A major investment bank has suggested Sydney and Melbourne to enter a period of moderation... US stocks fall sharply on China growth worries...
Price moderation predicted for Sydney and Melbourne
More speculation has come on the state of the nation’s two biggest property markets, with a major investment bank suggesting Sydney and Melbourne are set to enter a period of moderation.
While some have said recent developments have mean the two markets, especially Sydney, have seen the end of their booms, economist Scott Haslem from investment bank UBS believes the two are seeing a “moderation in strength,” rather than a full-fledged “downturn.”
According to Fairfax outlets, Haslem made the claim in a research note released this week and pointed to factors such as consumer sentiment, construction levels and interest rates as being behind his reasoning.
“Despite a moderation in commencements next year, completions are still likely to surge further to a record high peak above 200,000 in 2016,” Haslam wrote.
“This suggests a positive spill-over to consumption on furnishings and household equipment, albeit the fall in total housing sales, with established housing sales dropping, implies the peak in momentum is already passed,” he said.
Haslem predicts investment in new dwellings will lift until mid-2016 before flattening out in the second half of the year.
Haslem also said the housing in the two markets are somewhat overvalued, though low interest rates have helped affordability to some extent.
“The valuation of the housing market is clearly stretched, with the dwelling price to average household income ratio lifting to a record high of 5.6 now.
“However, with record low interest rates, housing affordability – proxied by the mortgage repayment share of income – is still only a bit around its long-run average, albeit the worst since the first quarter of 2012.”
While there are signs of a downturn, the depreciation of the Australian dollar will help as real estate becomes more attractive to foreign buyers.
"As we have highlighted previously, foreigners are increasingly a key driver of Australia's housing market, with approved investment more than doubling in 2013-14.
US stocks fall sharply on China growth worries
NEW YORK (AP) The stock market had its worst drop in nearly a month as investors worried about more signs of weakness in China's economy.
The Dow Jones industrial average dropped 312 points, or 1.9 percent, to 16,001 Monday.
The Standard & Poor's 500 index sank 49 points, or 2.6 percent, to 1,881. The Nasdaq composite lost 142 points, or 3 percent, to 4,543.
Biotechnology stocks, until recently a high-flying sector, continued to drop sharply.
Mining, energy and basic materials stocks also fell hard. Tumbling prices for oil, copper and other commodities have hurt profits at those companies.
The losses were widespread, with 98 percent of the stocks in the S&P 500 index ending lower.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.10 percent.
More speculation has come on the state of the nation’s two biggest property markets, with a major investment bank suggesting Sydney and Melbourne are set to enter a period of moderation.
While some have said recent developments have mean the two markets, especially Sydney, have seen the end of their booms, economist Scott Haslem from investment bank UBS believes the two are seeing a “moderation in strength,” rather than a full-fledged “downturn.”
According to Fairfax outlets, Haslem made the claim in a research note released this week and pointed to factors such as consumer sentiment, construction levels and interest rates as being behind his reasoning.
“Despite a moderation in commencements next year, completions are still likely to surge further to a record high peak above 200,000 in 2016,” Haslam wrote.
“This suggests a positive spill-over to consumption on furnishings and household equipment, albeit the fall in total housing sales, with established housing sales dropping, implies the peak in momentum is already passed,” he said.
Haslem predicts investment in new dwellings will lift until mid-2016 before flattening out in the second half of the year.
Haslem also said the housing in the two markets are somewhat overvalued, though low interest rates have helped affordability to some extent.
“The valuation of the housing market is clearly stretched, with the dwelling price to average household income ratio lifting to a record high of 5.6 now.
“However, with record low interest rates, housing affordability – proxied by the mortgage repayment share of income – is still only a bit around its long-run average, albeit the worst since the first quarter of 2012.”
While there are signs of a downturn, the depreciation of the Australian dollar will help as real estate becomes more attractive to foreign buyers.
"As we have highlighted previously, foreigners are increasingly a key driver of Australia's housing market, with approved investment more than doubling in 2013-14.
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US stocks fall sharply on China growth worries
NEW YORK (AP) The stock market had its worst drop in nearly a month as investors worried about more signs of weakness in China's economy.
The Dow Jones industrial average dropped 312 points, or 1.9 percent, to 16,001 Monday.
The Standard & Poor's 500 index sank 49 points, or 2.6 percent, to 1,881. The Nasdaq composite lost 142 points, or 3 percent, to 4,543.
Biotechnology stocks, until recently a high-flying sector, continued to drop sharply.
Mining, energy and basic materials stocks also fell hard. Tumbling prices for oil, copper and other commodities have hurt profits at those companies.
The losses were widespread, with 98 percent of the stocks in the S&P 500 index ending lower.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.10 percent.
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