CANBERRA’S appetite for McMansions may have lessened but architects are complaining that it is now the banks – not the clients – who are pushing them for extra more bricks and mortar.

President of the ACT chapter of the Australian Institute of Architects Tony Trobe said he had been effectively forced to change designs to give clients extra bedrooms they did not want or need, just so they could get finance from their banks for the build.

”The banks are saying ‘no’ because they think it’s not as easy to sell a stylish two bedroom house as is to sell a three bedroom house with a garage,” he said.

”I designed a home for a couple in Uriarra, which was to be done in two stages – the first was with two bedrooms and the second stage was later if they wanted it,” he said.

”They didn’t have children yet and didn’t need the extra bedrooms, but they wanted it set up so it could become a full family home down the track.”

The ”Uriarra project” became a three-bedroom home with two living rooms and an extra living area. It was not the first time it had happened.

Australian Bankers’ Association chief executive officer Steven Munchenberg said there was no hard and fast rule about needing at least three bedrooms.

”Nobody in the industry is saying ‘no more two bedrooms’ but the banks will take into account the re-salability of the home,” he said.

”It’s not only in the case of a mortgage repossession, but if the owner wants to sell, the bank needs to be confident it will get a proper price.

”If you want to make a house shaped like an enormous turnip and there’s no chance of getting the money back, then that won’t work.”

Mr Munchenberg said banks also took into account their own loan books and the need to spread risk over a range of areas.

”The bank has to consider whether it’s over-exposed to one style of property,” he said.

Mr Trobe said it was important for Australians to try to reign in the big house obsession – no matter what motivation was driving it.

”We build the biggest houses in the world on a per capita basis and there are less and less people in them,” he said.

”Affordability is an issue and the environmental footprint is an issue as well.”

At its meeting today, the Board decided to lower the cash rate by 50 basis points to 3.75 per cent, effective 2 May 2012. This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated.

Growth in the world economy slowed in the second half of 2011, and is likely to continue at a below-trend pace this year. A deep downturn is not occurring at this stage, however, and in fact some forecasters have recently revised upwards their global growth outlook. Growth in China has moderated, as was intended, and is likely to remain at a more measured and sustainable pace in the future. Conditions in other parts of Asia softened in 2011, partly due to natural disasters, but have recently shown some tentative signs of improving. Among the major countries, conditions in Europe remain very difficult, while the United States continues to grow at a moderate pace. Commodity prices have been little changed, at levels below recent peaks but which are nonetheless still quite high. Australia’s terms of trade similarly peaked about six months ago, though they too remain high.

Financial market sentiment has generally improved this year, and capital markets are supplying funding to corporations and well-rated banks. At the margin, wholesale funding costs have declined over recent months, though they remain higher, relative to benchmark rates, than in mid 2011. Market sentiment remains skittish, however, and the tasks of putting European banks and sovereigns onto a sound footing for the longer term, and of improving Europe’s growth prospects, remain large. Hence Europe will remain a potential source of adverse shocks for some time yet.

In Australia, output growth was somewhat below trend over the past year, notwithstanding that growth in domestic demand ran at its fastest pace for four years. Output growth was affected in part by temporary factors, but also by the persistently high exchange rate. Considerable structural change is also occurring in the economy. Labour market conditions softened during 2011, though the rate of unemployment has so far remained little changed at a low level.

Recent data for inflation show that after a pick up in the first half of last year, underlying inflation has declined again, and was a little over 2 per cent over the latest four quarters. CPI inflation has also declined, from about 3½ per cent to a little over 1½ per cent at the latest reading, as the weather-driven rises in food prices in the first half of last year have, as expected, now been fully reversed. Over the coming one to two years, and abstracting from the effects of the carbon price, inflation will probably be lower than earlier expected, but still in the 2–3 per cent range.

As a result of changes to monetary policy late last year, interest rates for borrowers have been close to their medium-term averages over recent months, albeit tending to increase a little as lenders passed on the higher costs of funding their books. Credit growth remains modest overall. Housing prices have shown some signs of stabilising recently, after having declined for most of 2011, but generally the housing market remains subdued. The exchange rate remains high even though the terms of trade have declined somewhat.

Since it last changed the cash rate in December, the Board has maintained the view that the setting of policy was appropriate for the time being, but that the inflation outlook would provide scope for easier monetary policy, if needed, to support demand. The accretion of evidence over recent months suggests that it is now appropriate for a further step in that direction.

In considering the appropriate size of adjustment to the cash rate at today’s meeting, the Board judged it desirable that financial conditions now be easier than those which had prevailed in December. A reduction of 50 basis points in the cash rate was, in this instance, therefore judged to be necessary in order to deliver the appropriate level of borrowing rates.

Daniel Morrissey  - April 19, 2012

Independent Property Group, Canberra’s biggest real estate company, has expanded into Sydney by buying Laing+Simmons, which has 47 offices in the harbour city.

The cost of the acquisition was not disclosed.

Independent Property Group chief executive John Runko said today it would allow the company to push a number of its business services into the Sydney market.

‘‘Services like strata management, project marketing and probably commercial real estate as well,’’ Mr Runko told The Canberra Times shortly after arriving at Sydney airport.

‘‘It is a much easier transition to do under a brand that’s already established within the Sydney market.’’

He said the Laing+Simmons would retain its name and its operational team would stay.

Cost savings would be generated in the back-end of the business through technology, software, training, administration and marketing, Mr Runko said.

He said the expanded business would likely need to hire more staff.

Independent Property Group, which has been working with Laing+Simmons for nearly 10 years, has about 40 per cent of the real estate business in Canberra.

Mr Runko said Laing+Simmons’ culture and operations would be a ‘‘great fit’’.

April 14, 2012

At its meeting today, the Board decided to leave the cash rate unchanged at 4.25 per cent.

The world economy is expected to grow at a below-trend pace this year, but does not suggest that a deep downturn is occurring.Several European countires will record very weak outcomes, but the US economy is continuing a moderate expansion.

Growth in China has moderated as was intended, and is likely to to remain at a more measured and sustainable pace in the future. Conditions around other parts of Asia softened in 2011, partly due to natural disasters, but are not showing signs of further deterioration.

At today’s meeting, the Board judged the pace of output growth to be somewhat lower than earlier estimated, but also thought it prudent to see forthcoming key data on prices to reassess its outlook for inflation, before considering a further step to ease monetary policy.

CLICK HERE for the full RBA Media Release – 3/4/12

RP Data – Rismark Home Value Index Release

Australia’s housing market is showing signs of stabilising after home values rose 0.2 per cent in March. Not only has the market remained unchanged for the quarter ending 31 March 2012, it is also level with the 31 November 2011 home values across the combined capital cities.  The flat result over the quarter is the strongest result since March 2011 when values increased by 0.7 per cent.

RP Data’s research director, Tim Lawless points out that while the quarterly result was an improvement on recent quarters, the Sydney housing market has been the primary growth driver.

“Looking at the quarterly results on a more granular basis, the improved conditions over the March quarter can largely be attributed to the performance of Australia’s largest housing market, Sydney, where values rose 1.1 per cent over the quarter.  Values were down across many of the other capital cities over the quarter with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent,” Mr Lawless said.

According to the managing director of Rismark International, Ben Skilbeck, “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in calendar year 2011. This month it was the resource rich states which delivered the strongest gains with Perth, Darwin and Brisbane up 1.4 per cent, 1.1 per cent and 0.8 per cent respectively”.

Over the twelve months ending March 31, capital city home values are down 4.4 per cent with the largest falls being recorded in Hobart (-7.3 per cent), Brisbane (-6.1 per cent), Adelaide (-5.7 per cent) and Melbourne (-5.4 per cent).  Despite the fall in Melbourne home values they are still up 45.5 per cent since the start of 2007.  At the other end of the spectrum, Canberra continues to show the most resilience with values down just -0.3 per cent over the year.

According to Mr Skilbeck there are a number of factors pointing towards an improvement in housing market conditions over recent months.

“The ratio of national house prices to household disposable incomes is currently below the decade average. Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwelling are at levels not seen since November 2009. First home buyers as a proportion of all home loans approved are back to levels not seen for 2 years,” Mr Skilbeck said.

Yields are also showing modest improvements.  According to Mr Skilbeck, “rental yields for houses across the combined capital cities have moved from just 3.6 per cent eighteen months ago to 4.1 per cent and gross yields on unit dwellings have improved from a recent low of 4.4 per cent to 4.8 per cent.  The most significant rental yield improvements have been recorded in Darwin, Perth and Brisbane where yields have increased by 22 per cent, 21 per cent and 18 per cent respectively from their recent lows.”

Other market metrics are also showing some improvement.  “The number of properties available for sale is continuing to moderate from the historic highs which peaked late last year and auction clearance rates have been holding above 50 per cent for most of 2012,” Mr Lawless said.

“Additionally, we have recently seen the Reserve Bank reporting that the rate of mortgage arrears has fallen from a peak of 0.7 per cent to 0.6 per cent, a default rate which is comparably low by international standards.  The latest Financial Stability Review from the RBA also highlighted that most mortgage holders are paying down more of their mortgage debt than they are contractually obliged to, a sure sign that Australian’s are coping with their mortgage debt,” Mr Lawless said.

Information becoming available since the December meeting confirms that economic conditions in Europe were weakening late last year, with risks still skewed to the downside. Reflecting this, most forecasters have lowered their forecasts for world GDP growth this year to a below trend pace.

That said, recent data from the United States suggest a continuing moderate expansion after a soft patch in mid 2011. Growth in China has moderated as was intended, but on most indicators remained quite robust through the second half of last year.

Extract from the RBA: media Release 07/02/2012

BY JOHN THISTLETON

Whether we are a lonesome city or a leader in housing trends is unclear, but Canberra is offering more single bedroom apartments these days.

They dominate three major inner-south projects awaiting planning approval.

In a $33.8 million, six-storey development on Eastlake Parade, Kingston, 94 of the 146 proposed units are for single-bedroom dwellings.

In a $69 million project in Irving Street, Phillip, 171 of the   278 units will be single-bedroom accommodation.

In Griffith a redevelopment for 76 residential apartments will comprise 57 one-bedroom apartments.

Banks once shunned them, but as Housing Industry Association chief economist Harley Dale points out, even with a credit crunch’s  negative impact on residential development, lenders must be coming to the party. ”It’s difficult to see how you would get a critical mass of projects actually flying to fruition with a lot of one bedders in them if there had not been some kind of change in attitude.”

The Australian Bureau of Statistics says lone-person households are projected to show the greatest percentage increase up to 2031.

The number will rise by between 63 per cent and 91 per cent, or 1.2 to 1.7 million households, mainly because of older women, in particular, being more likely to live alone.

Cox Humphries Moss architect Chris Millman says the single-bedroom option is market driven.

”There was a point in time where we were doing large two bedrooms and this has moved to one bedroom. We’ve even had a lot of studio stock come into play.

”You can get mortgage insurance for about 40sqm whereas it used to be a lot bigger than that. As a result you get people investing, or an owner occupier that can go into smaller units because they can afford them and get mortgage insurance.

”Five years ago you would not have sold any studio units, now it is popping into the mix.

”The latest trend is you are seeing two-bedroom units with a single bathroom, again because they are a bit more affordable.”

The ACT Liberals have dismissed as ”dangerous” Treasury modelling that shows the cost of living in Canberra is among the cheapest in the country.

The Canberra branch has been campaigning on living costs for months, claiming Labor has forced living costs up, overseen an unprecedented tax grab, neglected basic municipal services and made public transport unaffordable.

But the party has  now been given clear advice by Treasury that contradicts its message of gloom  and doom. According to Treasury, in terms of rent, public transport and  electricity, Canberra is Australia’s most affordable capital city.

Using data drawn  from the Australian Bureau of Statistics and others, it said stamp duty was on  par with the national average, rates were below the national average, parking was among the cheapest in the country and, while the cost of child care has risen, the rise was the second lowest in the country.

The Government advice was prepared by Treasury officials in preparation for a September meeting of community service organisations, and released to the Liberals under freedom of information laws.

The September meeting was called after Chief Minister Katy Gallagher told the ACT Labor conference last year the Government had to find a new way to support ”battlers” who don’t qualify for ACT or Commonwealth concessions.

The Government currently provides concessions on energy, water, rates and other charges to the holders of various concession cards.

According to the ABS, 16.5 per cent of Canberra households get more than half their gross household income from government pensions, compared with about 25 per cent of households nationally.

But Ms Gallagher wants to target assistance to people who are falling through the pension safety net, and has established a taskforce, which will report in March, to examine how this could be achieved.

For most Canberra’s, however, times are good. Wages have grown by 46 per cent since 2001, 2 per cent more than the national average. This represents the
second-highest growth in Australia (behind WA). The ACT continued to record the highest average weekly earnings in the country, about 15 per cent higher in seasonally-adjusted terms than the national average.

Taxation per capita rose by 76 per cent since 2001, while gross household income rose by 81per cent since 2001. Treasury says that given our relatively high incomes, Canberra’s rental market is ”the most affordable” in the country, with 16.9per cent of family income required to pay rent, compared with 25.1per cent nationally.

Mortgage repayments cost 18.6per cent of family income, compared with 34.2 per cent nationally.

Liberal Ginninderra MLA Vicki Dunne said, ”If this is the view of Katy Gallagher and ACT Labor, it is dangerously out of touch with Canberra’s cost of living problems”.

But Ms Gallagher said the debate over cost of living pressures should focus on the small number of people who were genuinely battling to make ends meet.

”It’s important to accept that not everyone in Canberra is suffering from the cost of living, but that doesn’t discount that there are people who aren’t ensioners who are struggling to make ends meet.”

FRANCES STEWART
01 Jan, 2012 04:00 AM

THE ACT’s richest suburbs will enjoy residential rate cuts this financial year, while less affluent areas in the ACT face significant rate hikes in tough economic times. The ACT Government’s summary of single standard residential property rates reveals blue-ribbon inner south suburbs – including Griffith, Forrest, Deakin, Barton, Red Hill and Yarralumla – will have residential rates cut over the financial year. Barton residents will enjoy the biggest rate reduction in both dollar and percentage terms, with charges set to fall 2.87 per cent – or an average of $91.70 per annum.

Home owners in Cook face the most significant increase in dollar terms, paying an extra $105.60 a year on average, while Oaks Estate has the biggest percentage jump of 8.53 per cent – or an average of $95.32 a year. Property owners in Forrest pay the most in dollar terms, despite the rate reduction, forking out an average of $4802.39 each year.

Barton and Red Hill residents will also pay significant sums for property rates, with each attracting average annual costs of more than $3000 after reductions in percentage terms are applied. After applying the average reduction of 0.16 per cent for the 2011-12 fiscal year, south Canberra had the highest average rates of any ACT region at $2578.51.

Gungahlin remained the cheapest place to pay rates at an average of $1219.57 after an increase 3.68 per cent was applied. Tuggeranong has the biggest hike in percentage terms, increasing by an average 5.55 per cent, Weston Creek was up by 4.79 per cent, Belconnen by 3.98 per cent, Woden Valley by 2.81 per cent, and North Canberra by 2.82 per cent.

The average residential rates charge across the ACT will rise from $1459.30 to $1510.62 – an increase of $51.32, or 3.52 per cent.