After a slow start to the year, BIS Shrapnel is predicting that property will pick up speed in second half of 2011.

According to the forecaster’s Building Industry Prospects report, the total number of new dwelling approvals is expected to rise eight per cent to 177,000 in 2011/12 – the highest level since 2003/04.

“The increase in first-home buyer demand from the Federal Government’s First Home Owner’s Grant Boost Scheme, together with various State Government incentives for new dwellings, resulted in new house approvals rising by 22 per cent in 2009/10,” Angie Zigomanis, BIS Shrapnel senior manager, building and construction said.

“However, these incentives only served to pull forward existing demand, with first home buyers who would have otherwise been in the market in 2010 entering the market in 2009 to take advantage of the increased incentives before they expired. As a result, there was a drop off in first home buyers in 2010, which has been evident by the decline in new house approvals through the second half of last year.”

The number of loans approved for first home buyers nationally by the middle of 2010 was nearly 60 per cent below the same (albeit elevated) period in 2009. With first home buyer demand well down, upgrader demand for new dwellings also eased as fewer potential buyers were in the market for their existing properties.

As a result, BIS Shrapnel is forecasting new house approvals to record a decline of 11 per cent in 2010/11. However, strong investor demand is driving further growth of 26 per cent in other dwelling approvals (private medium and high density dwellings).

“With the lower level of construction since the Global Financial Crisis, supply has fallen further behind underlying demand, and there is a rising deficiency of dwelling stock,” said Mr Zigomanis.

“At the same time, there is evidence that that the drop off of first-home buyers has now bottomed out. The latest data for the month of December 2010 indicates that the number of first home buyers improved to a decline of 29 per cent on the previous year, while the actual number of loans given to first-home buyers was also the highest level since December 2009.”

BIS Shrapnel says the improvement in first-home buyer activity should continue through 2011 as the post-Boost Scheme decline in first-home buyers is played out and numbers slowly recover back to long term levels by the second half of the year. Together with the pent up demand from the deficiency of dwelling stock, and an environment where economic growth is picking up and interest rates are stable over the next six months, demand for new houses will subsequently increase as upgraders also take advantage of the stronger demand for their existing dwellings and trade up to a new house.

(By: www.theadviser.com.au,Monday, 21 February 2011)

A new report revealed that town planning systems are performing poorly across the country with a large number of development applications being decided beyond the statutory time frame.

The First National Report on Development Assessment Performance 2008/09 showed that in New South Wales only 44 per cent of applications for higher density residential developments were determined in the statutory time frame, while in Victoria it was 47 per cent.

Only data for these two states was provided.

The Urban Taskforce’s chief executive, Aaron Gadiel, said the figures painted a grim picture of Australian town planning.

“New South Wales took an average of 137 days to assess medium and high density residential developments, while Victoria took 178 days,” he said.

Mr Gadiel said the time taken to deal with subdivisions was also disappointing, although only three states produced figures.

In New South Wales subdivision applications take an average of 120 days, in Victoria 132 days and Western Australian, 100 days.

Mr Gadiel said that in typical town planning fashion, the national report is only now available, 20 months after the end of the 2008/2009 financial year.

“This report only measures a tiny percentage of the activity and the problems inherent in Australia’s town planning system,” he said.

“We hope that future reports have better quality data that is more capable of interstate comparison, with delays in rezonings and strategy implementation also measured.”

The absence of a flexible town planning system and strong urban infrastructure investment was a risk to Australia’s economy, Mr Gadiel said.

“If we get demand shocks, such as a boost in immigration, regional booms, or surges in income, our rigid planning laws allow only one result – rapid price escalation.”

(By: Kate Miller  www.spionline.com.au, Wednesday, 16 February 2011)

RENTS are set to rise a solid 7 per cent this year, boosting returns for property investors.

During the last three months of 2010, rents in Australian capital cities increased by 1.4 per cent; they rose 4.2 per cent during the year.

Rents in regional markets did not change during the quarter, rising just 2.9 per cent throughout the year.

Melbourne’s median weekly advertised rental rate for houses was recorded at $360 a week; for units it was $350.

Rental rates increased by 2.9 per cent for houses in Melbourne during the final quarter of 2010 – beating the national average and taking the annual growth figure to 2.9 per cent.

Rental rates for units increased by 1.4 per cent during the quarter and by 6.1 per cent for the year.

Three-bedroom house rents performed better than four-bedroom properties during the year and quarter.

The median weekly advertised rent for a three-bedroom house is $350, with a four-bedroom $7 more.

During the final quarter of 2010, rents on three-bedroom houses rose 2.9 per cent, compared with no growth in four-bedroom rents.

On an annual basis, three-bedroom rents have well and truly outpaced that of four-bedroom rents (6.1 per cent vs 1.2 per cent).

One-bedroom units have average rents of $295 a week. Two bedrooms are averaging an extra $55.

Neither recorded a rent increase during the last quarter; but two-bedroom rents rose 6.1 per cent during the past year, compared with 5.4 per cent for one-bedders.

With interest rates already at levels above average, and the expectation that they will increase further during 2011, the prospects of renters moving into home ownership is likely to deteriorate further.

The latest ABS housing finance data shows that last November Victorian first-home buyers totalled 16.3 per cent of all owner-occupier purchasers – the lowest proportion of first-home buyers since May 2004.

Higher interest rates coupled with continuing strong population growth in Victoria – and, more specifically, Melbourne – suggests there is a likelihood of increasing competition for rental stock.

Nationally, we are forecasting rental growth of about 7 per cent this year, in line with the average annual growth during the past five years. We expect a similar result for Melbourne.

While we expect rents to increase during 2011, RP Data anticipates limited home value growth.

We expect the growth in rental rates, coupled with likely wage growth due to a tight employment market, will make ownership a more viable option – especially if capital growth lags behind inflation, which would reduce home values in real terms.

Cameron Kusher is senior research analyst at rpdata.com

(Source:By Cameron Kusher, Herald Sun)

One of Australia’s biggest banks has announced rate cuts of up to 80 basis points off one of its products.

Westpac informed its aggregation and broker partners last night that it would increase the standard variable rate discount on some of its selected home loans taken as part of the lender’s Premier Advantage Package.

Effective immediately, the lender will slash 75 basis points on loans ranging between $250,000 and $500,000.Customers with a loan greater than $500,000 will enjoy a 0.8 per cent discount on their Premier Advantage loan.In addition, Westpac has announced it will waive the requirement of having lenders mortgage insurance for loans taken as part of Premier Advantage Package between 80 and 85 per cent LVR.

Westpac’s general manager mortgage broker distribution Huw Bough said the changes, which are available to all of the major’s accredited brokers, were designed to help more borrowers into their home.“By having a clear customer focused agenda we place them at the centre of everything we do and as a result build our products and decisions around responsibly meeting the needs of our customers; we believe these recent changes will help more of them fulfill the great Australian dream of owning a home,” Mr Bough told The Adviser.

“It is also important we respect the customer’s right to choose their channel of origination and are committed to respecting their choice. “Mr Bough said the mortgage industry had become increasingly competitive of late and Westpac was determined not to be left behind.“These changes will ensure that we continue to offer choice and flexibility to ensure our customers get the best product to suit their varied individual circumstances.”

(Source:The Adviser, Wednesday, 16 February 2011)

The federal government has released a draft consultative paper outlining its plans to ban all exit fees.

The National Consumer Credit Protection amendments regulation paper calls for a blanket ban on exit fees for all lenders, not just banks.

In addition, the ban will apply to any fee payable at the time of repayment other than fixed rate break costs and discharge administration fees.

Gadens Lawyers partner Jon Denovan said the drafted regulation was “very worrying”.

“This will ban the collection of deferred establishment fees, capitalised account keeping fees, LMI recovery and interest equalisation fees to recoup honeymoon rates,” Mr Denovan said.

“This means that borrowers will have to pay many costs up front that are currently carried by lenders.  It will make refinancing much harder because of the cost.  Flexible product design will not be available in this country.”

(Source: Staff Reporter, 14 feb 2011)