Weekend reads - Must read articles from the last week

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

The weekend will be over before you know it, so enjoy some weekend reading.

How property prices are really reacting to COVID-19

How has coronavirus really affected the property market?

This article on Realestate.com.au looks at the affect on property prices.

Are house prices falling?

Not yet, but residential property prices are certainly not immune to the impacts of the coronavirus pandemic.

COVID-19: What’s next for property?

Predicting property prices is a favourite pastime for many economists but in most circumstances, forecasts are inaccurate.

During the coronavirus crisis, there have been projections of house price increases as well as major price falls, while some say the falls are already occurring.

What we can say with some certainty is that major financial support measures from the Federal Government will reduce the likelihood of significant price falls – at least in the short-term.

Stimulus is keeping house prices steady but transactions are slowing

Without wage subsidies in the form of JobKeeper payments, increased welfare through JobSeeker payments and mortgage holidays from the banks, the housing market would have been experiencing potentially large price falls by now.

However, the stimulus has resulted in a fall in the number of property transactions taking place.

While sales are still happening, it is more a case of willing buyers and sellers transacting on property as opposed to distressed sales, which are typically seen during a recession.

It’s worth noting, while lenders have offered mortgage holidays in the past including during the Global Financial Crisis in 2007, welfare payment increases and wage subsidies are not typically features of economic downturns.

This reflects the fact that COVID-19 is not a financial crisis but rather a health crisis, which has stopped businesses from operating and people from going about their everyday lives.

Listings are on the rise as COVID-19 restrictions ease.

The reduced demand for properties during COVID-19 has been coupled with a reduction in an already low volume of properties listed for sale with many vendors choosing not to list homes for sale amid the pandemic.

But interestingly, since state and territory governments began lifting COVID-19 restrictions, the property market has responded with a jump in the number of new properties being advertised for sale on realestate.com.au.

From here, the challenge for the property market, assuming COVID-19 remains under control, is what happens when JobKeeper payments and mortgage holidays are removed and JobSeeker payment amounts are reduced in September.

What happens when Federal Government stimulus run out?

Many hope that the Federal Government and lenders would take a pragmatic approach to winding-down financial support measures, particularly since a $60bn miscalculation in the cost of the JobKeeper program was announced last week.

But for now, all levels of government seem keen to re-open businesses and get the economy moving again, as they know these support measures can’t remain in place for good.

Read the full article here

Downed tools (construction/housing stimulus coming)

How has coronavirus affected the construction industry?

This Blog by Pete Wargen looks at the statistics.

Stimulus package in the post.

Construction is one sector which has continued to operate to some extent through the shutdown.

Even so, by the end of March apartment building work done was way down from the peaks, especially in Sydney and south-east Queensland.

Activity in Melbourne peaked much later, driven forth by the state’s monstrous population growth.

Activity for the building of attached dwellings was at the lowest level in 19 quarters in the March quarter, with further declines to come in Q2.

Read the full article here

The First Home Loan Deposit Scheme is now full, despite COVID-19 crisis

The first home loan deposit scheme is now full, so what does this mean for first home buyers?

This article from Domain.com.au explains what’s going on.

First-home buyers eager to get a toehold in the property market have snapped up all the places being offered by the federal government’s First Home Loan Deposit Scheme before the June 30 deadline – despite the COVID-19 pandemic.

The scheme, which allows first-timers to buy a property with as little as a 5 per cent deposit and not have to take out expensive mortgage insurance, has proved most popular with people under 30, who have taken up 58 per cent of the guarantees.

Another 12 per cent have gone to those over 40, according to data from the National Housing Finance and Investment Corporation, showing it’s also proved a hit with older Australians who’ve never before bought property.

While the scheme is capped to singles on incomes up to $125,000, or couples up to $200,000, the average income of those applying is just over half that.

Minister for Housing and Assistant Treasurer Michael Sukkar said the scheme, a key Morrison government election promise, had had an incredibly successful first year.

“First-home buyers have shown great confidence in the scheme and the housing market, reserving the remaining guarantees available – totalling 10,000 – before the 30 June deadline,” he said.

“The scheme is cutting years off the time it takes first-home buyers secure a deposit and, as expected, the data shows applications for guaranteed loans are being received from all parts of our community, be it in our capital cities, regional centres or rural areas.”

A further 10,000 guarantees will now become available to first-home buyers from July 1 and Mr Sukkar expects they would be in similarly high demand.

Agents around the country report that the scheme has kept the demand for properties from first-home buyers steady, despite the general slowing of the market from the pandemic.

“Throughout COVID-19, our biggest spike in inquiry was for properties below the upper limit for the scheme, under $600,000,” said Jesse Jones of McGrath St Kilda.

“A lot of buyers were talking about the scheme and how it was helping them get into the property market.

“I think along with low interest rates, and probably parents who are encouraging them to get into the market, having known interest rates of 15 per cent in the past, it’s really been promoting confidence.”

The upper threshold for properties to be bought with the guarantees are $600,000 in metropolitan Victoria and $700,000 in metropolitan NSW.

In regional Victoria, it’s $375,000 and regional NSW $450,000, while Brisbane is capped at $475,000, Canberra at $500,000 and Perth at $400,000.

In Sydney, it’s been proving similarly popular. David Diamantopoulos of Devine Real Estate Marrickville said first-home buyer activity has proved pretty constant.

“We’re seeing a lot of first-home buyers out and about, especially now we’re back to open inspections,” he said.

“Mostly we’re seeing them at anything under $700,000 and a lot are mentioning the First Home Loan Deposit Scheme and asking us to mention to vendors that they’re getting finance on that.

They’re hoping that, for properties just over the limit, it’ll persuade vendors to bring the price down to just under it.

That doesn’t usually work as there’s such a shortage of supply at the moment.”

The scheme was introduced in January this year to give first-home buyers a helping hand into the market.

It’s guaranteed a total of more than $316 million in home loans so far.

Read the full article here

Australian property prices: End of home mortgage honeymoon will lead to property market reckoning

Will property prices tumble?

An article from News.com.au looks at the current state of the market.

House prices in Australia are set to tumble as regulators warn the end of COVID-19’s mortgage honeymoon is likely to trigger forced sales.

First home buyers, investors and businesses have now deferred $250 billion in loans after they were laid off, lost shifts or forced to close their doors because of the coronavirus.

But a reckoning is looming for thousands of families when the current arrangements expire in September.

Prudential Regulation Authority chairman Wayne Byres told a Senate committee into COVID-19 on Thursday that some customers will be unable to repay their loans.

“We often talk of the cliff, which is when everything ends in six months’ time,’’ Mr Byres said.

“No-one has an interest in going off the cliff, so we have to work out what the next phase is going to be and that will be dependent on the economic situation at the time.”

Deloitte Access Economics’ Chris Richardson said the impact of forced sales on house prices might not be as great as the freeze on immigration.

“It’s a $7 trillion dollar market. So, $250 billion is important, but its not make or break,’’ he said.

“Population is smaller than expected, by the better part of 300,000 people.

“It has quite an impact on demand trends. You would be expecting those people would have occupied 80,000 homes.”

However, he predicted the fall in house prices might not be as high as some economists had predicted.

“I would expect Australian average prices to fall by less than 10 per cent,’’ he said.

Melbourne University economist Dr James Brugler took a gloomier view in some metropolitan cities, particularly Perth where he is forecasting a 20 per cent drop in house prices.

“Most households have only a small amount of borrowings against their home and are generally in good positions to withstand a fall in home values,’’ he said.

“However, households that have borrowed more money will feel the impact on their home equity more.

“In Sydney, Melbourne and Brisbane, we calculate that a quarter of households will see a fall in equity of 10 per cent or more.

“In Adelaide, the figures are less severe but for Perth, one quarter of households face a reduction in home equity of 20 per cent or more.

This is because the Perth property market is more exposed to movements in stock prices, and average household debt levels are higher relative to home values.”

Read the full article here

10 Positive life-long habits to adopt while in lockdown

After weeks and weeks of staying in, what habits have we picked up during lockdown?

An article from cntraveller.com looks at the life long habits that we can continue to apply even after lockdown is over.

1. NOTICE THE SMALL THINGS

There’s a lot to love on the doorstep if we just allow ourselves the time to pay attention and develop a fresh perspective. Noticing the small things that we pass on daily, hour-long sojourns can be a huge source of comfort and fascination – watching the journey from bud to bloom on that one tree, spotting how the same plants behave differently in different gardens and observing the wildlife beneath our feet is the ultimate in mindfulness and comes with all of the associated benefits. If you feel the need to make it more obviously constructive, take inspiration from London Forest School teacher Rachel Summers and chalk down tree names on the pavement as you go (the Woodland Trust has an app to help you identify ones you don’t recognise), creating uplifting and educational graffiti for those who follow in your footsteps.

2. GROW YOUR OWN PRODUCE

Growing food at home brings a whole new meaning to the term field to fork – we’re renaming it garden-to-gob. It’s amazing how many Good Life fantasies are flourishing in the coronavirus era, and whether it’s growing herbs on a windowsill (take a listen to the On The Ledge podcast for guidance and ideas) or setting up raised beds in the garden, we’re discovering it’s easier than we realised to create organic, ultra-local ingredients that nourish our bodies as well as our souls. The easiest starter herbs and vegetables are rosemary (it’s more forgiving of neglect than basil and can be easily propagated from an existing sprig) and potatoes (which you can grow from the last leftover potato in the bag, preferably one that’s already sprouting). Humans Who Grow Food on Instagram should get you dreaming big about what’s possible, and kitchen-garden beginners should start spring onions in water.

3. BRING THE TROPICS TO THE NORTHERN HEMISPHERE

Once you’ve mastered the basics (above), or for those who want to go straight for glory, it’s pretty easy(ish) to bring some tropical vibes into the kitchen. Happily, most attempts at channeling warm-weather climes help reduce food waste, too. Take the head of the pineapple that would normally go in the bin, simply strip the leaves, plant the stalk and wait for the sprout, which should take a couple of weeks. Likewise avocado stones (which work best when wrapped in a damp tea towel first). There are multiple how-to videos on YouTube for both fruits, along with guidance for growing lemons, chillies and pomegranates. Even though the fruit may take a couple of years to appear (if ever), you still get to enjoy a lovely new houseplant in the process.

4. APPRECIATE THE WORLD FROM AFAR

Thanks to a reduction in airborne pollution, many of the world’s most famous destinations are visible for the first time in years – residents in northern India report being able to see the Himalayas more clearly than they have for three decades, and the pictures beaming around the world are beautiful – perhaps more so as we appreciate the majesty of a world we can’t visit in person. But that doesn’t mean we can’t still enjoy it. Visiting the world’s natural wonders online and without the crowds can be a true delight, especially as it keeps our carbon footprints down. In one day you could take a thrilling virtual tour of Yosemite, get the perfect, tourist-free insight into Pompei, or see the Northern Lights with no fears about the weather not playing ball.

5. GET YOUR ADRENALIN FIX AT HOME

If you’ve always wanted to learn to salsa, climb Everest or be able to straddle like an Olympic gymnast, now’s your chance. There’s a lesson from every kind of expert online and suggestions for the best ways to do things at home. We’ve especially enjoyed the innovation behind carpet surfing and living-room parkour.

6. REDUCE YOUR FOOD WASTE

More and more of us are embracing the kind of waste-free cooking that has made Silo restaurant in London such a talking point. In these days of supermarket queues, it makes sense to use up what we have and to try to make a dent in the 1.3 billion tonnes of food that is wasted globally each year. Italian chef Massimo Bottura (often credited as the best in the world) has launched a Kitchen Quarantine series to show us how to use up the things we have at home (making passatelli from breadcrumbs is a life skill you never knew you needed). His enthusiasm and practicality are infectious and his videos show just the kind of delights you can whip up out of that old bottle of coconut rum hiding in the back of the cupboard.

7. EMBRACE NATURE

Wildlife watching from a window can be every bit as thrilling as catching the big five. RSPB reports that bird numbers in the UK are increasing thanks to warm weather and reduced traffic, which means it’s easier than ever to birdwatch, even if you live in a city and have no outdoor space. Watching starlings feed their chicks in a drainpipe nest or pigeons mating on rooftops can be every bit as mesmerising as what’s going on in South Africa’s Kruger national park (though if you’re looking for blockbuster action you can still take a ‘sofari’). Being able to hear the hum of birds and bees helps connect us to them and make us want to protect them, for a positive legacy that will last beyond lockdown.

8. MAKE THE MOST OF YOUR ARMCHAIR

This month, the armchair (or sofa) has become a vessel of escapism, and a joyful way to minimise our emissions while maximising our inspirations. You could take a serene tour of a National Trust property or catch a missed play from the National Theatre. Sales of books are increasing steadily, with a specific focus on history and longer titles we might not otherwise have the time or inclination to start. If culture is the root of humanity, how wonderful to be able to get so much of it without leaving the living room.

9. SHOP LIKE A LOCAL

Many of us only ‘shop like the locals’ when we’re abroad, but now there’s a shift to shopping more locally when we’re at home too. The way we have rediscovered local delis and provision providers (restaurants selling vegetables from local farms for example) and then sharing or delivering among the community must be one of the loveliest silver linings of the coronavirus pandemic. Shopping like this is a great way to remind ourselves of the sources of our food and gives an insight into seasonal eating. Plus local shops are friendlier, help support local food supplies and will hopefully remain as community hubs long after lockdown finishes.

10. CLEAN UP YOUR CLEANING ROUTINE

Not being able to get our hands on our usual cleaning products is a huge opportunity – to detoxify our homes and avoid sending a vast array of toxins into the water supply, while feeling the achievement of learning how to make our own tinctures and mixes. Vinegar, water and elbow grease are brilliant for windows. Castile soap (try Dr Bronner’s) is a wonder product that can be used to wash, clean and decongest – you can add essential oils for therapeutic fragrances – and it’s a very singular joy to see (and hear) the effects of baking soda and vinegar on scaly taps. An added advantage is that this whole process can be a useful science lesson for any homes with children in them too.

Read the full article here

About Michael Yardney

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au