Browsing articles in "Housing"
Wednesday 11th May 2016 - 9:01 pm
Comments Off on Lending to property investors surges in March:HIA

Lending to property investors surges in March:HIA

by Alan Thornhill

Lending to property investors surged in March, according to the Housing Industry Association.

The HIA, which based its statement on figures released earlier by the Bureau of Statistics, said lending to investors who are building new housing, rose by 54.1 per cent during the month

“While total home lending edged marginally lower in March, lending to investors in the new housing market jumped by 54.1 per cent,” HIA economist, Diwa Hopkins said.

“This moderated the effect of declining lending that occurred in each of the other components of housing finance,” she added.

Total housing finance in March 2016 was worth some $32.74 billion, with lending to investors constructing new housing accounting for $1.83 billion of this total.

Lending to investors is heavily influenced by negative gearing and capital gains tax laws.

These have become contentious in the present election campaign, with the Turnbull government promising no changes if it is re-elected and Labor saying it would introduce new restrictions.

Ms Hopkins said the value of home lending fell by by 1.2 per cent in the March quarter to a level 3.7 per cent lower than in the March 2015 quarter.

“Today’s housing finance results add to a string of positive updates for the residential construction sector that indicate 2016 will represent another healthy year of activity,” she said.

She said, too, that the number of loans to owner occupiers constructing or purchasing new homes in the March 2016 quarter was higher than in the March 2015 quarter in five of the eight states and territories.

These were:- New South Wales (+7.6 per cent); Victoria (+3.7 per cent); South Australia (+12.7 per cent); the Northern Territory (+25.7 per cent) and; the Australian Capital Territory (+7.4 per cent).

Elsewhere, there were declines over this period: Queensland (-0.9 per cent); Western Australia (-23.5 per cent) and; Tasmania (-31.3 per cent), Ms Hopkins said.

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Monday 9th May 2016 - 6:36 pm
Comments Off on The major parties:their “weaknesses”

The major parties:their “weaknesses”

by Alan Thornhill

Each of the two major parties will take an important weakness into the July 2 elections.

For the Liberals, it came with the choice of tax cuts for the rich.

With Labor, it came along with the decision to fight this election campaign on what its leader, Bill Shorten, calls “fairness.”

The result, at this stage, is too close to call.

The latest Ipsos poll, published in the Sydney Morning Herald today, puts the government and the opposition running neck and neck at 50 points each, on a two party preferred basis.

But it does show that Malcolm Turnbull is still more popular, personally, than his rival, Bill Shorten.

The Liberals took a calculated risk, when they decided that the personal income tax cuts, which are central to their re-election policy, should go to the well-off.

The plan, which follows the example of former US President George Bush, is being promoted as a way of advancing economic efficiency.

But cynics dismiss it as yet another case of the well-off “looking after their mates.”

If voters agree Mr Turnbull would lose the July 2 election.

His Treasurer, Scott Morrison, explained in his budget speech that the government would:”“…back … average full-time wage earners by preventing them from moving into the second highest tax bracket.

“From 1 July this year, we will increase the upper limit for the middle income tax bracket from $80,000 to $87,000 per year,” he said.

“Those earning average wages – full-time or otherwise – should stay in the middle income tax bracket,” he said.

“This will stop around 500,000 taxpayers from facing the 37 per cent second top marginal tax rate in each and every year,” Mr Morrison added.

But critics said $80,000 a year is well above average wages in Australia.

What, though, of Bill Shorten’s alternative, based on “fairness?”

“Too expensive” his critics proclaim.

The Treasury Secretary, John Fraser, is not among them.

However he has been having a close look at Australia’s economic prospects, and he is drawing attention to what he calls a “transition” in China.

He says our best customer, which has been buying a lot of coal and iron ore from us, is rapidly changing into a consumer society.

Mr Fraser says there will be “opportunities for Australia in this transition.”

But will we be ready to grasp them?

It is possible to spend too much time arguing about fairness.

And it is an elusive concept.

Friday 6th May 2016 - 4:38 pm
Comments Off on RBA reveals all

RBA reveals all

by Alan Thornhill

Australian shoppers are spending more and saving less, according to the Reserve Bank.

The bank made this observation in the May Economic statement, which it published today.

Its main purpose, in publishing this month’s statement, was to explain why the bank cut its marker interest rate by 25 basis points last Tuesday, to a new low of 1.75 per cent.

The bank confirmed, in its statement, that its board had been thinking of cutting this rate, for some time.

It peaked – at 17 per cent – in the late 1980s.

But the bank is expecting much quieter times, in the period ahead.

It noted that wage growth had been “modest.”

It said:“ This implies a further gradual decline in the household saving ratio over the forecast period.”

The bank also said:”The amount of residential construction work still in the pipeline is substantial and has continued to increase.”

“This points to further strong growth in dwelling investment, albeit at a gradually declining rate consistent with the decline in building approvals since last year.”

“ In established housing markets, conditions have stabilised over the past six months or so.”

“ Housing prices have grown moderately over 2016 to date, following a small decline at the end of 2015.”

“ Housing credit growth has eased a little over recent months to be around 7 per cent in six-month-ended annualised terms in early 2016.”

“ This follows increases in mortgage rates and the strengthening of banks’ non-price lending terms in response to supervisory actions.”

“In above average and business credit growth has picked up over the past year or so.”

“ Nevertheless, indicators of investment intentions suggest that non-mining business investment is likely to remain subdued for a time, although it is expected to gradually pick up later in the forecast period as overall demand strengthens.”

“ Mining investment is expected to continue to fall as projects are progressively completed,” the bank said.

Friday 6th May 2016 - 9:56 am
Comments Off on Bill Shorten speaks of Labor’s plans

Bill Shorten speaks of Labor’s plans

by Alan Thornhill

Analysis

Bill Shorten revealed much about Labor’s plans for fighting the July 2 elections, when he delivered his budget reply speech in Federal parliament last night.

These include mobilising money held in superannuation funds to advance major public transport projects, such as the Melbourne Metro, the Western Sydney rail line and Perth’s Metronet.

His speech also cleared the way for the Prime Minister, Malcolm Turnbull, to visit the Governor General, to seek his permission to call the early election.

Mr Shorten also promised that a Labor government would restore the $80 billion that the Turnbull government had cut from Australia’s hospitals and schools.

In fact it would “go beyond” that on education, Mr Shorten added.

“Over the next ten years , Labor will spend $37.3 billion to ensure that every school in Australia receives fair funding on the basis of need,” he said.

“We will deliver on the Gonski promise – and go beyond,” Mr Shorten said.

He attacked the budget that the Liberal Treasurer, Scott Morrison, had brought into parliament on Tuesday night, saying overseas shareholders are the only ones who would win, as a result of it.

Mr Shorten also promised that a Labor government would also put “the great Australian dream of home ownership back within the reach of working and middle class families who have been priced out of the market by taxpayer subsidised speculators.”

He said a Medicare card – not a credit card – should guarantee Australians access to the health care they need.

Mr Shorten also said:” Full employment and creating better paid and better-protected jobs is Labor’s economic priority.

“The jobs of the future will be powered by infrastructure and renewable energy,” he said.

“taking real action on climate change will create new jobs, attract new international investment and power our industries and services.

“Of course, advocating climate action is hard, and running a scare campaign against it is easy,” Mr Shorten said.

Mr Turnbull should know – “you’ve done both,” he added.

But delaying action on climate change will be a hit on Australians’ cost of living, a drag on our nation’s economic growth and an attack on our farmers’ way of life,” Mr Shorten warned.

Tuesday 3rd May 2016 - 5:32 pm
Comments Off on Testing investors

Testing investors

by Alan Thornhill

Analysis

Falling prices have allowed the Reserve Bank to shave interest rates.

But how well with this fit, with the Federal government’s economic policies?

We don’t know yet, because at the time of writing the Treasurer, Scott Morrison, still had not delivered his budget speech, in which he is expected to spell out those aims, in detail.

But we can say, safely, that the patience of Australian investors will be tested, in the months and years ahead.

The Reserve Bank’s decision today, to lower its cash rate from 2 to 1.75 per cent, is of historic significance, in the management of the nation’s finances.

The bank’s Governor, Glenn Stevens, was frank about the bank’s assessment of the circumstances in which it was made.

He said:” This follows information showing inflationary pressures are lower than expected.

“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.

” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.”

That’s not what investors are looking for, when they decide where to put their money.

Low risk and the prospect of reliable returns are more attractive, or even just acceptable prospects.

Will Mr Morrison’s budget help to produce happier circumstances of that kind?

Well, Australia is, once again, going through a time of quite basic adjustment.

The minerals boom is over.

Investors must look for fresh opportunities, in this time of adjustment.

They will be available.

But will tonight’s budget be compatible with them?

Perhaps that’s the real question.

Tuesday 3rd May 2016 - 3:57 pm
Comments Off on The Reserve Bank decides

The Reserve Bank decides

by Alan Thornhill

The Reserve bank has cut its cash rate by 25 basis points to 1.75 per cent

In a statement explaining the decision the bank’s Governor, Glenn Stevens, said:”At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016.

This follows information showing inflationary pressures are lower than expected.

“The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently.

” While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies.

‘”China’s growth rate moderated furthe”r in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook.

“Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years.

“Australia’s terms of trade remain much lower than they had been in recent years.

“Sentiment in financial markets has improved, after a period of heightened volatility early in the year.

“However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.

“In Australia, the available information suggests that the economy is continuing to rebalance following the mining investment boom.

“GDP growth picked up over 2015, particularly in the second half of the year, and the labour market improved.
Indications are that growth is continuing in 2016, though probably at a more moderate pace. Labour market indicators have been more mixed of late.

“Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.

“Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector.

“Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so.

“These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.

“In reaching today’s decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate.

“At present, the potential risks of lower interest rates in this area are less than they were a year ago.

“Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting,”Mr Stevens said.
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Tuesday 3rd May 2016 - 1:16 pm
Comments Off on Building approvals still rising:on trend figures ABS

Building approvals still rising:on trend figures ABS

by Alan Thornhill

The number of home building approvals rose by 0.6 per cent in March, on trend figures the Bureau of Statistics published today.

This was the fourth consecutive monthly rise on this measure.

The ACT was the stand-out performer, with an 18.9 per cent rise in approvals for the month.

But there was also a 1.1 per cent rise in WA, a 0.8 per cent rise in Queensland and a 0.2 per cent rise in Victoria, on trend figures.

However there were falls of 18.1 per cent in the Northern Territory, 1.5 per cent in Tasmania, 0.3 per cent in NSW and 0.1 per cent in South Australia.

Sunday 24th April 2016 - 5:39 pm
Comments Off on The tax talk gets tough

The tax talk gets tough

by Alan Thornhill

Malcolm Turnbull warned today that Labor’s “reckless” plans to reform negative gearing would “devalue” every home and property in Australia.

However Labor dismissed the Prime Minister’s warning, with the Shadow Treasurer, Chris Bowen,describing it as “a stunt” by the government

Mr Turnbull and his Treasurer, Scott Morrison, were speaking to reporters in the Sydney suburb of Penshurst, when he delivered his message.

He said the government would never adopt Labor’s policies.

“…they’ll devalue every home, every property, in Australia,” the Prime Minister said.

” They’ll result in increased rents because they will reduce the number of rental properties available,”he added.

” So it is an extraordinary trifecta of outcomes the Labor Party is proposing in their recklessness.

“They are going to drive down home values, drive up rents and discourage investment.”

” That’s why we won’t have a bar of it,” the Prime Minister warned.

However Mr Bowen said Mr Turnbull does not care at all about home affordability.

“Malcolm Turnbull is saying that he doesn’t have a plan for housing affordability,” Mr Bpwen said.

” He thinks it’s more important for an Australian buying their tenth or eleventh property to get a tax break than it is for first home buyers to get into the housing market.”

“… Tony Abbott knew how to run a scare campaign,”Mr Bowen said.

“but now we know that Malcolm Turnbull has no more than this for an election campaign.”

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Alan Thornhill is a parliamentary press gallery journalist.
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