Theresa Worrell: Weekend reads – Must read articles from the last week

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

The weekend will be over before you know it, so enjoy some weekend reading.

Sydney and Melbourne house prices could rebound by as much as 10% as sales pick up — but there’s an important test ahead

It seems that the Sydney and Melbourne property markets have overcome the worst.

An article on Business Insider looks the current state of play.

The worst appears to be over for the Sydney and Melbourne property markets after yet another successful weekend of auctions.

Clearance rates — the proportion of properties sold at auction — ran home strongly for another straight week, and look to be the best in around two years for both cities.

Across the weekend, 78% of all Sydney homes and 74% of Melbourne’s sold, according to real estate platform Domain.

While the final figures will come in slightly lower, that puts both markets on course for their best results in years, according to AMP chief economist Shane Oliver.

Those results mark the sixth consecutive weekend that both capitals have trended above the 60% level, and the second-straight week that Sydney has broken the 70% mark, according to Domain.

The rebound in market activity has been put down to a number of factors, ranging from the Reserve Bank of Australia (RBA) cutting the official interest rate two months in a row to the loosening of lending that has made it easier to buyers to get credit.

Throw into the mix a federal election result in May that guaranteed the current negative gearing policy as well as staved off the Labor party’s attempt to halve the capital gains tax discount and it appears Australia’s largest two property markets have plenty to jump at.

So much so that Oliver expects prices could rebound by as much as 10% across both cities.

“If you look back at the past cycle, clearance normally leads volumes.

If you look a the relationship between rebounding clearance rates and prices, this suggests that within a year or so prices will be up 10% in Sydney and Melbourne,” Oliver told Business Insider Australia.

But that comes with a caveat — Oliver sees a constrained market ahead for the remainder of 2019.

“I think we’ll spend this six month period between now and the end of the year bottoming out and then you might see modest gains coming in through next year.”

“There’s a bunch of positive factors supporting the property market but I don’t think prices are going to run away because lending standards are a lot tighter this time around.

This is not 2011/12 when banks were happy to lend to virtually anyone.

I also think unemployment is going to rise so I think that’s also going to put a cap on prices.

Importantly, those clearance rates are the results of low supply on the market.

“The increase in demand has pushed up clearance rates on still relatively low volumes, which begs the question as to whether it’s sustainable,” Oliver said.

With the number of auctions typically growing in spring as the weather improves, all eyes will be on how sales fare.

Read the full article here

Rates to fall to 0.50pc

Could we be seeing more interest rate cuts?

This Blog by Pete Wargen explains why this is a possibility.

More cuts

There was a noteworthy flicker of lively action in RBA October 2019 Overnight Index Swaps for last night.

And, lo and behold, today Westpac is calling for a rate cut in October 2019, followed by another cut in February 2020.

This would take the cash rate down to just 0.50 per cent.

Source: Westpac

In today’s note, Bill Evans of Westpac discussed other measures which might be taken to ensure that any rate cuts are passed on in full.

The Aussie stock market may be set to nudge intraday highs at record levels today.

Read the full article here

Australians positive about house price growth but worry about affordability, survey finds

While Australians appear to feel more positive about price growth – there is still a fear about affordability.

An article on Domain.com.au looks at the recent results from a national survey.

Australians are feeling more positive about property price growth but are still worried about affordability, a national survey of first-home buyers, owner-occupiers and investors shows.

The number of people expecting house prices to rise has risen across the country, ME Bank’s quarterly Property Sentiment Report for the June quarter, released on Tuesday, shows – with 38 per cent of Australians expecting house prices to rise over the next 12 months.

This was up from 32 per cent in the March quarter.

The survey showed that while overall sentiment was improving in Australia, some states were still holding negative outlooks when it came to property values.

ME group executive – customer banking Craig Ralston said the improved sentiment from buyers was unsurprising given the Reserve Bank’s recent interest rate cuts, changes to lending criteria for mortgages and the certainty over negative gearing options since the federal election.

“We weren’t actually surprised to see an improvement this quarter given what’s happened,” Mr Ralston said.

Rising auction clearance results were also having an impact on attitudes, he said.

“Positivity among sellers and owner-occupiers suggests these groups see the recent market trends as a sign their homes are retaining or regaining value again,” he said.

The survey involved 1000 people from across the country – 500 owner-occupiers, 300 investment property owners and 200 first-home buyers.

In NSW, many still believed the value of their property would drop over the next 12 months compared to other states and territories, with 41 per cent of people surveyed believing prices would continue to fall across the state. Only 26 per cent believed prices would rise.

In Victoria, more than one-third, 36 per cent, believed their property prices would fall with one-third expecting prices would jump.

In WA, 26 per cent believed prices would drop and 21 per cent thought they would rise.

Things were a little more positive in the other states, with 36 per cent of Queenslanders and half of Tasmanians believing house prices would rise in the next 12 months.

Home owners in the ACT seemed much more positive with 32 per cent believing prices would rise and only 6 per cent predicting a further fall in prices.

While most were more positive about house price growth, housing affordability was a major area of concern.

Almost all – 93 per cent – listed it as a leading issue despite the cooling prices in major cities including Melbourne and Sydney.

“House prices remain high by historical and international standards, hence perceived worries about affordability may take time to shift,” Mr Ralston said.

In what he described as one of the biggest surprises of the sentiment survey, Mr Ralston said investors’ positive sentiment had dropped since the March quarter survey.

Read the full article here

The myth of winter selling

Despite the cold-front – winter is not a bad time to sell.

In this article for Switzer, John McGrath explains why the ‘slow winter market’ is a myth.

It’s the biggest myth in property and home owners currently waiting for Spring should really heed this message.

Winter is NOT a bad time to sell! In fact, winter is usually an excellent time to sell because the number of competing homes for sale goes down (because people believe the myth!)

When you have fewer homes competing with yours for buyers, you’re far more likely to get a strong sale price.

It’s the law of supply/demand and I believe winter is the best season to tip the balance in your favour.

Spring and autumn are the busiest times of the year – that’s when most people sell.

I’m not saying you can’t sell well in these seasons but when the market is soft and buyer demand is lower, like it is now in Sydney and Melbourne, it’s best to sell when competition is lower, too.

In the first month of winter, we saw a bounce in auction clearance rates.

Both Sydney and Melbourne began trending above 60%.

This reflected not only a change in market mood following the election but also a change in supply/demand, with fewer homes going under the hammer.

If you believe the myth, buyers hibernate in winter.

That’s simply not true.

Sellers hibernate – and for no good reason!

Right now, a lack of stock in some of the most desirable suburbs is resulting in concentrated competition on only a few homes.

Look around in your area – check out the number of homes for sale online. You’ll likely find a stock shortage, particularly in blue chip suburbs.

Buyers who need a new home are not going to be demotivated by a bit of rain and wind.

That theory doesn’t make sense.

The only people put off by poor weather are those not committed to buying, so think of it this way.

On a cold, blustery day, the buyers attending your opens are more likely to be genuine.

On lovely, warm summer days, you’re more likely to get a mix of real buyers and window shoppers attending opens for fun.

The other part of the myth is that homes don’t present well in winter.

I’d argue that plenty of homes actually present better in winter.

Federation homes with open wood fireplaces, period charm and a cosy ambience look fantastic in winter.

People want comfort in their homes and stepping inside a lovely, warm, beautiful family home on a rainy, cold Winter’s day is going to stir up plenty of emotional appeal.

Then, there’s the garden. Don’t believe it can’t look good in winter?

These days, most city dwellers create minimalist, low maintenance gardens so they can spend more time enjoying them than working on them.

If your backyard is full of manicured evergreens, selling in winter isn’t a problem.

Read the full article here

3 surprising colour palettes to consider this winter

It’s often said that a change of decor is as good a holiday.

So how can you add a little change to your home this winter?

This article from Realestate.com.au looks at the latest colour trends.

Looking to revamp your interior spaces for winter but feeling a lack of inspiration?

Here we look at the chic colour combos stylists are choosing this season

1. Burgundy and charcoal in the bedroom

It’s easy to create a cosy haven in your bedroom this winter by amping up the luxurious tones of burgundy and charcoal; which are trending right now.

For easy updates, Jason suggests incorporating these shades with accessories, cushions and throw rugs.

Another popular bedroom colour trend this season is rust, mulberry and mustard. “Things should be serene in the bedroom; think texture and soft materials, for example velvet immediately adds an easy-luxe feel, while jersey bed linen adds a cosy and comfortable place to rest,” says Jason.

2. Blonde wood and matte black in the kitchen

Timber is the perfect natural material, according to Jason: “It’s so earthy and grounds any space, it’s honest and has an ease.”

“Set your table, ideally a timber one, with matte black ceramics, tableware and cutlery for a modern edge.”

3. Mist and gold for living spaces

Be inspired by nature and a little bling. By mixing these two looks together you can add a touch of luxe to your space, suggests Jason.

“Add a collection of decorative yet practical gold objects to your living space for an instant injection of luxe mixed with soft-mist shades in cushions and throws.”

This look creates an easy, everyday luxe feel, explains Jason.