Mortgage Shopper

Investors in failed real estate and finance group Fincorp could have half their capital recovered by September

Investors in the failed property development company Fincorp should see some of their money back as early as September. A series of creditors' meetings have today approved the sale of $204 million worth of properties by the Fincorp administrators. The disposal of the assets will enable 7,000 secured note holders to receive an initial 50 cents in the dollar.

Source: ABC

Real estate investment and mortgage loan spruiker declared bankrupt over Tax bill

Former Queensland property marketing tsar Chris Bilborough has been declared bankrupt after a tussle with the Australian Taxation Office.

Mr Bilborough, 41, was a key figure in the Gold Coast property industry in the late 1990s – but had run-ins with regulators and politicians.

He has recently been linked to a property deal involving a company of former Test cricketer Craig McDermott.

He said he had been hit with a $1.2 million bill from an initial $350,000 tax assessment.

He said he offered a $500,000 compromise. "They rejected it," he said.

A federal court in May ruled against attempts to seek a review of the ATO's rejection of the compromise for a bill stemming from a 1997 tax assessment.

In August, the ATO rejected the compromise for reasons including a lack of information to support his claims of an inability to fully repay tax debts.

Mr Bilborough was a director of companies, including National Asset Planning Corporation and Markfair (trading as Investlend Australia), which were involved in property sales to interstate investors. Markfair offered financial advice.

He was named in Parliament several times since 1998, on one occasion accused of being behind "scams".

Fair Trading Minister Margaret Keech said last December her office had recovered $240,000 from Mr Bilborough.

Mr Bilborough yesterday pointed out one of his critics – former fair trading minister Merri Rose – had been jailed over blackmail but he would not answer queries about other politicians' comments.

He has fought some actions by regulators. He previously said he was "cleared of selling any overpriced properties" in a federal case.

In 2005, The Courier-Mail revealed his involvement in a firm promoting a planned Warwick estate.

The Courier-Mail on Saturday reported Markfair was named in a 2004 court action over the sale of a property from McDermott Projects (Nut Tree Grove) Pty Ltd, in which Mr McDermott was a director.

The documents contained allegations from the buyers' lawyers of unconscionable conduct, and that Markfair and/or marketeers Asset Management Group were agents and/or joint venture partners for McDermott Projects.

Mr McDermott said he was unaware of the case, or any link with Markfair or Asset Management Group. No defence was filed and the action was abandoned.
Source: Courier Mail

Easing credit standards are blamed for worsening housing and mortgage crisis

Mortgage lenders are approving home loans without inspecting or valueing real estate properties, signing up home buyers with no deposit [nothing down] and encouraging home buyers, and especially first time homebuyers to shoulder debts far beyond their means.

More than half of all standard mortgage applications are now done without an onsite inspection and lending competition is encouraging mortgage banks and other home finance institutions to extend loans quickly and cheaply, Fairfax reports today.

Banks are also urging home buyers and real estate property investors to take on mortgage debts which swallow up to half their income.

One-quarter of loans to people with bad or incomplete credit histories had been approved without on-site inspections, relying instead on a drive-by or statistical analysis of local sales data.

The average loan-to-value ratio of new home loans in NSW has risen from 51 per cent in 2003 to 75 per cent this year.

Australian Property Institute president Gregory Preston said home buyers were at risk.

"If they get caught out and are forced to sell the borrower is sort of out on a limb," Mr Preston said.
Source: AAP

Housing Market crisis has Rudd suggesting a tax credit system help lower lower rents so renters can save and become home buyers

Australia's housing market crisis has would-be Prime Minister Kevin Rudd today suggesting tax credits for housing investors as a way to ease the rental shortage of affordable rental accommodation

Australia's opposition Labor Party has suggested tax credits for those willing to invest in affordable rental housing accomodation.

The Federal Opposition Leader, Kevin Rudd, has suggested offering tax credits to residential real estate property investors who are willing to develop affordable rental housing. Mr Rudd says spiralling rents are making it hard for young people to save enough for a housing deposit. He says tax credits could help address a tight rental market. "The Commonwealth Government could establish a pool of tax credits for those who are proposing to invest in affordable rental accommodation," he said. "Once they've invested in affordable rental accommodation and offer cheaper prices for those renting that accommodation, they become eligible to apply for tax credits from the Australian Taxation Office."

Source: AAP

First time home buyers return to the housing market

First time home buyers have returned to the Australian housing market in droves.

Bank and non bank home loan data from the Bureau of Statistics shows that first-time buyers across Australia made up 18.2 per cent of the market in March. That was the highest level since April 2006, the month before the first of three interest rate increases. However, first-home buyers now make up a much smaller proportion of the market than in the late 1990s and early 2000s.

Home Loan size nearly doubles.

The average new loan approval for a first-home buyer in March was a record $231,600 — up $105,700 since the start of 2001 or almost double. Reflecting that increase, the share of first-time buyers has fallen from 24 per cent in 2001 — the year after the first-home buyers grant was introduced — to just 17.5 per cent last year. Figures for Victoria are similar to the national figures: the proportion of first-home buyers has dipped since the start of the decade but rose in March to make up 20.4 per cent of the market. Housing Industry Association chief economist Harley Dale said housing affordability would need to improve for the recovery in first-time buyers to be sustained. "We have seen before, however, that improvement in the first-home buyer segment of the market proves all too short-lived in the current climate of record low housing affordability." Across Australia, loans approved to all owner occupiers rose a seasonally adjusted 1.3 per cent in March to 63,335, the ABS data released yesterday shows. This was slightly below economists' forecasts. In Victoria there was a 0.4 per cent dip to 14,156 after four months of increases while in the subdued NSW market there was an increase in lending for the third straight month. Economists also pointed to a fall in lending to investors in March after a climb in recent months.

Property Investment Lending Up

In February the value of lending to investors reached its highest monthly level since November 2003. But in March the value of lending to investors on a seasonally adjusted basis fell 5 per cent from February to $6.3 billion. In trend terms, however, it was up slightly. "While housing-related finance to investment purposes fell, this is viewed as a mild correction following four consecutive months of solid increases," JPMorgan economist Jarrod Kerr said in a report. "Investors continue to underpin demand for housing-related financing as the recent uptrend in rents, coupled with a more moderate pace of house price appreciation, has generated an attractive gross rental yield." Mr Kerr expects increased home lending in the second half of the year, with the Reserve Bank tipped to keep interest rates on hold, and in a climate of rising wages and tight labour markets. Meanwhile an Australian Industry Group-Australian Constructors Association survey of leading builders has found that building activity in the engineering and non-residential sectors is set to moderate in the next two years but remain solid. The value of total construction work by the private sector is tipped to reach about $72 billion in 2008.

Source: Australian Bureau of Statistics

Price of land at near historic highs hits new home buyers.

The price of housing land nationwide had lowered slightly at the end of last year but still sits at historical highs and is likely to rise in most cities, according to a report.

Vacant lots in Perth, which posted blistering growth in value over the whole of 2006, are still the most expensive, above Sydney, according to research by the Housing Industry Association (HIA) prepared by Australian Property Monitors.

But growth in the value of Perth lots slowed in the last three months of 2006, while Sydney prices surged.

The research, released today, said the weighted average vacant lot price for Australia's largest five cities fell by 0.3 per cent to $183,873 in the three months to December 2006.

But the figure remains 7.7 per cent higher than in the corresponding quarter in 2005.

"Recent englobo land sales reveal that further price increases are likely in most cities,'' the report said.

Englobo means land that is suitable for residential development with significant sub-division potential.

Land prices in Sydney skyrocketed at the end of 2006, rising 11.7 per cent to $357,500 per vacant lot in the three months to December after remaining flat for the previous nine months.

Perth residential land prices jumped a staggering 122.7 per cent in the year to December 2006 to sit well above Sydney at $389,750. But growth slowed to 2.2 per cent in the last quarter of the year.

Prices in Melbourne rose 3.4 per cent in the quarter and 9.2 per cent over the year to $155,000 per vacant lot.

Places where the price of land has dropped included Brisbane, the rest of Queensland, Western Australia excluding Perth, Darwin and Hobart.

The number of lots sold across the nation over the December quarter fell to historic lows, the report said, down 30 per cent due to supply constraints and a lack of demand at higher price points.

While availability in Sydney had improved to be above the "sluggish'' level of demand, HIA said there was still a critical shortage of land in Sydney below $250,000.

"Perth's land supply remains in critical shortage, whilst Adelaide is in better shape,'' the report said.

HIA's executive director for NSW, Graham Wolfe, said the report's findings were clear evidence that land costs and charges were to blame for near record low housing affordability levels in Sydney's growth areas.

"Inevitably Sydney's rental squeeze will tighten and rental costs will continue to rise,'' Mr Wolfe said.

Mr Wolfe called on all three levels of government to put aside their differences to address housing affordability in Sydney.
Source: AAP

Property investment goes into orbit

Investment in residential property is back in favour as data shows record levels of investment during April 2007 as people bet on a stronger property market and capital gains in 2007.

The AFG Mortgage Index shows that last month 33.8 per cent of mortgages were sold to investors rather than owner occupiers in April – an increase on March’s all time high of 32.9 per cent and a significant increase on the figure of 28.3 per cent recorded 12 months ago.

Western Australia and Queensland continue to drive the housing property market for investors, but it is the growing resurgence in New South Wales, Victoria and South Australia which is  leading to the dream scenario of healthy, growing markets coast-to-coast.

Despite fears about the WA market coming off the boil, investment there continues at near record levels and the average mortgage size broke through the $350,000 barrier last month.

Positive property outlook

Mark Hewitt, General Manager of Sales and Operations said things were looking positive for the property market.

“It is seldom that we see the indicators for every state looking positive, but right now that’s exactly what’s happening," he said.

"The levelling off in interest rates is just what property markets on the east coast need to build up a momentum. Meanwhile the strength of the resources sector continues to support property markets in WA and Queensland."

"We’ve just been doing our internal business forecasts for the next year and AFG is very positive about the year ahead.”

Mortgage size growing
The average home loan nationally now stands at $307,000, with the highest average loans in NSW ($362,000) and WA ($352,000) followed by Queensland (($288,000), Victoria ($277,000) and South Australia ($231,000).

Paradoxically, loan-valuation-ratios (LVRs), which are the value of a loan expressed as a percentage of the value of a property, are lowest in WA (55.4 per cent) and NSW (67.7 per cent), where the cost of housing is highest. Victoria has the highest LVR in the country of 73.0 per cent.
Source:NEWS.com.au

New home sales rise a welcome trend despite mortgage interest rate concerns

The number of new home sales rose for a third straight month in February led by a recovery in New South Wales as new home buyers took advantage of stable interest rates.

New home sales rose 2.9 per cent from a month earlier to 8193 dwellings, according to data from the Housing Industry Association (HIA) today.

New home sales in NSW rose 16.9 per cent from the month earlier period, HIA said.

HIA executive director Simon Tennent warned though that with affordability still low, further interest rate rises may stymie the nascent recovery.

"Affordability looms large and there is simply no room to move after saving a deposit and covering the upfront costs,'' Mr Tennent said.

Sales of private detached houses rose by 3.9 per cent, while sales of units fell by 4.2 per cent, the HIA said.

Western Australia had the second-fastest rise in sales volume with an increase of 11.2 per cent, while sales volumes fell in Queensland by 3.4 per cent.

Despite the three months of gains, overall sales volumes last month were down 5.2 per cent compared with the year earlier period, after the November interest rate rise.

While sales in NSW were up 5.6 per cent during the three months to February compared with the three months to November, volumes were down 21.4 per cent compared with the three months to February 2006.

"Buyers are still acutely aware that they are not out of the woods yet, following the most recent interest rate pressure,'' Mr Tennent said.

Source: AAP

Property transfer stamp duty is not the home buyers primary concern says Queensland Government

The federal Government should keep interest rates low to improve housing affordability instead of asking the states to abolish stamp duty, says the Queensland Government.

Federal Treasurer Peter Costello wants Australia's States and Territories to abolish stamp duty on residential property transactions.

He said the states had enjoyed a massive windfall from the introduction of the GST and it was time to do away with property transfer stamp duty on residential real estate.

Queensland Acting Premier and Treasurer Anna Bligh said that was not the solution to housing affordability, accusing Mr Costello of trying to divert attention from scandals engulfing the Howard Government.

"The federal Treasurer should know that the most important ingredient in housing affordability is the price of money - that is the interest rates on the mortgages, particularly of first home buyers," Ms Bligh said.

"I would encourage Peter Costello to go and look in his own backyard at mortgage interest rates and be doing everything he can to ensure that the Reserve Bank can keep interest rates low."

Ms Bligh said in Queensland, a first home buyer purchasing a property at the average cost of $320,000 paid no stamp duty.

"So any suggestion that first home buyers are finding difficulty in the market because of stamp duty in Queensland just doesn't hold up," she said.

Meanwhile the Property Council of Australia has repeated its calls for the abolition of stamp duty on new residential properties to stimulate growth in the construction industry.

The council said new Australian Bureau of Statistics (ABS) figures showed the number of new housing starts in NSW had fallen to record lows.

There were 25 per cent fewer houses started in NSW in 2006 compared to 10 years earlier, while Victoria has seen a 63 per cent increase, Queensland a 20 per cent increase and WA more than an 80 per cent increase.

The council said abolishing the duty would stimulate housing construction, drive economic growth and boost housing supply.

"NSW is experiencing record low levels of housing construction, and this is dragging our economy down," Property Council NSW executive director Ken Morrison said.

"Today's ABS figures reveal NSW urgently needs a housing industry stimulus to kick-start the state's flat-lining economy."

Source: AAP

Home loan mortgage rates likely to remain steady

Economic analysts say the Reserve Bank of Australia is unlikely to raise interest rates when it meets this morning. This is good news for homeowners in Australia's mortgage belts, who are doing it tough with three rate rises last years and property values in many key markets, especially many Sydney suburbs actually falling in value.

The Reserve Bank of Australia (RBA) increased official interest rates, which automatically translates to mortgage rate increases, three times last year in a bid to rein in inflation.

The official cash rate currently stands at 6.25 per cent.

The central bank has already met once this year and decided to keep interest rates on hold.

TD Securities chief strategist Stephen Koukoulas says while inflation is still higher than the Reserve Bank would like, it is unlikely to raise rates.

"The RBA is waiting to see if the rate hikes of 2006 cool the economy down," Mr Koukoulas said.

"It's too early to be sure that that's the case but they can afford to wait another month."

He says the conflicting news of too high inflation and low economic activity almost guarantees a decision to hold rates.

The RBA will announce its decision tomorrow morning.

Source: Australian Broadcasting Commission