Investment News/Events
ANZ Bank predicts home prices to explode
July 2008
The ANZ Bank says the growing housing shortage is setting Australia up for the "mother of all" housing booms. New home building figures showing slumping building approvals have sparked fears of a price and rent explosion that will price even more prospective buyers out of the market.
A million houses needed to avoid shortfall. A million new homes need to be built over the next five years to cope with Australia’s booming population, new figures out from the Housing Association show.
The number of houses currently being built falls well short of this, and according to the HIA, there'll be a shortfall of at least 175,000 houses if current building rates continue.
Rates tipped to stay on hold
Households look set to gain the full benefit of a new round of tax cuts which begin today as the Reserve Bank of Australia (RBA) is widely expected to leave its cash rate unchanged for now. The RBA holds its monthly board meeting later today, and economists are tipping that it will leave its key rate unchanged at 7.25 per cent for a fourth straight month.
Boom 2 on its way
May 24, 2008
FOR anyone looking forward to the end of the mining boom, there is bad news. It's not coming.
In its place will be a second boom, Boom Two, which will pump about 15,000 new jobs into the mining industry, along with millions of dollars into our region's economy.
The Bowen Basin is already looking forward to 55 new coal mining projects, with 33 of those in the Mackay district. Only three of those are expansions: Kestrel, Carborough Downs and Isaac Plains. Some are still waiting on government approval.
To put that kind of growth in perspective Mackay currently has about 32 coal mines on its doorstep.
The Australian Bureau of Agricultural and Resource Economics (ABARE) identified 16 new coal projects in just the six months leading up to October 2007. One of the largest coal mine developments in Queensland will be the Rio Tinto open-cut mine near Clermont.
The mining giant will invest $860 million and the mine will be expected to produce 12.2 million tonnes of thermal coal a year from 2010, replacing the capacity from Blair Athol mine.
A conservative estimate by Queensland Resources Council chief executive Michael Roche was that in the 2008-09 financial year, there would be $2.5 and $3 billion in royalties heading to the Queensland Government coffers, much of it from the Bowen Basin.
"Based on current demand, Queensland's coal exports are forecast to grow by around 42% by 2010 and by a further 40% by 2015," Mr Roche said.
"Prices for the next financial year point to hoisting the value of coal production in Queensland from $18 billion to $38 billion in less than two years."
Mackay will also face significant challenges as population growth parallels the booming mining sector.
State Government estimates show Mackay can expect to have nearly 130,000 people by 2026 about 40,000 or 42% more residents who will call our booming city home.
REDC chief executive officer Narelle Pearse said even with the challenges, Boom Two was something to look forward to.
"Not everyone is going to be happy economic prosperity puts the pressure on too," Ms Pearse said.
"Things are changing at a rapid pace."
Ms Pearse said one of the challenges of Boom Two would be: Where do the 15,000 new staff come from?
"They either bring them into the region, which affects affordability, or they take people from other industries like retail, hospitality and agriculture."
However, she was positive about the region's ability to cope.
"Boom One we didn't see coming, Boom Two we know about. Any improvements to Mackay will make it an even better place to live."
Rent crisis forces urgent action
The State Government has announced new fast-track home building rules as Melbourne rents jump 12.7% in just 12 months.
The rent rise is more than double the previous year's increase and almost three times the average annual increase over the past eight years.
The increase has pushed the proportion of rental properties that can be afforded by low-income earners down to just 25.2% - the lowest rate in eight years, the Victorian Office of Housing rental report for the September 2007 quarter shows.
The rental crisis has become so critical that federal, state and territory housing ministers will meet in Sydney on Wednesday to discuss the problem.
Rental vacancies across Melbourne are at just 1.4%, while the average vacancy rate for the period 2000-05 was 3.6%.
The surge in rent comes as the State Government moves to ease red tape for new homes.
Planning Minister Justin Madden said proposed new laws would reclassify residential zones into three categories: "substantial change zone", "incremental change zone" and "limited change zone".
These would replace the old residential zone one, two and three and are aimed at allowing councils to make faster housing development decisions.
"These new reforms will make a big difference to councils, giving them the tools they need to manage development and change in their municipalities," Mr Madden said in a written statement.
People living in a "substantial change zone", could see a rapid increase in housing and changes in style.
Opposition planning spokesman Matthew Guy said the proposed changes were an admission of failure for the Government's planning blueprint, Melbourne 2030.
Meanwhile, the Victorian Office of Housing rental report blamed tight supply for the sharp increase in Melbourne rents.
The biggest rent rises were in inner-Melbourne, up 13.3% to $340 a week. Southern Melbourne jumped 13.2% to $300 a week and north-east Melbourne is up 13% to $260.
For the September quarter, rents increased by another 2.6% across Melbourne.
Kate Colvin from the Victorian Council of Social Service said the figures showed that the crisis in affordable housing was getting worse.
"With the state budget coming up in May we are hoping the Government will make a solid commitment to affordable rental housing," she said.
"There is a particular issue for singles - it's very, very expensive to get a one-bedroom apartment, even in public housing where the bulk of public housing is focused on families," she said.
Housing Minister Richard Wynne's spokeswoman, Manika Naidoo, said "rising rents are a complex problem and need to be handled on a national basis".
"The minister is meeting federal, state and territory housing ministers this week to start working on the national rental affordability scheme to put 50,000 affordable homes onto the market and make sure Victoria gets its fair share," she said.
Raising the roof
- Rents across Melbourne up 12.7% in 12 months
- Inner Melbourne up 13.3% to $340 per week
- Southern Melbourne up 13.2% to $300 per week
- North-eastern Melbourne up 13% to $260 per week
- Median three-bed house rent across Melbourne up 14.9% to $260 per week
- Vacancy rate for Melbourne of 1.4% compared with 3.6% for 2000-05
Proposed new residential zones for Victoria
- Substantial change zone: Promotes significant increase in new dwellings
- Incremental change zone: Respects existing neighbourhood character
- Limited change zone: Recognises specific characteristics to be protected
SOURCE: VICTORIAN OFFICE FOR HOUSING, DEPARTMENT OF PLANNING AND COMMUNITY DEVELOPMENT
Home Affordability
The Australian Financial Review - 22 January 2007
The Federal Government has urged the states to cut "excessive" stamp duties on conveyancing and to release new land for development to make housing affordability easier for first home buyers.
Commenting on a report released yesterday that showed housing affordability had fallen to at least a 22-year low, acting Treasurer Peter Dutton said that in 2005/06 the states collected $10.8 billion in stamp duties.
"This is more than double the amount they collected in 2000/01 and comes despite record amounts of GST going to the states and territories," Mr Dutton said.
"Property taxes, such as stamp duty and land tax, now make up, on average, 32.5 per cent of the total revenue raised by the states from their own imposed taxes.
"This is up from 22.6 per cent in 2000/01."
He said that in Western Australia the situation was even worse with property taxes making up 43 per cent of total state sourced revenue, despite record levels of GST from a booming economy fuelled by the resources sector.
Stamp duties on a median priced property in Perth add, on average, $20,500 to the cost of the purchase, he said.
The survey released yesterday by Australia's peak building body, the Housing Industry Association (HIA), showed that, for the first time, Perth's housing for first home buyers is now less affordable than Sydney's.
"With Perth now overtaking Sydney as the most expensive market for first home buyers it is time for the Western Australian Government to cut this excessive level of stamp duty and give back to the people who are helping to make Western Australia such a prosperous state," Mr Dutton said.
"I call on all the state Labor governments to cut stamp duty on conveyancing now and make housing a whole lot more affordable for first home buyers."
Overseas Purchasers
Property acquired by foreign interests requires prior government approval.
FOREIGN INVESTMENT REVIEW BOARD (F.I.R.B)
The majority of foreign investment in Australia involves the purchase of real estate. The governmentĂs foreign investment policy is designed to create growth of property in Australia through a non-speculative approach.
The following do NOT require foreign investment approval:
- Australian citizens, residing in Australia or abroad
- Holders of Australian permanent resident visas
- Persons entitled to hold a special category visa (this category usually only applies to New Zealand citizens acquiring residential real estate)
- Australian citizens and their foreign spouse purchasing residential real estate as joint tenants.
- All other parties are required to submit an application to the F.I.R.B.
- Applicants should allow a 30-day period for a decision.
Executive Member
Foreign Investment Review Board
The Treasury
Langton Cresent
PARKES ACT 2600
AUSTRALIA
Website at: www.firb.gov.au
Or contact
Ted Tzovaras
Tzovaras Legal Commercial Lawyers & Advisors
Level 13
139 Macquarie Street
SYDNEY NSW 2000
AUSTRALIA
Tel: 61 2 9251 2336
Fax: 61 2 9251 6288
Website at: www.tzovaraslegal.com
Disclaimer
The information contained on this page is subject to Australian Federal Government (Foreign Investment Review Board) policy. We suggest all interested parties seek their own independent legal advise or contact the FIRB directly.
INTEREST RATE NEWS
More than half (58.7 per cent) of the investors surveyed believe that interest rates will remain at their current level for the next half of this year, while just over a quarter of those expecting a rise do not anticipate a rate rise higher than 25 basis points.
Borrowers continue to prefer a floating rate over fixed rates. 49.5 per cent indicated that if borrowing in the next six months, they would select a floating rate. Property professionals recommend that 41-50 per cent of any loan be fixed.
60.0 per cent of respondents stated that they were likely to invest in the property market in the next six months, with 45.4 per cent choosing residential property as their investment of choice. The mineral boom in Western Australia continues to have an effect on the housing industry as 62.9 per cent of Western Australians chose residential as their preferred investment (and increase of 6.5 percentage points since the last survey).
However, despite a 5.7 percentage point drop in support, Queensland remains the state that most property professionals believe offers the best potential for investment returns in the next six months.
The residential property market generally has demonstrated solid improvement since the last survey, with 43.9 per cent forecasting an improved outlook – a 7.5 percentage point increase on the previous result.
On the question of confidence in the market, Western Australia again experienced an extraordinary result, with 92.9 per cent in the state forecasting an improved outlook for residential property investment in the next six months - a 16.7 percentage point increase on the previous survey and the most positive outlook for a state in the history of the Property Investors Survey.
AT LAST, LAND TAX RELIEF FOR INVESTORS
SMH Article dated April 14-16 2006 - Budget Exclusive.
Land tax will be made fairer and less susceptible to sharp moves in the property market as part the of State Governments attempt to win over disgruntled voters for next years election. In his first state budget in June 6, 2006 the new Treasurer, Michael Costa, will announce an overhaul of the land tax system that will include an averaging of land valuations over three years and a new, more transparent appeal process.
As some property owners are hit with steep rises in their land tax bills, Mr Costa is also considering making a small cut in the 1.7% tax rate, giving the valuer-general more time to properly value property, and making sure assessments do not arrive at the start of the calendar year.