First National Lauds New Ministerial Appointment

First National Real Estate CEO, Ray Ellis, welcomed the Prime Minister’s appointment of a new Minister for Population, saying he hoped appropriate action would finally be taken in addressing the challenges facing the property market.

“We have been calling for some time for a consistent unified and national approach to the property market,” Mr Ellis said.

“It is heartening to see someone in the government at last taking responsibility for this but I hope they will take into account all the relevant factors, and not just an isolated few.

“The issues we face as an industry are not limited to population growth, although it is a key driver of the property market.

“Other considerations include protracted, complicated and inappropriate planning processes, high taxes and imposts and the whole supply versus demand issue which is producing a chronic shortage of supply for this country in basically every state.”

According to Mr Ellis, if the government, and in particular, the new Minister for Population are really serious about making sure Australia is ready and well prepared for projected population growth in the next 50 years, they need to ensure representatives from all areas of the industry have a say in what is happening and how the future should look.

“There should be an appropriate forum established where key players in the industry are able to voice their opinions and concerns and put all matters on the table,” Mr Ellis said.

“Then, vehicles can be created to drive the necessary changes forward. Real estate is an industry that dominates government revenues, as demonstrated by the New South Wales Government’s recent tax windfall of 600 million dollars in unbudgeted stamp duty.

“This is on top of the reported $1 billion bounce in state and territories’ budgets as a resurgent property market boosts stamp duty receipts around the nation.”

Mr Ellis said the critical component here was getting a strong representation of appropriate industry members, and not just limited to the usual suspects of industry and peak bodies.

“To effect the right kind of change, the people who are at the coalface of the real estate and the property market should be involved,” Mr Ellis said.

“They are the ones who are dealing with both buyers and vendors, the financiers, conveyancers and lawyers and all the other aspects of operating in this property space.

“Who are better qualified than those to know what is going on and the impact of proposed changes on the man in the street?

Mr Ellis also warned of the kind of situation that can arise as a result of inappropriate property planning laws and increased levels of immigration.

In one instance, he was advised by a First National agent that no local buyers bought any of the 160 apartments available in an off-the-plan development because lawyers advised the foreign builder held nothing more than an option over the development and that title was not sufficiently secure. As a result, the vast majority of apartments were rapidly snapped up, and are believed to have been sold to foreign investors.

“Housing approvals are still falling, and we already face a net shortfall of 50,000 new houses per annum on current figures and forecasts predict Housing Affordability to decline even further.

“Recent ABS figures show the prices of established houses rose again in the December quarter, in keeping with our own members’ experience, as outlined in our recent 2010 Property Outlook.

“In addition, there is no indication of an easing in rental vacancy rates for most areas in Australia, and, even with additional housing stock coming onto the market, there is still not enough to meet projected population growth figures.”

“You can develop all the infrastructure you like, but if the required number of homes can’t be built to meet the number of people seeking to live in this country, then you still won’t overcome the real issue.”

Principal of Chambers and Frewin First National, Dennis Riva, operates a First National agency in Hornsby, Sydney. He says the supply shortage is so dire that there wasn’t one new development released in Hornsby last year.

“As a result of dramatic changes in the Federal Government’s immigration intake in recent years, there has been a massive increase in immigration numbers and most of this pressure falls on Sydney and Melbourne,” Mr Riva said.

“Hornsby is situated close to high quality schools and has excellent transport links to city and suburban employment. As a result, we’ve seen more demand than the local market can supply.”

Child Proof Your Home

Children are always at risk of injury, but never more so than in the family home. 

There are many simple measures that can be taken to prevent simple accidents, often with far-reaching and serious long-term effects, from occurring in the home.

“It’s a simple case of taking a critical view of objects around your home and understanding where the potentials for hazards are,” Metro First National Principal, Geoff Dowling, said.

“Take the time to get down and crawl around the home so that you can see for yourself where curious hands and adventurous spirits might roam.”

While childproofing the home is important for families, investors should also take the time to understand how child-friendly their investment property is, as it may represent a marketing point for their investment property.

Injuries are the leading cause of death in Australian children aged one to fourteen, accounting for nearly half of all deaths in this age group.  More children die from injury than of cancer, asthma and infectious diseases combined.

Unintentional injuries make up around 95% of all child injury deaths, with young children under the age of five years most at risk of unintentional injury.

“The most common place for young children to be injured is in their own home, so ensuring the safety of our homes should be paramount for parents to keep their children safe,” Mr Dowling said.

 “There are so many things that are precariously balanced, just waiting to be pulled down, knocked over, bumped into or climbed on.

“And as the child becomes more mobile and dexterous, they love to put things in their mouths and they don’t discriminate between toxics or poisons and lollies or biscuits.”

First National Metro has produced a Tip Sheet to assist parents, and investors, create a safe environment in the home for children to thrive and grow.  

This tip sheet can be found here.

Local Stars Shine at Gala Dinner

First National’s Metro staff were rewarded for their stellar achievements over the past year on Saturday night at the network’s Gala Awards dinner with our agency being named among the state’s Top 10 Offices.

The elegant affair, held at the Sofitel Hotel, celebrated the best of the state’s real estate performances over the past year.

We also took out top honors for achieving the highest number of Commercial Listings and Sales as well as being among those offices achieving the Highest Number of Auctions.

Our Senior City Sales Agent, Ben White, was also recognised as being among the state’s Top 10 Salespeople  and Aaron Woollard was named Sales Rookie of the Year.

A fantastic effort all around from our team and we are looking forward to setting even higher benchmarks in 2010!

Does Australia Face a Property Bubble

For some time, elements of the media have suggested Australian housing values are over-inflated and face the risk of a speculative housing bubble bursting. This theme arises in some European and US based reports, where an incomplete understanding of the Australian property market’s unique dynamics is evident. Australian media is not devoid of such reports, although they are far less prevalent.

Of course, there are reasons for concern. Many of the market’s indicators do underline the fact that things are getting hotter. Housing prices have been rising strongly this year, on the back of modest gains even last year.

Information supplied by First National Real Estate, Your Industry, No. 133 – 15.03.10

Auction clearance rates started strongly in 2010 and pre-auction sales are well up. The number of properties being sold has risen. Rents continue to rise, although slightly slower than expected, and vacancy rates are at their lowest point in the past twenty years.

Balancing the rapidly heating market though is a sharp drop in home loan approvals. To an extent, this is an expected result of the removal of the First Home Owners Grant Boost. With many having rushed to beat the phase out in December, there’s a natural adjustment occurring. However, this is also partly attributable to tightened credit conditions.

The set of fundamentals driving the Australian property market differ, though, from most international markets right now. Firstly, Australians are chiefly coastal dwellers. This is in total contrast to the European and United States property markets. We have a limited number of population centers and these attract the vast majority of our population, as a result of employment and lifestyle conditions.

Our political structure of Federal and State governance leads to another unique factor. The Federal Government has determined a policy whereby levels of immigration are set at their highest since WWII, generating significant demand for housing. This collides with an environment of undersupply and a demonstrated State Government incapability to plan for appropriate land release and building approval processes.

Australia’s banks are more heavily regulated than those of other countries and the concept of ‘non-recourse’ lending that, in part, led to the sub-prime mortgage crisis in the United States, is simply not a feature of our marketplace.

The economy has performed strongly and continues to do so as employment posts some of the strongest gains on record in recent times.

Banks, however, remain reluctant to resume lending for apartment developments and this is another factor constraining supply. As predicted in First National Real Estate’s Property Outlook 2010, investors have noticed the opportunity for capital gain in such an environment and this is where the Reserve Bank of Australia (RBA) observes some risk of speculation creating a bubble.

Research shows that basic variable interest rate movements of the past ten years have averaged 6.6 per cent. The last few RBA board meetings have all discussed the need for interest rates to return to ‘normal levels’ if the economy still shows signs of expansion. According to finance brokers Smartline, Australia is now only 0.60 per cent from the medium term average, as the chart above shows. RBA boss Glenn Stevens’ estimate is that it will take one or two 0.25 per cent increases in official interest rates to return to ‘normal’.

New home sales made an encouraging start to 2010, with sales of newly constructed homes jumping 10.1 per cent in January. Sales of new apartments also rose, but only by 4.1 per cent, following a 14.5 per cent rise in December 2009. However, while sales were up in January, building approvals fell 7 per cent so supply remains the never-ending challenge critical to avoiding a bubble.

One simple factor is clear. If State and Federal Governments cannot coordinate, at all levels, to solve land supply constraints, high levels of taxation on new housing, and, structural barriers, the strangulation of dwelling supply will leave the RBA with one option only to minimise the chance of a bubble bursting – suppressing demand by lifting rates further still.

This information supplied by First National Real Estate, Your Industry, No. 133 – 15.03.10

February in Review

Brisbane is proving to be the mythical “push me, pull you” from Dr Dolittle. The fundamentals in the plus column have been a constant feature for some time now.

Continued migration to our little corner of paradise coupled with low interest rates and local economic enthusiasm should spell onward and upward growth for our residential sector. In the deep dark minus column however, affordability levels for both purchasers and tenants are now burning off some punters and inadequate infrastructure claims continue to dog the optimists.

The lynchpins seem to be confidence and interest rates with some in our midst’s speculating on a strong market recovery late in the year if holding charges can remain low.

All in all, heading into 2010 we are reasonably confident that the market will react to factors from both ends of the plus and minus column with net result somewhere in the middle. Interest rates will continue to play a large part in purchasing decisions and with rent increases beginning to slow in some parts, affordability for investors can seem shaky.

That said, people just keep coming here to live and that can only bode well for those with the holdings. Don’t be too surprised if, all things remaining equal, we find a year of modest growth with established inner and near city property showing a 5% to 10% growth rate in the next 12 months. Those further a field can still expect to remain in the black, albeit at less enthusiastic rates.

Herron Todd White

First National Calls For More Land Release

First National Real Estate CEO, Ray Ellis, is calling for state and federal governments to release more vacant land to meet increasing demand across Australia.

“This country is facing one of the worst housing shortages in its history with no foreseeable easing of the situation in the near future,” Mr Ellis said.

“Housing approvals are still falling, and we are already facing a net shortfall of 50,000 new houses per annum on current figures.

“These rates leave us with a chronic shortage of supply to meet the needs of the more than 35 million people expected to live in Australia within the next 40 years.  To keep up with demand, Australia should be building around 180,000 homes a year.”

Mr Ellis makes the call following forecasts that Housing Affordability is to decline further as strong demand and the ongoing lack of newly built homes keeps house prices increasing.

“This is in addition to recent ABS figures that show the prices of established houses rose again in the December quarter, in keeping with our own members’ experience, as outlined in our recent 2010 Property Outlook” Mr Ellis said.

The December figures showed house prices increased 5.2 per cent nationally, more than at any other time in 2009.

Mr Ellis said even the government’s National Rental Affordability Scheme (NRAS) falls well short of addressing the issue.

“The NRAS seeks to increase the supply of affordable housing for workers who service our cities,” Mr Ellis said.

“But there is no indication of an easing in rental vacancy rates for most areas in Australia, and, even with additional housing stock coming onto the market, there is still not enough to meet projected population growth figures.

“Our estate agents are reporting strong demand for property before it is even on the market.  In one case, buyers enquired about properties that were available in stages two, three and four of an estate’s development, when they were just releasing the first stage.

“And in Queensland, developers are still working on 2007 planning approvals, further impacting on the state’s ability to address its housing shortage dilemma.”

The Northern Territory will also continue to have an issue around housing stock availability in an increasingly tight rental and property market.

“The government has already released land in an effort to cope with increasing demand and the impending Inpex and Sunrise projects will only increase pressure on the Northern Territory’s property market,” Mr Ellis said.

“But every state across Australia is facing this demand and supply issue, and the only real way to address it is to make more land available.”

According to Mr Ellis, there is still plenty of land that could be freed up so that Australians living and working here are able to enjoy their patch of grass, which research shows is what Australians, and those coming to live in Australia, are looking for.