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European Study Pours Cold Water on Australian Banks Cost Claims

Posted: February 22nd, 2012 | Author: | Filed under: Business and Economy | Tags: , , , , , , , , , | 1 Comment »

European Study Pours Cold Water on Australian Banks Cost ClaimsElysse Morgan from ABC reports that new research by one of Europe’s biggest banks suggests that Australian banks are hiking interest rates to protect profit margins, not to cover higher funding costs as they have insisted. But the Australian Bankers’ Association has dismissed the study and says lenders may have to raise their rates again.

The study by Societe Generale shows nearly all funding costs for Australian lenders have fallen in the last six months. Societe Generale’s head of strategy in Asia, Christian Carrillo, says the banks’ claims about rising costs are dubious.

“Research suggests that effectively pretty much every source of funding that they use in terms of domestic deposits, short-term funding onshore, long-term funding onshore, has actually gone down,” Mr Carrillo said. “There has been some widening in spreads between offshore funding rates and the rates that they use to hedge against, but if you take into account the overall rate they pay to fund overseas, even that has actually come down slightly.” Read the full article »»»»

Australian Cities Among Ten Most Expensive In The World

Posted: February 15th, 2012 | Author: | Filed under: Australian Home Prices, STANDOUT | Tags: , , , , , | 2 Comments »

Australian Cities Among Ten Most Expensive In The World

Thanks in part to a strong Aussie dollar and rising inflation, Australian cities now rank among the world’s 20 most expensive places to live. It now costs more to live in the five mainland state capital cities than in London, New York, Rome, Los Angeles, Berlin or Hong Kong, the latest survey by the Economist Intelligence Unit has found.

Sydney leads the Australian list, globally ranked at number seven, slightly ahead of Melbourne at number eight. Perth is the 13th most expensive place to live in the world, Brisbane is the 14th and Adelaide is the 18th. The report’s editor, Jon Copestake, said the cost of a loaf of bread in Sydney had almost doubled in the past 10 years, while petrol had risen threefold.

Mr Copestake placed much of the blame for the high cost of living on the strong Australian dollar. “Exchange rates have been the greatest influence for the Australian cost of living, with the Australian dollar seeing its value to the US dollar double in a decade,” Copestake said. Read the full article »»»»

Australia’s Housing Shortage Worsened Despite Falling Property Prices

Posted: December 21st, 2011 | Author: | Filed under: Australian Home Prices, House Stalker, Real Estate News | Tags: , , , | Comments Off on Australia’s Housing Shortage Worsened Despite Falling Property Prices

Australian Housing ShortageAustralia’s housing shortage has worsened despite falling property prices and is set to keep growing, an official report has found. The National Housing Supply Council says the gap between supply and underlying demand in Australia widened by 28,200 homes in the 2010 financial year. New South Wales and Queensland have the largest shortfalls.

The council says the total shortage stood at nearly 187,000 dwellings in 2010 and was expected to reach 215,000 for the 2011 financial year. Council chair Owen Donald says not enough homes are being built by either the private or the public sectors.

“We simply haven’t been producing as much new housing and we’ve had additions to the number of households over the years,” Dr Donald said. “That’s been particularly the case since about 2005, when the rate of population growth exceeded the rate of additions to housing stock.” Read the full article »»»»

Even Steven: Australian Housing Supply

Posted: May 16th, 2011 | Author: | Filed under: Australian Home Prices, Blip | Tags: , , , , , , , , , | Comments Off on Even Steven: Australian Housing Supply

Amidst much talk of an impending housing slump in Australia, a senior analyst has deemed the market as at Equilibrium, so is that a Fine Balance or Finely Balanced?

The supply of homes in Australia is “around equilibrium”, although dwellings are hugely overvalued, a property analyst says.

Institute of Actuaries Australia fellow Anthony Street is bucking the view of many in the sector on supply, saying a property bubble will be averted if prices remain stable.

While the property industry and banks talk about a shortfall of between 160,000 to 200,000 homes nationally, Mr Street says until recently Australia had more than enough homes to go around.

“There isn’t the massive undersupply that a lot of people in the property market would want you to think, but there isn’t a massive oversupply either,” the former Macquarie real estate securities funds manager told AAP.

“As more and more people moved out of home and the number of people per dwelling decreased, that accounted for what seems like an oversupply, so I think it’s probably around equilibrium at the moment.”

Mr Street said there had been a fall in the average of 2.5 people per dwelling, down from three in the 1980s and nineties.

Extra housing would have been taken up by a reduction in the number of people per dwelling.

But while the property industry expects the next national census to show an increase in the average amount of people under each roof, it’s been more than a year since the National Housing Supply Council released a report for the federal department of housing to assess the supply situation.

From an economic investment perspective, house prices were at least 30 per cent overvalued, Mr Street said.

But this would not be a concern until the commodities boom ran out of steam.

Still, house prices had “flat-lined” over the past six months and were even starting to fall.

A sudden increase in unemployment of two or three per cent could see house prices fall sharply.

However, if there was no movement over the next five to eight years, the stability could act as a correction due to improvements in income and affordability, Mr Street said.

Almost 10 per cent of homes were unoccupied during the last census, but the shortage of housing near the CBDs of Australia’s capital cities remains a headache for policymakers in the lead up to the August 9 census this year.

Caryn Kakas, executive director of the Residential Development Council of Australia, which represents major developers, said underlying demand was running at around 200,000 homes per year.

She said the upcoming census would likely show an increase in the amount of people living in the same home due to affordability and supply constraints.

“That would be a reversal of the occupational decline,” she said.

“From what we’re seeing in the housing sector, we wouldn’t be surprised to see that.”

“It’s going to occur because we are unable to deliver housing into the market at a price that a growing portion of the population can afford to pay which means people are delaying home ownership.”

The Commonwealth Bank estimates annual underlying housing demand will push back towards the 190,000 to 200,000 level where it sat a year ago.

“At the moment, given the slowdown in net overseas migration, it’s probably back around 170,000 to 180,000 range, but as the economy starts to recover and we start to get more demand, particularly from the resources sector with workers coming in from overseas, we’re likely to see that underlying demand pick up,” Commonwealth Bank economist James McIntyre said.