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.
First-home buyers slash expectations on what parts of a home are ‘essential’, Westpac research finds
What do you look for in a home?
Well…if you’re a first home buyer, it seems those expectations may have changed.
This article from Domain.com.au looks at what the expectations of first home buyers are now.
First-home buyers have slashed their standards on what elements of a home are “essential”, including area, budget and future investment potential, new Westpac research shows.
The group is making sacrifices across every category when choosing an area to buy, according to the September survey of 936 home owners and 111 first-home buyers, including safety, proximity to work, access to public transport, and proximity to family and friends.
When asked if their first house should have “good investment potential” 28 per cent of respondents marked it as essential, compared with 40 per cent last year, while 13 per cent said it is “not that important”.
Meanwhile the number of first-home buyers who see “within budget” as being essential when looking for a property dropped sharply to 70 per cent from 86 per cent last year.
The result could show expectations were still too high even in 2016 and that first-home buyers are still in the process of recalibrating their focus in the market, according to Westpac head of home ownership Andy Wright.
“The results show quite a strong attitudinal change,” Mr Wright told Domain, adding first-home buyers are showing a lot more flexibility in choosing where they want to live.
“Sydney, for example, is not a cheap place to live – the median house price is now over $1 million – so maybe there’s an element of realism coming in.
People could now be considering places they may not have considered as strongly 12 months ago.”
The number of first-home buyers that said proximity to work is essential dropped significantly in the year, to 25 per cent from 48 per cent in 2016, while access to public transport saw a 21 per cent slump in the number of first-home buyers marking it as essential.
Safety and noise also fell in the “essential” stakes, down 9 per cent and 37 per cent, while the number of first-home buyers who see proximity to family and friends as essential tumbled 39 per cent.
Source: Westpac Research
And this across-the-board lowering of expectations appears to working, with ABS data this month showing the number of first-home buyer mortgage commitments as a percentage of total owner occupiers edged 0.2 per cent higher to 17.4 per cent in September – a 4.5 year high.
AMP Capital chief economist Shane Oliver has pointed to a “window being opened” for first-home buyers in the form of stamp duty concessions.
“NSW and Victoria have both introduced more attractive stamp duty concessions for first-home buyers … that’s the big factor,” Dr Oliver said recently.
“At the same time, there are fewer investors out there, which has made more room for the first-home buyers.”
Source: Westpac Research
A noticeable fall in the number of first-home buyers rating “good investment potential” as essential marks the swapping of ambitious property strategies for a more pragmatic approach, according to first-home buyer specialist mortgage broker Will Unkles of 40 Forty Finance.
Building approvals continued to defy the gloomers, rising to back above 19,000 in October – up from just 16,100 this time last year – a third consecutive month of gains being driven by strength in the state of Victoria.
The high-rise downturn appears to have mostly run its course now, although Queensland may see approvals continue to slide a little further in this sector.
The RBA is likely to hike rates in the second half of 2018, according to the OECD
Interest rates haven’t moved all year – but as a new year approaches, is that all about to change?
According to an article on Business Insider we could be seeing an interest rate rise from the middle from 2018.
The OECD is urging Australia to begin increasing official interest rates, even if inflation remains weak, to cool the housing market and prevent a blowout in risky debt levels.
Forecasting solid economic growth and falling unemployment over the next two years, the OECD said it was time for both monetary and fiscal support to be “gradually withdrawn”.
The Organisation for Economic Co-operation and Development’s latest world economic outlook argues that the Reserve Bank of Australia is likely to begin hiking the official cash rate in the second half of 2018 as a pickup in wages and prices becomes more entrenched.
“A tighter policy stance will ease pressures on house prices and will reduce the threat of the build-up of other financial distortions” in Australia, they said in their report published in Paris on Tuesday.
In lending support for higher official interest rates, the OECD said the growing shift towards normalising monetary policy in the big advanced economies is unlikely to blunt incentives among companies to invest in productive assets.
By contrast, it warns the greatest hurdles to a long-run recovery may include the fact that expectations for future growth have been permanently dampened since the global recession, as well as doubts about trade liberalisation and a decline in the number of new businesses being created in countries such as Australia.
The remarks add to a growing body of commentary by monetary policy experts who question whether central banks should wait for signs of inflation before unwinding crisis-era rates and bond-buying programs.
Former Reserve Bank board member John Edwards cautioned earlier this month that inflation may not be the best gauge as to how central bank rates are likely to evolve in the near-term.
The Reserve Bank expects core inflation to remain below the bottom of its 2-3 per cent target for most of the next two years, suggesting it sees no urgency to join the global trend towards tighter policy settings.
That debate is yet to be reflected in the Reserve Bank’s official signalling over the future path of the overnight cash rate, which financial markets don’t expect to be increased until late 2018. Some economists don’t anticipate a hike until 2019.
What is the state of the Canberra property market?
In this article for Switzer, John McGrath looks at the results from the latest McGrath Report 2018 and discusses what’s going on.
Canberra is on track to record the highest house price growth of all capital cities between now and 2020, with predictions of a 16% increase driven by population growth, continuing high incomes and a reduction in detached housing stock, according to respected analysts, BIS Oxford Economics.
As outlined in our recently released McGrath Report 2018, the national oversupply of apartments will see Canberra become one of only two capital cities with any apartment price growth by 2020, although it will be extremely modest at just 2%.
These forecasts signal a continuation of Canberra’s two-tier marketplace, with an acceleration in detached home prices and virtual stagnation in apartment prices.
The city’s typically strong economic performance, coupled with a lack of family home stock for sale, has seen the median house price rise solidly by 6.6% to $650,000 over the year to June 2017, according to CoreLogic.
Apartment price growth was sluggish at just 2.9% to a median $442,500.
Market conditions have been strong, with the city recording its highest Winter auction clearance rate since 2009 and the fourth highest clearance on record at 69.2%, according to Domain.
Restricted house stock is attributable to a decline in new construction and the ongoing impact of more than 1,000 asbestos affected ‘Mr Fluffy’ blocks being removed from the market under compulsory acquisition by the ACT Government in 2014.
Only 400 remediated blocks have been released back into the market so far.
Lack of stock is also contributing to a projected pick up in the renovations sector after a contraction of 6.1% in FY17.
A lack of choice in the marketplace is driving some home buyers to stay put and renovate instead, with the Housing Industry Association forecasting renovations activity to increase by 5.1% during 2017-18.
Apartments and other non-detached housing now account for 80% of dwelling approvals in Canberra, according to the HIA.
JLL estimates a pipeline of 7,000 new apartments for the city by 2021.
Okay, so we don’t mean to alarm anybody, but if you happen to get paid monthly, you have exactly two paydays left until Christmas rears it’s expensive, tinselled head.
Or, to put it another way, there are eight Fridays between now and C-day. Eight.
So while it may be a little too late to start any proper Christmas financial planning, there are still some things you can do to ensure you don’t end up spending your entire pay packet at Westfield on Christmas Eve (let’s face it, probably on things you don’t need and your relatives definitely don’t want.)
1. Make a list
No, we’re not talking about times when you’ve been naughty or nice. We’re talking about a list of all the things you need to buy.
In other words — no impulse purchases for you!
2. Shop online
One of the great things about shopping online is it’s so easy to shop around for the best price — a practice Brown greatly encourages.
3. Consider a Kris Kringle
If you have a large family, it’s well worth considering having a Kris Kringle, whereby participants draw a name out of the hat and just buy a present for that single person.
4. Don’t use your credit card
This is probably going to be the toughest thing to do this Christmas, but you’ll thank yourself next year when your bill isn’t out of control.
5. Get crafty
Who’s to say you have to spend a fortune on gifts? Why not embrace your inner hipster and plant some succulents or make some jam?
6. Prepare for next year
If you want to put yourself in the best possible stead for Christmas 2018, it pays to start planning now.
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