The housing sector is stabilising as talk of an interest rate rise wanes and Australians are encouraged to borrow more, economists say.

The number of home loans approved in August rose 1.2 per cent to 50,965, official figures show. Economists’ forecasts had centred on a 1 per cent rise in housing finance commitments for the month.

August was the fifth straight month that housing finance commitments had risen.

The Australian Bureau of Statistics said total housing finance by value rose 1.0 per cent in August, seasonally adjusted, to $20.848 billion.

JPMorgan economist Ben Jarman said the figures showed the housing sector was stabilising rather than rebounding.

‘‘It certainly means it’s not falling into a hole,’’ Mr Jarman said. ‘‘In the last few months worth of data, the housing finance figures have benefited from the perception that the RBA won’t be doing much in the near term.

‘‘So, if you went back to the start of this year, the RBA didn’t hike rates but there was all the forecast and all the language were making noises that you would get a couple of hikes this year.

‘‘Those aren’t being delivered and things offshore have turned a little bit sour.

‘‘What you’ve seen in the last few months in the home loans data is these fading expectations are helping out and people are coming back and they are happy to take on new debt.

‘‘We’re kind of calling this a mini-rally, but don’t think that this is the start of a tear away in the housing market.

‘‘There’s still a lot of uncertainty globally and that’s what’s keeping the RBA on the sidelines.’’

Mr Jarman said JPMorgan still expected the RBA not to change the cash rate from its current 4.75 per cent until at least the middle of 2012.

‘‘You’ve got a lot uncertainty offshore counterbalancing the domestic inflationary situation here and we see the RBA not doing very much for a while.’’

ICAP senior economist Adam Carr said August’s housing finance figure was a good result and continued a 13 per cent increase in lending since April.

‘‘The pattern we’ve witnessed over the last year is that home lending is posting a dramatic improvement after a GFC induced slump, interrupted only by the floods and the disasters,’’ Mr Carr said. ‘‘Now we’re back on track.’’He expected housing finance data to continue to be strong in the coming months.

‘‘Financial conditions are not too tight, we’ve had an easing in financial conditions (and) lending rates are going sharply lower.

‘‘Don’t forget the unemployment rate is low and income growth is strong, so the prospects are really good.’’

The data also highlighted why a cut in the cash rate was not needed, he said.

‘‘The reason I say that is because the economy is healthy – we don’t need one or two rate cuts.

‘‘We’re either going to get 100 basis points worth of cuts or more because Europe collapses and we have another GFC or, I would imagine, we get none.

‘‘That’s because retailing is accelerating, home lending is accelerating, approvals are accelerating and the unemployment rate is low.

‘‘To argue that we need one or two rate cuts is just absurd.’’

AAP

Source: www.domain.com.au

One of the biggest trends in renovating we might be about to see emerge is the mini-makeover.

Think: paints, cupboard handles, tap fittings, wallpapers (yes, wallpapers going up, not coming down) and the polishing of timber floors. Also light fittings and window treatments. Anything that changes the feel and adds a bit of pizzazz without spending the big bucks.

If that sounds like the ’70s revisited, perhaps it is. Hopefully not with such garish results, though.

And yes, if you are thinking – ‘hang on, hasn’t everyone been doing this all along?’ In part you are right. But the difference is the mini-makeover will be used by householders to make do for much longer than in recent years.

Why will we see this replace bigger aspirations – at least for now? It’s a meeting of several forces.

First, the property market isn’t going anywhere in a hurry at the moment – so the belief that you can do a big reno and flip the property to make a good quid is quickly dissolving.

Second, Australians are saving more than we have in years and there’s a propensity to pay down debt. That means making do with what we have and not taking on huge loans to expand our lifestyles.

It’s also dawning on some people that one way to make money off housing in this current market is not to buy and sell in a hurry, but to shake the housing debt as fast as you can and that way lower your overall costs of acquiring an asset that is free from capital gains tax.

More broadly, employers continue to report that the biggest thing employees are chasing isn’t dollars but work-life balance. Money is still important, yes, but there’s a greater focus on living a life outside of the office, and people aren’t jumping ship for an extra $5,000 or $10,000 like they were a few years ago.

So if they are working less and aren’t prepared to move for a bit more cash, it’s a fairly reasonable conclusion that people will be looking to make their dollar stretch further by extending the life of their current home.

There’s another force – again related to the slowdown in the property market. Industry talk says there’s been a general shift in the mindsets of homeowners – people now expect to stay in their homes for longer. And if you’re in for the long haul, you’ve got the luxury to plan and think – ‘right, I’ll paint that old laundry for now and make it last a few more years before we get around to building a new one’.

After all, you’ve got years to live in the house, and you’re not in such a hurry to get it sorted to flick it back on to the market.

It’s all happening at the same time that we are hearing of the re-emergence of the three-bedder as the house to have – but this time with a second toilet attached. For many, that could mean bye-bye to the media room, the fourth bedroom and the extra study. And who needs those, anyway, when you’re watching movies on your iPad and emailing on your smartphone?

A comfy chair and a flip-down desk that can be discreetly packed away into the wall when not in use might suffice for a study.

And with books, DVDs and music all going digital, there’ll be more space in lounge rooms to accommodate that kind of nifty set up.

I’m not suggesting houses will be totally devoid of all books but you can see collections will get smaller – for example why buy a hard copy dictionary for the study when it’s much simpler and easier to use an app on your phone?

There’s been a school of thought in recent years – which persists today, driven in part by property marketing – that it’s cheaper to detonate a house and start again, than renovate. Homeowners are often lulled by the lower prices that large home-building companies advertise.

True, looked at on a square-metre basis, it might be cheaper to build anew than renovate – some say it costs half as much on average. But if you are being more frugal and making use of what you have, then perhaps the renovation would involve a much smaller extra footprint and be cheaper overall.

The awakening on the cost of debt since the GFC is intermingled with this mini-makeover trend. Obviously it’s an awful lot cheaper to use the money you have saved to fund renovations rather than keep increasing the size of your home loan. And if you can spend a few thousand dollars to make your house more liveable and avoid or put off for several years having to borrow $100,000, $200,000, $300,000, you could be much better off financially in the long run.

When working out how much you should spend on a mini-makeover, it’s helpful to calculate what borrowing the money for the major renovation would cost you and do your sums backwards from there.

The trick to extending the life of what you’ve already got without pouring money down the drain, is getting a good picture of where you want to take your property in the long term (which might involve getting a building designer or architect in), and working out what you can – and can’t – live with for now.

For example, if you want to make do with your ratty old kitchen for a few more years, painting it, and replacing the door handles, taps and even the lights might be a good investment. But upgrading the oven or the range hood to something you may or may not use in the new kitchen is possibly a waste of money.

And of course, like any renovation, you need to be well-researched and enter with eyes wide open so you know what the hidden costs might be.

Story by Carolyn Boyd www.domain.com.au

Next time you are making a cup of coffee in the morning, spare a thought that you are dealing with a potential fuel of the future.

It’s not just aroma – in Britain, engineers have built a car that runs entirely on coffee beans and broke the world speed record for a car powered by organic waste.

In September, a modified Rover SD1 averaged 66.5mph at the Elvington Race Track near York, smashing the previous record of 47mph achieved by a US team that built a car fuelled by wood pellets.

Engineer Martin Bacon, with the Teesdale Conservation Volunteers of Durham, stripped out the old car and refitted it with a ‘gasifier’ and filters which turn waste coffee granules into energy to drive the engine.

The breakthrough car is not the first to be powered by coffee.

Mr Bacon and his team based the design of the Rover on a coffee-powered Volkswagen Sirocco built for the BBC science show Bang Goes The Theory.

That car was driven from London to Manchester in March last year and straight into the Guinness Book of Records, as no car powered by waste material had ever travelled that distance before.

Bang Goes The Theory presenter Jem Stansfield explained that the cars are a genuine alternative to powering engines using fossil fuels.

They work, he says, by burning waste coffee granules, which would otherwise end up in landfill..

“It’s like an old charcoal burner,” he said.

The coffee is heated up like charcoal. Then the combustion gases, generally carbon dioxide and water vapour, are reduced by hot carbon to carbon monoxide and hydrogen.

This is then filtered by a cyclone filter and a rock wool filter and cooled down by a radiator.

“By the end the gas is a lot cooler and cleaner and is piped through to the engine” Mr Stansfield said. “The coffee gas, the carbon monoxide and hydrogen, goes in the cylinders and the explosion drives the engine.”

Coffee powered cars … what a great way to reduce our carbon footprint and
cut the amount of greenhouse gases released into the atmosphere.

To read the full story, click here or visit www.yonderr.com.au

The benefits of natural light, minimal aircon and natural carpets have been shown to have positive benefits for office workers.  Beyond the obvious savings in cost and energy, employees are happier, healthier and more productive.  And remember, you don’t need a carbon tax to become more aware of CO2 emissions.

A recent article in The Sydney Morning Herald reported that the Green Building Council of Australia says the number of buildings winning Green Star certification has risen from just three in 2005 to 22 last year.

1 Bligh Street in the CBD is one of the 16 new buildings to be awarded six-star green status so far this year. It became the new home to law firm Clayton Utz in June this year and among the green features it incorporates are its own basement sewerage plant that recycles 90 per cent of the water in the building, solar panels on the roof and cooling from “chilled beams” rather than conventional air-conditioners.

“I wasn’t expecting to feel too much difference but having moved into the building it’s surprising how much more natural light there is and how much better you feel generally working in a naturally ventilated building,” 25-year-old lawyer Aman Saxena said.

Colleague Jemma Rowe, 26, shares his enthusiasm for the ultra-modern building, adding that there had been an obvious “positive impact” on staff since the move.

The pair’s sentiments are backed by an increasing body of evidence, including a detailed study with another law firm, Oakley Thompson, after it recently moved into a newly refurbished green building in the centre of Melbourne.

The study, conducted with the University of Melbourne, found sick days had fallen 39 per cent and the lawyers’ billings ratio rose 7 per cent despite the overall hours worked falling 12 per cent.

The survey even found the firm’s secretaries were typing 9 per cent faster in the new building and with greater accuracy.

Professor Deo Prasad of the University of NSW’s faculty of the built environment points out that keeping employees healthier and happier is a major financial incentive for businesses considering going green.

“In the lifecycle of a building the salaries of the people working in the building is by far the single largest cost,” he said.

“If you can improve productivity by, say, 2-3 per cent you are making a huge difference.”

Professor Prasad added that employers are also finding that providing green offices was helping them recruit and retain younger workers from Gen Y and beyond.

“There’s increasing evidence that working in a greener building is more attractive to a certain type of younger occupant,” he said.

Click here to read more

Story source: www.yonderr.com.au

The central bank has decided to keep the cash rate unchanged this month and has opened the door for possible future cuts.

The decision was expected, with all 15 economists surveyed last week by AAP predicting the Reserve Bank of Australia (RBA) would keep rates on hold at 4.75 per cent on Tuesday.

The central bank’s board last raised the rate from 4.5 per cent in November 2010.

But the focus was on the statement accompanying the decision, in which RBA Governor Glenn Stevens indicated he was less concerned that inflation would accelerate.

"The path for inflation may now be more consistent with the two to three per cent target in 2012 and 2013," he said.

That meant rate cuts were now on the table.

"An improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary," Mr Stevens said.

UBS interest rate strategist Matthew Johnson said the RBA appeared to have downgraded its growth and inflation forecasts.

"I think that the bank has gone from thinking that things were too strong a couple of months ago, to being around trend now," Mr Johnson said.

"If there’s a further deteriorating, they’ll ease policy."

He said the statement prompted investors to buy bonds, on expectations that the central bank may soon cut the cash rate.

The December 10-year bond futures contract rose to 95.985 (implying a yield of 4.015 per cent) from 95.96 (4.04 per cent) just before the RBA released its statement at 1430 AEDT.

The Australian dollar dropped to a one-year low 94.65 cents after the statement.

Mr Johnson said Mr Stevens’ statement suggested the bank would be watching unemployment figures very closely, as a gauge of inflationary pressure on the economy.

"But we’re a few months away from having to make that decision."

Mr Stevens said conditions in global financial markets continued to be "very unsettled, with uncertainty increasing about both the prospects for resolution of the sovereign debt and banking problems in Europe, and the outlook for global economic growth."

However, economic activity in China and Asia was continuing to expand, he said.

CommSec chief economist Craig James said Mr Stevens’ statement showed the RBA had become more open to the possibility of lower rates.

"For the first time since the global financial crisis, the Reserve Bank has opened the possibility of rates being trimmed to support the economy," Mr James said.

He said the focus now shifts to October 26, when the Australian Bureau of Statistics releases consumer price index (CPI) data for the September quarter.

The CPI is a key measure of inflation and is used by the central bank in setting its monetary policy.

HSBC chief economist Paul Bloxham said the RBA’s statement was more dovish than recent ones.

"The RBA is keeping a steady hand on the wheel and is more concerned with the inflation outlook," he said.

Mr Bloxham noted that while the European and US economies were slowing, Asia, and particularly China, were going strong or, at least, easing at a steady rate.

Story source: www.ninemsn.com.au

According to the manufacturers cold water laundry detergents wash most clothes perfectly well. Most if us, however, still cling on to our mum’s advice about using warm water to wash our clothes.  However in the process we use up valuable energy and contribute to carbon emissions.  And remember, you don’t need a carbon tax to become more aware of CO2 emissions.

According to TreeHugger, a full 90 percent of the energy used in washing clothes goes toward heating the water, so it stands to reason that using less energy by washing in cold, unheated water would create significant environmental savings. But just how much difference are we really talking about?

The TreeHugger number crunchers came up with some pretty interesting results. It turns out that pressing the cold/cold button (instead of the hot/warm button) on your washing machine has the same impact as driving about 9 miles in a car or the production, transportation and storage of a six pack of beer.

It may not be too surprising that one load of laundry doesn’t make a huge amount of difference compared to, say, not eating meat or dairy. But, multiply those impacts by 392 — the number of laundry loads an average U.S. home washes in a year — and, all of the sudden, there are some real impacts.

Washing laundry in hot water is really wasteful
Washing every load on the hot/warm cycle (in a top loading machine and an electric water heater) for a year is equivalent to burning about 182 gallons of gasoline in a car; in an average (19.8 miles per gallon) car, that’ll get you around 3595 miles. So, wash in hot/warm, or drive almost 3600 miles — same difference.

Similarly, if you wash with the hot/cold cycle (in a top loading machine and an electric water heater), you’ll end up with 2407 pounds of CO₂ per year — just over a metric ton — which is equal to about one US round-trip cross-country flight (6171 miles of long-haul flying).

Using a gas water heater is far more efficient
If you’ve got a gas water heater, the news is a little greener. You’re looking at 3.22 pounds of CO₂ per load, which translates to just over 3 miles in a car; add that up over an average year’s worth of washing, and you’re looking at just over 1288 miles in a car or about 1262 pounds of CO₂, or most of the way from New York City to London by airplane.

Using cold water can really net you some savings
When you use cold water to wash, you just use energy to run the machine — about .24 kWh — without using any energy to heat the water. That .24 kWh translates to about .41 pounds of CO₂ per load, or about 162 pounds of CO₂ per year. That’s about 8 gallons of gas, or 164 miles of driving. Compare that to the 3595 miles of driving that the top end of the emissions scale (washing in hot/warm, using a top-loading machine and water heated with an electric water heater), and pressing that cold/cold button starts to make a sizable difference.

Using an efficient Energy Star machine makes a big difference, too
Energy Star estimates that water savings range from 40 percent to 75 percent with front-loading washing machines, so their relative impact would be comparably less.

What does this all mean? Aside from being a great example of how little decisions add up to make a big difference, it shows how wasteful heating large quantities of water can be. Just selecting the “cold/cold” cycle has the potential to save as much CO2 emissions each year as thousands of miles driven in a car, or even an airplane flight or two.

For the full story click here

Story Source: www.yonderr.com.au

It’s not just houses among gum trees on ¼ acre blocks under threat from the supposed death of the Australian Dream; a report shows man’s best friend is also victim to a shift in where and how we live.

Dog and cat ownership is down across Australia, according to a report from the Australian Companion Animal Council that found high-density living, changing lifestyles and government legislation to blame.

The ACAC paper found that in the past decade Australia’s dog population has decreased by at least 14per cent and its cat population has dropped by about 10 per cent, as latest figures from the Australian Bureau of Statistics shows a decline in the rate of home ownership and rise human population.

Queensland figures from the Office of Economic and Statistical Research reflected the national downturn in pet ownership, with dog ownership in the state falling by 2.1 per cent from 2008 to 2010 as cats dropped by 1.4per cent.

The ACAC paper found slightly more than half of the state’s households accommodated cats and/or dogs in 2010.

And though pooches were more popular than pussies overall, Brisbane was among the survey regions with the lowest proportion of households with dogs.

Speaking from the inaugural Putting Pets Back Into Our Lives thinktank in Sydney, ACAC president Kersti Seksel said the steady decline in pet ownership had brought a $6.02billion pet-care industry to its knees.

But it wasn’t just commerce at risk as communities without pets were worse off as well, Ms Seksel said.

“There’s been lots of research showing pets are not just good for an individual’s physical health and mental health – if you own a dog for instance, you’re less likely to be lonely and more likely to get physical exercise – but you’re also more likely to interact with your community,” she said.

“All pets are down, but we’re focusing particularly on a decline in cat and dog ownership because there’s a lot of research that demonstrates the valuable relationships they share with owners.”

Ms Seksel said the costs associated with maintaining pets, difficulty in finding care during holidays, time constraints and moving to rented accommodation, particularly apartments, were the most common reasons why people no longer included animals in their households.

“There’s a perception that renting or apartment living don’t work with owning a dog but that’s just not true,” she said.

“If you look at America, you see that dog ownership in small space is fine as long as you’re caring properly for the pet.”

A change in Australia’s favourite breed of dog reflected a shift to inner-city living Ms Seksel said, with the diminutive Maltese ousting the German Shepherd from the top spot that the larger dog enjoyed 10 years ago.

Ms Seksel said the 150 participants in today’s Putting Pets Back Into Our Lives conference, including the RSPCA, hoped to find suitable solutions to the problem.

“Whether it’s changing the laws and regulations around pet ownership or educating the public about finding the right pet for them, we want people to realise just how good owning a pet can be,” Ms Seksel said.

Story source: www.domain.com.au

Top tips to help mortgage holders avoid budget blowouts

School holidays often impact Australian families juggling additional entertainment costs and their regular financial commitments. Many parents rely on credit for unplanned expenses and may not be aware that there are simple ways to take control of holiday cash flow headaches.

Home loan features, such as a redraw facility, can provide a clever way to stay on top of spending, according to Australia’s largest independently-owned mortgage broker, Mortgage Choice.

Company spokesperson, Kristy Sheppard said, “Borrowers are often unaware their home loan may allow them to stash extra funds for cash-heavy periods such as school holidays and save money over the long term. Some still put funds away into a savings account instead even if they are aware.”

“I question why a borrower who can contribute extra funds into their home loan as a buffer, and redraw without penalty when that money is needed for unexpected expenses, would store the funds in a savings account where the interest made is taxable. Which will build a stronger financial position?

“By contributing the extra into their home loan, they’ll accrue less interest, lowering their repayments. Every extra dollar above the minimum repayment reduces the principal loan amount the interest is calculated on. This same theory applies to funds kept in an offset account attached to the home loan.

“Of course, redraw and offset account usage costs need to be taken into consideration. There may be one-off setup costs to activate a redraw facility and some lenders set minimum and maximum redraw amounts and frequencies. Such a facility works better for those who occasionally redraw extra funds.

“Borrowers requiring frequent redraws would be better suited to a loan with an offset account. This links a savings account of sorts with their home loan account and ‘offsets,’ or uses, that amount to reduce the daily interest accumulated on their mortgage while still being available to withdraw. Note that some lenders offer partial offset only and some attract set up and ongoing maintenance costs.”

Consider Mortgage Choice’s other tips to consciously save, manage spending and enjoy the holidays:

1. Set a yearly savings plan. Utilise your home loan’s features or, if it works better for you, regularly deposit funds in a high interest savings account. Review it often to stay on top of holiday spending.

2. Involve the kids in creating a holiday agenda with a budget attached. Your children may be more appreciative if they are involved in the process of deciding what outings the family can afford.

3. Keep activity costs down, but the excitement up. With so many children armed with games consoles, invite your children’s friends over for a games night where everyone brings some food.

4. Research multi-passes and other discount offers. If pre-purchasing tickets, ask for multi-park or ride passes as well as family or student discounts. Monitor group buying sites for special deals.

5. Calculate what you want to spend next holiday season. Divide the total spending of the most recent holiday period by 12 (if you are paid monthly or by 26 and 52 for fortnightly and weekly) and add a little inflation to calculate how much you need to save for the next holiday season.

For home loan tips, trends, facts, data and other information, visit MortgageChoice.com.au, Facebook.com/MortgageChoice or Twitter.com/MortgageChoice. Or, call 13 MORTGAGE.

It’s a little worrying to find out that for those who live in cities or in the suburbs the air inside our homes and offices is actually more polluted than outside.  But help is at hand – and it comes in the form of the trusty house plant.  A study being conducted at the University of Technology in Sydney has found that plants can reduce nasty greenhouse gas emissions.

Have a look at this recent article form the Sydney Morning Herald, written by Michael Green.

”According to the World Health Organisation, urban air pollution kills 2 to 3 million people around the globe every year,” says Professor Margaret Burchett, from the school of environment at University of Technology, Sydney. ”But the amazing thing is that our air is more polluted indoors than outside.”

While Australian cities aren’t among the world’s smog-ridden worst, our population is overwhelmingly metropolitan. Eight out of 10 of us live in urban areas, Professor Burchett says – and we spend nine out of every 10 hours indoors.

In addition to the fossil fuel emissions that blow in from outside, indoor air typically comprises extra carbon dioxide, thanks to gas appliances and our breath, together with elevated levels of air toxics – volatile organic compounds (VOCs) from glues and synthetic materials.

”Inside our homes we have lots of petroleum-based products such as plastics, carpets, furnishings and electronics that are ‘off-gassing’ toxics,” Professor Burchett says. These contaminants can cause health problems such as headaches, asthma, loss of concentration, wooziness and nausea.

But here’s the good news: we can freshen the air by bringing greenery into our buildings, places that Professor Burchett describes as ”the most arid environment on Earth”.

Her team has been researching the way vegetation improves indoor air quality. They’ve found that pot plants can reduce the presence of VOCs by three-quarters and diminish carbon dioxide levels by a quarter. ”Plants help clean the air, there’s no doubt about that,” she says.

When it comes to dispelling the VOCs, it doesn’t matter what kind of indoor plant you choose, so long as you take good care of it. To reduce carbon dioxide levels, however, the more lush the foliage, the better. ”The bacteria in the potting mix are what takes up the toxics,” she explains.

”The plant nourishes the bacteria, and the bacteria do the uptake. If you keep the plant healthy, it will keep its micro-organisms healthy and they’ll do the job – they’re the same bacteria that suck up oil spills, so this is just an entree for them.”

In her living room, Professor Burchett has four pot plants (she had six, but two died recently while she was travelling – such calamities even befall the experts).

Over and under-watering are the most common ways to kill them, so she recommends testing soil moisture with your finger or a chopstick. To avoid mould growth, make sure you remove dead leaves and flowers.

”Have as many plants as you can, keeping in mind their level of shade tolerance,” she suggests. ”Half a dozen will make a significant difference to your air quality and also to how you feel.”

Professor Burchett has been working with psychologists to study the well-being effects of plants in offices and schools.

”They lift the spirits,” she says. ”They’re good for us psychologically. We’ve found that students perform better on memory and creative thinking tests. In offices, we found that one plant made all the difference in reducing feelings of stress and hostility.”

“When we’ve got greenery around us, it relieves our tension and fatigue.”

Source: www.yonderr.com.au

A FRESH round is likely to begin in the mortgage price war with Commonwealth Bank pledging to beat any advertised rate among its three big rivals.

The pledge has hallmarks of the ”unbeatable” campaign launched by National Australia Bank in New Zealand, a move that spurred on home lending but crunched margins among banks.

The move has been timed with the spring sale season, traditionally the most active period in the Australian housing market.

Intense competition has already emerged among banks across fixed rate loans, with some starting to price fixed rates lower than variable rates.

But CBA’s push extends to both fixed and variable rates and will remain in place until the end of September. The move is expected to draw a swift response from rivals National Australia Bank, ANZ and Westpac.

CBA’s executive general manager of retail products, Michael Cant, said the move was aimed at providing borrowers with competitive home loan deals.

”Our guarantee to beat our major competitors means we’re putting our money where our mouth is,” Mr Cant said.

Sluggish global economic growth, worsening debt market problems, as well as doubts about the Australian outlook have sparked predictions of cuts to official cash rates.

Source: www.domain.com.au

There’s good news for house hunters with lower mortgage rates and higher wages helping to improve affordability even as house prices edged higher.

A separate report, meanwhile, shows that people are staying put longer, underscoring how the property market has cooled in recent years.

The Housing Industry Association-Commonwealth Bank housing affordability index rose by 0.8 per cent in the June quarter, to 56.2 from 55.7 per cent.

Lending data from CBA, used in the index, showed an 0.8 per cent increase in the April-June period of Australia’s median home price to $471,400.

“Earnings growth and a small decrease in mortgage lending rates worked to improve housing affordability over the June 2011 quarter,’’ said HIA senior economist Mr Andrew Harvey. ‘‘These factors more than offset a small increase in the median house price.’’

Other recent reports point to stagnating or falling home prices in many regions around the country as concerns about the wider economy deter some people from the property market.

Still, unemployment levels remain low, at just above 5 per cent, and commercial banks have been trimming their fixed-term mortgage rates in recent weeks.

The Reserve Bank may also cut its key cash rate in coming months to reflect softening demand in the economy and reduced inflation risks

“Improved affordability is good news for home buyers,’’ said Mr Harvey. ‘‘If we look through the (global financial crisis) period which was skewed by unprecedented cuts to interest rates, we have not seen affordability reach its current level since 2006.’’

The home prices used in the HIA/CBA index are median loans financed by the Commonwealth Bank.

“They cannot and do not take account of changes in the mix of size, location and quality of dwellings financed,” the report said.

“Quarter-to-quarter variations therefore reflect any changes in the composition of housing financed, as well as changes in the price of a dwelling of a given size, location, and quality.

Home price trends

By most measures, however, home prices have been sinking in the new year. RP Data-Rismark information shows capital city home prices down 2 per cent in the year to June, on a seasonally adjusted basis. Home prices fell 0.2 per cent in June, according to RP Data-Rismark.

Borrowing for and building homes has slowed in 2011 while affordability remains constrained for many would-be buyers.

The pace of building has stalled amid uncertainty about the economy and about the direction of interest rates to come. Residential construction work fell by 4.1 per cent in the June quarter to $11.4 billion, the Australian Bureau of Statistics said yesterday.

The RBA will meet September 6 to decide on interest rates, with the market currently pricing in a 55 per cent chance of a 25 basis point cut.

Staying put

The slowing conditions in the property market, combined with higher transaction costs, are also keeping Australians in the same home longer, RP Data said today.

In 2001, the average hold period for a property between sales was 6.8 years. Now, it is 8.6 years, RP Data said today, with Melbourne residents the slowest to leave.

In Melbourne, the average hold period – the time between property sales – is currently 10 years, up from 8.3 years a decade ago. In Sydney the average hold period has risen to 9.5 years from 6.3 years a decade ago.

Story by Chris Zappone www.domain.com.au

Tags: housing, news, property, real estate, research

View the original article here

Borrowers’ uptake of fixed interest rate home loans rose by less than one percent of approvals over August despite lenders introducing large reductions to the cost of their fixed term loans, according to Australia’s largest independently-owned mortgage broker.

Fixed rates accounted for 14.1% of Mortgage Choice’s home loan approvals last month, up only slightly from 13.3% in July (though rising for the third consecutive month), while the popularity of ongoing discount loans continued its steady increase, up from 38.6% to 41.5% of approvals.

Company spokesperson Kristy Sheppard said, “New borrowers’ appetite for ongoing discount home loans has steamed ahead for 10 consecutive months now. We have reached a point where demand for such mortgages is more than double that for any other, at 41.5% of all our August approvals.”

“This loan type, where the interest rate is discounted over the loan term usually in return for an annual fee, overtook standard variable as the favourite in April and hasn’t looked back. The trend speaks volumes about new borrowers’ and refinancers’ mindset around interest rate rises and the value they place – or rather, don’t place – on locking in their rate at the moment.

“I expected the take-up of fixed rate home loans to grow noticeably in August due to the well publicised reductions many lenders have been applying to their fixed term pricing. Despite our lender panel’s average three-year fixed rate falling half a percent in the past four weeks alone, fewer than one in seven new mortgage holders fixed part or all of their rate last month.

“Borrowers’ reticence to fix may also be influenced by memories of the break costs many people faced when considering switching out of their fixed terms during Spring 2008 to Autumn 2009 when the cash rate fell from 7.25% to 3.00% and home loan interest rates followed.

Demand for standard variable and basic variable home loans fell in August, to 19.2% and 18.2% of approvals, as did that for line of credit and introductory rate loans, to 4.7% and 2.4%.

Note: Mortgage Choice currently writes one in 25 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 19 year old mortgage broker has a loan book of over $42 billion.

Tags: brokers, finance, home loans, mortgage, news, research

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The Reserve Bank has decided to keep interest rates on hold, despite fears of the Australian economy struggling outside the mining sector.

With instability in the European markets and concerns over a double-dip recession in the US, the RBA decided to keep official interest rates at 4.75 percent.

RateCity CEO Damian Smith said the decision to keep rates on hold is good news for homeowners and prospective buyers.

"With the number of property sales and mortgages plummeting this year, keeping the cash rate unchanged should give some confidence to both groups," Mr Smith said.

"It’s important that current borrowers use any rate pause wisely – paying down debt by increasing your monthly repayments is a tried and tested formula.

"For those about to enter the property market, having the highest possible deposit saved will help you reduce the impact of any future rate rises."

The Reserve Bank last raised rates by 25 basis points in November 2010.

Source: www.ninemsn.com.au

RP Data – Rismark Home Value Index Release

While dwelling values in Australia’s combined capital cities declined by a seasonally adjusted (s.a.) 0.6% in the month of July, and regional markets fell by a similar 0.7% (s.a.), homes in Sydney (+0.1% s.a.), Darwin (+0.6% s.a.) and Canberra (+1.9% s.a.) managed to produce small capital gains.

Based on approximately 178,000 home sales over the year to July, the market-leading RP Data-Rismark Hedonic Home Value Index recorded a seasonally-adjusted fall of -0.6 per cent in capital city home values over the month of July (-0.9 per cent in raw terms).

Canberra (+1.9 per cent s.a.), Darwin (+0.6 per cent s.a.) and Sydney (+0.1 per cent s.a.) bucked the soft trend set by the other cities, which, led by Melbourne homes (down -1.4 per cent s.a.), all registered declines during July.

Over the first seven months of 2011, Australian capital city home values were down -3.4 per cent. According to RP Data research director Tim Lawless, this national result conceals wide divergences across the individual cities.

Mr Lawless pointed to the example of Melbourne homes, which after rising by a stunning 29 per cent over 2009 and 2010 had now corrected by -5.3 per cent in 2011. In contrast, dwelling values in Canberra had actually risen in value by 1.8 per cent over the course of 2011.

Over the 12 months to July 2011, Australian capital city home values are off -2.9 per cent. Mr Lawless said that it looks like a multi-speed housing market: Brisbane (-6.6 per cent), Perth (-6.3 per cent), and Melbourne (-4.3 per cent) have all experienced significant declines over the last year, whereas the 35 per cent of Australia’s capital city population that lives in Canberra (+1.9 per cent) and Sydney (+0.5 per cent) had realised capital gains.

According to Christopher Joye, Rismark International’s economist, “Over the last 11 years, Sydney home values increased by a modest 5.6 per cent per annum compared to an Australian capital city average of 7.8 per cent per annum. Sydney housing has massively underperformed Perth (10.4 per cent per annum), Brisbane (9.7 per cent per annum) and Melbourne (8.9 per cent per annum) housing over this period. After years of being the perennial laggard, Sydney housing now looks to be a relatively resilient store of wealth.”

Mr Joye added that Australia’s housing market could be at a crucial inflexion point.

“The financial markets are pricing in five rate cuts while leading economists from Goldman Sachs, Deutsche Bank, Westpac and Macquarie Bank all believe that the RBA’s next move will be down.

As the most interest rate sensitive sector of the economy, the housing market will be the chief beneficiary of any decision by the RBA to reduce the cost of debt. Indeed, borrowers are already benefiting from de facto rate cuts.

The inversion in the yield curve has seen many banks start to slash the cost of fixed-rate home loans. Today lenders like Members Equity Bank are offering 3 year, fixed-rate loans of just 6.35 per cent, which is well below the standard variable rate benchmark of 7.8 per cent.

And while the rhetoric coming out of the central bank of late has been conflicting, UBS believes that the Governor’s testimony to Parliament last week shifted the RBA to a ‘neutral’ stance,” Mr Joye said.

“If rates do remain on hold, or begin to fall, we would expect to see Australia’s housing market find a base and begin to generate capital gains again. If the RBA has really come to the end of its tightening cycle – which we would find surprising given the high core inflation revealed over the last six months – 2011-12 will likely be judged one of the best buying windows seen in quite some time. The turning point will arrive when otherwise hawkish Australian consumers accept the notion that rates are not going to inexorably increase,” Mr Joye said.

Mr Lawless said that the current weakness in housing market conditions is related to the ongoing anxiety consumers have about their future finances as reflected in the latest consumer confidence data.

“According to the August Westpac-Melbourne Institute Consumer Sentiment survey, Australians still expect two interest rate hikes over the next 12 months. Combined with volatile equity prices, global financial market instability, and soft house prices, Australians are understandably reluctant to make high commitment decisions at the moment,” Mr Lawless said.

Mr Lawless also highlighted the premium housing market where comparatively larger declines in value will likely present patient investors with attractive opportunities during the next six months.

“Dwelling values across the most expensive capital city suburbs are down -6.2 per cent over the first seven months of year. This compares with a much smaller -2.3 per cent fall across ‘middle priced suburbs’ and a -2.1 per cent decline in the cheapest suburbs. Clearly, the ongoing financial market volatility is having a more marked impact on wealthier households, as are weak business conditions outside of the resources sector,” Mr Lawless said.

Despite some improvements in selling times in previous months, the average number of days it takes to sell a home has increased in June and July. Other key leading indicators also imply that market conditions remain soft.

“The build up in the number of homes being advertised for sale together with the slow-down in buyer demand has once again seen average selling times expand. Across the capital cities the average house is taking 55 days to sell compared with 45 days at the same time last year. We have also seen the level of vendor discounting expand to -7.2 per cent from -5.7 per cent in July 2010, which is in line with the lowest reading recorded during 2008. Finally, the weighted average auction clearance rate across Australia’s capital cities has remained slightly below 50 per cent over the past seven weeks”.

“If these soft trends persist, the Spring Selling Season is likely to open up some attractive investment opportunities for prospective buyers. In contrast, the selling environment is likely to be challenging for vendors, particularly if they have unrealistic price expectations,” Mr Lawless said.

Source: RP Data

Tags: economy, housing, market, news, real estate, research

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Next time you put your old newspaper into the recycling, spare a thought for your car.

An article in earth911.com  talks about some very clever people at Tulane University in New Orleans who have discovered a new bacterial strain that can convert paper into butanol, a biofuel that can be used as a substitute for petrol. The team from Tulane have been experimenting on copies of the New Orleans’ daily newspaper The Times Picayune, with great success.

Here’s an extract from the article about how it’s all done:

The strain, dubbed TU-103, is unique in its ability to produce butanol directly from cellulose, an organic compound found in plants and paper.

Scientists first discovered the strain in animal droppings, cultivated it and developed a patent-pending method to use it to produce biofuel.

At least 323 million tons of cellulosic materials that could be used to produce butanol end up in landfills each year in the United States alone, scientists said.

The new method could not only decrease America’s dependence on oil, but also make use of materials that would otherwise be thrown away.

“Bio-butanol produced from cellulose would dramatically reduce carbon dioxide and smog emissions in comparison to gasoline, and have a positive impact on landfill waste,” said David Mullen, the associate professor who discovered the strain with the help of two of his students in the university’s Department of Cell and Molecular Biology.

Researchers experimented with other forms of bacteria to produce butanol. But TU-103 is the only strain discovered to date that can grow and produce the biofuel in the presence of oxygen, which kills other butanol-producing bacteria.

The need to produce butanol in oxygen-free environments dramatically increases the cost of production, scientists said.

The new discovery will decrease the cost-per-gallon of butanol as fuel and make the conversion process more economically attractive to producers.

As a biofuel, butanol is superior to ethanol – which is typically produced from corn sugar – because it can readily fuel existing vehicles without any modifications to the engine, and it contains more energy, which means better gas mileage.

Butanol is also far less corrosive than other biofuels, meaning it can be easily transported through existing pipelines without fear of damage.

So if you thought newspapers were full of rubbish – think again! We thought this was a great alternative fuel source, what do you think?

For more information or to offset your carbon footprint visit: www.yonderr.com.au