Information regarding support provided by Westpac to customers affected by the recent interest rate rise.
Also included within the attached are the Interest Rate Rise Frequently Asked Questions sent to customers.
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The recent interest rate hike has solidified the belief that the Australian economy has "turned the corner" and future rises will trigger house price increases, a leading Melbourne buyer advocate has claimed.
JPP Buyer Advocates director Ian James pointed to strong weekly sales in directly after the last interest hike, which rates from 3.0% to 3.25% earlier this month, as evidence that investors were reacting positively to the changes.
He continued, "More than slowing the property market down, I believe the next couple of interest rate hikes will push prices even higher." James added that although some investors were being turned off by the current state of the world economy, positive local factors were encouraging others to enter the market.
James pointed out that supply and demand would remain the most important factor. He added, "Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now."
James also predicted a shift in the city's density patterns over the coming decade as Melbourne's population increases. He expects to see "colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD".
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House prices may surge about 20 per cent or more in some of Australia's largest cities over the next three years, driven higher by on-going shortages.
Adelaide - previously considered among the more affordable cities - may lead the advances, with prices likely to be 23 per cent higher by June 2012 from a base of June 2009, according to the QBE LMI Housing Outlook.
Sydney prices may jump 21 per cent in that period, while Melbourne prices may be 19 per cent higher, the report said.
The increases are likely even with the expected rebound in interest rates as the economy recovers. The Reserve Bank last week lifted official interest rates from near half-century lows to 3.25 per cent and signalled more rate rises to come.
''While interest rates are forecast to rise over 2010-2012, the outlook for the Australian housing market looks positive,'' said QBE LMI chief Ian Graham.
''The current low interest rates will be the main driver for house price increases, which are expected to accelerate through to 2012, particularly in those markets with positive affordability and continuing undersupply of housing.''
Perth, Canberra lag
The report, prepared by real estate industry research group BIS Shrapnel, predicts Perth and Canberra, which have both seen huge rises in home values, will grow only 12 per cent in that time.
Brisbane can expect a 15 per cent rise, as can those living in Hobart, while Darwin prices may rise 17 per cent.
''Price growth in Perth is forecast to be influenced by a decline in investment in the resource sector after the record levels of recent years,'' said Mr Graham. ''Softer residential demand is also envisaged in Canberra due to weaker employment growth.''
Prices in the Australian housing market have been driven up by a chronic shortage of homes, estimated be about 56,600 in 2009.
The projected price increases will add to a huge run-up over the past decade.
Based on calculations from data contained in the report, provided by the Real Estate Institute of Australia and BIS Shrapnel, the median house price in Sydney increased by 101 per cent from June 1998 to June 2008.
Over the same 10-year period the median house price in Melbourne more than doubled, rising 116 per cent.
Brisbane values soared 202 per cent while Adelaide's increased 208 per cent during the same 10-year stretch. Perth's rose 211 per cent and Hobart's soared 203 per cent. The median house prices of Canberra increased 191 per cent, while in Darwin they increased 135 per cent.
In 2008, home prices eased about 3 per cent nationwide, bucking the trend of price drops of nearly 20 per cent in the US, UK, Ireland and Spain.
A bubble?
The shortages have been driven by a variety of factors including population growth, tax advantages favouring home ownership and real estate investment, and price speculation by home buyers and investors. Also, bottlenecks in the approval process for home building have been blamed.
Other factors driving prices include the First Home Owners Buyer's grant which was reduced this month, but won't be phased out until the end of the year.
Rising home prices, along with the economy's strength has prompted the Reserve Bank to warn of the risk of a housing bubble forming.
Runaway home price rises ''pose elevated risks of problems of over-leverage and asset price deflation down the track,'' RBA governor Glenn Stevens said in July.
Housing affordability
The current household debt to income ratio is around 155 per cent, up from about 130 per cent at the time of the last RBA rate rising cycle in 2003, Westpac said today, in releasing the September consumer confidence number.
Rising home prices have been a contributor to household debt, analysts say.
According to Morgan Stanley's Gerard Minack, the ratio of average house prices to average income in Australia is now just under 5 compared with around 3.5 times at the top of the US housing cycle.
Bis Schrapnel senior project manager Angie Zigomanis said that even if a housing price bubble popped, a correction would not necessarily mean huge price falls.
The median Sydney home price in 2009 is $544,000, lower than the 2004's median house price of $552,000.
''Corrections are not like share market corrections, where people sell off all their shares,'' he said.
''People just sit in the property and wait for things to improve. You don't have this turnover, aside from people who are forced to sell.''
Mr Zigomanis said anything that had an impact on Australia's overall economy could affect home prices.
Publication: smh.com.au Date: Wednesday, 14 October 2009 Author: Chris Zappone
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Shopping giant Westfield has begun securing retailers for its Coomera centre.
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Publication: Gold Coast Sun Date: 7 October 2009 Author: Jessica Elder
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Property prices across
Australia scored their largest monthly gains in more than four years
during August, new research has shown.
The average home in Australia gained $9,064 in value in just one month and is now worth $486,939.
The 1.9 percent rise is the largest single monthly climb recorded since the RP Data Rismark Index began in January 2005.
Property prices are now up 7.9 percent so far this year, rising in every major city across Australia.
Christopher Joye, managing director at RP Data, said the strong monthly
gain allays fears that the wind down of the First Home Owner's Grant
was taking the heat out of the market.
"In contrast to claims that this is a first time buyer bubble, the
cheapest 20 percent of suburbs in Australia have actually
underperformed both the mid-priced market and Australia's 20 percent
most expensive suburbs since the housing market bottomed in December
2008," said Mr Joye.
He pointed out that all major lenders now require a minimum 10 percent
deposit and are applying the strictest credit standards homebuyers have
seen in over a decade.
Despite the squeeze in the credit markets, almost 80 percent of
auctions are clearing and average home values have now risen 3.8
percent past their February 2008 peak, RP Data's research shows.
Over the first eight months of 2009, average prices have risen the most
in Melbourne – up 11.6 percent – while property values have climbed 8.6
percent in Sydney, 5.2 percent in Brisbane, 3.1 percent in Adelaide,
4.1 percent in Perth, 9.7 percent in Darwin, 6.7 percent in Canberra
and 2.7 percent in Hobart.
However, Mr Joye said he did not expect the recovery to run at the same pace in the coming months.
"We expect medium term growth rates to be more measured as mortgage
rates normalise back to between 7-8 percent. This would bring the cost
of housing finance back in line with its 2000-2001 levels, which is
notably well below the searing 9.6 percent highs endured by borrowers
in August 2008 care of the RBA," he said.
Publication ninemsn Money Date 30/09/2009 Author Emma Thelwell
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The Sydney property market is officially out of the doldrums, housing indicators show.
Publication: Sunday Telegraph
Date: 2 August 2009
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House prices have recorded their strongest growth since late 2007, rising, on average, by 3.3 percent in the second quarter of this year, a national survey shows.
House prices are now back to levels last seen before the onset of the global financial crisis and are expected to continue rising over the rest of 2009 and into 2010, a survey by Australian Property Monitors (APM) found.
The national median house price rose to $484,308 in the June quarter, from $468,694 in the March quarter.
Most of the growth was driven by increased house values in Darwin, Hobart, Melbourne and Sydney, APM said.
APM economist Matthew Bell said the market had been consolidating since the first quarter of 2009 and that had now been transformed into strong growth across the country.
"The national housing market has experienced its strongest quarterly growth in both house and unit prices since the global financial crisis took hold late in 2007," Mr Bell said in a statement.
While the market had been supported by low interest rates, flat prices and a boost to the federal government's first home owner grants, the upper end of the sector had been particularly strong in the June quarter.
For Sydney, Melbourne and Brisbane, median housing prices in the top 50 per cent of suburbs grew by nearly double the rate of those of the bottom 50 per cent in the quarter.
"Not surprisingly this has coincided with the stockmarket rebounding by nearly 30 per cent from its March lows and the economic outlook improving," Mr Bell said.
In Australia's two biggest markets, Sydney and Melbourne, house prices rose by 3.7 per cent and 5.8 per cent in the June quarter, respectively.
Darwin experienced exceptional growth of 11.2 per cent from the March quarter, while Hobart house prices gained seven per cent.
Across the nation, the median apartment or unit price increased by two per cent to $349,093 in the June quarter, from $343,322 in the March quarter.
The strongest growth was in Hobart (3.3 per cent) Melbourne (up 2.8 per cent), Sydney (2.6 per cent) and Canberra 2.2 per cent.
Mr Bell said the upswing in the housing market should encourage property investors who had been waiting for interest rates to bottom and the run off of the federal government's boost to the first home owner's grants, expected later this year.
"Rising unemployment remains the biggest risk to house prices, but this risk has lessened over the past quarter with forecasts of peak unemployment falling below eight per cent and the economy expected to avoid a technical recession," he said.
"With population growing strongly and strong housing finance figures yet to translate into a significant rise in new building starts, all indicators point to house prices continuing to rise in the second half of 2009 and well into 2010."
Publication: ninemsn Date: 30 July, 2009
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AS NSW recorded its lowest figures for construction of new homes, developers have predicted the worst is over and the state is on the verge of a housing boom.
Bureau of Statistics data for the three months to March showed the number of new housing starts has fallen to 5400, down from 7500 in the same period last year and 11,000 five years ago.
However, the housing industry believes this week's budget will help deliver a long-awaited turnaround. "There will be a boom," said Stephen Albin, chief executive of the Urban Development Institute of Australia.
The acting head of the NSW division of the Property Council of Australia, Angus Nardi, agreed the budget announcement of a 50 per cent cut in stamp duty for the next six months on all new homes up to a value of $600,000 along with several other measures would see a dramatic change. "I think the Government has implemented a handful of measures that should bring about a boom in the residential market," he said.
The Treasurer, Eric Roozendaal, signalled yesterday the Government may open further areas for development in measures to revive building activity.
"I suspect there will be further announcements about opening up other areas," he said when asked whether additional measures were likely to boost housing construction.
Budget estimates from the Department of Planning confirm the Government is expecting a boom.
The upswing is most pronounced in the greater Sydney area with a 41 per cent increase in the number of homes built in the next 12 months.
The department estimates that 25,000 dwellings will be built next year, many of them apartment blocks in and around transport routes and in existing residential areas.
A senior economist with BIS Shrapnel, Jason Anderson, said the cut in stamp duty and other factors made an increase in housing construction levels certain but questioned whether it would be as big as the Government has forecast.
"I would be surprised if you got a response of that magnitude from a cut [in stamp duty] for six months," he said.
He expected investors would begin entering agreements to buy apartments off the plan enabling developers to secure funding for these projects.
Publication: ninemsn Date: 18 June, 2009 Author: Matthew Moore and Brian Robins
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AUSTRALIAN house prices will rise by nearly 20 per cent over the next three years, buoyed by the "current heat" in the market surrounding first home buyers.
That’s the forecast from research house BIS Shrapnel’s Residential Property Prospects report - based on data from the Real Estate Institute - released today.
BIS Shrapnel’s Angie Zigomanis said activity in the lower end of the market - buoyed by the boost to the first home owners grant and low interest rates - were generating “green shoots” of recovery.
The report says average house prices in most capital cities will grow by between 11 and 19 per cent over the next three years. In real terms (where prices are adjusted for inflation) the level of percentage growth is about half.
Mr Zigomanis, who said actual prices were more indicative than prices adjusted for inflation, predicts the boost to the first home owners grant combined with low interest rates would kick start further activity in the “upgrading” market.
“If the first home buyers are in the market buying, someone is selling it to them,” he said.
“We’re expecting that increased first home buyers activity to lead through to stronger upgrading demand for people upgrading to their next property,” he said.
Mr Zigomanis said once the (boost to the) first home owners grant expires, and first home buyers drop back out of the market, there’s enough activity in the market so it becomes self-sustaining.
The boost to the first home owners grant will finish at the end of this year.
Unemployment curbing property growth
But the research, based on Real Estate Institute data, said house prices would remain relatively stagnant until unemployment peaked around June 2010.
“Everything’s pointed at people jumping in the market”.
“At the moment we’re dealing with a confidence issue,” he said.
Weak economic growth and rising unemployment meant Australians were hesitant to jump into the market, he said.
The Government forecast in its May Budget that unemployment will rise to 8.5 per cent by mid-2011, leaving one million Australians out of work.
BIS Shrapnel predicts unemployment to peak “somewhere between 7 and 8 per cent” mid next year.
Mr Zigomanis said unemployment would impact house prices “more so from a confidence perspective”.
“Those people who have the means to buy property, and still have a job to buy property, they may be concerned about their employment outlook,” he said.
Outlook via region, according to BIS Shrapnel
Sydney
- Median house price $530,000 in June 2009
- New home construction at 50-year lows
- Total price growth forecast at 19 per cent to 2012
- Strongest growth at end of three year period
Melbourne
- Median house price $425,000 in June 2009-06-12
- A fall of 6 per cent for the financial year
- Pick up in “upgrader” activity expected
- Nearly 20 per cent increase in prices to 2012
Brisbane
- Median house price $391,000 in June 2009
- Down 7 per cent for financial year
- Interstate migration to boost modest price growth
- House prices to rise by 16 per cent to 2012
Publication: www.news.com.au Date: 15 June 2009
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Signs are building that investment in property is set to bounce back after a year in the doldrums, according to a news story by Robert Harley in The Weekend Australian Financial Review.
Quoting prominent experts and organisations, the report said the country's one million or so investors were now re-examining the essentials of property, and discovering they have 'rarely looked better.'
It added:
- Rising rents and falling interest rates have boosted returns
- Values have remained 'remarkably' stable
- The risk of house price falls is lessening and
- Decreases in superannuation concessional thresholds will push people on higher taxable incomes towards more deductible investments such as property.
RP Data national research director Tim Lawless reportedly said rental increases of the last two years had provided investors with their best gross rental yields for a long time.
BIS Shrapnel managing director Robert Mellor said he expected investors to be back into property markets from late 2009.
The Westpac-Melbourne Institute consumer confidence index found that more than 65% of consumers expected house prices to stabilise or rise in the next month.
Australian Property Monitors' Matthew Bell reportedly said there would still be upward pressure on rents because demand is high and vacancies are at historic lows.
The story quoted Macquarie Research as saying housing had always been the sector that led Australian out of recession, with large mortgage rate falls the trigger.
This time appeared to be no different, it added.
Publication: The Australian Weekly Financial Review Date: May 30-31, 2009 Author: Robert Harley
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