HSBC warns of impending Sydney bubble
No one seems to want to call the current market in Sydney a housing bubble. But investment bank HSBC says there's a risk of one in Australia – particularly in Sydney where prices have been growing twice as fast as the rest of the country. HSBC's chief economist Paul Bloxham said in a research note that Sydney’s housing market shows signs that price changes are being driven by expectations of future gains and not fundamental value, noting the enthusiasm of property investors for the Sydney market. He refrained from calling it a bubble because the market has catching up to do, post-GFC, and expects growth as long as interest rates remain low, with 10 per cent increases this year. The bank expects rates to begin to rise in the first half of 2015, as the Reserve Bank of Australia begins to shift focus to preventing an overinflated housing market. Read the full story here.
Residential property development projections fall off a cliff
The rush to build appears to be waning. According to a quarterly commercial property sector confidence survey released by National Australia Bank yesterday, residential developers intent to start new work fell more than 10 per cent, with only 28 per cent of developers expecting to break ground in the next six months. Developer confidence in commercial property and the office sector fell into negative territory. The survey of about 280 real estate agents, property developers, fund managers and larger property investors may reflect projections of a slowdown in the go-go markets of Sydney and Melbourne in coming years as development of current projects begins to catch up to demand. The forecast for Western Australia appears especially tepid, however, given the weakness in the mining sector. Read the full story here.
Brizzy leaders debate Kurilpa development
The Kurilpa plan calls for 25 hectares of industrial land in South Brisbane to become new apartments, commercial areas, parks and cultural facilities over the next 20 years. It would fundamentally transform Brisbane's waterfront with 15-storey apartment towers, 11,000 additional residents and 8,000 new jobs. But it's also anticipated to place additional strain on local schools that border on over-enrollment, that the background to the plan has been developed behind closed doors by the city council to accommodate developers, and that it connects weakly with the Cultural Precinct Master Plan. Read the full story here.
Global availability of cheap capital fuels Aussie mortgage lending
Interest rates may be low in Australia, but they're still near zero in America and Europe. That's left a pile of capital available for Australian banks to borrow, cheap, allowing them to raise $125 billion on wholesale funding markets in the last financial year. It's a 20 per cent gain year-over-year and rivals the largest levels of wholesale bank borrowing on record. A report from global rating agency Standard & Poor's this week attributes the competitive market for mortgages in Australia to unprecedented levels of accommodative monetary policy, both locally and abroad. Current international conditions lead to events like the competitive rate cutting to below-5-per-cent rates by three of the Big Four lenders last week. Read the full story here.
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