CIS: Land shortages are the reason behind the housing boom
The Centre for Independent Studies (CIS) says property prices are on the rise because there isn’t enough land for development. A report released by CIS this week shows new land supply has fallen by 21 per cent across Australia’s five largest capital cities in the past decade. The report also shows that land prices have increased by 148 percent to $504 per sq m. The report absolves investors – foreign and domestic – of their culpability in pushing values beyond affordability, laying the blame on zoning decision-makers. CIS is a libertarian thinker. Its solution shouldn’t surprise. Liberalize land development policies in order to increase density. “Land supply and the intensity of land use need to be freed-up to accommodate rising demand.” Read the full story here.
Under regulatory review: Real estate agents who are not licensed by the REA are being prosecuted
The Australian Competition & Consumer Commission may launch a full-scale competition investigation into a group of real estate agents fighting price increases at REA Group’s listing site, as connections between the group and REA’s prime competitor emerge. Real Estate Digital Marketing Services, a new company that brings together defectioned brokers, is now available. REDMS has hired a media buyer for the group’s ability to jointly negotiate advertising rates. But REDMS negotiator Vizeum has the listing service Domain – number two in the market – as a client, and some of the leadership of REDMS is connected to Domain as well. REA repeatedly asked REDMS for clarifications about its corporate structure. REDMS repeatedly denied. ACCC might conclude that rebel agents could have violated competition laws.Read the full story here.
The falling rent prices in Canberra and Perth could mean a decrease in yields
Australian Property Monitors’ latest rental price report shows that Canberra has seen a 6.6% drop in house rentals, and Canberra 6.3% for the same quarter. The average weekly rent in Canberra has fallen to $450 per semaine. The quarter’s largest drop in rental prices was 6.1%, with unit rents falling to $385. The median rent price is also the lowest in all capitals. Sydney’s weekly unit rents were $500 in the last quarter. This represents a 5.3% increase in unit rents over the previous year. But it’s increased rental supply – and not job losses – that has driven down prices in Canberra. Read the full story here.
The housing boom is making investors very happy
The latest Property Council/ANZ property industry confidence index reports steady – and very strong – confidence among property investors at 131 points, compared with 132 for the previous quarter. In NSW, it’s 143. A score of 100 means that you are neutral. In July, the Westpac/Melbourne Institute Index of Consumer Confidence rose 1.9 percent and reached 94.9. Property investors feel that the economic outlook is good for real estate. This is due in part to the low interest rate, low defaults rates, as well as a very strong employment market. Strong macroeconomic trends are evident in global markets. Property investors may find Australia less attractive due to China’s weakness, which could boost the value of their investments. Read the full story here.
Negative gearing was meant to spur new home construction – it didn’t work
Callam Pickering argues that if negative gearing’s original policy purpose was to boost the housing supply by encouraging greater investment into housing construction, it’s failed and “an unmitigated disaster”. Investors have preferred negative gearing as a speculative tool for purchasing existing housing. Only 7.1% are approved for investor loans. The majority of Australia’s two million property investors use negative gearing, generating $6.8 billion in net rental losses … and tax losses for the Australian government. Read the full story here.