mrd

The ANZ and the Commonwealth Bank are reducing their fixed rates for home loans because the cost of funding those loans has eased. ANZ rates will fall by between 0.11 and 0.5 of one per cent and Commonwealth Bank rates by 0.25 of one per cent. The move comes ahead of an expected official rate cut from the Reserve Bank of Australia (RBA).

Martins Comment -

• “Bendigo and Adelaide Bank posts 40% profit growth”
• “St George on target for record profit”

These headlines of the past few days appeared in the very same newspapers that have quoted that some banks may not pass on the total of any rate cuts, now imminently forecast. JP Morgan economist, Stephen Walters, is quoted as saying he expects the RBA to cut its key cash rate to 7% next month, followed by another 25 basis-point cut before the end of 2008.

What has not made the big headlines, however, is that both the Commonwealth and ANZ banks have both just cut their fixed rates. This is likely their response to the decreasing demand for these fixed rate products; with most customers correctly believing have peaked and are on the way down. At the risk of sounding like a clanging symbol… it is supply & demand that determines the worth of any product or service – property and loans alike!

Source: ABC

Hi Clifton Views Purchasers,

Clifton Views is progressing quickly now with stage 1 due for completion in September 2008 and stage 2 due January 2009.

There is some great stuff happening in Cairns as a copy of an article from the Sunday Mail below explains.

When researching an area in which to invest, the fundamentals that support its long term capacity to grow; and by grow I mean double in value every 7 – 10 years at least, is vital when making a well informed low risk investment decision.

Population growth is one of those factors that underlie and sustain an area’s price growth potential. Supply and demand will always be the major determining factor for price movement. So what we want to see is a place people want to live and are moving in droves creating a problem for councils and governments! New planning needs to take place, infrastructure spending is required and managing the growth in relation to urban development, transport, environment etc. is critical.

This is the case for Cairns!

An article released in the Sunday Mail, 18 May 2008, speaks of State Government plans to accommodate up to a 70% of the projected 100,000 new residents moving to North Queensland in the next 20 years, in Cairns.

This huge growth would be a 46.7% increase over the current population of approximately 150,000 people. That’s an extra 3,500 people per year moving into the city.

Following is the article from the Sunday Mail. Below that is your Clifton Views Construction Update and photos.

Read more…

House prices are expected to rise by as much as 40 per cent across the country during the next five years, according to economic forecaster BIS Shrapnel.

BIS Shrapnel director and chief economist Frank Gelber said housing affordability, already at record lows, would sink even lower as demand continued to outstrip supply.

Mr Gelber said there was currently a construction shortfall of 30,000 dwellings, but has forecast that number would grow to 60,000 by June this year and 129,000 midway through 2009.

Read more…

ABC radio this morning interviewed Bill Morris of the Midwood report. Marion and I (Martin) occasionally have dinner with Bill and his wife at local trivia night so I was already aware of his opinions but this interview was still interesting.

The points covered were-

• Median rents on the Gold Coast are now the highest in Queensland. $10 PW higher than Brisbane medians.
• G.C. median rents have increased 12% in the last 12 months.
• Because of the lack of rental properties Bill expects rents to increase by 40% in the next 4 years.
• We need 130 new dwellings EVERY WEEK just to meet existing demand and this is simply not happening.
• Currently there are only 400 blocks available for sale on the entire Gold Coast!
• The shortage of available land means that this situation will not change in the foreseeable future. Rents and prices will continue to rise with the laws of supply and demand.

It’s the return of the gold rush. Gold Coast property prospectors are again set to strike it rich as the latest Midwood report shows a buying boom will hit next year. Author and anaylst Bill Morris said property prices could rise as much as 40% fuelled by population growth and a thriving state economy.

The Midwood Report for the Feb 2007 quarter shows that the Queensland economy is outpacing the country, with the states gross domestic product increasing by 4.75% compared to Australia’s 2.6%.
Population growth is also increasing steadily, at a healthy 2% for the state with the coast counting 530,200 residents last month.

“The basic story from this report is all good news for Queensland and therefore the Gold Coast” he said. “From housing to units to rental prices, everything is on the way up.The future has literally never looked brighter”.

Source: Gold Coast Bulletin

SYDNEY is in the grip of a second property crisis with the supply of new houses falling to levels not seen since 1975 and research forecasting rents to rise by as much as 40 per cent within two years.The results of a study, by BIS Shrapnel, has shown construction of new homes in Sydney has hit an historical low, rivalled only by the slump of the mid 70s.

Coupled with housing affordability, low to middle income earners are being warned that prices are likely to spike again within four years with “steep price increases”.

Read more…

The article followed in the same vein as many regarding increasing rents and low vacancy rates. They showed the price of a 4 bedroom home in Brisbane increasing from $185k in 2001 (rent $245pw) to $360k in 2006 (rent $340). That’s a 95% increase in price and a 39% increase in rent. The Gold coast over the same period showed 100% increase in price from $189k to $378K (rent up 54% from 340pw to $370pw). In Caloundra 2 bed units rose from $176k to $372,500 (112% – who said that units don’t show capital growth!) with rents increasing from $155 to $230pw – 48%.

Michael Matusik was quoted as saying that the trend was set to accelerate – “we anticipate that up to 40% of households in urban Queensland will rent in the next 10 years or so. He also commented that with rising rents there would be an increasing number of people sharing accommodation. An interesting fact was that 80% of all property investors earned less than $75k p.a. You don’t need a huge income to invest.

Source: GC Sunday Mail