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Queensland Floods Causing Plummets In Property Values In Australia

Posted by Loans Guru in Loan Rates on May 12th, 2011

It is no understatement to say that properties in the flood-ravaged Queensland region have been hit hard. In fact, current land valuations dropped tremendously, leaving many Australian homeowners with mortgages worth more than their homes. State Government valuations on approximately 23,000 homes affected by the floods have seen price decreases of 5% through 25% of the pre-flood value and resulted housing crisis in Australia.

Local governments may cut the council rates offering some relief to homeowners. However, it remains to be seen what the real affects will be. There will obviously be little comfort for those that do not have insurance and the mortgage amount exceed the property value. Annual valuation letters expected soon will outline the effects on individual homes.

In a report issued on April 27th, valuer-general Neil Bray suggested that while these new valuations did take note of the flood damage, sales on properties could also reduce the prices. He also indicated a present approach to valuations based on reductions following floods in 1974, but did not say for certain what would be the outcome.

As it stands, many of the flood-affected homeowners may be in for a long wait in terms of their home values returning to anything near the pre-flood values. Those not affected by the Queensland floods will likely retain current values and take a larger share of the market competition in sales while damaged homes are renovated.

In Brisbane, for example, the number of homes for sale declined once it was hit by the flood. The asking prices for many of these properties were said to have lowered between 10 and 30%.

A new method for accessing home valuations has been applied in all of the relevant areas where rates are implemented. It includes improvements to the land or property, a piece of data that was not used in the previous assessment method. Using this method and combining it with the poor market performance as of late and there were no appreciable increases in land valuations.

Based on the information contained in the Valuer-General Property Market Movement Report, there has been a 4% increase in the total value of land throughout Queensland. As a result, the residential prices in the city of Brisbane have experienced 6.9% increases and caused housing affordability crisis Australia.

A large number of suburbs showed increases upward of 36% while other parts of Brisbane did experience property value declines. In the Gold Coast area, about two-thirds of the suburbs showed very little appreciable changes in valuations — if any changes at all.

“The Queensland property market has been subdued over the last twelve months,” said valuer-general Bray.

Other areas of the region, 19 total not accessed since 2006 by the department, have shown noticeable changes. The Central Highlands and Croydon have seen price decreases of 22% and 21%. While in Mount Isa, the average cost of property has risen 155%.

As a whole, the new land valuations for the Queensland area will take effect from June 30 onward. Each area from that point forward would be reevaluated on an annual basis. The goal, as outlined by Bray, is to provide better security in the future to compensate for market changes to avoid the major rises in land valuations. Regular reporting is the key to this approach.

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Why Governments Intervene In Housing Crisis

Posted by Loans Guru in Loan Rates on April 24th, 2011

Last years interest rate increases are keeping Australia’s housing market in a down slide and every one looked for best home loans Australia. While it is a dream of many Australian’s to enter the housing market and to become home owners, the reality is that it is just not affordable at this time for many people. Australian first time home buyers taking home loans in February was the lowest since June of 2004. The number of mortgages granted in February was the lowest in ten years. This shows, not only are applications for home loans down, but those that are being approved are even lower. On that same note, the number of home building permits approved in the past year is down 22 per cent over previous years. This means not only are fewer people applying for home loans, but there are just fewer new homes in general, both contributing to the housing slump.

House Rents
The decline in the housing market is making Australians reconsider home ownership as a viable investment. They are seeking to invest their money elsewhere, as well as consider rental as a more suitable option for living. Housing rentals in the capital cities of Australia have seen huge increases so far this year. However, with the increase in people entering the rental sector, demand is driving up rental prices. In Sydney, 40 per cent of renters are paying more then $400 per week for home rents. In the more isolated Pilbara rents as high as $1650 per week can be seen. With these rental prices skyrocketing, it is making renting in the city impossible for low-income families. It is also taking much longer for people to find suitable housing and therefore those in a time crunch are settling for homes that are less desirable or out of their price range.

Govenrment’s Role Till Now!
The housing crisis, including decrease in home ownership and increase in home rents, is prompting some people to think that the government should get involved and consider initiatives to ensure good quality house rentals and affordable housing. The International Monetary Fund has suggested that state and federal government’s intercede to help increase interest in the failing housing market.

There has been an overwhelming focus from the government on home ownership. Grants are available for first time home buyers as a way to encourage people to enter the housing market. However, the IMF has suggested that it might be better to put more focus on affordable housing, especially for low-income individuals and families. The focus by the government on home ownership rather then quality rentals, may be contributing to housing price swings. They suggest that a more level tax across owner- occupied and rental housing could help decrease the focus on home ownership alone.

How’s The Future
Some people think that the government is already too involved in the housing market and should stay out of it. Either way, there needs to be more options available to low-income families for affordable, quality home rents. For those with low income and less access to transportation, living in the cities near work places, stores, and public transportation makes the most sense. However, these are the areas that have the highest house rents. Government intervention and tax incentives might be the way to go to ensure affordable living options for this population. This will make home loans comparison in public favor.

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