The Mermaid Beach beachfront attracts the highest prices on the Gold Coast – and thereby attracts the greatest attention in both buoyant and depressed markets.

The latest resale hasn’t had much publicity, but at 56% less than its 2007 pre-global financial crisis sale price, it’s the highest yet recorded luxury price decline.

The 199 Hedges Avenue property has been bought by Parkdon Pty Ltd, a company associated with Avi Silver from Caulfield. The vendor, Max Twigg, also comes from Melbourne.

It cost $17.5 million in 2007 and resold recently at $7.7 million, meaning the price dropped by about $50,000 a week during his four-year ownership. (more…)

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Federal Reserve Chairman Ben Bernanke said in a letter to the top lawmakers on the Senate Banking and House Financial Services committees.

The paper noted “there is unfortunately no single solution for the problems the housing market faces,” as tight standards for mortgage lending, a 33% decline in home prices since 2007 and a huge number of vacant foreclosed homes on the market make it hard for the housing market to recover. (more…)

A debate is raging as to whether Australia’s housing market is a bubble about to burst. The debate, which has split the property industry, has been triggered by price falls in most capital cities. The falls have raised the question – is this the start of something bigger?

Some say the market is up to 40 per cent too high and could plummet if the Reserve Bank of Australia hikes rates steeply or the commodities boom ends. Others say the market is fairly valued and China and population growth have created unprecedented prosperity, meaning another leg-up in prices looms.

To Lawrence Roberts, a US-based real estate blogger, investor and author of The Great Housing Bubble, such a debate is nothing new. He was one of the few who predicted the housing crash in the US, which has seen house price declines of 30 per cent. Prices there are still falling. “The parallels between the debates in Australia and the debates here in the United States are remarkable,” he says. “Everyone here in the US was in denial because so many people were benefiting from the run-up in prices that nobody wanted to see the truth.” (more…)

Banks  and building societies have repossessed 22.5 per cent more homes than in 2010,  with western Sydney and big regional centres in NSW  hardest hit.

Lenders  asked the NSW Supreme Court to issue 2466 writs of possession against borrowers in default in the 10 months to November last year.

The number of writs issued in the same period in 2010 was  2143, indicating heavier financial pressure on mortgage holders.

WESTPAC has infuriated the peak banking regulator and the opposition has called for an explanation after the bank revealed that it had incorrectly classified $28.8 billion in property loans for up to three years.

Australia’s second-largest bank had been recording the loans as belonging to owner-occupiers since November 2008, when in fact they had been used for investment purposes. (more…)

A shared equity or shared appreciation mortgage (SAM) works differently from a normal home loan:

• You borrow, say, 20% of the value of the property as a SAM and instead of paying interest on it, you’re charged a percentage of the capital gain when you sell.
• For the remaining percentage of the home’s value (minus your deposit) you take out a normal home loan.
• This means your monthly repayments are lower than they would have been if you’d borrowed the whole amount under this loan.

What paying back a portion of the capital gain means is that as the value of the property increases, so also does the repayment amount. And, of course, it’s very hard to predict just how much the capital gain is going to be.

For example, in the last 20 years in Sydney, annual changes in the value of house prices ranged from a decrease of 3.9% (2004/05) to an increase of 46.1% (1988/89).

The RISMARK/ADELAIDE BANK Equity Finance Mortgage (EFM) was (more…)

Your lender may ask you for a guarantee from someone, such as your parents, if it thinks you might not be able to cover the loan repayments yourself. If you don’t have a deposit, a guarantee may also mean you don’t have to pay mortgage insurance and have a wider choice of loans.

Guarantors usually use their home as security, and traditionally they were liable for the full amount of the home loan. Now new-style versions like the ANZ Family Guarantee allow the guarantor to limit their liability to a specific portion of the home loan, such as 20%.

However, even in this case, if something goes wrong and the borrower gets into default, the bank can sell their home and/or the guarantor’s home. (more…)

Several financial institutions offer a home loan for the full purchase price, or close to it.  However, this comes at a cost:

• Mortgage insurance usually applies if you have less than a 20% deposit.
• No-deposit loans can also have a higher interest rate, especially compared to basic loans.

Mortgage insurance doesn’t insure you, but the lender. It protects the lender if you default on the loan and your home is sold for less than your loan amount. The insurance will compensate the lender, but you’re still not absolved from the debt — the insurer can chase you for it. It’s worth taking the cost of mortgage insurance into account when shopping for a home loan, as it varies between lenders. (more…)

CHOICE crunched the numbers and found that extending a mortgage to 40 years doesn’t make it much more affordable, and costs you many thousands of dollars more in the long term.

• On a $250,000 loan with an interest rate of 8%, your repayments would be about $100 per month cheaper: $1738 per month over 40 years instead of $1834 over 30 years.
• But it’ll cost you. Over the 40 years you’ll pay nearly $585,000 on the $250,000 loan in interest alone, which is more than double the amount borrowed — and about $174,000 in interest more than you’d pay over 30 years.
• If you borrowed $400,000 you’d pay $935,000 in interest over a 40-year term, about $278,000 more than over a 30-year term. Your repayment reduction is just $150 a month. (more…)

With first homes averaging $430,000 and housing affordability at a record low, new types of loan may seem an answer to the prayers of desperate home buyers — but are they?

In this article,  Choice takes a look at these new loans:

• 40-year mortgage   Spreading your repayments over a longer period means lower minimum repayments, but you’ll pay much more in interest.
• No-deposit home loan   With these loans, the typical 20% deposit (about $80,000 for a $400,000 loan) is no longer required. Some banks lend you the full amount, and specialist lenders even offer you the money for legal fees and extras as well — but this comes at a high cost.
• Guarantee   (more…)

If you have been spruiking the Australian property market it is time for you to be named.   Welcome to our inaugural review of ‘leading Aussie spruikers’.  Firstly we should start by providing definitions of the term spruiker or spruiking.

In British English, a tout (spruiker) is any person who solicits business or employment in a persistent and annoying manner (generally equivalent to a solicitor or barker  in American English, or a spruiker in Australian English) .  According to the American Bar Association, touting occurs when a person advertises, promotes, or otherwise describes a security for sale without disclosing that the person is being paid to do so.

An example would be a person who frequents heavily touristed areas and presents himself as a tour guide (particularly towards those who do not speak the local language) but operates on behalf of local bars, restaurant, or hotels, being paid to direct tourists towards certain establishments. Payments from customers can be direct or indirect.

Does this ring a bell?  Have you ever read an article by a self proclaimed independent source or specialist who is constantly talking up the property market.  Regardless of whether the market is flat, falling or rising?  They just keep on banging away.

Property statistical data may be used as a tool to present information in a certain way.  It is interesting to note that real estate data management in Australia is not governed by legislation and there are no licensing requirements.   So the data and reports provided by any source can be structured to satisfy the point of view required.  As there are no property data regulations and no quality standards in Australia.

Some recent spruiking articles we have exposed suggest that the  Adelaide property market is booming   and the Brisbane market is predicted to grow by 10% in 2012.  Yes believe it or not! (more…)

Property market analyst Michael Matusik has dismissed government forecasts that Australia is heading for a massive undersupply of housing over the next two decades, arguing that politics and “vested interests” are at play.

The National Housing Supply Council’s State of Supply Report for 2011 forecasts that at the current rate of new housing construction, Australia will have a shortfall of 640,000 dwellings by 2030.

According to the report, the gap between housing demand and supply increased by 28,200, (nearly 18%) to 186,800 housing units in the 12 months to the end of June 2010, with NSW and Queensland having the largest shortfalls of 73,700 and 61,900 homes respectively.

The Real Estate Institute of Australia, Housing Industry Association , Urban Taskforce Australia, Master Builders Australia and lobbying group Australians for Affordable Housing have all responded to the report by demanding government action to address the shortfall in housing.

But Matusik says the people who compiled the report have a “vested interest in finding an undersupply – they keep their posts”. (more…)

Lack of buying activity from retirees and wealthy professionals, in particular, is exacerbating WA’s embattled residential property market, CBRE says.

Global economic volatility and weak consumer sentiment have caused the local property sector to suffer, with massive stock levels, declining prices and no immediate recovery in sight.

The latest Residential MarketView report from CBRE suggests retirees and wealthy professionals are increasingly less active in the Perth residential market.

CBRE director, valuations and advisory services, Michael Veletta said economic volatility has particularly affected retirees, with this sector of the community seeing superannuation benefits diminish. (more…)

Rising property values have been an article of faith in the housing market for a generation of Australians who borrowed big as real estate prices marched ever upward.

Now, though, some buyers are finding that their homes are worth less than the size of mortgages taken out to acquire the proverbial roof over their heads.

While the percentage of home owners with so-called negative equity remains tiny – about one in fifty of the 3 million households with mortgages – the number may well swell in 2012 if home prices extend their declines as some analysts expect. The emergence of a sector of the housing market ‘‘under water’’ on their mortgages may hurt an already fragile real estate market.

Any forced sales would obviously dent individual household wealth but further drops in home prices would deter investors from buying residential properties. Ben Phillips, principal research fellow at the National Centre for Social and Economic Modelling, helped prepare the analysis which pointed to 60,000 households nationwide with negative equity. “The prospect of negative returns will certainly detract from sentiment through 2012,” said NATSEM’s Mr Phillips. (more…)

AUSTRALIA is on the brink of an unemployment catastrophe, with up to 100,000 jobs set to be slashed in the months after Christmas.

But the news isn’t all bad, with economists suggesting the nation’s wobbly economy could drive the official cash rate as low as 3.5 per cent by the end of 2012, The Daily Telegraph reports.

Westpac chief economist Bill Evans, one of the few economists who correctly predicted a rate cut in November, said lead indicators pointed to a very weak employment growth next year.

“We would expect the unemployment rate to edge up to 5.75 over the next six months,” Mr Evans warned. (more…)