Weekend reads – Must read articles from the last week

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.

Official data reveals the collapse in foreign investment activity in Australia’s housing market

Foreign investment has taken a dip – but is this a sign of things to come?

This article from Business Insider looks at the current state of play.

The value of approvals for foreign investment in Australia’s housing market tumbled in the last financial year, reflecting higher charges, tighter restrictions and the introduction of capital controls in China at the start of 2016. world-foreign-investment-property-house-market-stats-price-figures-data

According to Australia’s Foreign Investment Review Board (FIRB), a total of 13,198 residential real estate applications were approved for proposed investment in the 2016/17 financial year, totalling $25.2 billion.

As seen in the chart below, that was well down on the 40,149 approvals, totalling $72.4 billion, granted in the 2015/16 financial year.

Residential Real Estate Approvals by Year

For clarity, approvals are indicative of potential rather than actual investment.

The 2016/17 figure was the lowest since 2012/13 financial year.

“A significant factor contributing to the reduction applications for the reporting period was the introduction of application fees from 1 December 2015,” the FIRB said.  

Wealth Retreat 2017 - General 2

“The introduction of fees resulted in investors only applying for properties they intend to purchase.

“Prior to the introduction of fees, individuals often made several applications earlier in the process when considering multiple properties, even though they might have only ended up purchasing a single property.

“This suggests that the resulting reduction in approvals may not imply a corresponding a reduction in actual investment in residential real estate.

That is, the actual decline is likely to be lower than implied by the data.”

Along with the introduction of state-based taxes on foreign investors, the FIRB said weaker demand from China was another factor behind the decline in approvals granted.

“The approvals data also reveal a decline in the total number and value of approvals for Chinese applications, largely driven by reductions in residential real estate approvals,” the FIRB 29081526_lsaid.

“This likely reflects a range of factors, including the introduction FIRB application fees, Chinese overseas direct investment capital controls and changing macroeconomic conditions.”

Along with affordability constraints, weak household income growth and tighter lending restrictions on local borrowers, the drop in foreign activity in Australia’s housing market has undoubtedly contributed to a slowdown in Australia’s housing market.

Despite the total reduction in residential approvals last financial year, the FIRB said that Victoria and New South Wales remained the favourite destination for investment, accounting for nearly three-quarters of all approvals granted.

“This is consistent with recent years and reflects strong demand for residential property in Sydney and Melbourne,” the FIRB said.

By type of investment, the FIRB said that the vast majority of approvals were for investment, not to buy existing dwellings.

“The proportion of all residential real estate approvals for development remained relatively stable in comparison to the previous year and represents around 88% of the value of all residential approvals in 2016–17,” it said.

Development approvals include those to purchase new dwellings, vacant land and redevelopment of existing residential property, aimed at increasing the size of Australia’s housing stock.

Read the full article here

Construction cycle set to roll over

What does the future hold for the construction cycle?

This Blog by Pete Wargent shows the statistics.

Houses hold up approvals

Building approvals held up well in April 2018, still tracking at 19,000 per month in trend terms.

Building Approval

 

It’s still very much hammer time for Melbourne apartments, but Sydney unit approvals continued their decline to sit at the lowest level since August 2015.

Read the full article here

Australian house prices to fall by more than 5 percent in 2018

While there are some sign of housing prices falling, the questions remains – where is the marked headed?

According to an article on finance.nine.com.au the fall will continue to drop.

Australian house prices have been tipped to fall by more than five percent as banks tighten up who they lend to in the wake of the Royal Commission. Downturn

Wealth Management firm UBS have upgraded their previous forecast of a 3 percent drop in house prices, arguing that a crackdown on lending standards is a ‘game changer’ for the market.

“We have shifted our base case towards our ‘credit tightening scenario’, where home loans fall approximately 20 percent, credit growth drops to approximately 0 percent, prices fall persistently, and the RBA stays on hold for longer,” wrote UBS economist George Tharenou in a research note.

“Strategy is underweight banks.

This coupled with record housing supply in coming years and a slump in foreign buyers sees us downgrade our house price outlook to fall 5 percent plus over the next year.”

How to lock in a low interest rate on your mortgage  Royal Commission Into Misconduct In The Banking

UBS were the firm to correctly call the top of the housing market 13 months ago, when they predicted rising mortgage rates would throttle back growth felt in markets such as Sydney and Melbourne.

Tharenou also predicts that a fall in house prices will force the Reserve Bank of Australia (RBA) to hold interest rates well until the second half of 2019.

“The RBA has almost never hiked when house prices are falling – and are arguably already in ‘rate cut territory’,” wrote Tharenou.

“But, the RBA’s optimistic outlook means they’ll likely keep signalling the next move is up.”

Property data trackers CoreLogic this morning confirmed that it has been 12 months since the auction clearance rate – traditionally used as a barometer for the property market – was above 70 percent.

Property data trackers

Property data trackers1

Generally, an auction clearance rate above 70 indicates a healthy “seller’s market” where multiple buyers are clamouring to snap up property – as competition raises prices.

An auction rate below 70 begins to shift into a “buyer’s market”, where reduced crowds at auctions see fewer price wars and the availability for bargains increases.

Earlier this month, CoreLogic announced that capital city dwelling values had recorded their first annual decline since November 2012.

The hardest hit was Darwin, which lost 7.7 percent in value over 12 months, followed by Sydney properties which lost 3.4 percent on average.

Capital City House Prices trend lower*:

Capital City: Change over 12 months: Median value:
Sydney -3.4 percent $875,816
Melbourne +3.7 percent $720,433
Brisbane +0.9 percent $492,911
Adelaide +0.8 percent $435,042
Perth -2.3 percent $464,238
Hobart +12.7 percent $430,138
Darwin -7.7 percent $433,609
Canberra +2.6 percent $594,486
Combined Capitals -0.3 percent $655,419

*CoreLogic data as of April 30th 2018, includes unit and house prices

Read the full article here

Western Sydney Airport brings investment opportunities

The Western Sydney airport is already creating tremendous buzz – but will it also open the door for investment opportunities?

In this article for Switzer, John McGrath looks at whats we can expect

Western Sydney Airport will be one of the largest infrastructure projects Australia has seen in many decades, and with it comes some very compelling opportunities for property investors today. Western Sydney Airport

The airport will be a game changer for Sydney’s western suburbs, where almost half of Sydney’s population currently lives and where a million more residents will settle by the early 2030s.

We’re talking about an airport that will service five million passengers in its first year – about the same as the Gold Coast Airport today; and its capacity could double in as little as five years.

Along with it comes a new train line, new housing estates, new community facilities, many road upgrades throughout the west, north-west and south-west; and serious sky-is-the-limit economic investment.

Not to mention about 28,000 new jobs by 2031, according to the Federal Government.

Construction is due to start later this year and it’s supposed to be operational by 2026 – which is not that far away in real estate terms. Sydney Property

We talk of Sydney property values doubling every 10 years, so what will an international airport do for western suburbs house prices in less time?

The location of Badgerys Creek for Sydney’s second airport was confirmed by the Federal Government in April 2014.

Since then, home values in the immediately adjacent suburbs have skyrocketed, as shown by CoreLogic data published on realestate.com.au.

The median house price in Bringelly – which is right next to the airport site, went from $890,750 at the start of 2014 to $3,000,000 today.

No, that isn’t a typo!

Here’s some others:

  • In Kemps Creek, home values went from $1,180,000 in 2014 to $2,850,000 today
  • In Rossmore, home values went from $1,105,000 in 2014 to $3,375,000 today
  • In Mount Vernon, home values went from $1,080,000 in 2014 to $2,750,000 today
  • In Luddenham, home values went from $685,000 in 2014 to $1,480,000 today

These suburbs have many large acreages, and it’s the land that both local and international developers have been keen to acquire for future housing estate projects.

They’re snapping up the large blocks with run down cottages and sheds that will be easy to develop down the line. Sydney+suburbs

But don’t think of these suburbs as little rural outposts full of modest farmhouses alone.

There are some spectacular contemporary prestige estates out here that would be very appealing to high net worth clients now that an airport is coming to the area.

The airport provides plenty of opportunity to expand commercially and they can swap a $6 million – $8 million home on the North Shore for a $2 million – $3.5 million home of the same quality but on much more land and in a much more relaxed, rural-style environment.

Read the full article here

What time do high achievers get up?

Are you an early riser or a night owl?

This article from executivestyle.com.au looks at the success routine of our high achievers.

Early rising is a common habit found in many CEOs, presidents and other influential people. clock alarm business

But do you have to run several kilometres, drink a detox juice and check your emails before 6am to be considered a high achiever?

To find out we asked several people who are enjoying career success what they do each morning.

Not everyone we spoke to is an early riser – but one trait all these careers guns have in common is they’ve developed a personal morning routine over the years to ensure their day starts on a positive and productive note.

Dermot O’Gorman: CEO, WWF Australia

What’s your morning routine? Dermot O'Gorman.

I wake up at 6.10am during the week. I like to go swimming three to four times a week for about an hour.

Do you ever press the snooze button?

I keep my phone in another room, which forces me to get out of bed to turn it off.

What time are you at your desk?

I normally start work before I get to my desk; I check emails about 8am. As for getting to the office, it could be before 8am or after 9am depending on whether I have a breakfast meeting or somewhere to be.

How often do you check your email?

Too often. But I do have a rule not to check emails during personal time, like evening meals.

Ruslan Kogan: CEO, Kogan

What time do you wake up? Ruslan Kogan.

It varies significantly and depends on what time I go to sleep. On average, I sleep about four or five hours a day.

What time are you at your desk?

Always. My desk is very portable. It can take the form of a tablet, an ultrabook, a smartphone or a seat on a plane.

How often do you check your email?

I check emails over 100 times a day. I often check emails in my sleep.

Sometimes I even send emails in my sleep and then I have to translate them to my staff in the morning.

How do you feel?

Happy. I love what I’m doing and couldn’t imagine doing anything else.

Kristie Buchanan: CEO, RedBalloon

What time do you get up? Kristie Buchanan.

On a typical day I wake up between 8am and 8.30am, depending on what time I went to bed the night before – eight hours’ sleep is imperative.

What time do you arrive at the office?

Here at RedBalloon we have very flexible work hours, so I start any time between 9am and 9.30am.

How often do you check your email?

The first thing I do after the alarm goes off is check my emails. During the work day, I check my emails at three set times: mid-morning, lunchtime and early afternoon. I delete my email account off my phone when I go on holidays to avoid temptation.

Bryan West: Director, Fortress Learning

What is your morning routine?

I get up at about 5.30am and sit with my wife having two cups of coffee on the front verandah in the pre-dawn for about 45 minutes. The kids slowly emerge and join us.

What time do you start work? 

I take the kids to school about 8am. dream-clock-time-business-man-life-motivation-happy-dream

At 8.30am I attempt to meditate for 20 minutes. After that, I spend another 20 minutes reading or otherwise learning about something new. Then I start work.

David Prior: Founder, Five:am Organic Yoghurt

How and when does your morning start?

I start each day with either yoga, meditation or a wee-hours surf, and I never let a healthy, delicious breakfast (yoghurt, naturally) go astray. The Five:am philosophy is that you get a unique view of the world at 5am – a sense of clarity rarely seen throughout the rest of the day.

Dean Ramler: CEO, Milan Direct

What time do you get up?

I start my day early – at the gym by 5.45am. Into the office by 7am, fresh and at my most productive.

Read the full article here

Weekend video: 12 ILLUSIONS THAT WILL TEST YOUR BRAIN


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About

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


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