ACCC Move on agent underquoting
Source: ABC News Online
The Australian Competition and Consumer Commission (ACCC) says the real estate industry has been put on notice.
An amendment to the Trade Practices Act is due to be further scrutinised by Federal Parliament next month.
It is proposing fines of more than $1 million for companies and up to $220,000 for individual agents that underquote, use dummy bidders at auctions and airbrush photos of properties.
The ACCC says it hopes the changes will become law next year.
Chairman Graham Samuel says the crackdown has been prompted by complaints of misconduct.
“If we have a suspicion that there is a problem in relation to a particular auction or in relation to a particular agent, we’ll be able to issue a substantiation notice,” he said.
“That is a notice to the agent to say ‘please substantiate your claim that this property was for sale’ for example at $500,000 when we may have reason to believe in fact the reserve price was $600,000.”
Mr Samuel says stronger powers are needed to investigate discrepancies between the reserve price and the advertised price of some properties.
He says larger fines will deter agents and vendors from engaging in misleading conduct.
“By the end of this year we’re hopeful that laws will be passed at a Federal level that will enable the ACCC to collect very substantial fines from business, corporations … and from individuals … for engaging in these sort of deceptive practices,” he said.
July 7 – Reserve Bank holds interest rates at 3%
Source – Press release from reserve bank 7 july 2009
STATEMENT BY GLENN STEVENS, GOVERNOR
MONETARY POLICY
At its meeting today, the Board decided to leave the cash rate unchanged at 3.0 per cent.
The global economy is stabilising, after a sharp contraction in demand during the December and March quarters. Downside risks to the outlook have diminished, with conditions in global financial markets improving this year and action to strengthen balance sheets of key financial institutions under way. Growth in China has strengthened considerably, which is having an impact on other economies in the region, including Australia.
Nonetheless, credit conditions remain tight and the effects of economic weakness on asset quality present a challenge. There is tentative evidence that the US economy is approaching a turning point, but conditions in Europe are still weakening. While the considerable economic policy stimulus in train around the world should support recovery, it is likely to be slow at first. For it to be durable, continued progress in restoring balance sheets is essential.
Economic conditions in Australia have to date not been as weak as expected a few months ago. But output has been sluggish and capacity utilisation has fallen back to about average levels, with some further decline likely over the rest of the year. Weaker demand for labour is leading to lower growth in labour costs. These conditions should see inflation continue to abate over the period ahead.
A pick-up in housing credit demand suggests stronger dwelling activity is likely later in the year. House prices are tending to rise. Business borrowing, on the other hand, has been declining, as companies postpone investment plans and seek to reduce leverage in an environment of tighter lending standards. Large firms have had good access to equity capital, which is assisting in strengthening their financial structures.
Monetary policy has been eased significantly. Market and mortgage rates are at very low levels by historical standards, despite recent small increases. Business loan rates are below average. The effects of these changes will still be coming through for some time yet. Fiscal measures are also providing considerable support for demand.
The Board’s current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for a sustainable recovery in economic activity.
Housing prices on the rise
Source : RP Data Press Release 30 June 2009
RP Data – Rismark Home Value Index Release
Out today, the monthly RP Data-Rismark International, national Home Value Index confirmed that home values in Australia continued to trend upwards over the month of May to now reach a national median of $468,819; just 0.1 per cent, or $520, shy of their peak in February 2008.
The results reveal that apart from Perth, for the first five months of 2009 home values in every mainland capital city in Australia increased.
Based on Australia’s largest property database, which includes around 90,000 capital city home sales in 2009 alone, the monthly RP Data-Rismark National Home Value Index recorded an overall increase of 0.9 per cent in the month of May, and a remarkable 3.9 per cent gain over the first five months of 2009. During the 12 months to May 2009, Australian home values have increased by 1.6 per cent.
RP Data head of research Tim Lawless said, “These latest results herald a national residential market recovery.”
“It’s important to note that it has taken just 15 months for values to recover from the February ‘08 peak. I believe these results are encouraging, especially when we take a closer look at other Western markets around the world where prices are mostly in decline,” Mr Lawless said.
Rismark International managing director Christopher Joye concurred with Mr Lawless’ comments and said, “The February RP Data-Rismark Index results were the first clear signs of the so-called economic ‘green shoots’. All of the subsequent evidence—housing finance approvals, auction clearance rates, and other independent house price data—has affirmed this story of an incredibly resilient housing market.”
“The recovery in Australia’s housing market, which has defied countless doomsayers, has in turn been the cornerstone of the Australian economy’s stability in 2009. The robust rise in Australian home values this year has given builders and developers confidence to hire labour and buy materials to invest in new homes. It has also given existing owners the confidence that their largest investment has been a secure store of wealth while other asset-classes have been decimated”, Mr Joye said.
The improvement in market conditions during 2009 has been largely driven by an increase in owner-occupier (as opposed to investor) activity, which, according to ABS data, is up 23 per cent over the year.
According to Mr Lawless, although investor activity remains low, investment interest is likely to gather pace in the second half of 2009.
“Investors and first home buyers typically compete for similar housing stock. As first home buyer demand starts to taper leading up to the wind back of the first home buyer’s boost, it is likely investor participation will grow. Investors are becoming increasingly attracted to the strong rental yields that are creating positive cash flow opportunities within key markets around Australia.”
The RBA, which subscribes to the RP Data-Rismark Index data, confirmed its findings in their June Board Minutes, which noted that “dwelling prices showed a modest rise in April, following gains in the previous few months.” RP Data-Rismark was the only major index provider that the RBA covered to publicly release its April results.
The Australian Bureau of Statistics housing finance data in April also showed the first signs of a rebound in investor participation.
Given the capital gains recorded across most cities, growth in rental yields is now flattening. The gross annualised rental yield for units is now 5.3 per cent while house rental yields are slightly lower at 4.5 per cent.
In terms of property types, units continue to outperform houses. Over the first five months of 2009 unit values increased by 4.5 per cent while house values rose by 3.7 per cent.
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 affordability proposition for units is compelling. Units are generally located closer to the city and along transport spines which is very appealing to many Gen Y and Gen X buyers.”
*Technical Note: Readers should be aware of three technical points. First, the monthly RP Data-Rismark Hedonic Index compares month-to-month index results. Accordingly, the first quarter of 2009 index results compare the end of March index with the end of December index. Another way to measure index returns is to combine all the months together in a quarter and compare them to the previous quarter’s pooled index. So you would combine all sales in January, February and March and compute an index value. You would then compare this to the pooled October, November, and December index value. The problem here is that because many home sales are reported by the Valuer Generals offices with a 1-3 month delay, the sample sizes in the more recent months are smaller than the earlier month. So in the first quarter of 2009, January’s sales will dominate because there are more January sales than February and March. In practice, however, there will in the end be a much higher number of sales in February and March. This is the approach used by the ABS. To overcome this problem, RP Data-Rismark treats each month separately. The other issue is that the ABS uses a stratified median price index. If more lower valued homes are selling because of an increase in, say, first time buyer activity, median price indices can report lower returns when in fact house prices be rising. RP Data-Rismark’s hedonic regression method overcomes this problem. Finally, unlike the ABS Index, which excludes terraces, semi-detached homes and apartments, the RP Data-Rismark Hedonic Index includes all properties.
Sydney
Sydney home values have increased by 3.5 per cent over the 12 months to May 2009 with house values up by 2.5 per cent and unit values climbing an impressive 5.7 per cent. Over the first five months of 2009 Sydney has been one of Australia’s best performing cities with median house values up by 5.1 per cent and median unit values increasing by 5.4 per cent. Growth in Sydney home values has been a long time coming, with Australia’s largest property market recording virtually no value growth between 2004 and 2009. The recovery in the Sydney market is being lead by the more affordable western suburbs of Sydney; the same areas that saw the greatest value decline during the last five years. Rental yields for houses and units in Sydney remain strong with houses returning 4.6 per cent and units 5.6 per cent.