This Week in Real Estate: 11 Nov 2017

By November 11, 2017News

Cheapest Rents- Adelaide & Hobart

Adelaide and Hobart have the cheapest rents of the capital cities, according to rent.com.au.
During the month of October, the median rent in Adelaide fell 1.7% to $290/week while Hobart was a close second at $312/week – down 0.85%. Coming in third place, Perth’s rental market showed signs of recovery with apartment rents up 3.23% for the month to $320/week. Perth had the cheapest room prices at $121/week.

Sydney remains the most expensive place to rent. Rising 3.33% in the month, the median rent for houses was recorded at $620/week. Melbourne was the only capital to record a decrease – down 2.44% to $400/week for houses.

Houses in Hobart were the quickest to be rented, being tenanted within 15 “days on market”. And apartments moved even faster, renting in 11.5 days on average. This compares to Sydney where properties spent 22 days on market.

Prices Unlikely to Fall: Westpac

House prices are not expected to fall, but the property markets in NSW and Victoria will slow down, according to Westpac chief executive Brian Hartzer.

“There has been a lot of noise about the housing market over the past 12 months, but all the signs are that there will be an orderly slowdown in growth rates,” Hartzer said.

Westpac revealed it expects revenue growth to be strained as the property market cools in Sydney and Melbourne. However it said its bad loans were largely benign. Westpac said it had reduced its volume of interest-only lending to 26% in the September Quarter — below the prudential regulator’s 30% limit.

The re-pricing of interest rates on interest-only and investor loans has prompted a sharp rise in the number of Westpac customers seeking fixed-rate mortgages. Chief financial officer Peter King said fixed-rate mortgages now accounted for one-in-three loans written.

Quote of the week

“Growth has started to slow in NSW and Victoria and we expect that to continue, but we do not expect house prices to fall. We feel good about the quality of our mortgage book. It’s not in our interest to give someone a loan who can’t afford it.”
Westpac chief executive Brian Hartzer

Construction is Biggest Employer

The building and construction sector is now the biggest full-time employer in Victoria, says ABS.

The ABS reported that by August 2017, construction had surpassed manufacturing as Victoria’s top full-time employer, accounting for 11.5% of full-time employment.

During 2017, full-time construction employment grew by 9%, adding about 20,100 new full-time jobs to the state economy.

Victoria’s current rapid population boom is creating heavy workloads for many city councils trying to meet building approval deadlines. An increase in delays in council planning and processes could translate into higher costs for homeowners and builders, prompting a call for reforms to government processes.

Last year Victoria’s population increased by 127,000 and there is no slow-down in sight. Victoria will need to build 2.2 million new homes by 2051.

Revised CPI Keeps Rates Steady

A new method of calculating the consumer price index would see inflation drop and keep interest rates steady until the end of 2019.

The ABS said it will now pay more attention to how much weight it gives the cost of rent and utilities and less attention to food and non-alcoholic beverages in the new index schedule to start from December.

The change is driven by the need for the index to more accurately reflect how Australians are spending their money, with a greater percentage of household income going towards housing and services such as childcare and education.

“This may sound like a technical change that only economists are going to get a kick out of, but it could significantly influence what happens to interest rates and the financial markets,” said chief economist Paul Dales. Dales said would make it even harder for the RBA to raise interest rates before late in 2019.

GST Changes on New Properties

GST will be sent straight to the ATO as part of the purchasing process under a new proposal by the Treasury.

The proposed legislation will be applicable to those who buy a new residential property or potential residential land that is included in a property subdivision plan and has not been sold as potential residential land before.

Currently, the responsibility of sending the GST is up to the developer, but a statement from the Treasury claims that “some developers are failing to remit the GST to the ATO despite having claimed GST credits on their construction costs”.

According to Kelly O’Dwyer, Minister for Revenue and Financial Services, the draft legislation will help address GST evasion through phoenixing, the act of a new business being created and continuing the work of an old, deliberately liquidated one, by “dishonest developers”.

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