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.
Melbourne house prices: 13 more suburbs reach $1 million medians as city’s wealth sprawls
Want to live in the most livable city in the world?
It may cost you…
Another 13 suburbs have joined the ranks of having a $1 million median house price as Melbourne real estate gets richer.
And the city’s wealth is spreading to its edges, with suburbs as far as 50 kilometres from the CBD reaching seven figures.
There are now 164 suburbs with median prices above the Melbourne median of $903,859, and 143 of those have prices greater than $1 million.
Cranbourne South and Wantirna South are among the 13 suburbs where house prices cracked $1 million for the first time, according to the latest Domain Group data.
Just scraping into the $1 million club, Wantirna South had strong growth of 22.8 per cent in the year to December 2017.
A surprising addition to Melbourne’s million dollar suburb list was Cranbourne South.
The greenfield suburb had only 13 sales in the December quarter, which pushed the median to $1,030,000, up from $945,500 in the September quarter.
Well-performing schools and the Knox shopping centre redevelopment were attracting more buyers to Wantirna South, Barry Plant Wantirna director Daniel Cripps said.
“You’ve got primary schools like Knox Gardens – which is now in the 95th percentile in the NAPLAN results – it’s those sorts of forces that are really drawing families into this area,” Mr Cripps said.
He said the Westfield Knox revamp – mooted for 2019 – would make it the second-largest shopping centre in the southern hemisphere.
“People are looking forward into the future and understanding the impact such development is going to have on the area,” he said.
“Cranbourne South I think has been kind of a sleeper until now and I think people are buying there now because it’s a little bit cheaper than Somerville and Pearcedale nearby,” Mr Day said.
He said other buyers were often families with small businesses who needed acreage to store equipment.
“They’ve got some equity and they’re buying some more land for their businesses,” he said.
The inner west continued to perform well, with Spotswood and Kingsville pushing past $1 million.
Tightly-held Spotswood usually had fewer than 30 sales per year, said buyers’ advocate Cate Bakos, and nearby Kingsville – which had growth of 21.5 per cent for the year to December – was also small, but had more sales.
“The houses are a lot more homogenous in style – mostly gorgeous Edwardians and Californian bungalows.
There’s less price variation than Spotswood,” Ms Bakos said.
She said the inner west would continue to perform given its proximity to the city and its prices were still relatively low compared with the inner east.
“There will always people who are looking for a period property, near a village and near a train station at the $1 million mark – you can’t replicate that on the other side of the city,” she said.
Just four suburbs have a median below $400,000; they are Millgrove ($339,500), Melton ($360,000), Kurunjang ($378,000) and Melton South ($380,000).
There are 25 suburbs with a median between $900,000 and $1 million; including Mentone ($981,000), Preston ($950,000) and Altona ($900,000).
Knocking on the $2 million club’s door are Elsternwick ($1,972,500), Hampton ($1,955,000), Glen Iris ($1.92 million), Ivanhoe East ($1,911,250), Caulfield North ($1.91 million) and Balwyn North ($1.9 million).
Elevated into the exclusive $2 million club were Surrey Hills (up from $1.85 million in the September quarter) and tiny Parkville, up from $1,717,500 to $2,087,500.
The city’s priciest suburbs remain Toorak ($4,395,000), Canterbury ($3,082,944) and Deepdene at $2,965,000.
East Melbourne dropped slightly, with a quarterly median of $2.85 million – down from $3.65 million in the September quarter.
Suburbs that saw some growth in December but were down for the year included South Morang, which fell 29.9 per cent for the year to $601,000, and Springvale South which saw a drop of 22.8 per cent to $705,000.
Read the full article here
Queensland high-rise boom unwinds apace
It looks like apartment buildings in Queensland are slowing down.
Apartment building slowing
Residential building work done for non-houses dropped by some 25 per cent in Queensland in 2017.
And this construction trend will continue in 2018 as the sector continues to rebalance towards equilibrium.
Not quite so many cranes expected in 2018 then, at least in the residential sector!
As construction slows Brisbane’s apartments are gradually filling up, as I looked at in a bit more detail here, but it’s taking time for the stock to be absorbed.
Read the full article here
The RBA says financial stress for Australian households remains ‘relatively low’
While there’s much talk of financial stress, the reality may not be quite as grim.
According to this article from Business Insider the RBA sees financial stress for Australian households to be relatively low.
Australian household debt has increased and wage growth remains weak, but that’s not yet led to a substantial pickup in financial stress.
And that includes households with a mortgage, be they owner-occupiers or investors.
That’s the concise view of Michelle Bullock, Assistant Governor of the Reserve Bank of Australia (RBA), who painted a rosier view of Australian household finances compared to other more pessimistic economic commentators in a speech delivered today.
Bullock admitted that while pockets of financial stress do exist, they’re small and relatively stable in early 2018.
When it comes to those owner-occupier households with a mortgage, Bullock said there are currently few signs of a substantial increase in stress levels, pointing to a number of various indicators such as mortgage arrears, personal insolvencies and mortgage repayment buffers in her speech that suggest it’s well contained.
Here’s the current proportion of non-performing home loans in Australia.
This shows a significant and growing proportion of owner-occupier borrowers are currently ahead of their repayments.Source: RBA
“My overall interpretation of these myriad pieces of information is that, while debt levels are relatively high, and there are owner-occupier households that are experiencing some financial stress, this group is not currently growing rapidly,” she says.
“This suggests that the risks to financial institutions and financial stability more broadly from household mortgage stress are not particularly acute at the moment.”
As for housing investors, Bullock says the risks to financial stability are “probably a bit different from those associated with owner-occupier debt. Investors tend to have larger deposits, and hence lower starting loan-to-valuation-ratios”.
“They often have other assets, such as an owner-occupied home, and also earn rental income.
Higher-income taxpayers are more likely to own investment properties than those on lower incomes, so may be better able to absorb income or interest rate shocks.”
Despite a comparably better starting position, Bullock says the preference from investors to use interest-only loans could lead to a pickup in financial stress should property prices fall for a prolonged period.
“Many take out interest-only loans so that their debt does not decline over time,” she says.
“If housing prices were to fall substantially, therefore, such borrowers might find themselves in a position of negative equity more quickly than borrowers with an equivalent starting loan-to-value ratio that had paid down some principal.”
While few expect an extended decline in house prices, seemingly limiting that risk, Bullock did warn that financial stress may build for some investors due to recent regulatory changes introduced by APRA, limiting interest-only lending to 30% of total new mortgage debt.
“The recent increases in interest rates on investor loans, in response to APRA’s measures to reduce the growth in investor lending, has probably affected the cash flows of investors,” she says, adding that “interest rates on outstanding variable-rate interest-only loans to investors have increased by 60 basis points since late 2016”.
Read the full article here
How immigrants are shaping our suburbs
How have immigration levels shaped our suburbs?
In this article for Switzer, John McGrath looks at the results from the latest McGrath Report 2018.
Immigration to Australia has now hit a peak not seen since the late 1800s, with the percentage of Australian residents born overseas increasing every year for the past 16 years, official figures show.
About 1.3 million new immigrants moved here between 2011 and 2016, according to the latest Bureau of Statistics Census.
Today, one in four (26%) Australian residents hail from overseas, making us one of the most culturally diverse countries in the world.
By comparison, we have more immigrants than the UK (13%), US (14%), Canada (22%) and New Zealand (23%).
In our latest Annual McGrath Report 2018, we took a look at the current and historical impact of so many people crossing borders into Australia.
The most obvious impact is that it raises demand, particularly in Sydney and Melbourne where most immigrants choose to settle.
Sydney has the largest immigrant population of all capital cities and the 2017 Global Wealth Migration Review shows it also attracts the highest number of high net worth international buyers.
Overseas purchasers have become increasingly important in the harbour city, where locals consider home prices expensive but some overseas buyers see greater value.
Great Britain and New Zealand have long been our greatest source countries for immigrants but change is afoot with a rising middle class in Asia resulting in more Chinese, in particular, aspiring to an Australian lifestyle with our strong economy, clean air, pristine beaches and superior schools.
The 2016 Census revealed that for the first time ever, the majority of Australian residents born overseas are now from Asia, not Europe.
Around Federation, immigrants from Britain and Ireland made up more than 75% of our overseas born population, according to historical figures from the ABS. After WWII, we accepted large numbers of immigrants from other European countries such as Italy, Germany, The Netherlands and Greece.
After the White Australia policy was abolished in 1973, new groups of immigrants (particularly Asian) have increasingly led to a massive diversification of our resident immigrant population.
Today, 40% of our immigrant residents were born in Asia – up from 33% in 2011 and 24% in 2001.
The dominant source countries are China and India.
UN figures show these two enormous growing economies already make up 37% of the world’s population and their close proximity to us means we can expect them to be a major force in our property market for decades to come.
Immigrants can affect our market in different ways.
For example, Chinese buyers have a strong preference for certain suburban locations and property types.
New Chinese immigrants tend to buy in suburbs with established Asian communities.
Families are choosing new or renovated properties and young people are choosing apartments and townhouses close to shops, transport and universities.
Wealthy Chinese families are very active in the high end suburbs of Sydney and Melbourne and prioritise homes within the catchment zones of top public schools or close to private schools.
An elevated position, good feng shui and water views are highly prized and if there is an 8 in the address or sale price, it is considered good fortune.
Read the full article here
5 Interesting Things Your Home Says About You
What does you home say about you?
This article from mydomainehome.com.au reveals 5 personality traits based on your home style.
Have you ever walked into a new friend’s house and realised upon taking in your surroundings that there were so many things you didn’t know about that person?
Since we inject our humble abode with a feeling of comfort that’s personal to us, it no doubt also says a lot about who we are as individuals.
Reader’s Digest Best Health agrees, and just rounded up some on-point things our homes reveal about us:
1. If you are outgoing: Colour pros say you can judge whether people are extroverted based on their front door: Red means you are bold and outgoing, blue says you are relaxed, green says you are more traditional, and black means you are quiet.
2. How type A you are: Ironically, if your sock drawer is messy, it’s likely you are type A.
According to experts, individuals who are highly organised don’t waste time keeping little things in order.
3. If you’re a millennial: If you have framed selfies of yourself on display, you are likely a millennial, since older generations found this is poor taste.
4. If you like your job: A survey discovered that those who made their beds in the morning felt more fulfilled at work.
5. If you suffer from anxiety: If you don’t have any clutter anywhere—not even under your bed or in your closet—chances are you’re harboring some anxiety.
Scientists suggest this is because those who experience anxiety try to control other things in their lives.
Read the full article here
Weekend reads: Could We Record Our Dreams?
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.