Australian real estate shows no sign of slowing down, with 79 per cent of auctioned properties sold last weekend.
That is the second highest level in data going back nearly seven years, with the record set in September 2009 when the Federal Government’s First Home Buyers’ Boost scheme was boosting demand.
However, those figures from CoreLogic RP Data are dominated by Sydney and Melbourne, because they are the only two major cities where a substantial proportion of sales happen by auction.
The real estate analysis firm’s data show prices are up 6.4 per cent in Sydney so far this year, compared to 3.9 per cent gains in Melbourne, a 0.1 per cent rise in Brisbane, a 0.2 per cent decline in Adelaide and a 1.6 per cent slide in Perth.
Property analysts, such as Louis Christopher from SQM Research, say that most other data confirms that Sydney is where the main action is taking place.
“At this point in time we think the [Sydney] market’s about 25 per cent overvalued and, if our forecasts come in for this year, it’ll actually get up to about 40 per cent overvalued,” he told ABC television’s The Business program.
“It’s probably about the second highest overvaluation point we’ve ever recorded, the highest being back in 2003 when, on our numbers back then, the market was about 55 per cent overvalued.”
Mr Christopher said that, beyond Sydney and some parts of Melbourne, there is generally not much upward momentum in the Australian housing market.
“We don’t believe, for example, there’s a national housing bubble,” he said.
“We can definitely pinpoint areas where the markets have not moved for a very long time and they are undervalued compared to incomes.
“So, even with the cheap credit, it hasn’t influenced every market everywhere, because local economic factors have taken a greater hold.”
Mr Christopher points to collapsing home prices in most mining towns, falling prices in Darwin and Perth, and relatively stagnant prices over recent years in Brisbane, Adelaide, Canberra and Hobart as evidence.
Housing affordability damage done in previous decade
However, RMIT housing expert Emeritus Professor Mike Berry said most areas had seen much bigger rises over a longer time frame.
“Housing prices more or less doubling over the last 10, 12 years in the capital cities, but particularly in Sydney and Melbourne and it’s in particular parts of those metropolitan regions that house prices have gone through the roof,” he observed.
An even longer view paints a still more concerning picture.
EMBED: ABS home price indices 1986 to 2014
Australian capital city home prices rose a solid 68 per cent over the past 10 years, but a spectacular 125 per cent in the decade before.
Go back over the past 40 years or so, and BIS figures show that Australia has seen stronger house price growth than anywhere except Norway.
However, perhaps unsurprisingly, the chief economist of Australia’s biggest home lender – Michael Blythe from the Commonwealth Bank – told The Business that there is no bubble.
“Very strong demand for housing, we’re building more, but not at a fast enough rate to catch up with that demand,” he explained.
“Throw in low interest rates and you’ve got a mix that just points to higher house prices, and certainly that’s what we’ve been seeing.”
The international property analysts at Demographia beg to differ, arguing Australia is one of the world’s least affordable places to live.
On their measure of median home prices to median incomes, all five of Australia’s biggest cities are “severely unaffordable”, with Sydney and Melbourne in the world’s top 10, along with Tweed Heads.
A typical Sydney home is a record 10 times income and Melbourne is just below its pre-financial crisis record of nine times.
Lindsay David, the author of Australia: Boom to Bust, said that left the whole property market vulnerable to potential price falls of up to 50 per cent.
“What history tells us is that, when bubbles burst, what happens is that we move back to the long term medians,” he argued.
“So, if Sydney had a long-term median of say 5 or 6, you could see that we move back to the long-term median of 5 to 6 times income in the event of a deleveraging.”
Such a crash needs a trigger, and Emeritus Professor Mike Berry says there are two main threats.
One is rising interest rates, or moves to limit home lending or property-related tax concessions, in a market propped up by record household debt that is 154 per cent of incomes.
The other threat is an external shock.
“Things like the Chinese economy suddenly hitting the wall,” he explained.
“If that happened, then very quickly unemployment levels would start to rise in Australia, income growth would stop and perhaps go backwards and, when that happens and people start to get worried about the security of their income, that’s when the demand for housing can fall quite significantly and quite quickly.”
The past year’s plunge in iron ore prices is perhaps the best illustration that China’s economy already is not supporting Australia quite as much as it used to.
You can watch the full story on The Business at 4:30pm or 8:30pm (AEST) on ABC News 24 or 11:00pm (your local time) on ABC.
Billion-Dollar Facelift For Gabba Stadium Planned
A $1-billion redevelopment of Brisbane’s Gabba stadium will be at the heart of the city’s bid to host the 2032 Olympic Games and Paralympics.
Queensland Premier Annastacia Palaszczuk revealed the Gabba precinct would be the centrepiece for the Games. It would showcase the city and use the neighbouring Cross River Rail, she said.
“The Gabba has been home to our sport since 1895 …. a home for the 2032 Olympic Paralympic Games could be its crowning glory,” Palaszczuk said.
The proposed upgrade would increase capacity from 42,000 to 50,000, which has left some critics questioning the value of the billion-dollar price tag.
It is a substantial chunk of the $4.5bn budget initially proposed by the International Olympic Committee when Brisbane was announced as the preferred venue earlier this year.
The plans would capitalise on the connected Cross River Rail station, already under construction and due for completion in 2024, and would also include a new pedestrian plaza to link the two facilities, replacing initial suggestions of Albion as a potential stadium site.
Palaszczuk said hosting the games in the city’s centre would make the games more accessible to more people, and the pedestrianised plaza would also be part of the events focus.
The Games is predicted to create more than 100,000 new jobs and fast-track infrastructure developments across south-east Queensland.
Brisbane stadium design firm Populous provided concepts of what The Gabba would look like as an Olympic Games venue.
Palaszczuk said the plans were contingent on financial commitments from all levels of government, and that she had been in conversation with Prime Minister Scott Morrison.
Australian Olympic Committee president John Coates met the Queensland government cabinet earlier this week and said the IOC did not want countries to go out and spend big money on “white elephant” infrastructure.
“They’ve got to get in one [mindset] in terms of the funding not for the games but the funding, that this region requires to host the games…the future infrastructure, transport, in particular rail and road,” Coates said.
“The IOC is on a budget of circa $4.5 billion, the IOC puts in $2.5 billion give or take the exchange rate … then you get $1 billion from national sponsorship and $1 billion from ticketing.”
Article Source: theurbandeveloper.com
The Gabba Games – State’s $1b plan to turn stadium into sporting Mecca for 2032
The Palaszczuk government will push ahead with a redevelopment of The Gabba as the centrepiece of its 2032 Olympic Games bid, but it still needs support and a whole lot of money.
The government has rejected lacklustre greenfield sites near Bowen Hills and instead gone across the river to Queensland’s major AFL and cricket venue at Woolloongabba. If the plan goes ahead, and Queensland secures the games, The Gabba will become a building site for five years while an Olympic-class stadium is built.
The Gabba is normally used around 40 weeks in every year. Taking it out of action will require negotiation with a neighbouring school, the Brisbane Lions and Queensland Bulls, along with the Queensland Cricketers’ Club, which has previously been a stumbling block to work on the stadium. It is yet to be seen whether losing a home ground, and maximum revenue for five years, is worth having a larger, modern venue to return to.
While the International Olympic Committee favours using existing venues, thereby reducing the cost to host cities, Palaszczuk is intent on asking the Commonwealth to help fund a complete rebuild. There is no funding agreement yet, let alone architectural plans, but Palaszczuk suggested the new stadium could cost $1 billion.
Palaszczuk said another 8,000 seats could be added to The Gabba, taking its capacity to 50,000, serviced by the nearby Cross River Rail station currently under construction. It would be higher than the existing stadium, to allow for pedestrian overpasses across nearby roads to funnel patrons directly into the new venue.
That would give The Gabba more seats than the old QE2 stadium, which currently has capacity of 48,500, but fewer seats than Suncorp Stadium (52,500). It would have better transport connections than the Nathan venue and in the circular format that suits athletic events and the Olympic opening and closing ceremonies.
“The Gabba has been home to our sport since 1895,” Palaszczuk said.
“A home for the 2032 Olympic Paralympic Games could be its crowning glory.”
“We’ve hosted the AFL here, we’ve hosted cricket here, but for the Olympics, this is front and centre – opening and closing ceremonies, athletics, you name it, it’s going to be the best,” she told Nine’s Today program.
Palaszczuk told parliament a key factor in deciding to use The Gabba was being able to utilise the adjacent Cross River Rail station. She noted the rail project was being delivered with “not one dollar from the Commonwealth” but her office was not in a position to clarify whether the $1 billion would include any rail station components.
The Gabba was built in 1895 and has undergone two substantial renovations and refurbishments since 1993.
The last major redevelopment was completed in 2005 when a 24-bay grandstand built for $128 million.
The Gabba’s public, corporate and media facilities also received a $35 million upgrade in 2020.
The Labor government will seek financial support from Brisbane City Council and the federal government for the project.
“We do need this, and it’s going to be utilised for the future, so they don’t want white elephants they want workhorses, and The Gabba is definitely a workhorse,” Palaszczuk said.
The International Olympics Committee named Brisbane as its preferred host city in February.
But a final decision rests on detailed discussions with Games chiefs and key commitments from the federal government.
Australian Olympics Committee president John Coates addressed cabinet on Monday, where MPs formally endorsed Brisbane’s candidacy.
“This is still contingent on guarantees that need to be received from the federal government,” Palaszczuk stressed on Monday.
She has had a discussion with Prime Minister Scott Morrison and more talks will occur in the coming weeks.
“We are basically doing years and months of work in a very short time frame to meet the deadlines the IOC has set us,” she said.
The state needed the boost the games would bring, including 130,000 jobs.
“It gives us hope, after going through the pandemic. It gives us hope for the future,” the premier said.
Morrison is expected to have more to say on Queensland’s Olympic plans on Tuesday.
Last month, he told the IOC the Australian government was firmly behind Brisbane to host the games.
But Brisbane is not without rivals.
Earlier this month, South Korea said Seoul had submitted a proposal to host the 2032 games, despite Brisbane’s frontrunner status.
Article Source: inqld.com.au
City Council Backs Brisbane Olympic Bid
He was the sole voice of opposition to Brisbane City Council’s bid to host the Olympics but Greens councillor Jonathan Sri is adamant the negative impacts outweigh the positive.
The council’s confidential meeting this week included briefings from president of the Australian Olympic Committee (AOC) John Coates and the president of the Paralympics Committee Jock O’Callaghan.
The vote to formalise Brisbane’s commitment to the Games has paved the way for a formal bid to host the 2032 Olympic Games. It received bipartisan support with Sri the only dissenter.
Media and the public were barred from the meeting, to protect the locations of potential developments and any impacts it would have on property prices, the council said.
“While hosting undoubtedly offers some positive opportunities, after considering all the available information, I was concerned that the negative impacts upon our city will outweigh the benefits,” Sri said.
“Evidence from recent Olympics points to major cost overruns, significant disruption to residents, superfluous sports infrastructure that’s not as useful long-term as proponents might have suggested, and economic benefits flowing predominantly to major corporations rather than local businesses.”
Sri said taxpayers would have to foot the bill, estimated to be about $900 million, to develop new sporting venues.
An IOC feasibility study highlighted Brisbane’s need for about 20 per cent more sporting facilities.
Sri said the council and state governments were negotiating with the IOC over a new 50,000-seat stadium earmarked for Albion.
The Brisbane bid includes plans for seven new venues across the southeast corner, but that could be reduced to two with the use of existing facilities.
“While some of the infrastructure built for the Olympics can certainly leave a positive legacy and lasting public benefit, it’s almost inevitable that we’ll also spend public money building Olympics-standard sports facilities that we don’t really need and wouldn’t otherwise waste money on,” Sri said.
Brisbane was announced as a preferred candidate in February.
Lord Mayor Adrian Schrinner said the formalised commitment to the Games bid had received bipartisan support which was a “strong result”.
He said the Games presented a good value proposition for the city and he hoped they would receive the green light as early as July, when the Tokyo Games were due to begin.
“Brisbane City Council voted yes to the jobs that will be created, yes to the opportunities this will bring to our city, yes to the opportunity this will bring to our region and our state and yes to the bring forward and fast tracking of infrastructure and investment in our region that will service the needs of a growing population,” Schrinner said.
The final submission from the three levels of government and the AOC is due in April.
Article Source: theurbandeveloper.com
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