Melbourne Property Market Update – February 21st, 2015
By Peter Sarmas on 20 Feb 2015
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Was Last Weeks Auction Results An Aberration?
Perhaps last week’s surprising lower than expected auction results were an aberration or just not accurate due to the smaller numbers. Regardless, this weekend’s 74 per cent clearance rate was more reflective of the sentiment we witnessed last week and this week with both inspection numbers and auction results strong according to a number of real estate agents around Melbourne. Peter Sarmas reports we need to see a trend before we get too excited about Melbourne’s property market this year and hope the Federal Govt brings back some stability and confidence after the debacle spill election.
Australian Housing Boom Could Last for Two More Years
Sourceable Industry News reports that property developer Stockland is confident the housing boom will continue for at least another two years. Low interest rates, population increases and an undersupply of homes is fuelling strong growth, after its net profit rose 55 per cent to $462 million in the six months to December 31.
Banks More Leveraged Into Housing Than Ever
Martin North of Digital Finance Analytics reviews important data from ABS which shows that today Banks in Australia are deeper into property than they have ever been. As a result they are more leveraged (thanks to capital adequacy rules) and more exposed if prices were to turn. Meantime, other classes of commercial lending continues to decline.
First home buyers switch off, investor activity rises
First home buyer activity has reached a 10-year low according to the latest official figures, despite an investigation into first home buyer data resulting in an upwards revision last week. Housing finance figures, released by the Australian Bureau of Statistics yesterday, revealed that first home buyers’ share of new loans fell 0.1% to 14.5% in December. This figure is the lowest since May 2004 and shows a steady decline since May 2012.
Risky Lending In A Low Interest Rate Competitive Environment
Regulators have been concerned about the quality of lending, and have been increasing their supervision, conscious of the potential impact on financial stability. However, a paper from the Bank for International Settlements – Bank Competition and Credit Booms highlight that especially when interest rates are low, and competition intense, banks will naturally and logically drop underwriting standards. Martin North of Digital Finance Analytics reports this observation is highly relevant to the Australian context, where competition for home loans in particular is leading to heavy discounting from already low rates, and potential lax underwriting. It suggests that lowering rates further will exacerbate the effect.
Chinese New Year Dragon Parade 2015
RACV is poised to regale Melburnians with an exquisite Dragon parade to herald the Chinese New Year. The parade will be held at Little Bourke Street in Chinatown from 11:15am to 12:45pm on 22 February 2015. A Chinese Dragon parade traditionally constitutes a fantastic procession of lavishly costumed men and women carrying mythical beasts, lanterns, banners and weapons designed to drive away evil spirits. This procession is accompanied by dancing lions, musicians and fabulous firecrackers.
