Capital city rents are set to rise by 7 % this year and rose faster than inflation in 2010,

RP Data said rents in capital cities rose 4.2 % in the year to December.

"We expect rents to increase by around 7 % during 2011," RP Data analyst Cameron Kusher said, adding rents would rise most for inner city units and the more expensive housing markets on metropolitan outskirts.

“For the coming year we expect rental markets to tighten further and rental growth during 2011 will likely eclipse that of 2010,” Mr Kusher said

The rise in rent comes amid an expected rise in inflation and while home prices are expected to remain flat, if not fall.

This week ANZ Bank and National Australia Bank released separate reports suggesting house prices will weaken amid higher rates and worsening affordability.

That affordability crisis will leave many renters in capital cities - where the bulk of Australians live - with little choice but to pay more for a home.

Australian Bureau of Statistics data released yesterday showed housing costs rose 0.6 % in the December quarter, taking the annual rise to 5 %.

Over the three months to the end of 2010, RP Data said rental growth was unchanged nationally even as it rose 1.4 % in capital cities.

Over the past five years, capital city rents have risen 44.2 per cent, to a median weekly price of $375.

“Vacancy rates remain tight in the capital cities, first home buyers remain relatively inactive, interest rates are at higher levels and new supply coming on-line is quite constrained,” the report said.

The official cash rate, currently at 4.75 per cent, is tipped to rise, as the Reserve Bank readies for an outbreak of inflation that it fears will result from Australia's tight labour market and on-going demand from Asia for Australian commodities.

Source: Domain:  Chris Zappone  27 January, 2011

The Australian property market was the clear front runner in 2010 with demand supported by low unemployment and tight supply adding to the upward, according to a global property market report.

But there is likely to be a slowing sales and downward pressure on prices in 2011, according to the Global Real Estate Trends reports from Scotiabank that looked at the performance of the 12 most developed markets.

Australia was heading for a property bubble but consecutive interest rate increases by the Reserve Bank of Australia (RBA), totalling 175 basis points since October 2009, alongside the expiry of the enhanced First Home Owners Grant in January 2010, succeeded in cooling its red hot property market to some degree, the report says.

The market slowed towards the end of the year. Average inflation adjusted home prices in the third quarter of 2010 were up 9.4% year over year compared with a 15.9% year on year increase in the first three months of the year.

‘We anticipate a further slowing in sales and price appreciation in 2011. While Australia’s close trade ties with Asia and resource wealth will continue to underpin a solid pace of domestic activity, higher interest rates will worsen already strained affordability. The RBA has recently taken pause, but we expect the resumption of a gradual policy tightening path in 2011, with short-term rates rising an additional 75 basis points by the end of 2011,’ the report adds.

The latest national figures from Rismark RP Data house price index seem to back up this analysis. They show that nationally prices fell 0.3%. But some areas, such as Melbourne are still seeing rising prices, up 0.4%. Also apartments are performing better, up 0.6% in Melbourne compared with a national drop of 0.1%.

The market is weakest in Perth, where average prices have fallen by 4.9%, or almost $25,000, since May. Average apartment prices in Perth are down $44,000. Home buyers in Perth have seen no capital appreciation since August 2007. Prices are also very weak in Brisbane, having dropped 2.3%, or $11,000, since their peak in May, with a 0.5% fall in November. While prices in Sydney fell 0.24% and are now 0.76% below the peak.

Rismark managing director Christopher Joye said the likelihood of further rate rises in 2011 meant it was unlikely that home owners would see any capital appreciation, with small nominal price falls a chance. Financial markets expect three more 0.25 percentage point rate hikes this year.

While ANZ Bank economics spokesman Paul Braddick said the decision to raise interest rates again has led to weaker property prices. ‘While the November interest rate hike further deteriorated home purchase affordability, general household financial stability and underlying tightness in market fundamentals are continuing to support, albeit weak, annual growth in house prices,’ he said.

‘We believe these market foundations combined with a strong domestic economic outlook, falling unemployment and limited forced selling will effectively place a floor under house prices in 2011,’ he added.

source: Properrtywire.com

Australian Property continues to be popular with Investors say 2 new reports. CB Richard Ellis has revealed that Sydney is the 4th Most popular Location for global investors after London, Paris and New York.

It found that foreign investors accounted for 42% of al Australian purchases - including office, retail and industrial property in 3rdQtr 2010.

A HSBC study showed that 42% of Australian expats are sending significant amounts of investment back to Australia into Australian property.

Source:  Australian Broker - November 2011 

Australia's Reserve bank has raised rates by 0.25% today.

The Cash Rate is now at 4.75%

The last rate rise was in May 2010

It has been the 4th rise in 5 Years

Economists were surprised believeing rates would remain stable after subdues Inflation figures.

Australia has continued to experience strong growth as opposed to the UK and US which are still in substantial economic difficulty

There is a general belief now that rates will remain stable for the next couple of months at least.

2 November 2010

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 23 October 2010

Reserve Bank of Australia has kept official rates on hold at the monthly meeting today

Cash Rate remains at 4.5%

This has been the 5th month that rates have been kept on hold.

Reserve Bank believes inflation will be kept in their parameters between 2% - 3%.

The prospect, however remains that the four big banks may increase their own rates over the next few days - although this remains to be seen.

5 October 2010

The Reserve Bank has left interest rates on hold, giving borrowers another month to breathe easy over mortgage repayment costs.  The central bank kept rates at 4.5% for the fourth consecutive month today.

The decision follows official figures that show economic growth has not forced an increase in inflation. Today's decision, however, raises the question of when the borrowers will face another official rate rise over the next few months.

At the moment, borrowers are paying $300 a month more than they were in October 2009, when the RBA began a cycle of rate rises to keep the economy’s expansion sustainable. There have been six rate rises since last October.

Australia’s economy grew by 1.2% in the second quarter, almost double the 0.7% pace in the first quarter. Second-quarter inflation, however, rose by 0.6%, less than the 0.9% in the first quarter.

The nation's big banks have been complaining about increased funding costs for months and they could move on rates independently of the Reserve Bank - a prospect that is more likely to happen once Australia's political logjam has been resolved.

source: Fairfax - 

Chris Zappone

THE dream of home ownership is slipping further out of reach of ordinary Australians as the nation faces its worst-ever housing shortage.  A national shortfall of 190,000 dwellings will widen to 466,000 by 2020, the Housing Industry Association (HIA) says, amid expectations of a rapidly growing population.

Residential developer Australand Property Group says the major constraint facing developers is a shortage of land being made available for greenfield sites and for urban infill.

"Generally it comes from a government level, how much land is being made available to fulfil those needs, whether it be at greenfields sites or urban infill."

HIA chief economist Harvey Dale says it takes an average seven to eight years for a greenfield site to reach completion, an unnecessarily long period that pushes up costs and reduces supply.

"At the end of the day, the lack of adequate, affordable land supply is at the heart of the problem," Dr Dale said.

"The number of processes a development must go through is higher now than was the case 10 years ago.

Developer Stockland says government inconsistency at all levels is adding thousands of dollars to the cost of new homes.

"We have 565 local government areas across our country, and as property developers we have almost 565 different planning standards, charges and processes to adhere to," Stockland residential chief executive Mark Hunter said.

Australand's Bob Johnston says the underlying demand for homes is quite strong and the company views that as an opportunity.

"We will see a lot of pressure come back on to affordability and we think we are well positioned to try and address those affordability issues for purchasers, whether it be through built form or the land subdivisions we do."

Mirvac says its development division expects strong demand to continue throughout 2010, signalling that investors and upgraders have returned to the market.

Investors had begun to edge out owner-occupiers, particularly first home buyers, figures released by Australian Property Monitors on Thursday show.

However, Dr Dale says Australians won't give up their dream of a detached home any time soon.

"In the here and now, consumer preference is still for a detached house. Although home and land sizes have fallen over the past 10 years."

Source:  AAP – 1 August 2010

AUSTRALIA is in a two-speed property market with strong demand in Melbourne and Sydney and uncertainty everywhere else, real estate group Ray White says.

Ray White joint chairman Brian White said the group's results for July reflected the uneven forces at work in real estate markets as the nation heads to a federal election.

Ray White said sales for July were down three per cent on the corresponding period in 2009.

"The continuing attraction for property in Melbourne and Sydney now defines what 2010 has been all about," Mr White said.

"Demand in those cities just doesn't seem to falter even though the top end properties are quieter and there is evidence of tighter bank lending requirements."

Victoria was the strongest performing state for Ray White, with sales more than 30 per cent up in July compared with the same month last year, while New South Wales reported a four per cent increase.

 Mr White said the major mining states of Western Australia and Queensland experienced a big drop off in sales.

 source:  AAP 13 August 2010

HOUSE prices in major capital cities have jumped by almost 20 per cent in the past year, according to the latest Australian Bureau of Statistics figures.

Houses in major capital cities have increased by 18.4% in the last year, says the ABS / File Source: Bloomberg

• City house prices up 18.4 per cent - ABS
• Figures more than double private data
• Price momentum 'slowing', says economist 

The House Price Index of eight capital cities released by the national statistician today, shows quarterly growth to June of 3.1%, and an annual increase of 18.4%.

The data shows growth of almost double that of the private sector RP Data/Rismark index released last week which showed national city dwelling values up 10.5% in the same period. 

In its data today, the ABS said Melbourne house prices had jumped more than 24 per cent over the year to June, while Sydney house prices had risen 21%.

The index covers detached residential dwellings on their own block of land regardless of age, the ABS said. The RP Data index is calculated measuring all dwelling types.

The RBA decided yesterday to leave interest rates on hold for a third straight month at 4.5%.

In its statement yesterday, the central bank noted “the upward pressure on dwelling prices appears to have abated”.

Mr Hassan said the ABS data did show a "clear slowing" in price momentum.

In a note released today ANZ economists said while growth was expected to slow further this year, prices would be supported by the underlying housing shortage and a buoyant outlook for the Australian economy.

Last week's RP Data index showed average house prices had fallen slightly after 17 months of consecutive gains, as economists agreed the market was at a turning point.

Source:  news.com.au  4 August 2010

PROPERTY investors are targeting off-the-plan apartments hoping for short-term capital gain, with thousands of prospective pre-sale buyers eyeing Sydney projects.

Ray White is reporting a 6 per cent lift in investor buying as shares weaken and with the end last year of the boosted first-home buyer's grant, The Australian reported.

An Australian Housing and Urban Research Institute report this month said 80 per cent of investors buy for long-term gain, but at least half sell within five years because of cashflow problems or disappointing capital growth. One in four investors sells within 12 months.

Developers in Sydney are reporting strong demand for new residential projects following stamp duty concession by the NSW government this year.

Tim Casey of St Hilliers Group says his company has had 650 people interested in apartments at the Caritas site in inner Sydney's Forbes Street, for which marketing begins this week.

And Harry Triguboff's Meriton Apartments reports strong interest for proposed apartments at the former Seven Network site at Epping, with more than 300 applications.

"In the next decade, we might see very little growth, and if investors keep buying and thinking 'I'm going to make a killing and then move on', they're going to find themselves a little disappointed," he said.

This would be mostly the case in Melbourne, where the market had been strong, he said. In Perth, Brisbane and Adelaide, the trend had already started to occur.

Source:  The Australian 24-8-10

RISING interest rates and weaker first home buyer activity will lead to slower house price growth in 2010, an economic forecaster says. House prices will not fall though, and rents are tipped to continue to rise because of a lack of supply, BIS Shrapnel says in its Residential Property Prospects, 2010 to 2013 report.

BIS senior project manager Angie Zigomanis said first home buyer activity has dropped after the expiry of the first home owner's grant boost at the end of 2009.

Affordability has also suffered as interest rates rise off their low levels, he says.

"With interest rates quickly lifting from these emergency levels, and the current variable rate of 7.4 per cent now being close to long term trends, the recent levels of price growth cannot be maintained," Mr Zigomanis said.

Investors will replace some of the demand lost as a result of those factors, meaning house prices will continue to grow, BIS says.

More moderate interest rate movements than recent months will also aid purchaser confidence, it says.

BIS forecasts the cash rate to rise by 50 basis points in the 2010/11 financial year and by another 50 basis points in 2011/12.

"The more stable interest rate environment is expected to underpin purchaser confidence as economic conditions continue to strengthen, and should continue to push through moderate house prices rises," Mr Zigomanis said.

House price growth is likely to remain at an average in the mid-single digit percentage range over the next three years, he says.

On a capital city basis, Sydney and Perth are expected to post the strongest growth in house prices in the coming years.

Weaker demand and local economic conditions are expected to lead to more moderate price growth in Brisbane, Hobart and Canberra.

Melbourne and Darwin have already experienced very strong price rises and low affordability will limit further rises, BIS says.

For renters, the shortage of dwellings will keep pressure on rents.

"Even though overseas migration inflows are steadily easing, a deficiency of stock is still in place with dwelling construction below underlying demand," Mr Zigomanis said.

Source:  AAP  Drew Cratchley  15 June 2010

The Reserve Bank has left Interest Rates unchanged during its June 2010 meeting today.

The cash rate remains stable at 4.5%

The Reserve Bank sees rates remaining stable for a few months until it assesses the global economy and where it will be headed.

The Reserve bank has a dilema with a very strong Australian economy, yet great uncertainty with Europe's economy and where it may head to in the coming months.

World growth is expected to slow, the reserve bank remains positive on Asia.

THE housing and construction industries are to receive a significant boost from the budget.

One of the measures taken by the government to increase housing supply is cutting to zero stamp duty for those buying dwellings off the plan.

Those aged over 65 years will pay no stamp duty on a new dwelling, as long as they live in it for more than 12 months. In both cases, the new dwelling must cost less than $600,000.

These will give the housing construction industry a substantial lift.

To qualify for zero stamp duty, new dwellings most be at the "pre-construction stage" – that is, before the laying of foundations has begun, although site preparation such as demolishing existing buildings is permitted.

For off-the-plan dwellings where building is under way, stamp duty will fall by 25 per cent.

The purpose is to get a lot more housing stock into the market.

Since the global financial crisis, property developers have found it difficult to obtain the financing for new developments. A higher level of pre-sale is expected to ease financing pressures, helping developers to get projects off the ground.

Treasury expects the additional measures to boost housing stock by 8000 properties, twice the estimate arrived at by BIS Shrapnel based on concessional cuts to stamp duty introduced earlier in Victoria.

These cuts are initially for 2 years and will then be reviewed

Source: ninemsn 9 June 2010

There are plenty of positives in the current market

by Terry Ryder. 

Introduction:
There are plenty of positives in the current market 

When property prices rise, most Australian families  benefit. This needs to be remembered, because media tends to forget.

Because of media's obsession with finding the  negatives in any set of circumstances, the rise in house prices is being  presented is a pessimistic way. Headlines such as The Great Australian Dream is Dead are now common. There are  frequent articles about a price bubble. Misinformation rules.

Here's how I see it. Seven out of ten households own  their homes. A rise in values is a good thing for them. Of the remaining 30%,  many are renters by choice, for various reasons. Those who rent but aspire to  home ownership are relatively few. For them, rising prices is bad news.

But the notion that home ownership is out of reach is  far from true. Affordability currently sits as "normal" levels. It's where it  has been for most of the past five years. House prices as a multiple of incomes  currently sit in line with long-term averages.

There is nothing unusual or concerning about the  recent rise in house prices. The overall rise in the past year, somewhere  around 11% or 12% according to most measures, is a solid year but not an  extraordinary one. Many years in the past decade have shown larger rises.

For many of our key cities, the recent rise in prices  is overdue. Sydney is now showing growth for the first time since 2004. Perth  is showing signs of recovery after three years of price decline. Both Brisbane  and Adelaide were under-performers in 2009. Melbourne had big growth in 2009,  but it was the first major spike in Melbourne values in six years, and long  overdue.  

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·         Falls on the global equities markets may provide a boost to the local residential property market, analysts say.

·         Melbourne-based buyers advocate Christopher Koren said investors typically turn to real estate in the aftermath of a stock market correction, as they did following the 1987 stock crash.

·         In Australia, a chronic shortage of new homes, as well as optimistic forecasts for the economy have helped push capital city house prices up by 20 per cent in the year to March, according to the Australian Bureau of Statistics.

·         Auction clearance rates have been falling over the past few weeks, from the highs of last year, but are still relatively strong

·         Sydney-based Adviser Edge head of property Louis Christopher said over the past 20 years, there is evidence of investors switching into property in times of heightened global risk, such as the aftermath of the 1987 stock crash.

·         Reserve Bank raises rates today by 0.25%

·         Cash rate is now 4.5%

·         Due to an increase in price inflation and house prices

·         Australia was on of the first countries to start raising rates as the global economy steadied last year – showing our strong resilient economy.

·         Many economists believe the Reserve bank will now pause for a couple of months and leave rates where they are for the time being.

·         A strengthening domestic economy with lower unemployment, rising prices are evident now in Australia.

·         Asia has also continued to show strong signs of growth

  Reserve bank mentions there is considerable buoyancy in the property market with prices continuing to increase over recent months

·         THE average Sydney house renter is paying about $110 more a week than they were five years ago.

Houses

·         In 2005 median rental rate across the Sydney $340 a week

·         Now about 2/3 is $450 a week.

Apartments

·         Apartment rents across Sydney have increased 52% in the last 5 years.

·         Average Sydney apartment rent is now $410 per week.

·         5 Years ago it was only $270 per week

·         Large Increases due to low number of investors and high number of owner occupiers in the past few years

·         Other factors – low supply of residential property in general – high demand from locals and overseas migrants – pushes Rents up

·         Rents will continue to increase throughout 2010.

·         Rents have increased 3.5% over the past 3 months alone !!

Source: RP Data – Tim Lawless – Research Director 18 April 2010

·         Australia has been voted the world's best country to bring up children by expatriate parents working here   (source: HSBC bank survey)

·         Australia provided the best environment for healthy and active children 

·         Expat children in Australia found it easier to make friends easier.While schools in the United States and Britain were the least child-friendly for foreigners, the study found.

·         delayedAds.push(function(){ FD.addExternalReferralsAd($merge(FD.baseAd, { id: "adspot-300x250-pos-3", iframeId: "adspot-300x250-pos-3-iframe", params: $merge($merge(FD.baseAd.params, { pos: 3, aamsz : "300x250" }),getAdParams("300x250")) ,addSmall: true ,smallText: "Advertisement: Story continues below" }) ); } ); The survey looked at more than 3100 expatriates from 50 countries, including

Hong Kong, Singapore, the United Kingdom, the United States, United Arab Emirates and Australia.

·         Australia had the largest proportion of expat parents who reported an improvement in the quality of family life compared with their original homes, while almost half (45 percent) said moving to the UK could have a negative effect.

·         Other Rankings       2^nd Singapore,       3^rd Hong Kong     4^th UAE,      5^th United States,  6th Britain.

·         Parents saw Britain and the US as generally less healthy places to live, with children in both countries more likely to spend more time watching TV and playing computer games.

·          

·         Overall, expat parents believed their children benefited by moving to a foreign country, with an average 48 percent of expat kids adapting well to a new culture, half making new friends easily and 49 percent adapting well to new schooling.

Source:  Sydney Morning Herald 12 March 2010

*  Australia's economic recovery will continue as China reported a near 12% growth rate in the first 3 months of 2010.

*  "There's a massive rebound in these Asian economies, so it very good news for Australia," Nomura Australia chief economist Stephen Roberts told AAP.

*  Adding to the positive result was a low inflation outcome, dampening fears that China's central bank would be forced to curb growth through an imminent interest rate rise to keep prices in check.

*  "A solid pace of growth clearly benefits a raft of Australian companies, particular in mining, construction, transport and engineering sectors," he said.

Australia’s actual rate of annual inflation, was just 2.1% in the December quarter – well between the Reserve Bank’s target range of 2-3%

*  The central bank's most recent forecast for CPI inflation in February was for a peak of 3.0 per cent by the June quarter this year, before moderating to 2.5 per cent by the end of the year and through to mid-2011.

The March quarter CPI is released by the Australian Bureau of Statistics on April 28.

Source:  ninemsn  15-4-10

*           Australia has strong population growth

*           This will continue to outstrip housing supply

*           Shortfall could reach 500,000 by 2029

*           Gap between demand and supply will continue to increase

*           The housing shortage is most critical in NSW, which accounts for almost one third of the nation's total population.

*           Population growth is at an all-time high

*           Australia is building fewer houses per head of population growth than at any time on record, according to new research from economist Saul Eslake.

*           Last year there were just 333 dwellings completed for every 1000 increase in population,  

*           Bureau of Statistics confirmed that Australia's population grew 2.1 per cent last year, almost double the world average of 1.1 per cent.

*           Population set to hit 34 million by 2050

 source: The Australian - 29 March 2010

*  Australia faces a housing affordability ''time bomb'' - primed by a dysfunctional planning system, a chronic undersupply of homes, and unrealistic expectations from buyers, accoring to the chief of one of the nation's largest homebuilders.

*  Australia has a current housing shortage of 200,000 homes (Stockland Managing Director – Matthew Quinn)

*  Australia is Short 60,000 new dwellings per year (Stockland Managing Director – Matthew Quinn)

*  This shortfall will only continue to increase unless more housing is constructed.

*  House prices increased by 13.6% in Australia in 2009

*  In the last decade they increased by 170% (Australian Bureau of Statistics)

*  Residential real estate prices have soared as Australia's economy nears notching up two decades of growth without a pause.

*  During the same period, Australia has had more immigrants, adding to housing demand.

(source:  Sydney Morning Herald – 16 March 2010)

*           Australia is facing an under-supply of housing that isn't meeting the demands of a growing population     and will push property prices even higher,                                  source: Reserve Bank of Australia.

*           If this does not occur – house prices and rents will continue to rise

*           Property prices increased by more than 10% in 2009 and this will continue in the future despite rising       interest rates

*           Unlike other countries rocked by the global financial crisis – Australia did not have an oversupply of         housing

*           The rate of increase in dwellings has been below the average of the past 50 years, while population has   increased at its fastest pace over the same period.

*           Business investment in Australia was around 16% of gross national product, close to a 40 year peak,       and was expected to rise over the next two years.  (Source:   Dr Lowe – Reserve Bank Australia)

Source nine news 10 March 2010

Sydney's median house price is almost $600,000 - almost double what it was 10- years ago.

But wherever you look, the story seems to be the same: stock is low and prices are going up. ''It's … definitely up at the moment,'' Jeff Torr, an agent at Century 21 Engadine, said. ''There's just no supply of properties.''

Sydney's median house price is $595,745, according to the Australian Property Monitors.

The days of buying a house in the east for $600,000 are gone, same for the northern beaches.

You will only be able to buy apartments in these areas for $600,000.

Source: Sydney Morning Herald -  4 March 2010

The federal government has kept the Australian economy growing strongly while the rest of the world has been devastated by the global downturn, Prime Minister Kevin Rudd says.

The national accounts released on Wednesday - a snapshot of the economy in the three months to the end of December - showed economic growth of 0.9% and the fastest pace in nearly two years.

 "This morning's national accounts confirmed once again that we have kept the Australian economy growing strongly, while other economies around the world remain devastated by the global recession," Mr Rudd said at the National Press Club where he was launching his new hospitals plan.

The quarterly increase was in line with economists' expectations, although the annual rate beat forecasts of 2.4% growth due to revisions to previous quarters.

"These national accounts represent a very solid outcome for the economy, for an economy which is the envy of the developed world," Treasurer Wayne Swan told reporters in Canberra.

"To have grown the economy in what has been one of the toughest years since the 1930s is a truly remarkable feat and the stimulus is providing a firm foundation for the economy."

"The economy has proven remarkably resilient, with the strong outcomes to date providing a solid base for a broadening recovery over the coming year."

JP Morgan chief economist Stephen Walters said the economy's impressive performance was despite the Reserve Bank of Australia (RBA) lifting interest rates three times during the December quarter.

"The economy's robust rate of expansion last quarter, which far exceeded official expectations when the emergency interest rate settings were put in place, explains why the RBA was the first G20 central bank to tighten monetary policy," Mr Walters said.

The RBA raised the cash rate on Tuesday to 4.0%

.

The Australian economy is operating very well, but unexpected growth in gross domestic product (GDP) should signal a winding back of government spending, shadow treasurer Joe Hockey says.

"The Australian economy is performing very well, but we can't look in the rearview mirror, we need to look forward," he said.

"And if the Rudd government continues to spend like drunken sailors at the pub, Australia will pay a very heavy price."

Source: nine news 3/03/2010

The Australian economy is facing a dramatic improvement in its growth prospects, back on par with that seen in 2007 at the height of the resources boom, according to a leading index.

The Westpac-Melbourne Institute leading index of economic activity, which indicates the likely pace of activity three to nine months into the future, posted an annualised growth rate of 6.2% in December.

The result, released on Wednesday, was well above the long term trend growth rate of 2.7%.

The annualised growth rate of the coincident index, which shows the current pace of economic activity, was 1.3%, but below its long-term trend of 3%.

Westpac senior economist Matthew Hassan said the annualised growth rate as measured by the leading index continues to rebound after dropping to minus 6.9% in May 2009 to the plus 6.2% in December.

Australia's economy grew by 0.5% in the year to September 2009, official data showed.

"This large swing is not only the fastest reversal since the economy bounced out of recession in the mid 1970s but also puts the growth outlook back on a par with that seen in 2007 at the height of Australia's resources boom," Mr Hassan said in a statement.

The turnaround had been broadly based with all but one component of the index improving, Mr Hassan said.

"Three of the four monthly components of the index rose in December the share price Index (up by 3.6 per cent); dwelling approvals (up by 2.2%) and US industrial production (up by 0.6%)," Mr Hassan said.

"One monthly component - the real money supply - fell by 0.9%."

Mr Hassan said a run of strong data released since the Reserve Bank of Australia's (RBA) board meeting on February 2 could edge the central bank to lift the overnight cash rate at its next board meeting on March 2.

The RBA surprised financial markets earlier this month by leaving the cash rate unchanged at 3.75%.

Most market economists had expected a 25 basis point rise to 4.0%.

"Data releases since the February meeting, including another surprisingly strong jobs report last week and today's Leading Index result, continue to show a faster than expected upturn in growth domestically," Mr Hassan said.

"The (Reserve) Bank has shifted to a slower pace of tightening and is now keeping its options more open.

"Decisions are likely to remain finely balanced but our central case is still for another 25 basis point rise in March," Mr Hassan said.

Source:  nine news:  17/02/2010

The brief respite for renters appears to be ending, Chris Vedelago reports.  With the economy on the mend and the property market back on the boil, life is about to get harder for Melbourne renters.

Why? Because, as strange as it sounds, the global financial crisis actually tempered some of the worst effects of what had been considered a deepening rental crisis in 2007-08.

Far too few houses and apartments were being built to meet the needs of Melbourne's rapidly swelling population.

In turn, strong property price growth and rising interest rates meant a growing number of renters could not afford to become home owners.

The result? Demand for rental housing soared, Melbourne's rental vacancy rate hit rock bottom and, ultimately, rents skyrocketed.

Back then, the market was awash in grim stories of families priced further and further out of the city; of every property, regardless of quality, attracting scores of applications; of inspection lines that ran out the door; and "rental auctions" where would-be tenants competed to pay rents well above market value.

Australian Property Monitors, which is owned by Fairfax, reports that Melbourne's median weekly rent rose in 2007 by a record-setting 15.8% for houses and 16 per cent for units.

In 2008, rising interest rates (with costs passed on to renters by landlords) and pent-up demand pushed rents up a further 9.1% for houses and 10.3% for units.

By comparison, rental growth hadn't topped 3.6% for houses or 4.3% for units from 2005-06, even flattening out and falling during the minor downturn of 2004.

In real money, the 2007-08 growth spurt saw an increase in weekly rents from $285 to $360 for houses and from $250 to $320 for units.

Meanwhile, the metropolitan rental vacancy rate dipped to as low as 0.9% but never rose above 1.6%  in any month during that two-year period.

The Real Estate Institute of Victoria believes that a vacancy rate of about 3% is "optimal": tight enough to ensure profitability for landlords but flexible and affordable enough to give tenants some choice - a level that hasn't been seen in five years.

No wonder there was so much talk about a rental crisis.

While the REIV says the metropolitan vacancy rate rose to 1.6 per cent in December — the highest it has been in three years — Melbourne's near record population growth and ongoing shortfall in new housing supply are expected to see it tighten once again.

APM is forecasting median rents will rise to $380 for houses (5.6%) and $360 (7.5%) for units this year, the strongest growth rate seen apart from 2007-08.

Mr Papaleo agrees. He says: "[Renters] had a bit of a breather in 2009. I don't see rents running away to double-digit growth in 2010; it'll be a much more modest increase.

"But it's not as if they have got much of an alternative now. With interest rates going up, the first home buyer grant essentially wound back and property prices at an even higher base than before, all these factors will discourage renters from going into home ownership."

 
 Source: Sydney Morning Herald 25 January 2010

House prices are at all time highs in most capitals after more buying in expensive suburbs drove the strongest annual price growth in seven years.  The medium-to-long-term outlook for property prices remains strong as the population grows, incomes rise and demand for houses outstrips new supply, says an Australian Property Monitors' report.  Despite a sluggish start, 2009 ended with the biggest price growth since 2003 on a rise in activity at the top end of the market, the APM December quarterly report released on Thursday says. Median national house prices for 2009 rose by to 12.1%.

Melbourne's prices jumped 18.5% for the year, past the $500,000 mark for the first time.

Sydney's median house prices rose 12.1% over the year, while Perth's annual growth was 8.7%to back over $500,000, a level not seen since March 2008, APM said.

Within Sydney the greatest increases were in City and Eastern Suburbs - 21.4%

then Lower North Shore 21.6%,

Hobart was the second strongest market nationally with median house prices rising over 14% in 2009 while prices in Darwin lifted 13.5% and Brisbane's 7.7%.

Adelaide remains the most affordable capital after posting the slowest median annual growth for houses at 2.4%.

First-home buyers sustained the market in the early part of the year, but "up-graders" and investors ultimately drove the market, AMP says.

Activity in more expensive suburbs benefited from the resilient jobs market in late 2009 and the rising share market.

"The price growth seen in the more expensive suburbs in 2009 has largely been a recovery of the price falls that have occurred since late 2007 and early 2008," APM economist Matthew Bell said.

"This top-end recovery has been completed in most capitals with median house prices surpassing pre-global financial crisis highs for the first time in the December quarter in Sydney, Brisbane, Adelaide and Perth."

Mr Bell said rising interest rates and the expiry of the first home-owner boost at the end of December would slow activity for first-home buyers.

Median unit prices in capitals did not follow the housing trend over 2009.

Darwin units were up 22.8 per cent over 2009, Perth was next with 15.8 per cent growth then Hobart with 14.6 per cent.

Source:  ninemsn & Sydney Morning Herald -  28 January 2010

The property scramble is on.  Supply, or rather, a serious lack of it, is tipped to become one of the driving forces shaping the 2010 residential market.

There may be very little auction activity going on now but industry reports of strong levels of buyer inquiry and open-for-inspection numbers are already being received from across the metropolitan area.

It's not surprising, really, when you consider how 2009 ended. With a clearance rate above 80 per cent for December — the strongest it has ever been — a lot of prospective buyers who failed to get a property last year are still circulating in the market.

"They lost out last year, sometimes more than once, and they're keenly aware that they'll face more new competition this year and further price rises," said Catherine Cashmore of JPP Buyer Advocates.

"They don't disappear; they're still looking. Even average properties are attracting plenty of interest because there isn't enough available to meet demand."

RP Data reports that the number of properties advertised for sale in Melbourne in the month to January 10 was 30 per cent lower than for the same period in 2009.

About 1000 fewer properties came on the market each week in 2009 than in 2008, creating a supply drought at the same time that buyers began to surge back into the market because of government hand-outs, low interest rates and renewed confidence in the economy.

"We had a situation where there were more buyers out there looking for property but fewer properties being added to the market," said RP Data analyst Cameron Kusher.

"The low amount of stock available for sale and continued relative buoyancy of the residential property market should see real estate conditions continue to remain quite healthy."

That's great news for vendors but it means buyers can expect a tough time of it, likely to be forced to pay higher prices, assuming they are actually able to find a property.

REIV said 16 auctions were held around Victoria yesterday, the bulk of them in coastal and holiday areas.

There are more than 40 auctions scheduled for next weekend. The REIV median house and apartment price data for the December quarter will be released on Saturday.

Author: Chris Vedelago
Date: January 18, 2010

Sydney Morning Herald

Sydney tenants have been warned to brace themselves for a return to steeply rising rents as economists predict the sluggish rental growth of 2009 will end.  New figures from Australian Property Monitors, which is owned by Fairfax, show rental prices remained steady in the December quarter, with house and apartment rents in Sydney rising by only 2.2 per cent and 2.4 per cent respectively.

But an economist for APM, Matthew Bell, said a healthier economy, rising interest rates and land tax increases would all cause rents to increase at a higher rate in the coming year.

"It is clear that in 2009 rents were generally kept in a holding pattern as landlords and the market waited to see the end of the global financial crisis," he said.

"Sydney rents are likely to increase by at least double the 2009 rate of 2.2 per cent to approach the $500 per week level for houses."

A Macquarie Group economist, Brian Redican, said incentives for first-home buyers in 2009 also would have lured many people out of the rental market, which would have lessened demand.

"That pressure valve won't be there in 2010," he said. The slow growth in the December quarter was markedly down on the 2007 and 2008 figures, when rents rose by an average of 12 per cent each year.

During that period, the Herald reported real estate agents were having to extend normal inspection times to cope with large numbers of prospective renters.

But despite the flatter market last year, agents said interest from tenants had remained high. "I don't know that it eased that much last year ... there was still very high demand for property and quite low supply," Tim McKibbin, chief executive of the Real Estate Institute of NSW, said.

The drop off in rental growth was driven by the western, inner-west, south-western and upper north shore regions of Sydney, according to APM.

But rents did rise in the December quarter for houses in the eastern suburbs and lower north shore, regions with some of the city's most expensive rents.

Aaron Gadiel, chief executive of the Urban Taskforce, a lobby group representing property developers, said the dwindling supply of housing in Sydney would also continue to drive up rents.

"We're currently seeing the lowest levels of approvals for apartments, terraces and townhouses since 1987," he said.

But Mr Redican said an influx of new housing stock in the later part of 2010 should provide some relief and help stem price increases.

The Tenants Union of NSW said renters should be wary of predictions of rental increases especially from groups with a stake in the property industry.

Steep increases had been predicted in 2009 but had never eventuated, the policy officer, Chris Martin, said. Sydney's average rental vacancy rate rose to a two-year high of 1.6 per cent in November 2009, according to the most recent figures from the institute.

The most recent data available from the Department of Housing, for the September 2009 quarter, showed rents for a two-bedroom flat increased from between 2.8 per cent to 6.5 per cent.

Author: Josephine Tovey
Date: January 13, 2010
Publication:  Sydney Morning Herald

National dwelling values up 10% over first 10 months of 2009

•Sydney values  Up 9.9% to $553,583

•Melbourne values Up 14.9% to $481,247

•Brisbane values Up 6.9% to $450,386

•Perth values Up 6.1% to $498,541

 Based on the rpdata.com residential property database, which is the nation‘s largest withover 226,000 sales in the first nine months of 2009 alone, Australia‘s housing market bounced back strongly in the month of October after little growth in September

Rismark International Managing Director Christopher Joye said, ― Although we forecast a resilient recovery in 2009, we have been surprised on the upside by the  strength of conditions, which reflects Australia‘s better-than-expected employment and growth outcomes.

As interest rates rise over the next 12 to 18 months more normal rates of growth are likely. The removal of the First Home Buyers Grant Boost and higher loan costs are will also result in greater pressure on the rental market, he said.

This data implies that Australian housing is not expensive by overseas standards, and also helps explain our internationally high rates of home ownership combined with very low mortgage default rates.

The biggest story of 2009 has been the strong recovery in the Melbourne and Sydney housing markets. In the three months to end October, home values in Melbourne and Sydney have outperformed most other capitals rising by 4.5% and 3.2%, respectively

Over the 3 months to end October, house values (+3.3%) have also outperformed units (+3.0%). But in the year-to date, units (+10.4%) have generated slightly higher capital gains than houses (+9.8%).

Source: RP Data

• Rents to rise by 5.8pc over next three years
• Landlords will pocket extra $1.9bn
• Supply of housing has "plunged"
  
• 
  

STRONG demand for housing amid a growing population and record low levels of property construction will help to tighten rental markets considerably, pushing rents higher in 2010 and beyond, a report says.

BIS Shrapnel's latest Residential Property Prospects report found rents are expected to rise by an average of 5.8 per cent a year over the next three years.  This compares with a 5.7 per cent increase in 2009 and an average annual rate of 4.4 per cent between 2002 and 2008.

If realised, the anticipated rental increases would result in landlords pocketing an extra $1.9 billion in rents between 2010 and 2012.

BIS Shrapnel senior economist Jason Anderson said the supply of housing had "plunged'' while demand remained very strong.

"With the very low rate of medium and high-density dwelling construction in 2009, it is inevitable that rental markets will tighten considerably in 2010, and remain very tight in 2011," Mr Anderson said.

The report said there would be about 30,700 new medium-density and high-density housing starts in 2009, the lowest level since 1991 and a decline of about 30 per cent from a year ago.

Sydney was expected to experience the highest average annual increase in rents at 7.1 per cent from 2010 to 2012.
Melbourne (5.6 per cent) and Brisbane (5.0 per cent) were also forecast to be above the 4.4 per cent average annual increase experienced between 2002 and 2008.

Rent increases in Adelaide (3.4 per cent) and Perth (3.2 per cent), where housing construction had kept pace with underlying demand, were tipped to be below the national average.

Mr Anderson said the high number of first home buyers was also adding to the pressure on rental markets.

"Many qualifying first home buyers were young adults living at home, accumulating the savings which are now required for home loans," Mr Anderson said.

"A first home buyer moving out of the family home and purchasing a former investment property will have actually reduced the available rental stock."

The report said the housing component of the consumer price index (CPI) had risen 56 per cent since the start of the millennium, well above the 36 per cent rise in the overall CPI and higher than the 55 per cent increase in alcohol and tobacco products.

• By Jordan Chong
• From: AAP
• 30 November 2009

A rebound in economic activity in Asia is positive for Australia, which is already emerging from the global economic downturn, the central bank says. R eserve Bank of Australia (RBA) deputy governor Ric Battellino says it is now 18 years since Australia has experienced negative year-end gross domestic product growth, marking a very prolonged period of economic expansion.

"With the economy having only recently entered a new upswing it is reasonable to assume that we will see this growth extended for a few more years," he said during a speech in Melbourne on Wednesday.

"Over the next few years, Australia is also expected to see a further expansion of the resources sector, including the development of some very large gas projects," he added.

Mr Battellino predicted mining investment - already at record levels as a share of GDP - to rise "substantially further".

"If this scenario eventuates, it will have powerful and broad-ranging implications for the economy," he told delegates attending the 6th National Housing Conference.

Strong population growth and demand for labour, which will underpin immigration numbers, as well as solidly rising household incomes all will boost demand for housing.

In particularly, the construction industry is likely to face substantial competition for workers from the mining sector.

Mr Battellino said while this will be generally positive for the housing sector, there will be challenges.

Ensuring an adequate supply of housing was key.

But Mr Battellino also noted that while there is a consensus that Australia has not built enough dwellings, this was not because housing investment had been cut back.

"If as a nation we want to continue to do this, while at the same time providing enough dwellings for the growing population, the overall amount of dwelling investment undertaken will need to increase relative to GDP," Mr Battellino said.

"That would raise important challenges for the housing industry in terms of its capacity to meet that demand.

"It would, of course, also raise the question of which of the other expenditure components of GDP should bear the offsetting fall in share."

Mr Battellino also noted concerns in the industry that borrowers may not have good enough access to loans and about the cost of new loans for housing.

"However, to date at least, the evidence does not suggest that we should be overly concerned," he added.

Mr Battellino said interest margins on standard housing loans had narrowed a little over the past couple of years, even for the major banks.

"Two years ago, the interest rates charged by the major banks on new variable rate housing loans were about 190 basis points above their cost of funds," he said.

"The margin today is slightly narrower.

"To the extent there has been a widening in banks margins, it has been on their business lending.

"So far, it appears that there is still sufficient competition in the housing loan market for lenders not to have been able to widen their margins."

Meanwhile, approvals of new housing loans remains relatively high, indicating a degree of home buyer activity that is usually associated with rising house prices.

"At the same time, however, existing borrowers are continuing to take advantage of the low level of interest rates to make accelerated loan repayments, which is restraining the overall growth of housing credit," Mr Battellino said.

"Even so, housing credit is growing at an annual rate of seven to eight per cent, a pace which is more than adequate to fund the new investment in housing that is needed."

On housing prices, Mr Battellino said while the ratio of prices to household income in Australia was higher than it was 20 years ago, this was largely the result of a fall in inflation over the same period.

This had allowed nominal interest rates to "cycle around" a lower average level that was previously the case.

"That is, lower interest rates have allowed households to take out bigger home loans, without increasing housing loan repayments," he said.

"In turn this has given households more buying capacity in the housing market, which has been reflected in house prices."

Even so, arrear rates on housing loans in Australia are lower than in the US, where the ratio of house prices to income is lower than in Australia.

Mr Battellino said Australian households are able to sustain higher house prices because they spend less income on non-housing consumption and also pay lower health costs than in the US.

"Australian households therefore have greater capacity to service housing loans," he said.

"Second, the level of gearing in the United States housing market is noticeably higher than in Australia.

"This may reflect the fact that Australian households are more active in paying down their loans after buying a home, possibly because owner-occupied mortgage interest rates are not tax deductible here as they are in the United States.

The scene is set for a home construction boom after a record number of Australians rushed to take advantage of the First Home Owners Boost in September before the scheme was wound back from October.  In September more than 49,000 Australians took out mortgages for purposes other than refinancing, a seasonally adjusted record.

About 7600 were construction loans, the most since 1994.

Borrowers who before September 30 entered into contracts to build homes were eligible for the $14,000 temporary First Home Owners Boost on top of the $7000 first home owner grant.

From October 1 the boost fell to $7000 and will vanish in January.

First home owners buying existing houses were eligible for $7000 on top of the $7000 grant, but are now able to get a boost of only $3500, and will get nothing from January.

''It's one last surge,'' said ANZ economist Alex Joiner.

''Things will moderate from what has been frenetic activity over the last few months. This is not only as the grants are wound back but also as interest rates rise.''

Westpac economist Andrew Hanlan said the surge would ignite a construction boom.

''The upswing should kick in late this year and become a key growth engine of the economy through 2010,'' he said.

''It's not only first home buyers. Upgraders are continuing to respond to what are still extremely low interest rates.

Finance to upgraders is up 34 per cent so far this year.''

The Bureau of Statistics figures show lending to first home borrowers rose an extraordinary 86 per cent in the year to September, with lending for construction up 84 per cent. Lending to investors is up 18 per cent.

The latest RP Data house price index shows the typical Sydney price passing $600,000 and the typical Melbourne price approaching $500,000 after rising 9 % and 13 % respectively in the past year.

Apartment prices are lower and the houses bought by first home buyers are usually much cheaper.

The Government yesterday opened tenders for the second round of grants from the Commonwealth's $512 million Housing Affordability Fund, which will subsidise the infrastructure costs of developments in return for guarantees that a certain proportion of the homes will be made available to low and middle-income earners.

An Essential Media poll released yesterday found that only 41 per cent of Australians expected the latest interest rate increases to make them worse off and only 10 per cent expected to be much worse off.

Asked what the interest rate rises indicated, 53 per cent said they showed the economy was getting better.

Only 12 per cent said the rises showed the economy was getting worse. The ANZ measure of job advertisements slipped 1.4 per cent in October, after gains of 3.7 and 5.5 per cent.

''It's not a concern, yet,'' said CommSec economist Craig James.

''The lift over the past three months is still the strongest gain for almost two years.

''It is understandable that employers are still a little cautious to take on more staff.

Most will meet demand by getting staff to work longer hours. Only when the lift in work looks sustainable will they hire.''

Source:   Sydney Morning Herald

10 November 2009

Author: Peter Martin, Economics correspondent

The rush to buy homes before the reduction in the boost to the Federal Government's First Home Owners Grant has helped drive the number of new home loans to the highest level in seven months, official data show.

The number of home loans, seasonally adjusted, rose 5.1 per cent in September after falling 0.6 per cent in August.

That's the best result since the 5.3 per cent jump seen March.

"It’s obviously above what the market was expecting," said Housing Industry Association chief economist Harley Dale.

"It looks like quite a strong result." Analysts had predicted a 3 per cent rise in the monthly figure.

"You’ve got further growth and an indicator of how much new home building there will be six months down the track," he said.

First home owners made up 26.1 per cent of the total, up from 24.7 per cent.

The average loan size for first home buyers rose $3800 to $274,600 in September, while the average loan size for all owner-occupied housing rose $2900 to $269,500 in the same period.

 Buyers entered the housing market in September while the full Federal Government stimulus remained in place and interest rates remained low.

The Federal Government cut back the boost to the First Home Owners Grant at the end of September.

It will remain in place at a lower level until the end of the year.

"Established house approvals rose substantially, by 5 per cent, suggesting some underlying strength in housing demand," said TD Securities Annette Beacher.

"RBA already expects demand to cool post fiscal stimulus, hence a soft October will not be a surprise.

And indeed may be welcome, given the acceleration of house prices this year as demand chases short supply."

In October, the RBA raised rates 25 basis points, off a 49-year low of 3 per cent. After another rise this month, the official cash rate now stands at 3.5 per cent.

Source: Sydney Morning Herald, 9 November 2009

Author: Chris Zappone

The property pundits have been gazing into their crystal balls once again, and the outlook for the next few years appears rosy.  A recent report from QBE Lenders Mortgage Insurance projects double-digit growth in median house prices for all capital cities until June 2012, including growth of 19 per cent in Melbourne.

While first home buyers are often heralded for spurring this kind of growth during the "up" phase of a property cycle, their role may not be as significant as many people think.  Yes, first home buyers tend to enter the market in greater numbers when interest rates are low and affordability is higher.  However, these buyers account for less than 10 per cent of all purchasers, so they don't have the critical mass required to influence price growth significantly.  In addition, first home buyers are extremely price-sensitive.

They don't have as much equity as returning home buyers, so they are often forced to borrow a sizeable percentage of the purchase price and live on a tight budget.

When rates begin to rise again, as they are doing now, many first home buyers become concerned that they won't be able to meet mortgage repayments, and the burst of activity begins to peter out.

First home buyers usually purchase at the lower end of the market, so even when the value of their property rises substantially, it doesn't contribute much to overall median price movements.

If a first home buyer purchases a $300,000 house, and the property's value increases by 7 per cent a year, it will be worth $21,000 more after one year — barely nudging the wider median price.

By contrast, investors are more consistent participants in the property market, because their cash flow is boosted by rental income and negative-gearing tax breaks.

They also account for a higher proportion of buyers at any given time; about 30 per cent. Additionally, they tend to buy around the middle of the market, so their properties exert a stronger influence on median values.

If an investor purchases a $500,000 property that grows at 7 per cent a year, the asset will be worth an extra $35,000 after one year.

Multiply that kind of increase across the investor market, and you'll see where a major driver of median price growth really lies.

The other major contributors to median price growth are returning home buyers seeking to upgrade or downsize.

They're a bigger proportion of the market than first home buyers or investors — about 60 per cent.

They also have plenty of equity from their previous home, and tend to buy at the middle to upper levels of the market.

If a returning home buyer purchases a property for $800,000, and that property grows at 7 per cent a year, it will be worth $56,000 more after one year.

That's almost three times as much price growth, in dollar terms, as their first home buying counterparts can achieve from a $300,000 property.

In short, returning home buyers influence median price growth far more than newcomers because they're a bigger mass with more buying power.

Right now, first home buyers are on their way out of the property market because rising interest rates will lessen affordability.

At the same time, investors are on their way into the market, buoyed by the knowledge that rising rates signal a stabilising economy.

Investors will compete in the market until rates rise to unsustainable levels, while first home buyers will lie low.

Returning home buyers are more risk-averse than investors, so they'll wait until they feel certain that the economy has recovered.

The property market will peak when investors and returning home buyers are active at the same time.

I expect investors will come back to the market first, followed by returning home buyers about 12 months later.

This activity will drive competition — and in all likelihood push median price growth to the levels predicted by QBE LMI.

In summary

■Melbourne's median house price could rise almost 20 per cent in three years.

■First home buyers have a sporadic market presence.

■Investors and returning home buyers will drive the lion's share of growth.

 Author: Mark Armstrong
Date: 10 November 2009

Australian inflation pressures eased in October, and the annual pace of price gains is now at its slowest in seven years reducing the chance of the Reserve Bank lifting interest rates this year.

The monthly inflation gauge for October fell 0.3 per cent in October from September, according to the TD-Melbourne Institute's latest reading.

Australia's headline consumer price index (CPI) rose 1.0 per cent in the September quarter, for an annual rate of 1.3 per cent, the Australian Bureau of Statistics (ABS) said today.

It was the slowest annual pace for headline inflation since the June quarter of 1999, when it printed 1.1 per cent.

The Reserve Bank of Australia trying to dampen inflation before Australia's economic recovery really gathered pace.

The central bank lifted the cash rate by 25 basis points to 3.25 per cent on October 6, in its first rise since March 2008.

The ongoing strength in the Australian dollar has considerably dampened the price of imported goods.

Contributing most to the overall change in October were price falls for private motoring, fruit and vegetables, and financial services, she said.

These were offset by rises in prices for holiday travel and accommodation, eating out and takeaway foods, and for books, newspapers and magazines, Ms Beacher added.

World Bank managing director Juan Jose Daboub says Australia can be a model for developing nations struggling to recover from the global financial crisis.

Australia's success with macro-economic reform over the past 20 years should be an example to the world's poorest countries, which received $US59 billion ($A64.4 billion) in aid in 2009, Dr Daboub said during a visit to Australia this week.

"The many reforms that you have taken on in the last 20 years have paid off," he told the Sky Business Channel on Sunday.

These include macro-economic stability, flexible labour markets and nurturing an open economy, he said.

He also praised the "persistence and the consistency" of the reforms.

"I look at Australia as a model that others can follow," he said.

The World Bank expects GDP of all developing nations except China and India to grow by 2.5 per cent in 2010 after falling by 2.2 per cent this year.

"This is a recovery but there are still fragilities and there is still (the) risk of unemployment (growing) at dimensions that we need to be very concerned about," Dr Daboub said.

The World Bank expects the combined GDP of high-income developed nations including Australia will grow by just 1.3 per cent in 2010 after this year's 4.2 per cent drop.

Source:  ninemsn 2-11-2009

Some are the height of chic, style and elegance; others are simply top places to live. But for people who want to scale the very pinnacle of apartment living, Sydney's best 10 developments of the past decade are the buildings in which to own.

When Domain Apartments launched exactly 10 years and one day ago today, apartments were still more commonly known by the far less sophisticated "flats" and "home units" and to most they were simply cheap substitutes – or half-way homes – to what all hearts really desired: a house.

It's been the revolution in the design of apartments, however, ever since Harry Seidler's 1999's Horizon first pierced the clouds, that's helped usher in a revolutionary shift in attitudes. As the boutique buildings and classy complexes took shape across Sydney to accommodate a rapidly growing population, apartment living suddenly started to become terribly fashionable, even for generations of Australians reared on the fond dream of the quarter-acre block.

And it's our top 10 developments of the decade – Horizon, Altair, Republic II,        Jacksons Landing, Bennelong, Mondrian, Macquarie Apartments, Walsh Bay, Rockpool and Newington – that are helping mould Sydney into a 21st-century high-density haven.

Poor cousins to stylish siblings "Ten years ago, apartments really were the poor cousins to houses," says the author of the book Homes in the Sky: Apartment Living in Australia, Dr Caroline Butler-Bowdon.

"But the cultural perception of apartment-living has changed considerably in the last 10 years and they've now assumed a role at the centre of things. "That's attributable, in part, to the considerable growth in the numbers, and also choice, of apartments.

As a result, there's been a dramatic reassessment of apartment living as an alternative to having a house and they've become the subject of a great deal of hype."

Today, one in five Sydneysiders lives in an apartment and the demand for both high-end and affordable apartments has led to some model developments, good prices, healthy capital growth and high rental yields.

Between June 1999 and June 2009, the median price of Sydney apartments increased by 66 per cent, from $234,000 to $388,000, according to Australian Property Monitors (APM), equating to an average annual capital return of 5.2 per cent.

"But over the same period, the median price of Sydney houses increased by 86 per cent – an average annual rate of 6.4 per cent – from $294,000 to $547,000," says an APM economist, Matthew Bell.

In addition, more people are looking at units now because of their affordability and lifestyle benefits, advises the research director of RP Data, Tim Lawless.

"Empty-nesters are increasingly moving in because of low maintenance and because they're in areas closer to the facilities of the city, while single people and professionals are the other large sectors of the market.

"Going into the future, when you add in the current yields – 5.4 per cent for units and 4.4 per cent for houses – I think you'll find returns on both much more comparable."

Completed in 2003, its $65 million worth of real estate sold out completely in two weeks flat. Another building recognised for its environmental smarts is 2001's Altair at 3 Kings Cross Road. Designed by Tina Engelen and Ian Moore, it won the 2002 title of best multi-occupancy residential building in the world, with a cross-ventilation system airing apartments. "It was about good ventilation, sun-shading and lino floors from an environmental point of view," says architect Moore, who these days designs alone. "It's also one of the most efficient buildings, with an unprecedented 93 per cent of the floor space able to be sold."

Prices have risen 80 per cent for one-beds since off-the-plan sales and 92 per cent for three-beds, says a director of Belle Property Scott Aggett.

In the same period, Pyrmont's Jacksons Landing began construction – a sprawling development on former industrial land on the harbour, with different parts of the complex completed from 2001 to 2008. Prices of an average three-bed apartment have risen from $820,000 to $1.365 million – a rise of 66 per cent – according to developer Lend Lease.

Another large-scale development, Newington, on the western side of Homebush Bay, by a Mirvac-Lend Lease consortium, has been praised both for its sensitive environmental design and its style. With different stages completed from late 1999 to 2008, it's now home to 4,000 people and a typical two-bedroom apartment has grown in price from $398,000 in 2004 to $497,000 now, a rise of 24.8 per cent.

……..

Top 10 Sydney's most significant apartment blocks of the decade

Horizon A 43-storey tower in Darlinghurst, designed by Harry Seidler and finished in 1999.Famous for wave-like balconies and stunning views.

Altair A 19-storey building in Kings Cross, designed in 1999 by Engelen-Moore and completed in 2001. It has a sophisticated system of cross-ventilation, and won a world architecture award in 2002.

Mondrian This Waterloo development, designed in 2000 by Frank Stanisic and completed in 2003, won the Wilkinson Award for density-living and good environmental design in 2003.

Walsh Bay Completed in 2002, is a high-profile recycling of disused wharf structures near The Rocks, with work from architects including PTW, Bates Smart and Clive Lucas Stapleton.

Rockpool Designed by Alex Popov at Mona Vale, this 1999 project continues a strong tradition of walk-ups in the upper end of the owner-occupier market.

Republic II In Darlinghurst, by Burley Katon Halliday, completed in 2000. Uber-trendy in its day.

Jacksons Landing This Pyrmont development involving many architects has been a 10-year project of recycling a former industrial suburb into high density living, with more than 1300 dwellings.

Bennelong At Circular Quay along from the Opera House has been one of Sydney’s most reviled buildings – and at the same time, one of its most desirable. Nicknamed The Toaster.

Macquarie Apartments in the city, by Renzo Piano, is a widely-awarded 17-storey building completed in 1999.

Newington This Homebush development is a new suburb of strata homes built on sustainable principles

Author: Susan Wellings
Date: October 26, 2009
Publication:  Sydney Morning Herald

Numbers alone do not drive housing markets but the high levels of migrant intake will be responsible for Sydney's next boom. Migrants have historically been high housing achievers in Sydney, underpinning both our home-ownership rate and the prices paid for houses.

It's reflected in the higher mortgage payments for recent migrants.

If you're looking for a specific date on when we can expect the next property boom – or, indeed, whether or not we're in the early stages of one already – you won't find the answer here.

It's simply impossible to predict. Yet, an economist from the Fairfax-owned Australian Property Monitors, Matthew Bell, doesn't envisage any return to negative growth for at least the next few years.

And another expert, a director of Property Planning Australia, Mark Armstrong, says the real impact of the current upturn will be contingent on investors returning in a big way.

He expects the next boom to peak in 2011. But mum-and-dad investors are not driven by economics alone, so the ability to forecast property-buying behaviour can be difficult unless the herd stampedes in one direction.

What we can be sure of, Bell says, is that high migration levels, as part of high population growth, will only have an upwards effect on house prices in Sydney, particularly when there's simply not enough supply coming on line.

 "With investors only just returning to the market in significant numbers in the second half of 2009, construction of new dwellings is lagging behind estimated demand for new properties by a long way," he says.

"Other factors restricting supply at the moment include difficulty for developers to get finance for new developments and the expense associated with new properties and developments due to regulation and taxation.

"With the [higher] birth rate, there is obviously a longer time lag before that extra population needs to be housed in new dwellings but as business migrants enter Australia's cities, the need for available housing is much more immediate."

So, back to those recent migrants. The average monthly housing-loan repayment for recent migrants was $1095, compared with $974 for long-standing migrants and $890 for those born here, according to the 2001 Census.

And that was before the last big housing boom of 2002-03, which Professor Graeme Hugo from the University of Adelaide says was undoubtedly partly fuelled by non-resident buyers purchasing investment properties for rental.

The jump in migration levels enabled Australia to surpass 22 million residents this month, with the 400,000 population spike of the past 12 months aided also by the highest birth numbers for many years and the lowest-ever death rate.

These annual shifts in the level and composition of the population set off powerful changes in household formation and housing consumption, which then will ripple through the residential market.

With the benefit of hindsight, the dramatic demographic changes sooner or later become apparent in house prices, from the medium to the megamillion-dollar homes.

And the recent migrants have the wherewithall, since they are well represented in the nation's high-income earners, with 6 per cent earning more than $1500 a week, compared with 4 per cent of Australian-born people. Some 22 per cent of Australians were born overseas, according to the 2006 Census. Sydney currently settles about 32 per cent of migrants, down on the 36 per cent of four years ago, a drop presumably in part due to rising inaffordability. However, Australia's net migration is rising, as in 2007-08 it was 278,000, up from just 100,000 five years ago.

Estate agents don't need to be reminded that during the 1980s, the net gain from overseas migration jumped rapidly from 49,000 in 1983-84 to a 157,000 peak in 1988-89, which coincided with the biggest property boom in living memory.

The 2006 Census indicated a 72.4 per cent home-ownership status among Australian-born residents. For migrants who had arrived between 2002 and 2006, the home-ownership rate was 30 per cent. But the likely direction in ownership intention no doubt comes from the home-ownership rate of 76 per cent for overseas-born Australians with pre-2002 arrivals.

Migrants from Europe, mostly Italian and Greek, achieved very high levels of home ownership, in excess of 86 per cent after 10 years of settlement, according to earlier ABS data.

As the sharpest property spruikers know, property booms never last but neither do property busts. And so anyone can enjoy the next positive property cycle so long as they are in it for the long-term price appreciation.

But the greatest capital growth will always be where there is the highest demand for desirable property and the supply is scarce. Sydney has consistently outperformed the rest of Australia because we have almost run out of land within the basin.

So Sydney's price booms tend to extend ever westward from on or close to the harbour or water's edge.

APM's Bell believes the affluent suburbs that have fallen the fastest will be the fastest to rise in the current rebound.

What of the impact of the boost to the first-home buyer grant?

That's what kicked off the most recent boom: the sub-$500,000 first-home buyer market.

The end of the boost on September 30 seems to have sapped much of the frenzy, and quite possibly the frothy premium, that came from the rush to buy.

Source:  The Sydney Morning Herald

Author: Jonathan Chancellor
Date: October 26, 2009

House prices may surge about 20 per cent or more in some of Australia's largest cities over the next three years, driven higher by on-going shortages.

Adelaide - previously considered among the more affordable cities - may lead the advances, with prices likely to be 23 per cent higher by June 2012 from a base of June 2009, according to the QBE LMI Housing Outlook.

Sydney prices may jump 21 per cent in that period, while Melbourne prices may be 19 per cent higher, the report said.

The increases are likely even with the expected rebound in interest rates as the economy recovers.

The Reserve Bank last week lifted official interest rates from near half-century lows to 3.25 per cent and signalled more rate rises to come.

''While interest rates are forecast to rise over 2010-2012, the outlook for the Australian housing market looks positive,'' said QBE LMI chief Ian Graham.

''The current low interest rates will be the main driver for house price increases, which are expected to accelerate through to 2012, particularly in those markets with positive affordability and continuing undersupply of housing.''

Prices in the Australian housing market have been driven up by a chronic shortage of homes, estimated be about 56,600 in 2009.

The projected price increases will add to huge increases over the past decade.

Based on calculations from data contained in the report, provided by the Real Estate Institute of Australia and BIS Shrapnel, the median house price in Sydney increased by 101 per cent from June 1998 to June 2008. (double in value)

Over the same 10-year period the median house price in Melbourne more than doubled, rising 116 per cent. Brisbane values soared 202 per cent while Adelaide's increased 208 per cent during the same 10-year stretch.

Perth's rose 211 per cent and Hobart's soared 203 per cent. The median house prices of Canberra increased 191 per cent, while in Darwin they increased 135 per cent.

In 2008, home prices eased about 3 per cent nationwide, bucking the trend of price drops of nearly 20 per cent in the US, UK, Ireland and Spain.

The shortages have been driven by a variety of factors including population growth, tax advantages favouring home ownership and real estate investment, and price speculation by home buyers and investors.

Also, bottlenecks in the approval process for home building have been blamed.

Other factors driving prices include the First Home Owners Buyer's grant which was reduced this month, but won't be phased out until the end of the year.

Rising home prices, along with the economy's strength has prompted the Reserve Bank to warn of the risk of a housing bubble forming. Runaway home price rises ''pose elevated risks of problems of over-leverage and asset price deflation down the track,'' RBA governor Glenn Stevens said in July.

This month the RBA raised interest rates to 3.25 per cent from their ''emergency'' setting of 3 per cent, where they had been moved to insulate the economy from the impact of the global downturn.

Housing affordability

The current household debt to income ratio is around 155 per cent, up from about 130 per cent at the time of the last RBA rate rising cycle in 2003, Westpac said today, in releasing the September consumer confidence number.

Rising home prices has been a contributor to household debt, analysts say.

According to Morgan Stanley's Gerard Minack, the ratio of average house prices to average income in Australia is now just under 5 compared with around 3.5 times at the top of the US housing cycle.

Bis Schrapnel senior project manager Angie Zigomanis said that even if a housing price bubble popped, a correction would not necessarily mean huge price falls.

The median Sydney home price in 2009 is $544,000, lower than the 2004's median house price of $552,000.

''Corrections are not like share market corrections, where people sell off all their shares,'' he said. ''People just sit in the property and wait for things to improve.

You don't have this turnover, aside from people who are forced to sell.''

Mr Zigomanis said anything that had an impact on Australia's overall economy could affect home prices.

Source:  Publication:  Sydney Morning Herald Author: Chris Zappone
Date: October 14, 2009

It was 17 years ago that Penta first began operating from our first office in Balmain, Sydney.

We then expanded into Indonesia and later Malaysia and China.

Head Office moved into the Sydney CBD in 1999.

We now have some 10 offices and operate extensively having property stock throughout Australia, Bali and Malaysia.

The directors would like to take this opportunity to sincerely thank all of our staff, past and present for being a part of the ''Penta Team''

We would also like to thank all of our past and present purchasers, clients, friends and associates.

We look forward to operating and growing into the future.

The capital growth associated with apartments has virtually been on par with detached housing over the last five years, putting to bed the myth that houses appreciate at a faster rate than units.

Many home buyers and investors have adopted the philosophy that houses will generally outperform units. Most would argue that the underlying value of the land associated with a house is the real driver of capital growth. However over the last five years there has been little difference between the two property types based on the rate of capital growth. Nationally, houses have recorded an annualised rate of capital growth of 4.8 percent while unit values have increased by 4.7 percent per annum over the same period.

The equivalent level of capital growth associated with units is a relatively new phenomenon. Over the last ten years houses have outperformed units by about two percent per annum.

The improvement in capital growth associated with units may be attributable to housing affordability. Based on the national house value ($506,000) and national unit value ($409,000), units are about $100,000 more affordable than houses; a fairly compelling differential for many home buyers.

Another reason for the improvement in unit values is the changing demand side factors in the Australian market place. More baby boomers are downsizing from their empty nest; twenty and thirty something’s are more interested in living in the same location as where they work and play; and the lack of purpose built student accommodation has seen demand for units increase markedly from the overseas student sector.

Developers have responded accordingly, introducing units designed for a very specific segment of the market: luxurious boutique apartments for the empty nesters, smaller one and two bedroom apartments with minimal kitchen facilities for the young professionals and tiny apartments with communal social areas for the student market are just a few examples.

Additionally, units tend to provide higher rental yields than houses. This is partly due to the fact that unit developments are typically located in areas that have high rental demand: close to major transport networks, employment nodes or retail centres.

With population growth now projected to be well beyond expectations (Treasury recently announced that the Australian population is projected to reach 35 million in 40 years time; 7 million more residents than was originally forecast) and strategic land supply likely to remain constrained for a long time, the demand for well located unit projects is likely to increase.    

source: RP Data Group  -  25-9-09

Despite the world economic slowdown and a reduction in skilled migration, Australia’s population growth continues to surge ahead, creating unprecedented demand for Australian housing.

Over the 12 months to March 2009 Australia’s estimated population has increased by just over 439,000 residents, fuelled by continuing increases in net overseas migration and a climbing rate of ‘natural increase’ (births outweighing deaths). In raw numbers, these recent growth figures are the highest on record. In percentage terms, the growth rate of 2.1% hasn’t been this high since the baby boom. Australia’s estimated residential population now sits at almost 21.8 million persons.

Whilst the government has cut some skilled migration, other forms of migration are still powering ahead. The other primary driver of the strong net migration figure relates to the fact that far fewer residents are leaving Australia. The latest ABS data (July 2009) shows a 17.2% decline in the number of permanent residents departing for overseas over the last year.

The last year has seen 278,239 new overseas migrants (accounting for just over 63% of population increases) and 160,822 more births than deaths (approximately 37% of population growth). Based on July migration figures, people born in India accounted for the largest proportion of new settlers to Australia (12.1%), followed by people born in China (11.8%), the UK (11.4%) and New Zealand (10.9%).

On a state-by-state basis, Queensland recorded the greatest total increase in population over the last year, with a population gain of 112,666 persons. This result is slightly greater than the increase of 112,454 persons in New South Wales.

If the growth rate is expressed as a percentage of the total population, Western Australia is the clear leader with the estimated residential population increasing by 3.1%, whilst Queensland comes in second with population growth of 2.6%. At the other end of the spectrum Tasmania has recorded the slowest rate of growth at just 1.0% followed by South Australia where the population increased by 1.2% over the year.

New South Wales remains the most populous State in Australia, home to just over 7 million residents or 32.5% of the total population of the country. Combining the three largest states, New South Wales, Victoria and Queensland account for more than three quarters of the country’s population (77.4%).

It has not just been the rate of population growth over the last year which has been so impressive, Australia’s population has been ramping up for some time. Over the last five years Australia’s population has increased by almost 1.7 million persons at a rate of 1.7% annually over the period.

The increase in population creates additional demand for housing. The 2006 Census indicated that Australia’s average household size was 2.6 persons. Based on population growth alone and not considering other factors such as reducing household formation rates and demolitions, population growth over the last quarter of 109,765 persons would have created demand for around 42,217 new dwellings.

Despite this extra demand during the quarter, just 31,566 dwellings commenced construction. The June quarter data shows a further reduction in commencements, highlighting the disconnect between housing supply and population growth. The cumulative gap between supply and demand has been estimated to be around 200,000 dwellings and growing.

Such strong population growth should be viewed as a very positive outcome for Australia. A growing population creates more demand for our domestic products and services which in turn provides a natural stimulus to the economy.

Importantly, there are a wide variety of challenges that accompany such a strong rate of population growth. We need to see housing construction run in parallel with demand and there needs to be a Government strategy that is aligned with providing the essential services and infrastructure required by a growing population base.

Clearly these challenges are not being met: as a nation we have under built and housing is now critically under supplied. The flow on affect from this under supply will mean consistent upwards pressure on housing prices and rental rates which will lead to further issues associated with housing and rental affordability.

source: RP Data Group - 2 October 2009 

THE Australian dollar appears headed towards parity with the US dollar after Reserve Bank governor Glenn Stevens agreed the economy's strength could drive it"way up" to $US1.10. The dollar jumped after Mr Stevens also suggested that the Reserve Bank would not be “too timid” in further increasing the official interest rate, breaking through US92c to reach 14-month highs.

His comments startled foreign exchange market analysts and encouraged money markets to bet that the Reserve would lift its cash rate from 3.25 per cent to at least 3.75 per cent before Christmas and keep lifting next year, the Australian reports.

“I tend to agree with him,” the Commonwealth Bank’s chief currency strategist, Richard Grace, said of Mr Stevens’s Aussie dollar bullishness.

 But while Mr Stevens suggested the dollar’s rise was the result of Australia’s economic vigour, Wayne Swan warned that it would hurt farmers and other export industries.

“I do understand some people will do it really tough as a consequence of a higher dollar,” the Treasurer said.

Since October 2, just before the Reserve Bank lifted its 3 per cent “emergency” cash rate, the dollar has gained nearly 7 per cent, from US86c to US92.11c in European trading last night.

The dollar’s rise could further increase the tension between the Reserve Bank’s rate rise move and the Rudd government’s rejection of calls to unwind its budget stimulus more quickly.

In theory, an expansionary budget policy pushes up an economy’s exchange rate.

The Reserve Bank is not intervening in foreign exchange markets to dampen the currency’s ascent, which is akin to a policy tightening that mostly hits exporters and businesses that compete against imports. But it also contains inflation by making imports cheaper.

The Australian sharemarket rose again yesterday on the back of improved investor confidence in the Australian and global economies, with the All Ordinaries index gaining 28.5 points or 0.59 per cent to hit a one-year high.

Mr Stevens was asked at a breakfast function in Perth whether the Reserve Bank had any tools to prevent speculators driving the Australian dollar to $US1.10.

Mr Stevens replied that, rather than speculators, there usually was a rational reason for big exchange rate movements.

“You could do a scenario where the exchange rate goes way up,” he said.

“We’ve got one of the better-performing economies in the world. Even at very low interest rates, we still have a positive differential and we’re a country where the people here are, I think, reasonably confident about the future and foreigners are fairly confident about our future, and it’s not entirely surprising that they’re a bit keen on the currency.”

Mr Stevens suggested that this could change if economic recoveries in other countries surprised on the upside.

“But you could do a scenario of the one you suggest and, in that world, perhaps inflation is lower, but the reason the exchange rate is up there is probably that there are some very strong growth dynamics and trade dynamics at work here.”

The Australian dollar has not traded at parity with the US dollar since the local currency floated in late 1983, but appeared headed towards this level before the global crisis hit.

Source:  The Australian  By Michael Stutchbury  16  October, 2009

A luxury Hong Kong apartment has become Asia’s most expensive property, selling for $61 million.

The five-bedroom, 68th floor, apartment (at right) in Hong Kong’s exclusive 39 Conduit Road development sold to an unnamed Chinese businessman this week.

Each square foot of the property costs $9993, making it the most expensive property in Asia by floorspace, according to Henderson Land Development, which handled the sale.

The apartment has views over Hong Kong's harbour, and the building boasts an outdoor yoga gym, fitness centre and ‘aroma spa’.

While the sale is believed to be an Asian record, another unit in the building came close to eclipsing it, selling for $55 million recently.

The sales cement Hong Kong’s position as one of the world’s most expensive markets for real estate as wealthy investors from mainland China, flush with cash from China’s booming economy, snap up premium property.

Despite its huge price tag, 39 Conduit Road is far from being the world’s most expensive apartment.

That title currently rests with an apartment in central London, which comes with a price tag of $203 million.

The apartment, located in St James’s Square close to 10 Downing Street and Buckingham Palace, caused a stir last year when details of its construction emerged. It is set to be one of 6 apartments being carved out of a seven-story office blog, according to The Times.

The apartment’s developers paid $220 million for the entire building in 2007.

What is said to be New York City’s most expensive apartment, a penthouse near Central Park, was recently listed at $86 million.

Source: 16/10/2009  By Stuart Fagg, ninemsn Money

SAVVY small-business owners should be taking advantage of the changing demographics in Australia, specifically the huge rise in immigration and the business opportunities for local enterprises these migrants bring with them.  Australia's population recently passed the 22 million mark, with new migrants making up a significant contribution to that figure.

"Arguably the unsung hero of Australia's defence against the (global) downturn has been our magnificent population growth,''PKF enterprise Advisers national chairman Chris Allen said.

"People power is part of what is driving us along, relative to others. Put simply, more people equals more customers and therefore more jobs.''

Mr Allen was commenting after the release the PKF's second annual Business and Population Monitor, which found that Australia's growing population had helped it escape the worst of the global financial crisis.

He said the steady stream of migrants had increased the demand for housing, goods and services - everything that was needed for them to start their new lives in Australia - and the sort of things provided, for the most part, by small businesses.

"Because Australia's relatively highly-skilled migrants earn relatively high incomes, these people go on to spend their income, and in spending they create demand for more workers,'' he said.

"This makes them a 'good deal' for Australia's economy.''

PKF's Matthew Field said the challenge to small businesses was to identify the gaps and address them.

He said that, in Sydney in particular, migrants tended to gravitate to their own ethnic centres or the new growth areas that were affordable, the corridors in either the southwest or northwest of Sydney.

Mr Field said small businesses needed to be aware of cultural sensitivities, especially among the older new Australians.

"Older immigrants are generally set in their ways and find it difficult to adapt to changes, but the younger immigrants easily adapt to new situations,'' he said.

"The younger ones say 'this is my new life' and their spending patterns are reflected in this attitude.''

Homebush in Sydney's inner-west is a melting pot of Chinese, Korean, Russian, Middle Eastern and lately Indian and Sri Lankan migrants, and its shopping village reflects this.

Classic Kebab, Pide and Pizza co-owner Sefa Kuluk came out from Turkey in 1992 and found things quite strange, especially the food.

"I didn't like anything but then you get dragged into it and start liking it. But kids automatically adapt to things the first time and I think the young crowd here will definitely help our business,'' he said.

Source: The Daily Telegraph by Jenny Dillon 13 October 2009

The world's largest economies took the biggest hit in the World Economic Forum's second annual Financial Development Report. Global financial centres still lead in the report's Index, but the effects of financial instability have pulled down their scores compared to last year. The United Kingdom, buoyed by the relative strength of its banking and non-banking financial activities, claimed the Index's top spot from the US, which slipped to third position behind Australia largely due to poorer financial stability scores and a weakened banking sector.

 The Financial Development Report ranks 55 of the world’s leading financial systems and capital markets. It analyses the drivers of financial system development and economic growth in developed and developing countries to serve as a tool for countries to benchmark themselves and establish priorities for reform.

 The rankings are based on over 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors.

                                                                Rankings

                                                1              United Kingdom  

                                                2              Australia  

                                                3              United States  

                                                4              Singapore  

                                                5              Hong Kong                         

                                                6              Canada                                

                                                7              Switzerland                       

                                                8              Netherlands                      

                                                9              Japan                                   

                                                10           Denmark                            

                                                22           Malaysia                             

                                                26           China                                   

                                                38           India                                     

                                                48           Indonesia                           

The financial crisis was acutely felt in most global financial systems and caused most countries’ scores to drop significantly compared to 2008.

“The change in scores does demonstrate the implications of the downturn on our assessment of the long-term development of financial systems,” said Nouriel Roubini of New York University and Chairman, RGE Monitor who is the lead academic on the report.

Germany and France suffered a heavy fall in overall scores that pulled them out of the top 10. They dropped in the rankings but demonstrated financial stability scores that were significantly higher than the United Kingdom and US. Australia showed particular strength this year, a trend that is echoed in many Asia Pacific economies.

The breadth of factors covered in the report means that countries with high financial instability scores like the United Kingdom and US could still achieve a high relative ranking in the Index due to other strengths.

“We hope this report will provide some insight as to how the financial crisis has affected the world’s major financial systems. It draws attention to the diversity of factors beyond financial stability that must be addressed to support the role of financial systems in driving economic growth. The United Kingdom and US may still show leadership in the rankings, but their significant drops in score show increasing weakness and imply their leadership may be in jeopardy.” said Kevin Steinberg, Chief Operating Officer, World Economic Forum USA.

Some developing countries performed well in the financial stability section of the Index. Chile came in third while Malaysia, Mexico and Brazil are all in the top 15. Norway and Switzerland took the top two spots in this category.

“Developing countries exhibited a relatively strong showing in the financial stability pillar of the Index. For some, this is the result of learning from the mistakes of past financial crises, while for others it may reflect the relative lack of complexity and global integration of their financial systems,” said Co-Author Nouriel Roubini.

Developing countries also earned many of the top spots with respect to commercial access, which measures the availability of capital through such means as commercial loans, IPOs and venture capital.