Paul Denver's Blog

The power of Web marketing!

We recently kicked of an auction ad campaign for an apartment in St Kilda. Whilst we use 7 web portals, we always book a premium placement for new campaigns on Realestate.com.au.

Is it worth it?...check out the stats below, over 1000 visits in 4 days from 1 web portal!

	1/7 Robertson Avenue ST KILDA VIC 3182

Total Visits for Period: 1,083

Date	Graph of Visits	Visits for Day	Monthly Equiv.
12 Nov 2009		368	11,040
13 Nov 2009		281	8,430
14 Nov 2009		209	6,270
15 Nov 2009		181	5,430
16 Nov 2009		44	1,320

More rate rises on the RBA agenda!

NAB has said the Reserve Bank will raise interest rates 25 basis points in every board meeting until March.

According to the bank’s latest monthly business survey and economic outlook, the official cash rate should climb to 4.25 per cent by early 2010.

NAB’s chief economist Alan Oster said growing consumer confidence and an improvement in business conditions had increased the likelihood of another 25 basis point increase before Christmas.

The business conditions index surged nine points over the last month to a reading of +12, which is substantially above the long run average reading of +3 index points.

“While confidence has surged in recent times, business conditions had remained significantly below long term averages. That has now changed. In many ways, very high business confidence readings appear to be bearing fruit,” Mr Oster said.

“This is a pleasing result and as such, we expect there to be a 25 basis point increase in every RBA meeting till March.”

Source: Realestate Business online

The rate rise that was always on the cards!

The Reserve Bank has lifted the official cash rate by 25 basis points to 3.50 per cent.

The rate hike is the second 25 basis point increase in as many months, after the Reserve Bank decided to raise rates last month for the first time since March 2008.

Raine & Horne’s chief executive officer Angus Raine said the rate rise would have little to no effect on the market.

“It was probably the worst kept secret, everyone knew rates would increase so they were able to factor it into their average monthly repayments, some time ago” Mr Raine told Real Estate Business.

“A 25 basis point increase will have no real impact on a borrower’s bottom line. Demand for housing has been steadily increasingly since Easter this year and this rate hike will not serve to dampen that demand.”

The twenty five basis point rise from the Reserve Bank will now take the average variable rate to 6.3 per cent, well below the 9.6 per cent peak recorded in July and August last year.

Source: Real Estate Business online.

Melbourne's biggest auction weekend for the year delivered a solid result!!

While auction clearance rates remained relatively stable across the weekend, Melbourne managed to achieve its biggest weekend for the year as more than 950 properties went under the hammer.

Figures from Australian Property Monitors revealed that Melbourne recorded a 74.9 per cent auction clearance rate, in line with last week’s result of 76.4 per cent.

However it was the volume of stock that captured the market’s attention.

To date, 675 properties of the 950 listed for auction have not been accounted for. From the total listed, only 155 were confirmed as having sold under the hammer, with another 51 sold before auction.

In Sydney, the auction clearance rate remained relatively stagnate, achieving a 61.1 per cent rate, down from 64.7 per cent recorded the week before.

A five bedroom house in Burwood was the most expensive property sold over the weekend for $2.49 million; a three bedroom house in Mount Druitt was the cheapest property sold for $241,000.

More than 150 properties were sold in Sydney for a total value of $123.9 million.

Both Brisbane and Adelaide recorded less than impressive results, failing to achieve clearance rates above 60 per cent.

In Brisbane 10 properties were sold for a clearance rate of 33.3 per cent, while Adelaide faired a little better, selling 16 properties for a clearance rate of 67.1 per cent.

Higher rates and a weakening of house prices for 2010 & 2011!!

An interesting article from the NAB's economist for the outlook for 2010 & 2011, sourced from Realestate Business online.

Following on from the Reserve Bank of Australia’s decision to raise the official cash rate by 25 basis points to 3.25 per cent last week, the National Australia Bank has now revised its rate rise predictions.

According to NAB’s latest monthly business survey and economic outlook, released today, the RBA will raise rates 50 basis points before the year’s end, taking the official cash rate to 3.75 per cent.

But despite changing their rate outlook for 2009, NAB has kept its longer term rate path prediction unchanged at 4.25 per cent by the end of 2010 and 5.50 per cent by 2011 end.

NAB’s chief economist Alan Oster said the RBA’s decision to raise rates was thanks to a better than expected unemployment rate and a surge in business confidence.

“Fundamentally we still see the Australian economy as continuing to experience strong demand that has been heavily influenced by the timing of the fiscal packages. Business, while more optimistic, continues to meet that demand significantly from stocks and until recently imports,” Mr Oster said.

“Looking forward, we still see softness in consumer spending – possibly bottoming in early 2010. However the cash drops have clearly helped avoid a much harsher response.

“In an environment of under-building, the FHOB and low rates, house prices have recently jumped significantly – albeit they remain around the same levels as 12 months ago.

“While we expect the momentum to be maintained in the short run the combination of rising rates and higher unemployment is expected to moderately weaken house prices in 2010 – and keep consumption on a relatively subdued path.”

Banks to raise rates above RBA!

Higher funding costs may force the big four banks to increase their rates beyond the official cash rate.

According to a report in The Sunday Telegraph, the National Australia Bank (NAB) revealed that the costs of short term funding will increase by between 0.10 add 0.20 over the next six months, which, if passed on in full, would add up to $40 a month on the typical $300,000 mortgage – on top of the RBA rate rises.

Over the weekend, Westpac’s retail and business banking group executive Peter Hanlon  also confirmed that lending rates could outpace rises in the official rate due to increased funding costs.

"The pressure on every single one of those (RBA) decisions is for us to actually increase rates by a higher amount,'' he told the Telegraph.

"Any (mortgage) interest rate increases will be based not on what the RBA does but on how our funding costs are going.''

Slow growth for 2010 & 2011

The outlook for Australian housing volume growth remains challenged, according to a recent report.

The J.P. Morgan/Fujitsu Consulting Australian Mortgage Industry Report found that volume growth remains below the long run trend – with limited acceleration expected going forward.

“Government support in the form of the first homeowners grant saw growth rates modestly recover to a three month annualised growth rate of eight per cent since October 2008, however we see median loan growth stabilising between six per cent and seven per cent over the course of 2010 and 2011,” JP Morgan banking analyst Scott Manning said.

The report also noted that expectations of household de-gearing have proven unfounded to date.

“Housing outstandings as a percentage of disposable income rebounded to an all time high at approximately 150 per cent.

Household interest payments as a percentage of disposable income, while falling dramatically following initial rate cuts, hold the potential to return to approximately 11 per cent of total disposable income if interest rates increase by two per cent,” Mr Manning said

Source: Real Estate Business online.

RBA pushes rates up 25bp

The Reserve Bank of Australia (RBA) raised the official cash rate by 25 basis points this afternoon, making Australia the first developed nation to reverse the cycle of rate cuts triggered by the global financial crisis.

The 25-basis-point rise pushes the central bank's cash rate to 3.25 per cent.

RBA governor Glenn Stevens said the increase was as a result of Australia’s continuing growth.

“In late 2008 and early 2009, the cash rate was lowered quickly, to a very low level, in expectation of very weak economic conditions and a recognition that considerable downside risks existed. That basis for such a low interest rate setting has now passed,” he said.

“With growth likely to be close to trend over the year ahead, inflation close to target and the risk of serious economic contraction in Australia now having passed, the Board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy.”

RP Data’s director of property research, Tim lawless, said it was only a matter of time before interest rates rose from their ‘emergency lows’ and most property owners should have planned for rates to rise as part of their budgetary process.

“The start of the interest rate tightening cycle is not likely to have a dramatic affect on the domestic property market as mortgage rates remain well below the 20 year average of 8.8 per cent,” Mr Lawless said.

“Once there have been several successive rises and mortgage rates approach 7 to 8 per cent there is likely to be a dampening of demand, particularly at the affordable end of the market where affordability pressures are most sensitive.”

Source: Real Estate Business online

Australia's on track for a U-shaped recovery

Australia will endure a u-shaped recovery rather than a v-shaped recovery as many analysts had first predicted, according to the Melbourne Institute.

The Melbourne Institute’s latest Monthly Bulletin of Economic Trends said that while the rise in GDP over the June quarter was stronger than expected, a slow economic rebound was the most likely scenario for Australia over the coming months.

The report’s author, Dr Edda Claus, said the Institute is currently forecasting a quarterly GDP growth of around 0.5 per cent over the 2009/2010 financial year.

“The consolidation of the recovery in China and the strong turn-around in the Japanese economy, the two biggest importers of Australian raw materials, are particularly supportive of growth in resource-rich Queensland and Western Australia. This may mean a return of the two-track economy,” Ms Claus said.

Source: Real Estate Business online.

Bank rates critical in property recovery!

As the first home owners grant boost starts to phase out, the banks may determine whether the current property market revival can be sustained, according to First National.

“With prices stabilising and consumer confidence high, the only thing that could stop the recovery continuing and strengthening, would be the banks increasing their variable rates either with, or ahead of, the Reserve Bank increasing their rates,” First National’s chief executive officer Ray Ellis said.

In August, banks were quick to raise the fixed rates ahead of the reserve bank’s announcement it would hold interest rates until at least early in 2010.

But as pressure mounts on governments to rein in their support of the banks, there is speculation the banks will increase their rates early to offset any potentially negative impact from this move.

Mr Ellis said if first home buyers stop buying, there is potential for the emerging property recovery to stop or even reverse unless other market segments are stimulated.

“There are signs throughout our network that second and third home buyers, including investors, are taking advantage of current conditions, helping push prices up as they go,” Mr Ellis said.

“But, the threat of rising interest rates may impact on this promising trend.”

Since the grant and boost were introduced in September last year, more than 59,000 Australians have taken advantage of the highest levels of housing affordability since 2002.