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.
Australia’s housing boom is almost over, says HSBC chief economist Paul Bloxham
Headlines surrounding an Austrlain housing boom have been consistent throughout the entire year.
Now it would seem that the boom is nearing its end.
In an article on Domain.com.au an economic expert had suggested that while the boom may be ending, the landing won’t be rough.
The Aussie property boom is nearing its end, with housing price growth to run in the low single-digits in 2018, a leading economist says.
But it will be a soft landing rather than a property market crash.
HSBC’s chief economist for Australia, Paul Bloxham says house prices in Sydney and Melbourne have been growing at low double-digit annual rates over the past five years.
But during the past six months Sydney prices have fallen one per cent and Melbourne price growth has slowed to a seven per cent annual rate, he said.
“A hard landing is possible, but we believe this would require a negative shock from abroad and a sharp rise in the unemployment rate,” Mr Bloxham said.
“We do not see a significant local housing imbalance and view Australia as having had a housing boom rather than having a housing bubble.”
Mr Bloxham said the slowdown in Sydney and Melbourne had been driven by increased supply, higher lending rates for investors and a retreat in foreign demand, which had softened partly due to lending constraints by domestic banks and higher local taxes.
“We expect these factors to continue to weigh on housing price growth in the coming quarters and retain our forecast that national housing price growth will slow from the double-digit rates of recent years to three to six per cent in 2018,” he said.
Mr Bloxham said HSBC had revised down its forecasts for Sydney and bumped up 2018 predictions for Melbourne, given recent trends and changes in population growth estimates.
He said Sydney housing prices were tipped to grow by two to four per cent next year, while growth was expected to be between seven to nine per cent in Melbourne.
Read the full article here
Demand for land
As lending slows down there seems to be a greater demand for land.
Total lending finance slipped back down to $67.8 billion in October, as APRA’s cooling measures bite, the lowest total in 8 months.
Housing lending to owner-occupiers remained very solid at $20.8 billion, while major renovations activity continues to trend higher to be +14 per cent higher year-on-year. The slowdown has largely related to property investment loans.
Read the full article here
Why the RBA is unlikely to cut interest rates despite a slowdown in Australia’s housing market
Interest rates have remained at a low standstill for months and moths – so are things like to change?
According to an article on Business Insider changes to interest rate remain unlikely.
Australia’s housing market is cooling after years of rollicking price growth.
Annual price growth has halved since May, auction clearance rates sit at multi-year lows in Sydney and Melbourne and investor housing credit is declining, coinciding with tougher restrictions on interest-only lending from APRA, Australia’s banking regulator, introduced in March.
The slowdown in the housing market, coming on top of weakness in Australia’s household sector seen in Australia’s recent GDP report, has got many people questioning whether the Reserve Bank of Australia (RBA) should hike interest rates given the current set of circumstances, especially with inflationary pressures close to non-existent.
Rather than hiking interest rates, some have even floated the idea that the RBA may consider cutting interest rates given the sharp deceleration in the housing market.
George Tharenou and Carlos Cacho, Economists at UBS, played devils advocate on that front earlier this month, pointing to the chart below to show that when house prices weakened by a similar amount in the past, it has almost always resulted in the RBA cutting official interest rates.Source: UBS
The pair note that national price growth on a six-month annualised basis is currently running at just 0.7%, an important consideration given that over the past 30 years “when house prices over a 6-month period weakened towards flat or negative, the RBA cut within a few months in 7 of 9 cycles”.
While that’s not UBS’ official call, forecasting instead that the RBA will hike rates in late 2018 with the risks slanted towards a later move, it does pose the question as to whether the current weakness in the housing market will see history repeat.
To ANZ Bank’s Australian economics team, led by David Plank, the answer to that question is almost certainly no.
“There has been quite a lot of focus on the current downturn in house price inflation, with some commentators pointing out that similar downturns in the past have been followed by RBA rate cuts,” the bank says.
“While this might be true, it ignores the key differences between this cycle and previous downturns.
In particular, previous downturns in house prices followed a succession of RBA rate increases, which pushed mortgage rates sharply higher.
Given that RBA tightening cycles typically impact a lot more across the economy than just house prices, we think it is difficult to argue that the slowdown in house price inflation was the primary reason for eventual rate cuts.
“We think a rising unemployment rate was far more important,” it says.
One look at the charts below adds credence to that view.
The first looks at the relationship between annual house price growth and mortgage rates. The latter, shown in orange, has been inverted and advanced by six months.Source: ANZ
As opposed to what has been seen previously when house prices tended to decline following a series of interest rate hikes, in recent times, price growth has slowed despite mortgage rates remaining near the lowest levels on record, coinciding with tighter macroprudential restrictions on investor and interest-only lending from APRA.
“The current downturn in house prices has not come after a tightening cycle. Instead we think the most likely cause was the tightening in credit, though with a lag and interrupted by the impact of RBA rate cuts in 2016,” ANZ says.
In comparison, this next chart shows the relationship between the annual change in Australia’s unemployment rate to movements in the cash rate.
Read the full article here
The transformation of regional hubs
With inner city living becoming more and more expensive, it looks like regional Australia continues to undergo a lifestyle transformation.
In this article for Switzer, John McGrath looks at the results from the latest McGrath Report 2018.
Australia is one of the most urbanised countries in the world with 67% of our population living in a capital city today.
However, as house prices in major cities like Sydney and Melbourne become more expensive and industry seeks cheaper bases of operation – bringing hundreds of jobs with them, many Australians are embracing smaller cities as a great place to live and work.
Most of these small cities are formerly regional industrial hubs close to our capitals that have transformed into attractive lifestyle centres offering more affordable housing, employment opportunities, a strong sense of community and a more relaxed way of life.
New transport and roads infrastructure has brought these regional cities closer to the capitals, enabling locals to commute and earn a big city income while enjoying a small city lifestyle that includes far more affordable housing.
Telecommuting is also enabling more people to base themselves in lifestyle locations.
As revealed in our McGrath Report 2018, Wollongong and Newcastle in NSW, Geelong and Ballarat in Victoria and Toowoomba in Queensland, are among the most important key regional markets to have transformed themselves over the past 20 years from old industry satellite towns to attractive regional cities.
According to the Victorian Government’s Regional Network Development Plan, 40% of all regional growth to 2031 will be in the cities of Geelong, Bendigo and Ballarat.
Median house price $720K, up 15.2% over the 12 months ending June 2017
Located 80km south of Sydney, Wollongong was once a blue collar industrial town but today it is a coastal lifestyle centre known for its pristine beaches, leading university and arguably the most appealing commuter housing market for families priced out of Sydney.
It has always been a major export location for coal and other goods and also home to steel manufacturing but the city is shedding its industrial reputation.
Key sectors now include IT, business service and finance, education and research, health and tourism.
Wollongong’s population increased by 10.5% over the decade to 2016, the latest Census shows.
Median house price $570K, up 11.8% over the 12 months ending June 2017
About 160km north of Sydney, the population of Newcastle was 155,411 at the last Census and the City of Newcastle predicts it to exceed 180,000 people by 2036.
Newcastle has been undergoing a construction boom, as evidenced by the massive redevelopment of the old Royal Newcastle Hospital site into the $100M Arena Apartments due for completion this year.
The value of construction approvals topped $1B for the first time in FY17, according to Newcastle Council. Among the approved projects were the Verve Residences, two 19-storey towers with 197 dwellings; a new hotel on King Street; and the $88M redevelopment of Westfield Kotara.
Major recent projects include the largest regional courthouse in NSW, a new $95M city campus for Newcastle University, the Hunter Expressway and the $500M light rail and transport interchange expected to be completed in 2019.
Median house price $325K, up 4.8% over the 12 months ending June 2017.
The historic city of Ballarat, located 105km north west of Melbourne and famous for being the heart of Victoria’s gold rush, was previously a manufacturing region.
Today, more people are working in professional service with hospitals the biggest employer followed by school education and cafés and restaurants.
Ballarat is one of Australia’s fastest growing inland cities with 101,686 residents today and a projected population of 145,197 people by 2036, which is massive growth of about 36%.
Ballarat is still home to McCain Foods, which announced a $57M revitalisation of its potato plant in June 2017; as well as Mars Incorporated, which employs more than 2,000 people; and train builder Alstom Australia.
In its last budget, the Victorian Government announced it would move 600 jobs from eight departments to Ballarat. Construction is expected to start on the GovHub office at the redeveloped Civic Hall site in 2018.
Median house price $445K, up 2.4% over the 12 months ending June 2017.
With its spectacular beaches and cosmopolitan shopping precincts, Geelong is increasingly luring Melburnians to the coast.
About 75km south west of Melbourne, Geelong has had astounding population growth of 18% over the past decade alone.
Factors driving this growth include the relocation of government workers from Melbourne and the revitalisation of the CBD with new eateries, bars and retail outlets. Corio Street’s former wool exchange is now an entertainment complex with a good roster of Australian bands.
Geelong was once amongst Australia’s largest manufacturing centres but this has changed significantly with the closure of Shell’s Corio oil refinery, Ford’s Norlane plant and Alcoa’s Point Henry aluminium smelter.
In their place, service industries including health and education have grown, with Deakin University climbing up the world rankings.
Median house price $375K, up 2.2% over the 12 months ending June 2017
Toowoomba, located 125km west of Brisbane, has developed into a strong and thriving regional centre of Queensland where the local population has surged over the past decade from 90,199 to 160,779 people, the latest Census shows.
Known for its beautiful parks and gardens (the city hosts a Carnival of Flowers every September), Toowoomba is being further revitalised by a new airport and new roads diverting big trucks away from the city centre.
There are several multi-million dollar infrastructure projects in the works, including the 41km Second Range Crossing bypass due in 2018; and the Inland Rail direct freight link from Brisbane to Melbourne expected by 2020. Construction on the $235M InterlinkSQ rail transfer centre will also start in 2017.
Read the full article here
2017’s most clicked on homes in NSW
When it comes to homes – where’s was the wow factors in 2017?
This article on news.com.au looks at the top 10 NSW houses that left us breathless.
IT SEEMS size does matter — when it comes to property.
But you might be surprised about the other features that attracted the attention of buyers in the top 10 most viewed properties in NSW this year.
WHEN IT comes to #Propertyporn there’s no better place to look than in NSW.
And, according to data from realestate.com.au, people couldn’t get enough of hot property in 2017.
But nothing attracted more attention than the top Harbour-living homes and offerings on big blocks — and that was reflected in the top 10 most viewed homes this year.
1. ‘Rona’, 2 Ginahgulla Rd, Bellevue Hill
Top of the list is a lavish sandstone mansion in Bellevue Hill.
Built in 1883 — and with panoramic views of Sydney Harbour — ‘Rona’ has a famous history of high profile owners such as Edward Knox of the CSR sugar family and cleaning company businessman John Schaeffer.
‘Rona’ went on the market for the first time in 12 years and attracted 41,800 page views.
2. 3 Ginahgulla Road, Bellevue Hill
This modern Hamptons-inspired residence in Bellevue Hill was snapped up in just three weeks for $6.9 million.
The five-bedroom family sanctuary has four bathrooms, a swimming pool, gymnasium and is walking distance from elite high schools Cranbrook and Scots College.
3. 28A / 171 Gloucester Street, Sydney
This tri level penthouse is in one of Sydney’s most convenient locations and was designed by architects from the Kahn Finch Group.
It sold for $18 million.
The four-bedroom luxury pad is in the heart of Sydney’s historic Rocks Precinct and has Harbour views from room.
It’s no surprise the listing triggered the attention of 31,000 page viewers.
4. 6 Coronation Avenue, Mosman
The Mosman residence where Justin Bieber called home while he toured was up for grabs this year and attracted 30,300 viewers — undoubtedly mostly Beliebers sussing out where the high profile singer was residing. The three-level residence is close to Balmoral Beach and is decked out in state-of-the-art finishes, bespoke furniture and a curated selection of art.
5. 18 Hemers Road, Dural
This Georgian inspired home in Dural is the perfect family home.
On five acres of land, the seven bedroom home has valley views which can be enjoyed from large verandas.
No wonder it captured the eyes of 2158 viewers.
6. ‘Akuna’ 20 Wolseley Road, Point Piper
Akuna hit the market for the first time in 20 years, in 2017 — and it attracted plenty of attention.
If being neighbours with the PM isn’t enough, the secluded five-bedroom property was also designed by well-known Australian architects and has some pretty magical views.
7. 34 Jenolan Circuit, Harrington Park
A Bali-inspired oasis in Harrington Park sold for over $1.75 million in May and set the record for the most expensive property in the estate by Belle Homes.
With level lawns and a pool terrace, the glamorous residence has the ultimate family lifestyle just minutes away from local schools and shops.
8. 2-6 Wilhelmina Street, Gosford
A room with a view is the perfect way to sum up this lavish residential apartment in Gosford. Convenience is the key selling point, with the residence only 220m to the waterfront, 300m to the CBD and 680m to Gosford train station.
9. ‘Kurravista’ 570 Slopes Road, The Slopes
Built in 2017 — and sold just months later for $2.5 million — this European style property is on about 2.5ha in one of the most picturesque areas in the Hawkesbury region. Kurravista has a Roman style salt water pool and grape vines to encapsulate the ultimate European oasis surrounded by Aussie bushland views.
10. 102 Reservoir Street, Surry Hills
One of the most run-down properties in one of the most sought-after locations, a dilapidated terrace on Reservoir Street, Surry Hills, was on the market for the first time since 1969 and sold only a few weeks after it’s listing for $2.1 million.
The four-bedroom home was the perfect project for visionaries.
It had plenty of appeal because it is close to Sydney’s CBD, Central Station, shops, restaurants and parks.
Read the full article here
Weekend video: Could We Record Our Dreams?
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