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Australian homes are more affordable than 5 years ago, due to falling property values and mortgage interest rates rates

Is now a good time to buy a home? Some say so. The RBA say that a typical home worth a little over four times the average household's annual after-tax income This is down from almost six times, just five years ago.

Strong growth in incomes over the last three months, [despite rising unemployment levels] and a period of more sluggish median house price growth are working in the interests of first time home buyers.

But housing still remains expensive by historic standards. In the 1980s, it took just three times the average annual disposable income to afford a median priced home.

Australia

remains one of the least affordable countries in the world. In

Canada

the multiple is less than four. In the

United States

it has remained at about three times annual disposable income for the past two decades and precipitous house price falls in some areas of the

US

has reduced this even further.

The governor of the Reserve Bank, Glenn Stevens, said yesterday that the gradual improvement in affordability suggested Australian house prices were not heading for the same large price falls witnessed in other countries.

"In

Australia

's case, the ratio of the median dwelling price to average household income has declined quite noticeably since 2003, without a very large absolute decline in housing prices.

"This is evidence for at least the possibility that these adjustments can take place over reasonably lengthy periods and without being terribly disruptive to the economy."

Also working in favour of prospective home buyers has been the drop in mortgage interest rates to their lowest since the 1960s. Mr Stevens said this had already delivered a significant boost to household spending power. "I don't have much doubt that certainly for the household sector, this is an expansionary setting of policy."

Mr Stevens has also held open the possibility of further small interest rate cuts if needed to boost consumer confidence.

Thursday, 21 May 2009 in Australian Mortgage Articles, Australian Mortgage News, First time home buyers, Housing Market, Real estate news | Permalink | Comments (0) | TrackBack (0)

New homes sales plunge 12pc from last year

Sales in new homes eased in June and fell sharply during the last financial year, a survey shows.

Units [apartments] recorded the biggest sales drop in the month.

A Housing Industry Association (HIA) survey of 100 major residential builders and developers found new home sales slipped by 0.8 per cent in June to 8321 dwellings.

Multi-unit sales were down 20.1 per cent in June after posting rises in the previous two months.

But private new detached house sales went up by 2.3 per cent following a 6.9 per cent fall in May.

Overall, new home sales fell 12 per cent during the 2006/07 financial year.

HIA chief economist Harley Dale said record low housing affordability was hurting the home building industry.

"New home sales is the first financial year update for new housing in Australia and shows a considerable weakening in conditions over 2006/07," Mr Dale said.

"This update is a telling indictment of the impact record low housing affordability is having on the home building industry.

"Addressing the shortfall in supply is critical to alleviating the housing affordability crisis."

Mr Dale said federal government action was needed to help improve low housing affordability.
Source: AAP

Monday, 30 July 2007 in Housing Market, Real estate news | Permalink | Comments (0) | TrackBack (0)

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

Wednesday, 25 July 2007 in Investment Property, Real estate news | Permalink | Comments (0) | TrackBack (0)

Mortgage Brokers lending skills blamed for mortgage home loan default rise.

[As the Howard Government tries to play catch up with the Labor opposition, they are looking for people to blame [don't they have mirrors in Canberra?] and have turned on the innovative mortgage brokers and non bank mortgage funders, blaming them as the source of Australia's Housing market meltdown and debt crisis, instead of the fact that Liberal's work choices scheme is preventing Australians from earning a decent wage so that they could pay their mortgage when due.]

A Howard Government inquiry into mortgage finance may [wait for it] recommend first time home buyers be required to put up a deposit of 20 per cent. [That would spell the end of the first home buyer in Australia. 20 percent deposit hasn't been the norm since mortgage insurance cam into the market thirty years ago, when homes and land on a quarter acre could be bought for $20,000 to $30,000 dollars. If people could not save $6,000 for a deposit then, how can they save $100,000 for a deposit and all the costs that Governments suck out of home buyers and developers now?]

The parliamentary economics committee has called the snap inquiry into home lending as the number of people defaulting on mortgages continues to rise.

Personal bankruptcies up 17 percent 

Despite low unemployment figures, economic growth and high consumer confidence, personal bankruptcies went up by 17 per cent in the 2006-07 financial year.

The chair of the committee, Bruce Baird, today said the inquiry would bring together banks, the Australian Securities and Investment Commission, the Reserve Bank of Australia (RBA), the banking regulator and consumer groups. [Not the 'villian' mortgage brokers and the non bank mortgage industry players.]

Discussions would focus on discovering the extent of the problem, the role of mortgage brokers and whether fierce competition between the banks was eroding prudent lending practices, Mr Baird said.

One outcome could be tighter controls on mortgage brokers, he said.

"Also some requirement there is adherence to a degree of equity, it's normally 20 per cent equity but if that's being eroded stricter controls can be brought in,'' Mr Baird said.

He said the inquiry would also consider whether the root of the problem lay with consumer attitudes.

The McMansion dream

"There's also the question of whether we have just normal greed coming in, where people want their McMansions.''

The RBA had been concerned for some time about the ease of securing home loan credit and the abandonment of the normal prudential requirement of 20 per cent equity, he said.

"We are seeing that eroded and we are seeing more of a 100 per cent of the value of a house being borrowed,'' he said.

Falling house prices in areas such as western Sydney left many homeowners with negative equity, saddling them with a debt if they were forced to sell due to financial shocks such as job loss or pregnancy, he said.

Debt explosion

The financial divide is growing between those struggling under debts and those with the resources to pay off their home, according to research by the Melbourne Institute.

Rising interest rates and the drought have led to an increase - from 10.8 per cent to 15.1 per cent over the past year - in the number of people running into debt or drawing on their savings.

The Melbourne Institute research also shows that the number of people devoting more than half their salary to debt has increased from 5.9 to 7.5 per cent over the past year.

Rural stress

Financial stress is greatest in rural districts, where the number of people running into debt or drawing on savings has soared from 9.9 to 20.8 per cent.

But there has also been an increase in metropolitan areas. The number of people succeeding in saving some of their income in metropolitan districts has dropped from 57.7 per cent to 50.7 per cent in the past year.

The study confirms Reserve Bank research showing that people with the highest debt service burdens are generally those with higher incomes.

More than 80 per cent of people earning less than $40,000 a year spend less than 10 per cent of their income on debt. Most are either in the rental market or, in the case of age pensioners, have a fully paid-off home.

The survey nevertheless found that 28.8 per cent of the people who spend more than half their income on debt service earn $50,000 or less.

Source: The Australian

[PS Someone needs to tell these Liberal and National Party pricks that mortgage brokers don't make decisions on who is accepted or declined a mortgage. It is the bank, the non bank lender and or the mortgage insurer who decide that. All the mortgage broker does is take applications and put them to lenders. How these Howard Govenment dunderheads believe that they can change mortgage defaults by blaming someone who has no control over the decision, explains why the Liberals are lagging in the polls. They don't know the problem, so how can they figure a solution?]

Thursday, 19 July 2007 in Australian Mortgage Articles, Australian Mortgage News, First time home buyers, Housing Market, Mortgage Articles, Mortgage News, Real estate news, Subprime lending | Permalink | Comments (0) | TrackBack (0)

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

Sunday, 15 July 2007 in Housing Market, Investment Property, Mortgage Articles, Real estate news, Subprime lending | Permalink | Comments (0) | TrackBack (0)

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

Monday, 09 July 2007 in First time home buyers, Housing Market, Infrastructure, Investment Property, Real estate news | Permalink | Comments (0) | TrackBack (0)

House prices out of reach for first time home buyers

Debate is raging in the Queensland community about housing affordability and the official statistics show first-home buyers today are faced with fewer choices than their parents.

The Queensland State Government has offered some mortgage duty relief to all homebuyers, not just first time home buyers. This is after and inline with other Australian State Government lowering or abolishing of State mortgage stamp duty, whilst retaining the transfer duty.

In a bid to counter the affordability crisis for all home buyers, mortgage duty will also be phased out over two years and land tax thresholds changed to reduce the cost of buying properties.

First time home buyers are already exempt from duty on mortgages up to $250,000, and are taxed at a lower rate on larger amounts, so the savings are minimal.

Michael Matusik, property market analyst, says Queensland homebuyers are paying on average 35 per cent of income to service a mortgage, compared to 40 per cent in NSW.

Another measure of housing cost is to plot the median house price as a multiple of median incomes.

Over the past 50 years, Mr Matusik says people spent three to four times their median household income on buying a house, now it was 6.2 times in Brisbane.

Sydney at present has a median multiple of 8.5 times, Perth 8, Hobart 7, and Melbourne and Adelaide 6.5.

"This began to accelerate rapidly over the last decade and especially over the last five years," Mr Matusik says.

"All of the Australian cities above rank in the top 25 most expensive places to live in the world. Sydney is now ranked the seventh least affordable city in the world, beaten by six American cities including California, San Diego, San Francisco and Honolulu."

Mr Matusik says there is simply not enough developable land within urban areas and more needs to be released.

"We believe that land supply is a key issue with regard to affordability and it is no accident that the top 25 most expensive places in the world have little or no land left to develop, however the public does not think so.

"The second solution involves improving development assessment that is clearing backlogs and fast-tracking standard applications."

Mr Matusik says Australia's tax system also needs a complete overhaul.

"Contrary to popular opinion, there are not enough residential investors, and owner-residents are more often than not (and increasingly so) speculators.

"The average time between sales of an owner-residence is approaching six years and was over 15 years just a generation ago.

"More than half of the owner-residences resold over the last five years had undergone a substantial renovation (meaning more than $50,000 was spent on the property) between sales."

The average new home loan in Queensland broke through the $300,000 mark in May, up from $288,000 in April, according to AFG, Australia's largest mortgage broker.

"The $300k Club now comprises Queensland as well as NSW, where the average new mortgage is $382,000, and Western Australia ($359,000)," Mark Hewitt, AFG general manager of sales, says.

The AFG Mortgage Index also shows fixed-interest home loans have fallen from a peak of popularity in November 2006, when they represented a quarter of all new home loans, to 20.3 per cent in May. Property buyers may be less concerned about rate hikes than they have been in the past.

Wizard's Tomorrow's First Home Buyers series reveals the number of Australians intending to purchase their first home in the next 12 months jumped six per cent to 523,000 in the March quarter.

Wizard chairman Mark Bouris says the growth was largely driven by first-home buyers with higher household incomes keen to capitalise on their financial gain through property investment.

"We are seeing the emergence of a new breed of higher-income first-home buyer with their sights set firmly on the property market as a way to build their wealth," Mr Bouris says.
Source: Courier Mail, Queensland Australia

Saturday, 07 July 2007 in First time home buyers, Housing Market, Real estate news | Permalink | Comments (0) | TrackBack (0)

Sydney's suburbs ramp housing market sales demand

As some Sydney homeowners and home buyers wait out the property market downturn, Blacktown is leading a confident charge with a massive growth of home sales this year.

Sydney suburbs housing sales figures released yesterday show residential home sales have fallen more than 30 per cent in areas such as Penrith and Ashfield and 6.8 per cent across the state.

Mosman and Manly house sales have also been hit hard, with house sales dropping off by up to 26 per cent. Sydney prices dipped again by 2 per cent in the past three months.

Experts say homeowners in those areas are reluctant to sell their homes until they see a price rise trend, but Blacktown and Sutherland appear to have bucked the trend with house sales growing sharply.

The Real Estate Institute of NSW figures showed sales had skyrocketed 140 per cent in the Blacktown area, which stretches from Kellyville Ridge right through to Mt Druitt.

In the Sutherland Shire, which covers suburbs including Caringbah, Menai and Cronulla, house sales have increased 82 per cent this year.

While Michael McNamara at Australian Property Monitors said the figures covered only three months and could change, they were a sign of confidence returning to the property market.

"Those areas have probably benefited from a little bit more confidence, interest rates (are on hold), we know the market did pick up quite strongly in terms of buyer confidence," he said.

The institute figures also gave a snapshot of the top five most affordable Sydney suburbs. Campbelltown topped the list with an average house price of $286,000 followed by Penrith, Hawkesbury and Fairfield.

Woollahra, Manly and Waverley have relegated Hunters Hill to fifth on the list of the top five most expensive suburbs. Experts said buyers were choosing "lifestyle suburbs".

Mosman topped the list with an average house price of $1.68million followed by Woollahra with a median price of $1.56 million.

Real Estate Institute president Christine Castle said overall house sales were down across the state.

"People are reluctant to sell, perhaps because the housing market is flat," she said.

Wednesday, 23 May 2007 in Housing Market, Real estate news | Permalink | Comments (0) | TrackBack (0)

Americans go for bigger homes

Home sizes in the US are getting bigger when measured by the number of bedrooms according to the latest data from the government's Census Bureau.

According to the bureau's 2005 American Community Survey released, one in five occupied homes, or 20 per cent, had four or more bedrooms, compared with 17.7 per cent in 2002. While single-family homes were the most common type, accounting for 62.7 per cent of housing, mobile homes were the third most common.

Regionally, more than half of the nation's mobile homes were found in the South. In terms of size, Utah had the most homes with four or more bedrooms, about 39 per cent. Maryland ranked second at 28 per cent, according to the Census data.

Wednesday, 23 May 2007 in Housing Market, Real estate news | Permalink | Comments (0) | TrackBack (0)

Building a house in Manhatten, means finding an empty lot for sale

Finding a Vacant Lot to Buy. At first, that didn’t occur to Keith Strand. After all, who builds a house in Manhattan?

But when he could find no affordable houses to renovate, he did what an architect would do. He abandoned the hunt for a house and instead went looking for a plot of land to build on.

Mr. Strand, 53, who grew up in Colorado Springs, first came to New York in the 1970s with the group Volunteers in Service to America to work on Bronx housing projects. He met his wife, Cydney, 58, who is from St. Louis, through her former husband, who was also a Vista volunteer.

When the Strands married in 1991, they rented in Fort Greene, Brooklyn. They also owned a two-acre wooded plot in Dover, Vt., where they spent four months building an environmentally friendly summer cabin.

They could afford to buy a home only if they received rental income, so they bought a two-family town house in Clinton Hill for $125,000. They set out to renovate the entire place, never quite finishing, and giving their tenants a break on the rent for tolerating endless construction.

The Strands found themselves property rich and cash poor. “We had this huge asset but not much money,” said Mr. Strand, whose architectural practice specializes in renovations, conversions and office interiors. He said the house had “gone up so much in value” that they planned to sell it and move to Brattleboro, Vt., near their cabin, where they garden and play golf. But when negotiations for a house there fell through, they changed their minds and decided to stay in New York. This time, they looked for a way station while they concentrated on finding another house, preferably in Manhattan, where neither had lived.

“I am always ready for change,” said Ms. Strand, an educator for Lighthouse International, which helps those with impaired vision. “Staying in one place is hard for me.”

In 2002, they sold the Clinton Hill home for $740,000 and bought a two-bedroom wreck in a condominium building in the Mount Morris Park Historic District in Harlem for $170,000. Mr. Strand spent six weeks making it habitable.

It wasn’t easy to downsize. They immediately began hunting for a bigger home in the neighborhood, which they loved, with its wide streets and welcoming neighbors.

“Keith kept saying, ‘Don’t worry, it’s just temporary,’ and I am watching property values skyrocket, saying, ‘How is it temporary?’ ” Ms. Strand said. “They were beyond our price already. I was sure we just missed the boat.”

At that point, $500,000 to $600,000 bought a 15-foot-wide brownstone shell, Mr. Strand said. He calculated that restoring one would cost more than buying a house in livable shape.

In his old neighborhood, he had created a two-story house from a tire-repair garage for clients who had bought the garage for $200,000. He figured he could buy a similar structure in Harlem.

“There are a fair number of one-story carriage houses, and I basically walked around looking in the neighborhood for those types of buildings,” he said. Many were occupied by small churches. He found only one for sale, a little brick box with a missing roof on West 123rd Street.

A man outside was filling a Dumpster. Mr. Strand had assumed a recent buyer was cleaning up. But a for-sale sign was soon posted. The carriage house was attached to the brownstone next door. The owner, seeking $1.6 million, refused to split the properties.

What he needed, Mr. Strand realized, was a vacant lot. Starting from scratch would let him build just what he wanted, in an environmentally sensitive way.

Vacant lots were advertised as “investment properties.” Fifteen-foot-wide lots, many filled with trash or weeds, were selling for $150,000 to $275,000. Some lots, at 50 by 100 feet, were too large. Others were too shallow.

A plot on Manhattan Avenue near 123rd Street had possibilities, but a large tree in front interfered with plans for a one-car garage. Regulations from the Department of Parks and Recreation strictly govern the removal of street trees.

His wife disliked some of the plots. “Keith does all the legwork and then drags me out at the end to say, ‘What do you think?’ ” she said. “My input is all touchy-feely. I don’t do any of the rational stuff.”

Ms. Strand had only one hesitation when it came to a 15-by-100-foot lot on the same block as the carriage house, available for $159,000. How could a house possibly fit into that skinny space? But Mr. Strand noted that their living room was 14 by 16 feet. He knew he could work with the size. The Strands first offered $120,000, before buying the lot for $150,000 in June 2003. “I was, like, who else would want this?” Mr. Strand said.

They found out a few months later. There were two vacant lots, each 15 feet wide, adjacent to theirs. The owner of those found investors who wished to combine all three lots and build a larger building on the 45-foot-wide parcel. Mr. Strand was willing to sell for $450,000 if he could find an alternate lot to build on. But there were none, even at that price. “I did scour the neighborhood and noted any vacant lots that I saw,” he said. “A lot were attached to buildings in some way, either for parking or easements.”

Finding a Vacant Lot to Buy. One possibility was a lot on West 124th Street that is informally used as overflow from an adjacent Green Thumb community garden. “No way I am going to be the guy who goes in” and impinges on a Green Thumb site, he said.

Ms. Strand didn’t want to sell at all. “For what?” she asked. “To buy another property we didn’t like as much to make the developers happy? I didn’t like those other properties once I got used to this one. I had already adopted it as my block.”

So they went ahead with the construction. It took nearly two years before their home was habitable. Including the land, they spent a total of $900,000. They sold the condominium for $486,000 and relocated two blocks away last fall. For several weeks they had no gas or hot water, and showered at the gym or at friends’ homes.

“Cyd made me promise she would never live in a construction site again,” Mr. Strand said. “I seem to be unable to keep that promise.”

Some old-timers on the block remember the three identical brownstones that once stood on the parcels. The Strands assume the house that was on their lot had burned down. The remnants of the stone foundation are incorporated into their concrete foundation.

Now, their 15-by-70-foot three-story house has radiant heat throughout, a garden in back, and a gabled roof with solar panels that produce about 20 percent of the house’s electricity. Mr. Strand’s office is on the ground floor, as is a garage just big enough for their car.

Leaving from Harlem, the drive to Vermont is 45 minutes shorter.

“When you live with an architect, the house is never finished,” Ms. Strand said. They have yet to panel the entry hall of their new house. The Harlem house proves that “a small-scale project can be conserving and beautiful at the same time,” Mr. Strand said.

Source: New York Times

Wednesday, 18 April 2007 in Housing Market, Real estate news, US Housing Market | Permalink | Comments (0) | TrackBack (0)

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