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…and please forward to your friends by clicking the social link buttons.
How to ease your children out of the nest in today’s tough property climate
It’s no secret that the market is tough for first home buyers – forcing many to stay home longer.
So what can parents really do?
An article on Domain.com.au looks at the different ways parents can teach their kids to be more independent and leave the nest, even in a challenging property climate.
For many cultures, having children stay at home is the norm.
It’s also beneficial for some parents as they provide company, especially for single mums and dads, as well as (hopefully) helping, both with household chores and financially.
It can even help pay off your home if you’re receiving board.
But many parents do want their children to leave home, despite fears they can’t, or won’t.
A recent Galaxy survey done for Stockspot found 74 per cent of parents with children aged under 17 feared they would never leave home and 85 per cent were worried their children wouldn’t be able to afford their own home.
The Bank of Mum and Dad has certainly had a mighty good workout in recent years, with adult children are staying at home for longer.
The most recent figures from the Australian Bureau of Statistics show in 2012-2013, 31 per cent of people aged 18 to 34 had never left home, which had increased from 27 per cent in 2006-07, with the major reason being financial.
Chances are, with deteriorating housing affordability, these figures haven’t changed much, with young people staying at home longer to help save a deposit for their own home.
But while house prices are an impediment, interestingly the Galaxy survey found 62 per cent of parents thought spending habits of their offspring were an issue.
Research from Canstar has also shockingly found that adult children were borrowing from their parents well into their 30s, not just to buy a home but to pay everyday bills.
It found half of over-18s were borrowing money from their parents, with one in five 18 to 37-year-olds borrowing weekly or monthly.
Herein lies one of the answers to getting your offspring to leave the nest – teach them about finances, including the value of money, banking, budgeting and saving, ideally from a very young age.
You should set up a bank account for them early on, which should be the starting point for saving and could provide the beginnings of a house deposit.
If they’re already grown and they haven’t yet been educated, start teaching them how to be financially independent now.
It’s never too late.
While housing affordability is an issue, perhaps these adult children are just getting it too good, and there’s no great incentive to leave home.
Have them pay you board and contribute to everyday household chores, which will prepare them to fly the coop by becoming more responsible.
But to get them to actually bite the bullet and move out, you can try a few things.
The first is to set a moving day deadline.
Life skills coach Michele Jones recently advised parents to kick their children out by the age of 20.
Perhaps 20 is a little harsh, but the idea that they need to be forced to stand on their own two feet absolutely makes sense.
There’s no better way to learn how to be responsible and pay your own way, and it will boost their self-esteem.
If you want them to move into a home they own rather than renting, you can wait until they’ve saved enough of a deposit, but if that’s too far into the future you can help them by either giving or lending them money.
Maybe you can even sock away the board they’ve been paying you and give it back in a lump sum so they can use it as a deposit.
Read the full article here
Record high for housing finance
It would seem that despite the doom and gloom things are looking up for housing finance.
Lots of gloomy reporting around this month (every month), yet total housing finance surged to its highest ever level in August 2017 at a huge $33.9 billion.
Investor finance jumped by +4.3 per cent in the month to $12.6 billion.
The smoother trend figures suggest are plotted below, and suggest a steadier and consolidating market.
The recent increase has been driven by a combination of higher volumes and steadily rising loan sizes, at least for non first-homebuyers.
Driven by incentives, the number of first homebuyer commitments surged to the highest level in 92 months, since the stimulus of 2009.
Read the full article here
Spring property so far
Spring has well and truly sprung – so how is the property market looking at this stage of the season?
In this article for Switzer, John McGrath looks at the results of the property market, particularity focusing on the Sydney market.
The best way to gauge how a market is doing is by looking at auction clearance rates.
They give us a real time perspective on how buyers are feeling and whether vendors are meeting the market and being realistic on price.
Over the five Saturdays in September – the first month of Spring selling, we saw auction clearance rates in Sydney dip into the late 60% bracket and stay there.
The lowest they got to was 66.5% over the long weekend, according to CoreLogic data.
So, what does this tell us?
First of all, clearance rates are falling but not rapidly.
We’re down about 10% compared to six months ago and this is perfectly normal for a cooling market.
Secondly, a 60% clearance rate indicates normal market conditions and this doesn’t concern me, particularly with respect to Sydney.
We’ve had a very long sustained boom period and now we need the market to calm down and consolidate its price growth.
Auction clearance rates include properties sold prior to auction and we’re seeing this happen more often now due to softening buyer demand.
We expected cooler market conditions to be a catalyst for increased listings.
Vendors are seeing that the market has peaked and now is the time to sell for maximum value.
Plus, with more stock on the market, they’re no longer feeling the concern they had last year about their ability to buy back in.
This appears to be happening with SQM Research reporting a 12.3% increase in listings for sale in Sydney this September compared to September 2016.
This was the greatest increase in listings of any capital city.
In terms of price changes this Spring, we haven’t seen anything dramatic.
Demand has waned a bit and buyers are certainly more selective – they have a bit more choice and don’t want to pay a premium in a slowing market.
But so far, we’ve only seen an 0.3% decline in Sydney’s median house price in September and that’s nothing to be concerned about at all.
Let’s look at how the median house price has changed in 2017.
CoreLogic reports Sydney’s median house price every month and as you can see below, it has jumped around a bit this year – gaining in some months, losing ground in other months.
These fluctuations are typical at this point in the cycle.
Monthly changes in Sydney’s median house price 2017
January + 0.5%
June + 1.8%
All in all, Sydney is holding up very well as it makes the transition from boom growth to normal growth.
There is still the possibility of a minor price correction, especially if interest rates escalate significantly but this is unlikely.
Read the full article here
JP MORGAN: Australian interest rate cuts are ‘more likely than rate hikes’
We haven’t seen an interest rate rate in over a year, and the number one questions of everyone’s mind is – will they?
According to this article from Business Insider there is a greater chance of seeing further cuts, than there is a rise.
While the vast majority of economists think that the next move in interest rates from the Reserve Bank of Australia (RBA) will be higher, not everyone shares that view.
Sally Auld, chief economist and head of Australia and New Zealand fixed income and FX strategy at JP Morgan, is one who remains unconvinced that the next move will be higher, suggesting that there’s currently more risk that the RBA will cut interest rates, rather than hike in the period ahead.
Like many others, she remains concerned about the financial health of Australia’s household sector, the largest and therefore most important part of the Australian economy.
In her opinion, Australia’s incredibly weak August retail sales report, following an ugly result in July, creates doubts over the ability for household consumption to help power Australian economic growth to an above-trend rate of over 3% in the years ahead as the RBA is currently forecasting.
“The weak August retail print casts a shadow over Q3 consumption, with volumes likely to slump relative to the first-half average,” she wrote in a note released today.
“Any further sense that the consumer is wavering under the burden of slowing house price growth, rising utility prices, tighter lending conditions, and near-flat real wages would reduce the RBA’s confidence that current policy settings are consistent with a return to above-trend growth by mid-2018.”
The RBA’s latest forecasts have GDP growing at 3.25% by the end of next year before accelerating to 3.5% by the end of 2019.
Both are well above the 2.75% level that many deem to be Australia’s trend growth rate.
Given those concerns, Auld says that while JP Morgans’s base case is for the cash rate to remain at 1.5% for the foreseeable future, “we still view rate cuts as more likely than rate hikes”.
Read the full article here
The top five money mistakes financial planners watch us make
Do you find it hard saving or keeping track of your finances?
Chances are you are not following a good financial plan.
An article on Money Magazine looks at some of he most common mistakes people make with their finances, and how they could improve them.
Read the full article here
Weekend Video: How to Wake Up Early – And Not be Miserable
Subscribe & don’t miss a single episode of Michael Yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to Michael Yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.