So the news is all bad for NSW property – well particularly for the more expensive property say $1.8million and over. Just as the upper end of the NSW property market is collapsing as investors homes are impacted by the share market meltdown, the state government provides another incentive for investors to look to another state rather than invest in NSW.
Auction clearance rates are still well-down despite a glimmer of hope in some of the east coast cities. Clearance rates in Melbourne and Sydney improved over the weekend with Sydney reporting a clearance rate of 44.7%, up from the previous weekend’s 41.7%. Melbourne’s figures were 48.1% compared to 41.7% the previous week.
The financial meltdown has dissolved over $4 billion worth of central Brisbane’s proposed developments. The only question is, is this an unmitigated bad thing?
The Queensland government has cancelled the controversial Brookfield Multiplex’s $1.7 billion North Bank Project. Though it appears this project was the victim of planning rather financial reasons. The development which was dubbed “Brisbane’s Darling Harbour” – and not in a nice way, was never popular and the current financial crises is a very nice excuse. The development would have included a series of towers build along the under-developed north side of the Brisbane Rivers, some with up to 30 stories.
The storm clouds are getting darker for the world’s and Australia’s economy. In these uncertain times does the old standby of “you can’t go wrong in bricks and mortar” still hold true?
The Americans, British and Bulgarian property owners have seen that you can go very wrong with property. As with any commodity in over-supply, if there is too much supply and not enough demand the price will go down. In California house prices have dropped over 40% in 12 months. Australian’s are watching their share market follow Wall Street down, down, down, and wonder if their property values will be next to head south.
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It looks like the Federal government’s increase of the first home owner’s grant for purchasers of new homes or home and land packages is translating to increased interest at land sales offices and display homes.
A strange thing is happening at Yanchep in northern Perth. There are a bunch of people camping at a developers sub-division. And they are not being moved on as squatters either!
As a property investor I always like to keep an eye on what the urban planners are up to. Love or loath them they do affect the value of my properties so in my opinion its worth keeping an eye on new developments (bad pun intended).
However one chooses to look at the current financial situation, there are winners and losers. The current losers, to our minds, are developers with excess stock to move in a slow market. The winners are well-funded buyers in a good bargaining position. Prices are being reduced on property around the world, and any developer worth his salt knows that it is far better to take a drop in price and move the stock rather than sit on it until the market picks up.
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Despite reductions in mortgage interest rates and the big increase in the first-home buyer’s grant, the business of auctioning houses still seems to be in trouble.
As we have already reported Australian property auction clearance rates dropped along with most of the world’s stock markets. Improvement doesn’t look imminent either. Figures out today make interesting reading: so long as you are not trying to sell a property – then they are depressing.
So what’s the experience like if you need to re-finance a loan or raise new money in the current economic storm in Australia or New Zealand?
First off: this is not the US: NZ and Australia banks never really got into the crazy lending practices of North America. That said though it had got very easy to get 70% LVR (loan value ratios) without using anything but government valuations (desk-top valuations) in New Zealand. A standard loan of 80% was routine with a reasonable valuation and proof of income. Loans of over 80% were always more difficult and some lenders avoided them. But if you found the right lender you could borrow up to 100% without proof of income so long as you had a track record.
