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.
Sydney’s investor heartlands: Mapping the areas most affected by the decline of investor loans
Which Sydney areas are most affected by the decline in investor loans?
This article from Domain.com.au maps out the areas you need to know.
Domain recorded a $77,000 decline for the median Sydney house price over the year.
The latest housing finance data shows the value lent for investor mortgages also declined significantly, by $11.2 billion across NSW in the year to August.
But Sydney is made up of many different dwelling types, price ranges and buyers, so the fall in lending to the investor segment of buyers may hit some parts harder than others.
The markets that change with investor lending
To find out which markets move most closely with changes in investor lending, correlation analysis was used.
The result for each area is a correlation coefficient, and the higher the coefficient, the more changes in investor lending and dwelling prices move together.
Correlations were calculated between annual growth in lending to investors in NSW, and median price changes in different regions across Sydney.
The changes were compared over a 20-year period.
Changes in investor lending are usually about three months ahead of Sydney house price growth.
To better understand the strength of the relationship between the two data series, they were adjusted to account for the lag.
Across the board, houses had a higher correlation with changes in investment lending than units.
Regions further from the CBD (the west, south and south west) also generally had higher correlation coefficients, representing closer movements with changes in investor lending.
The market where the direction of investor lending is most tightly correlated with price movements is in the west Sydney region, specifically for houses.
The west region encompasses the major centres of Parramatta, Blacktown and Penrith.
Annual house price movements in the region had the highest correlation coefficient with movements in investor lending.
This means that as investment increases, prices in the region are likely to grow. When investor lending falls, house prices in the west are likely to follow.
The least correlated market with the weakest relationship to investor lending is upper north shore units, which include parts of Chatswood and Hornsby.
This is shown in the maps above, where darker colours on the map represent a stronger relationship with changes in investment lending across NSW.
It is important to note that correlation analysis does not tell us whether one factor causes another.
This analysis does not tell us that a decline in investor lending causes a decline in house prices.
Other factors may be at play such as a decline in population, an oversupply of housing or an increase in the price of avocados.
However, recent analysis suggests that “high investor regions” have been more affected by policies around investment lending.
Outlined below are a few other data points we can look to that explain some of these correlations.
Higher growth in rental stock makes an area vulnerable to changes in investor demand
Rental properties are owned by investors.
In markets where properties are more likely to be purchased by an investor to rent out, prices may be more affected as barriers to investor lending are introduced.
Measuring the growth in dwellings rented helps us understand where investor activity has been most prolific.
Between the census dates of 2011 and 2016, rental housing did not rise equally across the city.
As prices rose and developers became more active, the north-west, west and south saw the highest increases in the number of rented dwellings.
These changes in rental stock can further explain the correlation between changes to investor lending and changes in prices.
Where there has been high levels of investor activity (such as high growth in rental stock), we might also expect price changes to be influenced by changes in investor lending.
This is shown in the scatter plots below.
On the horizontal axis is the correlation coefficient – the number from the maps above, which show the strength of the relationship between investor finance and prices.
On the vertical axis is the five-year change in the number of dwellings rented in the region.
Read the full article here
Melbourne stock surge
It looks like listings in Melbourne have taken a surge.
Listings rise sharply in Melbourne
A big jump in listings in Melbourne and Canberra this month, with Melbourne’s available stock now comfortably exceeding 39,000, according to SQM Research’s latest data and media release.
There were small declines in October for Brisbane, Adelaide, and notably Darwin and Perth.
But the two major capital cities are well up from last year…
It took a bit longer to get there, but Melbourne has now well and truly joined Sydney with its slowing market, with stock levels leaping 5.9 per cent higher in the month of October alone.
Read the full article here
Why today’s RBA interest rate decision is unlikely to be an event that ‘stops financial markets’
As suspected the RBA left interest rates on hold this week.
But does this really make a difference to the markets?
An article on Business Insider looks at why the decision has little impact.
Thirty minutes before the horses jump in the 2018 Melbourne Cup, the Reserve Bank of Australia (RBA) will announce its November interest rate decision.
Unlike the “race that stops the nation”, the rates decision is likely to come and go with little fanfare, unless there’s a shock, of course.
That’s not just because many Australians are already out enjoying Cup functions, based on what I just witnessed on Pitt Street in Sydney, but also because no one thinks the RBA will touch rates for years, maintaining the status quo that’s been in place since August 2016.
This chart from Macquarie underlines why today’s decision is unlikely to be the policy decision that stops financial markets.Macquarie Bank
Using overnight index swaps (OIS) pricing — where markets believe the RBA cash rate will sit at a certain date in the future — it shows that traders are only attaching a 75% probability that it will sit at 1.75% by February 2020.
Collectively, they’re not even certain a 25 basis point rate hike will occur within 15 months.
It’s already been a long time between drinks when it comes to a RBA rate hike — the last occurred in late 2010.The prevailing theme in recent years has been for financial markets to push back when they expect the next hike will occur, as indicated by the downward-sloping lines in the chart.
Read the full article here
How hot are Brisbane, the Gold Coast and Sunshine Coast?
Just how hot are the the Brisbane, Gold Coast and Sunshine Coast markets?
In this article for Switzer, John McGrath looks at the current state of play.
South East Queensland will be the prime beneficiary of Sydney and Melbourne’s slowdown, with the economy starting to turn a corner and the state re-claiming its place as Australia’s No 1 destination for internal migration, as more families and downsizers from the southern cities cash-in for a lifestyle in the sun.
Economic growth and jobs are closely tied to every property market’s performance and Queensland has suffered in the shadow of the mining downturn.
But as discussed in our newly released annual McGrath Report 2019, things are changing, with boosted tourism, surging gas exports and the strongest annual growth in jobs in more than a decade combining for a comeback.
Economic growth is projected to accelerate from 2.5% in FY17 to 3% by FY19, supported by the biggest infrastructure spend since the 2011 flood recovery, announced in the FY19 Budget in June.
Looking ahead, economic forecaster BIS Oxford Economics says Brisbane will lead the capitals, with 13% property price growth predicted by 2021, although more of this growth will occur in 2021.
Brisbane is one of the world’s great cities.
Liveability, affordability, scale and future economic prospects all suggest that Brisbane is a market where you can confidently buy.
The value gap between the East Coast capitals is compelling – it is the largest it has ever been between Brisbane and Melbourne and the largest in 15 years with Sydney, according to CoreLogic.
A typical house in Brisbane is $437,000 cheaper than Sydney and $260,000 cheaper than Melbourne.
This level of affordability, coupled with positive economic signs means Brisbane is primed for future growth.
Amongst the thousands of southern migrants relocating north, there is currently a clear preference for beachside living, with the Gold Coast and Sunshine Coast favoured over Brisbane.
These two regions have weathered the mining downturn particularly well, with significant local infrastructure spending, jobs growth and the 2018 Commonwealth Games on the Gold Coast offsetting the impact.
About 5,200 Sydneysiders and 2,500 Melburnians moved to the Gold Coast in FY17 and a further 1,500 migrated from Melbourne to the Sunshine Coast.
This has translated into better property price growth in the regions, with house prices rising 4.8% on the Gold Coast and 6.1% on the Sunshine Coast compared to 3.1% in Brisbane over the 12 months to June 2018.
The Gold Coast and Sunshine Coast are now more expensive than the state’s capital, with median house prices of $650,000 and $589,000 respectively compared to Brisbane at $536,000.
The last time the Gold Coast had such a substantial premium to Brisbane was in July 2008.
This might be a sign of the future with a huge wave of downsizing due to unfold over the next two decades across Australia.
Queensland’s best sea change locations, such as the Gold Coast and Noosa have long been favourite destinations amongst downsizers looking for a more relaxed life.
While affordability is part of Queensland’s attraction, massive growth in Sydney and Melbourne property prices over a prolonged period means southern migrants can afford to buy wherever they like.
Within Brisbane, southern migrants and local upgraders are favouring premium property in blue chip inner ring areas close to the CBD and/or river.
Read the full article here
9 ways plants can boost your health and wellbeing
We all know that plants decorate any room, but did you also know they can be good for your health?
According to an article on Realestate.com.au there a 9 ways plants can improve your health and wellbeing.
Just like an apple a day keeps the doctor away, a home filled with lush greenery can do all sorts of amazing things for your physical and mental health.
Injecting your home with plants is about so much more than creating an Instagram-worthy abode: It’s about crafting a space that makes you feel welcomed, refreshed and connected to nature.
“We have an innate desire, even if watered down, to connect with nature,” says Gavin Cole, Psychology and Horticulture Academic at ACS Distance Education.
“When we are able to do this, we feel better, are healthier, and lead more productive lives.”
Below, we look at nine incredible ways plants in the home can improve your overall health.
1. Stress less
Although more research is needed in this area, prior studies would indicate that the presence of plants in our homes and working environments can help us to recover from stress and fatigue.
“Having greenery around us has been linked with lowered blood pressure and blood toxin levels, enhanced cognitive performance and memory, as well as recovery from stress-related health complaints,” Gavin explains.
2. Breathe easy
Gavin reveals that plants have an incredible ability to filter out dangerous toxins, which in turn improves air quality. Plants are hard workers, however, because as they’re doing this, they’re also reducing the carbon monoxide in the air and producing fresh oxygen for us to breathe.
3. Assist asthmatics
A lesser-known benefit to plants is that they can actually remove dust particles from the air we breathe, which asthmatics know can be triggering.
4. Improved sleep
“The mere presence of plants has a calming effect which helps to lower anxiety symptoms and stress levels,” says Gavin, adding:
“This in itself is likely to help people sleep more easily and perhaps to enjoy a better quality slumber.”
5. Keep cool
Plants in the form of green walls and roofs have other benefits to human health by their direct correlation to improving the environment and reducing our footprint.
“With less carbon dioxide floating around, we can help to slow climate change,” says Gavin.
6. Increased life expectancy
A recent Harvard study conducted over an eight-year period found that women specifically who surrounded themselves with lush greenery had significantly lower mortality rates than those who didn’t – 12% lower, to be exact.
7. Live happier
There’s been a myriad of studies in recent years suggesting that indoor plants and greenery around the home can improve a person’s mental health exponentially.
Another study in the Netherlands found that residents in areas where there was a greater amount of green space within a 1km radius had a lower prevalence rate for 15 of 24 diseases.
8. Stronger for longer
The age-old adage ‘healthy body, healthy mind’ rings true when it comes to maintaining your green space. “Many mental health problems are exacerbated by physical conditions and vice versa,” says Gavin.
9. Health properties when consumed or applied
“While some people are sceptical of the benefits of what we call medicinal herbs, many others swear by them,” Gavin tells.
“Since herbs have been used for such a long time it is difficult to deny their usefulness.
In fact, many synthetic medicines have been created to mimic compounds found in plants.
Read the full article here
Weekend video: 20 Psychology Tricks That Work On ANYONE!
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.