Australia Property

Yes it's all political consters at play lol

Chinese appetite for houses still growing
Su-Lin Tan & Nick Lenaghan
432 words
2 May 2015
The Australian Financial Review
AFNR
English
Copyright 2015. Fairfax Media Management Pty Limited.

Chinese investors are expected to pour even more money into Australian residential real estate in the short term, potentially pushing prices higher, after doubling their investment in the past year alone.

Approved projects reached $12.4 billion in 2014, up from $5.9 billion in 2013, Foreign Investment Review Board figures released this week show. The results have exceeded the expectations of Credit Suisse analyst Hasan Tevfik, who forecast last year that total Chinese investment in Australian real estate could top $44 billion by 2020.

"The latest FIRB numbers have come out even stronger than what we had thought," Mr Tevfik said.

"It seems like Chinese demand is growing faster than new supply in Australia. That is the critical point for house prices - is there enough supply to keep up with Chinese demand, as Chinese demand has picked up? Supply has picked up, but not by enough."

China's $6.5 billion increase in approved property investment made up nearly a third of the $22.7 billion increase in total property approvals for 2014, the FIRB annual report released on Thursday said.

Mr Tevfik expects Chinese and other Asian investment in residential real estate to remain strong for some time.

"Don't underestimate how much wealth is still being created in China and how big China is. It's a massive economy still growing at a solid rate. So the flow is going to be big," he said.

"It seems like the biggest residential real estate buyers are our neighbours. It's not Americans, it's not Canadians, it's not the British. It's the Malaysians, the Singaporeans, the Hong Kongers and the Chinese. By luck, Australia is on the doorstep of this massive wealth creation that is happening before our eyes."

For the first time, China has overtaken the US as the largest foreign investor in Australia, with total planned investment of $27.7 billion, overshadowing the US at $17.5 billion.

Malaysia and Singapore followed closely, chalking up 27 per cent and 114 per cent increases in planned investment in Australia respectively. They planned to spend between $2 billion and $4 billion in new property projects.

"The strong financial and economic fundamentals in Australia means Asian investors such as the Chinese will continue to invest here," Visionary Investment Group's China-born chief executive Michael Guo said.

"The market will determine how much more Chinese investments will come. At the moment we are at equilibrium. There is still a lot of demand for supply to come."


Fairfax Media Management Pty Limited

Document AFNR000020150501eb520000s

Crackdown on foreigners punitive, says Stockland chief Steinert
THE AUSTRALIAN 10:00 PM

Lisa Allen

Property & Tourism Reporter
Sydney
Greg Brown

Property Reporter
Sydney
Stockland chief executive Mark Steinert yesterday labelled the federal government’s crackdown on foreign buyers as “punitive”.

The head of the nation’s largest housing developer and president of industry lobby group The Property Council of Australia said some of the new federal fees would raise more money than was required to collect it. “So you could argue that some of those fees should be moderated,” Mr Steinert said.

“People need to understand that these flows can be fickle and we are lucky to have a good reputation with foreign investors. We should work pretty hard to maintain that and make sure that the fees are always viewed as fair and reasonable.”

Tony Abbott announced a major crackdown on foreign buyers attempting to purchase existing residential properties on Saturday. Third parties who assist a foreign investor to break Foreign Investment Board Review rules will now be subject to civil and criminal penalties including fines of $42,500 for individuals and $212,500 for companies.

The move has also angered real estate agents who claim the government plan, to be introduced on December 1, would turn foreign buyers away.

“The reality is we just want to do our job, we just want certainty, let’s not forget there are other destinations in the world to invest in not just Australia,” said Ken Jacobs of Christies International who sold the Villa del Mare Point Piper estate in Sydney to a Chinese buyer late last year. That $39 million sale sparked the federal government crackdown in early March, with the Chinese buyer forced to offload the property within 90 days.

“I know of Chinese and Asian clients that have swung away from Australia and invested hundreds of millions of dollars elsewhere because of the uncertainty and mixed messages that are coming from the federal government,” Mr Jacobs said.

In Melbourne, CBRE senior director Mark Wizel said the government policy was shortsighted.

Given Australia needed to attract international capital, the government should welcome investment from foreign property investors and developers, he said, “as opposed to putting in measures that will do the opposite”.

After so much claims from pundits that foreigners are immaterial in driving up Aussie property prices, we can now observe the proof of the pudding

Nonetheless i think so far they have orchestrated a soft landing rather well, with lower interest rates and "macro-prudential" policies

http://www.valuebuddies.com/thread-4912-...#pid101910

New home sales hit five-year high
MICHAEL RODDAN BUSINESS SPECTATOR MAY 06, 2015 11:19AM

New home sales have hit a five-year high, as Australia’s record-low interest rates continue to support a domestic property boom.

The Housing Industry Association’s latest new home sales report showed sales of new housing surged 4.4 per cent in March, underpinned by continued heat in the booming apartment market.

March’s figures take sales volumes to their highest level since early 2010.

Sales of new multi-units, or apartments shot up 11.3 per cent during the month, while sales of new detached homes increased 2.6 per cent during the same period.

“The monthly rise in both the detached and multi-unit segments of the market is an encouraging result. However, the broader trend is that growth over the past year has been driven by multi-unit sales, while detached house sales have tracked sideways,” HIA economist Diwa Hopkins said.

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MOREAustralian land prices ‘too high’
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Yesterday the Reserve Bank of Australia slashed the official cash rate to a record-low 2 per cent, after a previous cut to 2.25 per cent in February.

“Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction,” Ms Hopkins said.

On Monday, the Australian Bureau of Statistics released data showing building approvals hitting a fresh record high in March, as the surge in the number of apartments continued to increase.

Apartment approvals have surged by 59.2 per cent over the twelve months to March, the ABS said.

“The residential construction sector continues to be the main bright spot in the broader domestic economy,” Ms Hopkins said.

Sales of new detached homes increase by 5.9 per cent in Victoria, 4.2 per cent in NSW, and 4.2 in Western Australia during March, but fell by 5.8 per cent in South Australia, and by 2.3 per cent in Queensland.

Property boom shows signs of cooling ahead, economist says
EVAN SCHWARTEN AAP MAY 19, 2015 4:14PM

As fears grow of a bubble in Sydney’s soaring housing market, one economist says there are already signs demand for residential property is starting to wane.

UBS Australia chief economist Scott Haslem says Sydney’s record high auction clearing rates and the rapid price growth in the past three years meant the market could be considered to be in a bubble.

“The Sydney housing market does have some aspects that are bubble-like,” he said.

“The price growth and the level of auction clearing rates are consistent with periods like that.” But he expects the market to cool down in the near future, noting that property vacancy rates were moving higher, while national housing turnover had decreased in the past month, despite historically low interest rates.

And he said property prices had risen much faster than rents, making the market less attractive to new investors.

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MOREA tale of two property booms
MOREBanks tighten loans to investors
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“I think the forward indicators are telling you that we are starting to see some easing of that pressure,” he said.

His comments follow a warning by Australian Securities and Investments Commission boss Greg Medcraft that Sydney and Melbourne’s property markets might already be in a bubble.

Sydney home prices have risen more than 14 per cent in the past 12 months, according to research from CoreLogic RP Data, and the city’s median house price is expected to pass $1 million by the end of 2015.

The surge in prices has been fuelled by low interest rates, with the Reserve Bank cutting its cash rate from 4.75 per cent to a record low of two per cent in the space of three and a half years. Mr Haslem said some people buying into the housing market now could find themselves in financial trouble once the RBA started lifting rates again.

But he said that was unlikely to cause any bigger problems for the country’s financial system because official figures showed most homeowners were well ahead on their mortgage repayments.

“I think its difficult to build a recessionary scenario on the back of house price movements,” he said.

“But clearly there will be some people who have come into the housing sector at the end point who are not in that position and may struggle a bit if interest rates rise.”

Haha. Typical economist talk. Maybe got bubble. Maybe no recession. Maybe some will default if rates rise. Cover all scenario. I challenge him to look at vacant rates and compare that to the world. Tenants are putting deposit for units even before completion

Investor home loans tighten as regulator APRA clamps down

[Lending for investment properties appears to have suddenly tightened, as the banking regulator's efforts to rein in the sector appear to be succeeding.

Mortgage brokers are reporting credit conditions in Australian housing lending market have become a lot tougher in the past two weeks according to CLSA's leading bank analyst Brian Johnson.

Mr Johnson said recent discussions with broking contacts pointed to banks cutting discounts on investment loans and demanding tougher scrutiny on borrowers' ability to repay their debts.

The crackdown comes only days after data was released showing mortgages had soared to a new record high of $31.3 billion in March.]

[Bad news for bank and investment property investors
In recent weeks Australian banks have endured their sharpest sell-off since the GFC, falling more than 12 per cent since late March.

The earlier than expected capital raisings, rising bond yields and less-than-stellar profit results have not helped.

Now the tightening in investment lending conditions in housing will only add more pressure to share prices.

Mr Johnson quotes one broker as saying that present conditions in the investment property market feel like a "mini-GFC".

As Mr Johnson noted, the increase in serviceability tests and subsequent reduction in access to debt for speculative investors, coupled with reduced 'discounts' pushing up effective borrowing rates "can't be good for investment property prices."]


Read more here

Banks put brakes on investor lending

The steps to slow growth may hit demand from property investors, who have underpinned a surge of nearly 15 per cent in Sydney house prices in the past year and contributed to higher prices in Melbourne and other desirable locations.

CLSA banking analyst Brian Johnson said it could lead to a period of no increases in house prices. National house prices rose more than 10 per cent last led by Sydney and Melbourne.

"It probably means that we just have what you've seen in past cycles, which is that Australian prices tend to rocket, and then do nothing for quite an extended period of time," he said.

"The fact that investors probably can't borrow as much, and they have to pay a higher rate relative to an owner-occupier, would suggest at the edges that the capacity to compete on the basis of price goes down a little."

CoreLogic RP Data's head of research, Tim Lawless, said that 60 per cent of new loans in NSW were to investors, so a likely slowdown in investor borrowing would dampen price growth in Sydney. He predicted prices would continue to rise, but below 10 per cent. "Obviously if you're an investor, it probably means that getting a loan might be a bit more challenging," Mr Lawless said.

Read more here

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Now that's what I call a proper credit crunch.

official now, big four banks and mortgage brokers are now starting to notifying of this change and tightening a lot of their lending criteria, many clients have had their borrowing capacity reduced massively.

Effect over the next few months should be similar to the effect of singapore's TDSR, especially on Sydney and Melbourne markets.

I think you interpreted what you are hoping for... this is a moral suasion than outright specific measures to negate credit growth... just remember to change your tagline on the crash of China...

No experts is predicting negative growth coming but a more orderly market after some relentless rise...

As it stands, Sydney has a structural under-supply for a start and hence it has been the best performing property mkt in Australia.

No Vested Interests

(21-05-2015, 07:46 PM)BlueKelah Wrote: Banks put brakes on investor lending

The steps to slow growth may hit demand from property investors, who have underpinned a surge of nearly 15 per cent in Sydney house prices in the past year and contributed to higher prices in Melbourne and other desirable locations.

CLSA banking analyst Brian Johnson said it could lead to a period of no increases in house prices. National house prices rose more than 10 per cent last led by Sydney and Melbourne.

"It probably means that we just have what you've seen in past cycles, which is that Australian prices tend to rocket, and then do nothing for quite an extended period of time," he said.

"The fact that investors probably can't borrow as much, and they have to pay a higher rate relative to an owner-occupier, would suggest at the edges that the capacity to compete on the basis of price goes down a little."

CoreLogic RP Data's head of research, Tim Lawless, said that 60 per cent of new loans in NSW were to investors, so a likely slowdown in investor borrowing would dampen price growth in Sydney. He predicted prices would continue to rise, but below 10 per cent. "Obviously if you're an investor, it probably means that getting a loan might be a bit more challenging," Mr Lawless said.

Read more here

==================================

Now that's what I call a proper credit crunch.

big four banks and mortgage brokers are now notifying of this change and tightening their lending criteria, many clients have had their borrowing capacity reduced massively.

Effect over the next few months should be similar to the effect of singapore's TDSR, especially on Sydney and Melbourne markets.