National Australia Bank Ltd. (NAB), the nation’s fourth-largest lender, bought a 35 percent stake in William Mack’s Area Property Partners as the U.S. firm seeks funding to expand its global real estate investments.

Mack, chairman of New York-based Area, and Lee Neibart, chief executive officer, will remain in charge of all investment decisions, the real estate fund manager said in a statement. Terms of the agreement weren’t disclosed.

Area, which has invested in New York’s Time Warner Center, the St. Katherine Dock complex in central London and the Pascal Tower in Paris, is seeking to increase its real estate holdings in the early stages of an improving market. A recovery is “well under way” in most major markets and global direct investment in commercial properties may climb as much as 25 percent this year, broker Jones Lang LaSalle Inc. (JLL) said in a Feb. 2 report.

“We think that there will be opportunities to acquire some smaller REITs,” or real estate investment trusts, Neibart said in an interview in New York. “There’ll be an opportunity to acquire larger distressed assets. We think that there’ll be an opportunity to significantly grow our debt business. So by having access to this type of capital, we can look for bigger things to do.”

National Australia, based in Melbourne, had been seeking a “a top-tier global real estate investment manager,” Garry Mulcahy, CEO of the bank’s investment-management arm, NabInvest, said in the statement.

“We believe in Area’s ability to deliver high-quality investment solutions for its investors and therefore have high confidence in Area’s future prospects,” he said.

The bank’s interest will be non-controlling, Neibart said.

“This deal was not done for NAB to provide capital for a continuation of our businesses,” he said. “Our business is in very good shape and it’s totally organized. The capital they invested is really for growth of other businesses and doing new things. That’s really its purpose.”

The agreement will give Area access to institutional investors in Australia and New Zealand, the fourth-largest asset-management market globally, according to Neibart. He projects that the National Australia Bank’s investment could produce returns of 15 percent to 20 percent.

The partnership “puts us in a unique position to take advantage of the recovery,” Mack, 71, said in the statement. Mack, who founded the firm in 1993 with Leon Black’s Apollo Global Management LLC, said a year ago that Area was focusing on investing outside the U.S.

Area’s move to seek non-U.S. institutional investors makes good strategic sense, said David Hodes, managing partner at Hodes Weill & Associates, a New York firm that advises investors and fund managers. Major U.S. public pension funds, which have been some of the largest investors, are under political pressure to shift to defined-contribution systems, similar to 401(k) plans, “and therefore may be capital constrained,” Hodes said.

“What you’re seeing is a manager who has done well for close to 20 years and they’re taking a step back” to prepare for the future, Hodes said of Area.

Interest in U.S.

The deal is a sign that non-U.S. investors are seeing recovery in the U.S. property market, said Peter Slatin, editorial director at New York-based Real Capital Analytics Inc., which tracks commercial real estate sales and pricing worldwide. It may also be the beginning of a spate of international partnerships, he said.

“You have a company that now has global capital seeking global opportunities. That’s what’s most exciting,” Slatin said. “We will see more cross-border capital partnerships along with cross-border acquisitions.”

Area plans to invest more than $1 billion of equity this year, up from about $825 million last year, according to Neibart. About $500 million probably will be split between Europe and India, and slightly more than that in the U.S., he said.

The firm is considering acquisitions in the Manhattan hotel market, and looking to acquire multifamily assets in U.S. cities including Atlanta, Miami, Dallas and Washington, Neibart said. It also is seeking investments in retail properties.

“We still don’t feel comfortable in the office market,” Neibart said.

Area, formerly known as Apollo Real Estate Advisors, has invested about $13 billion of equity in more than 500 transactions since its founding, according to the statement.

National Australia Bank investors have suffered in the past from the lender’s U.S. expansion. The company in October 1997 agreed to pay $1.2 billion for HomeSide Inc., a U.S. home-loan business, as part of a plan to build a global mortgage company. The bank sold HomeSide in 2002 after $2.2 billion of writedowns from the takeover ended eight years of record profits.

In November 2007, National Australia Bank agreed to buy U.S.-based Great Western Bancorp for $798 million. In the year ended September 2010, cash earnings at Great Western, which sells services in seven Midwest states, rose 1.4 percent to A$74 million ($75 million). That was 1.6 percent of National Australia Bank’s total profit in the period.

Story by By David M. Levitt and Oshrat Carmiel http://www.bloomberg.com

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The last few months has seen clearance rates in the mid to low 60’s which means there is a higher proportion of homes being passed in than there was twelve months ago.

With that in mind it is sensible to look at what happens when a home is passed and provide some tips about the process.

Arrive in sufficient time beforehand for a final walk through of the property and to allow you to check the contract, vendor’s statement, information about auctions and the auction rules which will all be on display.

Pay particular attention to the rules.

They tell you how the auction will be conducted. One of the rules is especially important to be aware of if the reserve is not meet and the property is passed in. 

If the auctioneer passes the property in below the reserve price, the owner will first negotiate with the highest bidder. 

If you have participated in the bidding or have been sitting back watching how it is progressing, and the auctioneer announces the property is going to be passed in, it is a good strategy at this point to bid up to obtain the right to first negotiate with the owner.

Securing the right to first negotiate does not cost anything and you have created a contract between yourself and the owner entitling you to negotiate before anyone else.

Your contract comes into existence the moment the auctioneer concludes the auction by passing the property in.

Once the property’s passed in, it is too late to shout out a bid in an attempt to get to the front of the negotiating queue. The auction is over. You have missed out on securing the right to negotiate first.

The auctioneer can’t re-open the auction to accommodate your late bid and override the right someone else has secured ahead of you

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Reserve Bank of Australia chief Glenn Stevens says he is not “terribly troubled” about the level of house prices in Australia.

Mr Stevens said the ratio of income to house prices in Australia was “not exceptional by global standards” at a short question and answer session at a business lunch in London.

“I don’t think we have huge rises going on … we have quite modest growth in house prices for the past year or so,” he said at the Australian Business in Europe lunch.

“That would seem to me to be consistent with a household sector that is being more careful and has properly observed what has happened in other parts of the world.

“There is quite often quoted very high ratios of price to income for Australia, but I think if you get the broadest measures country-wide prices and country-wide measure of income, the ratio is about four and half and it has not moved much either way for ten years.

“That is higher than it used to be but it is actually not exceptional by global standards.”

He said in a speech that Australia needed to better manage its trade boom because the nation has a history of not managing booms “terribly well”.

He said a few things are working in the nation’s favour.

“Historically, Australia has often not managed periods of prosperity conferred on us by global trends terribly well. On this occasion, we have to do better,” he said.

“We are now engaged in a national discussion about how to stretch the benefits of the resources boom over a long period, and how to manage the risks that it will bring.”

Mr Stevens said the exchange rate was helping the economy adjust to the current high levels of terms of trade, led by resource exports.

He said households were more cautious about running up debt following the global financial crisis.

“Having taken on quite a degree of debt over the preceding fifteen years or so, households have thought better of taking on too much more,” he said.

“They are saving more than at any time for twenty years or more.

“So are households in many other countries, of course, but our good fortune is to be making that adjustment against a backdrop of rising income.”

He said managing the boom was complex, and would involve a wide range of policy areas – macroeconomic, microeconomic, taxation and industrial.

“But if that discussion can be conducted in a mature fashion, and followed up with sensible policies, then we have a good chance of leaving to the next generation a wealthier, more secure and more stable Australian economy,” Mr Stevens said.

AAP

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Just like charity, doing the right thing by the environment really starts at home. These days, it seems most people try to take at least a few steps to lighten their footprint on the planet.

Much of it is about changing your behaviour – remembering to put stuff in the recycling bin and not the rubbish, and switching off lights as you leave a room.

But there are also heaps of products that can make it a bit easier to be green. Of course, whenever you come across something with environmental claims, you need to do your research to make sure there’s not more greenwash than eco-cred attached to it.

However, here’s five ideas that I can vouch for from personal use.

Compost caddy

The one thing many people don’t like about compost is the mess it can create in the kitchen. What container do you keep the scraps in so they don’t smell? And when you empty out all the fruit skins and vegie peelings you’re often left with a manky bowl or bucket to clean.

But Maze, a Melbourne company, have a brilliant “compost caddy” which can be fitted with biodegradable bags.

It makes the whole process clean and simple. When the caddy fills up, you can just remove the compost by lifting out the bag and putting it straight in your compost bin or worm farm. No more really smelly food scrap containers to scrub out.

Some councils also allow these bags to be placed in the green waste.

$11.95 from Maze. A roll of 26 bags costs $4.92.

The caddies and bags are also sold at some hardware stores.

I really like the caddy because it is big enough to store a good few days’ worth of food scraps, and saves on cleaning. It also contains the smell of the scraps pretty easily, and fits nicely on our bench.

We have two – one for worm farm scraps, and another for citrus and onions, which don’t tend to agree with worms. We empty the onion one into our tumble compost bin, or council green waste bin.

Shower steam sensor

Do you hate the exhaust fan stealing all of your steam as soon as you get in the shower? Are you sick of people not turning on the fan and then mould growing on your ceiling?

This clever little sensor from Vapotec sits in the ceiling and turns your exhaust fan on when enough steam builds up to allow droplets to form on two little wires in the sensor.

The wires almost touch each other and the moisture creates the vital link for an electric current. This means the sensor only works when there’s enough steam being created. That gives you a few minutes to get warm in the shower before the exhaust fan kicks in.

Once the steam clears, the sensor turns the fan off.

The great thing is you don’t have to remember to turn the exhaust fan on and off – it operates automatically. And you should never get mould again, as the fan continues to operate until all the steam has cleared from the bathroom. It cost $99, plus delivery of $11.

I bought the sensor for our shower because I wanted something that only operated when it had to, hopefully saving power. After two months of use, I am very impressed.

We use it with an exhaust fan that has draught stoppers, which should help to keep the bathroom warm when the fan is not in use.

Power-off board

Leaving your TV and DVD player on standby can chew up quite a lot of power. You probably know you should turn it off at the power point but the problem for many people is reaching the switch.

Now you can do it all from the couch with a remote control power board. It has four ports, and you can turn all of them off at once, or just one. So if you are no longer using your DVD player you can turn it’s power off and keep the electricity running to the TV. I bought mine from online site Todae, for $69.95.

Parents managing the viewing habits of their kids may also find this as a handy way to be able to turn the TV off. It’s certainly been used that way at our place!

Green cleaning

Green cleaning sounds confusing, and there are plenty of companies out there making it more so by cashing in and selling a plethora of “green cleaning products”. Most of them you can do without.

For surfaces, if you’ve got a spray bottle, all you need to put in it is some vinegar and water. If you need to cut through grease, just add a bit of liquid washing up detergent to the mix. If you need something that has a nicer scent add some natural vanilla essence.

For the toilet, try flushing the toilet, then sprinkling in some clothes washing powder (go for one that has green cred). Leave it for a few minutes and then give the loo a quick scrub and a flush, and you’re done.

For floors, use very hot water and a few drops of washing up detergent.

For an air-freshener, you can try vanilla and water, or look for the Orange Power spray products in your supermarket. They are a mix of pure essential cold-pressed oils and sugar alcohol, and come in orange, lime and lemon myrtle. Costing under $5 each, they are Australian made.

Ceiling fans

With a few hot spells during summer, air-conditioner installers have been doing a roaring trade. Granted, there are times when it is just so hot you may need to flick on the air-con, but most days, you can get by with a ceiling fan.

Visit a good fan store and marvel at how beautiful some fans are, and you’re sure to find one that suits your home. If you are renting, the other option is pedestal fans, or a desk fan.

Carolyn Boyd is a property journalist and keen follower of Australia’s housing market.
Source: www.domain.com.au

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The CEO of Australia’s largest independently-owned mortgage broker, Mortgage Choice, is pleased to see the recent Productivity Commission report findings ratify an earlier government department report identifying the true cause of deteriorating housing affordability.

“Now it is time for governments to take immediate and effective action, which is long overdue, or suffer the consequences of even more Australians being pushed out of the market,” Mr Russell says.

In 2004 the Government’s Productivity Commission blamed the cause of higher property prices on rising interest rates and overlooked the effect undersupply continues to have on affordability.

Last April, following the second annual National Housing Supply Council report, Michael Russell called for urgent, significant improvements to development approval and planning assessment processes to boost the supply of housing. The desired outcomes are an increase in the supply of affordable housing and a downward pressure on housing prices.

It seems the Productivity Commission now agrees. The findings of its most recent report concur that:

Mr Russell states, “Australians deserve transparent, effective housing decisions to be made quickly and regularly in the interests of turning around the deterioration of affordability.”

“We call on the Federal Minister for Housing to accept the conclusions of both reports and open up a much more productive, consultative communication channel with the state Planning Ministers to take immediate action to resolve the true cause of housing affordability. The real issues are problems with sufficient land release, development approval processes and development costs.

“Undersupply is the barricade, not interest rates. The latest Productivity Commission report findings are long overdue; much-needed improvements must be actioned ASAP.

“Increasing the supply of residential properties in the low to medium price range will deliver a reduction in pricing pressure.

“We need to dissolve the rolls of red tape that limit the supply of land for development. We need to implement timeframes for rezoning and planning amendments to improve the development approval process. We need to formulate planning guides so developers can be confident in their due diligence and, finally, we need to include automatic zoning of land for ‘urban use’ to save time releasing land.”

Visit MortgageChoice.com.au,

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Australian building approvals fell by the most in more than eight years as the floods in Queensland and elsewhere disrupted construction plans.

Approvals dived 15.9 per cent to 12,342 units in January, seasonally adjusted, from an upwardly revised 14,682 units in December. Economists had been expecting a drop of 3.3 per cent in the month.

Approvals in flood-hit Queensland plummeted 29.9 per cent, seasonally adjusted. They also dropped 12.1 per cent in New South Wales and fell by 9.5 per cent in Victoria. In Western Australia, they slipped 4.6 per cent, the ABS said.

The main economic impact from the floods and cyclones earlier this year may be contained in the March quarter before rebuilding and other relief efforts start to kick in.

Australia’s economy posted 0.7 per cent growth in the final three months of 2010, according to national accounts figures out yesterday, but some economists say the current quarter may see little expansion in GDP if at all.

On the construction front, private sector home approvals dropped 2.4 per cent in January, seasonally adjusted, with a standout 20 per cent fall in Queensland, reflecting the flood impact.

In the year to January, nationwide building approvals were down 24.8 per cent, the Australian Bureau of Statistics said today.

Story by  Chris Zappone www.domain.com.au

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Property at the top end – more than $2 million – remains difficult to sell throughout Australia with the number of homes languishing on the market still growing.

Looking over data compiled by the number crunchers at Australian Property Monitors, sellers of pricey homes have been struggling to make a deal since the global financial crisis began to loom from the middle of 2008. And the pain remains.

In March 2007 there were 3961 homes on the market worth more than $2 million across Australia. Now there are 8608.

In the chart above, you can see a mounting stockpile of upmarket properties looking for cashed-up new owners. A breakdown of the figures reveals that the biggest growth by percentage (2100 per cent) was in the Australian capital, but that was off a very small base of just two homes.

More interesting is the fact that the number of pricey homes lolling around on the market has grown in every state and territory, but the number of new listings hasn’t moved around exceptionally, except a few small hills and valleys along the way. It all spells out that many of the 8608 properties for sale will have been on the market for a while.

Melbourne had the biggest growth in house prices of all Australian capitals last year. Median houses price there jumped 14 per cent in the 12 months to the end of December, according to Australian Property Monitors.

Story by Carolyn Boyd http://www.domain.com.au/

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WHEN Lloyd Borrett set up a website in the mid-1990s for a local computer company, he had to move overseas to find a suitable domain name – well before it was fashionable to do so.

The restrictions on Australian domain names meant that he could not reserve expert.com.au for Expert, an IT business later acquired by Indian outsourcer Infosys for $31 million. Similar generic names such as florist.com.au or computer.com.au were not for sale.

”Basically, any word in the dictionary was excluded,” said Mr Borrett, who now works for anti-virus and security company AVG . ”So I went to Norfolk Island instead and registered expert.nf because they had just opened up a registry there.”

The Australian rules were gradually relaxed and the trade in domain names ending in .au has boomed.

Last night, total registrations on Australia’s country-code top-level domain reached 2 million, indicating that Australian businesses, which make up almost 86 per cent of .au domain names, prefer local internet real estate. Almost a quarter of a million .au domains have been sold this financial year.

The domain registry manager, AusRegistry, was not able to identify the exact holder of the 2 millionth domain name because the total includes new registrations and those that lapse in what is effectively a five steps forward-two steps back motion.

The milestone does not mean there are 2 million Australian websites, because many of the .au domains registered are inactive, or are used to redirect web traffic to other sites. Also, many Australian residents, companies or organisations maintain websites on the global generic top-level domains such as .com, .net, .org or .info. There are more than 93 million domains registered on the .com top-level domain alone.

Germany manages the largest country-code top-level domain, with 14.1 million, followed by Britain with 9 million registrations.

Australia’s tight rules for domain name registration were devised by a University of Melbourne computer engineer and lawyer, Robert Elz, who connected Australia to the internet in late 1989.

Mr Elz, an academic who now lives in Thailand, later handed over the management of Australian domains to a university spinoff company, Melbourne IT, which later listed on the ASX and continues as an internet services and hosting company.

The boom period of the internet in the late 1990s featured accusations of cybersquatting on domain names, especially in the .com name space, but Australia was largely immune from those difficulties because of Mr Elz’s rules.

Australian businesses on the web were perceived as trustworthy and still are, said Glenn Gore, the chief technology officer at Melbourne IT.

”It was good for business in how people trust those companies using a .com.au address,” Mr Gore said.

”If it ends in .com.au, you know that it was not some fly-by-night operation. There has to be a real business behind it.”

This did not mean Australian domain name policies were without controversy. Many webmasters complained of high costs to register an internet name and third-party resellers of domains were frustrated by the rules.

Mr Elz handed over policy and regulation to a new domain name authority, Australian Domain Administration Ltd, known as auDA, and in 2002, AusRegistry won a tender to manage a fully independent registry of .au domain names.

Over the past decade, the auDA board has gradually relaxed the controls of internet name management and sales in Australia while still maintaining the integrity of the system.

”The biggest reform milestone was introducing the new registry in 2002, said Paul Szyndler, auDA’s general manager of public affairs.

From then on, anybody could set up a business to sell the domain names and the competition led to large price falls for those setting up websites.

Story by Glenn Mulcaster www.smh.com.au

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Heated competition in the home loan market, a wider range of variable loan special offers and extended cash rate stability look to be suppressing borrowers’ appetite for fixed rate loans.

Demand for such loans has taken a tumble, the first fall since July 2010, as a greater proportion of new borrowers move to take up variable rate deals.

The latest data from Mortgage Choice, the country’s largest independently-owned mortgage broker, shows 10.7% of the home loans approved for its customers in February had a fixed interest rate. This compared to 15.3% in January, 15.2% in December and 11.2% in November.

The consumption of fixed rate loans fell for the first time in four months in the majority of states by an average of 6 percentage points, except WA, where demand grew by 1.2 percentage points.

Mortgage Choice spokesperson Kristy Sheppard said, “The appetite for fixed interest rates is at its lowest since October 2010, where it sat at 8% of our loan approvals before rising as consumers reacted to November’s surprise rate increases. Last month’s fall in demand coincides with the start of the ‘lender war’ for home loan volume growth.”

“It appears new borrowers were lapping up the newly introduced deals on offer in February, taking advantage of lenders’ various incentives as they compete to outstrip each other of vital market share.

“A move away from fixed interest rates may also signal an uptick in positive consumer sentiment towards the economic outlook. The next cash rate rise is now tipped for mid to late this year.

“Ongoing discount loans – where the interest rate is discounted over the entire loan term usually in return for an annual fee – experienced a 2.1 percentage point drop in popularity. This occurred as borrowers, smitten by the range of special offers, increased their demand for standard and basic variable rate loans, by 3.9 and 1.9 percentage points respectively.”

In February, standard variable rate home loans continued to be the loan of choice, at 34.6% of Mortgage Choice’s news approvals. Basic variable loans followed at 25.6%, before ongoing discount loans at 23.3%, which took a step back from second spot in January.

Demand for line of credit home loans (often popular with investors) rose marginally to 5.1% of approvals from 4.8% the month prior while introductory rate home loans accounted for only 0.9%, though this was up from 0.2%.

Note: Mortgage Choice currently writes one in 25 new home loans in Australia, equating to over $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 18+ year old mortgage broker has a loan book of over $40 billion.

Visit www.mortgagechoice.com.au or call customer service on 13 MORTGAGE.

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Australians have taken to saving in a big way – but some options offer much better results than others and that includes your mortage, writes John Kavanagh.

It is the summer of love – a love of saving. Consumer research reports and banking industry data all point to what has been called ”a new love of saving” and, by all accounts, the trend is going to go on for some time.

What started in the global financial crisis as a flight to quality has become an entrenched investment pattern, as Australians enjoy the high yields and worry-free returns of at-call savings, term deposits and fixed-income funds.

During the past year, the market for savings products has become intensely competitive, with lots of special offers to tempt savers. With deals changing all the time, savers need to keep on top of the changes or lose out.

A survey conducted by researcher Datamonitor earlier this year shows 35.4 per cent of respondents increased their holdings in cash and bond investments last year.

”We have had an acceleration of the trend seen in 2009, when uncertain conditions and a global recession caused investors to take shelter in cash products,” a senior analyst for Datamonitor, Andrew Haslip, says.

He says the move to cash, term deposits and bonds is looking more like a long-term investment strategy and not a stop-gap. More than 30 per cent of respondents say they invested in government or corporate bonds for the first time last year.

USE THE MORTGAGE

When interest rates go up, consumers focus more on their mortgage repayments. A strategy of accelerating debt repayment can be an effective form of saving.

Paying extra on the mortgage every month can have a big impact. Broker Mortgage Choice estimates that, based on a loan of $300,000 at 7 per cent over 30 years, if you round the monthly repayments of $1996 up to $2050, the loan will be repaid one year and eight months earlier, saving more than $25,000 in interest.

Making a lump-sum payment into a loan can make a substantial difference. Mortgage Choice says if you deposit your tax return of, say, $500 into the loan, it would reduce the overall term by one month and the total repayments by about $2350. Doing so annually would make a significantly larger dent.

Borrowers need to make the most of loan features. Loans with offset accounts enable borrowers to link a savings account to their home loan and use it to reduce their interest. If a borrower has $5000 in an offset account, then the term on a $300,000 loan (at 7 per cent interest) would be reduced by about a year and the borrower would save about $33,000.

Offset accounts are a form of tax-free savings. The offset reduces the loan balance on which the monthly interest is calculated. That saving-on-interest cost is, in effect, a return set at the mortgage rate and is tax-free because there is no capital gains tax on the sale of a family house.

STASH THE CASH

ING Direct’s most recent Financial Wellbeing Index survey, conducted late last year, identifies what it calls ”a new love of saving”.

Respondents’ median saving is $9238. Gen Y households have average savings of $7789 and baby boomer households have average savings of $12,651. All respondents have a low level of comfort with the balance of their savings, indicating that they plan to save more.

With the rise in interest rates last year, an increasingly common savings goal (more than 30 per cent) is to pay down credit card and mortgage debt.

The general manager of RaboDirect, Greg McAweeney, says while Australians are saving more, they should not be complacent. ”Our research tells us that almost a third of people could live on their savings for no more than two months,” he says.

RaboDirect compiled the National Savings and Debt Barometer last year, which shows only 17 per cent of people have a written household budget. ”Most have some kind of budget in their heads but for many there is a big gap between that imaginary budget and reality,” McAweeney says.

GET MORE THAN 6 PER CENT

Some of the heat has gone out of the at-call savings account market since the start of the year, with a number of institutions reducing introductory rates.

Savers need to pay attention to the base rates being offered on high-yield online savings accounts and not just the intro rates. Once the intro rate is over, renegotiate another intro rate or be prepared to move elsewhere.

Virgin Money set the pace in the at-call market when it launched an online savings account in July, with an introductory rate of 6.75 per cent for four months. That rate has dropped to 6.51 per cent. The base rate remains unchanged at 5.35 per cent.

Virgin’s intro rate now matches UBank’s offer of 6.51 per cent for customers who make regular monthly savings. The UBank base rate is 6.01 per cent.

RaboDirect relaunched its brand in May last year and set a 6.4 per cent introductory rate on its online High Interest Savings account. That rate has now dropped to its base rate of 6 per cent on the first $200,000. Rabo also has a PremiumSaver account, offering 6.1 per cent if the account holder deposits a minimum of $200 a month (the base rate is 4.75 per cent).

Citibank has maintained an introductory rate of 6.45 per cent (with a base rate of 5.25 per cent). CUA was running a four-month introductory rate of 6.3 per cent in the fourth quarter of last year but is now not offering an intro rate. Its base rate is 5.15 per cent.

Hunter United has a base rate of 6.27 per cent. ING Direct has a four-month intro rate of 6.35 per cent and a base rate of 5 per cent. Others offering more than 6 per cent include Defcredit, ANZ, Bank of Queensland, Bankwest, Bankstown City Credit Union, St George Bank and Easy Street.

CHECK TERM DEPOSITS

With the reduction in competition in the at-call deposit market, more savers are turning to term deposits. The best deals are on terms of six months to 12 months, where lots of deposit-takers are offering more than 6 per cent and rates are as high as 6.6 per cent.

Savers who use short-term deposits tend to allow their deposits to roll over for another term and this is where they can run into trouble.

Last year, the Australian Securities and Investments Commission called on banks, building societies and credit unions to review their term-deposit advertising in light of what it described as a dual-pricing strategy being followed by some institutions.

ASIC found some deposit-takers promoted their term deposits by actively advertising the higher interest rates available on one or two terms – their headline rates – while maintaining lower rates for all other terms.

The terms for which higher interest rates are offered and advertised change on a regular basis.

Because term deposits can roll over on a default basis, ASIC’s view is that this dual-pricing practice would appear to create a risk that a deposit could roll over automatically from a higher interest rate to a lower interest rate without the investor being conscious of the change.

This means savers need to be proactive when their term deposit approaches its maturity date and negotiate another high rate or be prepared to move banks.

There has been some product innovation in the term-deposit market.

ING Direct will allow depositors to pick their maturity date if the term is between 30 days and 365 days and also offers a loyalty bonus of 0.1 per cent in addition to the advertised rate for depositors who roll their deposits over for another term. ”Customers like the loyalty bonus because it makes them feel their business is valued,” the head of savings for ING Direct, John Arnott, says.

While some people of her generation are turning away from the idea of saddling themselves with a huge debt to buy property and are planning to remain renters, that is not an option for Sonia Figol.

The 24-year-old Sydney advertising sales executive put a savings plan in place at the start of this year with the goal of getting together a deposit that will get her into the market with a $300,000 or $400,000 apartment in the next couple of years.

She sat down with her parents and worked out a budget, figuring how much she needs for essentials, how much she could have to maintain her social life and how much she could save each month.

So far so good. Figol says she is sticking to her plan but it is not easy.

”I’m not the best with money,” she says. ”I have saved for a holiday in the past but this is much bigger. There are always birthdays, engagements and the events that get in the way of the plan.

”You have to spend less on other things. I probably don’t go out as much. It’s OK. It’s not much in the scheme of things if you have to say no to a couple of dinner parties.”

Figol opened an online savings account but switched to another, UBank’s USaver, when she discovered that its rates were higher – a primary consideration when she was choosing banks.

Simon McKendry got the travel bug when he went to Thailand at the end of high school. Since then the 24-year-old has travelled to Japan and South America.

McKendry, who works for a Sydney commercial real estate company, is keen to have one more big trip before he allows career ambition to become his main focus. He is saving for a trip to Europe.

He has set a target of $20,000 and is putting part of his salary from his day job as well as pay from a casual bar job into an ING Direct Savings Maximiser account. He is a Commonwealth Bank customer but found setting up the account with the online-only bank easy.

Describing himself as someone who would always ”spend rather than save”, McKendry says he does not want to worry about having to deal with a big credit card bill when he gets back.

”There is nothing wrong with having a credit card as a supplement but I want most of my spending on the trip to come from savings.”

He is six months into his savings plan and says the discipline of maintaining a savings program can be a grind. He misses out on some social life and with a second job feels as though he is always on the go.

Story by John Kavanagh www.domain.com.au

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WAYNE Swan has conceded that his budget is under enormous pressure as floods in the Queensland coal fields subtract 0.4 per cent from growth in the December quarter.

The Treasurer said the full impact of the more extensive flooding in southeast Queensland and the effects of Cyclone Yasi would be felt in the March quarter.

“They will take a heavy toll on output and will take a heavy toll on our budget,” Mr Swan said, adding that company tax revenue would be likely to fall short of Treasury’s forecast of rapid growth.

National accounts released yesterday showed that a 0.7 per cent rise in growth in the final three months of last year lifted the year’s GDP by 2.7 per cent. Although in line with the Reserve Bank’s latest forecast, it is well below the economy’s long-term trend of 3.5 per cent and below the even faster growth that might be expected given the strength of Australia’s resource revenue.

“Housing activity and household spending are clearly much weaker than would be expected for an economy basking in the sunshine of the highest level of its terms of trade since the 1950s,” said Westpac chief economist Bill Evans.

Households saved almost 10c of every dollar they earned, a massive turnaround from the pre-financial crisis period, when as little as 1.5c in every dollar was being put aside. More than half the growth in household income since the financial crisis has gone into savings.

Spending on new housing fell by 1 per cent while lower turnover in the housing market resulted in a 9 per cent fall in real estate agent fees and other housing transfer costs. Partly due to weaker consumer spending, business profits have been depressed, despite the mining boom.

Excluding the banks, business profit rose by only 0.6 per cent in the December quarter following a flat result in the September quarter.

“Lower corporate profitability will probably mean lower company tax revenue,” Mr Swan said.

The mid-year budget update tipped rises of about 20 per cent in company tax revenue this year and in 2011-12.

Although the mining boom means that investment in new plant is growing strongly, rising 5.1 per cent in the quarter, other business spending remains soft.

Non-residential construction fell by 3.7 per cent in the quarter and is still 30 per cent below its level before the financial crisis.

The winding down of the Building the Education Revolution is also slowing the economy, subtracting 0.3 per cent from growth in the final quarter and about 1 per cent over the course of last year. Returns from the mining industry were hit by flooding in Queensland coal fields, with output down 3.7 per cent in the quarter.

Mr Swan said the floods would subtract a full percentage point from growth in the March quarter, while reconstruction activity would start providing a boost to the economy from the June quarter onwards.

The Treasurer has previously canvassed the possibility that the economy may contract in the March quarter.

He said that despite the recent headwinds, the continued upgrading of forecast commodity revenue would bring long-term gains to the budget and the economy.

Story by David Uren, Economics correspondent www.theaustralian.com.au

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What would you do if you found out your home sits on a contaminated site?

That was the news that 2000 residents of Adelaide woke up to last week when they found out – mostly via the media – that under their homes the groundwater was awash with poisons that had been leaching from a sizeable chunk of land formerly owned by Hills Industries, the makers of – among other things – Australia’s iconic clotheslines.

Worse still, authorities had known about the situation for years but had sat on it as they worked out whether it was really a problem.

Some of the chemicals that are present (at least one of which is known to cause cancer) can actually vaporise from sprayed water, become air-borne and then concentrate in confined spaces in houses.

The affected area is pure ’50s working class, with lots of brick homes, neat blockwork or chainmesh fences and tidy front lawns. It never was wealthy and still isn’t.

Many of the people who laboured at the former Hills site when it set up business sometime around 1945 probably whistled as they walked to work from some of those homes.

There are 33 registered household bores in the affected suburbs. In oven-hot South Australian summers many people draw water from their bores to nurture vegie patches and fruit trees, and even to drink.

Understandably many of the young families who live in the suburbs affected are very concerned about their health, and more particularly, that of their kids.

Families like Susan and Ben Prosser, a couple in their 30s who have three young children under six.

Their eldest son was so worried about what he heard on television that when Ben and Susan suggested a quick hit of cricket at the local school grounds, he refused to go. “But mummy, isn’t that where the toxic water is?” he asked.

There’s also another dark cloud hanging over these families’ heads – how will the situation affect the price of their homes?

It might sound trite compared to health worries, but if you’ve got a mortgage and you want to move, you’re going to have to sell at a price big enough to at least pay out your lender and have a deposit to get you into the next home.

Bill Waterhouse, an Adelaide director of valuation company Herron Todd White, says it’s a “really serious issue” that will definitely be on the radar of sellers, buyers and lenders.

Until more is known about the contamination in terms of how bad it is and if and when it might be cleaned up, Waterhouse tips that “houses in those affected areas won’t transact, or those that do may have to transact at a lower level”.

Financiers also could be very reluctant to lend for properties in the area because they “stay away from contamination issues at all cost”.

However, the Environmental Protection Agency South Australia disagrees.  On its website it notes: “The EPA’s experience in managing other similar incidents is that property values were not affected.”

Nevertheless, the Real Estate Institute of South Australia was quick to issue an email to agents reminding them of their obligations to fully disclose all known facts when selling a property.

The institute also noted that while the Environment Protection Authority had only “flagged” the Hills Industries site’s certificate of title of due to the potential contamination, “it is expected that properties surrounding the Hills Industry site may be ‘flagged’ over the coming weeks and months”.

Even if the situation did impact on property prices, it could be very difficult and expensive for home owners to seek any form of compensation, says lawyer Richard Abbott from Holding Redlich. Abbott is a commercial lawyer who has acted for companies that own contaminated land, and in other cases, those buying it.

“They’re massively difficult cases to run,” Abbott says.

Aside from the fact litigation can cost hundreds of thousands of dollars, there’s also the difficulty in proving a direct relationship between decades-old contamination and house prices. “It’s not as straightforward as saying ‘I’m 30 per cent down in value,’” explains Abbott. “The factory could say ‘well what about the fact that house prices have gone down because of the GFC?”

Factory owners could also argue other factories have contributed to the issue, and that developments in the area could have affected the flow of the groundwater.

There are cases of similar contamination – for example the Orica industrial site near Botany Bay in Sydney. After issues of dangerous plumes of chemicals leaking into the groundwater from the eastern suburbs site, Orica was ordered to clean up the groundwater in 2003 and has spent millions trying to do so.

There remains a large swathe of surrounding suburbs where groundwater cannot be used for domestic bores.

Many of the areas in Sydney’s bore water exclusion zone such as Alexandria and Erskineville have increased strongly in price since 2003 and there does not seem to be a measurable effect on house prices (although, I’d be interested to hear from anyone living in those areas closer such as Pagewood and Matraville with their thoughts).

As Waterhouse notes, in the Adelaide case, testing of the contamination from the 7.78 hectare property (which Hills offloaded in 2007 but is still communicating with the EPA about) is still underway.

Waterhouse points out there is the potential that the contamination might not turn out to be as bad as it first seems “but we’ll certainly have to be flagging it in terms of refinances and all of that sort of thing in that area”.

Story source: www.domain.com.au

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It was a case of steadying the ship as expected when the Reserve Bank met today and decided to keep interest rates on hold at 4.75 per cent.

The move comes on the back of comments by the Reserve Bank Governor Glenn Stevens last month that rates would stay on hold in the near future.

Each 0.25 per cent interest rate rise adds another $60 to the monthly cost of an average Australian mortgage.

The official interest rate is currently 4.75 per cent. Mortgage holders on variable interest rates are being charged a standard variable rate of about 7.83 per cent by their lenders.

By keeping rates on hold the Reserve Bank has presented borrowers with an opportunity to beat their lenders at their own game, and pay more off their mortgages before the next rate rise, which is now expected to be quite late in the year.

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Coming out of the Christmas holiday period and landing straight into natural disasters the property market has taken a hit over the last two months. Consumer sentiment is low* and interest rates somewhat uncertain. But it appears the last week has produced a more optimistic outlook. With more properties on the market, could we be entering a “Buyer’s Market”?

Market Activity Index, which is RP Data’s measure of pre-listing activity by property professionals, has continued to record a strong increase over the last week and is back to similar levels as those recorded prior to the Christmas / New Year slowdown.

The higher level of market activity suggests that an increasing number of properties are likely to enter the market in the coming weeks. Higher listing numbers will not bode well for vendors as there are currently relatively few active buyers and already a significant volume of stock to choose from. It will be interesting to see whether or not vendors start removing their properties from the market due to the increased competition amongst vendors creating a challenging selling environment.

The number of newly advertised properties for sale increased by 33.0% last week however, volumes remain 9.6% lower than the 12 month average. Total property advertisements increased by 5.2% last week and are 6.9% higher than the 12 month average.

The weighted average capital city auction clearance rate increased from 43.4% the previous week to 45.8% last week. Despite the increase, the volume of auctions remains fairly low with just over 500 capital city auctions taking place last week. Auction clearance rates in Melbourne increased to 59.0% last week from 54.8% the previous week. In Sydney, clearance rates fell to 50.0% last week from 69.0% the previous week.

Number of homes for sale
Residential property listings advertised for sale over the month ending 06/02/2011
Note that sales listings are based on a rolling monthly count of unique properties that have been advertised for sale.

* Westpac and the Melbourne Institute released the results of their monthly Consumer Sentiment Survey results this week. The Consumer Sentiment Index was recorded at 106.6 points for February 2011. The latest result shows that the Index has increased by 1.9% after falling by -5.7% in January. The Index is
currently -8.9% lower than it was at the same time last year however, with interest rates at much higher levels it is no surprise to see that the consumer outlook has fallen over the year.

Article and statistics supplied by RPData. www.realestate.com.au

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Shopping centres are positioning themselves to capitalise on the success of online retail and customers ordering items for parcel delivery, it has been suggested.

Speaking at a Property Council of Australia event in Sydney last week, Australian chief executive of real estate firm Lend Lease Rod Leaver said his company was researching the possibilities of internet-based retail, the Australian reports.

“It is, without question, one of the biggest headwinds facing the sector. How do you make retail centres relevant? They have to reinvent themselves,” he explained.

His comments come after Westfield Group – the world’s largest shopping mall owner – launched its own online offering, signing up 50 retailers with another 50 to come soon.

Westfield joint managing director Peter Lowy remarked that the internet is just another way in which shopping centres are set to compete.

Recent figures from Data Driven Marketing Asia found web-based purchasing is growing rapidly in China, with ten per cent of sales in Shanghai made via the internet last year.

Story by Paul Burn

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