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.

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.

Herron Todd White senior valuer Brett McGrath said despite 3300 homes being written off and 1700 needing repair from January’s disaster there are a lot of home buyers and investors prepared to buy a property in Ipswitch. However most buyers need to obtain a home loan – therein lies the hitch. Banks are not prepared to offer finance in high flood risk areas.

“There are many buyers keen to purchase flooded homes but the banks are not financing loans,” Mr McGrath told a luncheon for more than 120 people at The Ipswich Club yesterday.

The only properties moving off the market are a result of cash purchases, where people have access to funds and do not need a home loan.

“But those who want to borrow to buy are not having any success at all.”

New home sales numbers increased by 4.3 per cent in March, following a 0.6 per cent gain in February. Detached homes sales also went up by 5.8 per cent in March.

Multi-unit sales declined by a further 10 per cent in March, following a drop of 7.6 per cent  in February.

According to data provided by the HIA, the number of new home sales went up from more than 9000 properties in February to about 10,500 in March.

The good news about some growth in new home sales comes as the general pace of housing activity has slowed during the first few months of 2011. The weighted average home price in eight capital cities fell 1.7 per cent in the March quarter, compared with the previous three months, the Australian Bureau of Statistics reported this week, marking the biggest fall since the September quarter of 2008 during the financial crisis.

Auction clearance rates, which have tracked home prices closely since 2004, have dropped in the new year. The rates are now as low as 50 per cent in Sydney and Melbourne, down from highs of 80 per cent seen in 2010.

Potential home buyers can breathe a sigh of relief with RBA deciding to leave the cash rate at current levels for another month.

New house sales rose 13.5 per cent in New South Wales, 11.1 per cent in Queensland but only 3.6 per cent in Victoria. In Western Australia, they advanced 3.1 per cent while in South Australia they sank 6.4 per cent.

“The amount of realestate being advertised for sale is about 30 per cent higher than what it was last year. The numbers were being dragged down by a recent rapid build up of housing stock into the market.  The simple fact that there’s so much stock to choose from for prospective buyers is resulting in more negotiation in the markets (and) buyers are having to sell at lower than what their expectations were. Seller were now selling properties about 6.5 per cent lower than the original asking price on average, compared with about 5.2 per cent the same time last year.  Recent extreme weather events, including the flooding in Queensland, may also be impacting on the lower numbers”  Mr Lawless said.

The Housing Industry Association – RP Data residential land report showed that the volume of land sales dropped to about 11,500 lots in the three months to December 2010 from 12,500 in the previous quarter.

If we were to look at land sales statistics a year earlier we would see a drop of just over 40 per cent. The quarterly drop was the biggest since 2001 when the HIA-RP Data survey began.

At the same time that land sales are dropping the weighted price of a residential block increased 4.1 per cent to $194,161 across the country.

“The sharp drop in the volume of land sales signals a very weak 2011 for new home building,” said HIA economist Matthew King. “The escalation in land values highlights an on-going deterioration in new home affordability driven by constraints on supply.”

The latest residential land price data follows a report from the Real Estate Institute of Victoria over the weekend showing that Melbourne home prices had posted their biggest decline since 2008. The median Melbourne house price for the March quarter fell by 6 per cent to $565,000 from $601,000.

Auction clearance rates have also deteriorated to about 60 per cent in Melbourne and Sydney since the beginning of 2011, significantly lower than the highs of 80 per cent seen last year, as the effect of higher interest rates, crumbling affordability and economic uncertainty took their toll.

REIV chief Enzo Raimondo said “the current residential market in Melbourne and Victoria has entered into a different phase of lower transaction numbers and reduced price growth.”

Nationally, home prices were flat in February, following a revised 1.5 per cent drop, seasonally adjusted, in January, according to RP Data-Rismark figures released last month, with January’s fall the biggest decline since 2005 when the index began.

In addition to the increasing cost of purchase and the tighter regulation in lending for residential purposes, there are a number of other adverse influences driving down land prices. There are the high costs of land tax, the difficult lending conditions, the increasing costs of living and the list goes on.

The Reserve Bank raised our cash rate to 4.75 per cent in November, a move that was followed by even larger rate increases for borrowers from most lenders.

Based on the latest Genworth Financial’s Home Buyer Confidence Index, recent first home buyers have shown they are comfortable with high debt levels, this may well result in other First Home Buyers deciding that now is the time to enter the market.

While home loan affordability remains a key concern for first home buyers, many wanted to step onto the property ladder sooner rather than later but found that lack of adequate deposit is holding potential buyers back.

The Real Estate Institute of Australia has to this end issued a call to the Federal Government to revisit the current levels of FHOG with the view to offering new buyers a boost.

The Mortgage Insurer believes that overall First Home Buyers have no aversion to taking out high lvr home loans – as this is their only chance of becoming home owners.

The Genworth March Index showed that first home buyers are, overall, more comfortable with higher debt and LVR lending than any other home buyer. This is most likely due to the high capital appreciation of housing over the past few years.

To assist First Home Buyers REIA has called to Federal Government to re-introduce a boost to the current First Home Buyer Grant to entice more first home buyers into a flagging market.

In its pre-budget submission, the REIA has suggested a range of measures it claims will increase housing affordability. In addition to increasing the First Home Owners Grant, the group has also called for a retention of negative gearing, a commitment by the government not to increase capital gains tax on property investment nor introduce a tax on owner-occupied homes, the removal of stamp duty and allowing superannuation to purchase homes.

Industry will also seek a commitment from the State Government to significantly reduce stamp duty for off-the-plan purchase contracts and the introduction of legislation banning termination of contracts for minor technical reasons.

The forum, was called last year by Premier Anna Bligh and is to be held at the State Library.

It comes as new data shows building approvals hit a three-decade low last month, while thousands of jobs have been lost and activity has slumped as credit dries up with consumer appetite for property.

The State Government’s own discussion paper for the forum acknowledges issues such as infrastructure charges were “affecting the viability of some developments”.

Premier Bligh and Deputy Premier Paul Lucas will both address the one-day event, which the sector has pinned its hopes on to help boost activity.

Paul Bidwell representing Master Builders Association has said that stamp duty concessions and a targeted first-home owners grant were among the initiatives his organisation was hoping to address.

“Initiatives Master Builders will raise include the removal of the mandatory requirement for rainwater tanks in new houses in urban areas, particularly in north Queensland and more flexible plumbing and building inspections,” he said.

Master Builders Associating would like to see the First Home Owners Grant limited to new construction only, introducing stamp duty concessions, planning reforms that free up land supply and decrease approval times, and a 12-month moratorium on all new regulations.”

Similarly, the state Urban Development Institute of Australia said it wanted to see development applications processes fast-tracked.

In its submission to the forum, the Urban Development Institute of Australia’s Queensland division argued for stamp duty to completely eliminated for off-the-plan sales in order to promote greater demand for new properties.

The number of new home loans approved by Australian lenders has fallen by 5.6 per cent to a 10-year low in February, after a similarly sharp decline in January.

We can not blame natural disasters exclusively for the decline in demand because the number of new home loans declined across all states. NSW experienced a drop of 10% – more than any other state.

While home buyers are backing away from the market, the volume of housing stock available for sale is growing. Figures compiled by property analysts SQM Research show there are now 356,600 properties currently for sale across the country, which is almost 50 per cent more than this time last year.

The drop in home loan approvals has more to do with the cost of finance, expectation of rate increases, as well as the difficulty to qualify for a home loan under the current credit laws.

The current drop in demand for property is more significant than that experienced in the midst of the Global Financial Crisis.

Mr Christopher said reported auction clearance rates of between 50 and 60 per cent in the major capitals could not be believed, since the results of half the houses put up for auction each weekend are not recorded. Many agents whose auctions doe not perform simply do not record the results.

The number of loans for new homes fell by 12 per cent in February and has dropped almost 36 per cent since the beginning of 2011.