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.

Australian house prices just rose for the first time in two years as Sydney and Melbourne markets ‘find a floor’

It would seem property prices are back on the rise.

This blog from Business Insider looks at the current state of play around the country.

After a multi-year slump, national property prices have managed to finally turn a corner to post their first positive month in two years.

Across the country, prices rose 0.1% according to the latest figures produced by real estate research house CoreLogic.

“Our national dwelling value index may have found a floor in July, with dwelling values holding firm over the month following a consistent trend towards smaller month-on-month declines through the first half of the year,” CoreLogic head of research Tim Lawless wrote in his report.

That stabilisation of house prices found support in July as five of the eight capital cities — Sydney, Melbourne, Brisbane, Hobart and Darwin — recorded subtle price rises.

All the east coast capitals recorded a rise of 0.2%, pipped by a 0.3% uplift in Hobart and 0.4% in Darwin.

It’s been the rebound in Australia’s largest two cities, however, that has helped move those numbers higher, according to CoreLogic.

“The primary drivers for the turnaround in housing market performance were Australia’s two largest cities, Sydney and Melbourne, where values have ticked higher over the past two months, taking values 0.3% off their floor in Sydney and 0.4% higher in Melbourne,” the report said.

That’s as auctions in both cities are selling at their highest levels since mid-late 2017.

Lawless echoed other economists in singling out interest rate cuts, the federal election result safeguarding negative gearing and capital gains concessions, and relaxed credit restrictions as being the main drivers behind the property bounce.

While encouraging, the price rise pales in comparison to the 8.3% price decline Australia has seen since peaking, and 6.4% this year.

This year alone, capital cities are collectively down 7.3%.

Future forecasts

As Sydney and Melbourne begin a possible recovery, don’t expect prices to “go off to the races” again, according to AMP chief economist Shane Oliver.

“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,” Oliver told Business Insider Australia.

“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.”

That’s largely in line with the expectation of Commonwealth Bank senior economist Gareth Aird, who is forecasting property markets to largely keep ticking up over the next eighteen months.

image: https://edge.alluremedia.com.au/uploads/businessinsider/2019/08/CBA-and-CoreLogic.jpg

CoreLogic’s actual home value index figures until June 2019, followed by CBA’s forecasts (Source: CBA)

“Our base case for property prices in Sydney and Melbourne has them rising by 2.5% and 2% respectively over (the second half of) 2019.

Such an outcome would see prices ending 2019 down by around 2% in Sydney and Melbourne,” he wrote in a note released on Thursday.

Read the full article here

Approvals crunch continues

Building approvals continue to plunge.

This Blog by Pete Wargen shows the statistics.

A look through the building approvals figures in 45 seconds.

Unit and townhouse approvals have crashed nearly 40 per cent lower year-on-year, driven by Sydney, Melbourne, and to a somewhat lesser extent, Brisbane.

June was the lowest month for attached dwelling approvals in Sydney in more than six years.

The annual total for house approvals was also well down across Sydney (-13 per cent), Melbourne (-12 per cent), and Brisbane (-21 per cent).

Read the full article here

Another rate cut expected as petrol and drought start to pinch

There is another interest rate cute looming.

According to an article on The Sydney Morning Herald we can expect another cut before the end of the year.

The Reserve Bank is expected to press ahead with another interest rate cut by year’s end, with inflation remaining subdued despite a spike in petrol prices and signs the drought is now hitting the hip pockets of consumers.

Markets remain convinced the RBA will be forced into cutting official interest rates to a new low of 0.75 per cent by December, after the Australian Bureau of Statistics reported inflation rose by 0.6 per cent in the June quarter.

Half of the increase was due to a sharp lift in petrol prices, confined to April and May, that added more than 10 per cent to bowser costs across the country.

The increase more than offset a drop in petrol prices through the first three months.

In positive news for the Morrison government, electricity prices dropped by 1.7 per cent while gas and other household fuel costs slipped by 0.5 per cent.

Total household costs fell for the first time since the March quarter of 1998, with the bureau attributing this to the drop in utility prices plus weak housing market conditions.

Rents in Sydney were flat for the quarter while in Melbourne they increased by just 0.3 per cent.

While overall fruit and vegetable prices were down through the quarter, thanks to a fresh supply of bananas, apples and citrus fruits, the data showed the drought was starting to bite into consumer staples.

Lamb prices have now climbed by 13.5 per cent over the past year, beef prices have increased 6 per cent, while bread prices have risen by 4.8 per cent and now sit where they were in the September quarter of 2014.

The end of the milk discounting wars between the nation’s major supermarkets is also having an impact, with prices up by 3.1 per cent to their highest level since late 2010.

Measures of underlying inflation, carefully watched by the Reserve Bank, confirmed there is still a lack of inflation pressure through the economy.

The trimmed mean rose by 0.4 per cent in the quarter to be 1.6 per cent higher through the year while the weighted median lifted by a similar amount in the three months to June to be 1.2 per cent up over the past 12 months.

Underlying inflation has not been in the RBA’s target band since late 2015.

BIS Oxford Economics chief economist Sarah Hunter said the sharp lift in petrol prices and the recent weakening in the Australian dollar had contributed to almost all the increase in inflation through the June quarter with the underlying measures of price growth barely moving.

“With the headline rate now well below the RBA’s 2-3 per cent target band, the data is very unlikely to alter the trajectory for the cash rate,” she said.

“A further cut to 0.75 per cent is very likely in the December quarter, and this could be followed by more easing in early 2020 if we don’t see signs of the residential downturn stabilising or the income tax cuts feeding through to consumer spending.”

Read the full article here

What Aussie suburbs are performing well?

What are some of the best performing suburbs around the country?

In this article for Switzer, John McGrath looks at which suburbs are outperforming.

Property delivered a collective $14.3 billion in gross profits to sellers over the March quarter alone.

That is an incredible amount of wealth generated by plenty of mum and dad property owners across Australia, according to the latest Pain and Gain Report from CoreLogic.

Capital growth is the biggest benefit of property ownership and in many cases, the average income earner will earn more from their properties over the long term than they do working in their jobs (if they buy a good property in a good location and hold it for the long term).

The report shows 87.9% of all sales in March were profitable (ie the selling price was higher than the purchase price).

It’s that high because property is a very reliable and safe asset class and most people come out of it well.

However, sales at a loss do happen and of course, they happen more frequently after a boom because people can pay too much, then panic as prices fall; and they sell sooner than they should.

So, although 87.9% is impressive, it’s actually the lowest proportion of profit-making sales since March 2013.

This reflects the fluctuating market we’ve seen over the past two years across the country, with prices either falling or price growth softening pretty much everywhere due to this.

When the going gets tough, owners have to hold on.

There is a big difference between buying a dud property and having to cut your losses due to bad judgement – which can sometimes be the best call; and buying a good property but selling too soon because the market slows and nerves set in.

This is a key message for investors, as they’re the ones more likely to sell at a loss, according to the report.

This happens because investors have no emotional connection to the property, so it’s easier to panic when the market fluctuates.

Plus, they can claim capital losses against other capital gains.

It’s different for home owners.

They’ve made the property their own and they’re typically planning to be there for the long haul, so a few bad years at the bottom of the cycle is no big deal because they know the market will come back again, like always.

In March, just 10.5% of owner-occupied properties nationwide re-sold at a loss compared to 16.7% of investment properties.

Houses that re-sold at a loss were held for a median 6.1 years, compared to houses that sold for a profit which were held for a median 9.8 years.

Apartments re-sold at a loss were typically held for 6.3 years and those that sold for a profit were held for 8.7 years.

Holding your property for the long term is the key to capital gains.

Read the full article here

9 of the best bedrooms ever seen on The Block

The Block is back for another year this Sunday – and before the new season kicks off, here’s a look at some of the previous highlights.

This article from Realestate.com.au looks at 9 of the best bedrooms from all the seasons.

Designing bedrooms may seem like a cinch – just throw in some cushions and throw rugs, right? Wrong.

As contestants have found out over 14 seasons of The Block, there’s plenty of room for error when creating a private sanctuary for a broad market. However, some teams absolutely nailed the brief, creating luxe master suites, kids’ retreats and all manner of restful spaces.

Here are nine of our picks for The Block’s best bedrooms – some for their design flair, some for their sense of fun, and some for simply being our #bedroomgoals.

1. Hannah and Clint, Elsternwick, season 13

A bold floral feature wall is not for everyone, but if you like to ‘go big or go home’, this eye-catching element might be up your alley. Paired with a plush velvet headboard and colour-matched soft furnishings, this room is a bright and sumptuous retreat.

Styling inspo: Grey makes a great neutral base against these vibrant pinks and pastel purples; it’s not as stark as white or as harsh as black, and softens the space while letting the palette pop.

2. Josh and Elyse, Elsternwick, season 13

This winning master suite is literally a dream room. It would be hard to imagine not sleeping soundly when surrounded by sweet flowers, musky pinks and feather-soft sitting areas – from a chaise lounge to a built-in day bed. Swoon.

Styling inspo: Josh and Elyse were smart to maximise the natural light coming through the high windows. The choice of semi-translucent drapes bathe the room in a gentle, dreamy wash.

3. Julia and Sasha, Port Melbourne, season 12

Referencing the building’s old-world heritage, this vintage-inspired bedroom is tastefully done; careful not to over-decorate, the pair let furnishings like the blue velvet headboard and Art Deco side tables shine. A glamorous but restful space.

Styling inspo: Beautiful light fittings can really make a room sing. Try metal tones, such as gold and copper, to add a touch of understated elegance.

4. Kerrie and Spence, St Kilda, season 14

This apartment at The Gatwick has vintage elements, such as the ornate leadlight window and velvet decor, but it’s overall a functional contemporary bedroom with plenty of space and sunlight. Plants inside and on the terrace help to tie it together.

Style inspo: Dark tones, such as the timber bed frame, the door frames and the curtains, lend a timeless touch of drama to the crisp-white canvas of the walls, ceiling and shutters.

5. Ronnie and Georgia, Elsternwick, season 13

A beautiful blend of modern industrial elements – such as black track lighting, leather, bare bulb lighting and dark grainy timber – and soft velvety furnishings, this room is a sophisticated urban sanctuary.

Styling inspo: One well-chosen piece of artwork can really anchor a room, and this contemporary, feminine portrait is a case in point. Effortless chic.

6. Dan and Carleen, Port Melbourne, season 12

From the tile-inspired wallpaper and striking vintage-style lighting, to that headboard and plush velvet ottoman, this Port Melbourne bedroom is deluxe and delightful.

Style inspo: The choice of two-tier curtains, with a sheer panel for maximum sunlight, adds a freshness to this densely decorated space. The floral touches have the same softening effect.

7. Sticks and Wombat, Elsternwick, season 13

Surely a children’s wonderland, this bedroom is whimsical but also clever, with every inch of space capitalised for storage and functionality.

Style inspo: Sophisticated decor choices work well to balance the playful elements, like that fun-tastic climbing wall, which will stay timeless as the kids grow.

8. William and Karlie, Port Melbourne, season 12

A brown leather armchair, chocolate-coloured curtains and a geometric timber wall? Talk about suave. The greenery adds much-needed freshness. A smart balancing act.

Style inspo: Adding a rug under the bed really grounds the room, adding another layer of texture to tie in the strong elements.

9. Jason and Sarah, Elsternwick, season 13

Another elegant kids’ room playing the long game. The built-in desk, ample storage and sitting area are all clever inclusions for future flexibility. The colour palette is sweet and relaxing.

Style inspo: Feature lighting and animal-themed homewares add a playful touch to the stylish space. Fluffy cushions and throws add texture and more of that natural element.