New Homes Sales Lowest Since June 2013
Sales of new homes fell sharply in June to the lowest since 2013, though conditions varied across states, says a Housing Industry Association survey.
Overall sales declined 6.9% from May’s figures and were 11.9% lower than the same period last year, with sales of detached houses down 5.8% and multi-unit sales 10.7% lower. Sales fell in NSW, Queensland and South Australia, but rose in both Victoria and Western Australia.
HIA senior economist Shane Garrett said the results supported HIA’s forecasts that new dwelling commencements would continue easing until late 2018. “The fall in sales needs to be considered against the backdrop of residential building coming off a record peak of activity in 2016. We project that residential building will still be operating at a historically high level,” he said.
Crackdown on Family Trusts
The Federal Government wants to crack down on those who use family trusts to avoid paying income tax.
High-income earners who use trusts to split money to other family members in lower tax brackets would be charged 30% tax.
Tax agents H&R Block describe the benefits of a trust as: “From a tax perspective, the main advantage is that any income generated by the trust from business activities and investments, including capital gains, can be distributed to beneficiaries in lower tax brackets (often spouses or children).”
Opposition Leader Bill Shorten says: “Every year in Australia there are some fortunate high-income earners who use discretionary trusts to park their money in a lower tax bracket. And the rest of the community are left to subsidise this.”
Quote of the week
Reserve Bank Leaves Rates on Hold
The Reserve Bank has left the cash rate unchanged at 1.50%.
The RBA reported: “Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease.
“In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities.
“Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes.”
Shift in Sydney Home Ownership
Home ownership rates have fallen in several of Sydney’s inner and middle-ring suburbs and risen in more exclusive neighbourhoods, says analysis of census data by the Grattan Institute.
The proportion of home owners declined in 87% of Greater Sydney neighbourhoods between 2011 and 2016. But the falls are most dramatic in a band of suburbs between about 10 and 25 kilometres to the west and south-west of the central business district.
The slump in home ownership rates coincides with soaring property prices and rising population density in many Sydney districts. The median price for a detached house in Sydney reached $1.18 million last quarter.
However, home ownership crept higher in some of the city’s most exclusive neighbourhoods including Mosman (+0.3%), Rose Bay-Vaucluse (+0.6%), Double Bay-Bellevue Hill (+1.4%), and Avalon-Palm Beach (+3%).
Calls for Housing Market Reforms
Calls for housing market reforms are expected to “grow louder” with the housing market passing its fifth year of growth, hitting $7.1 trillion in value nationally.
The latest CoreLogic Quarterly Housing and Economic Review found that despite combined capital city dwelling values hitting their slowest quarterly growth rate since December 2015 (0.8%), Sydney and Melbourne were still powering ahead.
CoreLogic found Sydney and Melbourne were the only capital cities to record double-digit value growth in the past year, rising 12.2% and 13.7% respectively.
“With affordability becoming stretched we are seeing increasing pushes for housing market reform from Government. These calls are expected to only grow louder the longer the current growth conditions persist,” said CoreLogic research analyst Cameron Kusher