Which suburbs have the most properties on the market?

This week’s Property Pulse looks at which suburbs have recorded the greatest number of property listings over the last months and tries to determine why.

For months now RP Data’s Property Pulse has been highlighting the fact that total advertised listings have been climbing nationwide, this week we look at the ten suburbs in Queensland that are recording the highest number of properties being advertised for sale during the last month.

Across Qld, only one suburb with the greatest number of properties being advertised for sale was found in Brisbane, Forest Lake, which is a recently developed suburb.

However, seven of the ten are located in South-East Queensland with four located on the Gold Coast and two on the Sunshine Coast. With Surfers Paradise, Southport and Labrador making the list it is unsurprising to see that these suburbs have a significant number of units listed for sale.

Meanwhile in newly developed areas of South-East Qld such as Buderim, Forest Lake and Upper Coomera, it isn’t a surprise to see a significant number of houses listed for sale.

Virtually all of the Qld suburbs detailed have recorded growth in median prices during the last 12 months, only Surfers Paradise units and Noosaville houses have seen a decline.

 

 

Solar rebates go sky high

The national solar-panel rebate for Australian homes is so popular that the Federal Government has handed out $150 million – the equivalent of three years’ funding – in 16 months.

Only four months into this financial year, the bucket of money put aside to subsidise solar panels is empty. However, Federal Environment Minister Peter Garrett said the Government would continue to fund the initiative out of next year’s budget.

High demand has meant that approval for rebates takes two months as bureaucrats in the Environment Department find themselves swamped by applications.

Householders can claim rebates of up to $8000 to install solar panels. But the solar industry is claiming millions of dollars in investment are at risk because the future of solar rebates and alternative methods of subsidising solar panels are unclear.

The industry is pushing the Government to scrap the rebate in favour of a feed-in tariff based on the generous German model. A feed-in tariff is a payment people receive for the electricity generated by their solar panels.

The solar industry no longer prefers a rebate because it is a measure that is subject to government whim and will become increasingly unnecessary as the upfront price of panels starts to fall, which is expected in the next two years.

The Clean Energy Council, speaking on behalf of the solar industry, said a feed-in tariff would provide a locked-in return for purchasers of solar panels and better underpin the industry. The Government is looking at a national feed-in tariff but already the states are moving on different models.

No progress was made on the issue at a recent meeting of State and Federal governments.

“We are a company that is growing around the country,” Richard Turner, chief executive of Zen Home Energy Systems, said.

“We have $60 million of investment subject to some sort of rebate or tariff. We can’t understand why the Government has not come up with some sort of announcement about the next step.

“Are they prepared to let the solar industry in Australia collapse?”

Shadow minister for climate change Greg Hunt said the Government had stalled on its promise of a national feed-in tariff and should guarantee that the rebate scheme will not be abolished.

“The Government’s solar policy is in disarray and the industry had been left in financial limbo,” he said.

But Mr Garrett said the popularity of the solar rebate had proven wrong Mr Hunt’s claim that a means-tested rebate would kill the solar industry.

This is Australia-not the USA

This week looks at what has happened to the US property market and analyses why the events in the US property market is so far removed from the Australian market.

Many people subscribe to the fact that what happens in the USA affects all of us (which it does) and if property prices slump there the same must happen in Australia. This however, is not the case!

Firstly the financial systems of the two countries are vastly different and the pitfalls of the US financial system have been uncovered in recent months. The USA’s lending system includes non-recourse loans where if property owners default on their mortgage, the banks will take the property as security and not chase the value of further outstanding debts. By contrast, the Australian financial system has recourse lending where the bank will repossess the house and they will also chase borrowers for the outstanding balance of the debt should the sale of the property not cover their cost of debt.

Secondly, the US market has had a much greater occurrence of sub-prime lending. This is where banks lock borrowers into a home loan at an initial low rate say 2% and after a set period this rate gets increased, usually to above the standard interest rate. The people borrowing in this way can be generalised as being a higher risk: generally those with nil or low incomes and essentially, they have little chance of fulfilling the repayment once the interest rate is lifted.  In Australia, there are laws which prevent this kind of lending and the fact that the country has recourse loans mean that people are more wary of these types of arrangements as most borrowers realise that if they can’t afford the repayments they may lose much more than just their property.

Across the USA, dwelling values peaked during June 2006 at a median value of $226,290 and between Jun-06 and Jul-08 they have fallen by 21.1%. During the first seven months of 2008, median values have seen a fall of 11.1%. It’s not just the falls witnessed across median values, but sales volumes have also taken a significant dive. Volumes peaked during Aug-04 at 111,099 sales, since that time sales volumes have recorded a decline of almost 54%.

In Australia, dwelling values have peaked much more recently at $469,258 during Feb-08. Over the year to August, dwelling values have seen a decline of just 1.3%. Sales volumes across Australia have also fallen through 2008 however, volumes peaked much earlier in Australia than they did in the USA. Australia’s peak sales volumes occurred during May-01 when 35,758 dwelling sales occurred, since that time volumes have fallen by almost 62%.

Importantly, even after Australia reached its peak volume of sales, value growth continued for another six and a half years. Once the USA reached its peak, it took less than two years for property values to start falling.

Fundamentally, ongoing value growth in Australia’s property market is driven by a shortage of supply, this is best highlighted by residential rental vacancy rates. On a quarterly basis, across the last 10 years, the USA has had an average residential vacancy rate of 9.1%. Over this same period Sydney has recorded an average vacancy rate of 2.7%, Melbourne has had 3.0% and Brisbane has recorded an average of 2.8%. Importantly, as at the end of June the USA’s rental vacancy rate sat at 10% whilst Sydney’s was 1.1%, Melbourne’s was 1.0% and Brisbane’s was 2.2%. Interestingly, the US Census Bureau also publishes homeowner vacancy rates, with these currently sitting at 2.8%. In this instance current US homeowner vacancy rates are greater than rental vacancy rates of all Australian capital cities except Perth where they are equivalent.

At the same time as US rental vacancy rates and homeowner vacancy rates have been so substantial, the country has continued to build. Census Bureau figures show that between June 2002 and June 2007, the USA commenced work on 9.268 million dwellings, whilst at the same time the population grew by 13.7 million. The current average US household size is 2.6 persons, highlighting the dramatic oversupply of housing, in contrast, Australia is estimated to be building around 50,000 too few dwellings.

With a rental vacancy rate at around 10% and a homeowner vacancy rate above Australian rental vacancy rates, it’s easy to see why significant property value falls have been recorded. Such a glut of property being built over the last five years coupled with the fact that vacancy rates were already exceptionally high have led to a significant oversupply.

This oversupply, coupled with a poorly regulated financial system has led to the downfall of the USA property market. The Australian market is undersupplied with population growth the highest on record and dwelling commencements remaining flat as well as having minimal rental vacancies. Australia is also recognised as having one of the world’s best banking systems designed specifically to ensure that what happened in the USA does not happen in Australia.

 

 

Rates news interests Coast builders

Sunshine Coast builders have been buoyed by predictions that interest rates could drop to their lowest levels since the aftermath of the 2001 terror attacks.

One Sydney academic is even forecasting an unprecedented zero interest rate by 2010 on the premise that debt-laden consumers will close their wallets and threaten to push the economy into a deep economic contraction.

Macquarie Group interest rate strategist Rory Robertson said the Reserve Bank of Australia (RBA) would cut the cash rate, now at 6% to 4.25% over the next year as global financial market turmoil put the economy under pressure.

Debt futures markets are expecting two bigger than usual interest rate cuts by Christmas.

They expect the RBA to cut interest rates by 75 basis points in November and follow up with another three-quarter of a percentage point move in December.

Such cuts would take the cash rate to 5.25% in November and 4.5% by Christmas, a level not seen since mid 2002.

Master Builders Sunshine Coast regional manager Stephen Robinson said significant rate cuts would be welcome by Coast builders who were beginning to feel the pinch of a slowdown in the past three months.

He said a 0.75% cut next month would provide a stimulus on top of the increase in the first home buyers grant to $21,000.

Master Builders will hold a breakfast meeting this morning at Maroochydore where members will be given an update on the economy.

Mr Robinson said there had been a dip in building inquiries on the Coast which would translate to a slowdown next year.

“Most of the experienced builders have factored in a bit of a downturn… they did that about six months ago.’’

“They are pretty well okay (with work) until March to June but their forward bookings are a little light on.’’

University of Western Sydney associate professor of economics and finance Steve Keen is radically bullish on interest rates, predicting a 2% cash rate by the end of 2009, dropping to 0% in 2010.

Dr Keen said the RBA would become more concerned about high household debt levels than inflation, as deep rate cuts in 2009 failed to stimulate the economy.

“They (the RBA) can cut the pain but they can’t boost the economy.”

Earlier this month, the RBA cut interest rates by 100 basis points for the first time since May 1992.

The RBA cut rates by 1% on five occasions during 1991 and 1992.

 

Caloundra rents soar to Noosa level

Sharp rental fee increases in Caloundra over the past 12 months have put the southern seaside town on a par with Noosa as the most expensive place to rent on the Sunshine Coast.

The Residential Tenancy Authority’s most recent median rental price figures have shown significant jumps in almost all styles of accommodation across Queensland, leading housing minister Robert Schwarten to declare the private rental market in crisis.

Ipswich, Mount Isa, Kingaroy and Townsville took some of the hardest hits in terms of single category price hikes but on the Coast the biggest rises were seen around Caloundra.

Across the Coast the median price for a one-bedroom flat rose from $200 a week to $230 a week but in Caloundra it went almost three times higher, from $200 to $286.

Coast-wide, the median cost of a two-bedroom house went up from $260 to $290 but a larger than expected increase saw prices skyrocket from $250 to $300 in Caloundra to make it the most expensive.

Noosa was still the most expensive place to rent a two-bedroom flat or a four-bedroom house, but although it still topped the price category for three-bedroom flats the weekly rent on one in Noosa actually decreased from $380 to $360.

The only category in which Maroochydore aligned itself with its northern and southern neighbours was for a two-bedroom townhouse, with all three localities seeing a uniform rise from $255 to $300 between September, 2007, and September, 2008.

Rudd’s $10.4bn rescue package

Pensioners, first-home buyers and families will benefit from the Rudd Government’s $10.4 billion package announced today in a bid to strengthen the Australian economy in the face of the global financial crisis.

The government said the Australian economy was strong, but the country was not immune from “the worst global financial crisis since the Great Depression”.

Kevin Rudd’s $10.4 billion Economic Security Strategy contains five key measures:

* $4.8 billion for an immediate down-payment on long-term pension reform.

* $3.9 billion in support payments for low and middle-income families.

* $1.5 billion investment to help first-home buyers purchase a home.

* $187 million to create 56,000 new training places in 2008-09.

* Acceleration of the implementation of the government’s three nation building funds. Investment in nation building projects will also be brought forward to 2009.

Australia’s four million pensioners, carers and seniors will benefit from December 8. with single pensioners to receive a lump sum payment of $1400, while pensioner couples will receive $2100.

People receiving the carers allowance will also receive $1000 for each eligible person in their care.

Mr Rudd said it was time for fast, decisive action.

“The global financial crisis has entered into a new, dangerous, and damaging phase,” he told reporters in Canberra.

“That’s why the government has decided to act decisively and early on the question of this economic security strategy for the future. (It’s) decisive action, responsible action, early action, all in Australia’s interests.“

Mr Rudd said the package would support growth in the domestic economy and provide practical support for households.

The government said about 3.9 million Australian children would receive a $1000 one-off benefit from December 8.

Families who receive Family Tax Benefit (A), families with children who receive the Youth Allowance, Abstudy or a benefit from the Veteran Children’s Education scheme will be eligible.

First home buyers will be eligible for grants of up to $21,000, designed to stimulate housing activity. The scheme will be time limited and all contracts entered into by June 30 next year will be eligible for the new assistance.

The payment under the first-home buyers scheme will be doubled from $7000 to $14,000 and first home buyers who buy newly constructed home will receive an extra $14,000, taking their total grant to $21,000.

The government will invest about $1.5 billion in the housing market over 2008/09 and 2009/10 through this initiative.

Mr Rudd said the $10.4 billion strategy would be entirely funded from the budget, and Treasury had advised that the budget would continue to be in surplus after the measures were introduced.

The government will publish a full budget update in the Mid-Year Economic and Fiscal Outlook within a month.

The Prime Minister said it was time to spend part of the federal government’s $21.7 billion budget surplus.

“The purpose of a surplus in the budget is to deal with tough time and tough times are with us,” he said.

Buyers clamber for Coast’s prestige properties

Forget the stock market crash or high interest rates, buyers are scrambling to part with millions of dollars for prestige properties on the Sunshine Coast.

While blue-chip homes in some parts of the Gold Coast have reportedly lost almost half their value, real estate agents on the Sunshine Coast say their biggest worry is keeping up with demand.

“Prestige properties are in such demand that my biggest problem is getting stock, not selling it,” said Susan Musgrove of Henzells Prestige Properties in Caloundra.

“I would love to have more to sell because once you’ve got the stock, there are buyers there.”

It is a lament echoed by other agents who say blue-chip properties do not exist in the same numbers on the Sunshine Coast.

So when one does come on to the market, it doesn’t last long.

“We are so different to the Gold Coast in that it is spread out – there are so many waterfront developments down there that buyers have a lot to choose from,” said Mark Unkel of PRD nationwide Elite at Kawana.

“The buyers are in the box seat down there but up here it’s different because we are geographically a small area and there is no more waterfront … what we have is all there will ever be.”

Mr Unkel said properties such as the penthouse of Mooloolaba’s Cilento building were attracting strong interest, even with price tags of more than $2 million.

For Susan Musgrove, a three-bedroom sub-penthouse in The Observatory building at Kings Beach sold for $1.01 million on the weekend, hot on the heels of the $1.5 million sale of a penthouse in nearby Montego.

“I had people queueing up for them, so there is still plenty of money,’’ she said.

At Noosa, Olivier Miller of Laguna Real Estate agreed a scarcity of blue chip properties had kept demand high.

“The market has softened about 5% on last year but there have been two significant sales on Noosa Parade, both of them for between $5.5 million and $6 million, a sale at Little Cove for $4.5 million, and of course several sales in Noosa Waters for between $1.5 million and $3 million.

“So we are holding our own.”

And it’s not all about waterfront homes.

Lynda Sherwell of Ray White Buderim said demand was strong for prestige homes on the mountain – again because of scarcity.

“There is a rarity factor of good high quality product for sale here,” she said. “There is not a lot of property on the market and when they do come on they attract a lot of attention.”

 

Qld land shortage not true: report

A report has found the widely-held belief that south-east Queensland is short of residential land is a myth.

The Local Government Association of Queensland (LGAQ) report says there is enough land to meet housing demands for the next 19 years.

It also found three major developers own the bulk of land available for development in south-east Queensland.

On the Sunshine Coast it is Stocklands; along the western corridor to Ipswich it is Springfield Land Corporation; and in the Logan-Beaudesert corridor it is Delfin Lend Lease.

The report concluded that the accumulation of vast parcels by big companies, particularly during the property speculation boom from 2002 to 2005, played a big part in the rise of house prices.

LGAQ executive director Greg Hallam said the report, Review of Residential Land Supply and Demand Issues in South-East Queensland, was a first of its kind in south-east Queensland.

“We got the councils to go through and find out who owned which lots. The state government has looked at the amount of land (before) … not who owns it,” Mr Hallam said.

“We’ve gone one step further and this is the first time it has ever been done. But I have to say it still doesn’t reflect the totality of what the developers control because we are not able to find what options to purchase they have, which means they have options to purchase but haven’t yet purchased it.

“We know anecdotally that it is extensive.”

Queensland Premier Anna Bligh agreed there was no land shortage.

“There is enough land for the people that want to live here, it’s a question of land that can be brought to market,” she told reporters on the Gold Coast.

But she said the government had no say in the amount of land held by big investors.

“We don’t live in a country where we can force people to market,” she said.

“What we do in this country is everything to facilitate, from a government perspective, (approval) applications to proceed as quickly as possible.”

She said both local and state governments needed to work harder to ensure land was not tied up in red tape before being sold.

 

Homebuyers in line for mortgage windfall

Twenty new-home buyers on the Sunshine Coast could save up to $90,000 and cut 10 years off their mortgage, thanks to a deal being offered by Queensland’s biggest residential developer.

Coming on top of Tuesday’s surprise 1% cut in interest rates by the Reserve Bank of Australia, Stockland said its Mortgage Buster deal would apply to house-and-land packages available at four of the company’s Sunshine Coast projects: Bellvista, The Boardwalk, Doonella Noosa and Woodgrove.

Stockland Queensland general manager Mark Hunter said under the offer, anyone who purchased one of 58 specific home-and-land packages would receive a $17,600 cash rebate at the time of settlement.

Mr Hunter said by investing the total rebate into their mortgage, buyers would save $89,597 and cut 10 years off their loan on a $500,000 home-and-land package.

“Combined with this week’s substantial cut in interest rates, that would help give potential property purchasers the confidence to act now,” he said.

Mr Hunter said in Stockland’s research, potential buyers had listed house prices and expectations of lower interest rates as factors affecting their plans.

 

Interest rate cut helps, but is it enough?

The decision by major banks to slash loan rates has received a mixed response on the Sunshine Coast.

While it is generally thought the 0.8 of a percentage point reduction in the big four banks’ standard variable mortgage rate will have a positive effect, the Maroochydore Chamber of Commerce has warned more cuts are needed to restore confidence.

The move by the ANZ, NAB, CBA and Westpac followed the Reserve Bank of Australia’s unexpected decision on Tuesday to cut the official cash rate by 100 basis points.

Chamber of commerce president Myles McNamara said it was too early to tell if the cuts would help to shield Australia from the financial turmoil in global markets, but he had a feeling it would not be enough.

“There’s been so much negativity for a long period of time that I think it will take more than a 1% interest rate cut to have a significant impact,” he said.

“We need broader stability – both in Australia and abroad – before there is a high level of confidence.”

The property and tourism sectors are, however, more upbeat. Six properties sold at auction in Caloundra yesterday, further fuelling optimism in the sector.

Ray White Mooloolaba and Ray White Commercial Sunshine Coast principal Greg Young said the rate cut was exactly what the property market needed.

“It will put real estate back into the spotlight as a good, sure vehicle for investors,” he said. “Hopefully it will encourage people not only to buy houses but to build houses, which is needed because the rental market on the Sunshine Coast is very tight at the moment.”

Smartline mortgage consultant Bruce McAnally agreed the cuts should boost confidence in the market.

He said homebuyers were very cautious at present, with many hedging their bet with combination loans.

“We’re seeing more of that than what is normal,” he said.

Mr McAnally said lower rates would likely result in higher home prices – and that would price many people out of the market.

“If rates continue to go down it will stimulate the property market and prices will potentially go up,” he said.

Tourism Sunshine Coast acting chief executive Ren van Tulder said the rate cuts, combined with the introduction of Tiger Airways’ daily Melbourne flight in December, could only help.

“It will certainly instil some visitor confidence,” he said.