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.

Is another housing boom about to begin?

Are we in for a housing boom?

This article form Realestate.com.au looks at what we can expect.

The last property price boom began in 2011

The last property price boom began in 2011, although the length of the boom changed from city to city:

• In Darwin and Perth, it was an uptick that fizzled out quickly, lasting less than three years.
• For Sydney, Melbourne and Hobart, the boom was significant.
• Sydney was the main beneficiary with prices increasing by 70% between November 2011 and September 2017.

In most major cities, it ended pretty much as soon as the banks began enacting tighter lending standards just before the Financial Services Royal Commission began in late 2017.

Nervousness about access to finance was the main factor driving a complete shift in sentiment towards housing.

The correction phase

In the aftermath of the housing boom, we’ve experienced a correction.

• Prices may have increased in Sydney by 70% since 2011, but they have now dropped back by 12% since the boom ended.
• In Melbourne, prices didn’t see the highs of Sydney, but the decline so far has also been less.
• Prices in Adelaide and Brisbane didn’t rise by much, but also didn’t really decline much either.
• Hobart prices increased significantly during the boom, but most likely due to the structure of the economy changing , so it seems unlikely prices will see a large decline any time soon.

Signs of a recovery

The current correction does look like it is coming to an end, primarily because there has been a lot of stimulus into the market.

The first positive sign was when search activity on realestate.com.au started increasing just after the federal election in May, with policy ensuring greater certainty for property investors.

Since then, we’ve experienced three interest rate cuts in fast succession and three restrictions removed by APRA on home loan lending and income tax cuts, which has resulted in increased buyer activity.

Whilst whispers of the downturn coming to an end has encouraged buyers back into the market, there is a supply problem as listing volumes are particularly low – the buyers are back but sellers aren’t.

The supply demand imbalance is reflective of an early cycle that will lead to strong price rises in premium suburbs, although it’s not currently showing up across all capital cities.

Supply an issue, but prices will remain low

Although a housing market recovery is underway, conditions are very different this time around and at this stage, it is unlikely we will see a surge in pricing equivalent to the most recent boom.

The biggest problem is that the economy is weak. Interest rates are very low because unemployment is rising.

On one hand, low interest rates are good for house prices as people can borrow more money, but if households are worried about job loss, this will restrict the amount they will choose to borrow.

If unemployment rises too much, this could quickly lead to very negative conditions where people are forced to sell.

This scenario seems very unlikely, but it is a consideration.

In addition to the weak Australian economy, there are a lot of other structural differences to the previous housing recovery and boom.

Read the full article here

Moody’s rebound forecast…for housing

Results have come in from Moody’s Forecast.

This Blog by Pete Wargen explains the statistics.

Forecasting

Moody’s sees house prices rising by about 12 per cent over the next two years in Australia at the 8 capital city aggregate level, with apartment prices to rise by just over 10 per cent.

Source: Moody’s

The gains are set to be driven by Sydney and Melbourne.

Truly, I’ve no idea how you’d run a sub-regional forecast by property type – let alone incorporating price growth to one decimal place – but here they are anyway!

Read the full article here

What is open banking and what does it mean for borrowers?

What is open banking, and what will it mean for you?

This blog form Domain.com.au explain what the new system means and how it will impact borrowers.

The way Australians do banking will change in a few short months when customer data that was once jealously guarded by banks is shared between financial institutions.

Open banking is set to begin in February next year, allowing customers’ financial information to be shared between banks and other companies, as long as customers give their consent.

Banks will be able to use this data to provide products and services better tailored to customer’s circumstances, whether that’s a new credit card or home loan, or an app to help customers manage their money. 

It also means any bank or company you choose to share your data with will be able to see your spending habits in minute detail.

It’s all a result of the Consumer Data Right bill passed in August, which requires the big four banks to start sharing data next February, with other banks following suit in July.

The move brings Australian into line with – and in some ways goes further than – several other countries already using open banking.

But despite the significant implications of open banking, a recent Accenture survey found only 20 per cent of Australians were aware of the concept, let alone what it means for consumers.

What data will be shared by the banks?

Data will be shared in two phases.

All consumer, account and transaction data for credit and debit cards, deposit accounts, and transaction accounts from the big four banks will be shared from February 2020, with smaller banks to follow in February 2021.

Mortgage and offset data will follow in phase two in July 2020, with smaller banks following in July 2021.

Open banking is just the latest in a suite of recent changes resulting in increased data sharing between financial institutions.

Since July 1, comprehensive credit reporting means banks have been required to share positive credit events, such as regular payment histories and what types of credit people use.

Previously only negative credit interactions such as missed payments and bankruptcies were shared.

What are the benefits of open banking?

Open banking will give home buyers, home owners and investors better access to financial products and services, according to Deloitte open banking and open data lead partner Paul Wiebusch.

“The opportunities for each of those groups are similar,” he said.

“All of them can share personal information about their financial position with another organisation to allow them to assess credit risk better or come up with a product offering that better suits their financial arrangement.”

Wiebusch said overseas examples showed the success of open banking would be dependent on how much customers trust banks.

“In the UK it only applied to nine banks, it only applied to transaction accounts, and to begin with, there weren’t any consumer experience standards,” he said.

“Australia has learnt from the UK experience. It has API standards, consumer experience standards; it also applies to all banking products. It’s much more comprehensive in its applications [compared] to the UK open banking.”

For those looking to refinance, open banking will take the pain out of switching,  according to Alex Trott, banking lead at Accenture Australia and New Zealand.

Borrowers will be able to keep tabs on their home loan with one bank while tracking their other accounts with other banks.

“They may even be able to lock in a more competitive deal based on this data, with banks offering better interest rates for sharing this data,” he said.

“Once the consumer has decided upon the product, switching between banks could also be drastically improved, reducing the time and administration involved as the data would be automatically shared between providers.”

What are the risks and downsides of open banking?

A Finder survey earlier this year found less than 20 per cent of Australians had a high level of trust in their banks, suggesting not everyone may be keen on sharing their data.

Despite this, Finder open banking specialist Ben King said the move is set to make it easier for borrowers to apply for and secure a loan.

“There’ll be a whole part of the process where you don’t have to provide income data, home loan data; you can just plug your banking data in,” he said.

King said the changes would speed up the application process.

“We’ll see more automated approvals and declines,” he said.

While consumers will still have the power to control who their data is shared with, there are downsides to open banking, King said,

“Full access to your financial data makes it easier for the lender to identify frivolous or stupid things in your data.”

What are the future applications of open banking?

Open banking could also yield apps that draw data from multiple banks, allowing borrowers visibility of account balances and transactions across different institutions.

This has been a critical outcome of open banking in the UK.

Swedish fintech company Tink is one business that has its eyes set on the Australian market.

Its product tracks users’ financial data across all banking and financial platforms to provide people with a complete snapshot of their financial health.

Another newcomer from the UK, Crowd2Fund, is a peer-to-business lending platform which aims to use open banking to share data between lender and customers and create an algorithmic lending platform.

Trott said open banking could streamline the process of applying for a loan and even buying a home, Trott said.

Read the full article here

ScoMo’s success sees Sydney’s Spring sales soar

Things seem to be blooming for the Sydney Property Market.

In this article for Switzer, John McGrath looks at why Sydney’s spring sales are soaring.

Sydney is experiencing a strong Spring market with clearance rates in the upper 70% range.

We are well and truly off the market floor, with many sellers celebrating exceptional results so far this season due to a low volume of homes for sale and rising buyer demand.

As discussed in our just released McGrath Report 2020, the Sydney market turned the corner a year earlier than expected, with a combination of factors including the ‘ScoMo effect’, APRA’s easing of lending criteria and interest rate cuts bringing forward a conclusion to the steepest correction on record.

Home values in Sydney fell -14.9% from the peak in July 2017 to the trough in May 2019.

Credit restrictions relegated many buyers to the sidelines in 2018 and the first half of 2019, resulting in new loans to NSW owner occupiers falling 28% and investment lending halving from their peaks, according to the Australian Bureau of Statistics.

On the flip side, falling prices have inspired the highest level of first home buying in Sydney in seven years.

Stamp duty concessions, a $10,000 grant on new homes, interest rate cuts, expedited savings via the Super Saver Scheme and now, help with the deposit via the new First Home Deposit Scheme, starting in January 2020, will enable many young people to achieve the dream of home ownership.

At the market turn, Sydney’s median house price had fallen to $866,524 and the median apartment price was $682,374.

Buyers have now re-engaged, many with new funds after having their borrowing capacity reassessed following APRA’s lowering of the serviceability bar on new loans from July.

Since the first month of price growth in June, Sydney values have improved by 3.6%.

Modest price growth is expected in coming years, with CoreLogic-Moody’s Analytics predicting 7.9% house price growth for Sydney over CY20 and CY21, with best gains in Sutherland (15.9%), Baulkham Hills/Hawkesbury (15.3%), Blacktown (13.5%) and the Northern Beaches (10.8%).

Apartments will rebound 10%, with strongest gains in Parramatta (14.5%), the Outer South West in areas such as Camden and Wollondilly (14%) and the Inner West (13.6%).

Critical new infrastructure bringing Sydney’s affordable outskirts closer to the CBD continues to be rolled out across the city.

The Sydney Metro North West heralded a new era for the Hills District, with immense opportunity to capitalise on the new train line following house price dips of -13.9% in Castle Hill, -18.3% in Rouse Hill and -8.3% in Kellyville in the 12 months to June 30, 2019, according to CoreLogic.

Also recently opened is the first underground section of WestConnex – two 5.5km M4 tunnels from Homebush to Haberfield, reducing the trip from Parramatta to the CBD by up to 20 minutes.

As Sydney continues to grow, traffic congestion, overcrowding, lack of family time and the high costs of living are motivating people to change their living arrangements according to their priorities.

The most common trade-off is families living in apartments close to work in the CBD, while others accept a long commute in exchange for the traditional house on a quarter acre block.

More families are choosing public schools instead of costly private education and buying according to catchment zones.

Others are choosing to work, live, play and stay in burgeoning suburban mixed-use precincts where new apartments, office towers and recreational facilities are combined to allow them to stay local.

There is growing interest in master planned estates, with an abundance of shared facilities such as parks, playgrounds, aquatic centres, gyms and childcare giving people more time with their families.

In Sydney’s prestige market, entrepreneurs are investing major capital into trophy homes, with Australia’s first $100 million sale in FY19 and a $140 million sale reported just last week for a penthouse and sub-penthouse purchased in one line off-the-plan at Barangaroo.

Both sales went to locals.

A shortage of prestige stock, buyer re-engagement after the Liberals’ election win and the opportunity to borrow hundreds of thousands of dollars more under relaxed lending rules led to Sydney’s most expensive market quartile recording the greatest price growth over the September quarter, according to CoreLogic.

The low Australian dollar has also led to renewed interest from ex-pats, somewhat offsetting less demand from foreign buyers due to capital controls out of China.

The construction issues surrounding Opal Tower and Mascot Towers have shaken confidence in the new apartment sector.

Given the crucial role of vertical living in accommodating Sydney’s population growth, the state government is expected to introduce tough new building regulations after a parliamentary inquiry as they seek to restore confidence to this sector.

Read the full article here

The Best Travel Destinations For 2020, According To Lonely Planet

This time of year has everyone thinking about their next holiday.

So what are the best destination for the year ahead?

An article on the Huffington Post looks at the best destinations for 2020.

Already thinking of your next holiday?

Us too.

If you’re unsure where to go, Lonely Planet has unveiled its Best in Travel 2020 list, ranking the top 10 countries, cities, regions and best-value destinations to visit.

The lists were chosen from nominations made by Lonely Planet’s community of staff, writers and bloggers, which was then whittled down to a top 10 for each category.

Bhutan, located in the eastern Himalayas, came out as the top country to visit next year. And according to Lonely Planet, it’s also set to become the first fully organic nation by 2020.

Bhutan operates a “high-value, low-impact” tourism policy, says Lonely Planet.

This means it requires travellers to pay a daily fee to walk along the mountain trails, amongst Buddhist monasteries that are kept free from litter.

England was awarded second place in the top 10 countries list, thanks to the English Coast Path, which is hoped to completed by 2020.

It will be the longest managed and way marked coastal path in the world, enabling you to access the country’s entire coastline from the North East to the South West.

The top 10 countries to visit in 2020:

1. Bhutan
2. England
3. North Macedonia
4. Aruba
5. eSwatini
6. Costa Rica
7. The Netherlands
8. Liberia
9. Morocco

As for cities, Salzburg in Austria took the top spot, with 2020 set to be a big year, as it marks the centenary anniversary of its world-famous festival of music and drama.

Held every year from late July to early August, Salzburger Festspiele is one to keep an eye on (and book soon if you’re interested!).

Another city close to home on the list includes Galway in Ireland, which came in fourth place.

The top 10 cities to visit in 2020:

1. Salzburg, Austria
2. Washington, DC, USA
3. Cairo, Egypt
4. Galway, Ireland
5. Bonn, Germany
6. La Paz, Bolivia
7. Kochi, India
8. Vancouver, Canada
9. Dubai, UAE
10. Denver, USA.

Lonely Planet also looked at the best regions, and awarded the winning spot to the Central Asian Silk Road, which runs through East and Southeast Asia, the Arabian Peninsula, East Africa and Southern Europe.

It was commended by the travel guide for its accessibility, thanks to visa improvements for the majority of the world’s citizens, along with big transportation and infrastructure investment.

The top 10 regions to visit in 2020:

1. Central Asian Silk Road
2. Le Marche, Italy
3. Tōhoku, Japan
4. Maine, USA
5. Lord Howe Island, Australia
6. Guizhou Province, China
7. Cadiz Province, Spain
8. Northeast Argentina
9. Kvarner Gulf, Croatia
10. Brazilian Amazon.

And thrifty travellers, fear not.

Lonely Planet has helpfully hand-picked the best-value destinations to keep your budget at bay, while still ticking off those spots on your bucket list.

The islands in East Nusa Tenggara, Indonesia, are an overlooked region, where one of Indonesia’s best diving scenes can be found, according to the travel guide.

But if you want to stay a bit closer to home, head to Budapest in Hungary.

The top 10 best-value destinations to visit in 2020:

1. East Nusa Tenggara, Indonesia
2. Budapest, Hungary
3. Madhya Pradesh, India
4. Buffalo, USA
5. Azerbaijan
6. Serbia
7. Tunisia
8. Cape Winelands, South Africa
9. Athens, Greece
10. Zanzibar, Tanzania.

Read the full article here

from Property UpdateProperty Update https://propertyupdate.com.au/must-read-articles-the-last-week/