the growth phase in employment, with Australia at least a year ahead of the rest of the world,” Mr Stanley said.


Mr Stanley said CBRE had brought forward its forecasts for rental growth by 12 months, with the spike in rents now expected to occur next year as opposed to 2012. CBRE’s revised forecast is for rental growth to average 6.7 per cent from 2010 to 2012.

CBRE has also forecast capital values in the Sydney CBD to grow by an average of 10 per cent per annum between 2010 and 2012.

“The income growth promise in Australia is the big motivator and while the market will continue to be dominated in the short term by equity investors we expect to see a gradual return of bank lending, with a very cautious letting off of the screws by the banks in the next few years,” Mr Stanley said.

Story from

Home prices chipping away at fairness

Home prices chipping away at fairness: Ratings executive

S&P credit ratings expert confirms the strength of the housing sector but questions the benefit of high home prices for society

A managing director of a credit ratings agency responsible for scoring the quality of Australia’s mortgage debt has questioned the social impact of the nation’s soaring house prices, even while she confirms the strength of the sector.

Standard & Poor’s managing director of rating services Fabienne Michaux said the strength of Australia’s mortgage quality is a success on the capital markets but the high valuation of homes underlying the debt presents a long-term risk to the basic fairness in society.

“The social implication of house prices in the longer term is a key issue,” she said. “One of the things people were proud of was that (Australia) was fairly egalitarian and even and everybody had basic rights to housing and basic education and good healthcare.”
“Those are the sorts of things that start to chip away when you’ve got people who can’t afford to actually to find somewhere to put a roof over their head.”



The median national city median home price was $468,000 in May, according to RP Data-Rismark, following years of nearly uninterrupted increases in value, driven by a shortage of available new land, a cumbersome building approvals process and tax incentives that reward owners to purchase and hold second homes.

There is an estimated 200,000 home shortage in the nation, expected to worsen as a recovery in building stalls. Ratings agencies such as Standard & Poor’s grade the quality of the mortgage debt that is repackaged and on-sold by local lenders to institutional investors.

While confirming the strength of assets underlying Australia’s residential mortgage backed securities market, which has issued $352 billion since 2000, Ms Michaux noted home owners are unwise to take too much satisfaction in becoming property millionaires.

“Ultimately the utility of the house is still that you’re living in it,” she said. “When you pass it on, it’s still one house. If you’ve got two kids you’ve got half a house each.”

Story by Chris Zappone Fairfax Digital

Sunny in all the wrong places

Sunny in all the wrong places

I’ve been thinking lately of setting up the lounge in the toilet. The dining room table too, and maybe the kitchen, if I can squeeze it in. There’s the obvious matters of hygiene to overcome but at a pinch, you can always do at least some of the ho-hum toileting stuff in the old kitchen sink, as shown by New York Post editor Col Allan when he was on Aussie shores.

In this chilly weather it’s been easy to sort out where the warmest, sunniest part of the house is. Yes, the smallest room in the house is also the brightest, while the places you actually want to spend time in (for longer than it takes to read the morning news or a trashy mag) are darker and cooler than a cave.

In an old house it’s easy to think ‘well that’s how they did things 100 years ago’. But the loo in question is actually in a newish rear extension that also houses the south-facing kitchen and dining area. Someone needed to give that draughtsperson a compass and show them which way was north.

It’s little wonder that we have one of the highest environmental footprints in the world (per capita) if this is how we continue to design houses. Short of hanging out in the toilet all day, or the bedrooms (which also face north), enticing though it is to sleep until lunch, the only way to get warm in the “dark zones” that are the living areas is to really crank up the heater. Last power bill? $600. And that’s not even including the gas for the main heater, so you can probably factor in another few hundred dollars there. If the house design is hurting my hip pocket, it’s also sucking up a more natural resources than it has to.

The place I’m talking about is a rental. If it was mine I’d be tempted to call in a builder to sort the mess out. But realistically, it’s much harder and way more expensive to fix something once it’s built rather than just plan it well in the first place.

Admittedly it doesn’t help  that it’s a home with gorgeous old high ceilings, up near which there’s probably a metre-thick blanket of warm air floating, hovering enticingly above our heads. But I can live with them, they look great and help keep the house cool in summer, even though they’re not recommended in modern green homes.

But a home that takes advantage of the lower-in-the-sky winter sun and baths the living areas in warmth is high on my wish list at the moment. Building codes such as BASIX in NSW have done a lot to raise awareness amongst home builders that the direction you face your main living areas is important. But it seems there’s still a fair way to go.

It makes sense that as energy prices rise over time, home buyers will also be prepared to fork out more for energy-efficient properties that keep them comfortable and cut their utility bills. We’re not there yet … but we can only hope the day comes soon. Then many more homes would be designed with such basic but vital things as the path of the sun in mind.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.

She writes for

The Next RBA Move will be Downwards

The Next RBA Move will be Downwards

When yours truly was on Seven’s Sunrise back in May it was acknowledged by both David Koch and myself that the Reserve Bank of Australia (RBA) would be unlikely to lift rates that day, with the knowledge that things were looking worse in Europe and there were already signs of a slowdown on housing here. We were wrong.

The RBA lifted rates that day by yet another quarter point to 4.5 per cent. At the time it was largely expected by economists.

However, I believe it was a serious mistake to lift cash rates; similar to the mistake made in 2008 when the RBA thought lifting rates was a prudent idea in the first half of that year.


Now, sure, the RBA board members do not have a crystal ball and can only go on present information at hand. So it was not to know of the events on Wall Street and in Europe later in the week (the so-called “flash crash”).

However, Europe had been simmering for some time before May and as each week had gone by in March, and then in April, the situation was becoming worse and worse.

Yet the RBA moved rates higher in May largely on the belief the housing market was still surging ahead. This belief was due to, among other factors, auction clearance rates.

But, as I have stated before, there has been an increasing number of passed-in auctions failing to make it into the official results and clearance rates.

The problem with this is that the RBA has been relying on auction clearance rates to get an indicator of the market. Naturally, to think that it may have lifted interest rates in May partly based on incorrect data is a disturbing thought.

Now, not much more than a month later, the banks are starting to cut their fixed rates. And banks only tend to do that when they are sure cash rates have peaked.



Even the real estate spruikers have been stating the housing market is slowing. You know the market is seriously slowing when they do that.

The positive news in all this is that the probability of further interest rate rises this year has all but been eliminated. And I believe the next move is actually going to be down.

That is because the RBA was lifting rates to stop a potential housing bubble. Now that risk has gone and, indeed, the risk has increased for house price falls, the RBA can accommodate a cut and will likely make a cut if Europe drags us down and/or house prices retreat.

The RBA will never admit it, but it made a mistake in May. And that’s why I believe the probabilities have risen that the next move will be down.

Louis Christopher is the managing director of SQM Research and the head of property at Adviser Edge.

Investors fill the first home buyers' gap

Investors fill the first home buyers’ gap

When June-quarter property prices are released in the next two months, it’s likely we’ll see house price growth down markedly from the rates we saw in March and December.

The figures probably won’t show falling prices but growth will be a lot closer to zero than it has been for more than a year.

That in itself would be an unusual result. The fall in housing finance figures compiled by the ABS has been steep and would normally suggest falling prices, not just a fall in the rate of growth.

Overall, the number of housing loans for owner occupation, excluding those for refinancing, is down more than 30 per cent year on year for NSW.

One reason the downward effect on house prices hasn’t been as pronounced as we’ve seen historically is that it was accompanied by a rise in the proportion of housing purchases not involving mortgages.


Or another way to think about it, the lack of a significant fall is partly due to a fall in the proportion of first home buyers, who recently have had a much greater propensity to use mortgages for their purchases.

The other reason is the increased level of investor activity, reported separately to the owner-occupied numbers that are usually considered to have the biggest link to prices.

Nationally, the value of loans taken out by investors is up nearly 30 per cent year on year, according to the ABS, and brokers and financing groups are reporting strong upswings in investor activity as the competition from first home buyers and upgraders continues to dissipate.

This has helped cushion the effect of the withdrawal of first home buyers and upgraders from the market as interest rate concerns dominate.

Matthew Bell is the economist for the Fairfax-owned Australian Property Monitors.

Moving your pets

Moving your pets

Your pets will always be aware that something new is happening. As with humans, your pets enjoy comfortable and familiar surroundings. Moving away from routines will increase the stress levels.

Quotify has an excellent site detailing some of the measures you should consider when moving with your pets. Among the main concerns are:

> Keeping pet routines regular.

> Ensuring animals are registered and have all their identification tags available – especially during the moving period in case they get lost.

> Have your pet checked by the vet before you move.

> Ensure your pet meets local laws and regulations if you have moved interstate – some states have curfews (and in some cases outright bans) for different animals.

> Make sure your pet is accustomed to its familiar surrounding such as bowls and toys, etc, soon after they have arrived at your new address.

If you’re travelling by car, ensure you have the correct size animal carrier for your pet.



> It’s a good idea not to feed pets substantial meals during the trip, but rather have snacks and plenty of water.

  • Incorporate breaks and exercise time for pets into the trip.
  • Take a litter box for cats and scoop and plastic bags for dogs.

> Dogs should be acclimatised to their new surroundings as soon as possible – take them for a walk to familiarise themselves.

> With cats, in particular, it is a good idea to leave one room where they feel completely at home and are not upset by the sight of packing boxes and furniture out of place.

> At a cat’s new location, it is likely to feel out of place for a while and may be happy being kept inside until it’s ready to venture forth.

  • A good solution is to leave the cat in cage outside to check its new surroundings – with you not far away of course.
  • Making sure your cat is allowed to look outside through windows is a good way of letting them acclimatise.

> Animals such as guinea pigs, mice, birds or reptiles, should be kept in their cages, covered and cool.

  • Ensure they have access to water as soon as you arrive at your location.

> You could consider rubbing a towel around your cat’s or dog’s body at your old address and rubbing this around prominent surfaces at your new address to ensure your pet gets a feeling of ‘home’ at its new location.

> Some companies might move pets – always ensure you have up to date vaccination and vet records.

Story by Alice M –

We must do better on housing supply says Swan

We must do better on housing supply says Swan

Australia must do better in the supply of housing – a supply gap that could grow to 600,000 by 2028/29, Treasurer Wayne Swan has warned.

Mr Swan told a Property Council conference in Canberra that the National Housing Supply Council estimates the country’s housing stock is currently short of 178,400 dwellings.

“It seems that the supply of housing in Australia is not as responsive as it could be, and this has been the case for some time now,” Mr Swan said in a prepared speech on Monday.

He said reasons for this supply shortage were impediments created by various regulations, slow planning and zoning processes, and complex, uncertain and time-consuming systems for charging developers for infrastructure.

“In the worst-case scenario, it can take as long as 15 years to proceed from the identification of suitable land to a completed house,” Mr Swan said.

“We can do better than this.”

He said commonwealth and state treasuries and premiers’ departments were now fully engaged in the process of designing reforms to improve the operation of the housing market.

“I’m determined to see the Australian government play a role in reforming the housing market for the long term, embedding better practices in planning and zoning and developer charging,” he said.



Mr Swan reeled off a number of initiatives undertaken by the federal government in its efforts to improve the functioning of the housing market.

These included a $6.2 billion national affordable housing agreement with the states, $5.2 million of stimulus money to build more than 19,300 in public housing stock, and a $512 million housing affordability fund.

This is on top of a national rental affordability scheme that encourages institutional investors to deliver low-cost rental housing, the first-home saver account and a more generous first-home owners grant during the global financial crisis.

The government is also committed to $27.7 billion in urban and regional road infrastructure that will help support housing.

“These are all important steps and they will all contribute to improving the functioning of the Australian housing market and, in particular, the supply of low-cost housing,” he said.