The number of new homes sold around Australia has risen for the third month in a row, with February's increase underpinned by a rebound in the hard-hit NSW market.
Sales in NSW increased 16.9 per cent from a month earlier.
However, financial markets are speculating that the Reserve Bank could use the improved sales figures to raise rates again as early as next week, when it holds its next monthly meeting.
Other surveys released yesterday point to more rough patches for owners and renters.
A Fujitsu-JP Morgan Australian Mortgage Industry survey found almost a quarter of home owners had to trim spending to meet mortgage repayments after three interest rate rises last year.
And one of Australia's biggest rental agencies, RUN, also released anecdotal figures showing the pace of rental increases had doubled for Sydney and Melbourne in the past four months, compared with the previous four months.
RUN, which manages 20,000 rental properties, said rents on relet properties in the two cities rose 4 per cent or $53.50 for the four months to October, but this had accelerated to 8.62 per cent, or $109.27 higher, for the four months to February.
While bad news for renters, it is a sign of some health returning to the overall housing market, where low rent returns and falling prices had kept investors away.
Commentators yesterday said the outlook for the housing sector, particularly for first-home buyers and investors, would be dictated by interest rates.
JP Morgan chief economist Stephen Walters said that if rates did rise, it would worsen the market in depressed areas such as western Sydney and outer Melbourne, where three to four out of 10 house sales were forced.
"We are not forecasting a rates rise this year, but eight or nine other economists are going for a rate rise," he said.
Fujitsu/JP Morgan found that of the 1500 people surveyed who were thinking about buying a property for the first time, 30 per cent said they could not afford it. The figure is up from 17 per cent at the same time last year.
In contrast, rising interest rates would have little impact on upper to middle housing markets around the country. "If rates do rise, it is likely to be next month, otherwise we are into the May budget and an election later this year," Mr Walters said.
Housing Industry Association executive director Simon Tennent said that with housing affordability still low, further interest rate rises might stymie the recovery in new-home sales.
Sales of private detached houses rose 3.9 per cent in February, while sales of units fell 4.2 per cent, the association said.
Western Australia had the second-fastest rise in new-home sales, with an increase of 11.2 per cent, while sales in Queensland fell 3.4 per cent in February.
The overall sales volume last month was still 5.2 per cent lower than a year ago.
Source: The Australian
Saturday, March 31, 2007
Thursday, March 29, 2007
Bad debt is on the rise with debt strapped homeowners in the mortgage belt.
A growing number of households are falling behind in the mortgage payments as record indebtedness, rising interest rates and high petrol prices continue to bite.
Moody's Investors Services has found that 30-day delinquency levels in the fourth quarter of 2006 were on the rise, particularly in December, when seasonal factors such as Christmas spending depleted borrowers' pockets.
Moody's said the availability of "easy money" and a relaxation of lending rules had led to many households incurring high levels of debt that were out of line with their ability to repay.
Moody's analyst and author of the report, Philip Wong, said that as a result of high debt levels, borrowers were much more sensitive to adverse movements in the cost of living and debt repayments.
"While interest rates appear to be on hold in the near term, the full impact of the most recent rate rises of 0.25 per cent in November, 2006 has not yet been reflected in borrower behaviour," Mr Wong said.
He said the housing loan market remains fiercely competitive between banks and non-bank lenders who are introducing new products such as no-deposit finance to drive volume and market share.
"The current trend of increasing issuer risk appetite and relaxation of lending rules may increase future delinquency and loss rates, especially during economic stress," Mr Wong said in the report.
The report said that rapid growth of house values, where borrowers benefited from significant equity build-up in their properties, had come to an end.
It said that while there were spectacular rises in Western Australia, property prices on the eastern seaboard were flat.
"Furthermore, disparities can be observed within cities themselves, with increased levels of mortgagee repossession in troubled areas like southwestern Sydney but continued property appreciation in premium areas such as Sydney's north shore and eastern suburbs," the report said.
The chief executive of the Australian Banker's Association, David Bell, said the percentage of delinquent home loans for banks was at very low levels, particularly when compared with non-bank mortgage lending.
"The Moody's data shows that the delinquency performance of non-bank lenders' loans is much higher than for banks," Mr Bell said.
According to Moody's, non-conforming lenders' delinquency rate is 2.15 per cent for loans 30 days past due, while the banks' rate is 0.78 per cent.
"There is a large and growing segment of non-conforming lenders in the mortgage marketplace," Mr Bell said.
"They are not prudentially supervised and often need to act more quickly on a mortgage default than a bank."
He said if a customer could make payments on their loan they should speak to their bank as soon as possible.
"Generally, the bank will try to work out a solution, for example a different repayment schedule to accommodate temporary difficulties," Mr Bell said.
Source: AAP
Moody's Investors Services has found that 30-day delinquency levels in the fourth quarter of 2006 were on the rise, particularly in December, when seasonal factors such as Christmas spending depleted borrowers' pockets.
Moody's said the availability of "easy money" and a relaxation of lending rules had led to many households incurring high levels of debt that were out of line with their ability to repay.
Moody's analyst and author of the report, Philip Wong, said that as a result of high debt levels, borrowers were much more sensitive to adverse movements in the cost of living and debt repayments.
"While interest rates appear to be on hold in the near term, the full impact of the most recent rate rises of 0.25 per cent in November, 2006 has not yet been reflected in borrower behaviour," Mr Wong said.
He said the housing loan market remains fiercely competitive between banks and non-bank lenders who are introducing new products such as no-deposit finance to drive volume and market share.
"The current trend of increasing issuer risk appetite and relaxation of lending rules may increase future delinquency and loss rates, especially during economic stress," Mr Wong said in the report.
The report said that rapid growth of house values, where borrowers benefited from significant equity build-up in their properties, had come to an end.
It said that while there were spectacular rises in Western Australia, property prices on the eastern seaboard were flat.
"Furthermore, disparities can be observed within cities themselves, with increased levels of mortgagee repossession in troubled areas like southwestern Sydney but continued property appreciation in premium areas such as Sydney's north shore and eastern suburbs," the report said.
The chief executive of the Australian Banker's Association, David Bell, said the percentage of delinquent home loans for banks was at very low levels, particularly when compared with non-bank mortgage lending.
"The Moody's data shows that the delinquency performance of non-bank lenders' loans is much higher than for banks," Mr Bell said.
According to Moody's, non-conforming lenders' delinquency rate is 2.15 per cent for loans 30 days past due, while the banks' rate is 0.78 per cent.
"There is a large and growing segment of non-conforming lenders in the mortgage marketplace," Mr Bell said.
"They are not prudentially supervised and often need to act more quickly on a mortgage default than a bank."
He said if a customer could make payments on their loan they should speak to their bank as soon as possible.
"Generally, the bank will try to work out a solution, for example a different repayment schedule to accommodate temporary difficulties," Mr Bell said.
Source: AAP
Wednesday, March 28, 2007
Financial services and mortgage wholesaler group Challenger reports a record profit
The finance company backed by billionaire James Packer has delivered a record result by more than doubling its first-half profit.
Challenger Financial Services Group yesterday reported a 117 per cent surge in interim net profit to $130 million, up from $60 million in the previous corresponding period.
That put the company in a position to easily eclipse its $134.3 million net profit result for the year to June.
Assets under management swelled 17 per cent to $46.4 billion over the six months to December, with net income growing 47 per cent to $324 million.
"The result was driven by strong revenue growth across each of our businesses," chief executive Mike Tilley said.
Three of the company's four divisions had met or bettered their return on net assets target of 18 per cent for the half, he said. Only the financial planning division failed to meet the benchmark.
"We are delivering a greater than 30 per cent return on net tangible assets from our businesses and achieving double- digit growth in earnings per share (EPS)," Mr Tilley said.
The firm has interests in funds management, property and infrastructure assets, mortgage financing and financial planning. Mr Packer is the biggest single shareholder with a 22 per cent holding.
Challenger plans to increase investments after starting two Australian property funds and forming real estate joint ventures in Japan and London.
Challenger declared a fully franked interim dividend of 5¢, double the amount from a year earlier.
Source: The Australian
Challenger Financial Services Group yesterday reported a 117 per cent surge in interim net profit to $130 million, up from $60 million in the previous corresponding period.
That put the company in a position to easily eclipse its $134.3 million net profit result for the year to June.
Assets under management swelled 17 per cent to $46.4 billion over the six months to December, with net income growing 47 per cent to $324 million.
"The result was driven by strong revenue growth across each of our businesses," chief executive Mike Tilley said.
Three of the company's four divisions had met or bettered their return on net assets target of 18 per cent for the half, he said. Only the financial planning division failed to meet the benchmark.
"We are delivering a greater than 30 per cent return on net tangible assets from our businesses and achieving double- digit growth in earnings per share (EPS)," Mr Tilley said.
The firm has interests in funds management, property and infrastructure assets, mortgage financing and financial planning. Mr Packer is the biggest single shareholder with a 22 per cent holding.
Challenger plans to increase investments after starting two Australian property funds and forming real estate joint ventures in Japan and London.
Challenger declared a fully franked interim dividend of 5¢, double the amount from a year earlier.
Source: The Australian
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