Pop Quiz: Who is the fifth largest mortgage lender in the country? The Bank of Mum and Dad. You might not have seen their ads on the telly. They're largely working with a word-of-mouth marketing campaign. But they're gaining traction and market share. And now, according to the AFR, they've got a $16 billion dollar stake in the Australian mortgage market. "Bank of Mum and Dad... is estimated to have lent about $16 billion... "It is astonishing," said Martin North, principal of DFA. "Bank of Mum and Dad has become a critical factor in helping first time buyers break into very expensive property markets - and it is growing fast"... Large-scale unregulated parental funding is likely to increase prudential regulators' nervousness about the vulnerability of over-stretched buy
Property is cheaper than it was ten years ago. That's going to sound like a pretty wacky thing to say given the phenomenal boom in prices we've seen over the past ten years or so, especially in Sydney and Melbourne. (Maybe Spiro's got the chart upside down? He's normally pretty sharp with those things...) But what I really mean is, property is more affordable. Again, that's going to sound pretty crazy. But the truth is, when we're talking about affordability, we can't just simply look at prices. Because almost nobody (apart from the Chinese) buy with cash. Pretty much everyone buys property with finance. That means we need to look at finance costs as well - not just the purchase price. And on that front, finance costs are falling... fast. Record-low mortgage
One of the main drivers of the Australian property market over the past 20 years or so has been a shortage of housing. For whatever reason, we just haven't been all that good at building enough houses. And if a market is under-supplied, then prices will grow. That's economics 101. But has that story been changing? We hear a lot these days about how apartment construction is booming. How each year we're building a record number of apartments. How our capital cities are exploding with them. So does all this change the story? I mean, if we had an undersupply, do we now have an oversupply? And if there's an oversupply, doesn't economics 101 tell us that prices will fall? The short answer to this is no. No there isn't an over supply now, and no prices are not
Seems that Melbourne has become the focal point of the Chinese buy. While the other Australian capitals have seen waning interest from Chinese buyers, Melbourne is growing in favour, and Chinese buyers are going to great lengths to get into the market. This chart here from the NAB survey shows that foreign buyer demand, as a share of total demand is falling everywhere except Melbourne. In Melbourne, foreign buyers (and that's probably mostly Chinese buyers) still account for around 9% of demand for established homes. That's almost one in ten. If we look at the share of enquiries on Chinese language portal Juwai, we can see that Melbourne is starting to streak ahead. Melbourne now accounts for 40% of enquiries. Sydney barely rates 17%. And now The Australian
Construction costs are rising quickly... but not everywhere. Take a look at this table here and tell me what you see: This is a table of total construction costs in Australia. It's looking at how much more it costs to build a dwelling this year compared to last year. This comes from the property analyst Michael Matusik - one of the best in the game. So what does it tell you? Well it tells you construction costs are booming in New South Wales, and Queensland. So what does it mean? Well, on the face of it, it means that tradies are getting more expensive. Or materials. Or both. It just costs a lot more to build a dwelling in each of these states. But want to know what I see? I see price pressures building in the pipe-line. In many ways it's the flow of new
Can a frenzy of irrational buyers create a rental crisis? No. Renters are doing it tough, it seems. That's the word from The Department of Health and Human Services in Victoria: Booming house prices and wage stagnation have been blamed for making rental affordability the worst it's ever been in Victoria. The Department of Health and Human Services (DHHS) collects data on the availability of affordable new housing for low income earners in the state. It's now at the lowest level since 2000, when the survey began. A decade ago, about 30 per cent of rental properties in metropolitan Melbourne were considered affordable for struggling families. Now it's just 5.7 per cent. Only 0.4 per cent of one-bedroom rentals are considered affordable for low-income singles... "What we'r
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