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Archive for May, 2010

New Housing Minister Bill Marmion has shocked the property market by saying he wants to flood WA with housing lots to cut home prices.

In a speech to Parliament that has set alarm bells ringing throughout the real estate industry, Mr Marmion said the Barnett Government’s aim was to “bring house prices down”.

“The Department of Land is looking at this issue very closely,” he said.

“It owns land and it is looking at its land stocks and will release as much land as possible.

“That will reduce the pressure on housing supplies. Our aim is to bring the median house price down and to have it lower than the median house price in other States.”

Mr Marmion, who took over the job last month after Troy Buswell was sacked, said the only thing the Government could do to achieve its aim was “release more land and houses”. He refused to elaborate on his comments yesterday.

March quarter figures from RP Data put the median house price in Perth at $480,000, equal to Darwin, but behind Sydney ($500,000) and nation-leading Canberra ($510,800).

Hobart had the cheapest prices in Australia at $323,750.

The State Government established an Office of Land and Housing Supply in Thursday’s Budget and is reviewing available government land which Premier Colin Barnett said would “achieve a comprehensive and co-ordinated approach to housing affordability issues”.

Shadow housing minister Mark McGowan warned the policy could result in houses being worth less than what people paid for them.

“If people go into negative equity with their house, that’s the worst possible outcome,” he said.

Real Estate Institute of WA chief executive Anne Arnold said Australians stored their wealth in the family home and it would be “politically unwise for any government to go down that path”.

But the plan won support from developer Nigel Satterley, who said land needed to become more affordable.

But he said the policy would not cut the price of existing houses.

“We’re on the cusp of a block shortage and whatever the Government can do should be encouraged,” Mr Satterley said.

Analysts at RP Data found in April that houses in Perth’s cheapest suburbs cost at least $60,000 more than those in the most affordable areas in the other major Australian cities.

Hillman was named the cheapest suburb in Perth, with a median house price of $280,000 – higher than the cheapest suburb in Adelaide ($200,000), Brisbane ($205,000), Melbourne ($218,000) and Sydney ($219,000).

Perth had less than 10 per cent of its 259 suburbs with a median house price under $350,000, compared with more than 20 per cent in all other big cities.

Blocks of land in Perth were the most expensive in Australia, according to a recent analysis by RP Data and the Housing Industry Association, with a single square metre of “prime earth” now costing an average of $521.

Source  :  www.thewest.com.au

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Mining magnate Clive Palmer says his iron ore company has put a West Australian project on hold because of the federal government’s resources super profits tax.

Mr Palmer continued his attack on the government today, saying he is prepared to put everything he has got into fighting the new tax.

He said the board of directors of his company Mineralogy decided to put the brakes on one of his planned Balmoral South iron ore projects in the Pilbara region on Tuesday due to growing uncertainty over the tax.

Source  :  www.watoday.com.au

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Australians need to save more for the economy to avoid a more rapid run-up in inflation, triggered by nation’s rising terms of trade, the Reserve Bank said today.

“In putting together the Reserve Bank’s forecasts it has been assumed that more of this boost to income is saved than was the case in the earlier boom in the terms of trade,” RBA assistant governor Phillip Lowe.

“This reflects two factors. The first is the different position of the federal budget and the second is the more cautious approach to spending currently being displayed by the household sector.”

The federal budget, handed down this week, contained no major increases in public spending and is expected the return to a surplus by 2012-13.

In that time, the RBA forecasts Chinese steel production will continue to drive demand for Australian iron ore and coal strong, boosting the nation’s terms of trade.

Terms of trade are the prices of a nation’s exports relative to its imports.

“If this lift in saving does not occur, then demand in the economy could well be stronger than forecast, and this would put additional pressure on capacity,” he said.

A lack of spare capacity in the economy has pushed the year-to-March inflation figure to 2.9 per cent from 2.5 per cent in the year to December, which surprised the RBA, Mr Lowe said.

“Disinflationary forces in the economy are not quite as strong as previously expected, largely because the economy has performed better than previously expected,” Mr Lowe said, in the speech delivered to Colonial First State Investment Forum in Sydney.

The RBA expects inflation to fall only to 2.75 per cent later this year, less than originally anticipated after the release of the March data.

Retail sales have remained lacklustre since the middle of last year, after the end of the government’s cash stimulus grants to households during the financial crisis. Six interest rate rises since October have also cut into demand at retailers, with a number of businesses including Fantastic Furniture, Clive Peeters and Woolworth’s flagging weaker sales ahead.

The RBA lifted interest rates to 4.5 per cent his month, creating more headwinds for shoppers. The latest rate rise added another $46 to the average monthly repayment cost on a $300,000, 25-year mortgage.

Investors currently foresee no chance of an interest rate rise in June, but predict the official cash rate will be at 5 per cent within a year, according to Credit Suisse data.

The central bank predicts 3.25 per cent economic growth this year accelerating to 3.75-4 per cent growth in the next couple of years, amid rising prices for commodities exports.

Source  :  www.watoday.com.au

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