Category archive: Australia

News: NSW Housing Investment Sets Record High

Housing investment in New South Wales continues to grow as current levels are getting close to record highs, new Australian Bureau Statistics reports revealed.

Latest ABS data found that the value of residential lending in the state reached $7.19 billion in November 2016, the highest on record for the year and a significant 25.5 per cent increase from the previous month’s $5.7 billion.

The November value was also the second highest on record for NSW, with the highest being $7.36 billion in June 2015.

Investor loans constituted 56.7 per cent of all approved residential lending in NSW over the month, making it the highest market share nationally, followed by Victoria’s 45 per cent.

NSW’s residential investor lending represented 56.1 per cent of all approved lending in Australia in November. “This is clearly a record result, eclipsing the previous high of 48.8 per cent reported over March 2016,” said Andrew Wilson, chief economist at Domain Group.

“The strong Sydney market remains a magnet for investors with demand set to continue to rise attracted by continuing solid price growth and a tight rental market with rising rents consolidating gross yields.”

Wilson expected the NSW market to continue its growth, prompted by the possibility of better investment property taxes and rate cuts after 2015’s hike in mortgage rates.

“Residential investors have stormed back into the market since May 2016 driven by the prospect of possible changes to the tax treatment of investment property and interest rate cuts,” said Wilson.

“NSW generally and Sydney specifically remain the epicentre for what has re-emerged as unprecedented activity from this group.”

Cameron Kusher, head of research at CoreLogic said while NSW and Victoria might seem promising, investors should be mindful of the long-term risks.

“It’s clear that demand for mortgages from the investor segment is picking up, particularly in New South Wales and Victoria, which are proxies for Sydney and Melbourne respectively,” said Kusher. However, he added that investors should also think about the risks from long-term value growth phase as well as the historically low rental earnings.

News: Sydney’s Housing Market Second Most Unaffordable in the World, New Survey Found

Sydney’s housing market has been rated as the second most expensive in the world, according to the 13th Annual Demographia International Housing Affordability Survey: 2017.

Sydney, which is only topped by Hong Kong, beats other cities including San Jose (fifth most expensive) and Los Angeles (eighth).

The survey rates housing markets based on the World Bank-recommended “median multiple” principle, which divides median house price with median household income. A score of 5.1 and above is categorised as “severely unaffordable”.

10 Least Affordable Housing Markets

1            Hong Kong                       18.1

2            Sydney, NSW, Australia 12.2

3            Vancouver, Canada        11.8

4            Santa Cruz, CA, USA        11.6

5            Santa Barbara, CA, USA  11.3

6            Auckland, NZ                   10

7            Wingcaribbee, NSW, Australia    9.8

8            Tweed Heads, NSW, Australia    9.7

9            San Jose, CA, USA            9.6

10          Melbourne, VIC, Australia           9.5

The report found that 47 of Australia’s 54 markets are categorised as “seriously unaffordable” or “severely unaffordable”. The report’s co-author, Hugh Pavletich said the contrast between Australia’s land size and its housing prices indicates a “decentralisation” issue.

“State and local governments have lost the control of their costs and their capacity to finance infrastructure properly,” said Pavletich.

“Sydney house prices are about 12.2 times annual household incomes which is grossly excessive… What housing should be in normal markets is at or below three times household earnings, so Sydney is four times what it should be.”

The newly-sworn in NSW premier, Gladys Berejiklian said in her first press conference that housing affordability would be one of her policy priorities.

“I want to make sure that every average hard-working person in this state can aspire to own their own home,” said Berejiklian.

News: Petrol Prices Rise in Australia as OPEC-Led Deal Takes Effect

Petrol prices have risen by up to 20 cents a litre in a number of areas in Australia, following the December agreement between the Organisation of the Petroleum Exporting Countries and non-OPEC oil producers to cut production.

According to the Australian Institute of Petroleum, the national average price of unleaded increased by 2.2 cents over the week to Sunday to 128.3 cents per litre.

While Melbourne prices remained steady at $1.22 per litre, Sydney and Adelaide’s prices reached above $1.40. Other capital cities fell in between these extremes, with prices around $1.30 a litre.

There were also some local variations, with some parts of Tasmania – such as Hobart and Launceston – reaching $1.46 a litre.

Experts have recommended motorists to fill up quickly before the prices rise even further.

“The low petrol prices are not sustainable and prices are likely to lift markedly in coming days,” said Savanth Sebastian of stockbroking firm CommSec.

The Australian Competition and Consumer Commission (ACCC) warned that the price hike could be exacerbated by the falling Australian dollar.

“The ACCC is concerned that petrol prices are increasing in Sydney, and those in Melbourne, Brisbane and Adelaide may increase in the coming days,” said ACCC chairman, Rod Sims.

“Motorists should get in early, shop around, and consider filling their tanks before prices jump.”

Sebastian said the petrol price hikes would be applied around the world.

“The focus now shifts to see if oil producers comply with the stated production cuts,” said Sebastian.

“The early indications are that producers are already notifying customers in Asia, Europe and the US of cuts to oil deliveries from January. Importantly for motorists it means higher pump prices in the medium term.”

Property Market Predictions for 2017

Property prices in Sydney and Melbourne shows no sign of slowing down while prices in other cities fall, experts predicted.

Property research group SQM Research predicted that if the cash rate remains unchanged throughout the year, Sydney and Melbourne’s house prices could grow by 15 to 16 per cent.

Low interest rates will keep Sydney and Melbourne markets strong due to high income and population growth in these cities, said Moody’s economist Emily Dabbs.

“Affluent areas tend to be driven by the prosperity of local economy, and right now both Sydney and Melbourne have the fastest-growing economies in the nation,” said SQM managing director, Louis Christopher.

However, apartment prices in Sydney, Melbourne and Brisbane could fall by 15 to 20 per cent in the next two years, AMP capital chief economist Dr Shane Oliver predicted. “There’s a [supply] indigestion problem, but Sydney won’t have a supply problem for another two years,” Dr Oliver said.

On the other hand, Perth, Darwin and Adelaide’s prices are expected to continue falling due to dwindling population and high unemployment rate.

“The unemployment rate in Perth, for example, is quite high compared to the rest of the country,” said Dabbs. “That’s really hampering any income growth and making it difficult for households to pay higher prices for houses.”

Construction industry analyst BIS Shrapnel said house prices would rise in all capital cities except Perth and Darwin, and apartment prices would fall in Brisbane and Melbourne.

Alipay CBA

News: Alipay Enters Australian Market With Commonwealth Bank Partnership

Commonwealth Bank of Australia have signed an agreement with third-party payment platform Alipay to allow Chinese tourists and students to use Alipay in Australia.

The deal will also enable Australians to use Alipay for purchases over AliExpress, a platform for Chinese merchants to reach global consumers.

“We are constantly working on payment solutions that offer flexibility and choice for our customers so the prospect of bringing them closer to a globally leading mobile payments provider, and its 450 million active users, is truly exciting,” said Kelly Bayer Rosmarin, group executive of institutional banking and markets at CBA.

Alipay said the deal is targeted at the 19,000 Chinese tourists who visit Australia every week.

“Australia is a popular destination for Chinese travellers and Chinese students studying overseas,” said Douglas Feagin, senior vice-president at Ant Financial Services and head at Alipay International. “We want Alipay users to enjoy the kind of convenience they are used to at home.”

Alipay’s parent company, Ant Financial was valued at $US75 billion in September.

China is the world’s largest market for mobile payment, with a transaction volume of $US235 billion in 2015.

building

News: Chinese Investment in Australia’s Property Market Declines

Chinese property investment in Australia has declined by 37 per cent year-on-year, according to a report by London-based property consultancy Knight Frank.

The Changing Currents, Rising Tides report found that Chinese developers and investors spent US$1.7billion in the first half of 2016, with the volume of office and hotel transactions dropping 65 per cent and 42 per cent respectively year-on-year.

“The volume of Chinese investment in Australia is down considerably year-on-year because of a lack of mega-deals in the first half, as large deals such as the Investa portfolio dragged the 2015 number higher,” said Matt Whitby, head of research and consulting at Knight Frank.

However, Whitby said en-block commercial properties in Sydney and Melbourne remained popular to Chinese investors, who were “attracted by rental growth supported by strong tenant demand and a supply shortage.”

The report also noted that Chinese investors’ interest in foreign real estate market remained strong, “driven by Chinese economic and policy factors and are attracted by favourable local market conditions in gateway cities” in Australia, Canada, the United Kingdom, and the United States.

Dominic Ong, head of Asian markets at Knight Frank indicated that more major deals could be made in the second half of the year, as fewer transaction opportunities and a promising rental market have pulled in investors.

“Activity has picked up in the past few months,” said Ong.

“Some of the most recent transactions in Australia from Chinese buyers include 15 Help Street, Chatswood which sold for $43.8 million to One Pro Investment Group; 20 Bridge Street, Pymble which sold for $78 million to YuHu; 210 George Street, Sydney sold for $160 million to Poly Group; and 61 Lavender Street, Milsons Point sold to Aqualand for $110 million.”

 

Construction equipment sales in China have improved based on reports from Equipment hunt