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.

CLICK HERE for the PDF of my Market Update – 4th Quarter 2011

For the average borrower this will be reflected in a reduction in the average variable rate from approximately 6.9% down to 6.65%.

Assuming that most/all lenders will pass this rate cut on (a few have already reacted – eg Westpac and passed on the full 25 point reduction) the average home loan of $300,000 will have repayments reduced by $49/month.

A secondary benefit is that borrowing capacity increases. For example: a couple earning $80,000pa jointly will now be able to borrow roughly an additional $30k.

Australian Money Magazine published a great article in the September 2011 issue called  ’what’s an agent worth?’

To read the article in full which examines the need to engage an effective agent with marketing and negotiating skills, not just the agent with the cheapest fee as it will end with your home selling for a poor result.

CLICK HERE to view the “What’s an agent worth?” article

Conditions in global financial markets have been very unsettled over recent weeks, as participants have confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States. As a result, the outlook for the global economy is less clear than it was earlier in the year. Some temporary impediments that had contributed to a slowing in growth in some countries over recent months, such as the supply-chain disruptions from the Japanese earthquake and the dampening effects of rising commodity prices, are lessening. But the uncertainty and financial volatility is reducing confidence and may result in more cautious behaviour by firms and households in major countries. A number of forecasters have scaled back their global growth estimates over the past couple of months.

At this stage, little evidence is available to gauge any effects of the European and US problems on other regions. Prices for key Australian commodities have remained very high thus far, with growth in China continuing to look solid. As a result, Australia’s terms of trade are now at very high levels and national income has been growing strongly. Investment in the resources sector is picking up very strongly and some related service sectors are enjoying better than average conditions. In other sectors, cautious behaviour by households and the high level of the exchange rate are having a noticeable dampening effect. The impetus from earlier Australian Government spending programs is now also abating, as had been intended. Overall, the near-term growth outlook continues to look somewhat weaker than was expected a few months ago. Beyond the near term, growth is still likely to be at trend or higher, unless the world economic outlook continues to deteriorate.

Growth in employment has been moderate this year and the unemployment rate has been little changed, near 5 per cent, for some time now. Reports of skills shortages remain confined to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn, though productivity growth has been weak.

Year-ended CPI inflation should start to decline towards the end of the year, as temporary weather-related effects reverse. But measures of underlying inflation have been increasing this year, after declining for the previous two years. While they have, to date, remained consistent with the 2–3 per cent target on a year-ended basis, the Board remains concerned about the medium-term outlook for inflation. A key question will be the extent to which softer global and domestic growth will work, in due course, to contain inflation.

Most financial indicators suggest that monetary policy has been exerting a degree of restraint. Credit growth has declined over recent months and is very subdued by historical standards, even with evidence of greater willingness to lend. Most asset prices, including housing prices, have also softened. The exchange rate is high. Each of these variables is affected by other factors as well, but together they point to financial conditions being tighter than normal.

At today’s meeting, the Board judged that it was prudent to maintain the current stance of monetary policy. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

More than $2MILLION difference at age 65 is a huge incentive for you to at least look into this option further. Clarity Financial Group were awarded ACT Mortgage Provider of the Year in 2011 along with previous years too, their contact details are in the below PDF.

If the comparison table below doesn’t make you want a piece of the action then nothing will!

CLICK HERE for a comparison PDF table

Also from the ABS, the House Price Index declined 0.1 per cent for the eight capital cities in the June quarter, a decline of 1.9 per cent for the year. The capital city indexes decreased in Perth, Adelaide, Brisbane, Melbourne, Darwin and Hobart and increased in Sydney and Canberra.

And the June results for the RP Data-Rismark Hedonic Home Value Index echoed those results, revealing capital city housing markets remained flat over the month. The best performing capital city was Canberra, with values up 0.5per cent over the June quarter. The weakest performing capital city was Melbourne, with values down 1.6 per cent over the same quarter. Darwin reported the highest rental yields and Melbourne the lowest.

Author: Melissa Beaumont Lee – Finance News Network.