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

Melbourne housing market to be tested as 1037 homes go to auction

It would seem that all the action is happening in Melbourne this weekend.

But will we see some big winners?  Propertyupdate Victorian Property Melbourne

This article on Domain.com.au looks at what we can expect when 1037 homes go to auction.

Melbourne’s softening property market will be under the microscope this Saturday as more than 1000 homes go under the hammer.

The first “super Saturday” of spring comes as property observers report that the overall mood at auctions has shifted to one of caution.

Auction numbers have surged as sellers seek to avoid clashes with the AFL Grand Final long weekend and the start of school holidays.

There are 1037 properties across the city expected to go to auction on Saturday.

Melbourne’s auction clearance rates 

“This will be the first big test for Melbourne for the spring season,” Domain senior research analyst Nicola Powell said.

Clearance rates have hovered between 54 per cent and 55 per cent since the start of September.

It follows a sluggish winter in which almost half of all properties that went to auction failed to sell under the hammer.

Traditionally the weekend before the AFL grand final, and the weekend before Melbourne Cup, are among the busiest auction days of the year.

“What was the biggest surprise for me is that we haven’t seen much of a slip in the number of auctions going to market this year,” Dr Powell said. 

what properties are investment grade

Buyers’ agent Kirk Stafford said the mood at auctions was subdued and tentative, partly because the confidence of buyers had been affected by negative chatter about the property market.

“A lot of people are sitting on their hands, watching and waiting to see what shape the market takes,” Mr Stafford said.

“We’re dealing with a cautious group of buyers, rightfully, who have found that their borrowing capacity is being clipped by the banks, by up to 8 or 10 per cent.”

Marshall White director John Bongiorno said the city’s auction market had returned to balance.

“This is the market we’re going to be in for quite a while,” Mr Bongiorno said.

“I think buyers probably have the upper hand, but, having said that, fundamentally not a lot has changed out there in terms of the economy – other than banks tightening up on lending criteria, which had the biggest impact on the market.”

Mr Bongiorno said off-market transactions had picked up and properties that passed-in usually sold within a fortnight.

Richmond and Reservoir will host the most auctions this weekend, with 21 scheduled in each suburb. Twenty properties are slated to go under the hammer in Craigieburn, while auctioneers will call 17 homes in Hawthorn.

Read the full article here

Is mortgage stress really at record highs?

What’s the current state of play when it comes to mortgage stress?

This Blog by Pete Wargent looks at the results.

Moderate mortgage stress Couple Mortgae Stress Sep

Has a ‘perfect storm’ pushed mortgage stress to ‘epidemic’ levels, and, indeed, ‘record highs’?

OK, breathe.

Let’s take a look.

Fortunately this one is an easy question to answer, because there’s a very simple de facto measure of mortgage stress, being late payments – or mortgage balances 30+ days in arrears.

30+ day prime arrears rates have been flat for the past three months at just 1.38 per cent.

So there’s not been too much struggling going on, in reality.

The prime arrears rate is up a bit from 1.17 per cent a year earlier, so there’s been something of a recent increase, partly relating to interest-only borrowers being switched across to principal repayments (you can click on the charts to expand them).

A2

Read the full article here

The CBA thinks Sydney property values can fall 10%

What does the future hold for Sydney’s property values?

According to an article on Business Insider the CBA predicts values to fal by 10%.

Australia’s property market won’t crash, according to the Commonwealth Bank.Sydney Market Down

But as the housing downturn remains ongoing, it makes sense that more analysts are turning their attention to the medium-term outlook.

CBA economist Gareth Aird forecasts that house prices in Sydney and Melbourne will continue declining until the end of next year.

“We see the peak to trough being around 10% in Sydney and a little less in Melbourne (8.8%),” Aird said.

This table summarises CBA’s forecasts for changes in house prices across Australia’s eight capital cities to December 2019:

Commonwealth Bank

Aird’s model is calculated as a function of four key variables:

1. Annual changes in mortgage rates (1 year advanced);

2. The annual change in the flow of credit (six months advanced);

3.  Auction clearance rates (four months advanced); and

4. The house price expectations index from the Westpac/Melbourne Insitute consumer sentiment survey (2 months advanced).

He concedes that “predicting property prices can look foolish retrospectively”.

However, the chart below shows that the four leading indicators outlined above track actual movements in house prices “very well”.

Commonwealth Bank

“Clearly, we can’t forecast auction clearance rates or the household perception around the future path of dwelling prices.”

However, using the latest data for those two variables helped to predict near-term movements in house prices.

And the first two variables — mortgage rates and credit growth — historically have a lagged impact of 6-12 months months, which Aird said makes them useful indicators over that time frame. Sydney Property

Based on those inputs, it’s not hard to see why the market is currently in a downturn.

Three of the big four banks have just raised mortgage rates, and Aird said rates “are more likely to go up rather than down” over the next year.

Credit growth to housing investors has fallen to an all-time low. Auction clearance rates have steadied at a lower base, but overall listings remain elevated — especially in Sydney and Melbourne.

And in Westpac’s latest consumer survey, the number of respondents who said they expect house prices to rise over the next year fell to the lowest level since the question was first asked in 2009.

CBA’s base case is that Sydney home prices will decline by 5% annually in 2018 — a relatively mild assessment given the latest weekly data from CoreLogic Sydney house prices are currently 5.9% lower than this time last year.  Commonwealth Bank

That would take overall declines from Sydney’s July 2017 peak to around 7.5%.

“For Melbourne, prices would be down by around 5% from their November 2017 peak,” Aird said.

“Nationally, we think prices will end the year down by around 3% with a roughly similar outcome likely in 2019.

That would mean the total correction in dwelling prices is not too dissimilar to the corrections of 2010 and 1989,” he said.

In other words, CBA doesn’t expect a hard landing — largely because the broader economy outside of housing is still performing well.

Aird noted the continued strength in Australia’s labour market, and said he expects the unemployment rate will decline further which lowers the risk of mortgage defaults.

Read the full article here

Winners and losers in top suburbs

Despite a cooling market, there are still suburbs in Sydney and Melbourne that are heating up.

In this article for Switzer, John McGrath looks at which suburbs and winning and losing on the market.

Sydney and Melbourne might be cooling overall but not all suburbs are following the trend.   Desirable Location 300x200

As with all major market cycle swings, some suburbs are standing up to the change extremely well, with properties either growing or holding their capital value and sellers still in command.

Other suburbs are following the trend, with prices softening and buyers enjoying new opportunities.

According to CoreLogic analysis, Sydney peaked in July 2017 and Melbourne in November 2017.

Since then, both city markets have recorded patchy results at the suburban level and this is entirely expected.

The difference comes down to local market factors and which buyers are most active.

Generally speaking, we’re still seeing strong demand for high quality homes in desirable, tightly-held suburbs; as well as the more affordable, outlying areas where first home buyer activity has spiked. Sydney+suburbs

Suburbs where prices are weakening are a mixed bag. Some of them are highly desirable areas that experienced a lot of price growth during the boom, so prices are only dipping now because buyers simply can’t afford (or can’t get the finance) to compete anymore.

Prices are also weakening in suburbs that are now oversupplied with new apartments, or have been heavily impacted by the departure of investors.

Below are some tables showing the suburbs with the best price growth and the greatest price dips in the year to 30 June 2018.

You need to know what’s going on locally to interpret these figures and that’s where an experienced, qualified local agent can help.

SYDNEY 

These suburbs had the best growth in Sydney over the year to 30 June 2018.

Houses:

Jm Syd House Original

Units:

These suburbs experienced the most price softening in Sydney over the year to 30 June 2018.

Jm Syd Units Original

Houses:

Jm House Syd Soft Original

Units:

Jm Units Syd Soft Original

MELBOURNE

These suburbs had the best growth in Melbourne over the year to 30 June 2018.

Houses:

Jm House Mel Original

Units:

Jm Units Mel Original

These suburbs experienced the most price softening in Melbourne over the year to 30 June 2018.

Houses:

Jm House Mel Soft Original

Units:

Jm House Units Soft Original

Source: Market Trends, 12 months to June 30, 2018, suburbs with minimum 40 sales pa, house and apartment data excludes suburbs with less than 30% of the relevant stock type, CoreLogic, published 10 September 2018

These statistics remind us that local market factors matter and they will make a difference to sale prices this Spring.

Read the full article here

Ban these phrases to get ahead in your career

If you want achieve success, you’re going to have to change the way you think.

An article on Executivestyle.com.au looks at the phases you need to ban in order to get ahead in your career.

I was sitting in a café waiting for a meeting the other day and overheard a mother and her young daughter sitting at the next table. Success2

The little girl was doing her homework and exclaimed, “It’s too hard. I can’t do it.” Her mum replied, “Don’t say that, your brain cells will hear you.”

Whilst I’m not sure if this was the most accurate science lesson, I did agree with her sentiment in terms of how what we say can have a dramatic impact on our chances of succeeding.

There are endless articles written about how good bosses should speak to their employees – how to be firm but fair, constructive but not critical, and how to encourage them without mothering them.

But do you pay as much attention to how your speech affects your own psyche?

Are you sabotaging yourself with your speech patterns? 48507505_l

There are certain phrases that, over 14 years in business, I’ve learnt do not put me in the right headspace and so I’ve actively banned from from my internal and external monologues.

Are there phrases that jar with you?

Then don’t use them

! Successful people don’t talk the talk, so they can walk the walk.

Here is a list of my vetoed vocab, and I urge you to make your own.

They’re my idol

I have many “idols” in business but I would never use that word to describe them.

To me, an idol is someone on another level – above you.

They are unreachable, unrelatable and therefore not really motivational. 36496681 L

Instead I prefer the phrase ‘role model’, or just ‘friend’ if I am lucky enough to meet them.

Don’t put your role model too high on a pedestal.

I wish I could

If there is something you want that’s in your reach, rather than wishing for it, put a productive plan in place to achieve it.

If it’s really not within your reach there’s no point wishing for it and your mental energy is better used elsewhere.

Sadly, Peter Pan is unlikely to hear your wish and grant it.

They’re so lucky

I love the quote by Coleman Cox, “I am a great believer in luck.

The harder I work, the more of it I seem to have.”

That’s why I try never to put success – whether it’s mine or someone else’s – down to luck, as it belittles the slog put into achieving it.

I want to be rich  alarm-clock-2116007_1920

Whilst I am a great believer in setting goals, I’ve learnt that statements which are this general have no real strength to them.

Be specific! How much do you want to earn by what date and how are you going to achieve it?

If you’re going to draw a treasure map, make it as clear as possible.

#IHateMondays

When I noticed this hashtag on Twitter I wanted to reach out to every user retweeting it and stop them.

I know that we should all hate Mondays – it’s a mental habit we learnt as schoolchildren – but should we keep perpetuating it as adults?I love Mondays – and I’m happy to admit it! It’s a fresh start, a new week and I think we should celebrate it.

Read the full article here

Weekend video: 6 Crazy Magic Tricks That You Can Do

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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


'Weekend reads – Must read articles from the last week' have 2 comments

    Avatar

    September 21, 2018 Tom Tyman

    Thanks for sharing these articles Michael. I’m also a fan of reading and I actually make it a habit to at least read 3 or 5 real estate articles per day. Gotta keep myself updated.

    Have a nice weekend!

    Reply


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