Browsing articles in "Housing"
Monday 30th November 2015 - 8:08 pm
Comments Off on The economy stirs

The economy stirs

by Alan Thornhill

The Australian economy has stirred over recent months.


Manufacturing sales rose 0.8 per cent – on seasonally adjusted figures – in the September quarter – after six quarters of falls.


However this small rise – on a volume basis – seen in figures published by the Bureau of Statistics – was dwarfed by a 5.1 per cent fall over the year.


A survey, also published today showed business confidence fading in recent months as results failed to meet expectations.
The fall in business optimism was reflected  in the results of the  latest Dun & Bradstreet’s Business Expectations Survey.


These suggest a fairly subdued outlook for the first quarter of 2016.


However Westpac Economist, Andrew Hanlan, said the tone of the bureau’s business indicators’ survey had been more positive than anticipated.
Adam Siddique, the Head of Group Development at Dun & Bradstreet, broadly concurred.


He said business confidence remains historically strong,.


However he warned that cooling in housing market activity might present challenges in the year ahead.


“There can be no doubt the Sydney and Melbourne housing markets are now slowing down, which is to be expected after a period of spectacular growth,” Mr Siddique said.


The firm also reported that, as the new year approaches, business are reporting lowered expectations for activity across sales, profits, employees and capital investment.

It said that in the September quarter, the percentage of  businesses reporting an actual increase in activity minus percentage of businesses reporting an actual decrease fell short of expectations a across all components, except selling prices,


That exceeded expectations by a marginal 0.33 points.


Meanwhile, the actual increase in both selling prices and employment exceeded expectations for the September quarter:

Twenty five point 2 per cent of businesses reported an increase in selling prices for Q3, compared to the 24.2 per cent that had expected an increase, while 23.0 per cent of businesses reported an increase in employees for the quarter, compared to the 21.1 per cent that had expected an increase.


D&B said the muted outlook came despite an improvement in actual indices for profit, capital investment and selling prices in the September quarter over the June quarter.


Only the actual sales index decreased; while the actual employees Index remained unchanged since the previous quarter.

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Friday 27th November 2015 - 7:30 am
Comments Off on Malcolm;s big statement

Malcolm;s big statement

by Alan Thornhill

Some might call it a mini-budget.


All the Prime Minister said, in an interview with Leigh Sales on the ABC last night, though, is that his government would release “an innovation statement” within the next two weeks.


Well, perhaps he did add a little dressing, to make the prospect enticing.



By promising, for example, that he would would “set out a very large number of substantial measures. to drive the innovation that would ensure that Australians, their children and grandchildren, will have great jobs.”


“…better jobs in the future that will drive our economy,” he added.


Then he laid it on the line.
“I don’t think anybody has any doubt that if we are to remain the high wage, generous social welfare net country, first world country that we want to be then we need to be more innovative, more competitive, more productive and the innovation statement will be a good example of the measures the government is undertaking to achieve that.”


Yet Mr Turnbull, himself, has some catching up to do in this regard.
He saddled Australia with the pursuit of an internet system which, even if achieved, would offer speeds be well below those of many other first world countries, such as France.
Of course, with its vast expanses to connect, Australia does have difficult – and expensive – problems to overcome, in building anything that could – even remotely – be called a fast internet system.


Yet the picture emerging from Mr Turnbull’s attempt to do so – on the cheap – has not been impressive, so far.


Long waits for connection.

Cost over-runs.


There can be no doubt about one thing.


This “innovation statement, when it appears, will be drawn up to underwrite Mr Turnbull’s bid for re-election next year.


Politically, his situation has its difficulties, despite what some are calling his initial “honeymoon” period.


He is still the man who became Prime Minister, without a popular mandate.


And he is not short of opponents who stand ready to remind him of that fact, if he starts making mistakes, as most Prime Ministers do, as they start to settle into office.

Mr Turnbull also declared during his interview last night that he is “comfortable” in his new job.


But make no mistake.


His handling of the Brough affair is already being watched very closely.

Thursday 12th November 2015 - 1:53 pm
Comments Off on Life expectancy hits a new high

Life expectancy hits a new high

by Alan Thornhill

Life expectancy in Australia hit a record high last year, according to the the Bureau of Statistics.


The Bureau said said  male life expectancy at birth rose to 80.3 years in 2014 from 80.1 in 2013 and female life expectancy  increased to 84.4 years from 84.3.

The Bureau’s Beidar Cho  said: “There are only six other countries worldwide where both men and women have a life expectancy over 80 years.”


” These countries are Japan, Italy, Switzerland, Iceland, Israel and Sweden.”

“Australia has a higher life expectancy, at both the male and female level, than many similar countries to ours, such as New Zealand, the United Kingdom and the United States of America,” she added.


But there are big differences between different parts of the nation.


Ms Cho said:” “In 2014, the Australian Capital Territory had the highest life expectancy for both males and females while the Northern Territory had the lowest.”

She said too that  the number of registered deaths rose 4.0 per cent to 153,580 in 2014 from 147,678 in 2013.


Ms Cho said this reflects both Australia’s ageing and its growing and ageing population.

Tuesday 10th November 2015 - 12:55 pm
Comments Off on Housing market still bright

Housing market still bright

by Alan Thornhill

Housing finance rose strongly in September, despite increased investor caution.


The Bureau of Statistics reported today that the amount lent to finance the purchase of new homes rose by 3 per cent that month, on seasonally adjusted figures.

However the Bureau also noted that the amount lent to investors, in fixed loans, to finance dwelling purchases, fell by 8.5 per cent in September.

This suggests that investors have become less eager to buy, as previously high growth in home prices, particularly in Sydney and Melbourne eased.

Broadly, though, the Bureau’s Housing Finance Figures for September suggest that Australia’s building industry is likely to remain strong.


Perhaps the clearest indication of that, in its Housing Finance figures, is its observation that the number of finance commitments, for the purchase of new homes, rose by 5.4 per cent that month.

This suggests that trade in Australia’s housing markets has been brisk.


And with populations rising, in the nation’s cities, builders are likely to be kept busy, trying to keep up with demand.


However, the Bureau’s figures do point to some weak spots in Australia’s housing markets.

It reported, for example, that the total amount lent, to finance the purchase of dwellings fell by 1.6 per cent in September.

Thursday 5th November 2015 - 2:27 pm
Comments Off on Home prices:What now?

Home prices:What now?

by Alan Thornhill



What’s happening with home prices?

Few questions are more basic to family finances than that.

Or more urgent, given the sharp rises seen in both the Sydney and Melbourne markets over recent times.

All this, of course, makes a  report, just published by the Housing Industry Association,  all the more relevant.

The overall conclusion of this study called Perspectives on Australian Dwelling Prices will, however, surprise many.


For the report concludes that “dwelling prices in Australia are proportionate and balanced in the broader economic context.”


What’s behind that bold claim?


The study notes that there is a significant gap between the high growth markets (Sydney and Melbourne) and those cities experiencing falling prices.

It says, too, that the national dwelling price growth rate of 10.1 per cent in the year to October 2015 masks these variations.


“That said, the current position of dwelling prices with respect to fundamental economic indicators like incomes, earnings, interest rates and rental streams remains largely balanced at the national level and across a majority of the capital cities,” it adds.



There is a bit of  economist speak, there.


Basically, though, what the economists who wrote this paper are pointing out is common sense.

That is, if you want one of the high incomes, available in the Sydney job market, you might find yourself paying a little more for a home than you would in, say, Hobart.


Besides as the HIA economists, who wrote this report also say: “it is important to stress that price to income ratios are very sensitive to the particular income metric used.



Accordingly, the selection of an unsuitable income measure will result in unreliable price to income multiples being estimated.


Since mid-2012, home prices in Sydney have increased by 50 per cent.

But the HIA economists add:”Despite the strong price growth over the past three years, Sydney prices remain in a ‘normal’ range with respect to fundamental indicators like rents, earnings and interest rates.”


But the sums, on which this report are based, are more complex than might, at first seem necessary.


What, though, of the broad overall picture with home prices?

The HIA  report puts its answer to that question very forcefully.

It says:-”Since bottoming out in May 2012, dwelling prices have increased by 32.1 per cent across Australia’s eight capital cities.”


That’s impressive, particularly at times of low inflation in many other areas.


Once again, though, the HIA concedes that the price growth you are likely to see, on your property, depends very much on where you choose to live.


Or as the report itself says:” The distribution of price growth is increasingly polarised with double-digit growth in Sydney and Melbourne and prices declining in several capital cities.”


A mixed picture, indeed

Tuesday 3rd November 2015 - 3:41 pm
Comments Off on Rates held for now, but…

Rates held for now, but…

by Alan Thornhill

The Reserve Bank board kept its cash rate on hold again today,

but its Governor, Glenn Stevens, hinted that there might be

at least one further cut in future.


In a statement issued after a board meeting today, the Bank’s

Governor said the bank had decided to leave the cash rate

unchanged at 2.0 per cent.


In that statement, Mr  Stevens said the global economy

is expanding at a moderate pace, despite some further

softening in conditions in the Asian region.


He  said US growth is continuing, as is the recovery

in Europe.


But he added: ” Key commodity prices are much

lower than a year ago.”


He said that, in part,  this reflected increased supply,

including from Australia.


“Australia’s terms of trade are falling,” Mr Stevens



“The (US) Federal Reserve is expected to start

increasing its policy rate over the period ahead

, but some other major central banks are continuing

to ease monetary policy,” he said.


” Volatility in financial markets has abated

somewhat for the moment,” he said.


At today’s meeting the Board judged that the prospects

for an improvement in economic conditions had

firmed a little over recent months and that leaving the cash

rate unchanged was appropriate at this meeting.


Members also observed that the outlook for inflation

may afford scope for further easing of policy, should that

be appropriate to lend support to demand.

He said  “The Board will continue to assess the outlook,

and hence whether the current stance

of policy will most effectively foster sustainable growth

and inflation consistent with the target.


In a statement issued, with the bank’s decision,

Mr Stevens also said that

while credit costs for some emerging market

countries remain higher

than a year ago,

global financial conditions overall

remain very accomodative.


In Australia, the available information suggests that moderate

expansion in the economy continues, Mr Stevens said.


While GDP growth has been somewhat below longer-term averages

for some time,

business surveys suggest a gradual improvement in

conditions over the past year.


This has been accompanied by somewhat stronger

growth in employment and a

steady rate of unemployment.


Inflation is low and should remain so, with

the economy likely to have a degree

of spare capacity for some time yet.


Inflation is forecast to be consistent with the target

over the next one to two years

, but a little lower than earlier expected.


“In such circumstances, monetary policy needs

to be accomodative,”

Mr Stevens said.


“Low interest rates are acting to support borrowing and spending.


While the recent changes to some lending rates for housing will reduce this

support slightly, overall conditions are still quite accommodative.


Credit growth has increased a little over recent months, with growth in lending

to investors in the housing market easing slightly while that for owner-occupiers

appears to be picking up.


Dwelling prices continue to rise in Melbourne and Sydney,

though the pace of growth has moderated of late.

But Mr Stevens added :”Growth in dwelling prices has remained

mostly subdued in other cities.


“Supervisory measures are helping to contain risks that

may arise from the housing market.


“In other asset markets, prices for commercial property

have been supported by lower long-term interest rates,

while equity prices have moved in parallel with developments in global markets.


“The Australian dollar is adjusting to the significant declines in key commodity prices,” Mr Stevens said.


At today’s meeting the Board judged that the prospects for an i

mprovement in economic conditions had firmed a little over recen

t months and that leaving the cash rate unchanged was appropriate at this meeting.


Members also observed that the outlook for inflation may afford scope for further

easing of policy, should that be appropriate to lend support to demand.


“The Board will continue to assess the outlook, and hence whether the

current stance of policy will most effectively foster sustainable growth

and inflation consistent with the target,” he said.

Monday 2nd November 2015 - 3:45 pm
Comments Off on Wage subsidies getting older employees back to work

Wage subsidies getting older employees back to work

by Alan Thornhill

Colin Johns, of Transformer Services, hired a mature age worker last year, under the Federal government’s Restart Program, which now offers wage subsidies of up to $10,000.


Senator Michaelia Cash, who launched improvements to that program, at the Canning Vale markets near Perth today, said it is yielding great benefits for both job seekers and employers.


Mr Johns agrees with the Federal Employment Minister.


“It’s been great for our business,” he said today.


The gentleman we hired really hit the ground running.

“He knows how to solve problems, coach other employees and look after our customers,” Mr Johns said.

“And I am personally very pleased to have been able to give a mature aged worker a chance to stay in the workforce and earn an income.”


Senator Cash said employers will now be able to get the$10,000 subsidy, available to those who take on a mature age worker, as Mr Johns did, over 12 months, instead of the 24 month period that previously applied.


She said too that:“The Government understands that there are mature-aged Australians with an enormous amount of knowledge and experience to offer employers.

“The reforms that came into force yesterday will incentivise businesses to employ this very experienced, yet often overlooked workforce,”Senator Cash said.

Restart offers employers up to $10,000 in wage subsidies to help with recruitment and related costs when they hire an eligible job seeker aged 50 or over.”

Friday 23rd October 2015 - 5:46 pm
Comments Off on The ANZ raises its home loan rates, too

The ANZ raises its home loan rates, too

by Alan Thornhill

The ANZ bank became the last of Australia’s big four to raise its interest rates this afternoon, when it announced that it will increase its home loan interest rates by 0.18 percentage points.


This is expected to add about $36 a month to repayments on an average home loan.


The National Australia Bank had made a similar announcement earlier in the day.


The Westpac  led the present round of rate rises, when it announced last week that it would increase the rates it charges on its home loans by 0.2 per centage points.


The rises are being blamed, primarily, on Federal government requirements that the banks increase their capital holdings.


This has been done to put the banks in a stronger position if there is a downturn in financial markets.


However the new Federal Treasurer, Scott Morrison, said the banks have been making their own commercial decisions.


The ANZ Group has raised interest rates by 0.18 percentage points, becoming the last of the major banks to increase mortgage rates independently of the Reserve Bank of Australia.


Its standard variable rate for owner-occupiers will rise to 5.56 per cent and its standard rate for property investors will rise to 5.83 per cent.

Westpac led the Big Four in raising home loan rates last week, when it hiked its variable rate by 0.2 percentage points.


The Commonwealth Bank followed with a 0.15 percentage point rise.   Then National Australia Bank joined in this morning with a 0.17 percentage point increase.

All four banks blamed the increases on a requirement for banks to hold more capital to cover their mortgage loan books.
NAB’s standard variable home loan interest rate will rise to 5.6 per cent and the change will take effect on November 12.


NAB said its decision was a response to “market conditions” and policy changes that have forced the big banks to hold larger capital buffers for absorbing losses on mortgages.


NAB’s executive in charge of personal banking, Gavin Slater, pointed to the bank’s move to raise $5.5 billion capital from shareholders earlier this year, which was partly in response to the tougher rules


“There are a range of factors that come into consideration in interest rate decisions. The home loan market is dynamic, with multiple changes being seen across the industry,” Mr Slater said.


The Reserve Bank board will meet on Tuesday, November 3, to review rates.

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Alan Thornhill

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

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