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housing mortgage in australia

koala88

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http://www.smh.com.au/business/inte....html?promote_channel=edmail&mbnr=MTMxNDQxNzU


Missed out on your dream home? Lucky you
Intelligent Investor Property The Economy
Date: March 17, 2014 - 5:24PM

In case you hadn’t noticed, property is hot right now, burning hot in fact. But if you’ve just missed out on the home of your dreams, think yourself lucky. You may have just dodged not one but three bullets, all aimed at your bank balance.

The ABS reckons capital city house prices were up 3.2 per cent in the first half of last year and 6.1 per cent in the second. With auction clearance rates at all-time highs on heavy volumes and housing finance commitments skyrocketing, that momentum looks set to continue.

The fear of missing out on a $600,000 inner city shoebox has even provoked xenophobic rants about the number of Asian buyers making life hard for the locals, who naturally take a tax system legislated to encourage speculation as a human right.

Unsuccessful buyers may well worry. Heaven forbid that, amid the sea of punters waving mortgage pre-approvals, you see the auctioneer pointing at you mouthing the word ‘sold!’

As someone long bemused by the Australian property obsession, I’ll not pass judgement on where the market is heading. But research produced last week by Leith van Onselen in Intelligent Investor Share Advisor should have property investors quaking in their hush puppies.

Let’s start with the first bullet described by van Onselen: wages growth.

Last year, this metric slumped to the lowest level on record. Yep, while house prices went up by 10 per cent last year, wages rose by just 2.5 per cent - less than the rate of inflation. That, to paraphrase Robert Palmer, is simply unsustainable.

When Palmer’s song was on high rotation in 1988 the value of Australia’s housing stock was about 180 per cent of GDP. Now it’s over 300% and, if the ABS is right, will breach the previous mid-2010 peak later this year.

That alludes to the second major bullet coming property investors’ way: the sheer number of them buying.

Accounting for almost half of all house finance commitments, just below the all-time peak set a decade ago, this is an investor-driven boom that prescribes volatility.

Homeowners tend to stay put, riding out periods of market declines because they’ve purchased a home rather than an investment. Debt-financed investors are far more fickle, running for the hills at the first sign of over-the-odds strata fees.

Comparisons with 2003, a much-favoured tactic used by property spruikers to justify rocketing prices and create fear of missing out, don’t stack up.

The 2003 peak preceded a once-in-a-lifetime mining boom that pushed wages through the roof, allowing people to devote an ever greater share of their disposable income to mortgage repayments.

Record low interest rates are now doing the same thing. The difference now is that the economy is at the end of a boom, not the beginning of it.

Which brings us to the last bullet aimed at eager property investors. Not only is income growth slowing, more people aren’t earning a wage at all. At 6 per cent, unemployment is at its highest in a decade.

Last January was the 14th consecutive month where employment grew by less than the size of the labour force. With the mining sector accounting for nearly 10 per cent of employment, the end of the boom could push unemployment up further. And that’s before the loss of 50,000 jobs in the automotive sector.

Not only are we not creating enough jobs to absorb new workers, existing workers are being given the boot.

As Leith concluded: “While Australian housing is likely to be well supported in the short term, propelled by positive sentiment and intense investor activity, it appears to be heading for trouble. Australian housing valuations are likely to hit their highest level on record later this year just as the economy enters its biggest adjustment since the early-1990s recession.”

That’s what property investors have to look forward to. Be careful what you wish for.
 

koala88

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This article is meant for real estate agent. I am not one of them.

http://solutionsblog.rpdata.com/2014/03/14/prices-wont-go-forever-sharpen-skills/


Prices won’t go up forever, so sharpen your skills.


It’s never easy being an agent. When prices are up, everyone assumes it is easy and that you are making a fortune doing practically nothing. Of course the public doesn’t see the long hours and the stress of dealing with umpteen frustrated buyers convinced you are out to gazump them, let alone understand how hard it is to get listings with so much competition.

However, it is true that when prices are rising and you have a good listing, it is easy to be a hero and sell for a ‘record’ price. And if you are smart and good at self-promotion, you will leverage this success into another listing…and another.

The crunch comes when prices stop rising. Almost overnight the tap of eager buyers turns off. Suddenly it becomes hard to attract anyone to bid. They collectively decide to hold off and “see what happens.” Vendors are bemused; they look for someone to blame, and you’ve just gone from hero to zero. In my selling career, I have seen this several times.

What to do?

Well first you need to realise that the day is approaching. Already prices are stalling in several states. It won’t take much to tip it over the edge, especially an interest rate rise. So use this to your advantage by educating potential vendors to act now before it’s too late.

Secondly, sharpen your selling skills. However irritating all those buyers may seem now, you may have to be cajoling them in the not-too-distant future. If you go the extra mile now, they are much more likely to trust you when you need them.

And if I am wrong, and prices to continue to rise? Well the effort is not lost. Your reputation will still be enhanced.


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Dr Gil Davis is now a university lecturer, but for twenty-five years he was one of Australia’s most successful real estate agents. He wrote the top-selling book Sell for More, packed full of useful tips for agents, which you can purchase on-line through Harper Collins.
 
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