Minister wants to flood land market

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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Market odds move firmly against Reserve Bank interest rate rise

THE market odds have moved firmly against an interest rate rise by the Reserve Bank in February.

The sharp change in direction, which began on Tuesday after the central bank revealed its December 1 meeting minutes, accelerated yesterday following a speech by RBA deputy governor Ric Battellino.

Mr Battellino signalled that rates could stay on hold when the RBA next meets in February, saying the “overall stance” of monetary policy was “back in the normal range”.

His comments, at the Australian Finance & Banking Conference in Sydney, surprised the markets, triggering a slump in the Australian dollar to below US90.

Last night the dollar was hovering around US89.70.

Financial market betting on a 25-basis point rate hike in February retreated from a 67 per cent chance to 45 per cent.

Mr Battellino said that although the cash rate still seemed “unusually low” at 3.75 per cent, monetary policy was back “in the normal range” because the current level of deposit, housing and business lending rates made the cash rate equivalent to a “before the crisis” level of 4.75 per cent.

“Taking these considerations into account, it would be reasonable to conclude that the overall stance of monetary policy is now back in the normal range, though in the expansionary segment of that range,” he said.

The deputy governor’s remarks were made half an hour after the Australian Bureau of Statistics revealed economic growth in the September quarter was weaker than expected.

The national accounts showed GDP edged up just 0.2 per cent in the three months to September, half the pace of growth expected by the market, for an annual rate of 0.5 per cent.

The main drag on growth was a slump in exports which coincided with a jump in imports.

However, demand from households, businesses buying more equipment and government investment was solid.

ANZ acting chief economist Warren Hogan said the GDP figures indicated there was little urgency to get official interest rates back to a neutral setting, adding that Mr Battellino’s comments had “dealt a solid blow” to the prospect of substantial gains in the cash rate over coming months.

“Put another way, the emergency setting for interest rates has now been removed and policy will be adjusted as and when required by economic conditions,” he said.

Westpac chief executive Gail Kelly told reporters after the bank’s annual meeting in Melbourne yesterday that the RBA was likely to raise rates “very carefully” in 2010.

However, she said the official cash rate was not quite yet at a “normal” level.

Mrs Kelly said she remained cautious about the economic outlook while the bank’s chairman Ted Evans said a “V-shaped” recovery for Australia was unlikely.

“It will be a long recovery and that’s what our plans are based on,” he said. 

Source  :  www.news.com.au

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Bold vision on the horizon for city

A vibrant foreshore entertainment district, an indigenous cultural centre, cheap inner-city housing for students, voting at 16 and gay marriage are some ideas for improving Perth that Australia’s 2008 youth ambassador to the United Nations will take to today’s C2030 Summit.
 
One of many speakers at the summit, Elizabeth Shaw, 25, said a bold plan to bring the river to the city should be at the top of the State Government’s to-do list.  
 
Ms Shaw, of Claremont, is on the City of Perth youth advisory council.
 
She said it was time Perth realised its potential. “We need to stop talking about things like connecting the city to the river and just do them,” she said.
 
“When you’ve got a space like the foreshore, you’ve got to be bold and innovative and take risks.”
 
Ms Shaw’s vision for the foreshore included a variety of housing for all social economic backgrounds, a range of restaurants, live music, wine bars, a rowdy pub, an art gallery, a public space for weekend markets and an indigenous cultural centre.

Diversifying usage on each city block to achieve a balance of retail, housing, business and industry combined with deregulated trading hours would keep the city activated and vibrant at all times.
 
Ms Shaw said attracting and retaining skilled local and international students could be improved by building high-density housing in the city and making it an exciting place to be.
 
“We need a big resident population to create flow-on services,” she said. 

JOSEPH CATANZARO  :   www.thewest.com.au

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WA leads rise in June building approvals

WA has led the charge with a rise in building approvals in June, fresh figures reveal today. 

There was a 21.1 per cent rise in building approvals in WA last month, compared to a national rise of 9.3 per cent.

But the recovery followed an 11 per cent decline in May, taking the latest tally of 11,086 new construction projects to a level lower than where it was in April.

Still, the latest monthly increase was stronger than a market forecast for an eight per cent rise.

Approvals in the volatile apartment-building sector surged 27.7 per cent while detached housing numbers increased by a much smaller 4.9 per cent.

On an annual basis, overall building approvals are down 14.3 per cent.

Apartment building approvals are also 45.7 per cent weaker compared with a year earlier.

Construction activity was also more robust in Victoria, where approvals rose by 17.4 per cent, followed by an 11.3 per cent increase in South Australia.

NSW had a more modest recovery of 3.4 per cent.

Building approvals went backwards in Tasmania, shrinking by 7.6 per cent, and Queensland, which suffered a 1.9 per cent decline.

Source  :  www.thewest.com.au

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Brighton Estate in Butler – One of WA’s biggest construction site

Butler is said to be the biggest construction site outside the mining sector.

The Brighton estate is more than halfway complete, now offering more vacant lots for a total of $8.4 million. The largest block for sale is almost 16,000sqm in Captiva Approach, near Lukin Drive which is $3.25 million. Property developer Nigel Satterley said this block would be zoned mixed business allowing for multi-purpose use.  Another site overlooking the park in Brampton Avenue which is 6664sqm mixed used lot at $2.1 million.

Mr Satterley said the North-West-Metropolitan sector is the third fastest growing area in Australia for housing.  In the Brighton Estate there will be 6300 residential lots and eventually a population of 28,000 people.  It is the biggest project ever to be lodged under the WA Planning Commission’s Liveable Neighbourhood community design codes.  The plan includes 55 parks, artificial lakes, shopping village and community facilities.                                                                                                                     

The other lots up for offer are : 

• 5335sqm on Chipping Crescent, zoned business $1.1 million.
• 3553sqm on Kingsbridge Blvd mix of commercial and residential use classed as centre zone $790,000.
•  More information call 9562 0422 or 0418 953 659

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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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Stamp duty on home loans under review

STAMP duty on housing loans could be abolished after the Henry tax review, which is likely to recommend states be given a share of income tax to make up the difference.

The most likely path to do this would be for the Commonwealth to give the states the ability to impose their own surcharge on income tax, which would be collected for them by the Australian Tax Office.

 The Henry review has been inundated with submissions calling for the end of stamp duty.

Tax economists argue that the tax on moving house, although easy to collect, leads to poor use of the housing stock and poor labour mobility, The Australian reports.Having to pay stamp duty not only discourages elderly people from moving to more appropriate accommodation, it also deters people from moving house to a better jobs market. 

At a conference conducted by the Henry tax review at the Melbourne Institute last week, both international and Australian tax economists said stamp duty should go, with Melbourne University professor John Freebairn describing the tax as “a piece of garbage”.

The review panel is being influenced by state submissions arguing that replacing stamp duty by extending other state taxes, such as payroll tax or land tax, would be too difficult to implement nationally.

Tasmanian Treasury secretary Don Challen, who is close to the inquiry’s head, federal Treasury secretary Ken Henry, told last week’s conference that reform of state taxes would succeed only with leadership from the national government.                                                                                                                                                     

“If you want to achieve a difficult reform, you’ve got to make it a national one,” Mr Challen said.

He said it would be too hard to win political consensus to extend land or payroll taxes.

“It requires eight lots of political commitment and eight lots of legislation and that path is doomed to failure,” he said.

However, he said he believed states would be willing to act on stamp duty if the commonwealth provided an avenue for alternative revenue.

The idea of giving states a cut of income tax was pressed two years ago by the OECD, which suggested the states “piggy-back” on income tax. The OECD also urged states to drop stamp duty.

One of the world’s leading experts on federal taxes, Canada’s Richard Bird, said the states were heading for a financial crisis because they did not have a sufficient tax base to support their burgeoning health and education costs, which were all rising much faster than the consumer price index.

One of the problems with stamp duty for the states is that it is vulnerable to the state of property markets.

Stamp duty usually raises about $14 billion a year for the states, but the recent state budgets showed big falls of more than $1bn each in NSW and Queensland, in 2008-09, for example.

“In Australia, it should certainly be feasible to permit states to impose a surcharge on the federal personal income tax base,” Professor Bird said.

He said that, ideally, Australia would follow the Scandinavian practice of allowing states to have a flat tax surcharge on income, rather than mirroring the commonwealth’s progressive taxation.

The states would be allowed to set their own level, making states more responsible for their own finances.

Source  :  www.news.com.au

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Minimum wage increases $12.30 a week

The State’s lowest-paid workers will get a $12.30 a week pay rise, in a move social advocates say will have them relying on community services more than ever.

The WA Industrial Relations Commission today handed down the 2.2 per cent increase, effective from October, saying the rise was in line with the Perth CPI.

It will take the minimum wage, which covers about 2.2 per cent of the state’s workers, to $569.70.                                         

Unions had argued for a $31 a week increase, while the Chamber of Commerce and Industry pleaded for none.

The State Government had submitted $19 a week as appropriate.

WA Council of Social Services chief executive Sue Ash said the commission was “out of touch” with community expectations.

“This decision means (low-paid workers) will bear the brunt of the economic downturn,” she said.

“The CPI is a wholly inadequate measure of the real living cost pressures and income value of minimum wage workers as it does not reflect the basket of goods that (they) have to spend their money on.”

Food prices had risen 8.6 per cent in the year to March, while housing (8.1 per cent), health services (11.9 per cent) and education (15 per cent) had far exceeded the CPI figure.

“These stark increases… mean that low income earners will be relying on community services more than ever,” she said.

Source  :   www.watoday.com.au

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A Boost for the Housing Industry

The residential construction industry has been assisted by growth in the first time home-buyer activity along with the low interest rate.

Home builders are offering some competitive priced housing, and in the last few months things have started to pick up as we see with the display homes traffic which has increased by around 1000 more visitors a week compared to the same period last year.

With the growing concerns of the recession, some homebuyers are investing in the single storey home which is allowing them to lower their debt, rather than building the two storey home.

The Commercial developments throughout Perth have slowed down, but the ones with less financial risk attached to them are still going ahead.

What is happening is there is a  big demand for the first home buyer homes, therfore a lot of  houses being sold are at this price range therefore bringing down the median house price. 

There are also alternative financing options in WA such as the WA Governments Keystart Home Loans which has helped a lot of new home owners get on the property ladder.

Activity in the residential construction is providing  jobs at time when needed.

The first homebuyer’s stimulus is moving through two stages this year  :

From now until October 1, 2009  $21,000 on a house and land package, or a new house built that  has not been lived in.

$14,000 for an established home.

From October 1 until December 31, 2009 the boost will be lowered to  :

$14,000 for a house and land package, or a new built house that has not been lived in.

$10,500 for an established home.

From January 1, 2010 is to be confirmed.

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Stimulus, rates ‘spur first home buyers’

First home buyers now comprise a record proportion of the residential housing market after responding to low interest rates and the government’s revamped assistance package, economists say.

First home buyers made up 27.5 per cent of all home loans in March, a record since the Australian Bureau of Statistics (ABS) began the data series in 1991, and compared with 26.5 per cent of the total market in February.

The ABS data also showed that the housing market has recovered to its February 2008 levels, when interest rates were still being raised by the Reserve Bank of Australia (RBA) before a series of monthly cuts since September to a 49-year low last month.

The number of home loans for owner-occupied housing jumped to a 13-month high of 59,793 in March.

The 4.9 per cent rise in March was even sunnier than economists’ forecasts of a 4.5 per cent increase.

“The housing industry is one of the more interest rate sensitive sectors and its a positive that the response has so far been rapid,” ICAP senior economist Adam Carr said.

“The result clearly ads weight to the argument that the Reserve Bank of Australia has done enough.

“It’s lost on many that other central banks around the world are cutting aggressively to counteract a breakdown in the transmission mechanism. This isn’t the case here.”

Between September and March, the central bank cut official interest rates by 400 basis points to 3.25 per cent in a bid to stimulate a flagging economy.

In early April, the RBA cut the cash rate by a further 25 basis points to a 49-year low of three per cent.

The ABS data found that total housing finance by value rose by 6.7 per cent in March, seasonally adjusted, to $20.688 billion, while loans to investors rose by 4.7 per cent from a year earlier.

“It’s particularly positive that investors are coming back into the market from low levels,” Mr Carr said.

Housing construction rose 13.9 per cent, or 5,565, year on year.

Lending for new dwellings climbed 2,610, or 8.8 per cent, while lending to buy established homes climbed 51,619, or 3.8 per cent, since March last year.

JP Morgan economist Helen Kevans said the boost to the federal government’s first home buyers grant has lifted demand for housing, particularly for new homes.

“As expected, demand for home loans again was underpinned by first home buyers, owing to the attractive grant and improved housing affordability, stemming from lower interest rates and falling house prices,” Ms Kevans said.

“The bigger grant for new building largely explains the solid 8.8 per cent rise in loans issued for the purchase of new dwellings in March.

“In coming months, we believe grants will continue to underpin demand for home loans, particularly during the June quarter given expectations that the expanded grant will end on June 30, as originally planned,” she said.

The government’s first $10.4 billion stimulus package, unveiled in October, doubled the first home buyer grant for established homes to $14,000, and tripled it to $21,000 for newly-constructed dwellings.

There is speculation the grant for brand new housing will be maintained in this year’s budget while the subsidy increase for established homes is scrapped.

Ms Kevans expects the RBA to cut the cash rate by 50 basis points to 2.5 per cent in the second half of 2009.

www.thewest.com.au

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