Thursday, February 22, 2007

Why renters fat and thin are singing

It's a pretty safe bet the big story in housing this year will be steep increases in rents. The media have dubbed it the "rent crisis", with a leading property market forecaster, BIS Shrapnel, predicting that rents for inner-Sydney apartments will rise by more than 7 per cent a year for the next five years. But you'll hear worse than that before we're through.

Once again, politicians are going to sit by the sidelines while rents escalate. However, unlike mortgage payments, rentals go into the CPI calculation, and many employers peg wage raises to the CPI. Hence, indifferent, laissez-faire politicians will be watching national inflation spiralling out of control, and there is little interest rate rises from the Reserve Bank will do to fix it. The more interest rates go up to 'control inflation', the more new landlords who paid too much for their property will pass the costs on to tenants, and the more inflation will increase in the community. That's capitalist exploitation of property for you, egged on by the politicians...

Why renters fat and thin are singing

Tuesday, February 13, 2007

Wind out of sales

This shows the incredibly poor quality of urban planning in Sydney — people don't want to live in the far-flung outer suburbs because they are forced to commute huge distances to the city to work. Housing near the city is unaffordable. Housing further out can't be sold. The free-market free-wheeling approach to allocating housing simply isn't working.

DEVELOPERS have resorted to offering cash incentives and no-deposit finance as they struggle to sell newly built homes in Sydney's outer suburbs.

Multi-million-dollar housing developments on the city's outskirts have taken the biggest hit, with three rate rises in the past year deterring prospective homebuyers.

Housing Industry Association figures show the number of new houses sold in NSW over the past 10 years has slumped by 50 per cent.

The trend continued last year with 14,121 new homes sold around the country, compared with 14,175 the previous year and 39,860 in 1998/99.

The national figures tell a similar story. Last year, 107,145 new homes were sold, down from 110,979 the previous year.

Half-empty streets and rows of for-sale signs are common at some of the multi-million-dollar estates in outer Sydney as developers turn to lavish gifts and no-deposit finance to attract buyers.

Some estates are offering cash incentives of up to $10,000, no-deposit finance, fixed interest rates or free extras such as air-conditioning.

Only 951 new homes were sold in NSW in December, 2006 - down from about 1127 in December, 2005.

Simon Tennent, executive director of housing and economics for the Housing Industry Association, said Sydney prices were driving young couples and families out of the homebuyer market.

"I'm not surprised (at the fall in NSW), with the price of land in Sydney's growth areas,'' he said.

"And at the end of last year, the three interest rate rises and nerves over other prices, like petrol, just took the wind out of the sails.''

HIA figures show the median block of land in Sydney costs about $325,000 while a similar-sized block in Melbourne costs only $150,000.

"I'm not surprised that some estates are struggling,'' Mr Tennent said. "These are great quality homes on excellent estates, but do the simple maths and you can't afford them.''

The Sunday Telegraph visited several major developments last week. One street in Prestons has 19 houses for sale. At another development site, only 32 of 54 lots had been sold - five in the past four weeks.

Michael McNamara, of Australian Property Monitors, said the new estates had become an unattractive option for those working in the city.

"People just don't want to live there,'' he said. "It's so difficult to get from the outer suburbs of Sydney to the city.''

Wind out of sales The Daily Telegraph

Saturday, February 03, 2007

Housing surge to favour rich

Mr McNamara said that as the three interest rate rises of 2006 took affect, the impact would be felt more deeply by low-to-middle income earners, creating weak property markets in the mortgage belt areas of Sydney, Melbourne and Brisbane.

"Sadly, forced sales will continue to create an oversupply and flat demand in these areas," he said.

The real story is that foreclosures are up, demand at high prices is down, and the boom is over. The bust begins.

(There is no 'surge', just a slight increase in upmarket properties -- largely due to more profits flowing to the top of business in the new environment.)

Housing surge to favour rich