Thursday, 30 November 2017

Rising housing costs hurting younger, poorer Aussies the most

By Guest in Australian Property

at 10:20 am on November 29, 2017 | 18 comments

Cross-posted from The Conversation:

Rising housing costs are hurting low-income Australians the most. Those at the bottom end of the income spectrum are much less likely to own their own home than in the past, are often spending more of their income on rent, and are more likely to be living a long way from where most jobs are being created.

Low-income households have always had lower home ownership rates than wealthier households, but the gap has widenedin the past decade. The dream of owning a home is fast slipping away for most younger, poorer Australians.

As you can see in the following chart, in 1981 home ownership rates were pretty similar among 25-34 year olds no matter what their income. Since then, home ownership rates for the poorest 20% have fallen from 63% to 23%.

Home ownership rates also declined more for poorer households among older age groups. Home ownership now depends on income much more than in the past.

Lower home ownership rates mean more low-income households are renting, and for longer. But renting is relatively unattractive for many families. It is generally much less secure and many tenants are restrained from making their house into a home.

For poorer Australians who do manage to purchase a home, many will buy on the edges of the major cities where housing is cheaper. But because jobs are becoming more concentrated in our city centres, people living on the fringe have access to fewer jobs and face longer commutes, damaging their family and social life.
Prices for low-cost housing have increased the fastest

The next chart shows that the price for cheaper homes has grown much faster than for more expensive homes over the past decade. This has made it much harder for low-income earners to buy a home.

If we group the housing market into ten categories (deciles), we can see the price of a home in the lowest (first and second) deciles more than doubled between 2003-04 and 2015-16. By contrast, the price of a home in the fifth, sixth and seventh deciles only increased by about 70%.

Tax incentives for investors may explain why the price of low-value homes increased faster. Negative gearing remains a popular investment strategy; about 1.3 million landlords reported collective losses of A$11 billion in 2014-15.

Many investors prefer low-value properties because they pay less land tax as a proportion of the investment. For example, an investor who buys a Sydney property on land worth A$550,000 pays no land tax, whereas the same investor would pay about A$9,000 each year on a property on land worth A$1.1 million.
Rising housing costs also hurt low-income renters

As this last chart shows, more low-income households (the bottom 40% of income earners) are spending more than 30% of their income on rent (often referred to as “rental stress”), particularly in our capital cities. In comparison, only about 20% of middle-income households who rent are spending more than 30% of their income on rent.

Why are more low-income renters under rental stress?
First, Commonwealth Rent Assistance, which provides financial support to low-income renters, is indexed to the consumer price index and so it fell behind private market rents which rose roughly in line with wages.

Secondly, rents for cheaper dwellings have grown slightly faster than rents for more expensive dwellings. Finally, the stock of social housing – currently around 400,000 dwellings – has barely grown in 20 years, while the population has increased by 33%.

As a result, many low-income earners who would once have been in social housing are now in the private rental market.
What can be done about it?

Increasing the social housing stock would improve affordability for low-income earners. But the public subsidies required to make a real difference would be very large – roughly A$12 billion a year – to return the affordable housing stock to its historical share of all housing.

In addition, the existing social housing stock is not well managed. Homes are often not allocated to people who most need them, and quality of housing is often poor. Increased financial assistance by boosting Commonwealth Rent Assistance may be a better way to help low-income renters meet their housing costs

Boosting Rent Assistance for aged pensioners by A$500 a year, and A$500 a year for working-age welfare recipients would cost A$250 million and A$450 million a year respectively.

Commonwealth and state governments should also act to improve housing affordability more generally. This will require policies affecting both demand and supply.

Reducing demand – such as by cutting the capital gains tax discount and abolishing negative gearing – would reduce prices a little. But in the long term, boosting the supply of housing will have the biggest impact on affordability. To achieve this, state governments need to change planning rules to allow more housing to be built in inner and middle-ring suburbs.

Unless governments tackle the housing affordability crisis, the poorest Australians will fall further behind.

Article by John Daley, Brendan Coates and Trent Wiltshire from the Grattan Institute

Wednesday, 29 November 2017

Foreign property buyers feel SA sting of dumped bank tax

The hammer has come down on foreign property buyers with a surcharge lifted to 7 per cent from January 1 to partially make up for the ditched state-based bank tax.

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Foreign property buyers will feel the sting of the decision by the South Australian Government to dump its controversial state-based bank tax in a move which property experts say will dampen demand in a market which hasn't experienced the boom of Sydney and Melbourne.

A foreign property buyer surcharge of 7 per cent will apply from January 1, 2018 in South Australia after the measures passed the state's upper house of parliament late on November 28, a higher rate than the original 4 per cent foreign buyer tax announced in the June state budget.

SA Treasurer Tom Koutsantonis increased the planned tax from 4 per cent to 7 per cent to partially fill a hole after the state-based bank tax was ditched on November 15 following a vigorous campaign by the Australian Bankers Association, ANZ, CBA, NAB and Westpac.

But the property industry is furious, arguing it will deter foreign buyers who make up an estimated 10 per cent of total buyers in South Australia, well below the foreign buyer component in Sydney and Melbourne.

Stockbroking house Credit Suisse estimated in October that foreign buyers, most of them Chinese, were buying the equivalent of 25 per cent of new housing supply in NSW.

Alex Ouwens, a principal of real estate firm Ouwens Casserly and also the president of the Real Estate Institute of Australia, said it was a disappointing move at a time when the local economy was at a "tipping point".
"It's certainly a massive impost on foreign investment in the state," Mr Ouwens said on Wednesday. High existing stamp duty rates on residential property combined with the increase in the foreign buyer surcharge would also dampen activity among builders and developers.

He said the Adelaide residential market was a slower and steadier performer delivering annual gains of between 3 to 4 per cent over an extended period, and hadn't experienced the dramatic jumps of Sydney and Melbourne. "We don't have that same boom," he said.

Apartment living was also less popular in Adelaide, with many buyers preferring traditional stand-alone houses. "It's a horizontal living environment rather than vertical," he said.

NSW doubled its foreign buyer surcharge to 8 per cent in its state budget earlier this year, while Victoria has a 7 per cent surcharge.

Daniel Gannon, SA executive director of the Property Council of Australia, said the state needed policies that attracted investment and the foreign buyer surcharge was a bad move.

"Instead of toasting 2018 and welcoming the new year, the first day of January will mark a tax hangover for investors as the increased foreign investor surcharge takes effect," Mr Gannon said.

"The passage of this damaging tax shines a bright red light for investment in South Australia and demonstrates the need for strong political leadership."
Mr Gannon said it was a punitive tax.

The South Australian Government's foreign property buyer surcharge is expected to raise $85 million over the next four years, but will only partially make up for the foregone bank tax revenue. The state-based bank tax had been originally earmarked to raise $370 million over four years, but those figures were later revised upwards by state Treasury officials to $417 million.

The tax was to be levied on the four big banks - ANZ, CBA, NAB and Westpac - plus Macquarie, in a similar style to the Federal major bank levy. It was announced in the June State Budget by Mr Koutsantonis in a move which stunned the banking industry.

Read more:
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They believe that recent changes in real estate laws for foreigners allowing them to obtain control for more than a normal lifetime and up to 70% bank financing is creating a huge new demand for Indonesian and Bali Real Estate.

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Free Bali Real Estate Seminars: 

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Australia's Perth’s property prices continue to slump

Perth’s property prices continue to slump
By Gerv Tacadena 28 NOV 2017

Property owners and investors in Perth are still suffering as prices remain in the doldrums.

In a commentary on the Motley Fool Australia, industry watcher Steve Holland said for many investors in the West, the Great Aussie Dream has suddenly become the Great Aussie Nightmare.

"I was speaking with a friend recently and he said he had to drop the price of his rental property from $450 a week to $350 a week to keep the tenants in the apartment," he said, "Another person told me that, sadly, they took out a hefty loan when the price was high and are now struggling to make interest-only payments on what has proven, in the short-term at least, [to be] a depreciating asset."

Also Read: Canberra's Inner North attracts throngs of home buyers

Holland said should big banks started to raise rates, things could suddenly go from grim to worse.

Citing data from the Real Estate Institute of Western Australia, he noted that the number of properties up for grabs in the Perth metropolitan area reached 13,535 in the week leading up to 25 February 2015, a big jump from the 9,207 available in the same period in the preceding year.

The figures as of November 21 showed that the number of listed properties went up to 14,973.

"While this may benefit companies in the real estate advertising business, it’s not great news for those trying to sell property in Perth," Holland said.

Additionally, the median house price in Pert has declined by more than 8% since 2015 and the average selling days for a property has jumped from 50 days to around 70 days.

"As such, the question has moved from: ‘When will Perth’s property market crash? [to] ‘How low can it go?'," Holland said.

Why Hong Kong’s housing bubble is only getting bigger Prices increased 11% this year

Bali news views editor's comments:
At Macau Resort across from Hong Kong 2015
Hong Kong real estate is like Bitcoin, no fundamental reason for it to continue to go up. 

And when and not if it finally crashes like Bitcoin a lot of people will  go bankrupt. Maybe even causing a few suicides.

Central District, Hong Kong. (Mstyslav Chernov)

Despite attempts by the government to curb Hong Kong’s housing market, prices continued to climb this year as demand outpaced supply.

Housing prices rose 11 percent this year, and Colliers International Group projects that they will grow another 8 percent to 10 percent next year. Mortgage rates are low and developers are offering hefty financing packages, Bloomberg reported. Sun Hai Kai Properties, for instance, is providing buyers with financing of up to 120 percent of the purchase price of units at its Cullinan West project.

“Now it is very hot, because of the hot money rushing in,” Raymond Ho, deputy senior director of residential development and investment at Savills, told Bloomberg. “There is more record-breaking coming.”

Sign up for China Watch for weekly emails on Chinese real estate investments.

In October, a four-bedroom house in the city’s Peak neighborhood sold for $149 million. A penthouse on Peak Road also sold for over $13,000 a square foot this fall. Both deals were said to be records in Hong Kong.

Meanwhile, the number of new residential units that are coming to market can barely keep up with the number of mainland Chinese who become residents every year. An average of 20,000 new units hit the market every year, which is roughly the number of people from China who become permanent residents of Hong Kong annually. [Bloomberg] — Kathryn Brenzel

Thursday, 23 November 2017

Real estate inventories taper off over 16 percent

VNA MONDAY, NOVEMBER 20, 2017 - 16:29:00 PRINT
Real estate inventories nationwide saw a reduction of over 16 percent as of November 20. (Photo: VNA)

Hanoi (VNA) – Real estate inventories nationwide saw a reduction of over 16 percent as of November 20, from the same time last year, to an estimated value of over 26 trillion VND (1.14 billion USD).

Highest inventories were recorded in residential land. They were estimated at more than 3.1 million square metres and valued at 12.4 trillion VND (544.8 million USD).

This was followed by town house with 3,129 units worth over 7 trillion VND (307.5 million USD). Unsold apartments stood at 2,924 units, equivalent to about 4.2 trillion VND (184.7 million USD) while that of commercial land was at 604,151 square metres valued at nearly 2.4 trillion VND (105.5 million USD).

Unsold properties in Ho Chi Minh City were 4.78 trillion VND (210.1 million USD) while Hanoi saw a total inventory value of 5.3 trillion VND (232.9 million USD).

The Ministry of Construction forecast that housing price is stable in the short term and the tourism property market will experience robust development in the coming time.

Apartment prices in Hanoi declined 0.5 percent from the previous quarter and individual housing segment increased 0.13 percent.

In stark contrast, apartment prices in the southern hub went up 0.8 percent, however, luxury units dropped 0.5 percent in their prices. Individual housing segment escalated 1.65 percent from Quarter 3.-VNA

A 75% increase in Foreign investment surcharge could turn buyers away from South Australia, agents warn

Editors comments:

Just one more reason I am neutral to bearish on much of Australian major cities real estate at this point.

The bottom line is citizens' are waking up and realizing that they sold their properties to foreigners and now they can't afford to buy one for themselves.

Their politicians will put more emphasis on curtailing foreign investment if they want to get reelected.

You don't have to be a rocket scientist to figure this one out.

By Michael Coggan

Posted Mon at 5:28pm

Real estate agents specialising in overseas investors have warned the South Australian Government the way a new levy on foreign investment in residential property is being applied will damage the state's reputation as a good place to invest.

Treasurer Tom Koutsantonis last week announced the Government had decided to increase a 'foreign investor surcharge' from 4 per cent to 7 per cent as part of the Government's Budget Measures Bill.

The levy will apply to foreign investor property settlements from January next year.

Other states have introduced similar charges on foreign nationals investing in real estate, but the principal of DG Real Estate in Adelaide Simon Hou said South Australia was the only state imposing the levy from the settlement date rather than the date the contract of sale is signed.

Mr Hou said that means investors who bought a house or unit off the plan more than a year ago would have to pay an unexpected levy of 7 per cent if their property is not built before next year.

"It's actually quite unfair and I think this will damage South Australia's reputation badly," he said.
Potential investors desert South Australia

Mr Hou said there were hundreds of people who had signed off-the-plan contracts before the levy was announced who were now being forced to pay the extra charge.

He said about 30 per cent of his clients were foreign investors, most of them buying accommodation for their children to live in while they study in Adelaide.

But since the announcement more than 50 potential investors had decided not to invest in South Australia.

In a statement the Mr Koutsantonis said investors understood there could be levy changes.
PHOTO: Adelaide based conveyancer Helen Wu said foreign investors were pushing for earlier settlements to avoid the levy increase. (ABC News: Michael Coggan)

"Whenever someone buys an apartment off the plan, or with a very long settlement period, they do so in the knowledge there could be changes to stamp duty before settlement," he said.

Adelaide based conveyancer Helen Wu said many of her foreign investor clients were pushing her to complete settlement before January.

"I deal with lots of foreign buyers so everyone wanted to settle before the end of this year but sometimes it's out of our control," she said.

Ms Wu said she expected many foreign investors would drop out of South Australia's market as a result of the levy.

"I don't think they will continue to buy in the future," she said.
Property turnover 'slowing down'

Auctioneer and real estate agent Jonathan Teng said recent changes to bank lending policies setting higher loan to value ratios for foreign investors had had a more significant impact on the number of foreign investors entering the South Australian market.
PHOTO: Jonathon Teng said that property turnover was slowing down. (ABC News: Michael Coggan)

"The property turnover is slowing down and also the price of property might also be impacted in a negative way," Mr Teng said.

Mr Hou is also the president of the China Business Network of South Australia, and has urged the State Government to allow a foreign investor surcharge exemption for residential property in Adelaide's CBD to ease the negative impact on investment in the city.

He said the city needed foreign investment in residential units in the city.

"Over the last 15 years the CBD apartments don't really have much capital growth or the majority of them actually have no growth over last 10 [to] 15 years," Mr Hou said.

He said without foreign investment he thought "the CBD apartments might have a collapse in price in capital price".

But Mr Koutsantonis has rejected the call for an exemption for Adelaide's CBD.

He said the surcharge on foreign investment "is about ensuring South Australians aren't priced out of their neighbourhoods by international investors".

Topics: housing-industry, industry, housing, government-and-politics, states-and-territories, adelaide-5000, sa

Apartments trend shrinks Aussie homes

Editor's comments: 

No doubt this will be a continued trend in the Western world and  European countries as the cost of and  availability of land, cost of building materials and labor continues to increase. Especially  what record unemployment rates.

So most of you reading this in other countries should be prepared to live in smaller quarters in the future. 

An option of course is to move to Bali and live in a three-bedroom 600 m² private Villa with with private large pool for $158,000
THE size of the average new home in Australia has shrunk to a 20-year low as more people buy apartments, but the McMansion era is far from over.
Aaron Bunch
AAPNOVEMBER 20, 20177:38AM

CoreLogic's November National housing market update

Ads by Kiosked

THE size of the average new home has shrunk to a 20-year low as more people buy apartments but the McMansion era is far from over, with Australian houses still among the world’s biggest, new data shows.

At 233.3 square metres, the average freestanding house being built now is 30 per cent larger than 30 years ago and has double the number of bedrooms of 20 years ago, a survey by CommSec and the Australian Bureau of Statistics has found.

Only houses in the US are bigger, at an average 245 square metres. Despite the size of houses creeping up, fewer are being built as an increasing number of Australians choose apartment living over the suburbs.

CommSec chief economist Craig James says experience-hungry younger home buyers no longer want to invest their money in large houses requiring time-consuming upkeep. “Gen Y and Millennials are saying ‘I don’t want to put a lot of money into a place where I’ve got to have the upkeep, where I’ve got to mow lawns’,” he said.

“What they’re more focused on is life more generally, they want to travel overseas, they want to go eat at cafes and restaurants.”

It’s not just lifestyle choices driving apartment demand, Mr James says strong population growth due to migration, coupled with Baby Boomers downsizing and younger Australians taking advantage of lower interest rates has resulted in demand for affordable, smaller high-rise homes grow.

As more people live in high and medium density dwellings, the average new home size — across houses and apartments — has dropped to 189.8 square metres in 2016/17, down 2.7 per cent over the past year and the smallest since 1997.

“We’ve got greater consolidation occurring, there’s more units, apartments and semi-detached dwellings, with people wanting to live closer to capital city centres,” Mr James said.

And the size of average new home may continue to drop further as older freestanding houses continue to make way for apartments across the country. Seven years ago, just 27 per cent of homes built were apartments but today they account for 47 per cent of all new homes built.

Despite this the great Australian dream is far from endangered: the 2016 census found freestanding houses account for 72 per cent of all homes in Australia, with apartments, semi-detached houses and town houses making up just 26 per cent.

Wednesday, 22 November 2017

Australian Housing market looks bloated with borrowers on 'wafer-thin' margins

Further indications are that the Australian Real Estate Market May be entering a crisis stage for several reasons. 

(1) First and foremost hardly anything in Australia makes sense from a cash flow basis. 

(2) Australians have less money to spend on real estate as a result of a falling Australian dollar and commodity prices. 

(3) Finally after pressure from the public the Australian government has taken actions recently to curb the appetite of Chinese investors. 

The unknown is how long will naive investors continue to buy overpriced properties that can not provide any cash flow?

My position is neutral on the Australian Market at this time.

MY Facebook friends may remember that I issued a Sell signal for America in 2007 and Singapore in 2014 just before both of those markets collapsed. 

I hate to be the bearer of bad news but there are much greener pastures such as Vietnam, and Bali

Especially Bali because it's already had the first correction in modern history with prices down as much as 50% from the 2014 highs. 

The time to buy real estate is "when the blood is running in the streets" according to Baron Rothschild not after this long-term exponential growth.

Earn 10% to 20% per yr. - Free Bali Real Estate Seminar – Foreign Ownership Laws Clarified – Properties up to 50% off.

Are you tired of traditional investments such as banks and bonds that only offer 1-6% per year which do not keep pace with the real inflation?

Do you want to become rich the way over 60 % of self-made millionaires did? 

According to PT. B.A.L.I., Bali's leading real estate expert for the past 13 years, who have thousands of satisfied clients, this is the “Second best time to purchase Bali Real Estate this century”.
They believe that recent changes in real estate laws for foreigners allowing them to obtain control for more than a normal lifetime and up to 70% bank financing is creating a huge new demand for Indonesian and Bali Real Estate.

Coupled with the fact that Bali Real Estate has just undergone the first correction in modern history with prices down as much as 50 % this has set the stage for *increases of 20% to 100 % the next three to five years. 

Free Bali Real Estate Seminars: Whether you are a buyer, seller, broker, agent, investor, lessor or renter you can benefit from attending one of our two free Real Estate Seminars in Bali this month.

At these seminars PT. B.A.L.I’s Canadian President, Lawrence, a 21 yr. Bali resident who is married to Azizah, a fully Licenced Notaris will review the most recent real estate laws for Indonesians and Foreigners in detail. 

Then they will also discuss the Past, Present, and Future of Indonesian Bali Real Estate.

Free Seminar Schedule: 

Bali, Emerald Villas, Jl. Karangsari, # 5, Sanur, Bali, Indonesia.

(1) Thursday Nov. 30th.. 6:30 PM - 7:30 PM. 

(2) Saturday Dec. 2nd.. 2:00 PM - 3:30 PM.

Seminar Topics SEE MORE

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Is the Australian housing market ready to burst after decades of gorging on debt?SUPPLIED: MONTY PYTHON

It's one of Monty Python's finest skits.

Mr Creosote waddles into a posh French restaurant, a regular, welcomed fawningly by the maître d'.

After ordering everything on the menu, served mixed in a bucket — with the quails' eggs on top, of course — he sits, gorged even by his standards.

It is at this point the maître d' — John Cleese at his best — returns to offer him an after-dinner mint.

Creosote tells him to "bugger off", but the waiter leans in, a master in the art of persuasion: "It is wafer thin", he coos.

The glutton caves in and accepts the mint on his tongue, like a holy communion.

Cleese's character flees the scene, diving behind a row of plants as Creosote explodes.

YOUTUBE:Mr Creosote blows up: Monty Python (warning, this is gross)
We asked for your thoughts on Australia's bloated housing market. Read the discussion in the comments.

But what on earth does this have to do with finance?

Australia's housing market has become Mr Creosote.

Not satisfied with merely getting a place to live in, thousands of investors are leveraging up, borrowing millions based on the rising value of their existing properties to purchase more, pursuing the dream of a "passive income" — a polite way to describe doing nothing and living off the effort of others.

More than 2 million Australians now own at least one rental property, and more than a quarter of them own two or more.

Nearly 20,000 taxpayers report income from six or more rental properties. They're living the passive income dream — for now.
Household debt kills growth
The Bank for International Settlements warns high household debt will drag on economic growth for years to come.

But this orgy of investment, fuelled by the assistance of negative gearing income tax deductions and the lure of a 50 per cent capital gains tax discount, has severely bloated Australia's property prices and debt levels as owner-occupiers have scrambled to keep up.

Australian property prices have roughly doubled nationally over the past decade, led by massive gains for Sydney where the typical house now costs more than $1 million.

The rise in prices has been largely debt-funded, particularly over recent years as incomes have stagnated.

The Reserve Bank's measure of household debt to incomes has reached a new record of 194 per cent and is heading towards 200 — it's risen 16 per cent during the latest Sydney-Melbourne boom over the past five years, from already-high levels.

Throughout this process, Australia's banks have played John Cleese's role of maître d'.

Whatever homebuyers wanted, the banks served up — particularly the big four.

YOUTUBE:Mr Creosote orders: Monty Python (warning, this is also gross)

As the housing Creosote gobbled up Australia's savings, in the early 2000s the big banks and their non-bank rivals went offshore to feed the beast with foreign debt.

But this binge is coming to an end.

Creosote is bloated and, as in the skit, the banks are standing there offering just a bit more lending to keep their profits growing and executive bonuses flowing.

But this time the bank regulator, APRA, until recent years absent from the scene, is stepping in.

Within months of taking over in mid-2014, APRA's current chairman, Wayne Byres, announced unprecedented limits on investor-lending growth and tougher rules around stress-testing borrowers (basically how much debt each individual Creosote could take on before they blew up).
Banks dodge a bullet
The big banks dodge one bullet, with APRA's relatively modest capital increase, but the regulator still has mortgages in its sights.

Those moves were needed, following APRA research conducted after Mr Byres took over that exposed just how lax many banks' lending standards were.

And they worked, for a while.

But, funnily enough, as caps were imposed on investor loans and rates for investment loans rose, many people (and their banks) suddenly realised they were owner-occupiers.

The property market again picked up steam, leading to a firmer investor-lending cap and a new limit on interest-only loans, imposed earlier this year.

These have again taken steam out of the major markets, especially Sydney, the market most like Creosote — ugly and bloated in beautiful surrounds.
Stopping the housing Creosote from eating itself

But APRA still sees the banks waving that mint around in front of a hungry mouth, this time with first homebuyers the prime target, given the limits on investor loans.
VIDEO 5:56The Business investigates how many people don't understand their home loansTHE BUSINESS

The remaining risk that has never been fully addressed is the woeful debt-servicing testing most of the banks persist with.

In his latest speech, Mr Byres revealed living-expense benchmarks were still being used for well over half of loan assessments, and more than three-quarters of the time for low- to middle-income borrowers.
EXTERNAL LINKWayne Byres APRA speech Nov 21 2017

APRA has been concerned about these benchmarks for the past few years, with many set around the poverty line and not accounting for people's real spending levels and financial commitments, including other debt obligations.

The measures are considered so inadequate, corporate regulator ASIC is pursuing Westpac in court over potential breaches of responsible lending laws for its previous use of a similar measure between 2011 and 2015.
Property bust triggers
We're at record levels of household debt, but it's not just debt that's threatening the housing market, writes Ian Verrender.

Mr Byres' latest message to lenders is that they need to tighten up on the amount of money they'll lend to people, or APRA will do it for them.

He said too many people were still borrowing six times their incomes or more, exposing them to repayments that would soak up half of their net pay when interest rates go back to normal.

If the banks don't heed his message, APRA's next move seems likely to be an enforced cap on loan-to-income ratios.

It would be the regulator's last desperate move to keep that mint away from Creosote's mouth and avert the explosion.

The risk is that he's already eaten too much anyway and the only thing that's wafer thin is the financial buffer held by many recent homebuyers.POSTED TUE AT 2:45PM

Monday, 20 November 2017



In this week’s edition of People in the News, a top executive at a formerly troubled Shenzhen developer is joining the board of another builder in the southern Chinese megacity, while an asset management expert is upgrading his title at a global pension giant. A number of property brokerage pros are also making career moves, and a luxury hotel executive in Beijing just got a promotion. Read on for more details.

Ying Chi Kwok, a co-founder of Kaisa Group, has been appointed to the board of directors of US-listed Chinese developer Nam Tai Property as an executive director as of October 30. Kwok has served as a senior advisor to Kaisa, the Shenzhen-based developer chaired by his brother Ying Shing Kwok, since 2015, and was vice-chairman and a director of Kaisa from 2009 to 2014. Kaisa is now the largest shareholder in NYSE-listed, Shenzhen-based Nam Tai, holding a 22.75 percent stake after buying into the firm since July. Nam Tai’s CEO Julian Lin has also been appointed to the board as executive director.

Bobby Chin Yoke Choong will take the reins as Chairman of Frasers Centrepoint Asset Management (Commercial), the Singapore-listed office trust announced, succeeding Chua Yong Hai, who is retiring as Chairman (non-executive and independent director). As part of the board shake-up, effective November 30, Chang Tou Chen (a non-executive and independent director) will also be appointed as Chairman of the Nominating and Remuneration Committee, replacing Tan Guong Ching. Choong, currently a non-executive and independent director of the company, has also served as Managing Partner of KPMG Singapore from 1992 through 2005 and is on the board of Singaporean developer Ho Bee.

Brian Hung has been promoted to Senior Portfolio Manager at APG Asset Management, based in Hong Kong, this month after holding the title of Portfolio Manager since early 2014. Prior to joining the Dutch pension fund asset manager, where he specialises in private real estate investments in the Asia Pacific region, Hung worked in the roles of Associate and Analyst at Merrill Lynch and Bank of America Merrill Lynch. The graduate of the University of Michigan – Stephen M Ross School of Business also serves on the board of directors of Scape, an Australian builder of student accommodation, as well as Malaysian mall developer Suria KLCC.

Yvonne Yung has joined JLL this month as Senior Manager for Transaction Management with the company’s Corporate Solutions for Asia Pacific. Yung previously held a variety of roles at rival agency Colliers starting in September 2010, most recently as a Manager with the Corporate Solutions team since July 2015. In that role, Yung served as the single point of contact globally or regionally for managing real estate assignments including leasing, acquisition and disposition of properties.

Kiran Chalke is now Associate Director at Colliers International India, based in the Mumbai area, having worked since April 2015 as a General Manager heading the Mumbai residential division for sales and leasing. Prior to joining the global real estate brokerage, Chalke held a variety of roles at property firms including Milestone Realty Venture, Knight Frank India, and Tata Housing Development. The residential sales and corporate leasing pro has picked up degrees in the UK and Hong Kong.

Steven Tay has joined engineering consulting firm WSP in Asia as Senior Principal, based in Singapore. The professional engineer previously worked for Singaporean urban consulting firm Surbana International Consultants as Director M&E Engineering (China) & Regional GM, based out of Chengdu, China for over three years. Tay’s engineering-focussed career has also included senior positions at DTZ Facilities & Engineering, UGL Services PREMAS Operations, and DSTA in China and Singapore since 2000.

Nicholas Emery has been promoted from General Manager to Managing Director at Regent Beijing. Since joining the team at the 500-room hotel in the Chinese capital in December 2015, Emery has boosted the Regent Beijing’s performance and is now orchestrating an extensive three-year renovation program in tandem with the property’s owner, the Fu Wah Group. Emery has spent over 30 years working in the luxury hospitality sector, with stints at Hilton International, Fairmont, Raffles, Anantara and Renaissance.

As usual, if you know of other Asia real estate professionals changing their jobs, getting promoted or just doing something exciting, please feel free to share with the rest of the community here at Mingtiandi.

Chinese buyers go cool on Australia homes

Chinese buyers go cool on Australia homes
MON, NOV 20, 2017 - 10:15 AM

Chinese demand for Australian residential property has eased because of tighter capital controls imposed by Beijing and tougher restrictions on mortgage lending by local banks, a top central banker said on Monday.

[SYDNEY] Chinese demand for Australian residential property has eased because of tighter capital controls imposed by Beijing and tougher restrictions on mortgage lending by local banks, a top central banker said on Monday.

The Reserve Bank of Australia's (RBA) head of financial stability, Jonathan Kearns, said foreign buyers accounted for around 10 to 15 per cent of new construction, or about 5 per cent of total housing sales and around one-quarter of newly built apartments.

"Many foreign buyers come from China, seemingly around three-quarters," Mr Kearns said in a speech to an Australia-China property conference.

"Purchases of new properties by foreign buyers have eased over the past year, reportedly because of stricter enforcement of Chinese capital controls and tighter access to finance for foreign buyers."

Offshore demand for property has become a contentious issue amid sky-high house prices and complaints locals are unable to afford a first home.
SEE ALSO: Chinese buyers go cool on Australian homes

Yet, Mr Kearns said foreign demand did not reduce the supply of available dwellings overall and might actually drive the expansion of new supply.

Foreign buyers in Australia for work or study would have been renting if they did not purchase, while other foreign buyers rent the property as an investment and so contribute to the rental stock, he said.

Also, there were some new developments that only proceeded because they got high pre-sales from offshore.

Mr Kearns said the central bank was keeping a careful eye on loans for property development, particularly in the commercial and apartment sectors, where rapid growth in lending by foreign institutions had helped bid up prices.

"The run up in commercial property prices raises the risk of a sharp correction, for example if there is a change in sentiment or a pick-up in long term interest rates," he said.

Unlike in some past construction cycles, Australian banks had not eased their lending standards and instead had generally tightened requirements for commercial property in recent years.

That had left the door open for Asian banks which had doubled their market share of Australian commercial property in the past couple of years, he said.

While valuations for some apartments at settlement were lower than the purchase price off the plan, there had not been widespread reports of higher rates of settlement failure or any notable increase in arrears or losses for banks, Mr Kearns added.

Sunday, 19 November 2017

Millennial anger on housing costs could have huge Australian impact, UK expert warns


Millennials in Australia are growing increasingly angry about being priced out of the housing market which could end up having a huge impact on the rest of the country, a leading UK expert has warned.

Unless public funds are put aside to provide more affordable housing for those aged between 20 and 35, we could see greater divisions in society, more youth support for extremist groups and damaging levels of alienation.

“I think in Australia you haven’t yet felt the anger that is coming from young people,” says Oona Goldsworthy, the chief executive of UK housing association United Communities, who is in Australia as part of a world tour studying Millennials’ housing.

Oona Goldsworthy: “I think in Australia you haven’t yet felt the anger that is coming from young people.” Photo: Sue Williams.

“It can be nice and civil and well-behaved, or it can be quite difficult to contain, and you don’t know where it can go. It can lead to things like young people supporting extremist groups on the fringes of society if you’re not careful. If you don’t listen to young people’s voices, that can have a big impact on both the micro and macro levels.”

Ms Goldsworthy, who is also working with Grand Designs presenter Kevin McCloud on a landmark housing project in the UK, says the housing crisis disproportionally affects the young because they have no, or little, capital behind them, and fewer options.

In Australia, she sees that problem as particularly acute with Millennial home ownership levels among the lowest in the world, beaten only by the UAE, according to a recent global survey by the HSBC bank. Here, only 28 per cent of young Australians own their home, compared with the average around the world of 40 per cent.

In Australia, Millennial home ownership levels are among the lowest in the world.

“On an individual level this is very difficult for young people,” Ms Goldsworthy says. “But on a macro level it impacts on the success of our cities and economy, with Millennials making decisions to leave cities, delay families and fostering inequality and resentment between generations.

“In Britain, that was particularly recognised after the anger that followed the Grenfell disaster [when 71 people in a tower block in London died in a fire] which highlighted the social inequality and injustice of the housing market. A lot of people then realised the depth of the housing crisis – which isn’t solved by leaving it all to the private sector.”
Related: Best property suburbs for millennials
Related: These millennials don’t want a house
Related: Aussies among worst for home ownership

Ms Goldsworthy will now be having meetings with local authorities and developers across Australia to discuss the issues, as well as academics working in development and housing policy, and community housing associations developing projects on the ground. She will also be speaking at a major Australian Housing and Urban Research Institute (AHURI) conference to start in Sydney on November 29.

She says some of the solutions to the problems could lie with expanding the ethical market rental sector, with many more affordable listings for property. Her project with Mr McCloud’s custom-build home company, Happiness Architecture Beauty (HAB), in Bristol in England, for instance, is to provide 160 homes that are evenly split between those for sale, those providing affordable housing and those for ethical market rental.

There are hopes, too, in Australia for more community land trusts being set up; non-profit corporations that own real estate to benefit the local community with housing and commercial spaces. There could also be more micro-homes produced as are being seen in Europe, and more mixed housing, like in Holland where elderly people and Millennials live side by side in the same projects.

“Millennials want the same thing as everyone else – somewhere they can put down roots, feel a sense of belonging, have safety and security, and not having to keep moving,” says Ms Goldsworthy.

“But the difference is that this generation are used to sharing, with the sharing economy and not necessarily owning things like vehicles. They want accessibility, but not necessarily ownership. So different typologies of housing like sharing spaces, co-housing, or having small bedrooms but sharing facilities with others, could suit them.”

Ms Goldsworthy’s visit to Holland ended up in a pilot project between a youth homelessness charity and a university converting shipping containers for homes. “I look around Sydney and I can see a lot of empty spaces where we could do this, although I prefer to call it ‘pop-up housing’,” she says.

“I can see old railways yards being redeveloped, space by the fish markets, there is lots of land that’s not being used that could become housing while we wait for longer-term developments to happen. You can do things like that quickly and cheaply.”

She says people outside Australia are shocked to hear we have a housing crisis, particularly when we have such a comparatively small population and such huge expenses of land.

But when they hear the statistics – that general home ownership fell from over 70 per cent in 2006 to 61 per cent in 2016, and that the private rental system has doubled over the same period – they are routinely stunned.

“That’s both a huge fall in ownership and huge rise in rentals over a short period,” she says. “They are really big movements. In Australia it’s because Baby Boomers are buying investment properties so Millennials can’t afford to get on the housing ladder.

“That’s a real intergenerational shift in expectations and a split in society between those who own property and those who have less and less hope of ever owning a home. It’s too early to tell what will happen if little continues to be done. But when you hear from young people that they don’t know what to do, and where to go, what happens with that anger?”

Family move from south London to tropical paradise of Bali - where they live comfortably on just £1,000 a month

Editor's comments: I've been saying for last 21 years Bali's not only a tourist destination, but a destination for those who want escape the high cost of living, deadly pollution, exponential increase in crime and horrific traffic in many areas of the world these days.

Not only did I move here 21 years ago but also moved my 76 yr old  mother who lived like a queen until her passing at eighty seven years old in the same area this family has chosen Sanur on the East Coast of Bali.

Not only is it expensive, but is very comfortable especially when you have maids, gardeners, pool men, drivers that can be hired for as little as $200 per month.

This is why I started PT Bali Affordable Lifestyles International 13 years ago. The beauty is you can still purchase a large 550 m2 three-bedroom Villa with pool for $158,000 or rent for  $1500 a month.

The next wave of individuals to enjoy Bali's low cost of living will be the baby boomers born between 1947 - 1955. They represent 25% of the population of the world and 50% of the cash. 

When you consider our neighbors to the north China, Japan, Korea, Taiwan fall into this category. 

Many people will want to leave the negatives of those cities behind and move to beautiful, tranquil, friendly Bali.

My wife Aziza is a fully licensed Notaris and I plus our 135 staff can help you to move here  temporary or permanently, including everything from visas, work permits, retirement visas and of course low cost affordable housing.

I highly recommend you attend a series of free seminars I have coming up on Nov. 30 th or Dec. 2nd. and learn everything you need to know about living in Bali form a 21 year Veteran.


Hannah and Patrick Canavan and their three children in Bali
For many young London parents, the start of the day involves rushing their children to school after frantically putting breakfast on the table.

But Hannah and Patrick Canavan’s mornings tend to be more relaxing affairs, involving a trip to the beach or a jump in the pool after they left hectic London for a new life in Bali.

The family, originally from Croydon, took their children from deepest south London to a new life on the island - where the family are getting by very comfortably on £1,000 a month.

The family, from Croydon, have started a new life on the paradise island of Bali

Inspired by a backpacking and volunteering holiday in Thailand ten years ago, Hannah, 28, and Patrick, 31, took the plunge and left their traditional life in Caterham a month ago when they moved to the Indonesian island with their three children Esmae, six, Eira, five and Elfie, two.

Mr Canavan quit his busy personal trainer job and the family jetted off to Sanur, to begin an open-ended adventure - with the aim of eventually finding a charity they believe in to work for full-time.

The family were renting in London and left with £5,000 of savings.
The family eats local food and cooks at home on one small gas hob ring

Mrs Canavan is supporting the family’s lifestyle abroad by working online as a freelance travel and parenting writer. The couple also run a blog and YouTube channel.

“Patrick and I knew we wanted to do this for nearly eight years… going away means that we get to spend more quality time together and Patrick gets to spend time with the girls, which is important,” she said.
The family left the UK and fled the cold weather, rushing around and hectic life in London

“We left more than a month ago now, on Eira’s fifth birthday on 3rd October, she was really excited.”

“People think you have to be super rich to do this but it actually costs a lot less to live and explore here than it does just to live in London,” she added.
The family dreamed of their big move across the world for eight years

“Our rent here in Bali costs £300 per month and the house has a swimming pool and is five minutes from the beach.

"We will have lived for £1000 for the whole month, by eating local food and cooking at home on our one small gas hob ring.

“Lots of people could do this, but they don’t realise.” 
Patrick Canavan with daughters Esmae, 6, Eira, 5, and Elfie, 2

An average day sees Mr Canavan take the three girls to the beach in the morning while his wife writes, before all spend the afternoon together relaxing or volunteering at charities.

“We have always lived a calm lifestyle, but now we take things really slowly,” Mrs Canavan said.

The couple already home-schooled their children and believe travel is a better education than what was on offer in London.

The family, who are also accompanied by Mrs Canavan’s mother Jayne Davies, 55, who “came along for the once-in-a-lifetime opportunity” after retiring, are not sure they will ever return to the capital.

They intend to spend a few more weeks in Bali before spending two months in Thailand and time in Vietnam, Cambodia and Sri Lanka.

Mrs Canavan said: “We will re-group in a year and see where we are at.

“We will miss the people, but we don’t miss anything else about London. We don’t miss rushing around and the hectic lifestyle and the keeping up with the Joneses aspect of life, or the house cleaning - or the weather.”

She added: “We are not special - if we can do this, lots of people can.”

Follow the family here

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