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- Sep 10 2015 at 3:30 PM
- Updated Sep 10 2015 at 6:27 PM
Apartment building boom about to end, predicts BIS Shrapnel
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/c/9/3/2/image.related.afrArticleLead.620x350.gjjevl.png/1441873671634.jpg[/img]Last hurrah for investors: Latest research indicates the sun is setting for apartments investors. Arsineh Houspian
[Image: 1425598457909.png]
by Su-Lin Tan
The building boom that has helped drive the economy is going to start slowing next month because too many apartments are being built, according to business research company BIS Shrapnel.
There is still demand for houses but an excess of apartments will drive prices down and lead to fewer being built, BIS Shrapnel associate director Kim Hawtrey said.
"The important story here is apartments. To read the current cycle is to read the apartment cycle," he said.
"Detached houses will continue on being built. It's like the grandfather of housing. They will keep going on after the party finishes."
[img=620x0]http://www.afr.com/content/dam/images/g/j/j/w/l/m/image.imgtype.afrArticleInline.620x0.png/1441873426814.png[/img]
The fall in new apartments will be bigger than the number of new houses being built, leading to an overall fall in the construction of new dwellings after September, BIS Shrapnel said.
The number of dwellings built in Queensland will drop in the last three months of the year, followed by Victoria and then NSW in the middle of 2016, it said.
The exception is Sydney, where the number of apartments built could increase until the later half of next year.
"Generally, prices are already falling in Perth, and in Adelaide. There is limited upside in Melbourne and Brisbane," Mr Hawtrey said. "Sydney will have price increases for another six months but after summer, the rate of increase will go sideways."
'LAST HURRAH FOR INVESTORS'
Fading interest from property investors is slowing demand for apartments. "They have gone from fear of missing out to fear of losing their shirts," Dr Hawtrey said. "It's the last hurrah for investors."
A clampdown of investor lending for property by the Australian Prudential Regulation Authority will be felt by mid 2016, BIS said.
AMP stopping lending to property investors in August. ING Bank is demanding a higher deposit from investors and some banks are asking for higher presales of apartments – up to 100 per cent – before it will lend to developers.
People who have paid deposits for apartments that haven't been built may not be able to get a loan when the money is due or may have to pay a higher interest rate than now, Dr Hawtrey said.
"People who buy new off-the-plan apartments might not have to settle for another two years but banks are slowing down their lending," he said. "They think they have an agreement with the banks but the cost of finance may go up or the funds may not be available."
"While it is a silver lining for owner occupiers – banks are cutting lending to them by 40 basis points – the ratio of owner-occupier loans to investor loans is starting to normalise."
The Sydney market continues to be the outlier in the the national property market. The city is short 75,000 houses and apartments.
"The Sydney market has a long way to go … even if interest rate increases, the boom-bust cycle in Sydney will continue until the deficiency goes away," BIS Shrapnel chief economist Frank Gelber said.
The national spring property selling season will not be as strong as last year, Dr Hawtrey said. "We are going to see less excitement," he said. "Price fatigue or indigestion has set in and the gap between housing prices and wages is becoming more stretched."
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Tradie shortage pushes home prices up as skills lost to mining
Greg Brown
[Image: greg_brown.png]
Property Reporter
Sydney
[Image: 390960-69d9a4ba-5841-11e5-9877-6b1eb7594cef.jpg]
Builder Bede Worthington, in Sydney, is struggling to recruit tradesmen to keep up with booming business. Picture: Britta Campion Source: News Corp Australia
[b]The residential construction boom is being plagued by a tradie crisis, with a shortage of skilled labour increasing the cost and time involved in building a house and adding to already high property prices in Melbourne and Sydney.[/b]
Sydney-based builder Bede Worthington says he simply cannot find enough tradesmen to fill his orders as a record number of housing starts stretches blue-collar capacity.
Mr Worthington, whose company Worthbuild builds and renovates homes, is one of many business owners feeling the effect of a tradesmen shortage.
The dearth of labour, a legacy of young workers flying into high-paid mining jobs instead of learning a trade, is particularly pronounced in carpentry and bricklaying. Analysts say that aside from leading to costly delays in home building, a lack of qualified tradesmen is inflating prices for established homes.
“I’ve had three people call me today asking for work to be done,’’ Mr Worthington told The Australian. “There is no one to do it.
“They open their conversation with ‘if you are going to take six months, you are going to take 30 per cent more (than usual), then don’t bother quoting’. That is how frustrated people are (by delays and cost).”
Mr Worthington said he had starting accepting 15- and 16-year-old work-experience students enrolled in trade colleges to work on building sites because there was no one else to do the jobs.
He has been unable to expand his business to meet new orders.
“The usual carpenters that I use are so busy that I can’t get them — everyone has gone out on their own because there is so much work,” he said.
“So I had to start using work-experience kids. People are having to pay more to get builders. Our hourly rate has increased by $20.”
More than 213,000 homes will be built in Australia this year, with the record number being driven by the real estate boom in Sydney and Melbourne.
The value of residential property in Sydney and Melbourne has soared in the 12 months to August, by 17.6 per cent and 10.6 per cent respectively.
Housing Industry Association senior economist Shane Garrett said the tradesmen shortage had contributed to bubbling house price growth.
“Bricklayers being in such short supply has had a detrimental effect on the cost structure of the home building market, particularly in NSW and Victoria,’’ he said.
“Bricklayers, plastering and carpentry, those are all in a short supply. The fact that we have price pressures in the trades market is certainly going to add to the cost of building a home and also the cost of homes being sold on the market, whether they are new or existing. It has increased the financial cost of homes and added to the timescale of completion.’’
According to the HIA, renovations activity will increase by 10 per cent by 2018, taking the value of that market to $31.25 billion and creating more labour demand.
Mr Garrett said the now dissipated mining boom had diverted resources away from trades.
“One of the things that has affected this is the fact that we saw the mining boom in the early years of the decade — that had the effect of diverting people who would have otherwise done apprenticeships in housing-related trades.
“It actually diverted them to better-paid jobs in the mines.
“What we are seeing is a fallback effect, whereby we lost out on the cohort of potential apprentices and potential tradespeople.”
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- Sep 14 2015 at 2:07 PM
- Updated Sep 14 2015 at 9:35 PM
Chinese retreat from Australian property as capital controls bite
NaN of
[img=620x0]http://www.afr.com/content/dam/images/1/m/d/s/w/q/image.related.afrArticleLead.620x350.gjm282.png/1442230523900.jpg[/img]Chinese banks have set up watch lists for unusual transactions. Bloomberg
Chinese purchases of Australian property have dropped significantly in the past month, according to agents, as buyers struggle to shift money out of the country following Beijing's move to tighten capital controls.
One Chinese agent said the latest efforts by the central government to avoid large capital outflows were having a "significant impact" on his business.
"It has affected 70 to 80 per cent of current transactions and some have already been suspended," said the agent who asked not to be named.
The tighter foreign exchange rules are also set to impact the federal government's relaunched Significant Investor Visa (SIV), which provides fast-tracked residency for those investing at least $5 million into Australia.
"I think it will be big, big trouble for the SIV program because the amount of money is just too large," said one Shanghai-based adviser, who sells Australian property and advises wealthy clients on their migration plans.
Only seven SIV applications have been submitted since the new rules were introduced on July 1, which require investors to put their money into riskier assets such as venture capital and emerging companies.
China has previously tolerated significant capital outflows via so called "grey channels", but has tightened up enforcement in recent weeks as the economy slows and fears over capital flight put downward pressure on the currency.
The crackdown from Beijing has seen Chinese banks setting up watch lists for unusual transactions, according to one bank manager, who asked not to be named as he was not authorised to speak about the policy.
He said the operation was aimed at cracking down on a practice whereby family and friends of those wanting to purchase a property overseas all transfer US$50,000 into an overseas account. That's the limit each Chinese individual is allowed to move out of the country each year.
The purchaser then pays back his friends and family in China and uses the money from the overseas account to put down a deposit on the property.
However, banks are now tracking the source of funds for overseas bank accounts that have received more than US$200,000 within 90 days, according to the bank manager, who works in Shanghai for one of the major state-owned banks.
"We have always had this policy but now it has been restated and is being enforced more strictly," he said.
"In the past we could find a way around these rules but now all those ways have been blocked."
"I'm sure this would be having an impact on overseas property purchases," he said.
The crackdown is also said to be affecting trading companies, which have been asked to submit more supporting documents to verify transactions, according to a report inChina Business News on Monday.
China's move to tighten its capital controls comes after the country's banks reported net capital outflows of $US109 billion in the first quarter of 2015, according to the Bank for International Settlements.
The People's Bank of China has also been spending record amounts of its foreign reserves to keep the yuan stable after it devalued the currency on August 11.
The devaluation, which came as a surprise, caused havoc on global markets as investors feared it signalled the economy was experiencing a sharper downturn than previously thought.
The tighter rules in China come as Sydney recorded its lowest auction clearance rate for the year this past weekend, while Melbourne has now recorded two weekends below the same time last year, according to Corelogic RP Data.
Credit Suisse estimates Chinese buyers account for around 15 per cent of all new home purchased in Australia and this proportion will rise to 20 per cent by 2020.
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15-09-2015, 08:25 AM
(This post was last modified: 15-09-2015, 09:26 AM by BlueKelah.)
Haha no more chinese buyer, clampdown on investor loans and now change PM. lookout for sydney melbourne to join perth property downturn.
sent from my Galaxy Tab S
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(15-09-2015, 08:25 AM)BlueKelah Wrote: Haha no more chinese buyer, clampdown on investor loans and now change PM. lookout for sydney melbourne to join perth property downturn.
sent from my Galaxy Tab S
I kind of expected yr reactions. Anyway, i seriously doubt that you will buy and own yr property Down Under anytime soon since prices are always sticky downwards...
All you need to do is to read about property price performance in major Chinese gateway cities.
U better go and check with your mates on change in Aussie leadership - while it may be a big thing in Singapore, nobody gives a damn on who the conster is ruling over them...
Just wait and see lah
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forgot to add, AUD has crash from 1.3 to par value with SGD now, not looking good for those who joined the bandwagon and vested directly in Aus props the past couple years. Tide is going out, who will be swimming naked?
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(15-09-2015, 11:43 AM)BlueKelah Wrote: forgot to add, AUD has crash from 1.3 to par value with SGD now, not looking good for those who joined the bandwagon and vested directly in Aus props the past couple years. Tide is going out, who will be swimming naked? http://www.valuebuddies.com/thread-5501-...#pid119603
The people who are swimming naked are those who don't have hard assets. As long as you are producing what consumers and the world wants, you will be relevant.
Forget to add, tourism, education and other quality services that Australia is well known for are enjoying a boom that many have lost sight simply by focussing on the demise of the mining boom.
Even on mining, there are signs that deep pocket players are starting to evaluate on wrong term strategic acquisitions...
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More foreign buyers forced to sell properties
- ROB TAYLOR
- DOW JONES
- SEPTEMBER 16, 2015 2:41PM
[Image: 334322-a5f5bb8c-5c2e-11e5-993e-551447e7f5c0.jpg]
The Sydney mansion Villa del Mare was sold this year as part of the government crackdown.Source: News Corp Australia
[b]A crackdown on illegal investment in real estate has broadened, with almost 500 properties worth more than $1 billion in total under investigation and more foreign buyers forced to sell properties.[/b]
The government has been under pressure to rein in an investment-driven surge in home prices in Sydney and Melbourne, amid growing criticism that wealthy Asian buyers are making the property market increasingly unaffordable.
Treasurer Joe Hockey said divestment orders have been served on five properties across the country, forcing their owners — who hail from Singapore, Indonesia, the UK and China — to sell homes. He added that the crackdown is continuing despite political turmoil this week that saw Malcolm Turnbull replace Tony Abbott as prime minister.
“The purchase prices of the properties range in value from $265,000 to $8.1 million,” Mr Hockey told reporters in Canberra. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed, meaning they were breaking the rules,” he said.
Many Australians fear cashed-up foreign investors could put homeownership out of reach of much of the population. Mr Hockey told The Wall Street Journal last month that equity-market turmoil in China could drive even more Chinese buyers to seek havens by investing in Australian property.
China last year overtook the US as Australia’s largest source of investment from overseas, with a total of $27.6 billion last year, according to FIRB, the foreign-investment watchdog. Real estate accounted for almost half of that.
The latest divestment orders bring the number of properties hit by the crackdown to 12. In March, Mr Hockey ordered a Hong Kong-based buyer of $39 million Sydney mansion Villa del Mare to sell after investigators said it was purchased illegally.
This time, the properties netted by the crackdown are scattered across the country and include homes in the cities of Perth, Sydney, Adelaide, Brisbane as well as the Gold Coast.
Mr. Hockey said all five owners had voluntarily come forward to detail their investments, meaning they would have a year to sell their homes rather than the usual three months, under an amnesty offer announced by the government in May.
The Reserve Bank of Australia has warned the nation’s property boom is unbalanced and potentially dangerous to a fragile economy, as economists become increasingly nervous about the possibility of the country entering a recession for the first time in 24 years.
Australia’s economy grew by 0.2 per cent in the second quarter from the first three months of the year and 2 per cent from a year earlier, its slowest quarterly growth in four years in the second quarter.
The Reserve Bank of Australia is forecasting 2.25 per cent growth for the year, but a dip below 2 per cent could put the prospect of an interest-rate cut back on the table.
Dow Jones
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(15-09-2015, 11:43 AM)BlueKelah Wrote: forgot to add, AUD has crash from 1.3 to par value with SGD now, not looking good for those who joined the bandwagon and vested directly in Aus props the past couple years. Tide is going out, who will be swimming naked? Looks like mass housing developers may benefit from the ongoing dynamics of China...
May not be as bad as what many thought since China middle class is growing and certainly more wealthy than many AustrAsians...
- Sep 16 2015 at 6:08 PM
- Updated Sep 16 2015 at 6:08 PM
Yuan devaluation makes Australian, Canadian property more affordable
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/k/j/e/7/image.related.afrArticleLead.620x350.gjoaoi.png/1442390880400.jpg[/img]Juwai estimates the number of property searches for Australia has grown 15 per cent this year, slightly stronger than the same period in 2014. Josh Robenstone
[Image: 1426118157768.png]
by Angus Grigg
The number of Chinese buying overseas homes will slow rapidly this year, according to Mandarin-language property portal Juwai.com, but Australia is seeing an uptick in inquiries due to Beijing's recent currency devaluation.
Simon Henry, the co-chief executive of Juwai, said overall sales growth by Chinese buyers would slow from 25 per cent last year to about 10 per cent this year.
He attributed the cooling to Beijing's crack down on illegal capital outflows, the slowing Chinese economy and a hit to confidence from the recent sharemarket slide.
"Confidence has been rattled by the stockmarket fall even though very few people own shares," Mr Henry said via phone from Beijing.
He said home sales in the United States had been the hardest hit, with growth in Chinese buyers expected to slow to about 5 per cent this year.
This has been attributed to Beijing's devaluation of the yuan against the US dollar in late August, which has made property and education in Australia and Canada relatively more affordable.
"I can see the market shifting away from the US to places like Australia and Canada," he said.
Juwai estimates the number of property searches for Australia has grown 15 per cent this year, slightly stronger than the same period in 2014.
Mr Henry said this would help insulated mid-priced homes in Australia, but high-end Australian property would be the most affected by Beijing's tighter enforcement of capital controls.
"I think this [the capital controls] are definitely going to hit the higher end as it will be harder to justify transferring $10 million out of the country via a legal channel," he said.
"That said I think it is pretty easy to justify something around $1 million."
China has previously tolerated significant capital outflows via so called "grey channels", but has tightened up enforcement in recent weeks as the economy slows and fears over capital flight put downward pressure on the currency.
The crackdown from Beijing has seen Chinese banks setting up watch lists for unusual transactions and preventing those wanting to transfer money overseas using the foreign currency quotas of family and friends.
Under China's closed capital account an individual can only transfer $US50,000 ($70,000) into an overseas account each year.
Exceptions are made for the purchases of homes for children attending school or university overseas and for tuition.
One Chinese property agent told The Australian Financial Review earlier this week that the tighter enforcement of capital outflows was starting to have a "significant impact" on his business.
"It has affected 70 to 80 per cent of current transactions and some have already been suspended," said the agent, who asked not to be named.
China's move to tighten its capital controls comes after the country's banks reported net capital outflows of $US109 billion in the first quarter of 2015, according to the Bank for International Settlements.
The People's Bank of China has also been spending record amounts of its foreign reserves to keep the yuan stable after the devaluation.
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(16-09-2015, 02:22 PM)greengiraffe Wrote: More foreign buyers forced to sell properties
- ROB TAYLOR
- DOW JONES
- SEPTEMBER 16, 2015 2:41PM
[Image: 334322-a5f5bb8c-5c2e-11e5-993e-551447e7f5c0.jpg]
The Sydney mansion Villa del Mare was sold this year as part of the government crackdown.Source: News Corp Australia
[b]A crackdown on illegal investment in real estate has broadened, with almost 500 properties worth more than $1 billion in total under investigation and more foreign buyers forced to sell properties.[/b]
The government has been under pressure to rein in an investment-driven surge in home prices in Sydney and Melbourne, amid growing criticism that wealthy Asian buyers are making the property market increasingly unaffordable.
Treasurer Joe Hockey said divestment orders have been served on five properties across the country, forcing their owners — who hail from Singapore, Indonesia, the UK and China — to sell homes. He added that the crackdown is continuing despite political turmoil this week that saw Malcolm Turnbull replace Tony Abbott as prime minister.
“The purchase prices of the properties range in value from $265,000 to $8.1 million,” Mr Hockey told reporters in Canberra. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed, meaning they were breaking the rules,” he said.
Many Australians fear cashed-up foreign investors could put homeownership out of reach of much of the population. Mr Hockey told The Wall Street Journal last month that equity-market turmoil in China could drive even more Chinese buyers to seek havens by investing in Australian property.
China last year overtook the US as Australia’s largest source of investment from overseas, with a total of $27.6 billion last year, according to FIRB, the foreign-investment watchdog. Real estate accounted for almost half of that.
The latest divestment orders bring the number of properties hit by the crackdown to 12. In March, Mr Hockey ordered a Hong Kong-based buyer of $39 million Sydney mansion Villa del Mare to sell after investigators said it was purchased illegally.
This time, the properties netted by the crackdown are scattered across the country and include homes in the cities of Perth, Sydney, Adelaide, Brisbane as well as the Gold Coast.
Mr. Hockey said all five owners had voluntarily come forward to detail their investments, meaning they would have a year to sell their homes rather than the usual three months, under an amnesty offer announced by the government in May.
The Reserve Bank of Australia has warned the nation’s property boom is unbalanced and potentially dangerous to a fragile economy, as economists become increasingly nervous about the possibility of the country entering a recession for the first time in 24 years.
Australia’s economy grew by 0.2 per cent in the second quarter from the first three months of the year and 2 per cent from a year earlier, its slowest quarterly growth in four years in the second quarter.
The Reserve Bank of Australia is forecasting 2.25 per cent growth for the year, but a dip below 2 per cent could put the prospect of an interest-rate cut back on the table.
Dow Jones
Five homes on block in foreign owner clamp
Samantha Hutchinson
[Image: sam_hutchinson.png]
Property Writer
[b]Five more homes around the country will be forced to market as the government continues its crackdown on illegal foreign investment in property.[/b]
A boutique penthouse worth more than $8.1 million in Elizabeth Bay in Sydney’s eastern suburbs is among five properties that will be forced for divestment, after its owners came forward as part of an amnesty on illegal purchases that ends in November.
The top-floor apartment at Darnley Hall on Onslow Avenue was bought by Paul Longmuir and wife Elain Wei Ah Kwan from property developer Tony Benjamin in 2009. The Longmuirs have recently spent $16m buying a sprawling mansion in Sydney’s Bellevue Hill, but sources indicate this home is not under suspicion for breaching foreign investment rules.
Because the owners declared themselves, they will have 12 months to sell the home, compared with three months for owners who do not come forward, and will not be referred for criminal prosecution. “The foreign investors involved either purchased established property without Foreign Investment Review Board approval, or had approval but their circumstances changed meaning they were breaking the rules,” Joe Hockey said.
Other homes up for divestment are in Ardross in Perth, Underdale in Adelaide, Stretton in Brisbane and Labrador on the Gold Coast.
The low range of the divestments is $265,000, busting the myth illegal property investment is a pursuit of the ultra-wealthy.
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