With the exception of Victoria, where the proportion of income required to meet repayment of home loans has gone up by 0.4 per cent to 35.6 per cent, all Australian states and territories recorded drops in this figure. This was led by Western Australia, which enjoyed the largest fall over the quarter, down 2.3 per cent to 23.9 per cent.

According to the REIA, this brings the state’s affordability back to the level it was in December 2003.

The REIA said the Australian Capital Territory remained the most affordable state or territory in which to buy a home, a title which the territory has held for the past five and a half years. The proportion of income to meet loan repayments declined by 0.9 per cent to 17.9 per cent over the quarter; 15.7 percentage points below the national average.

NSW remained the least affordable state or territory in which to buy a home. The proportion of income required to meet loan repayments decreased 1.6 per cent over the quarter to 37.1 per cent; 3.5 per cent higher than the national average.

In South Australia, the proportion of income required to meet loan repayments fell one per cent quarter-on-quarter to 33.5 per cent; in Tasmania it decreased 1.5 per cent to 28 per cent; in Queensland it dropped by 0.5 per cent to 32.5 per cent; while the Northern Territory witnessed a 1.4 per cent drop to 21.4 per cent.

The REIA added that the number of Home Loans taken up by first home buyers increased by 4.4 per cent to 23,997 over the September quarter and 5.4 per cent over the year. During the September quarter, first home buyers made up 15.6 per cent of the market compared to 15.4 per cent in the June quarter.

Most states have see a decline in the value of properties in some cases by as much as 25%, although the average statistics are significantly lower. ]]> http://www.realestatereview.com.au/housing-is-becoming-more-affordable/feed/ 0 http://www.realestatereview.com.au/no-joy-from-auction-clearance-at-weekend/ http://www.realestatereview.com.au/no-joy-from-auction-clearance-at-weekend/#comments Tue, 22 Nov 2011 01:44:15 +0000 admin http://www.realestatereview.com.au/?p=1190 Auction clearance rates were down this weekend despite talk of consumer confidence returning.

Auction figures released by Australian Property Monitors found clearance rates in Brisbane were down by 35.5 per cent over the weekend, with Brisbane  recording the lowest clearance rate of only 12.5 per cent.

The story was much the same in Melbourne, with auction clearance rates declining by yet another 10.3 per cent to 47.4 per cent.

The Real Estate Intitute of Victoria (REIV) reported a 53 per cent clearance rate in Melbourne on the weekend.

Enzo Raimondo, REIV’s CEO, said the auction market “has been typified by consistently moderate levels of demand this year and this weekend [was] no different.”

Almost half of all auctions held were passed in with majority of these being passed in on a vendor bid.

“Next weekend the REIV expects around 1045 auctions next weekend.”

Despite the sharp falls in both Brisbane and Melbourne, clearance rates in Sydney and Adelaide remained relatively stable with 52.4 per cent and 34.5 per cent of properties selling, respectively, over the weekend.

A three bedroom house located in Annandale, in Sydney’s inner west, took the title as most expensive property sold over the weekend, selling for in excess of $2.4 million. The most affordable home was three bedroom villa in St Marys, in Sydney’s outer west, which sold for $241,000.

The Real Estate Institute of NSW (REINSW) reported a Sydney clearance rate of 58 per cent for the weekend, with 372 properties selling and 268 passing in (33 of those on a vendor bid).

Across the board buyers appear to be holding back hoping to see further property price drops. It does not appear that the recent interest rate cut by the RBA has made any difference to buyer demand. Despite home loans being significantly cheaper now than even 3 months ago, demand for property is just not there.

According to the latest data from Australian Property Monitors, 54.3 per cent of properties cleared in Sydney over the weekend.

The most expensive property to achieve a sale was a $3.5 million, four bedroom house in Saratoga, the most affordable property sold in the capital city was a two bedroom townhouse in Macquarie fields.

In Melbourne, only 48.1 per cent of properties cleared at auction – a sizable drop from 69.4 per cent last weekend.

The Real Estate Institute of Victoria chief executive Enzo Raimondo said both home buyers and property professionals are now hoping the Reserve Bank cuts the cash rate at its November Board meeting. Home owners and renters alike have been squeezed from all directions over the past 12 months and are seeking some relief.

“It has been twelve months since the Reserve Bank last increased interest rates.  This Tuesday, buyers, sellers and those holding home loans will be hoping to see a cut to rates and if it occurs it will help encourage more buyers into the market, particularly into the new year.

According to the latest data from Australian Property Monitors, only 56.3 per cent of properties listed for auction in Sydney last weekend actually sold.

The most expensive property sold in the capital city at the weekend was a $3 million five bedroom house in Strathfield, while the most affordable property to go under the hammer was a $290,000, two bedroom unit in Fairfield.

In Melbourne, the auction clearance rate was a little better, with 60.5 per cent of the 825 properties clearing. This is not at all the kind of clearance rate on generally expects in October. Whats more the anticipation of a possible interest rate cut on cup day, together with very cheap fixed rate home loans offers available in the market today does not seem to have done anything to improve the situation.

But despite the solid result, the Real Estate Institute of Victoria’s chief executive Enzo Raimondo said the auction result was still a long way off what was achieved this time last year.

“The clearance rate this weekend last year was 67 per cent. It’s important to note that the number of auctions was also higher last year with 1,127 homes offered for sale,” he said.

“Next weekend 445 auctions are expected, a lower number than this weekend due to the Melbourne Cup being raced on the following Tuesday.”

In NSW, first home buyers currently receive a stamp duty exemption for home purchases under $500,000, with discounts calculated on a sliding scale between $500,000 and $600,000.

But from January 1, 2012, the stamp duty concessions will apply to new homes only.

In recent weeks, NSW estate agents are reporting a significant increase in the level of inquiries from First Home Buyers looking into the unit market opportunities.

Data from Loan Market Group released late last month also confirms the return of First Home Buyers to the NSW market, with the company reporting a 60 per cent increase in the number of first home buyer home loan enquiries in September.

Furthermore, 76 per cent of brokers outside of Loan Market are reporting similar results.

“The increase in activity around pre-approvals is a clear indication that parts of the NSW property market are due for increased competition,” Loan Market chief operating officer Dean Rushton said.

“What we’re starting to see in the NSW market right now is a similar scenario to the end of 2009 when the government withdrew the increased First Home Owners Grant. Market demand has been pulled forward and buyers are accelerating their purchasing plans.”

Australians for Affordable Housing (AAH) – which is made up of 60 community and housing groups – launched the report today as part of a push to provide more affordable housing for Australians.

“Australian households are paying more than they can afford for housing, with over 740,000 renters and more than 380,000 home owners with hefty home loans suffering from significant financial stress,” spokeswoman Sarah Toohey said.

In Sydney, it takes 8.1 times the average annual income to afford the median house, up from 5.6 times in 2001, according to the report.

The group is concerned that increased property prices will see first-time buyers to stay in the rental market for longer, competing for properties and pushing up rental prices. Since 2005, rents in Australian cities have risen at twice the rate of inflation, according to the report.

It should be noted that while government was talking up interest rates and banks are making it very difficult for developers to access construction loans – demand will exceed supply in the premium areas of Australian capital cities including Melbourne and Sydney.

The report also found that 50 per cent of low-income home owners are having a hard time keeping their heads above water with many behind in their home loans.

“The NSW housing system is failing too many people. We need the NSW Government to commit to working with federal and local governments to solve this crisis.”

Last week, the NSW Government was called on to implement an emergency housing plan after figures showed new-home starts had plummeted.

The 20.1 per cent fall, which was worse than the 16.3 per cent recorded by flood-hit Queensland, prompted calls from the Urban Taskforce for an emergency housing supply plan by Christmas.

“NSW’s housing supply is clearly in dire trouble,” said the organisation’s chief Aaron Gadiel.

Two years previously Sydney was a lot lower on the same list – at number 38.

The survey found that it is now cheaper to live in international hubs like London and New York than Sydney. This finding is not a complete surprise to Sydneysiders who experience Sydneys high cost of living and especially high cost of housing on a daily basis.

Oslo, Zurich, Geneva, Copenhagen, Stockholm and Tokyo are the only cities with higher living costs, according to the financial services firm report.

Sydney is the only Australian city included in the latest UBS rankings.

But it’s not all bad news for Sydneysiders, because with high living costs come higher wages, UBS found.

Sydney finished second in a table ranking the domestic buying power of its citizens. This ranking is calculated by comparing wages in each location with living costs.

In 2010 Sydney was 12th on the list of most expensive cities and in 2009 it was 38th.

Sydney is moving rather quickly to the top of report rankings. This can not be put down to currency pricing exclusively as no other Australian cities are on this list

However, Sydney is just one of many cities that have seen a jump in their rankings.

UBS found some US cities had fallen in the cost of living rankings, with New York slumping to 14th, if property rental is excluded.

In recent years New York has been ranked in the top 10 of the most expensive cities.

“This can be attributed to the general depreciation of the US dollar versus the world’s other currencies,” the UBS report added.

London slumped to 15th place on the list, compared with 10th in 2010.

The rankings, published in the annual Prices and Earnings, are calculated by comparing the cost of an average “shopping basket” of 122 goods and services.

Instead, more and more Australians would choose to own a townhouse or an apartment in close proximity to the city or other suburban centres.

According to a report from the Grattan Institute, home loan affordability was not the only concern of potential home buyers.

There are many myths and assumptions about housing, and what Australians really want.

The report, which surveyed 700 residents of Melbourne and Sydney, asked what home they would like to live in, taking into account housing costs and income.
To ensure that home buyers are able to afford to live in their chosen location – size and qualify of accommodation is sometimes sacrificed.

Just under 50 per cent of those surveyed in Melbourne indicated a preference for detached housing; the remainder opted for high-density housing.

Committee for Melbourne CEO Andrew MacLeod said the city had to address the shortage of high-density housing.

“This report clearly shows we would like the choice to live in different-style housing in our chosen areas. But those options simply don’t exist, because of the push to keep our suburbs as they are,” he said.

Melbourne’s struggle for affordable housing is set to increase with another report showing the city’s debt burden is “approaching Sydney levels” while Victoria’s property market is likely to weaken soon.

The Australian Local Government Association’s latest State of the Regions report suggested business confidence might evaporate in regions that depend on non-mining industries.

Property cohabitation works well for those who have already purchased their home as well as potential buyers who need to save up a deposit. House sharing can reduce the burden of home loan repayments even though it may not be the answer for everyone.

As first time home buyers are getting older, many take years to save up a deposit while either living at home with family or house sharing. If so, this would be especially prevalent in areas of dense housing and high property prices and living costs.

Sharing your home with others outside your family or romantic relationship is often a financial necessity when utility, petrol and other costs increase as they have recently. The same goes for home owners who are trying to make ends meet.

Research from RP Data shows capital city rents grew a solid 4.8 per cent in the first quarter of 2011 – markedly higher than the 2.9 per cent experienced in the year to March 2011.

It seems that especially properties in the Sydney suburb of Woollahra have recorded an increase in advertised rents of 22.2 per cent over the year.

Suburbs of Sydney overall performed very well showing top rental returns and accounted for 23 of the 35 best performing capital city rental regions over 2010.

In contrast, the Perth council area, which is essentially the inner city region of Perth, recorded the most significant drop in average advertised rents over 12 months.

Median house rents declined by 21.5% over the year from $650/week to $510/week.

Perth overall did worse than other cities in terms of rental performers, accounting for 20 of the 35 weakest performing capital city markets for rents.

RP Data’s research analyst Cameron Kusher said while Perth rental returns had declined over the past 12 months, this was not a trend that he expects to continue over the longer term.

“With tight rental vacancies and ongoing demand for rental accommodation, we expect that weekly rents will increase in most capital cities,” he said.

“Although there was a surge in building approvals last year, in many instances this new supply won’t actually get to the market during 2011. Considering how difficult it is today to qualify for home loans as well as construction and development finance, there is an expectation that the number of new developments will be declining. . Because of this we are seeing fewer new high density developments taking place in inner city areas. These regions are particularly attractive for renters as they provide significant levels of amenity. With less new supply in most capital cities it is likely to create greater competition for available stock.”

The best five performing rental suburbs nationally were Woollahra and Burwood in Sydney, Sorell in Hobart and Claremont and the Nedlands in Perth.