Australia Property

I'm not sure why u still using land mass as a reason when US with 50 states and China with 28 "states" is a spectacular reference of non-intervention vs intervention consequences, and with population of more than 10X Australia to boot

On a micro basis of course there are different idiosyncracies across regions but bubble source is always the financial centres and major cities. They will also lead the demise but experience tells us that the laggard lower tier cities will be hit hardest

The lucky country is also not immune to "nothing new under the sun". This time is not different.

(31-10-2014, 04:30 PM)greengiraffe Wrote: For as far as I have been tracking the Australia prop mkt, demand has never been filled as the mkt has been constantly under supply.

One should never use the cosmopolitan mentality to analyse a big continent like Australia. Each state is way too big that dynamics of which is so difficult to understand.

At the right price, there will be buyers. In any event, Australian properties have never had quantum leap like Asian property markets hence, a crash for them could well be a 10 - 15% correction.

I have no vested interests apart from the shares that I invest in but I just want to caution anyone in their analysis.

Australia is a boring place to make big $. However, there are excitement to thrill in such low beta environment.

GG

(31-10-2014, 12:59 PM)specuvestor Wrote: For the record I think it is great that GG posts all these here so that in 12 months time we will see whether the supply shortage issue becomes another deja vu Singapore. Isn't it interesting that Singapore moved from undersupply to oversupply relatively quickly?

Any old enough observer can see it doesn't just apply to Singapore. Just that Singapore has better familiarity for most forumers here. Nothing new under the sun.

PS I don't think Aussie property will crash next year per se... but I think we will get some real signs of who is swimming naked in 12 months

Let time tell lor...

Winning and losing is just a line of difference...

End of the day... I m only focusing on how to make money from what I read and see and I think that's all that matters.

I have no luck with actual properties largely because I never believe that the consters globally can print so much $ and created never ending property bubble since the failure of Gold Standards...

Anyway, I still have no interests in excess gearing so i just do what I can to think ahead of the consters to make $.

In that I just have to read and form judgement and look for the right Godfathers to place my blind faith in.

2017 is back on track - The Hunt for Red October turned out to be another confidence building phase... fresh $ will be drawn in.

No Worries Lah
Stay Focussed
GG

(01-11-2014, 12:22 PM)specuvestor Wrote: I'm not sure why u still using land mass as a reason when US with 50 states and China with 28 "states" is a spectacular reference of non-intervention vs intervention consequences, and with population of more than 10X Australia to boot

On a micro basis of course there are different idiosyncracies across regions but bubble source is always the financial centres and major cities. They will also lead the demise but experience tells us that the laggard lower tier cities will be hit hardest

The lucky country is also not immune to "nothing new under the sun". This time is not different.

(31-10-2014, 04:30 PM)greengiraffe Wrote: For as far as I have been tracking the Australia prop mkt, demand has never been filled as the mkt has been constantly under supply.

One should never use the cosmopolitan mentality to analyse a big continent like Australia. Each state is way too big that dynamics of which is so difficult to understand.

At the right price, there will be buyers. In any event, Australian properties have never had quantum leap like Asian property markets hence, a crash for them could well be a 10 - 15% correction.

I have no vested interests apart from the shares that I invest in but I just want to caution anyone in their analysis.

Australia is a boring place to make big $. However, there are excitement to thrill in such low beta environment.

GG

(31-10-2014, 12:59 PM)specuvestor Wrote: For the record I think it is great that GG posts all these here so that in 12 months time we will see whether the supply shortage issue becomes another deja vu Singapore. Isn't it interesting that Singapore moved from undersupply to oversupply relatively quickly?

Any old enough observer can see it doesn't just apply to Singapore. Just that Singapore has better familiarity for most forumers here. Nothing new under the sun.

PS I don't think Aussie property will crash next year per se... but I think we will get some real signs of who is swimming naked in 12 months

Disclaimer- I am new and vested.
AU financing move from 110% and no doc to low doc and 95% for Aussie residents. This with low interest rates, negative gearing is fuelling the boom and lack of supply esp in Sydney are factors too. No country can avoid inflow of funds esp China. Also try asking Aussie expat who earn stronger currency whether they are buying back home. You will get a better feel.

Hi Newbie,

Sounds like you have a better ground feel...

Are you saying that the strong prices of Australian properties in selected location is fundamentally driven and the speculative element is likely to be "cry wolf" syndrome by those that have missed out in hope for a pull back?

Appreciate your feedback.

No Ground Feel
GG

(01-11-2014, 11:31 PM)newbie11 Wrote: Disclaimer- I am new and vested.
AU financing move from 110% and no doc to low doc and 95% for Aussie residents. This with low interest rates, negative gearing is fuelling the boom and lack of supply esp in Sydney are factors too. No country can avoid inflow of funds esp China. Also try asking Aussie expat who earn stronger currency whether they are buying back home. You will get a better feel.

(02-11-2014, 08:14 AM)greengiraffe Wrote: Hi Newbie,

Sounds like you have a better ground feel...

Are you saying that the strong prices of Australian properties in selected location is fundamentally driven and the speculative element is likely to be "cry wolf" syndrome by those that have missed out in hope for a pull back?

Appreciate your feedback.

No Ground Feel
GG

(01-11-2014, 11:31 PM)newbie11 Wrote: Disclaimer- I am new and vested.
AU financing move from 110% and no doc to low doc and 95% for Aussie residents. This with low interest rates, negative gearing is fuelling the boom and lack of supply esp in Sydney are factors too. No country can avoid inflow of funds esp China. Also try asking Aussie expat who earn stronger currency whether they are buying back home. You will get a better feel.

I think media over play the foreigner investor and China bit. I don't see it different from any global city that went through property boom. surely you will find investors, foreigners, Aussie expats who earn stronger currency, baby boomers, down sizers who are locals and almost anyone will try to get into the market. And of course, those who can't afford now scream and blame. Then next year those who missed the boat will scream. Going to be the same old story we saw in Hk, sg, London. haha.

Observe the auctions where foreigners cannot buy, it's the wealthy locals and smsf who are buying. And many went way way way above reserve price. Just look at the terraces at Millers point.

(02-11-2014, 10:07 AM)newbie11 Wrote:

(02-11-2014, 08:14 AM)greengiraffe Wrote: Hi Newbie,

Sounds like you have a better ground feel...

Are you saying that the strong prices of Australian properties in selected location is fundamentally driven and the speculative element is likely to be "cry wolf" syndrome by those that have missed out in hope for a pull back?

Appreciate your feedback.

No Ground Feel
GG

(01-11-2014, 11:31 PM)newbie11 Wrote: Disclaimer- I am new and vested.
AU financing move from 110% and no doc to low doc and 95% for Aussie residents. This with low interest rates, negative gearing is fuelling the boom and lack of supply esp in Sydney are factors too. No country can avoid inflow of funds esp China. Also try asking Aussie expat who earn stronger currency whether they are buying back home. You will get a better feel.

I think media over play the foreigner investor and China bit. I don't see it different from any global city that went through property boom. surely you will find investors, foreigners, Aussie expats who earn stronger currency, baby boomers, down sizers who are locals and almost anyone will try to get into the market. And of course, those who can't afford now scream and blame. Then next year those who missed the boat will scream. Going to be the same old story we saw in Hk, sg, London. haha.

Observe the auctions where foreigners cannot buy, it's the wealthy locals and smsf who are buying. And many went way way way above reserve price. Just look at the terraces at Millers point.

On terraces at Millers Point - it looks like "additional floor space" could be the key factor contributing to the "higher bidding price".

http://www.smh.com.au/nsw/no-fancy-exten...1a00v.html

Putting that aside, don't you think the "landed property factor" and the "location factor - just adjacent to the Rock" could well justify the price ?

Perhaps. Next to barangaroo too. my point on these auctions is buyers have to pay the premium in cash since valuation can't match. And we are talking about a lot of "cov"

SMSF property debt close to $9b
PUBLISHED: 30 OCT 2014 18:07:00 | UPDATED: 31 OCT 2014 04:46:13

SMSF property debt close to $9b
Limited-recourse borrowing arrangements, on the increase, allow self-managed super funds to gear into property.
NASSIM KHADEM

Self-managed super funds are gearing into property more heavily, amid regulator concerns that debt is fuelling growth in house prices and creating risk for the financial system.

The Australian Taxation Office’s 2013-14 annual report said limited-recourse borrowing arrangements, which allow self-managed super funds to gear into property, have tripled from $2.5 billion at the end of June 2012 to $8.7 billion at the end of June 2014.

“With limited-recourse borrowing arrangements increasing in value . . . we will continue to ensure these arrangements are appropriate and meet all ­legislative requirements,” the Tax Office said in its report.

The Australian Securities and Investments Commission recently stepped up reviews of the commissions that are paid to agents and advisers, recommending property as a self-managed super funds investment.

The Financial Systems Inquiry, led by David Murray, has also suggested a ban on this kind of risky debt.

The self-managed super fund industry continues to grow. There are over 534,000 funds and total membership exceeds 1 million.

This represents an increase of 21.3 per cent in the number of small funds over the past four years, the report said.

Self-managed super funds assets now exceed $557 billion, representing 30.1 per cent of total superannuation assets under management across the retirement system.

ATO ‘VIGILANT FOR NEW SCHEMES’
The Tax Office has also been keeping watch over the sector.

“To maintain the integrity of SMSFs as a key element in the retirement ­system, we used a risk-management approach to undertake over 37,000 compliance activities, many resulting in enforceable undertakings to rectify identified breaches,” the report said.

“Where serious breaches occurred, our compliance actions included ­making 129 funds non-complying – removing their tax concessions – and disqualifying 585 trustees.”

The report said in 2013-14 it prevented 258 funds from entering the ­system and removed 186 existing funds in which it suspected illegal access was planned.

“This approach has proven very effective at reducing the incidence of illegal early release and we remain ­vigilant for new schemes and methods,” the report said.

The Tax Office also gave fresh figures of the number of penalties dished out for individuals who exceeded their superannuation contribution caps. In 2013-14, the agency issued about 66,000 assessments, raising over $256.4 million in liabilities.It said this represented just 0.6 per cent of people who made contributions to their superannuation fund.

The Abbott government’s proposed changes to stop penalising individuals breaching caps on super contributions has angered industry super funds. In a submission to Treasury, Industry Super Australia said it would benefit the rich and could lead to more people “gaming” the system.

The Australian Financial Review

Property price growth slowing: RP Data
THE AUSTRALIAN NOVEMBER 03, 2014 10:00AM

Kylar Loussikian

Journalist
Sydney
GROWTH in Australian property prices is slowing, according to latest RP Data figures which show a 1 per cent rise over October.

House prices grew a mere 0.1 per cent in September, calming concerns about a property housing bubble.

Despite a slow two months, dwelling values still rose 2.2 per cent for the three months to the end of October.

But price growth remains uneven, with only three capital cities recording higher home values over September.

Melbourne values grew fastest, up 1.9 per cent to hit a median price of $555,000, while Sydney grew 1.3 per cent for the month, to a median price of $680,000.

Brisbane rose just 0.6 per cent, but Adelaide fell back 1.1 per cent and Perth was down 0.1 per cent.

Hobart and Canberra recorded the biggest falls, down 2.4 per cent and 2.3 per cent respectively.

And growth would continuing to moderate, Tim Lawless, RP Data’s chief economist, said.

He said Sydney was the “standout” performer with home values increasing at a rate of more than 1 per cent a month, up 3.9 per cent over the past three months.

Mr Lawless said Perth and Canberra have clearly moved through the peak of their growth cycles.

The consistent rise in house prices has caused rental yields to compress to record lows, with Melbourne rental yields at just 3.3 per cent. Sydney’s average yield is 3.7 per cent.

Mr Lawless said capitals with lower or falling price growth, particularly Darwin and Hobart, had “a much healthier yield profile with the typical dwelling providing a gross yield of 5.4 per cent and 5.9 per cent respectively”.

Its a BIG continent

Australia's tale of 3 cities highlights RBA loan curbs dilemma
Prices along the east coast are surging, while the rest of the country fell in Oct

4 Nov5:50 AM
Sydney

AUSTRALIA'S property market is showing signs of a new two-speed economy. Prices along the nation's east coast are still surging, while the rest of the country declined last month, RP Data's CoreLogic Hedonic Home Value Index showed on Monday.

The housing market has been pumped up by the Reserve Bank of Australia keeping its benchmark interest rate at a record-low 2.5 per cent for 15 months, with home loans to property investors in September growing at the fastest since 2008.

Demand for higher-risk mortgages, including interest-only loans, have prompted regulators to review tools to cool lending and avoid a jump in delinquencies.

The data "highlights the issues facing policymakers in attempting to cool a very diverse housing market", said Savanth Sebastian, an economist at a unit of Commonwealth Bank of Australia. "It would be more encouraging if price gains across the nation were more uniform."

Monday's report showed prices jumped 1.3 per cent in Sydney in October and were up 13.1 per cent from a year ago. Prices rose 1.9 per cent in Melbourne and 0.6 per cent in Brisbane. In contrast, they fell 2.3 per cent in Canberra, 2.4 per cent in Hobart, 1.1 per cent in Adelaide, 0.4 per cent in Darwin and 0.1 per cent in Perth. Across all capital cities, prices rose on average one per cent, RP Data said.

Australia's two-speed economy reached its pinnacle in the third quarter of 2011, when the nation's terms of trade peaked, the currency climbed above US$1.10 and the key interest rate was at a developed-world high of 4.75 per cent.

The bonanza of investment in iron ore and coal mines meant states in the north and west boomed, threatening to accelerate inflation, while the south and east stagnated.

Between late 2011 and August 2013, as resource investment started to cool, the RBA cut rates by 2.25 per centage points to encourage residential construction and soak up mine workers. That set off a property buying spree, particularly from investors who could access tax benefits.

The RBA indicated from mid-September this year that regulators planned measures to target speculation by people buying residential property as investments. That was a U-turn on past dismissals of macroprudential measures, including Governor Glenn Stevens's description of them in August as an "international fad".

The central bank will announce its interest-rate policy decision on Tuesday, with economists and markets expecting no change.

While the heightened rhetoric from policy makers has seen some slowing in house price growth, other measures remain strong, according to RP Data. "Auction clearance rates continued to hover around the 70 per cent mark week-to-week while volumes across RP Data real estate agent and valuation platforms remained strong, which is indicative of heightened levels of industry and mortgage market activity," said Tim Lawless, head of research at RP Data. "The number of new properties listed for sale continues to rise as are total listing numbers." BLOOMBERG