The residential home rental market in Canberra Australia is now almost impossible to break in to and it's going to get even harder as rents climb, the Real Estate Institute of Australia (REIA) says.New REIA market figures show Canberra has the tightest vacancy rate in Australia, with just 1.1 per cent of properties vacant currently.
Across Australia, vacancy rates are extremely low, in Sydney the rate is 1.7 per cent, in Adelaide 1.5 per cent and the highest rate is in Perth at 2.1 per cent.
REIA ACT President Peter Blackshaw said he has never seen such a shortage of accommodation in the Australian Capital Territory.
"At the moment it's very, very tight - it's certainly the tightest that I've known it and I've lived in Canberra for nearly 20 years and the really alarming thing is it's going to get a lot worse,'' Mr Blackshaw told ABC radio today.
The market is so tight, he said, because there are not enough people investing in residential property, instead they are putting their money into the stock market or other investments.
"The local government takes such a big proportion of the rent through land tax and rates that (residential property) just doesn't make sense as an investment,'' he said.
One way to fix the situation would be to abolish land tax, he said, or at least start cutting it back. If the Government does not start cutting back land tax, Mr Blackshaw said there was a risk some really serious social problems would arise.
"The people who are going to be hurt in this situation are the low income earners because they're going to be outbid by people coming in from outside of Canberra.''
And the difficulty in finding a rental property will not be the only problem for Canberrans, Mr Blackshaw also said rents are starting to rise significantly.
The next time a lease expires or a property becomes vacant, he said, landlords will be able to demand a significant increase on rent, in some instances more than ten per cent.
ACT Chief Minister John Stanhope said the real reason for the low vacancy rate in the ACT is that the economy is so strong.
"The fact is, we are now dealing with the pressures of a busting, booming economy and I think it's fantastic,'' Mr Stanhope told ABC radio.
"I must say I find it ironic that here we are complaining about the incidence that we have this enormously strong economy.''
Mr Stanhope said he was investigating the possibility of reducing land tax and was awaiting advice from both the Skills Commission and the Affordable Housing Taskforce.
Source: AAP
Monday, December 18, 2006
Sunday, December 10, 2006
Mortgage approvals back slide
Demandfor mortgages was subdued in October, data released today showed, as rising interest rates and a patchy housing market curbed enthusiasm from consumers to borrow.
Housing finance approvals for owner occupied housing fell for a second month in a row, easing 0.1 per cent in October, seasonally adjusted.
Market economists had expected a flat result.
The data takes into the account the May and August interest rate rises, but precedes the November rate hike.
source: AAP
Housing finance approvals for owner occupied housing fell for a second month in a row, easing 0.1 per cent in October, seasonally adjusted.
Market economists had expected a flat result.
The data takes into the account the May and August interest rate rises, but precedes the November rate hike.
source: AAP
Property gives the best returns overall
Investors should be devoting at least 20 per cent of their investment portfolio to direct property assets in the retail, office and industrial sectors, a study shows.
The study commissioned by the Australian Direct Property Investment Association (ADPIA) found increasing the direct, or commercial, property component in an investment portfolio significantly reduced risk and the chance of investment loss.
The research looked at the performance of 11 different asset classes over 10 and 20 year periods, such as local and overseas shares, residential and listed property, Australian fixed interest and cash, and managed funds.
"ADPIA's view is we should have at least 20 per cent in direct property," ADPIA immediate past-president and executive committee member Richard Cutler said.
Mr Cutler, who also heads up Macquarie Bank's Direct Property division, said there was a very significant mismatch between the findings and what was happening in the market, with the allocation to commercial property from investors and their advisers declining since the 1980s.
"It (property) is the financial wealth of the world and ... we've got a very low and decreasing allocation to it," he said.
"So common sense says we've got it back to front and this research will really flesh that out."
Atchison Consultants managing director Ken Atchison, who carried out the study for ADPIA, said the decline was caused by a lack of available research, as well as behavioural finance.
"A market goes bad and everybody withdraws – that's the time when you should invest ... it's a classical psychological reaction," Mr Atchison said.
Investment in direct property peaked in the property boom of the late 1980s and early 1990s.
He said the research showed direct property provided strong total returns of 9.5 per cent in the 20 years to June 30, 2006, and 10.5 per cent over the 10-year period, with industrial and retail assets the best performers.
In the 10 years to June 30, direct property also produced the highest levels of income return of any other asset class, at 7.2 per cent, the report found.
According to the study, the asset class also exhibited the lowest volatility of income returns over both periods, a valuable characteristic that made a significant difference to long-term returns because it reduced the chance of making a timing error entering or exiting the market, Mr Atchison said.
He said a fully diversified property portfolio should be made up of "four states, three sectors", being NSW, Victoria, Queensland and Western Australia, and across the office, retail and industrial sectors.
ADPIA represents property industry professionals such as fund managers, custodians and financiers and was set up as the peak industry body in 1999.
Source: AAP
The study commissioned by the Australian Direct Property Investment Association (ADPIA) found increasing the direct, or commercial, property component in an investment portfolio significantly reduced risk and the chance of investment loss.
The research looked at the performance of 11 different asset classes over 10 and 20 year periods, such as local and overseas shares, residential and listed property, Australian fixed interest and cash, and managed funds.
"ADPIA's view is we should have at least 20 per cent in direct property," ADPIA immediate past-president and executive committee member Richard Cutler said.
Mr Cutler, who also heads up Macquarie Bank's Direct Property division, said there was a very significant mismatch between the findings and what was happening in the market, with the allocation to commercial property from investors and their advisers declining since the 1980s.
"It (property) is the financial wealth of the world and ... we've got a very low and decreasing allocation to it," he said.
"So common sense says we've got it back to front and this research will really flesh that out."
Atchison Consultants managing director Ken Atchison, who carried out the study for ADPIA, said the decline was caused by a lack of available research, as well as behavioural finance.
"A market goes bad and everybody withdraws – that's the time when you should invest ... it's a classical psychological reaction," Mr Atchison said.
Investment in direct property peaked in the property boom of the late 1980s and early 1990s.
He said the research showed direct property provided strong total returns of 9.5 per cent in the 20 years to June 30, 2006, and 10.5 per cent over the 10-year period, with industrial and retail assets the best performers.
In the 10 years to June 30, direct property also produced the highest levels of income return of any other asset class, at 7.2 per cent, the report found.
According to the study, the asset class also exhibited the lowest volatility of income returns over both periods, a valuable characteristic that made a significant difference to long-term returns because it reduced the chance of making a timing error entering or exiting the market, Mr Atchison said.
He said a fully diversified property portfolio should be made up of "four states, three sectors", being NSW, Victoria, Queensland and Western Australia, and across the office, retail and industrial sectors.
ADPIA represents property industry professionals such as fund managers, custodians and financiers and was set up as the peak industry body in 1999.
Source: AAP
Sunday, December 03, 2006
Mortgage lenders defies trend to post a big profit
Australian Mortgage Lender Aussie Home Loans Group's aggressive expansion has helped bump up its annual profit despite stagnant east coast housing markets.
The mortgage lender and broker formed by John Symond yesterday posted a 44 per cent rise in net annual profit for 2005-06 to $19.7 million.
Aussie said it processed more than $10 billion worth of housing loan applications throughout the year, with the average loan size increasing to $242,000, which is higher than the Australian Bureau of Statistics average of $221,000.
Mr Symond told AAP that even though the Perth residential property market was "going gangbusters", challenging conditions in NSW had made the overall situation tough.
But he said the unlisted Aussie Home Loans was able to maintain profit growth, employing more people and rolling out more branches. "Our mortgage writers don't write any more business but there's more of them and we're touching more people," Mr Symond said.
In the year to June 30, Aussie increased its sales force by 19 per cent to 600 mortgage advisers.
"We have also very successfully rolled out about 14 new franchise businesses at a rate of about one a month," Mr Symond said.
"These have mostly been in parts of regional Australia we have not serviced before, so more consumers are being touched by the Aussie brand."
Aussie's credit card business was also growing fast and now had more than 100,000 customers, Mr Symond said.
Aggressive growth would continue in 2007 through the rollout of more franchise businesses and the establishment of new products.
Capital expenditure over the next 12 months was expected to hit about $10 million.
As for the group's future profitability, Mr Symond said Aussie had a "confident view of the medium term".
This month's quarter of a percentage point interest rate rise to 6.25 per cent had caused more caution in the housing market, Mr Symond said.
But he felt another rate rise was unlikely.
"We might have reached the top of the cycle this time and I'm hopeful the Reserve Bank will see no reason for an increase next year - unless of course inflation gets ugly again.
"And if the economy was to slow I don't think they'll hesitate in bringing rates back down.
"The market is certainly going to hurt for a few years to come.
"Consumer debt is at astronomical levels, so people won't go out and randomly spend.
"That's what the RBA want and that's what the RBA will probably get."
AAP
The mortgage lender and broker formed by John Symond yesterday posted a 44 per cent rise in net annual profit for 2005-06 to $19.7 million.
Aussie said it processed more than $10 billion worth of housing loan applications throughout the year, with the average loan size increasing to $242,000, which is higher than the Australian Bureau of Statistics average of $221,000.
Mr Symond told AAP that even though the Perth residential property market was "going gangbusters", challenging conditions in NSW had made the overall situation tough.
But he said the unlisted Aussie Home Loans was able to maintain profit growth, employing more people and rolling out more branches. "Our mortgage writers don't write any more business but there's more of them and we're touching more people," Mr Symond said.
In the year to June 30, Aussie increased its sales force by 19 per cent to 600 mortgage advisers.
"We have also very successfully rolled out about 14 new franchise businesses at a rate of about one a month," Mr Symond said.
"These have mostly been in parts of regional Australia we have not serviced before, so more consumers are being touched by the Aussie brand."
Aussie's credit card business was also growing fast and now had more than 100,000 customers, Mr Symond said.
Aggressive growth would continue in 2007 through the rollout of more franchise businesses and the establishment of new products.
Capital expenditure over the next 12 months was expected to hit about $10 million.
As for the group's future profitability, Mr Symond said Aussie had a "confident view of the medium term".
This month's quarter of a percentage point interest rate rise to 6.25 per cent had caused more caution in the housing market, Mr Symond said.
But he felt another rate rise was unlikely.
"We might have reached the top of the cycle this time and I'm hopeful the Reserve Bank will see no reason for an increase next year - unless of course inflation gets ugly again.
"And if the economy was to slow I don't think they'll hesitate in bringing rates back down.
"The market is certainly going to hurt for a few years to come.
"Consumer debt is at astronomical levels, so people won't go out and randomly spend.
"That's what the RBA want and that's what the RBA will probably get."
AAP
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