Tenants warned to brace for increased rents

Perth tenants should brace themselves as rising house prices, improving economic conditions and more newcomers to the state combine to force up rents this year, a leading property researcher says.

The latest rental report by Australian Property Monitors shows asking rents in Perth have increased in the first three months of the year.

The median weekly asking rent for houses in the metropolitan area is now $370, a $10 increase on the previous quarter and the first rise in more than a year, while units increased $8, to $358.

But with rising house prices, increased rents have not led to increased yields. The gross yield for houses is now 4.06 per cent, while units are yielding 4.62 per cent.

That leaves Perth ahead of only Melbourne among all state capitals.

APM economist Matthew Bell said he expected Perth rentals to increase a further $10 a quarter for the rest of the year, with a strong resources sector and population growth the driving factors.

But this was unlikely to be fast enough to maintain yields, which would drop slightly as house prices rose further. The median Perth house price is believed to have passed $500,000.

Really, the outlook for both rents and house prices is pretty strong,” he said.

“Yields will probably soften again, but historically they are at pretty good levels.”

Houses were usually bought by investors for capital growth, with units offering better yields, Mr Bell said.

Meanwhile, the Urban Development Institute of Australia said its own research showed a six-month delay in planning approval could add 7 per cent to the price of an average block in the metropolitan area.

UDIA WA chief executive Debra Goostrey said developers were doing what they could to ensure “affordable” land was being made available during a time of increasing prices.

“We also need the support of a fast and efficient planning approvals process to avoid costs associated with delays,” she said.

Her comments follow those last week by property researcher Terry Ryder, who said claims of housing shortages were a beat-up by property industry lobby groups.

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Reserve tipped to bump up rates

Homeowners face finding another $50 a month to pay the mortgage, with the Reserve Bank tipped to lift official interest rates again today as it battles to dampen house prices and keep inflation pressures at bay.

A quarter percentage point rise this afternoon would mean official rates would have climbed 1.25 percentage points since October, adding more than $240 to the monthly repayments on a $300,000 mortgage.

It would be the biggest run of increases in a 12-month period since the Reserve took the official cash rate from 5 per cent to 6.25 per cent between November 1999 and August 2000.

But the decision could be a close call, with signs of softness in the retail and building sectors lifting expectations the Reserve may wait at least another month before moving in the week before Treasurer Wayne Swan hands down the Federal Budget.

At least mortgage holders may be saved from a “super-sized” lift to their repayments, with the NAB yesterday saying it would not increase its rates more than any move in the official cash rate. Its recent policy of matching rate rises had led to more customers.

That prompted Mr Swan to challenge other major banks to follow NAB’s lead.

TD Securities senior strategist Annette Beacher expects the Reserve board to hold rates today.

But Macquarie Bank rate strategist Rory Robertson said the chance of a rate rise was about 80 per cent.

“Interest rates here remain unusually low, our jobs market is strengthening, China and bulk-commodity prices are booming, so, too, local home prices, and the world’s biggest economy increasingly is getting back on its feet,” he said.

A new survey from Dun and Bradstreet of business executives out today shows sales, growth, employment and capital investment expectations all rising. 

Source  :  www.thewest.com.au

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WA needs more migrants

Deputy Prime Minister Julia Gillard says WA needs more migrants amid claims hundreds of thousands of extra workers are necessary over the next decade to thwart a labour crisis.

Speaking at a Perth business breakfast hosted by _The West Australian _and Murdoch University, Ms Gillard said both interstate and international migration was needed to help fill future job vacancies.

It comes as employer groups warn labour shortages are set to hit within months.

Ms Gillard said WA also needed to better utilise its youth market, which was suffering a 10 per cent unemployment rate.

She blamed the labour problem partly on the booming resources sector which was drawing workers, infrastructure and services away from rest of the economy.

“That’s why we need to properly analyse and assess all claims about the West’s needs in the decade or so ahead, including claims about the need to attract hundreds of thousands of new workers,” she said.

“There’s no doubt more interstate and overseas migrants will be needed, but we need to look also at how we can achieve better results with the assets that are already available and underused.

“With a youth unemployment rate of almost 10 per cent, there is more work to be done to create the pathways that will give these kids a future.”

The Chamber of Commerce and Industry said labour shortages would hit in the second half of this year, with WA needing an extra 400,000 workers in the decade from 2007. Based on current population trends, there would be 150,000 shortfall.

CCI supports strong migration to alleviate the skills shortage, which threatened to curb WA’s economic growth during the last boom.

The WA Group Training Scheme, which last year sacked some apprentices because of reduced work, said there had been a quick economic turnaround and expectations of boom-level demand this year.

Ms Gillard said an expanded training initiative announced yesterday, creating 11,000 advanced level training places nationally, would help address some of the skills shortage.

Ms Gillard, who heads to the Pilbara today to inspect the $43 billion Gorgon project, warned unions not to engage in unlawful industrial action, singling out the construction union’s Kevin Reynolds and Joe McDonald. “We have got no tolerance for people who seek to break the rules and I am well aware there is a concern in this State over the propensity of some individuals to believe they are beyond the law,” she said.

Mr Reynolds said he was not surprised at being singled out by Ms Gillard over unlawful industrial action, claiming the pair had an adverse relationship. He said migration should be a back-up with the focus on training. 

Ms Gillard said an expanded training initiative announced yesterday, creating 11,000 advanced level training places nationally, would help address some of the skills shortage.

Ms Gillard, who heads to the Pilbara today to inspect the $43 billion Gorgon project, warned unions not to engage in unlawful industrial action, singling out the construction union’s Kevin Reynolds and Joe McDonald. “We have got no tolerance for people who seek to break the rules and I am well aware there is a concern in this State over the propensity of some individuals to believe they are beyond the law,” she said.

Mr Reynolds said he was not surprised at being singled out by Ms Gillard over unlawful industrial action, claiming the pair had an adverse relationship. He said migration should be a back-up with the focus on training.

Source  :  www.thewest.com.au

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Rates now closer to normal, RBA boss says

Reserve Bank governor Glenn Stevens has signalled interest rates are on their way back up with mortgage rates likely to edge up between half and a full percentage point.

Giving evidence to the House of Representatives economics committee in Canberra, Mr Stevens said the RBA’s focus continued to be on what mortgage rates were offered by commercial banks rather than on the Reserve’s official cash rate.

He said given the commercial banks had lifted rates over and above what the RBA had done, there was still about a half and a full percentage point to go before mortgage rates were back to what the Reserve would consider close to their long term average.

“There’s a little distance to go yet before I think you could characterise the setting of interest rates as normal or average,” he said.

The RBA surprised markets by leaving official rates on hold at its February meeting.

Mr Stevens said on top of the Reserve’s own lift in official rates, the commercial banks actions had effectively delivered three and a half interest rate rises to mortgages cases, and in the case of Westpac customers, four rate hikes.

He said one of the advantages of lifting rates as the RBA did in the last three months of 2009 was that it could hold rates in February and get a clearer picture of how the economy was travelling.

“You get that luxury when you can wait a little a bit further down the line,” he said.

Mr Stevens said Australia had performed much better than even the RBA had expected out of the global recession.

But he warned that meant the economy was now heading into an upswing stronger than otherwise would have been the case.

“With the economy having had only a mild downturn with begin the upswing with less spare capacity than would typically be the case after a recession,” he said.

“There’s less scope for robust demand growth without inflation starting to rise again down the track.

“Monetary policy must be careful not to overstay a very expansionary setting.”

Mr Stevens said the resources sector in particular was looking to grow quickly, with the terms of trade likely to head back to the record highs seen in 2008 this year.

He also highlighted the strength of Australia’s sovereign debt position, hosing down fears the country was carrying too much debt.

“Australia’s position is by any measure very strong indeed,” he said.

The governor also played down fears raised by Opposition finance spokesman Barnaby Joyce that Australia could default on its debts.

Mr Stevens said Australia had never defaulted before and there were no signs it would now.

“I very much doubt there ever will be,” he said. 

“Monetary policy must be careful not to overstay a very expansionary setting.”

Mr Stevens said the resources sector in particular was looking to grow quickly, with the terms of trade likely to head back to the record highs seen in 2008 this year.

He also highlighted the strength of Australia’s sovereign debt position, hosing down fears the country was carrying too much debt.

“Australia’s position is by any measure very strong indeed,” he said.

The governor also played down fears raised by Opposition finance spokesman Barnaby Joyce that Australia could default on its debts.

Mr Stevens said Australia had never defaulted before and there were no signs it would now.

“I very much doubt there ever will be,” he said.

Source www.thewest.com.au

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North Beach property tests property market

THIS North Beach property could confirm whether Perth’s struggling real estate market has turned the corner. 

Real estate experts say that during the height of WA’s property boom the 1346sqm ocean-front house on West Coast Drive would have fetched more than $5 million.

It is for auction on Saturday and the selling price will be a strong indication of whether property prices, especially for top-end homes, have started to recover.

Nexus sales consultant Peter Berridge, who specialises in the North Beach area, said the property would have been highly sought after during the 2006-07 housing boom.

“It’s a nice elevated lot, with a nice frontage. It’s got everything going for it,” Mr Berridge said.

“I don’t think it would be an over-exaggeration to think it might have sold for in excess of $5 million (back then). We were going through an era where it didn’t seem to matter what you paid for it, you were always going to make a packet until the proverbial hit the fan.”

Mr Berridge said he believed values had dropped about 40 per cent since the property peak.

“The last sale was 341 West Coast Drive in Trigg that sold for $2.2 million and it was a very choice piece of land _ something like that could have possibly pulled $4 million in 2007 and I can mention lesser blocks that sold for more than $4 million,” he said.

According to Landgate, North Beach has enjoyed solid property value growth in the past decade.
It recorded a 19.4 per cent average annual growth rate in the 10 years to December 2008. It also recorded strong growth last year and was among the Perth metropolitan area’s Top 10 performing suburbs, with a 17.7 per cent jump in median house prices.

But during this period it recorded a low volume of sales activity, with just 19 homes sold.
This could have skewered the statistics.

“There’s no doubt that the market for premium coastal property has come back since the height of 2007,” Real Estate Institute of WA president Rob Druitt said.

“Indications are that the first signs of recovery are starting to come through now, so there’s certainly a unique opportunity for buyers who are (looking) in that market,” he said.

Mr Druitt said it has been a bottom-up recovery, so if the top end was reasonably priced and sold, it could give a good indication that Perth’s entire property market had seen the worst.

Source  :  www.news.com.au

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Interest rates on hold

The Reserve Bank of Australia (RBA) left interest rates on hold at 3 percent as predicted.                                                

A  survey by AAP had expected the RBA to leave the cash rate at the lowest since 1960.

Treasurer Wayne Swan said last weekend that it was obvious that rates will rise, while Minister for Financial Services, Chris Bowen, warned yesterday that rates can’t stay low forever.

Some economists believe the first rate rise could come this year, but the general view is that rates will remain on hold until the middle of next year.

In a statement released after the announcement, governor Glenn Stevens said the risk of “severe contraction” in the Australian economy had abated.

“Economic conditions in Australia have been stronger than expected a few months ago, with both consumer spending and exports notable for their resilience,” the statement says.

“Measures of confidence have recovered a good deal of ground.”

The statement adds: “The board’s judgment is that the present accommodative setting of monetary policy is appropriate given the economy’s circumstances.

“The board will continue to monitor how economic and financial conditions unfold and how they impinge on prospects for sustainable growth in economic activity and achieving the inflation target.”

 

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Visa crackdown will hit numbers

THE education export industry has to find a new way to prosper now that the government has made it harder for would-be migrants to use study as a route to permanent residency, social researcher Bob Birrell says.

In the Monash University journal People and Place, Dr Birrell said the industry, whose phenomenal growth had been helped by foreign students seeking permanent residency as skilled migrants, had reached a crossroads.

Dr Birrell is co-director of Monash’s Centre for Population and Urban Research, People and Place’s publisher.

He said a change to the skilled migration rules in December last year, coupled with other reforms, would put permanent residency beyond the reach of many former overseas students with poor English, little work experience and low-value qualifications in hospitality and cooking.

“Those providers who have built their business around marketing a credential that will lead to permanent residence must refocus their business,” he said. “They need to sell credentials that overseas students believe they can take back to their country of origin with profit.”

But Dennis Murray, executive director of the International Education Association of Australia, said the new rules would have little effect on universities although they would cut growth in hospitality courses. “We don’t see a wholesale collapse of the industry, which is what Bob would like to see,” he said.

Dr Birrell argued the appeal of permanent residency and lax rules for skilled migration delivered strong growth in business and information technology courses at universities in the early 2000s and even more dramatic growth since 2005 in hospitality, cooking and hairdressing courses at private colleges and TAFE institutes.

But the education business had come to distort the migration program, producing graduates ill-equipped or uninterested in the jobs they were supposedly trained for. Dr Birrell said the government took a stand, culminating in the tough new rules of December last year, but the surge in student numbers had carried through into the first few months of this year, for which there was official data.

“My expectation would be that the enrolments in the hospitality area will decline significantly once the message gets back via the recruitment network to the countries of origin,” he said.

Dr Birrell said higher education also would lose fee income because graduates in accounting, a field that had enjoyed strong growth, had to have better English or take on an extra year of professional training.

But he said the government needed to back its tough policy changes with a clearer message to the industry. Instead, it had allowed more than 40,000 former students to stay on temporary and bridging visas, even though most had little chance of securing permanent residency. Most had taken up temporary visas created to soften the blow of September 2007 reforms aimed at the poor English and poor employment prospects of former students.

Dr Birrell said another, sizeable group had found a loophole. In the year to May the Department of Immigration and Citizenship had allowed 15,417 former students to apply for permanent residency as skilled migrants, despite their lacking occupations on the tough new critical skills list ushered in last December. The department had put off the processing of applications by those lacking critical skills, meaning these students remained on bridging visas.

The department’s decision to accept these applications, and the $2105 fee, was “contentious and unwise” because it suggested these students eventually might win permanent residency despite not meeting the tight new rules.

“I think there’s something of a battle going on within government as to which should be given priority: the maintenance of the (overseas student) industry on the one hand and dealing with the immigration problems generated by it on the other,” Dr Birrell said.

An Immigration Department spokesman said the government was pursuing a more carefully targeted migration program, given the difficult economic times.

“Australia is giving priority to those people sponsored by employers or on the critical skills list, thus ensuring the nation gets people with the skills the economy and employers need,” he said.

Source  :  www.theaustralian.news.com.au

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WA regional house prices bouncing back

Real estate data for the June quarter has revealed regional house prices in Western Australia have bounced back after dropping sharply in the second half of last year.

The median house price for regional WA grew 6.6 per cent in the past three months, while Perth homes increased by just 2.3 per cent.

The median house price in country areas is now $373,000.

Real Estate Institute of WA president, Rob Druitt, says it is further evidence the housing market is stabilising after last year’s sharp drops.

“The bottom of our market was in the second half of 2008. We’ve now seen a more normalised, stable market,” he said.

“That’s good news for home buyers in the sense they can see interest rates are at 49-year lows, there is some growth there and we can see the market slowly improve from here.”

Source  :  www.abc.net.au

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House prices tipped to lift by 2012

HOUSE prices could rise by as much as 22 per cent during the next three years, an economic forecaster says.  

”The conditions are ripe for a sustained recovery in residential property prices,” according to BIS Shrapnel’s Residential Property Prospects, 2009 to 2012, report.

”Low interest rates, solid growth in rents and housing shortages are evident in most markets.

”However, the current economic malaise will mean confidence will only recover slowly during 2009/10.”

BIS Shrapnel senior project manager and study author Angie Zigomanis said that, at this stage, all of the action was occurring at the lower-priced end of the market.

This is due to a surge in first-home buyer demand as a result of the federal government’s first home owner boost scheme and low interest rates, he said.

BIS Shrapnel forecasts there will be 180,000 first-home buyers in 2009.

Although first-home buyer demand was expected to ease after the expiry of the government’s boost scheme at the end of 2009, upgraders and investors were expected to take the baton, Mr Zigomanis said.

”We expect rising confidence in the prospects for an economic recovery in 2010, so investors are likely to return in greater numbers, attracted by increased rental returns and low interest rates.”

Among the state capitals, Sydney, Melbourne and Adelaide will show the strongest price growth over the next three years, at 19 per cent.

More moderate growth is expected in Brisbane, Hobart, and Canberra, while price growth in Perth and Darwin is expected to be weak as the local economies of these cities are impacted by a decline in investment spending in the resources sector.

BIS Shrapnel estimates Sydney’s median house price at June 2009 to be $530,000, and predicts it will rise by mid-2012 to $630,000. Melbourne’s current median house price is estimated at $425,000, rising to $507,000 by June 2012.

In Adelaide, the median price is estimated at $360,000 and predicted to climb to $430,000 over the three years.

Among other cities around Australia, Newcastle and Wollongong are expected to benefit from the migration of residents from Sydney over the coming years.

The median house price in Newcastle is expected to soar 22 per cent over the three years, while Wollongong is forecast to see growth of 20 per cent in the same period.

In Brisbane, the average house is estimated to cost $391,000 now and is expected to cost $455,000 by mid-2012, an increase of 16 per cent.

Hobart’s median house price is estimated to be $335,000 and will rise by 15 per cent to $385,000 over the three year period.

An average house in Canberra is estimated to cost $440,000, increasing to $515,000 by 2012, a rise of 17 per cent.

In Perth, the estimated median house price is $425,000, expected to reach $475,000 in three years, up 12 per cent.

Darwin’s forecast median house price is $470,000, predicted to show an increase of 11 per cent over the three years.

For the Gold Coast, the Sunshine Coast and Cairns, BIS Shrapnel forecasts prices will increase by 14 per cent, while Townsville prices are expected to grow 13 per cent over the three years.

Source  :  www.news.com.au

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Skilled Migration: Dispelling the Myths

Source  :  Alan Collet   www.gomatilda.com

Since Australia’s Immigration Minister announced changes to the skilled migration program at the end of last year there has been a lot of misunderstanding among intending skilled migrants. In this article we try to dispel some of the myths.

In no particular order, here are some of the comments we have heard in recent months:

Australia has stopped accepting skilled migrants

Nothing could be further from the truth. In fact, Australia’s skilled migration program (the amount of visas the Immigration Minister requires his Department to grant annually) is the highest on record this year, with a planned 115,000 skilled visas to be granted in the year to 30th of June, 2009.

The skilled program for 2009/10 is planned to be 108,100, which is the third highest program on record.

By way of comparison the skilled program in the last few years has delivered the following outcomes:

 
2007/08: 108,540
– 2006/07: 97,920
– 2005/06: 97,340
– 2004/05: 77,880

My occupation is not on the Critical Skills List and I can’t be sponsored by a State or Territory Government. That means I will never get a visa.

It is true to say that the Minister’s announcements have impacted quite significantly on the processing of skilled visas, with occupations on the CSL and State/Territory Sponsored skilled visa applications being the only offshore skilled visa applications that are being processed to a decision at the moment.

However, there will come a time (we anticipate in the next 3 to 4 months) when Department of Immigration case officers will have to move onto the next category on the Minister’s priority list, namely applications where an occupation on the Migration Occupations in Demand List (or MODL) is nominated.

We anticipate that many applicants with MODL occupations will have sought sponsorship from a State or Territory Government (as MODL occupations have tended to be included on their Wanted Skills Lists) and as such we think it likely that remaining skilled visa applications will start to be looked at with a view to visas being granted during the.

It should also be remembered that when the total skilled migration program was in the region of 70,000 annually processing times were typically 9 to 12 months – even allowing for heightened demand in recent years the large program total that is now available should allow visa application processing times to be closer to 12 months over the next year to 18 months.

And as ever, the sooner a visa application is lodged the sooner a visa will be granted.

I won’t be able to obtain sponsorship from a State or Territory Government

To a verying degree all of the States and Territories in Australia are sponsoring skilled individuals for the grant of visas. Some are sponsoring for the grant of provisional subclass 475 visas (which provide for permanent residency via a second visa application once subclass 475 visaholders have been residing and working in a regional area for the required period), while others are sponsoring for subclass 176 permanent residency visas.

The key question for intending skilled migrants is therefore which States and Territories are sponsoring my occupation, and for what subclass of visa.

If I am sponsored by a State or Territory Government I will have to live there while I remain in Australia

Technically, that is not the case. If applying to a State or Territory Government for sponsorship you will be asked to provide information that demonstrates you are genuine in your intentions to reside in that State or Territory.

Indeed, in most cases you will be asked to sign an undertaking to reside in the sponsoring State/Territory for at least 2 years.

We would add that when applying for sponsorship you should be completing the application in good faith, with a genuine intention to reside in the State or Territory to which you are applying.

Note also that if applying for sponsorship of a subclass 475 (provisional) visa you will be subject to a visa condition that requires you to live and work in a regional area of Australia, and that you can anticipate that this will be checked when you apply for permanent residency in due course. 

Employers are no longer able to sponsor individuals for skilled visas

This comment is typically heard in the context of subclass 457 visas – which is the long term temporary residency visa.

It is fair to say that Australia’s Immigration Minister has sought to change 457 visa sentiment amongst employers by issuing “clarification” in the last few months in the form of policy guidance to his Department. This has included (amongst other things) requiring employers to more clearly demonstrate the benefit to Australia arising as a consequence of the employment of the nominated individual following the grant of a 457 visa.

However, this amendment of policy settings has not caused a cessation of 457 visa grants – far from it. Indeed, Go Matilda has had many 457 visas granted in the last few months.

Even if I obtain a visa, the global economic crisis means I won’t be able to get a job when I move to Australia

The Australian economy has held up remarkably well in comparison with other first world countries, and indeed has thus far avoided a technical recession. This is quite possibly due to its closer associations economically with South East Asia and China, and the financial boost associated with a growth in population, most notably through the large migration programs of the last few years.

By contrast the UK has found itself more closely aligned with the fortunes of the US, and with the collapse of wealth through banking and housing failures.

No-one can say that any one individual will be certain to secure employment when they move to Australia. However, the prospects for work are generally considered to be brighter in Australia than in the UK, US, etc, which should augur well for intending migrants.

I won’t be able to sell my house and the GBP – AUD exchange rate is awful

Yes, the economies of the world are in a dreadful state at the moment, and the bottom has fallen out of the housing market in the UK.

However, there is no requirement for you to move to Australia as soon as your visa is granted – permanent skilled visas require you to enter Australia by an initial entry date, which is usually 12 months from the earlier of the date of police clearance certificates and the date medical examinations were attended.

That required initial entry can be on a holiday, and the permanent move can be a few years later – at any time up to 5 years after visa grant – by which time we suggest the economies of the world and the currency exchange rate will be somewhat different, most probably better than they are today.

This means that applying for a skilled visa now rather than waiting could actually mean that you find yourself migrating at a better time than those who have been granted their visas in the last 12 months.

If you are a skilled individual and are contemplating a move to Australia some of the above issues might have crossed your mind.
If you would like to talk about your concerns and to discuss the migration process more fully please contact us.
Go Matilda has many years of experience assisting with Australian visa applications, and we will be pleased to have a free initial discussion about your situation, your visa strategy, and how we might help, after which we can send you a no obligation proposal as to our fees.

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