Mortgage shoppers and first time home buyers have been warned that rents will skyrocket over the next five years due to a housing shortage across the country, an economic forecaster said.
Research firm BIS Shrapnel said it expects national building commencements to fall for a third straight year, dropping five per cent to 142,500 new homes in 2006/07 following a four per cent drop in 2005/06.
BIS Shrapnel senior project manager Jason Anderson said such a result would inflame the country's already tight rental market, which is meeting increased demand from a growing population. "Rental markets throughout Australia are as tight as a drum, with vacancy rates in all capital cities below 2.5 per cent as at June 2006," he said. "With the supply of new dwellings decreasing, rental markets are set to tighten even further in 2007 and 2008."
Mr Anderson said strong population growth supported by increased overseas migration would push demand for new homes, particularly for rental property use, up to about 165,000 in 2006/07, leaving a shortfall of about 22,500 homes.
As a result, rents in Sydney are forecast to rise five per cent this year and by as much as 40 per cent in the next five years."
The extreme undersupply in the Sydney market will trigger a substantial and extended adjustment to residential rentals," he said. New housing starts are expected to fall in all states across the country as a result of limited land supply for new housing development and a predicted rise in interest rates.
Housing starts are tipped to drop nine per cent in both Victoria and South Australia, eight per cent in the Northern Territory, six per cent in Tasmania, five per cent in the ACT, four per cent in Western Australia, and three per cent in both NSW and Queensland.
But while the shortage of housing will squeeze those in the rental market, Mr Anderson said a rise in rents, particularly in Sydney, is needed to encourage investors back into the market. "A very large increase in rents is required to improve yields on residential property in order to draw investors back into the market and push up the number of new dwellings back towards underlying demand," he said.
Source: AAP
Monday, October 30, 2006
Sunday, October 22, 2006
Mortgage Shoppers benefit as major home loan lenders drop home loan rates for new mortgage business.
Major home loan lenders dramatically lower effective interest rates to compete for mortgage shoppers home loan business. As the big mortgage players slashing margins to lower the effective mortgage interest rates to attract home buyers and mortgage refinance business, the smaller home loan lenders plan to join in.
Consumer finance research firm Cannex said that lenders had reported cuts to 54 fixed rate mortgages since the beginning of October.
Cannex financial analyst Harry Senlitonga said now may be a good time to consider a fixed rate loan with competition for customers in the increasingly popular fixed market driving lenders to cut rates.
"We are expecting to see more lenders follow in the next few weeks," he said.
Mr Senlitonga said rates had fallen an average 0.12 per cent in three-year fixed mortgages, while the five-year fixed rate category had dropped an average 0.17 per cent.
Fixed rate mortgages have gained popularity since the Reserve Bank of Australia (RBA) raised interest rates in May and August this year, bringing the official interest rate to 6.0 per cent.
Following the latest move, the number of fixed rate loans taken out by owner-occupiers jumped to 20.4 per cent in August from 16.2 per cent in July, according to Australian Bureau of Statistics (ABS) data.
As a result, lenders are now trying to capitalise on the increased demand for fixed rate loans as they scramble for customers in a shrinking market.
The ABS figures showed that both the number of mortgages taken out and the amount borrowed by consumers fell in August, dropping 1 per cent and 1.3 per cent respectively.
RESI Mortgage national consumer advocacy manager Lisa Montgomery said there were some great fixed rates because of the increased competition.
"We are actually seeing that there are a lot of good rates out there for consumers to fix into," Ms Montgomery said.
But she warned borrowers that fixing 100 per cent of their loan may not be the best financial move.
"There needs to be some caution displayed because when you do fix in - someone is going to lose - and it's either going to be the institution or it will be the consumer," she said.
While RBA governor Glenn Stevens said this week that the chances of another interest rate rise were high, most economists believe that rates have neared their peak and some even think rates may begin to come down next year.
"If you are looking to fix in, sit on the fence with perhaps 50 per cent of your loan and keep the other 50 per cent variable," Ms Montgomery said.
She said that by doing this, borrowers effectively had the comfort and piece of mind that came with a fixed rate but also the flexibility to make extra payments, which generally cannot be done with fixed mortgages.
As well, by only fixing part of the loan, borrowers could also take advantage of any potential falls in interest rates.
"So you're actually getting the best of both worlds," she said.
Source AAP
Consumer finance research firm Cannex said that lenders had reported cuts to 54 fixed rate mortgages since the beginning of October.
Cannex financial analyst Harry Senlitonga said now may be a good time to consider a fixed rate loan with competition for customers in the increasingly popular fixed market driving lenders to cut rates.
"We are expecting to see more lenders follow in the next few weeks," he said.
Mr Senlitonga said rates had fallen an average 0.12 per cent in three-year fixed mortgages, while the five-year fixed rate category had dropped an average 0.17 per cent.
Fixed rate mortgages have gained popularity since the Reserve Bank of Australia (RBA) raised interest rates in May and August this year, bringing the official interest rate to 6.0 per cent.
Following the latest move, the number of fixed rate loans taken out by owner-occupiers jumped to 20.4 per cent in August from 16.2 per cent in July, according to Australian Bureau of Statistics (ABS) data.
As a result, lenders are now trying to capitalise on the increased demand for fixed rate loans as they scramble for customers in a shrinking market.
The ABS figures showed that both the number of mortgages taken out and the amount borrowed by consumers fell in August, dropping 1 per cent and 1.3 per cent respectively.
RESI Mortgage national consumer advocacy manager Lisa Montgomery said there were some great fixed rates because of the increased competition.
"We are actually seeing that there are a lot of good rates out there for consumers to fix into," Ms Montgomery said.
But she warned borrowers that fixing 100 per cent of their loan may not be the best financial move.
"There needs to be some caution displayed because when you do fix in - someone is going to lose - and it's either going to be the institution or it will be the consumer," she said.
While RBA governor Glenn Stevens said this week that the chances of another interest rate rise were high, most economists believe that rates have neared their peak and some even think rates may begin to come down next year.
"If you are looking to fix in, sit on the fence with perhaps 50 per cent of your loan and keep the other 50 per cent variable," Ms Montgomery said.
She said that by doing this, borrowers effectively had the comfort and piece of mind that came with a fixed rate but also the flexibility to make extra payments, which generally cannot be done with fixed mortgages.
As well, by only fixing part of the loan, borrowers could also take advantage of any potential falls in interest rates.
"So you're actually getting the best of both worlds," she said.
Source AAP
Thursday, October 19, 2006
Sacked mortgage staff refuse to train their overseas replacements
Regional mortgage lender St George Bank has hit union trouble in its bid to sack local IT specialists and repleace them with cheap overseas labour.
The Finance Sector Union (FSU) will meet St George Bank management today, after staff who are being made redundant refused to train their replacements yesterday.
FSU national secretary Paul Schroder says the jobs of 60 IT staff from Kogarah in Sydney are being outsourced.Mr Schroder says the staff voted to defy orders to train their replacements, who were flown in from overseas this week.“You can get people to work for less than $100 per week to do this work,” he said.“This bank is a profitable bank - it doesn’t need to do this but it is doing this to cut its own costs.“We think that’s the wrong decision for the whole economy and for the bank in particular.“But it’s particularly nasty to expect the people who are losing their jobs to train the people who are taking them.”St George Bank spokesman Jeremy Griffith says the workers do not have to train their replacements if they do not want to.The bank says it has invited staff to apply for jobs in other areas.
If you are a mortgage shopper we suggest that you consider your values when placing your business. After all the mortgage business is a local business, and should be using local people to service the community.
The Finance Sector Union (FSU) will meet St George Bank management today, after staff who are being made redundant refused to train their replacements yesterday.
FSU national secretary Paul Schroder says the jobs of 60 IT staff from Kogarah in Sydney are being outsourced.Mr Schroder says the staff voted to defy orders to train their replacements, who were flown in from overseas this week.“You can get people to work for less than $100 per week to do this work,” he said.“This bank is a profitable bank - it doesn’t need to do this but it is doing this to cut its own costs.“We think that’s the wrong decision for the whole economy and for the bank in particular.“But it’s particularly nasty to expect the people who are losing their jobs to train the people who are taking them.”St George Bank spokesman Jeremy Griffith says the workers do not have to train their replacements if they do not want to.The bank says it has invited staff to apply for jobs in other areas.
If you are a mortgage shopper we suggest that you consider your values when placing your business. After all the mortgage business is a local business, and should be using local people to service the community.
Tuesday, October 10, 2006
Property investment soars as Aussie investors look for overseas hotspots
Australian property investors are sending huge amounts of investment offshore in search of higher returns and diversified portfolios.
Research by real estate money management firm Jones Lang LaSalle found that Australian investors poured $US5.3 billion ($7.06 billion) into overseas real estate in the first half of this year, up from only $US1.2 billion ($1.6 billion) in the first half of 2005.
Jones Lang LaSalle head of forecasting services John Sears said an increase in the amount of superannuation allocated to listed property trusts (LPT) was largely driving the flight overseas, with LPTs seeking to diversify their portfolios and capitalise on high overseas yields. "There's a huge amount of money flowing into LPTs and they need to find stock,'' he said. "Because there's so much money, there's a lack of stock available in Australia. "LPTs are traditionally seen as a high yielding asset ... So to get the yields, they have to look overseas.''
As a result, Australia is now the third largest international investor in property after the United States and the Middle East. The company's Australian head of research Kathryn Matthews said around 80 per cent of the funds spent overseas in the first half of 2006 were invested in countries outside the Asia Pacific region, particularly in the US. "The US received almost half of our overseas purchases, making Australians the third largest cross border investors in the US,'' she said.
However, Ms Matthews said Australians were increasingly interested in European markets. "Australians invested particularly heavily in Germany where they purchased around $US1 billion ($1.33 billion) worth of assets in the first half of 2006,'' she said. Germany accounted for 19 per cent of Australian offshore property investment in the first six months of this year, followed by Belgium with 6 per cent, the United Kingdom with 3 per cent, Poland and the Netherlands with 2 per cent each, and France with 1 per cent.
Mr Sears said the rising interest in investing in Germany was a result of the county's relatively high yields for the European region coupled with low interest rates, which made borrowing money to invest in the country cheaper.
Source: AAP
Research by real estate money management firm Jones Lang LaSalle found that Australian investors poured $US5.3 billion ($7.06 billion) into overseas real estate in the first half of this year, up from only $US1.2 billion ($1.6 billion) in the first half of 2005.
Jones Lang LaSalle head of forecasting services John Sears said an increase in the amount of superannuation allocated to listed property trusts (LPT) was largely driving the flight overseas, with LPTs seeking to diversify their portfolios and capitalise on high overseas yields. "There's a huge amount of money flowing into LPTs and they need to find stock,'' he said. "Because there's so much money, there's a lack of stock available in Australia. "LPTs are traditionally seen as a high yielding asset ... So to get the yields, they have to look overseas.''
As a result, Australia is now the third largest international investor in property after the United States and the Middle East. The company's Australian head of research Kathryn Matthews said around 80 per cent of the funds spent overseas in the first half of 2006 were invested in countries outside the Asia Pacific region, particularly in the US. "The US received almost half of our overseas purchases, making Australians the third largest cross border investors in the US,'' she said.
However, Ms Matthews said Australians were increasingly interested in European markets. "Australians invested particularly heavily in Germany where they purchased around $US1 billion ($1.33 billion) worth of assets in the first half of 2006,'' she said. Germany accounted for 19 per cent of Australian offshore property investment in the first six months of this year, followed by Belgium with 6 per cent, the United Kingdom with 3 per cent, Poland and the Netherlands with 2 per cent each, and France with 1 per cent.
Mr Sears said the rising interest in investing in Germany was a result of the county's relatively high yields for the European region coupled with low interest rates, which made borrowing money to invest in the country cheaper.
Source: AAP
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