hotspotting

Rate cut increases spending power

Fri, 10 Oct 2008 11:24:00 +1000

Buyers’ purchasing power has been boosted up to 10% thanks to the Reserve Bank’s 1% interest rate cut, according to Raine and Horne Queensland CEO Stephen Sharry.

He expects first-home buyers to be one of the first groups to re-enter the market, especially in outer suburban areas where median house prices remain under $400,000.

Sharry says agents have already noticed the knock-on effect from the cut in the official rate from 7% to 6%. “There’s been an increase in pre-approval requests for financing and we expect a slight increase in sale volumes in certain sectors,” he says.

Repayments on the average mortgage of $300,000 will reduce $200 a month, giving the average investor greater purchasing power. They will be able to borrow between $30,000 to $60,000 extra, depending on income and marital status, allowing purchasers to buy in an upper price bracket, Sharry says.

But he warns the interest rate cuts will not trigger a huge increase in sales or property prices, particular given the confusion created by worldwide economic turmoil.

“However, it will help to stabilise the market and improve consumer sentiment,” he said. “When you combine its effect with the Federal Government first home saver initiative and the Queensland Government’s removal of stamp duty on purchases up to $500,000 for first home buyers, we may see some first-home buyers return to the market.”

Stockland releases first Townsville satellite city

Sat, 04 Oct 2008 13:15:04 +1000

Stockland has released the first stages of North Shore, a $1 billion master-planned community and the first of several satellite cities approved for development.

North Shore will eventually house 15,000 residents in a community including schools, parks, retail, commercial and entertainment hubs.

The development on 3.5km of Bohle River frontage is the first of several satellite cities, including a $1.6 billion Greater Ascot development on the Bohle Plains and a $1.5 billion Rocky Springs development south of Townsville. North Shore land prices begin at $152,000 with house-and-land packages ranging from $390,000 to $680,000.

Good unit sales boost Brisbane market

Sat, 04 Oct 2008 12:59:44 +1000

An injection of fresh stock in Brisbane’s inner-city apartment market has revived sluggish sales.

Following the slowest quarter in years, new projects recorded good sales in September including Multiplex Living’s Promenade Hamilton Apartments where 52 of the 156 available apartments were sold in three days.

Another Portside Wharf project offers apartments between $399,000 and $1.65 million. Interest has also been strong in the $800 million Trilogy Tower development in Queen Street and 80 people have paid deposits on The Residences at The Westin.

Investors optimistic in slow market

Thu, 25 Sep 2008 09:00:13 +1000

Six out of ten people see the current slow market as a time of opportunity, according to the latest online poll on the hotspotting.com.au website.

While a quarter of the 700 respondents to the poll are cautious and want “to stay on the sidelines until things become clearer”, 61% believe this is a good time to buy because there are bargains available.

Only 12% believe it’s a bad time to buy because the market is in decline.

The poll results show most investors recognise that the climate of subdued prices, falling interest rates and rising rents represents a buyers market, with opportunities to become well-positioned for the next up-cycle.

The full breakdown of poll responses was:

- A good time to buy: a buyers market with bargains available: 61%

- A time to stay on the sidelines until things become clearer: 27%

- A poor time to buy because the market is in decline: 12%

Adelaide rental market tightens further

Thu, 18 Sep 2008 19:53:42 +1000

The rental vacancy rate in metropolitan Adelaide fell again in August, reaching 1.23%. The Real Estate Institute of SA (REISA) says quality properties are renting quickly and investor interest has stepped up a notch.

“The vacancy rate has been steadily declining since June so the September result is also expected to be very tight,” the REISA says.

The Adelaide Hills region has again reported zero vacancies, while the western suburbs recorded a vacancy rate of 0.5%. The Adelaide sector with the highest vacancy rate was the eastern suburbs – at just 1.8%.

First-home buyers defy decline in home lending

Mon, 18 Aug 2008 12:07:31 +1000

While the number of loans approved for residential property continues to fall across Australia, lending to first-home buyers is on the rise.

Housing finance figures for May indicate an overall 8% fall in the number of loans to 52,006. However the market share of loans to first-home buyers increased from 16.9% in April to 17.3% in May.

Some analysts say that the increase in first-home buyer activity can be attributed to the increased opportunities created by investors fleeing the property market and the incentive to escape spiralling rents and low vacancy rates.

First-home buyers have also received encouragement in various State Budgets with additional grant money and reductions in stamp duty. South Australian first homebuyers can look forward to a $4,000 grant in addition to the Federal Government’s $7,000.

New constructed homes in Victoria are eligible for a $5,000 bonus plus the federal grant. And from 6 May the First Home Bonus was extended to offer an additional $3,000 to purchasers of newly-constructed homes in regional Victoria. The new $3,000 regional bonus is additional to the existing $12,000 available for newly-constructed homes valued under $500,000.

The overall fall in housing finance was most noticeable in Tasmania where a drop of 19% was recorded. Other states recorded falls of 9% in Victoria, 9% in Queensland, 8% in the ACT, 7% in NSW, 6% in Western Australia, 5% in South Australia and 5% in the Northern Territory.

Aussie miners secure Hyundai coal deal to 2019

Mon, 18 Aug 2008 11:54:24 +1000

South Korea’s Hyundai Steel has signed Australian mining giants Rio Tino and Wesfarmers in a strategy aimed at securing 90% of its coal needs.

The Rio Tinto deal secures at least one million tonnes of coking coal per year from April 2009 to March 2019.

Wesfarmers is signed to provide 500,000 tonnes per year from April 2009 to 2014.

Economy will be stronger than expected - forecaster

Wed, 30 Jul 2008 12:24:44 +1000

Economic forecaster Access Economics believes the 2008-09 financial year will be much stronger than forecast by the Federal Treasury and the Reserve Bank of Australia.

It says migration into Australia will rise to a record 200,000 this financial year, pulling the economy up with it.

Access Economics’ Business Outlook report predicts strong domestic demand, good employment growth and solid growth in output. It agrees with another economic forecaster, BIS Shrapnel, which has also argued that the general pessimism about the economy is overdone.

Access says that, apart from rising migration intakes, there is strong business investment, particularly from the mining sector, and indications that GDP growth will be considerably higher than the Treasury forecast for 2008-09.

Mining sector will need 87,000 more workers

Wed, 30 Jul 2008 11:46:51 +1000

An additional 87,000 workers will be needed by Australia’s mining industry over the next decade or so, according to the Minerals Council of Australia.

The council has published a report prepared by the National Institute of Labour Studies on the industry’s workforce outlook until 2020.

The mining sector currently employs 128,000 workers, but this is expected to rise 68% to 215,000 within 12 years. Western Australia alone will need 50,000 workers.

Most of the new jobs are expected to be for trades people and semi-skilled workers. The Minerals Council says the sector’s labour market is already running at capacity and the extra demand will worsen the “chronic” skills shortage.

The mining sector has been a key factor in generating real estate hotspots in recent years. The hotspotting.com.au tips for future out-performers are contained in the Boom Towns Hotspots report.

Developer named for new Geraldton port

Wed, 30 Jul 2008 11:35:42 +1000

The Western Australia State Government has named Oakajee Port and Rail Pty Ltd as the preferred developer of the $2 billion Oakajee Port in the state’s Mid West region.

The company is a joint venture between Murchison Metals and Mitsubishi Corporation, which won the port development rights ahead of Yilgarn Infrastructure, an entity backed by Midwest Corporation.

The port and associated rail links will be built 20km north of Geraldton, a WA regional centre which features in the Boom Towns Hotspots report on hotspotting.com.au.

Premier Alan Carpenter says the Government will now negotiate with Oakajee Port and Rail to achieve a binding legal commitment, with the project feasibility study scheduled for completion by mid-2009. It’s hoped the new port will be operational by 2012.

No Go Sunshine Coast hits landlords with rates hike

Tue, 29 Jul 2008 19:39:40 +1000

Hotspotting’s inclusion of the Sunshine Coast in its No Go Zones report earlier this year raised eyebrows among some investors and outraged locals. But the introduction of higher rates for investment properties on the Sunshine Coast provides yet another reason to think twice before buying an investment property there.

A report in the Sunshine Coast Daily says the newly-formed Sunshine Coast Regional Council is facing a fiscal crisis and will introduce separate rates categories for homes (principal places of residence) and investment properties. It’s estimated the additional loading could amount to a 20% hike for landlords.

Mayor Bob Abbot is unapologetic about the new system. He says: “Investment properties are businesses for some people and why should they run a business without paying equivalent rates to other businesses?”

There are concerns that the area’s rental shortage will be worsened as landlords pass on the additional expense to tenants.

The Sunshine Coast Daily, however, suggests some investors will choose to sell up rather than absorb the additional expense. Investor Alan Chapman says he will sell his four rental properties when the leases run out in September.

“The attitude of the local authority to affordable homes is just a platitude,” Chapman says. “Property owners already pay enormous amounts to maintain their investments.”

Record price for Magnetic Island home site

Tue, 22 Jul 2008 09:47:44 +1000

A home site on Magnetic Island has sold for a record $1.3 million. Lot 12 at Nobby’s Headland sold to a Melbourne buyer, beating the $1.2 million paid previously in the same development.

The $1.3 million price tag is highest ever paid for a single residential block in the Townsville market. The Townsville mainland record is $1.25 million for 414 square metres at Breakwater Quays.

Magnetic Island, a short ferry ride off Townsville, features in our Queensland Hotspots report as a market which is emerging strongly with genuine “blue sky” potential.

Adelaide vacancies remain around 1.7%

Tue, 22 Jul 2008 09:41:31 +1000

Adelaide residential vacancies continue to hover around 1.7%. The vacancy factor in June was virtually unchanged from May.

The Real Estate Institute of South Australia says the median weekly rent for Adelaide houses is now $270, up from $250 a year ago. Typical unit rents have risen from $195 to $225 per week over the past 12 months.

The tightest rental market is the Adelaide Hills which reports zero vacancies, a common event for the Hills property market. The shortage of rental accommodation is one of the reasons why Mt Barker features regularly in our South Australia Hotspots report.

No Go Zone Kalgoorlie drops 5%

Tue, 22 Jul 2008 09:36:53 +1000

The Western Australia mining town of Kalgoorlie has confirmed its rating as one of our No Go Zones. House prices dropped 5% in the June Quarter, according to figures from the Real Estate Institute of Western Australia.

Local agents report buyers are cautious because of high interest rates and petrol prices, but we have rated Kalgoorlie a No Go Zone for property investors because its market has peaked, its rental returns are no longer attractive and the town has serious environmental and social problems.

Even with the fall in values, Kalgoorlie still has a median house price around $330,000, which means its previous appeal as a boom town with affordable prices and high yields has dissipated somewhat.

Adelaide prices hold firm, says institute

Mon, 14 Jul 2008 14:44:07 +1000

The median house price for Adelaide was unchanged in the June quarter, stabilising at $365,000. The Real Estate Institute of South Australia says the city’s median was 16% higher than a year earlier but stagnated over the three-month period.

The institute says the number of house sales is down on a year earlier, which was expected after interest rate rises in February and March.

The median unit price rose 1.3% in the June quarter to reach $335,000 (17% higher than a year earlier).

The REISA says the good news for Adelaide is that its prices have not gone backwards, unlike other major cities. “Many cities fluctuate to large extremes but Adelaide tends to be more steady and reliable,” it says.

Interest rates unchanged for July

Tue, 01 Jul 2008 16:32:58 +1000

The Reserve Bank today decided to leave official interest rates on hold for another month. The Official Cash Rate therefore continues at 7.25%.

The RBA increased interest rates four times during the 2007-08 financial year, leaving Australia with the highest rates in 12 years.

The next Reserve Bank meeting is on 5 August.

Construction industry wage breakout set to continue

Tue, 24 Jun 2008 13:15:17 +1000

The 10-15% wage rises across the property & construction sector over the past year are set to repeat in the next 12 months. According to a report by Hudson Property & Construction, construction recruitment specialists, this is due to a skills shortage and the demands of several billion-dollar infrastructure projects across Australia.

A Hudson spokesman says he “wouldn’t be surprised to see salaries rise again” due to an unrelenting demand for skilled workers.

Property valuers are particularly in demand with development directors currently earning between $250,000 and $350,000 in Victoria.

While wage restraint remains high on the government’s economy watch, evidence indicates the retail sector is also experiencing significant wage growth with 11% of Australian Retailers Association members facing an increased wages bill.

Apart from the commercial, construction and engineering sectors, however, wage growth remains more in line with the current inflation rate of 4.2%. This differs from the 1970s when wage increases in the property and construction sectors leaked significantly into the wider economy.

One in three first-home buyers opt for investment

Mon, 16 Jun 2008 21:38:59 +1000

One-third of first-home buyers choose to forego the $7,000 first home buyers grant to rent out their first home as an investment.

Raine & Horne Real CEO Angus Raine says: “Savvy buyers are recognising that the long-term tax benefits of an investment property while living with mum and dad can outweigh the one-off lump sum benefit of the First Home Owners Grant.”

While wannabe empty nesters might not agree with the benefits of this strategy, the rental crisis combined with low housing affordability has forced young home-buyers to think more creatively about how to get a foothold in the market.

The statistics provided by Raine & Horne mirror recent figures that indicate one third of 18–29 year olds still live in the family home with their parents. The casualisation of the workforce and employment instability, along with higher costs of housing and education have contributed to a generation that is not ready or willing to go it alone financially.

Hervey Bay continues to deliver steady growth

Mon, 16 Jun 2008 21:38:17 +1000

Figures released recently by PRDnationwide Research indicate that Hervey Bay continues to deliver solid growth in house and land sales, with unit sales steady for the second consecutive quarter.

The iconic Queensland beach community, about three and a half hours drive north from Brisbane, is famous for whale watching and as the gateway to World Heritage listed Fraser Island. The area’s established infrastructure, recent airport upgrade and spate of recent developments totalling many hundreds of millions of dollars earmark it as a hotspot for future growth.

While the number of transactions in all categories fell slightly over previous quarters, the median price for houses and land increased. 44% of house sales achieved between $300,000 and $400,000, while the highest price was $1.6 million for a house on a 1,619m² Esplanade block in Scarness.

PRDnationwide research says steady prices for units indicate an established market that’s operating at true value and not in a speculative bubble. 41% of sales achieved between $200,000 and $300,000, with the highest price being $1.65 million for a unit in the Pier complex.

Land prices continued to rise, despite a drop in the number of sales. PRDnationwide research says this could indicate an imbalance in the supply and demand for land in the area. 73% of all transactions sold for between $100,000 and $200,000.

NSW outlines $140 billion infrastructure blitz

Thu, 12 Jun 2008 15:19:54 +1000

The NSW Government has announced plans for “the largest capital investment program in Australia’s history” – a $140 billion infrastructure overhaul designed to cope with the 600,000 new arrivals expected in the state by 2018.

With 70% of growth expected to take place in Sydney and the central coast, it’s likely 11,000ha in the city’s west will be released for development and infrastructure needs.

Treasurer Michael Costa says the plans include $12 billion for the North West Metro rail system, $1.9 billion for a desalination plant and $3.9 billion to upgrade the Pacific Highway - along with 15 new hospitals, 51 schools, 27 TAFEs and 17 police stations.

The Treasurer has also earmarked Sydney’s M4 East motorway extension and a western metro rail service linking the city and Parramatta as high priorities but has said he hopes commonwealth funding will see these projects get off the ground.

Also not included in the $140billion strategy are the cost implications of the government’s sale of state electricity assets. Should the sale go ahead, the government will have an additional $10billion in its coffers - if not, it will have to come up with an additional $15 billion to spend on a new baseload generator.

Costa says the implications of the sale are significant, adding: “If we weren’t to go down that path, certainly something would have to give.”