Brisbane’s property market is reeling under a slew of unfavorable conditions. The prices are already very high and BIS Shrapnel has declared that South East Queensland would see the rise in prices of residential properties by as much as 22% in a very short span of mere three years. The market spirit has dampened further by this information. Steve Greenwood of Property Council of Australia has more to add. According to him in the coming years rental rates of the property are expected to go still higher. He further informs that not only have the prices increased in the past years, the trend shows signs of getting stronger in the coming years.

This means that people who were looking forward to purchase property in Brisbane might have a hard time ahead. Brisbane city budget has not been very helpful either. In fact according to a number of experts in the real estate sector, it is because of the increase in rates declared in the city budget that rental prices would experience the skyrocketing trends.

In the past the rate calculation was done on the same basis, be it a house or an apartment. This was done using a fixed dollar rate and the unimproved value of the land. The apartments got lower rates primarily due to the fact that a number of apartments stood on the same piece of land and the owners of apartment had to share it. Come 2009 and the things would be different. The owner occupied properties would now be rated according to a parity factor. This parity factor takes both the value of the land and the value of apartment into account and thus drives the rates higher.

Dan Molloy of Real Estate Institute of Queensland has warned people who have apartments closer to CBD. They would be the hardest hit by this new system because their property has considerable value. Brisbane Labor Councillor David Hinchcliffe says that in some cases an increase of 700% may be noticed. On the other hand Lord Mayor Campbell Newman refutes such estimates. He informs that while significant increase would take place, it would not be higher than 150 to 160% In the worst case he says that increase would still not be more than 300%.

Greenwood says that property investors who have rented out their investment units would forward the burden in the form if higher rents to the tenants. On the other hand Newman says that increasing the rent substantially with the increase of rates would be a risky step. He says it is neither fair nor justified. Molloy is also worried that this would mean more pressure for a market that is already reeling under pressure from other sources. Molloy says that vacancy rates are at an all time low.

Greenwood also holds the rise in property costs responsible for this. It is simple economics. People can not buy homes so the demand for rentals is high. At the same time, the same factor is also responsible for shortage of supply. Greenwood also recommends the unlocking of more land so that the prices can be brought under control and for market to avoid getting in a condition where it might be facing a total collapse.

The entire city of Canberra is buzzing with the upcoming 2020 summit. Delegates from a number of countries are flying in and speakers are preparing to present their views and those of the organizations they represent on a number of issues. One of the issues to be taken up in the summit is the housing problem in Australia and in other parts of the world. The developed country that Australia is, it is suffering from an acute problem of shortage of affordable housing opportunities. Mortgages and property tax have become a pain and housing rental sector is reeling under pressure.

Tim Costello, the head of World Vision has decided to take up the matter himself. He has noticed that the housing sector of Australia is under a lot of pressure due to a number of unplanned and under-planned policies which were implemented by the Federal government, the various state governments and different local government bodies in various parts of the country. The taxation is so high in the property sector that the people feel as if they are virtually denied by the state of their basic human right to have a place they can call a home.

Mr. Costello has taken up the mantle to promote the up and coming rent to buy schemes. The country’s policies have driven mortgage rates too high. An increase in the overall cost of living has had its own role to play in the game and a noxious scenario has arisen out of the entire thing. Costello pleads that the governance bodies of the country make such policies as are favorable to the rent-to-buy schemes. The demand is to bring such legislation that encourages banking organizations across the continent to take this new business model seriously. It is a must to harness its potential for solving the affordable housing problem that Australia is facing.

There are number of recommendations that Costello would like to make. He proposes that these measures would improve the housing equity. Such policies are to be very helpful for the young people who are paying dead money in the form of rent. With these rent-to-buy business model thoroughly entrenched in the Australian real estate sector, owning a home would become a realizable dream for most of the people in Australia. Costello is very hopeful about the success of such a policy and feels that it shall be a great step in developing overall potential of the country.

Tim Costello also warns that as of now there is wide chasm in the housing sector. There are the renters who are paying money in the form of rent and then there are people who own the titles of said property. Costello urges that this chasm needs to be bridged. He says that a number of people want to buy their homes which is difficult in the present scenario. Costello assures that if the governance bodies take appropriate measures, it would not be difficult for the young generation to actually own their homes.

The prices of houses are likely to rise in Australia due to the growing housing shortage. Australia has been a trend setter for all housing boom throughout the world. Many new buildings are being built and their approvals have created a fear among the buyers of hike in price and rent of houses in Australia. This may put away many buyers from the market. The ANZ Bank says that Australia is facing a critical position due to shortage of houses. The rising immigration and the demand have more or less affected the shortage. The rising interest rates also continue to stump building recovery.

The housing demands have already exceeded the new ones and it has extended the demand to a high level. The Australian Bureau of Statistics survey says that the new apartment approvals fell 18.2 per cent in May and were down 4.2 per cent over the previous year. New house approvals declined 1.2 per cent and were down 1.7 per cent over the year. In Victoria, total building approvals were up 2.8 per cent. One of the economists says that the buyers are trying to escape from the property market because of the high rate of interest.

It is, however, essential to build more houses due to the increase of population year by year. The upcoming building owners and investors are scared by the hike in interest rates. So people are trying to stay in rental market and the investors are investing their money in the banks. Because of this situation of hike in prices of house both rental and selling, the investors are ultimately getting attracted and this leads to more construction of building. The fall in new residential approvals will only affect those persons going in for rent. However, the availability of apartments has not risen except the rise of those who want to rent it. Victoria tops the rent prices and the affordability of houses is likely to go down. The common view is that the hike in interest rates is the only reason for the decline of buyers in the property market. The buyers have to realize that the price will rise more even before they plan to re-enter the market. The building approval has slashed another interest rate increase from the Reserve Bank of Australia.

Thus, the prices rise of houses is likely to increase further in Australia because more investors are due for a hike in the interest rates. The buyers of the property market are diminishing because of the rise in the house rates. Those going in for rent are also affected because of the delay or fall in the approvals of new building. The main reason once again is the rise of interest rates and the inflation rate for the rise in house rates. The cost of living has also been increasing from the beginning of this year, which has largely affected the buyers who can only sit back and watch the situation. It is hoped that by the end of this year if the interest rate and inflation comes under control the house rates may come down.

The price hikes of houses in Australia are starting to reflect the rise of interest rates by the banks. The swell in house prices has caused many people to suffer increasingly soaring costs which is leading to mortgage stress. It has been found that the prices of houses in Melbourne have risen up to 8.1% in a year which is approximately double compared to the pervious year. The leading city for price hikes was Huntingdale where the increases of 53% were found. Sandhurst is not far behind with a 50% increase and Carlton sustaining 47% hike. he price hike not only affected the metropolitan cities but also in suburban and rural Victoria which rose to an average of 4.5%. However, some areas such as Rockbank, Melton, Millgrove and Diggers had a very low growth rate.

The home prices hike has been a great disaster for the Australian general public. It is said that the year 2007 was a boon to both the buyers and sellers of houses because the rate of residents were medium and affordable and also the interest rate of cash was low. But the markets have now totally changed. There is a general view that prices have gone down in many suburban areas and the auction sale rate has dropped to 65%. Because of this, the auction of sale has also come down to 360 properties compared with 614 the previous year.

In Victoria, the medium-size house price has risen to 164% in ten years from $88,000 to $232,000 in 2007. Lake Tyers Beach had the largest rise (59%), followed by Strathmerton (37%) and Ouyen (31%). The growth levels show that the percentage has come down to 7.3 from 18.9% in 2002 which was the highest. Survey results show that the price of units have increased to 10.3% and the vacant blocks increased up to 2.5%.
One prominent valuer says that the total sales value of property across the state was around $74 billion, an increase of 22% from 2006 onwards. The sales rose to 14.8% from 152,890 in 2006 to 175,455 in 2007. The property rates will gain from the Government's provincial first home bonus, which is given in addition to the first homeowners grant. The first home bonus of up to $15,000 is given to the first-home buyers in regional areas towards their new home.

The first five Melbourne suburban areas with the maximum medium house prices in 2007 were: Toorak ($2,530,000), Brighton ($1,600,000), Canterbury ($1,500,000), East Melbourne ($1,432,500) and Malvern ($1,411,000). And the first five lesser ones were: Melton South ($180,000), Rockbank ($189,000), Millgrove ($190,000), Melton ($192,500) and Diggers Rest ($200,000).

Thus the hike in house prices in Australia has not only affected the buyers but also the sellers because of the low sales compared to the previous years. Even the auction sales have also gone down because of this. Economist and valuers are of the view that the rise of house prices is due to the rise in interest rates and inflation rate. The Government and the Reserve Bank of Australia (RBA) should take steps to control the inflation growth and the RBA has to reduce the interest rates.

 

 

 

Falls in the amount of mortgages being approved in Australia have lead experts to believe that Australia is in a Mortgage Recession. In a report given by the Australian Finance Group (AFG) in June it has been said that there had been a fall in mortgage applications and approvals. According to them, there has been a fall of 9.2 per cent compared to the month of May. By the end of June it declined to 22 per cent thus declining the sales percentage to 31.5 per cent in comparison to the previous year.

The report by AFG (which has 10 per cent of brokerage market) says that there has been negative growth for the past two years. This data suggests that the market is in mortgage recession, after sales fell from 23,143 in the end of December to 20,543 in the month of March and further down to 19,755 in June. This mortgage recession is partly caused by the sub-prime crisis in the United States causing the cost of money to greatly increase. Interest rates are high world wide which is another factor contributing to the current mortgage recession. From this, the borrowers don’t go in for major purchases. The mortgages sold by the AFG have come down to $2 billion from $2.6 billion within a year.

The mortgage recession has forced the Reserve Bank of Australia to increase the interest rate four times, which comes to 7.25 per cent, the highest ever since the past 12 years. The commercial banks have also raised their interest rates independently to compensate their funding costs. It is said that the interest rates may increased again by the Reserve Bank of Australia if the decline in mortgage continues at current rates. The hope that the mortgage recession may be bottomed out is being closely watched to achieve unassuming growth. The statistics of the AFG shows that there has been an increase of 7.5 per cent in mortgage size this June compared with the previous year. The major increase was in South Australia and Queensland which was 13.5 per cent and 11.7 per cent respectively. New South Wales followed with mortgage size growth of 7.6 per cent, then Victoria with 6.1 per cent and South Australia with 2.6 per cent. However the growth was stable in Western Australia.

Some market watchers says that the overall rise in the mortgage size reflect on large loans at the wealthy part of mortgage market. The growth of the market is because of some fair buyers investing in properties. Persons captivating small and medium size mortgages cannot meet the expenses. Some of them had taken fixed rate loans, thinking that the interest rate will remain steady or may decrease. Demand for standard variable loans rose from 39.9 per cent to 40.8 per cent. The proportion taking fixed loans fell to 11.5 per cent in June from 13.7 per cent in May. Hence the mortgage recession in Australia has been an obstacle for the growth of the mortgage industry. However, it is hopeful that the Australia in mortgage recession could be restricted thus giving way to Australia’s economic development.