We regularly hear from the Pollies that they have a plan to create affordable housing to bring to reality the great Australian dream of home ownership.                                    
 
Of course not much happens and for a variety of reasons including non performance of election promises. 
 
How about this for an idea?     
 
The Governments talk to each other to change the Planning Laws to allow housing [flats,townhouses,units] onGovernment controlled land close to the City.This land often has such features as proximity to the City,transport and parks .What about a rezone to allow a developer to enter into a PPP[Private Public Partnership] to build affordable and other more expensive housing on the Jolimont railway yards, the Preston tram depot,the West Melbourne railway yards,The Camberwell tram depot…………. the list could go on for pages.                   
 
And more….what about the rezone of our major shopping centres e.g. Highpoint,Chadstone,etc., to allow for housing to be built over their carparks?                              
 
Sounds simple but will it ever happen???????????       

“The pass in rate is up…..the pass in rate is down”. So what does that really mean? The weekly announcement from the newspapers is useful but often can send negative or positive messages to the public.However there is no method to disseminate the results. For example when the rate moves one week to the next it does not necessarily mean that prices have gone up or down nor does  it say that the pass in rate in the outer suburbs [where Auction is not as common as in the inner suburbs] is higher or lower and vice versa.                                              
 
Therefore do not think that auction results are in any way a reflection of the state of the market and remember that not all auction or private sales are reported to the media.                         
 
This weekend past 63% of properties auctioned sold .Last year the rate was 85%.                                             
 
Call Brian if you feel you need more explanation.0439004889

AUSTRALIA is set to experience the slowest economic growth in seven years which would make the case for a 50 basis point interest rate cut in September, a survey shows.

The Westpac-Melbourne Institute leading index, which predicts the likely pace of economic growth three to nine months into the future, showed an annualised growth pace of 2 per cent in June.

The reading was at the lowest point since July 2001.

The leading index has been below the long-term average of 3.9 per cent since February.

Westpac chief economist Bill Evans said global factors were largely responsible for the likely slowdown in economic growth.

“The slowdown in the growth rate of the index can be mainly attributed to the sharp fall in the share market; tighter liquidity as represented by money supply; weak dwelling approvals and softer data for US industrial production,” he said.

 Mr Evans said high borrowing costs would make a 50 basis point official interest rate cut in September more likely.

“With rates well into the contractionary zone and global liquidity conditions deteriorating there is a strong case for a larger first cut of 0.5 per cent,” he said.

“That seems a more effective strategy than current market expectations of two consecutive 0.25 per cent moves.”

The Reserve Bank left interest rates on hold at 7.25 per cent in August for the fifth month in a row.

The minutes of that August 5 board meeting, released yesterday, suggested the RBA expected economic growth to have slowed down in the June quarter, with low growth also possible in the September quarter.

The RBA last cut interest rates in December 2001.

Source: news.com.au

SYDNEY: With Australia expected to cut interest rates, beleaguered property trusts could see their rental yields become more attractive, but the bad news that has battered the sector may rumble on.

Australia’s highly leveraged real estate investment trusts, or REITs, have suffered as the global credit crunch lifted borrowing rates and raised questions about a practice of using nonrental income to increase dividend payments.

GPT Group, Mirvac Group and Babcock & Brown - which have listed REITs - have issued profit warnings and seen their share prices dive.

Centro Properties Group set off the bearish mood when concerns about debt refinancing emerged early this year.

The S&P/ASX 200 REIT index has lost 42 percent since a peak last October, but has picked up more than 20 percent since mid-July.

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 Some analysts say the sector is still 20 percent undervalued, and rate cuts would ease pressure on the securities, which pay most of their rent to investors as dividends.

After more than a decade of expansion backed by a commodities boom as the nation sold iron ore and copper to China, the Australian economy is now seeing signs of weakness, with consumer spending sapped by rising fuel and mortgage costs.

The Reserve Bank of Australia said that it would not wait for inflation to fall before lowering interest rates, giving the clearest indication that it would ease monetary policy next month.

“As the RBA begins the easing cycle, this will make REITs more attractive from a yield perspective,” said a Merrill Lynch analyst, John  Kim.

The weighted average dividend yield for Australian REITs is 7.8 percent, slightly above the central bank’s cash target rate of 7.25 percent and compared with a 10-year government bond yield of 5.8 percent.

“The large cap A-REITs will benefit the most, as equity and global property investors revisit the sector, now that one of the major headwinds against the industry appears to be headed for a reversal,” Kim added.

During the last two periods of falling interest rates, in 1996 to 1998 and in 2001, REIT prices rose 6.7 percent in the following 12 months, according to UBS.

UBS said that groups active in residential development, or which have large domestic floating debt exposure, should benefit most, pointing to Stockland Group and Mirvac as examples.

Affordability has become an issue for Australia’s residential market of nearly 3 trillion Australian dollars. Home prices have jumped fivefold in 20 years, while household income has only doubled, so lower borrowing costs should offer homebuyers some relief.

But even if the central bank cuts its policy rate, lenders could still be reluctant to adjust their views of risk for property trusts, said Clement Chong, vice president and senior analyst for Moody’s Investors Service.

In May, Moody’s said it maintained a stable outlook on the ratings of Australian REITs over the next 12 months, but warned that a challenging credit environment and softening property fundamentals in some overseas markets were risks.

Dugald Higgins, associate director for Property Investment Research, said that a deteriorating global economy could hurt REIT earnings, as commercial property values and rents suffered in Australia and the United States, where many Australian trusts own shopping malls, offices and warehouses.

“It will only take a piece of bad news to hit the market, and I imagine we will see a lot of people jump ship again,” Higgins said. “Valuations, fundamentals are still pretty much out the window and have been in the last six months and I don’t see that changing a lot throughout the rest of this year.”

Babcock & Brown, which has listed real estate vehicles, has seen its share prices tumble after a profit warning due partly to revaluation of real estate assets. Babcock & Brown shares have sunk to below 4 Australian dollars, or $3.47, from almost 35 dollars in June 2007.

Office vacancy rates in Australia crept higher in July, prompting property executives to predict the global credit crunch would take its toll on rents and the value of buildings.

As the market braces for earnings announcements from REITs, investors will watch property valuations to see whether the trusts apply mark-to-market accounting.

The practice, which has gained ground in Britain, relies on indexes rather than appraisals of individual buildings, and allows companies to adjust their asset valuations faster.

“Typically in Australia, we’ve still got six monthly valuations,” said Tim Nation, director of international investment at DTZ. “It just inherently slows down the ability for asset values to reflect where the market thinks the pricing should be.”

Source:International Herald Tribune by Reuters,  By Eriko Amaha ReutersPublished: August 20, 2008

The REIV supports the recent calls by the Federal Treasurer for the private banks and other financial institutions to immediately pass on future reductions in interest rates by the Reserve Bank to mortgage holders.

Over the past six years the Reserve Bank has lifted the official interest rate a total of twelve times taking the rate from 4.25 per cent in April 2002 to the current rate of 7.25 per cent. In recent times the private banks have also increased interest rates in addition to the RBA increases.

As a result of the increases the standard comparison rate is now between 9 and 10 per cent - double the rate of six years ago.

The interest rate increases have required many borrowers to make changes to household budgets and spending patterns. These rising payments have also coincided with fluctuating petrol prices and rising grocery prices. These factors combined have contributed to a softening of the housing market with a reduction in the number of sales and a stabilisation of price throughout the first half of 2008.

Many economic indicators, including the REIV’s June Quarter data show that the Reserve Bank’s monetary policy decisions are taking into affect, the result being an economic slowdown.

A reduction in the official cash rate, if passed on to mortgage holders by private banks and other financial institutions , would help alleviate some of the financial stress households are experiencing and provide mortgage holders and future first home buyers with some respite.

A lower interest rate would also help stimulate investment in the private rental market. This would then help to provide prospective tenants with more choice and also stabilise rents

Source: REIV

Analysis of the REIV June quarterly median prices shows that the Melbourne property market is strongest in the inner and middle suburbs.

The REIV classifies the inner city as those suburbs within 10km of the CBD and the middle those between 10km and 20km from the CBD.

Comparing the number of sales in the inner, middle and outer suburbs between the March and June quarters shows that the largest increase in homes sold was in the inner suburbs. In the June quarter there were 5,374 homes sold, a 21 per cent increase on the 4,456 sold in the March quarter.

The middle suburbs recorded a more moderate increase in sales with an increase of 11 per cent from 4,481 to 4,989.

A clear sign of the impact of interest rates, broader economic uncertainty, increases in the price of petrol and groceries can be seen in the fact that the number of sales dropped in the outer suburbs, by 9 per cent between the March and June quarters from 3,617 to 3,288.

Over the June quarter there was a subtle change in sales method being used to take property to market. The number of properties sold at auction during the June quarter increased by 17 per cent from the March quarter whilst the number of properties sold via private sale has increased 4 per cent, however this likely to be a statistical anomaly as there are almost no auctions conducted in the metropolitan areas during January. However if the comparison is made with the June quarter of 2007 it shows that the number of homes sold by private sales and auctions dropped by an equal amount of 22 per cent.

This shows that whilst the more moderate market conditions have not changed the method of sale, there has clearly been a substantial dampening of demand in the outer suburb and consolidation of demand for homes in the inner and middle suburbs.

Source: REIV