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
Why you should understand the property cycle before buying a home in Sydney
Like most things – property investment requires a level of research and education.
So what do you need to understand before buying you next home?
This article form Domain.com.au looks at why you need to understand the property cycle – particularly when buying in Sydney.
A property cycle depicts four phases that are associated with the movement of home values.
The stages are most commonly referred to as the boom, bust, bottoming and recovery.
The word ‘bust’ may, however, be misleading.
The descriptive insinuates prices are moving into negative territory.
It is important to note that not all price cycles result in a period of negative growth.
Preferably it should be looked upon as a reference to the rate of growth.
Of course the bust phase can result in prices moving backwards, however, often it is a moderated rate of growth, whereby prices move at a much slower pace compared to the level that was experienced during the boom phase.
There is no single property cycle in Australia.
They differ between cities, between property types and even regions.
An example is Australia’s current east and west markets.
Many experts describe a property cycle to exist roughly every seven years.
The truth is that Australian housing cycles have been occurring in greater frequency than this.
Since the millennium, the Sydney housing market has experienced numerous property cycles, occurring around 2003, 2007 and 2010. We have watched the most recent property cycle unfold over the past few years.
The prior three boom phases that Sydney house prices experienced in 2003, 2007 and 2010 then moderated into negative territory.
Various factors influence property cycles, and one of the most significant is monetary policy.
The extended period of rate cuts from the RBA sparked the most recent house price upswing in Sydney, with double digit growth recorded in the September 2013 quarter.
Other influences include supply and demand, as well as socioeconomic factors, unemployment, consumer sentiment and job security.
Sydney is now showing signs of a slowing market, with clearance rates lower as supply levels become elevated.
The nail in the coffin was the house price moderation of 2 per cent from the June to the September quarter.
Prices are now a cool $23,572 lower than they were three months ago.
The median price is still an eye-watering $1,177,000.
Read the full article here
APRA strikes back
It seems that the APRA is taking serious measures in preventing interest-only lending.
If anyone doubted APRA’s commitment or ability to quell interest-only lending, then they definitely shouldn’t any more.
New interest-only loans have been smashed to smithereens, down from 45.6 per cent of the market at the 2015 peak to just 16.9 per cent.
Banks continue to wind back high loan-to-value ratio (LVR) lending, continuing a trend that has been underway for 4 years now.
Property buyers will not only need to pay back principal, they’ll need to have a decent deposit too.
Read the full article here
Biggest property boom winners
Which suburbs hold the title of the biggest property boom winners?
In this article for Switzer, John McGrath looks at the results from the latest McGrath Report 2018 and delivers the results.
Sydney and Melbourne have recorded phenomenal price growth over the past five years, with house prices rising 66.9% and 39.8% respectively between mid-2012 and mid-2017.
As of June 30, 2017, the median house price in Sydney was $960,000, representing a capital gain of $385,000 in just five years, according to CoreLogic figures. (Currently it is over $1M).
The median house price in Melbourne being $675,000, with the boom putting on average about $192,500 of new equity into the pockets of home owners. (Currently it is over $830,000).
As discussed in our recently released McGrath Report 2018, a strong economy, population growth, new infrastructure, a chronic shortage of housing, a spike in investor activity and interest rates falling to record lows have all contributed to this surge in property values.
Some suburbs have fared better than others, with local factors substantially propelling prices forward in parallel with citywide trends that caused a frenzy of buying in our two big capitals.
Figures compiled by CoreLogic have identified the Sydney and Melbourne suburbs with the strongest house price growth in the five years to June 2017.
The biggest boom winners in Sydney were Bringelly (170.1% growth) and Kemps Creek (166%) in the west and Clareville (125%) on the northern beaches.
Melbourne’s biggest boom winners were Huntingdale (103% growth), Ashwood (91.2%) and Ashburton (90.6%) in the south east.
BIGGEST BOOM WINNERS
Here are the suburbs that had the biggest median house price growth over the boom.
Box Hill North
Mont Albert North
Read the full article here
The Land Of The Fair Go Has Gone
Is the great Australian dream slowly coming to an end?
According to this article in the Huffington Post the gap between those who can afford a property and those who can’t continues to widen, leaving a lot of questions about the future.
Australia has long been considered the land of the fair go — a nation regarded as a classless society where the suburbs were the social equalisers, a melting pot of lawyers and labourers, teachers and tradies.
But The ‘Great Australian Dream’, where people on average incomes near the start of their working life could afford a home, is well and truly fading, and the latest data reveals a widening wealth gap.
Rising property prices and declining home ownership
The latest HILDA data from the University of Melbourne showed that, two decades ago, more than one in three young people aged 18 – 39 owned a property, compared with today, where just one in four young people own a property.
The impact of growing demand on house prices is most evident when comparing prices to average earnings.
Twenty years ago, the average Sydney house was 5.6 times average annual earnings, while in Melbourne it was an affordable 3.4 times annual earnings.
Today, Sydney homes are more than 14 times average earnings, and in Melbourne more than 11 times annual earnings.
The latest Census results show that the proportion of Australians who own their home outright has fallen over the past five years, while the proportion of renters has increased.
And if it feels like a flat wages environment, that’s because it is.
In fact the HILDA data shows that average household after-tax income is actually less now than it was in 2012.
The generational financial inequities are even more pronounced when analysing net wealth by generational cohort.
While Gen Y Australians aged 25 to 34 have a household net worth of $268,800, it is less than half that of the Gen Xers who are just a decade older.
The highest net worth generation in Australia are the Boomers aged 55-64, who not only have a net wealth almost 5 times that of the generation of their children (Gen Y) but they still have a decade or more of earnings and wealth accumulating ahead of them.
How can we level the playing field?
Policy has partly created the rising house prices through migration settings and therefore population growth.
Read the full article here
5 ways millennials are reshaping global business
Millennials have had an affect on many aspects – particularly when it comes to business.
An article on Business Insider looks at the 5 most crucial ways millennials are changing the face of global business.
Millennials, some of them now aged in their mid 30s, are already having a major influence on how business is conducted.
The generation which supposedly can do almost anything with an electronic device, while texting and posting to Twitter at the same time, will by 2025 make up of three-quarters of Australia’s work force.
Recruiters and human resource departments around the world have been quietly changing their processes to accommodate this emerging work force to make sure organisations are attractive to millennials.
Anthony Mitchell, the co-founder and Chief Potential Officer of Australian consultancy Bendelta, which focuses on designing organisations and leaders for the cyber-physical age, says millennials are both different and the same.
“Humans just don’t change very much from generation to generation,” he says.
“Since Roman times, there have been commentators saying that younger generations are ungrateful whingers who will surely be the downfall of society.”
However, generations are different from each for many reasons.
“Firstly, there’s the impact of workforce supply and demand,” says Mitchell.
“Those who enter the workforce in a recession with a surfeit of talent in the market have very different views around their relationship with their employer than those who’ve only seen boom times and a war for talent.
“Secondly, you are going to have a very different view of the world if you’ve grown up in the age of social media and been educated around issues such as climate change.
You are simply likely to be a more globally aware person who is self-empowered around expecting information.”
Here are five ways millennials are influencing business:
1. They interview companies, not the other way around.
Millennials won’t work for just anyone. And it’s not just the job itself or the pay packet, millennials want the opportunity to develop their skills and their careers.
2. They want to make a difference.
Jorn Lyseggen, the Norwegian founder of global media monitoring service Meltwater, is upbeat about millennials among his 1600 staff.
3. They pay attention to social, and not traditional, media.
The influence from social media can be greater than traditional media. What their peers say, not media commentators, matters.
4. Transparency, collaboration, flexibility.
Australian companies have already started adapting their hiring to meet this generational change.
5. Funds management
Millennials are bringing a fundamental shift in how people deal with money.
The fintech disruptors, such as Stockspot and Afterpay in Australia and more in the pipeline, are increasingly gaining in the financial services sector.
Read the full article here
Weekend Video: Early Birds vs Night Owls
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