Alone Again, Naturally.

The prediction we made a year ago that Australian housing values would rise during 2009 left us feeling very much "alone again", as a hoard of experts howled us down, forecasting price falls of up to 40%.

The housing market has seen a resoundingly positive outcome for 2009 with an average total return of 9.5%, very close to my predicted total return of 9%.

Market Wrap with John Edwards - Residex CEO

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House price recovery led from the top...

'Buyers are back in the Prestige Property market' - Michelle Singer

Click image to enlarge.

Source: Financial Review

Top end leads market recovery... stunning 5.7% growth for first half of 2009.

A 4.5 per cent increase in Australian home values in the first half of 2009 heralds good news for the property market with improvements being recorded across all market price segments according to the combined RP Data-Rismark National Home Value Indices out today.

RP Data national research director Tim Lawless confirmed that prices improved across all price segments over the last six months, however growth is moderating as we move into the second half of 2009.

Rismark International managing director Christopher Joye said “Outside of cash, Australian residential property has proven to be a safer store of wealth for households than shares or commercial property.”

Mr Lawless said “The recovering residential environment comes as consumer and business confidence records large improvements. Housing finance approvals are trending upwards for both owner occupiers and investors, and auction clearances are averaging more than 70 percent across the nation.”

“Growth across all markets is being recorded over a broad base, not just in first home buyers markets as commentators have suggested,” he said.

Based on the first half year results, home values have risen in the top 20 per cent of most expensive suburbs, the middle 60 per cent of suburbs, and the cheapest 20 per cent of suburbs ranked by price.

The top 20 per cent of most expensive suburbs across Australia have risen in value by a stunning 5.7 per cent since their lowest point in January 2009 which follows a hefty 10.3 per cent fall in values between February 2008 and December 2008.

Mr Lawless said the fact that prices are improving across all segments of the market demonstrates that improved affordability and attractive buying conditions are the key market drivers rather than the boost to the First Home Buyers Grant.

Source: RpData

No Recession for Australia!

The Australian economy expanded by 0.4 per cent in the March quarter after contracting by a revised 0.6 per cent in the December quarter.

The Australian economy out-performed all other industrialised nations in the quarter by a big margin.

No state government is officially in recession once exports and imports are taken into account.

CommSec expects the Australian economy to rebound far quicker than Federal Treasury. In 2008/09 the economy will probably grow by only 0.6 per cent, but 2.1 per cent growth is tipped for 2009/10 and 4.1 per cent growth is expected in 2010/11.

What does it all mean?

In may not spark dancing in the streets, but it is clearly good news that the economy has avoided recession. Because this downturn has been all about confidence. If consumers and businesses become confident about spending and hiring again then recovery should be a lot quicker and stronger than most analysts thought possible just a month ago.

Is Australia the wonder from down under? It certainly looks that way. Every other major developed economy went into reverse in a big way in the first three months of the year but Australia actually grew. Much of the credit for Australia’s resilience must be given to the swift actions of the Reserve Bank and the Government in stimulating our economy. And the weaker Aussie dollar played a key role in boosting the competitiveness of our exports.



If the near-death experience of the economy has taught us anything it is not to count your chickens before they hatch. Forecasts for economic growth and unemployment are just that – forecasts. Forecasts inevitably miss their mark and that’s why businesses and consumers should spend more time looking at their balance sheets than worrying about what may happen.

Gloom and doom reports in the media almost caused Australians to talk themselves into recession. The important thing now is that commentary and analysis of our economic situation becomes more balanced. While the tough times abroad must be acknowledged, the strong position of our economy must be similarly recognised.

It’s amazing how much time is spent looking backwards, not forwards. While Australians should take a short amount of time to assess the latest economic growth figures, they should spend a far greater amount of time on what lies ahead. The good news is that the global economy appears to have bottomed, China is recovering strongly and the housing market is driving the domestic upturn. Businesses must now look to take on staff to take advantage of the stronger economic conditions that lie ahead.

Rumours of the death of the Australian economy have been highly exaggerated. Despite premature pronouncements, the economy has avoided recession – if only just – and now it should be a case of companies and consumers getting on with business. Too much time has been spent fretting over a possible recession when Australians should have been spending more time focussing on their improved financial circumstances.

The Australian economy was certainly flattened by the global financial crisis but it is clear that it has avoided the sort of downturn experienced by other major developed economies. The swift stimulatory actions taken by the Reserve Bank and the Federal Government can take credit for Australia’s impressive resilience, together with the strength of our banking system.

The worst of the economic slowdown is now over. It is becoming clearer by the day that forecasters became too pessimistic, failing to give equal weight to the responsiveness of policymakers as to the fundamental problems faced by the US economy. The federal budget is less than a month old but already it looks to be out of date. The economy could rebound much quicker than expected, reducing the size of the potential budget deficit.

One thing is clear – Australia went close to talking itself into recession. Our economic conditions were nowhere near as bad as other parts of the globe, but somehow we all thought they were as bad. If Australians focus on the opportunities that lie ahead then the rebound could be much quicker and stronger than envisaged only a month ago.

The world is experiencing its biggest ever post war slowdown, so we were never going to come out of this totally unscathed. Growth was at best flat over the last year. More importantly for companies and investors forward looking indicators like building approvals and retail sales suggest the domestic economy has likely seen the worst of this global downturn.

Source Craig James, Chief Equities Economist, CommSec

Australian home values continue to recover, recording a 2.8% increase over the first four months of 2009

The RP Data/Rismark Australian Home Value Index out yesterday confirmed that housing values around Australia rose by a healthy 2.8 per cent over the first four months to April 09—virtually wiping out the price falls seen in 2008 according to RP Data National Research Director Tim Lawless.

Unlike the Australian Bureau of Statistics House Price Index, which excludes terraces, semi-detached homes, and apartments, the RP Data/Rismark International hedonic methodology, which is reported by the Reserve Bank of Australia, includes all dwellings. In addition, RP Data benefits from the largest sample of early property sales and property attributes (such as number of bedrooms, bathrooms and land area) of any index provider in Australia.

Over the first four months to April 09, every mainland capital city apart from Perth recorded an increase in home values with the most significant gains in Darwin (+5.3 per cent), Melbourne (+4.4 per cent), and Sydney (+3.9 per cent).

According to Rismark International Managing Director Christopher Joye, “Our analysis demonstrates that home values are rising in around 80 per cent of all suburbs with only the top 20 per cent of suburbs ranked by price suffering material falls.”

The recent growth in the Australian residential property market has fuelled speculation about a ‘bubble’ developing in the first home buyers market but RP Data’s Mr Lawless believes these claims are largely unjustified.

Mr Joye adds “While first-time buyer activity has certainly supported the market, people forget that 70-75 per cent of home buyers are not first timers. Also, lending standards are more conservative today than they have been for over 15 years with maximum borrowing ratios being consistently reduced.”

The return to capital growth comes as weekly rental rates start to level.

Mr Lawless said, “Rental rates across Australia have powered ahead over the last three years, providing the best gross rental yields investors have seen for a long time.

“We are now seeing growth rates for weekly rents start to level due to decreasing rental affordability which is causing many renters to consider buying a home instead of renting.

“Gross rental yields are likely to peak over the coming months suggesting that now is probably the best time for investors to roll up their sleeves and become active,” he said.

In terms of housing stock, units are continuing to outperform houses where over the first four months of 2009 values increased by 3.3 per cent while house values increased by 2.7 per cent.

In closing Mr Lawless said “The stronger performance of the unit market is due to a number of factors. Comparing median house and unit values nationally, the price gap between is just over $90,000, so the value proposition of a unit is very compelling. Additionally, units are generally located closer to the city and along transport spines which is very appealing to many Gen Y and Gen X buyers,” he said.

Source and full article:
RP Data

Sky Business - Real Estate News - Riparian Plaza

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