Sydney's housing shortage to continue

Credit:The Age

BUILDING a new house on Sydney's fringe costs about $200,000 more than it would in other capital cities, ensuring the city's severe housing shortage will only get worse, according to a yearly report card of housing supply commissioned by the federal government.

The report by the National Housing Supply Council estimates a shortfall of 178,400 properties across the country, a gap projected to grow to 308,000 within five years and 640,600 by 2028.

On the same day the council released its forecasts, the NSW Planning Department released its own detailed document claiming there was plenty of land for residential development in Sydney with the highest levels of released land since 1981 and the highest levels of zoned land since monitoring began in 1997.

But developer groups dismissed these findings in the department's Metropolitan Development Program (MDP) and said there was more to making suitable housing than colouring in areas of land zoned residential on maps. They agreed with the Housing Supply Council's report which which paints a grim picture for Sydney and found that in the past decade, NSW trailed mining hubs of Western Australia and Queensland in supplying its growing population with new housing.

And the shortfall will only grow. Using estimates from the Planning Department, the report predicts about 237,400 properties will be built in Sydney in the next decade - the same number of properties likely to be built in Brisbane and the Gold Coast, and 120,000 fewer than in Melbourne.

A breakdown of building costs illustrates the obstacles to development. Building a new ''greenfield'' house in Sydney, on land previously not used for housing, costs an average of $560,711.

This is almost $200,000 more than the cost in other capital cities, with government taxes and the raw cost of land accounting for most of the difference.

In contrast, the cost of developing ''infill'' housing in Sydney in already urbanised areas is roughly equivalent to that in other states at about $550,000. Sydney is the country's only major city where it is cheaper to construct a two-bedroom apartment in the inner city than a three-bedroom house on the fringe.

Yesterday's annual State of Supply report, provided to the Rudd government, acknowledges government progress in attempting to increase construction of low-cost and social housing, but says these will be insufficient to fully help those struggling with high housing costs.

''These actions will take time to be fully effective and will require significant additional capital and recurrent expenditure to address the full extent of the deficit at the lower end of the housing market,'' it says.

The shortfall in housing supply is mainly the result of faster than expected population growth since the middle of 2005.

The NSW Premier, Kristina Keneally, said that despite criticism of the rate of housing construction in Sydney, the government was exceeding targets in the state plan.

"The NSW government has rezoned land for a record 68,636 lots, of which more than 30,000 lots are ready for development right now. This easily exceeds the government's target to have enough land rezoned for 60,000 dwellings,'' she said.

But Stephen Albin, from the developer lobby group the Urban Development Institute of Australia, said there was a ''fundamental disconnect'' between the MDP report and the reality that Sydney was building 10,000 fewer homes each year than were needed, because the government could not provide what developers required.

''It's more than rezoning land, it's the provision of services, the provision of roads and public transport and the whole DA process itself. If you are a developer, are you going to invest where there is all this uncertainty?''

Housing shortage to reach 200,000 by June, experts warn

Credit: Smart Company
The Australian housing shortage will hit 200,000 this year as developers struggle to meet demand, bogged down by a shortage of credit, higher interest rates and regulatory burdens, experts have warned.

The comments come in response to a report from the National Housing Supply Council, which says the supply-demand gap increased to 178,500 homes during the 12 months to June 2009, representing an increase of 99,500 during the previous 12 months.

Additionally, the report also stated the national shortfall will reach 202,400 this year in a "medium projection", and could possibly hit 640,600 dwellings by 2029 if nothing is done to fix the problem. Council chairman Owen Donald has said this number could be even higher.

Victoria has recorded a shortfall of about 22,000, with the biggest shortages in New South Wales and Queensland of 57,600 and 56,100 respectively. The lowest shortfall is in the Australian Capital Territory, with a shortfall of just 5,000 dwellings.

The figures come just weeks after a Housing Industry Association report found the demand-supply gap will hit 466,200 by 2020 if no action is taken to increase dwelling construction rates.

The report noted a number of barriers to development, such as high levels of regulation and difficulty accessing finance, along with a shortage of land.

''Community opposition is often a significant barrier to infill and medium-density development,'' it also stated.

David Airey, president of the Real Estate Institute of Australia, says the shortage is just "same-old".

"Nothing changes. The states blame the Federal Government, the Government blames local authorities and it keeps going around in circles until somebody grabs someone and says that we need a cohesive plan. It's going to continue to get worse."

"In simplistic terms, people are choosing not to build new homes and developers are not putting up new spec homes in housing estates to assist the supply side. The established home market is under pressure with increased demand and a lack of a supply."

Airey says these factors, combined with interest rate rises, are deterrents to developers who "simply can't borrow money". He recommends the Federal Government institute a national building planning authority which could coordinate with state authorities to open up new land developments.

"At the very least we need states to take over planning regulations away from local authorities."

The report itself states developers are concerned about the increasing cost of land, and the burden of taxes and charges associated with development. It claims these prices put housing "beyond the reach of many" who would have been able to buy in previous years, thus restraining growth.

"The Council notes that ensuring an adequate supply of affordable serviced lots with ready access to jobs, transport and services has proven challenging in several cities. Measures to increase land supply and reduce the cost of urban infrastructure to home buyers would likely stimulate an increase in production and a reduction in the price of new housing."

It also claims the solution is a matter for governments at all levels, whether the solution be "changes in the nature and incidence of housing-related taxation, measures to address land supply, measures to reduce the cost and improve the delivery of urban infrastructure, further changes in planning and development approvals processes, subsidies for owner-occupancy and investment, and/or direct provision of housing".

CommSec economist Craig James also said Government action is appropriate given the dramatic projections included in the report.

"The bottom-line is that the Reserve Bank can't solve the housing crisis by lifting interest rates. This only would serve to temporarily depress demand and reduce incentives for investors and developers to increase supply," he said in a statement.

"Clearly it's now up to state and territory governments to practically respond to the findings in the latest report. The time for fine words and statements of intent has passed. Now budding home buyers, renters, the Reserve Bank and developers all want to know how the supply gap will be bridged."

But not all agree that the shortage problem should be fixed via the construction of new dwellings. Louis Christopher, SQM Research founder, believes there is more to be found in the vacancy statistics than most people believe.

''The vacant stock identified in the 2006 census was roughly equivalent to six times the number of new dwellings completed each year and eight times the number of homeless people in 2006,'' the report stated. Christopher says this point is crucial to understanding the shortage problem.

"I agree that vacancies are tight, and the issue there is particularly at the lower end of the market. But it's important to note the shortage isn't everywhere, for example, I don't believe the shortage is that high in south-east Queensland, and I struggle to see a shortage in Perth."

Nevertheless, Christopher says action must be taken to increase supply, but he also believes an increase in construction is already underway and there could be significant improvements made to the supply gap this year alone.

"I think we are going to see a resurgence in supply. We need a normal economy for that to happen, going forward, which we have, and I believe there is actually more of a chance of a greater supply response in the short- to medium-term."

But the New South Wales Property Council isn't so optimistic. Executive director Glenn Byres said in a statement in response to the report that the Government must take action quickly to address the problem or face a genuine crisis.

"The Government needs to act more urgently in taking responsibility for the supply shortfall in Sydney and facilitating projects from concept to completion."

"We need to move past a regime of high developer levies that diminish the feasibility of projects and reduce housing affordability. NSW also needs to deliver on past policy promises, including the introduction of a deferral mechanism to the point-of-sale for State Infrastructure Contributions."

"Delays and complexity in the assessment process can mean that housing projects currently entering the system won't hit the market for three years."

Savannah fashions a new home in Cirencester

Credit: Homes & Property
Fashion designer Savannah Miller may have found her dream home near Cirencester — but she has yet to finish renovating it.

“We bought a house last year in need of a lot of work and it’s taken much longer than we thought. But it’s in a really beautiful spot with epic views of the Stroud Valleys and River Severn, and so it will all be worth it in the end,” she enthuses.

The eco-friendly older sister of actress Sienna Miller eventually hopes to add a wind turbine, borehole and solar panels to her existing wood-burning stove and recycled furnishings. After previously living in Devon, she shares this rural retreat with her husband, builder Nick Skinner, their children Moses and Lyra and her stepson Java.

In 2007 the blonde New York banker’s daughters founded their own fashion label, Twenty8Twelve, which is popular with such celebs as Thandie Newton, Kelly Hoppen and Pixie Geldof.

Why Melbourne's up us for the rent

Credit: The Daily Telegraph
SYDNEY is poised to lose its position as the nation's leading city, with a lack of housing driving migrants south to Melbourne.

The exodus will see Melbourne overtake Sydney's global city status in population, migration and economic growth by 2037, a BIS Shrapnel report has forecast.

Within five years, life in Sydney would also be tough, with all rental stock occupied and housing affordability pushed beyond critical.

Figures revealed under Freedom of Information showed Sydney stood to fall short of its housing targets by 27 per cent, delivering about 180,000 new homes by 2013 instead of the 245,000 State Government target. More than 13 Sydney council areas are up to 1229 dwellings short of meeting the Metropolitan Strategy, allowing Melbourne to grow "much more rapidly than Sydney".

To meet the strategy, Camden requires a four-fold increase in construction, Canterbury needs to increase three-fold, and Campbelltown, Hawkesbury and Auburn need to double, developer lobby Urban Taskforce CEO Aaron Gadiel said.

Sydney's size advantage, the report said, had lost 20 per cent to Melbourne over the past eight years and if construction continued to "limp along", population growth would fall from the Strategy's projection of 1.1 per cent a year to just 0.9 per cent.

"This will mean that Melbourne, with its long-term population growth of 1.3 per cent a year, will displace Sydney as Australia's largest city by 2037," BIS Shrapnel senior economist Jason Anderson said. Forecasters expected under-supply would push the Sydney market over a "critical affordability ceiling" over the next five years.

"If Melbourne overtakes Sydney in people and housing then Sydney loses its relevance as the commercial heart of Australia, and status as a global city," Mr Gadiel said.

"Our city is fading. We can't expect Sydney to remain the premier city and stop or reduce housing construction."

With the State Government handing down its report card on land supply later this week, a spokesman for Planning Minister Tony Kelly said NSW was set to meet the challenge to its status.

"Sydney is the nation's only international city, which means it is a super magnet for interstate and international migration and growth," he said.

Coast still golden for ocean-front apartment sales

Credit: The Australian
THERE is little doubt some parts of Queensland's Gold Coast market are not travelling well, but Surfers Paradise ocean-front apartments seem to have fared better than other property sectors in the area, if a recent analysis is correct.

Industry commentator Michael Matusik looked at the resale apartment market finding that values fell by 9 per cent across the Gold Coast during 2008 and a further 4 per cent last year. But he says individual apartment resales of ocean-front properties in Surfers Paradise continued to sell well, lifting 8.9 per cent in value on average last year.

Last year, just 17 apartments were resold (and settled) in a sample set by Matusik of 17 buildings. Only one resold for a loss, with a price drop of $25,000.

Matusik says ocean-front apartment prices have grown by close to 10 per cent a year through the longer term and only one in 10 sells for a loss.

"When a loss does occur, it is usually a small one," he says.

"Ocean-front apartments, in Surfers Paradise at least, are tightly held with under 3 per cent of the total stock in our sample set turning over each year.

"In some buildings, the turnover is much less."

Matusik looked at 350 resales across 17 ocean-front apartment buildings in Surfers Paradise. He excluded sales between family members because of hardship such as divorce.

The analysis found an average capital gain of 9.9 per cent per year and an average actual gain of just under $225,000 between sales, equating to an annual gain of more than $40,000.

Owners, too, seem to hold on to the apartments longer than is widely thought.

Most owners held their ocean-front apartments for 71 months, or almost six years.

Just one in 10 resales, or 37 in total, showed a loss in the 20-year study period, and the average drop was 2.7 per cent a year or $35,000 in total. Collectively, apartment resales in the sample set have yet to show a loss on an annual basis, but lesser apartments on the Gold Coast often do, Matusik says.

Other parts of the Gold Coast residential market, such as houses and apartments not on the beach, are more dependent on confidence, good times and occasional or holiday use than in many other parts of Australia and this causes a greater boom-bust cycle than would be the case normally.

While the size of the cyclical wave is getting smaller as the Gold Coast's resident population grows, it remains nevertheless, and the area is one of the few markets that bore the brunt of the global financial crisis.

Matusik says there is more pain in the pipeline, too, with a high default rate expected across high-rise settlements in coming months. Developers and local consultants haven't escaped the slowdown. "We have only two consultancy jobs on the Gold Coast at present compared with the four or five jobs we usually have on the go. It has been this way for more than 18 months now," Matusik says.

The Gold Coast's troubled market has been well documented in state government and real estate industry figures and in the media.

The Queensland Department of Environment and Resource Management's Property Market Movement for 2010 Valuationshows Gold Coast values have fallen 10 per cent since the last time valuations were undertaken in 2007.

Matusik says it shows the greatest falls were for ocean-front land, down 30 per cent on average since 2007.

Residential land values, overall, were down 5 per cent across the Gold Coast and multi-unit values were down 17 per cent in the past three years.

The report notes the Gold Coast apartment market has been treated harshly as investor demand wanes with the flagging tourist market, and an oversupply has also had an adverse influence.

Recent Real Estate Institute of Queensland figures suggest house prices have dropped 2 per cent in the past 12 months, with half of the localities surveyed showing a fall in median price last year. It also shows median house prices dropped by 30 per cent in Surfers Paradise and Mermaid Beach during the past 12 months.

Credit and contact: majellacorrigan@optusnet.com.au

Australia 8th-richest: IMF

Credit: The Age

AUSTRALIA has vaulted back into the top 10 of the developed world's rich list, the International Monetary Fund estimates, because it survived the global financial crisis while others went under.

New IMF estimates of global output rank Australia the eighth-richest of 33 countries it classifies as forming the developed world. It is the highest ranking Australia has held since IMF estimates began in 1980. The 1982-83 recession kicked us out of the top 10, and since then we have made it back only fleetingly.

British economic historian Angus Maddison estimates that 100 years ago Australia was the world's richest country, living off lucrative exports of gold, wool and beef.

But as the gold ran out and manufacturing became the main driver of global wealth, Australia sank to 17th in 1991.

It had climbed back to 12th by 2008, when the financial crisis began. In 2009 Australia was the fastest-growing developed country. Its growth was just 1.3 per cent, but 30 of the other 32 went backwards - and we overtook Austria, Canada, Iceland and Ireland.

The IMF projects that by 2013 we will climb to seventh, overtaking the Netherlands. But the top six include Luxembourg, Singapore and Hong Kong, where GDP is swollen by multinationals attributing their income to countries with low tax rates.

Those three aside, Norway is the developed world's richest country, thanks to its oil and gas exports, followed by the United States, Switzerland, the Netherlands and Australia.

But in the long term most Western countries can be seen as riding bunched close together. It is not clear yet whether Australia is breaking away from the pack.

This year, the IMF estimates, Australia will be operating closer to full capacity than any other developed country.

It urged the government to consider ''reforms to entitlement spending, increases in consumption and fuel taxes, and elimination of distortions that lower private saving, foster leverage and boost investment in real estate.''

Poll: Is Australia worthy of the ranking of 8th-richest country in the world? Vote on The Age

Google Maps “Significant” Change in Australia

Credit: Property Portal Watch

Google Maps’ launch of real estate listings could pose a threat to Australia’s real estate portals according to Frost & Sullivan’s latest report, Australia Online Classifieds Advertising Market 2010.

The report describes Google Maps’ addition of real estate listings as “the most significant competitive development in real estate online classifieds advertising”.

“[Google Maps real estate] could challenge the established online real estate publishers if a critical mass of estate agents shift online classifieds advertising spend to the alternative portals that list on Google Maps, or even upload listings directly onto Google,” the company says.

Frost & Sullivan’s report goes on to say that a second issue in online real estate classifieds is the potential emergence of “significant” For Sale By Owner websites. “These sites already exist, however their impact on the market to date is limited with over 95 per cent of home sellers using an agent to market their property,” the company says.

The report notes that the Australian online classifieds advertising market grew by only 2.5 per cent in 2009, finishing the calendar year valued at AUD$506 million. In the 2008 financial year, the market grew by 28 percent.

While growth was slow in 2009, online now accounts for an estimated 25 per cent of total classifieds advertising expenditure, up from 23 per cent in 2008.

But Frost & Sullivan predicts the rise of social media, along with “maturity” in the market, will cause growth in online classifieds advertising to taper off over the next three years, reaching $762 million by 2013.

Phil Harpur, ANZ Senior Research Manager at Frost & Sullivan, had this to say about the growth of online classifieds in Australia:

“Over the past few years, the fundamental driver behind the growth of the online classifieds advertising market has been the migration of expenditure from print classifieds to online classifieds, as advertisers have gradually switched their expenditure to the online channel, or started using the online channel alongside the print channel.

However, as the Australian online classifieds market matures, it is, like the print classifieds market, becoming more closely correlated with economic conditions. This is not to say that the migration from print to online has ceased, but it is no longer the overwhelming market force that it was in the early stages of growth of the online market, where factors such as the state of the economy had much less relative impact on overall online classifieds growth.

As select sectors in the online classifieds market, such as the recruitment sector, have established themselves as more popular than print, both companies and consumers are questioning whether they also need to advertise on the print channel at all.”

Credit:Alice Allan Property Portal Watch

Ten tips for attracting a following on Twitter

Credit: Boston.com

OK, so you’ve been persuaded by all the Twitter hype that the terse messaging service might actually help advance your career, build your reputation, or attract new customers to your business.

But how do you actually get people to “follow’’ you on Twitter? There’s not much incentive to compose useful or witty messages (known as “tweets’’ on the service) if you don’t feel anyone is out there.

I’ve been collecting advice this month from digital media consultants in Boston who have attracted thousands of followers on Twitter, and also some executives at local businesses that have built a respectable following on their own. Here are their 10 key recommendations, relevant to those who are new to Twitter and those who have been dabbling for a while but haven’t yet amassed a substantial audience.

Set up your profile. Before people decide whether to follow you, they want to know who you are, says Jim Storer, a Lynnfield social media consultant, whose Twitter "handle" is @jimstorer. Click “Settings’’ and then “Profile’’ on the Twitter site, and enter your real name, a link to your website, and, in the “bio’’ field, a few words of description about you, your company, or what you plan to tweet about. Upload a photo or your company logo, too. “Having your own avatar on the service means a lot to people,’’ Storer says.

Put your Twitter “handle’’ everywhere. Though they start with an “@’’ sign, Twitter handles are different from e-mail addresses or website addresses. (The handle for Globe business news, for instance, is @GlobeBiz.) Knowing your Twitter handle makes it simple for people to follow you on the service, without having to hunt. Stromedix Inc., a Cambridge biotech start-up, prominently points people to its Twitter feed from the company website. It’s also relatively easy to add a “widget’’ to your website that displays several of your most recent tweets. (Visit twitter.com/goodies/widgets.)

Nick Littlefield, the marketing manager at Cambridge-based Marathon Sports Inc., a running retailer, includes his Twitter handle (@MarathonSports) in his e-mail signature file, so it shows up on his outbound messages; there are also signs in the company’s stores encouraging customers to follow Marathon Sports on Facebook or Twitter, or sign up for the monthly e-mail newsletter. Others recommend adding your Twitter handle to business cards the next time you have a batch printed, or putting it on your slides when you give a presentation.

Share information; avoid self-promotion. What should you post on Twitter? “It’s good to have a combination of things,’’ says David Meerman Scott (@DMScott), a Lexington author and speaker on marketing topics, who has 39,000 Twitter followers. “You might offer advice or a tip, shoot a photo of the place you’re at, post a stand-alone quote that sounds kind of fun, or share a link to an article.’’ At Marathon Sports, Littlefield says, “I’m always trying to connect people with other information that they’ll find valuable with respect to running.’’ Use Twitter to spread interesting information and buzz, says Storer, and only occasionally perhaps in one out of every 10 Tweets to promote what you’re doing.

Re-tweet other people’s messages. When someone you follow shares an interesting link, or posts an inspiring quote, consider sharing it with your followers by re-tweeting it. “It’s kind of like giving somebody a virtual pat on the back,’’ says Scott, adding that often when you re-tweet someone else’s message, they’ll starting following you. “But too many re-tweets,’’ he cautions, “and you’re just like a parrot.’’

Leverage Twitter users you know. If you know people who’ve been on Twitter for a while, it doesn’t hurt to ask them to introduce you to their followers, including your handle, and writing a few words about who you are. One way that Jerry Remy’s Sports Bar & Grill (@JerryRemysGrill)built its Twitter following (now about 1,200 people, just about a month after the grand opening of its Fenway outpost) was by having Sox broadcaster Jerry Remy mention it on his own Twitter account (which has north of 40,000 followers), according to restaurant partner John O’Rourke.

Pick people or businesses to follow. Choosing to follow other users on Twitter is an important step for two reasons: Often, they will choose to follow you as well, and reading their messages will often give you good material to “re-tweet,’’ or share with your own network of followers. “Follow people you’re genuinely interested in because they’re most likely to be interested in you,’’ advises Mike Troiano, (@miketrap) a partner at the Boston marketing agency Holland Mark. You can go to search.twitter.com and enter topics connected to your business to find other people to follow; refer to a directory like wefollow.com; or use a site like whoshouldifollow.com, which invites you to enter the handle of someone you already follow and helps you find related Twitterers.

Find people who are already talking about you. At the Charles Hotel in Cambridge, e-marketing manager Elizabeth Stefan serves as a kind of digital concierge. Using free desktop software called Hootsuite, she monitors Twitter for people who are talking about visiting the hotel, its bar, or its two restaurants, or who are attending a conference there. Stefan reaches out to welcome them (occasionally doing things like sending a complimentary dessert to someone celebrating a special occasion), or to try to satisfy someone who had a bad experience. Many of them start following the hotel’s Twitter account, @CharlesHotel, which now has more than 3,500 followers. “We use Twitter to establish a personal connection with people,’’ Stefan says.

Be consistent. Many Twitter users start by sending a fusillade of messages and then go silent. “People like consistency,’’ says Jeff Cutler @jeffcutler), a Hingham-based social media trainer who hosts the Webcast NomX3.

At gatherings, be a reporter. When you’re at seminars or trade shows, find out if there is a Twitter “hash tag’’ (these begin with the “#’’ sign), Cutler suggests. When you post notes or observations from the event even just a brief review of someone you saw speak include this hash tag in your message. Other Twitter users looking for info about the event will be able to easily find your tweets, and the odds are good they’ll start following you for more information about your field.

Dangle incentives. Make your Twitter followers feel like insiders. Some restaurants and boutiques invite them to special tasting events or trunk shows. Marathon Sports has occasionally done giveaways, and the Charles Hotel offers 10 percent off its best-available room rates to people who follow the Harvard Square hostelry on Twitter.

Perhaps the easiest way to attract lots of Twitter followers overnight, jokes Pearl Freier, a Cambridge biotech recruiter, is to have Conan O’Brien, the talk show host and Brookline native, decide to follow you. When O’Brien joined Twitter last February, he picked one person at random, a Michigan woman named Sarah Killen, to follow. Killen had three people following her before that; today, she has more than 28,000.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.

Daredevil ride of thrilling highs and killing lows

Credit: The Australian
THE adage that top-end residential property has the biggest rises and falls is ringing true, with new figures showing sharper swings during the past five years than middle or lower priced homes.

Those who have lashed out and spent big money on a home may be forgiven for acquiring a few more grey hairs during the past three years.

Premium property has been on a wild ride in that time and, while values have risen, sales volumes last year were well down on the 2007 boom year, according to residential researcher RP Data.

In 2007, as most of the property market was showing strong gains, the most expensive 20 per cent of Australia's suburbs recorded price increases of 19.8 per cent, while the broader housing market gained 13.7 per cent, according to RP Data national research director Tim Lawless.

Then the global financial crisis kicked in and prices in premium suburbs fell by 7.4 per cent while the broader market fell 2.5 per cent. Now values have rebounded by 12.1 per cent during the calendar year compared with 11.3 per cent across the broader market.

Although it has greater volatility, the upper end also has had a bigger increase during a five-year period, with an average annual gain of 8 per cent year on year compared with the middle of the market, where values rose 6.6 per cent, and the bottom 20 per cent of the market, which rose by 5.8 per cent.

But RP Data says sales volumes in the top end haven't returned to anywhere near the levels recorded back in 2007. Sales of $1 million-plus houses are 21 per cent lower compared with 2007 and $1m-plus units are down 40 per cent. "The numbers of premium sales across parts of Australia remain well below average," Lawless says.

On the Gold and Sunshine coasts in Queensland, the Tweed coast and in the Byron shire in northern NSW, the number of $1m-plus house and unit sales are down about 55 per cent on 2007.

The suburbs recording the largest number of premium sales haven't changed a great deal in the past five years.

Sydney's harbourside suburb Mosman has the highest number of $1m-plus sales, with 271 houses in that suburb priced $1m and above last year, 91 per cent of all sales in the suburb.

During the past 10 years, 3055 houses in Mosman have sold for at least $1m or more.

Sydney and Melbourne featured equally in the top 20 suburbs for $1m-plus with nine suburbs in each city .

In Melbourne these included bayside Brighton and the eastern suburbs of Balwyn, Camberwell and Glen Iris, followed by Kew, Balwyn North, Brighton East, Hawthorn and Toorak.

In Sydney there was Paddington and Randwick in the eastern suburbs and Wahroonga and Pymble on the north shore, followed by Roseville, Strathfield and St Ives.

Western Australia had two suburbs in the top 20, Nedlands and Cottesloe, both in Perth's exclusive western suburbs.

In apartments, Sydney's Pyrmont had 95 sales at $1m or higher.

This represents only 22 per cent of Pyrmont sales last year, however, because of the wide variety of units in the suburb.

This was followed by the Sydney and Melbourne central business districts, Mosman again, Southbank in Melbourne, Manly on Sydney's northern beaches and Toorak in Melbourne.

Brisbane City was in the top 20 for apartments, as were Surfers Paradise, Main Beach and Broadbeach on the Gold Coast.

"For those who can afford the price tag, premium property markets have generally provided stronger capital gains than the broader market, thanks to inherently tight supply of inner city, coastal and character properties," Lawless says.

However, he says, investors should be cautious because premium properties are also characterised by relatively low rental yields, so cashflow can be an issue in these cases.

That is what many people found out in the previous downturn, when they tried to hang on to their prestige home by renting it out.

The exercise shows how common $1m-plus homes are becoming in the biggest capital cities.

It also shows that last year, compared with 2007, fewer people bought in that price range. Perhaps also some properties that would have achieved more than $1m in 2007 may have sold for below that magic mark last year.

Majella Corrigan: majellacorrigan@optusnet.com.au

Call for reform as 'rental society' looms

Credit: Ruth Williams The Age

AS HOME ownership slips beyond the grasp of more Australians, the private rental market will need major reforms to cope with unprecedented demand in coming decades, housing affordability researchers have warned.

Terry Burke, professor of housing studies at Swinburne University's Institute for Social Research, said Australia had crossed a point of ''no return'' in housing affordability, raising ''fundamental questions'' about the role of private rental housing.

He said a range of reforms should be considered, including greater access to longer leases of up to 10 years, US-style controls over rent rises, and minimum quality standards for rental properties.

Figures released yesterday by the Real Estate Institute of Victoria showed Melbourne house prices rose 29.5 per cent in the past year, with the median house price now $524,500. First home affordability, as measured by the Housing Industry Association and the Commonwealth Bank, declined for a decade but eased during the global financial crisis, only to dive last year when the monthly repayment on a typical first-home mortgage increased 20 per cent.

Professor Burke said that unless the housing affordability problem was fixed, Australia was ''going to move towards a rental society, away from a home ownership society''.

''We have always seen the rental sector as a transition to home ownership,'' he said. ''But more and more people are going to become long-term renters, with no control over the price they are paying and no security of tenure.''

Judith Yates, of Sydney University's faculty of economics and business, said that as more people rented, those on lower incomes would find it harder to get accommodation. ''Our current system is built on a foundation of home ownership,'' she said. ''If you are getting people increasingly being unable to get into home ownership then you are going to find you have got more renters, and [they] are … richer than renters used to be, and they squeeze out traditional renters.''

Last year's National Housing Supply Council report found Australia had a shortfall of 202,000 dwellings for low-income renters, and that most of the growth in private rental stock between 2001 and 2006 was in more expensive brackets.

Cath Smith, chief executive of the Victorian Council of Social Service, said a significant proportion of renters were long-term. But they had little security - the average tenancy turnover rate was about 18 months, she said. ''We are now looking at a new, even bigger generation of renters, of people who, five years ago, would have been able to put the money together to buy a house,'' she said.

The federal government's recent State of Australian Cities report found that about 22 per cent of households were renting privately, and another 4.7 per cent from a housing authority. Being served notice by a landlord was a common reason for renters to change houses, the report said, adding that the cost of moving was ''considerable''.

This month, VCOSS launched a campaign for basic standards for rental properties. State government spokeswoman Rebecca Harrison said the Brumby government had committed to improving renters' rights and conditions, saying it would review rental housing standards. It also provided renters a service to assess whether they were paying excessive rent.

Federal Housing Minister Tanya Plibersek said that although rental tenures were a matter for state governments, overseas experience showed that both tenants and vendors could benefit from long-term leases. "Tenants can plan for the medium term and may be prepared to take on greater responsibility for maintenance,'' she said.

The Rudd government has pledged $5.638 billion for building and refurbishing social housing, and Ms Plibersek said its National Rental Affordability Scheme, which offers investors tax incentives to charge less rent, had so far approved construction for 11,000 affordable rental properties.

Prestige home market lies becalmed

Credit: Jonathan Chancellor The Sydney Morning Herald

SYDNEY'S $5 million-plus prestige residential property market has stalled. The number of such sales this year sits slightly above the low levels recorded during the trough of the global financial crisis.

There have been just 45 sales higher than $5 million during the first quarter of the year, a small rise on the 44 sales in the March quarter last year. Volumes are well down on the 74 sales in the 2007 March quarter, and the 63 in the 2008 March quarter.

The recent slump follows three active quarters last year when 70 sales were secured, according to Australian Property Monitors.

''Buyers just seem to be ultra-cautious now … it's not for want of listings,'' one agent said. ''Many prospective buyers won't commit until they sell their home before they upgrade. The brave early birds got their sales last year when there wasn't the competition from the few other orderly listings.''

The lack of sales and comparable prices have made it hard for sellers and buyers to see how much prices have recovered from their lows.

Bucking the trend with a recent sale has been the former head of Merrill Lynch Asia Pacific, Greg Bundy, and his wife, Nicola, who sold their vast Pymble estate, with a six-bedroom Georgian-style house, tennis court, pavilion and pool, for $7.5 million.

The national director at Knight Frank Australia, James Hall, said prestige prices began to stabilise in the middle of last year after experiencing significant falls.

''They have bounced back by around 5 per cent from the bottom of the market, with steady further growth predicted,'' he said. "Sydney's old-money suburbs such as Bellevue Hill and Point Piper have been the most resilient, as there were few forced sales during the downturn, with potential vendors waiting for the market to rebound.

''Suburbs like Mosman, popular with high net worth individuals employed in the banking and investment sectors and more dependent on mortgage finance, are 15 per cent to 20 per cent off the peaks seen at the end of 2007, but with bank bonuses back on the agenda, prices should start to recover.''

Mosman still led the nation with the highest number of house sales at $1 million or more last year, according to RP Data. It had 271 such sales, which put 91 per cent of all house sales in the suburb at more than $1 million.

The volume of $1 million-plus prestige sales has risen dramatically across Sydney over recent months.

Estate agents have sold about 5475 houses and units at $1 million-plus prices in the past six months, a 55 per cent jump on figures for the same two quarters in 2008-09, according to Australian Property Monitors.

Holiday homes remained slow, with prices still down up to 35 per cent, Mr Hall said.

A Herron Todd White report suggests the Palm Beach market still offers properties at ''well below previous market levels''.

''The Palm Beach holiday home market suffered heavily due to the impact of the global financial crisis, with holiday homes the first assets to be liquidated by those seeking to restore cash flow and underpin their primary places of residences as bonuses evaporated, and margin calls became commonplace,'' the report said.

''The market was flooded with these homes, with value levels dropping up to 25 per cent … confidence is again emerging in this market.

''Supply and demand appears to again equalising, and value levels still remain below previous highs, encouraging those in a strong position to take advantage of weakened conditions.''

Across Pittwater, in places such as Patonga, Pearl Beach and Macmasters Beach, the values vary considerably, the report said.

''The main determinant seems to be linked to the mindset and means of the individual or family group and the latter, more than anything, dictates the confidence in this market segment.''

In Byron Bay, market activity and levels of inquiry for holiday homes priced up to $700,000 had been reasonable, but above that price the market was restricted, according to Herron Todd White.

Low risks make it a great time to invest in property

Credit:The Wall Street Journal

DO I sound bullish about property to you? If not, you're missing the point. To me, this is an extraordinary time for property investment.

Most of the risk has gone. Non-residential prices have fallen dramatically. They're below replacement cost. Development has stalled. Demand is returning. And we can't build until rents rise.

Risk hasn't been this low, or investment decisions more clear cut, for 15 years. Certainly, across cities and sectors, prospects aren't uniform. But by and large, we're looking at strong positive returns over the next five years, with some internal rates of return above 20 per cent.

The key is risk. Some think high return means high risk. Too many people look at risk as statistical without trying to understand where it comes from. For them, risk is variation, everything that they're not sure of.

We can do better than that. We can specify sources of risk associated with specific events.

Let's focus on three specific cyclical property risks: overbuilding and its consequences, excessive gearing and overvaluation.

First, overbuilding. Before the global financial crisis hit, I was worried about overbuilding during the boom leading to oversupply and significant falls in rents and prices, a classic boom/bust cycle. Buoyed by the inflow of funds, building was rising to unsustainable levels. As it turned out, the GFC did us a favour, curtailing construction early, before we oversupplied markets.

The initial setback to development came from the funding squeeze. Now, the problem is making financial feasibilities work. Commercial and industrial commencements have halved in real terms since the peak and are struggling. During the boom the risk of overbuilding was high. Now, it has evaporated and there is the prospect of a shortage.

Second, gearing. This is not only an individual property investor risk but can also create market risk. The financial engineering boom put enormous pressure on corporate Australia to gear up. And the Real Estate Investment Trust sector, with relatively stable cash flows, was a prime candidate.

It was hard to resist. And the REITs didn't, gearing up from 14 to 40 per cent in the blink of an eye, with some more classic financially engineered operations heading above 90 per cent.

Gearing compounds returns in the good times, but multiplies losses when returns don't cover interest. Of course, the GFC triggered falls in property prices which, with gearing, compounded the fall in net assets.

Initially, shell-shocked investors did nothing. The REITs, without equity injections, were forced to try to sell assets. But, with few investors, markets didn't clear and prices fell. Only later were the less affected REITs able to raise equity, mainly through new rights issues, gradually reducing gearing to levels that are allowing them to resume normal operations and think about development and investment.

The third risk is overvaluation.

Increased gearing in the boom, plus additional equity, hugely boosted investable funds, all chasing a limited amount of property. Yields got away from us. Weight of money caused yield compression and caused prices to overshoot.

The risk was that yields would correct, that prices would fall. And they have. The risk of further price falls is low.

Contrary to the present heightened perception of risk, all three types of risk have receded. We're too cautious.

To me, it's safe to invest.

I worry more when I can't understand value. My benchmark is replacement cost -- we can't stay below it for long when we need to develop. This stage of the cycle presents an undervalued market with emerging demand and little new supply.

At BIS Shrapnel we're looking at internal rates of return in some sectors up to 20 per cent. Most risks are on the upside. What would you do? I know what I'll do.

Frank Gelber is chief economist for BIS Shrapnel fgelber@bis.com.au

Overheating fears as China growth speeds up

Credit:The Wall Street Journal
CHINA's economy grew by 11.9 per cent in the first quarter - its fastest growth for almost three years - fuelling fears of overheating and further policy tightening in the world's third-biggest economy.

China's State Council said the nation's economic recovery had been further consolidated in recent months, but there were still serious problems and risks to deal with.

Top of the list was an increasingly frothy real-estate market. Property prices in China grew at their fastest pace in nearly five years in March, according to official figures.

The national property price index surged 11.7 per cent in March from a year earlier, up from February's 10.7 per cent rise, the National Bureau of Statistics said.

The increase was the largest since July 2005, when the bureau switched to an index based on data in 70 cities, rather than 35.

Despite the growth, inflation eased back to 2.4 per cent after hitting 2.7 per cent in the January-February period.

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The GDP growth of 11.9 per cent was up from the 10.7 per cent gain reported in the fourth quarter of last year, and was faster than market expectations of 11.5 per cent.

After the figures were released, Australian investors sold shares on fears of further policy tightening, the ASX 200 closing off its highs but still above the 5000 level for the first time since September 2008.

The benchmark was up 7.2 points, or 0.1 per cent, at 5001.9 points, but off its intraday high of 5025 points.

Analysts remain divided as to whether the economy is growing too quickly and the possibility of a resultant property bubble punching a hole in the national economy.

"In short, growth is strong, but there are signs of overheating," Standard Chartered Bank economist Stephen Green said.

"With stimulus already partly removed, the key is whether the authorities can steer the economy on to a more sustainable growth path, or whether generalised inflation and/or an asset bubble will break out in the second half and then trigger a bigger policy-induced slowdown for China in 2011."

Mr Green said: "The GDP figures were a little stronger than expected, but given that the government has already started tightening and the effect of the stimulus winding down will be much clearer in the second half of the year, we don't at the moment expect additional severe tightening measures.

"Other data continue to look sturdy," Mr Green said.

Industrial production grew by 18.1 per cent year on year in March (versus 12.8 per cent in January-February), a little stronger than expected.

Fixed asset investment, which surged above 30 per cent in January and stayed there all year on the back of a massive rise in bank lending, slowed further to 26.4 per cent for the first quarter compared with last year, as the government began clamping down on new loans. New project approvals slowed.

Retail sales remained healthy, growing by 17. 9 per cent in March compared with an average of 16.5 per cent in the last quarter of last year, and were supported by fresh growth in wages.

Economist Intelligence Units Beijing chief Stephen Joske said the clamp on local government infrastructure spending after last year's phenomenal growth was already under way and would be clearer in the data later this year.

"Property is not yet in bubble territory except in some particular markets like Hainan," he said.

"Underlying demand is strong, so the main threat to property prices comes from changes in tax policy, but major changes are unlikely soon. The true size of the bad loans problems is probably understated but it's not a short-term or even long-term macro threat, as the central government has a strong fiscal position and will bail out local governments with severe debt problems."

Beijing University economics professor Michael Pettis said, however, in a recent blog post that the last bank bailout in China led to lower consumption nationally, exactly the opposite to what the government is seeking as it tries to rebalance China's growth from investment and exports towards domestic spending.

Australia leads property recovery

Credit: The Wall Street Journal
A GLOBAL survey of property investors has revealed that Australia's commercial property recovery leads the world.

The Colliers International survey of 244 major institutional and private investors showed Australia ahead of the Americas, Western Europe and Asia.

The survey used a property clock to measure markets, with the top of the market at 12 o'clock and the bottom at six.

Felice Spark, Colliers International's director of research, said Australia was currently at seven o'clock, but would swing upwards to eight o'clock by early next year. During the same period Canada, currently at five would move to seven, the Americas would move from six to seven, Asia from six to eight and Western Europe from five to seven.

Ms Spark said the survey found 27 per cent of respondents believed Australia would reach nine o'clock by the start of 2011.

"If Australia's property market reaches eight to nine o'clock in the cycle by next year, this will clearly put us in a state of upswing," she said.

Ms Spark said this would lead to improved demand and declining vacancy rates, and could herald the start of the next development cycle in a number of markets.

Colliers International Investment Sales managing director John Marasco said despite continuing global uncertainty, the findings for Australia were supported by improved capital flows.

"According to Pacific investors, on a risk adjusted basis 38 per cent believe Australian offices will offer the best return in three to five years," Mr Marasco said. "Ignoring risk, by sector Australian offices are still the preferred investment choice for best returns, followed by China retail, Australian retail and US offices."

He said investors also saw future opportunities in emerging markets such as Poland, Ukraine, Vietnam, Brazil and India.

Mr Marasco said he expected the Australian investment market to be very active in the second half of 2010 because of pent-up demand from domestic and offshore investors.

"We are also seeing movement with the real estate investment trusts starting to raise capital for new acquisitions, which is a very big shift in sentiment," he said.

Residential land in parts of Australia floods the market

Credit: The Wall Street Journal
The amount of residential development land for sale in parts of Australia has rocketed by up to 40 per cent since this time last year, with one agency alone marketing 1800ha in Queensland and northern NSW.

Land parcels are flooding the market as banks work through their books.

Buyers -- who distanced themselves from the residential land development market last year because of funding constraints -- are now more willing to purchase sites.

Sellers "have engaged with the market because they see that there are genuine buyers out there now", Ray White special projects director Mark Creevey said.

The value of non-income-producing land has fallen sharply, with some developers who paid $33 million for a site during the boom receiving offers of only $10m for the same property.

Queensland is understood to lead the country in the amount of residential development land on offer.

Australand Property Group residential division executive general manager Rod Fehring said the various states were being affected by different factors.

In parts of southeast Queensland, banks began foreclosing last year, and there were discounts, but that was not the case in Victoria and parts of NSW, Mr Fehring said.

"In Victoria and Western Australia, they are cashing in on higher values," he said.

"For parts of southeast Queensland, it is due to distress. In NSW it is a bit of both."

Mr Fehring said the difference from a year ago was that sellers were more confident of being able to achieve sales.

"You could buy anything last year, but no one had the cash to buy it."

Areas with the most land available in Queensland and northern NSW, according to Ray White, were between Yeppoon and Emu Park on the Capricorn Coast, Hervey Bay, Airlie Beach, Cairns, Brisbane's western corridor and the Gold Coast.

Land prices in southeast Queensland had been slashed by 40 per cent since December 2007 and some blocks were being sold at half-price in regional Queensland, Mr Creevey said.

However, sales were occurring, with six development sites sold in the past month, he said.

For the whole of last year, Ray White put up 120 properties for sale, but so far this year it had written 45 submissions to market properties, which was a rise of 40 per cent.

Last year, Mr Creevey said, there were few buyers even if a site had fallen from $33m to $10m in price, although that was a worst-case scenario.

Now, there were offers at $10m for such properties.

Residential Development Council of Australia executive director Caryn Kakas said many developers had gone bankrupt or pulled out of the residential market completely.

Land was being sold at a break-even or loss position.

"Finance continues to be the largest problem the industry is facing," Ms Kakas said.

AVJennings chief executive Peter Summers said there was more land for sale this year than there had been last year.

"We are looking at opportunities," he said. "We are looking at buying strategies going forward. They are still being worked through."

The group wanted to purchase where it was already active and would fund acquisitions through joint-venture deals, Mr Kakas said.

Mr Summers said the problem for developers in NSW had been government-induced risk for projects over four to five years.

"Forecasting government issues is too hard, which is why we have supported Melbourne. There has been a greater level of planning certainty."

Colliers International Queensland land marketing director Andrew Scriven said few transactions had occurred in previous months because of funding restrictions. Most of the sales around the Gold Coast involved land that was distressed.

"With broad-hectare land, there haven't been too many transactions occurring," he said.

"There are some cashed-up people, but not too many."

For sale

Top 10 Queensland locations with most development sites for sale (marketed by Ray White Special Projects)

1. Capricorn Coast: Yeppoon to Emu Park

2. Hervey Bay

3. Airlie Beach

4. Cairns

5. Brisbane western corridor

6. Gold Coast

7. Sunshine Coast

8. Mackay

9. Townsville

10. Brisbane

Real estate information age brings power to the buyer

Credit: Brisbane Times

Queensland property buyers are so savvy today that huge property booms are a thing of the past, according to industry insiders.

Thanks to the internet, buyers and sellers have access to a wealth of information including a property’s sales history, what other similar properties are selling for and what the house should be worth.

And according to agents, all this information has made buyers so aware of the state of the property market, it’s unlikely we’ll ever see a lengthy property boom again.

Daniel McGahan of Belle Property in Wilston said that long real estate booms, such as that of the early noughties which went on for two years, would not happen again because buyers were far too educated.

"Technology, and the access to information that buyers and sellers now have, has forever changed the dynamics of the Queensland property industry," he said.

"Back in 2002 when prices just kept rising and rising and people were doing all sorts of crazy things, buyers didn’t have access to comparable sales results and suburb profiles.

"Since then, everyone’s biggest fear has become buying in a rising market. But with all the information now on hand, buyers won’t let it get out of control again.

"They’ll back off as soon as they feel the market has become too crazy."

Instead, Mr McGahan believes the property market will run in much smaller cycles of peaks and troughs.

"Because everyone is so in touch with the market, I’m seeing mini-booms, where we might have a great few months, prices rise, and buyers recede for a few months. Then they come back again once things have calmed down."

Mr McGahan said real estate agents no longer had control over the market.

"When I started out, real estate agents were very much in control of the information that clients received. Buyers had to rely on what agents were telling them," he said.

"Now the buyers and sellers have the control. People can jump on RP Data and find out exactly what’s going on in their area."

Christine Rudolph of Space at New Farm said the advances in technology and information available had opened up property to some very lucrative markets, including expats.

"I would agree completely that technology has turned everything on its head," she said.

"Think about how many people buy property remotely these days, whether they’re interstate or overseas. They can do all their research online and know the market inside out."

Ms Rudolph said the increase in expat sales was "massive" and that the majority of her sales over $1 million last year were to Australian expats living overseas.

"Without the internet these buyers would not have been in the market," she said.

Kim Murdoch of Ray White Nundah said the real estate sector would continue to change as technology evolved and that the traditional realty office with photos in the window would become a thing of the past.

"Why would we need to work in an office when all our business is done via phones and computers? They just won’t be needed," she said.

Jim Midgley, managing director of PRDnationwide, said all technology, such as the internet, smart phones, prospect/contact management software, global positioning systems and online mapping were all part of an agents must-haves now.

Google had become increasingly popular amongst buyers and sellers, he said.

"The buying public is very information hungry and time poor and we find Google is much faster for finding properties than the other options," he said.

PRDnationwide has recently started uploading all of its listings on Google and this means the public are able to find listings quickly via map searching in just two clicks.

"We are already seeing the benefit of our Google relationship with many of our properties ranking at the top of their relevant searches. In the end, this is a great outcome for our clients and customers and another instance of technology serving our industry well for consumers benefit," he said.

Housing market to weaken as buyers retreat

Credit: The Age

BUYERS are retreating from the Melbourne property market at the rate of 600 a month, causing real estate professionals to predict an ''exhausted market'' with increasingly weak price growth throughout the rest of the year.

High auction clearance rates and record prices notwithstanding, official figures show the number of loans to buy houses in Victoria slipped from a record high of 15,300 in September to 13,400 in February after sliding in six out of the past eight months.

Victoria's slide of 12 per cent is the least severe in the nation. In New South Wales the number of loans slid by 27 per cent and in Queensland and South Australia by 25 and 29 per cent.

''This will lead to a slowing of price growth, no question about it,'' said Real Estate Institute national president David Airey.

''The housing market moves slowly. Unlike the stockmarket it doesn't jump around on a daily or even weekly basis. These things take six to nine months to filter through, but we will look back on the March quarter and say it was pretty buoyant, we will look back on June and say it was more normal, and we will look back on September and December and see the combined effects of interest rates and simply an exhausted market.''

The Bureau of Statistics figures show that this February was the worst for home loans since 2001. Nationwide only 2174 Australians borrowed to buy new homes, a figure that also reflects the low number of new houses on offer.

In February, a mere 2728 Victorian first home buyers took out loans, down from 4206 in July before the phase-out of the first home owner's boost and the Reserve Bank's string of interest rate increases.

''First home buyers are leaving the market and there is no evidence that owner occupiers and investors are replacing them in sufficient numbers,'' said Housing Industry Association economist Harley Dale.

''The prospects for a second stage building recovery are diminishing amid rising interest rates, lack of available credit, and persistently high supply barriers to new housing,'' he said.

ICAP Securities economist Adam Carr said the figures should make the Reserve Bank reconsider the pace of its rate rises.

''House credit growth is not, as the bank would have us believe, solid,'' he said. ''This argues for a softer rate hike touch.''

The latest RP Data figures show Melbourne prices climbing at a blistering annual rate of 19 per cent and Sydney prices climbing 12 per cent.

''But as sure as the sun comes up tomorrow we won't have that kind of extraordinary growth continuing,'' Mr Airey said. ''If we did nobody would be able to afford to buy property.''

The latest Westpac Melbourne Institute survey found a collapse in the proportion of Australians believing that ''now is a good time to buy a dwelling''. The proportion agreeing slid from 62 per cent in December to 42 per cent in March.

Eight buyers tee up for Australia's largest golf course sale

Credit: The Wall Street Journal
EIGHT potential purchasers have been shortlisted for Australia's largest golf course sale.

Melbourne's 47ha Eastern Golf Course, in the suburb of Doncaster, has been earmarked for a $1 billion mixed-use development and is expected to fetch up to $110 million.

A deal is expected to be finalised by the middle of next month.

Meanwhile, the nation's second-largest golf course sale -- of the $70m Horton Park Golf Club, abutting the Maroochydore CBD on the Sunshine Coast -- remains gridlocked because of a dispute over height limits.

The eight shortlisted bidders for the Doncaster site -- understood to include Mirvac, Melbourne developer MAB and at least two overseas developers -- have been asked to lodge final bids by the end of the month.

Colliers International investment sales director Peter Bremner said the Eastern Golf Club, which plans to build a Greg Norman-designed course at Yering in the Yarra Valley, was keen to finalise the sale as quickly as possible.

Mr Bremner said the federal government's decision to lift restrictions on purchases of Australian property by overseas investors had fuelled offshore interest in the land.

It will be the largest sale of a development site since Mirvac paid $100m for the former Austral Bricks site in Scoresby in 2008.

In the past year, foreign buyers, mostly from China, have made the Doncaster area one of Australia's biggest housing hot spots.

While the local Manningham Council has campaigned for about a third of the site to be left as open space, about 1000 houses, as well as apartment towers, offices and bulky goods retail premises are expected to be built.

The site, surrounded by some of Melbourne's most desirable suburbs, is close to the Westfield Doncaster Shopping Town.

Meanwhile, Maroochydore's Horton Park Golf Club believes it could be is running out of time to finalise a $70m deal with Lend Lease that would enable the club to fund a move to a new site 8km away.

Pre-GFC, the club entered into an agreement with Babcock & Brown under which the developer would advance it sufficient funds to purchase a new site to construct two courses, a practice facility and new clubhouse.

With Babcock & Brown out of the picture, the club later signed a heads of agreement with Lend Lease under which the sale of the existing 53ha course to the developer would fund the $70m purchase of the new site.

However, Horton Park Golf Club relocation director Tony Nichols said he was increasingly pessimistic about any move because the club's option to buy the new site was due to expire in the middle of the year and Lend Lease was still restricted to 10-storey buildings on the Horton Park site rather than the 16 storeys it wanted to build.

We are not in a housing bubble: RP Data

Credit: Real Estate Business Online

RP Data’s national research director Tim Lawless has slammed claims Australia is currently in a housing bubble.

According to Mr Lawless, a housing ‘bubble’ suggests housing values increased too rapidly and are set to experience a rapid decline, a fate not likely to come to fruition in Australia.

“Bubble is a word that has been used pretty loosely in relation to Australia’s real estate market since about 2003. Generally I would disagree with using this term,” he told Real Estate Business.

“Across Australia’s capital cities, home values have increased by just 6.2 percent per annum over the last five years – a rate of growth that is in line with wages growth which has been 6.0 per cent per annum over the same time frame.

“Rather than experience a rapid decline, my view is that home values will continue to show modest growth due to the ongoing under supply of dwellings and rapid population growth that creates demand for housing.”

Mr Lawless said despite the fact that 14,000 new homes are approved for construction each month, the rate of new dwelling approvals is much lower than what is required – approximately 17,400 new homes need to be approved each month.

“With such strong demand for new housing and an ongoing undersupply together with improving consumer and business confidence, it is reasonable to expect that the building industry will lift their game and start producing more housing stock. The strategic imperative is to deliver stock to the market that is aligned with consumer demand. That means a focus on developing affordable and well located housing stock,” Mr Lawless said.

Property boom spurs spending spree

Credit: The Sydney Morning Herald

SURGING property prices appear to be driving a spending spree in Australia, with home owners taking out bigger mortgages to help fund the purchase of big-ticket items, from new cars to holidays.

While many struggle to get a foothold in the housing market, home owners buoyed by double-digit rises in property prices are increasingly using their homes as ATMs.

It has rekindled memories of the early 1990s when banks encouraged home owners to borrow for a holiday or new car and add it to their mortgage.

But regulators and economists fear that the borrowing binge could leave home owners vulnerable to rising interest rates, while any sudden reversal of housing prices might tip many into negative equity - when the size of the loan exceeds the value of the property.

Before this week's 25-basis point rise in interest rates, Reserve Bank governor Glenn Stevens took the unusual step of appearing on breakfast television to say that property prices were ''getting quite high'' and warn of the dangers of people taking on too much mortgage debt.

Mortgage refinancing hit a record high of 37.2 per cent of all home loans arranged in March.

Fujitsu Consulting executive director Martin North said there had been a significant jump in the proportion of those refinancing to help finance acquisitions ranging from shares to big-ticket consumer items.

''That's one of the reasons why the RBA is twitchy about where house prices and the housing market is going,'' Mr North said.

Figures from RP Data show house prices in capital cities have risen by 12.7 per cent over the past year.

The top-performing cities in recent months have been Melbourne (5.4 per cent), Darwin (4.2 per cent) and Sydney (3.8 per cent).

Coinciding with these figures, new car sales hit a monthly record in March, led by consumer-focused sports utilities and luxury vehicles.

The latest figures compiled by VFACTS show sales of 95,744 new cars in March, up 25 per cent on the same time last year.

Meanwhile, the high Australian dollar is also encouraging Australians to travel overseas in record numbers.

After taking out bigger loans against their property for much of the past decade, US home owners were badly caught out in the belief that house prices would continue rising.

However, the collapse of the housing market there left many with mortgages that were substantially higher than the value of their homes.

The median Australian house price is now $485,000 in capital cities, while the median unit price is about $400,000.

Rather than paying down debt when interest rates were low, households have been taking on more debt.

The proportion of debt on the nation's housing stock has hit a record high of 50 per cent, compared with a historical average of 30 per cent.

According to JPMorgan banking analyst Scott Manning, this has left households more vulnerable to rising interest rates, with first home buyers being among the most at risk.

''If mortgage rates approached their pre-financial crisis highs then first home owners will be committing about half of their post-tax income to interest servicing,'' Mr Manning said.

Figures compiled by Fujitsu Consulting show first home buyers are typically borrowing about $280,000, which matches established borrowers. However, first home buyers are borrowing more as a proportion of their income.

Sydney suburbs ready to go boom

Credit: The Daily Telegraph
SOME Sydney suburbs will have their populations double or even quadruple in just 25 years, official NSW documents reveal, as the city hurtles towards a population of six million people by 2036.

Official projections obtained by The Daily Telegraph predicted Camden's population would explode by 390 per cent to about 250,000 people in 2036 as a massive development takes shape in the area.

Liverpool would have the second biggest boom, almost doubling to 324,000, and Burwood would grow by almost three-quarters.

Even the already jam-packed Sydney CBD and inner-city were projected to grow by 60 per cent.

Overall, the Sydney metropolitan area would grow from 4.55 million in 2011 to 5.98 million.

The figures were contained in a State Government study which charted growth across metropolitan and regional NSW.

It is understood they were not targets the Government was seeking to achieve but projections based on existing patterns - forcing the Government to provide the infrastructure, including transport, to cope with a population explosion.

While many areas of the city, especially the south-west, have long been earmarked as high-growth areas, the size and scope of the boom in some areas is extraordinary.

It also explains why the Government has focused its attentions on transport in the south-west rather than the north-west.

Ten local areas will have their populations increase by more than 50 per cent - Camden, Liverpool, Burwood, Auburn, Wollondilly, Sydney, Wyong, Campbelltown, Baulkham Hills and Strathfield.

By region, the greatest growth would be in the south-west (up 113 per cent) and the north-west (52 per cent).

The least growth was projected in Sydney's south (15 per cent) and north-east (18 per cent).

Outside Sydney, the greatest growth was on the South Coast (42 per cent), the Sydney-Canberra corridor (42 per cent) and the Central Coast (39 per cent).

The Hunter's population would also grow significantly, from about 650,000 to more than 800,000 in 2036.

And the Illawarra would add almost 100,000 residents, growing from 434,000 to 529,000.

Mel Gibson Finally Sells Old Mill Farm

Credit: Luxist
It took almost three years but Mel Gibson's Greenwich, Connecticut home, Old Mill Farm, may have finally sold. The Stamford Advocate points out that the contract was reported on the Greenwich Multiple Listing Service Tuesday. No details on the buyer or a selling price are available. When the estate hit the market in 2007 it was listed at $39.5 million but cut the price last year to $29.75 million.

Old Mill Farm is a design by architect Charles Lewis Bowman built in 1926 for his horse-loving client, G.L. Ohrstrom. The home is one of the last great manor homes in Greenwich and is significant not just for the architecture but for the fact that it has 77 acres of land. The home itself is an Elizabethan-inspired Tudor mansion of 15,800 square feet and the property has 15 bedrooms and 18 bathrooms total. The jaw-dropping room of the place is the great hall which has a 40-foot cathedral ceiling with a stone minstrel's gallery, walk-in fireplace and leaded glass ceilings. The grounds, which were done by landscape designer James Doyle, include formal gardens and a maze. There is also a terrace pool, tennis court, greenhouse, stable, staff houses, log cabin and a pond on the property.

One thing that might not be going along with the property is the mural in the dining room. A sharp-eyed commenter recently pointed out that the Maxfield Parrish painting Sing a Song of Six Pence which is shown in the dining room in these listing pictures from Sotheby's Realty is set to be auctioned off for an estimated $2.5-3.5 million next month.

One of Gibson's other properties, his Lavender Hill Farm in Malibu, remains on the market for $14.5 million.