Murray report draws fire from all sides
David Murray released an interim report this week as part of the government’s financial system inquiry, arguing that the housing market harbours serious risks to the financial system and calling for changes to tax breaks, such as negative gearing and capital gains tax concessions which may be distorting the housing market. However, his comments have prompted a strong reaction from many. Housing Industry Australia chief economist Harley Dale called Murray’s take on negative gearing “an inaccurate and misleading picture". The report has already raised speculation that the Big Four banks will begin holding back dividends in anticipation of heightened regulatory requirements and could threaten the banks' credit ratings, which would in turn push up their funding costs. Read the full story here.
New home building pace remains brisk
New dwelling commencements grew 8.7 per cent in the March 2014 quarter – 12.8 per cent in detached houses – with growth everywhere except South Australia, the Housing Industry Association reported Wednesday. It’s near a four-year peak, with the strongest increases in the Australian Capital Territory (31.6 per cent), Victoria (15.4 per cent), and Western Australia (12.1 per cent). “The challenge is to harness this momentum and use it as the platform for enacting real housing policy reform,” said HIA chief economist Harley Dale. “We need to lock in a structural increase in the number of homes we build in the years ahead if we are to successfully house our growing and ageing population.” Read the full story here.
If the RBA says it’s better to rent than own right now … what do real estate agents tell their clients?
This week, the Reserve Bank of Australia told the public that home prices would need to gain 2.9 per cent per year – for 60 years – to provide a better option than renting, a pace that hasn’t been matched nationally over any sustained period in the last 60 years. Nonetheless, some property experts believe a few areas may outpace the RBA’s growth benchmark. Cameron Kusher, senior analyst for RP Data, said that 5.5 per cent appreciation over 10 years would cover inflation and provide a high-enough return to overcome the buy-rent question. At 3.6 per cent appreciation over 10 years, Sydney doesn’t cut it. Melbourne does at 5.6 per cent over 10 years. Brisbane just misses at 5.2 percent. Sydney’s property values have grown 7.3 per cent per year for the last five years, adjusted for inflation … but it’s hard to argue that’s sustainable growth. Meanwhile, Aussie Home Loans reports that the median rental cost of a Sydney apartment at $500 per week is about $70 more than the average home loan in Sydney, today. Read the full story here.
Baby boomers shut out of retirement due to housing costs
About one in three older Australians say increasing property prices have frightened them out of retirement. According to the Baby Boomers Housing Lifestyle Report released on Thursday, 20 per cent will be reliant on a government pension. While commonly labelled as the chief beneficiaries of Australia's booming property market, findings from the report indicate that superannuation funds may still leave boomers struggling with affordability pressures such as rising house prices. More than half believe they need more than $46,000 a year to retire comfortably, higher than the estimated $42,200 experts believe is required. Read the full story here.
$100m tower gains approval in Docklands district
A 30-storey apartment tower with 229 units earned construction approval in Melbourne’s Docklands urban renewal district, the latest evidence of the continuing boom in Victorian housing construction. The $100million tower at 160 Lorimer St will have 302 car parks, 84 bike spaces and shops on the ground floor. The council has been wrestling with a connected proposal for a bridge linking Fishermans Bend to the Docklands for trams over the Yarra River – a bridge Lord Mayor Robert Doyle described as “the epitome of ugliness". Developers also unveiled plans for a $200 million 81-level skyscraper in City Rd, Southbank, featuring almost 600 units and a 198-room hotel. Read the full story here.