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MFAA Prosper : Mortgage and Finance Brief 11
Mor tgage & Finance brief | 23 Braced for impact? A ustralia’s economic future is no longer ruled by bad news from the USA and Europe. However, most market economists say Australian house prices will follow the English-speaking world by 2012. The drop in market value is a delayed impact of the global financial crisis that began in 2008, rather than a whole new crisis. But that may be little comfort for homeowners. According to RPData, the average Australian home now costs $417,500, dropping $66,000 in less than two years. Combine that with forecasts of higher interest rates and the outlook for the property and mortgage industry is uncertain, at best. Property prices set to go down This calendar year has seen a decrease in sales of existing residential properties, new home lending and loans. Additionally, Australian median capital city property prices dropped to 2006 levels in the June quarter, as reported by RPData. “Property prices are now pretty much the same as they were five years ago,” says Damian Smith, CEO of financial comparison service RateCity. In the past 12 months, Sydney is the only capital city not to lose market value. The median value grew 1%, but that still failed to keep pace with inflation at 3.6% . Negative price growth is a new phenomenon to With the US and European economies set for more turmoil, Mortgage & Finance Brief asks experts to predict the impact for Australia. Words Jason Bryce some homeowners and investors. As recently as March 2010, RPData reported Sydney’s price growth at almost 13% over the preceding 12 months. The previously mighty Melbourne property market has suffered significant declines in value this year, the median price falling by 2.9% in 12 months. According to the big bank economists, these prices will continue to drop over the next 12 months. “House prices will keep experiencing moderate falls between 1 and 1.5% each month until the end of the year. We will probably see a decrease of 0 to -1% in national median prices for the majority of 2012,” says David Cannington, senior property economist at ANZ. According to Cannington, the latest monthly ABS data release recorded Sydney prices falling just 0.7% and 2% in Melbourne. “That is compared to a 20% growth per year, until recently, so we think prices are moderating back to sustainable levels,” says Cannington. Decline in auction results This year’s residential auction results have become a weekly horror story for agents and vendors. The national clearance rate is sitting near 50% and even Melbourne’s is in the low 50s. Many are hoping that spring will bring some welcome relief for auctioneers. The winter of THE AVERAGE AUSTRALIAN HOME NOW COSTS $417,500, $66,000 LESS THAN 2009 Report At Suncorp Bank, we’re very clear about whose business we’re developing. Yours. We’re consistently delivering quicker approval times, increasing commissions on Fixed Rate loans and removing Target Business. And that’s only the start of the positive changes we’re making. As a broker, you’ll also benefit from a dedicated Business Development Manager and a skilled and professional Sales Support Team who are on hand to keep you up-to-date and provide you with consistent answers. We’re improving our capabilities and systems so it’s even easier for you to do business with us. After all, our success depends on your success. Banking products are issued by Suncorp-Metway Ltd ABN 66 010 831 722. ACL 229882. BSUN6147_MFB Helping you build your business is our business. Call your Business Development Manager suncorpbank.com.au/businesspartners Recognised by brokers in MPA’s annual Brokers on Banks survey.
Mortgage and Finance Brief 10
Mortgage and Finance Brief 12