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.
Buy, invest or sell? Experts weigh in on Sydney’s cooling property market
As the Sydney property market continues to cool down – the question remains what is the best course of action for investors?
This article from Domain.com.au looks at what the experts think.
The cranes filling Sydney’s skyline should be enough to prompt investors to consider selling up and tapping out of the city’s cooling property market, according to a leading economist.
With a “huge increase” in supply set to come onto the market at a time of tightening bank-lending standards, sensible investors should be weighing up their options, according to AMP Capital chief economist and head of investment strategy Shane Oliver.
“If I was an investor … I’d be tempted to get out,” Dr Oliver told Domain. “Particularly if there are cranes all over the place.”
Whether Sydneysiders should buy, hold or sell in the cooling market is the million dollar question to be debated by Dr Oliver and other industry experts at the Property Buyer Expo, starting in Sydney on Friday.
In line with the investor adage of “buy low, sell high”, Dr Oliver believes investors should be cashing in on the massive growth of the latest property boom.
“I’m not saying people should sell their houses, I’m not selling my house,” Dr Oliver stressed.
“I’m not in the property-crash camp.”
“[But] if you’re an investor it’s a different story, [property price] cycles matter a lot more to you.”
While Dr Oliver is wary of encouraging people to sell, he thinks investors could be better off cashing-out of the Sydney market, which he expects will continue to fall up to 2020.
“We’ve now come back about 5.5 per cent, which is really just a flick off the top,” he said.
“A better time to sell would have been a year ago, but I think there is still more to come.”
Dr Oliver said huge increases in supply, particularly apartments, were already starting to have an impact on vacancy rates and rents.
“I’d be selling where there are the most cranes,” he said.
“I’d also avoid suburbs that have had [above average capital growth] … take your profits and get out.”
But other experts disagree, urging people to hold on to their properties in the falling market, or even snap up more.
“Every percentage drop makes the market more affordable,” said Property Buyer chief executive Rich Harvey.
“When you’re buying on the softening side, when the market is having a breather, you have more time to choose and less competition.”
While he expects a soft market for another six to 12 months, he said buyers should get in while they could, because it was hard to pick the bottom of the market.
“No one is going to ring a bell and say this is the bottom of the trough,” he said.
“You can go to an auction today and there are two bidders, a year or so ago there might have been 10 and then in a year’s time we could be back up to five or six bidders.”
While Mr Harvey said there were places he would avoid due to larges increases in units – Green Square, Zetland, Mascot and some areas around Parramatta – he felt issues of oversupply would be short lived.
Population growth, fuelled by migration and job growth, coupled with restrictive planning rules, would see the large volumes of new dwellings absorbed in the future, Mr Harvey said.
Market commentator John Lindeman from Property Power Partners agreed an oversupply would be short-lived, and so too its impact on property prices.
“Developers always lag behind the market, there will always be oversupply in certain areas,” Mr Lindeman said.
“But that will even out over time, that’s not a drama.”
Mr Lindeman, who expects prices to stabilise in the coming months, said investors and owner occupiers were better off to hold onto their properties.
“Prices might be coming back a bit, but hang in there, they’ll go up again,” he said.
Read the full article here
Growth surges to 6-year high
The GDP growth continues to surge.
Here’s a turn-up for the books, with GDP growth surging to 3.4 per cent in FY2018, the strongest annual growth in 6 years.
The Aussie economy now enters a record 28th year of expansion, with a seasonally adjusted 0.9 per cent growth reported for the June quarter, and the result for the March quarter being revised all the way up to 1.1 per cent.
Yep, that’s right – the economy was growing at an annualised 4 per cent in the first half of this calendar year!
In per capita terms (thus accounting for population growth) GDP growth came it at 1.8 per cent year-on-year, which was also the strongest annual result since March 2012.
The economic growth has also broadly followed immigration patterns with strapping growth in Sydney and now a huge lift in Melbourne/Victoria, but a significant drag from Western Australia and the Northern Territory.
There was strong expansion in the construction sector, driven by Victoria (of course) and South Australia.
Read the full article here
Australian new home sales hit a 5-year low — a trend industry experts expect will continue
It seems there’s no good news for new homes.
Results from an article on Business Insider show a 5 year low, with no sign of change for the better.
Australian new home sales fell to fresh multi-year lows in July with declines reported in all of the mainland states.
According to the Australian Housing Industry Association (HIA), sales of detached houses slumped 3.1% in seasonally adjusted terms, leaving them at the lowest level since early 2013.HIA
Declines were recorded each of Australia’s mainland states, led by a steep 5.1% drop in Victoria. It was the fifth consecutive month that sales had fallen.
“The slowdown in Melbourne home sales that started in March is showing no signs of abating,” the HIA said.
“This update is consistent with our view that the record boom in Melbourne’s housing market peaked in the first quarter of 2018.”
Sales in New South Wales, Australia’s most populous state, also declined by 2%, leaving total volumes down 11.2% over the past three months compared to sales levels seen between February to April.
“This is a relatively rapid slowdown in sales that is being experienced predominantly in the growth corridors of Sydney,” the group said.
“The high volume of new apartments in metropolitan cities are competing for first home buyers and resulting in a slowdown in new detached home sales.”
Across the remaining mainland states, sales fell by 2.7% in Western Australia, 1.8% in South Australia and 1.2% in Queensland, completing a clean sweep of declines across the nation, something that has been seen with increasing frequency this year.
Reflective of recent broad-based weakness, the HIA said total sales volumes nationally have fallen 6.1% so far in 2018 compared to the same period a year ago, a trend the group expects will continue.
“With Victorian new home sales now showing signs of weakness we expect the national trend of declining sales will continue throughout 2018,” it said.
“Building approvals data, which is slow to respond to changes in market conditions, was released by the ABS yesterday and it also shows that approvals have fallen in recent months, consistent with the evidence provided by new home sales data this year.”
According to the ABS, total dwelling approvals slumped by 5.2% in July in seasonally adjusted terms, leaving the decline on a year earlier at 5.6%.
Approvals to build private sector houses fell 2.8% over the year, outpaced by a 6.2% decline in private non-housing dwelling approvals, largely measuring units.
Even with the decline in the latter, analysis from CoreLogic suggests the number of units in Australia could increase by close to 10% over the next two years, the vast majority in New South Wales and Victoria.
Along with a strong pipeline of new apartment supply, especially in New South Wales and Victoria, the HIA said tougher lending restrictions, slower population growth and falling prices were other factors that have contributed to the sales slowdown.
“The market for new home sales across the country is cooling for a number of reasons including a slowdown in inward migration since July 2017, constraints on investor finance imposed by state and federal governments and falling house prices,” it said.
“Finance has become increasingly difficult to access for home purchasers.
Restrictions on lending to investors and rising borrowing costs have seen credit growth squeezed.
“Falling house prices in metropolitan areas have also contributed to banks tightening their lending conditions which have further constrained the availability of finance.”
Read the full article here
SOLD! By auction or private treaty?
Auction or Private? That is the question…
In this article for Switzer, John McGrath looks at which road leads s to better results.
CoreLogic figures show there was a 20% reduction in the number of homes taken to auction nationwide over this year’s winter period compared to 2017, with Sydney and Melbourne the main contributors to this decline.
Property prices and clearance rates in Australia’s two most auction-centric markets have continued to progressively moderate in 2018 and it’s spooked many would-be sellers.
In the June quarter, median house prices dipped -1.2% in Sydney to $1,012,368 and -1.7% in Melbourne to $821,463.
At the same time, CoreLogic’s Quarterly Auction Market Review, released in late July, showed auction clearance rates over the June quarter softened a further -7.6% in Sydney and -7.3% in Melbourne.
Generally speaking, both cities are recording clearances in the 50-60% range now.
A 60%-ish clearance is what we expect to see in normal market conditions, however, many sellers are struggling to adjust.
The market has cooled rapidly, exacerbated by tighter lending restrictions; and for many sellers it still feels like only yesterday that both cities were clearing 70-80% at auction.
But there’s really no reason to panic and there’s certainly no reason to rule out selling by auction.
There’s actually plenty of buyers out there who want to make purchases and are willing to compete on properties that are priced correctly.
When you have good competition, auction is always the best way to go.
Using the auction method also puts a timeline on buyers and this is becoming important in both Sydney and Melbourne, where buyers have more stock to choose from and softening prices means they can take their time.
An auction motivates people who have fallen in love with your home to get organised.
In order to make them fall in love, you must present your home well, invest in good quality marketing and most of all, hire a great agent who has proven success in the auction arena and ideally someone who has worked in cooling markets before.
That’s a recipe for a good auction in today’s market.
Lending restrictions are interrupting the auction process a bit, with some buyers unable to compete either on the day or during pre-auction negotiations.
Agents need to make room for this and conduct negotiations in a way that includes as many potential buyers as possible.
Equally, the auction method also provides scope to sell prior.
Once again, you simply need an experienced agent with expert negotiating skills whom you can rely on to draw the best price out of the market prior to auction.
For those of you interested in stats, CoreLogic’s Quarterly Auction Market Review tells us the following:
Top 3 Auction Capital Cities
- Melbourne 12,330
- Sydney 9,312
- Brisbane 1,574
Top Auction Suburbs (by volume) per city
- Reservoir in Melbourne
- Randwick in Sydney
- Sunnybank in Brisbane
Top Auction Suburbs (by clearance rate) per city
- Sydenham 86.7% in Melbourne
- Northbridge 85% in Sydney
- Kambah 78.3% in Canberra
So, where to from here?
Well, it’s the first week of September and we’re now gearing up for the typically busy Spring season.
The number of homes for sale via auction is already increasing in line with this seasonal trend.
Read the full article here
4 Personality Traits Linked To High IQ
What does your personality say about your IQ?
According to one study – quite a lot!
An article on Spring.org.uk looks at the 4 personality traits linked to a high IQ.
The traits are so powerful that they are linked to intelligence when measured almost 40 years later.
Insatiable curiosity, an active fantasy life, a sensitivity to emotions and an appreciation of art and beauty are all linked to high IQ, a study finds.
High IQ may have a particularly strong link to curiosity because intelligence creates a ‘cognitive hunger’ — a desire to think.
Over the years, higher IQ drives people to keep exploring new experiences to satiate this hunger.
Curiosity, along with sensitivity to emotions, appreciation of beauty and an active fantasy life are all aspects of the major personality trait called ‘openness to experience’.
Being open to experience is so powerful that it is linked to intelligence when measured almost 40 years later.
Children who scored higher on IQ tests at just 11-years-old were more open to experience when they were 50-years-old, the psychologists found.
The study’s authors explain their results:
“…childhood intelligence is indeed positively associated with adult trait.
Openness, even when it was assessed almost four decades earlier when participants were at 11 years.
Intelligence may influence the development of personality in that intelligent people develop habits to satisfy their curiosity and ‘‘cognitive hunger’’ which are an essential ingredient of Openness.”
The conclusions come from a huge study of 17,415 people born in the UK in one week in March 1958.
Over the following 50 years they were given various personality and intelligence tests.
Children with higher IQs were more open to experience because of higher motivation at school, greater support from their families and higher social status, the researchers found.
Read the full article here
Weekend video: Are You Smart Enough For Your Age?
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.