Are too many apartments planned for Melbourne?

I came across an interesting statistic a short while ago.

Amidst all the talk of a housing shortage Bureau of Statistics figures show that 123,500 new dwellings have been approved in Australia since July.

But when you look closer at what is happening in Melbourne the trend has changed from building houses and now virtually half the new dwellings approved this financial year are high and medium-density apartments and units. In fact more than 20,000 high-rise and medium-rise apartments approved in the past two years. And most are in or around the CBD.

This is a concern as this will create too many apartments creating a glut in and around the Melbourne CBD. With many of these apartments being bought by investors off the plan, some investors are sure to lose out.

However not all the apartments that have obtained approval will be built. Some won’t get finance and others won’t have sufficient levels of pre sales to allow the development to proceed.

times developers cannot obtain the finance they need. Sometimes the approval is speculative, with the owner aiming to resell the land, and permit, to a genuine developer.

As Melbourne matures, these new apartments are changing the shape of the a city.

In the 1990s, just 5% of new dwellings approved in Victoria were in high rise buildings. So far in 2010-11% are in high rise buildings with another 15% in low-rise apartment blocks or medium-density developments.

Tenancy rights and responsibilities during a natural disaster

In times of natural disaster, housing is always one of the biggest issues facing a community. With around one third of Queenslanders renting their home, it is important that all people landlords and tenants understand what options are available to them.

This information supplied by Queensland’s Residential Authority explains the rights and responsibilities of all parties during a natural disaster.

The RTA fact sheet Important renting information for natural disaster victims will answer some tenancy questions, however the RTA has also compiled a list of commonly asked tenancy questions during times of natural disaster.

Does the tenancy agreement end during a natural disaster?
The tenancy agreement does not automatically end during a natural disaster, even if the premises is totally destroyed. A tenancy agreement will only end if one of the parties (tenant or lessor/agent) has taken action to end it. 

The action could be the lessor/agent giving the tenant a Notice to Leave (Form 12), or a tenant giving the lessor/agent a Notice of Intention to Leave (Form 13). These forms can only be given in certain circumstances.

The premises is totally non-liveable and I need to end the tenancy agreement. How is this done?
Where the premises is considered non-liveable, either the lessor/agent or the tenant can give a notice formally ending the tenancy on the grounds that it is non-liveable. This will end the tenancy agreement on the same day the notice is served, but you must give the notice within one month of the disaster that made the premises non-liveable. 

The forms that must be used are:

  for a tenant to give to a lessor/agent, a Notice of Intention to Leave (Form 13)

  for a lessor/agent to give to a tenant, a Notice to Leave (Form 12) Once the correct form has been given ending the agreement for non-liveability, the agreement is ended and the obligation for the tenant to pay rent is stopped.

What is a "non-liveable" property?
Non-liveability is when the premises:

• has been destroyed, or made completely or partly unfit to live in, for reasons other than a breach by the tenant or lessor/agent, or
• the premises can no longer be used lawfully as a residence.

Where tenants have been ordered to evacuate their rental property, such as by emergency services, it may or may not be due to non-liveability as the premises may or may not be damaged and the tenant may be able to return to the property after evacuation. This will need to be discussed between the tenant and their lessor/agent. In such circumstances the parties may be best negotiating possible rent reductions, rather than ending the tenancy.

When are premises considered non-liveable?
Each situation needs to be considered on a case-by-case basis. The premises may be considered non-liveable when occupation became unsafe for health and safety reasons, or were not able to be occupied.

The parties should also consider what outcome they're after, for example does a tenant wish to end the tenancy and leave or stay but negotiate some rent relief?

What if the parties cannot agree on whether the premises is or isn't non-liveable?
Sometimes, the parties might not agree on whether the premises is liveable or not, particularly if there are no other housing options available at that time.

If the tenant believes the premises is still liveable and wants to stay but has been given a Notice to Leave (Form 12) by the lessor/agent, the tenant can dispute the notice by lodging a Dispute Resolution Request (Form 16) with the RTA. 

The same applies to a lessor/agent who believes the premises is still liveable where the tenant does not and has given them a Notice of Intention to Leave (Form 13).
If you are having trouble accessing a computer to download the form, the RTA may be able to assist on 1300 366 311.

Do tenants have to pay rent when they've been evacuated?
This would need to be considered on a case by case basis, and depends on a number of factors, such as whether or not the premises is non-liveable. The best solution is for the lessor/agent and tenant to come to an agreement about the future of the tenancy and rent payment arrangements such as rent reductions. 

If the lessor/agent and tenant are unable to come to an agreement, the RTA can provide a free dispute resolution service to help the parties reach an agreement.

Can the rent be reduced?
If the lessor/agent and tenant come to an agreement to reduce the rent during evacuation, or for the period the property is damaged, the agreement should be put in writing.

Should the property be damaged or partially damaged, then the tenant and lessor/agent may be able to come to an agreement regarding a reduction in rent until the premises are returned to the condition prior to the disaster occurring. Again, any agreement should be put in writing and signed by all parties.

If an agreement cannot be reached between the parties about a rent decrease, or the amount of decrease, then the RTA's Dispute Resolution Service may be able to assist. 

Can the lessor/agent put the rent up?
Queensland tenancy law sets out when and how rent can be increased. Two months notice of a rent increase must be given to a tenant, and it must have been at least six months since the last rent increase. The rent cannot be increased during a fixed term agreement unless the tenancy agreement already allows for it. 

If the tenant believes a rent increase is excessive, either during a tenancy agreement or between successive fixed tenancy agreements, they can dispute it.

If the lessor/agent and tenant decide to end the agreement for non-liveability and then start a new tenancy agreement some time later after the premises is fixed, a new tenancy agreement may include a higher rate of rent.

Can a tenant be evicted to make way for another who will pay higher rent?
It is an offence to evict a tenant in a way that does not comply with the Act. If the lessor/agent and tenant do not agree about the ending of an agreement, the RTA's free Dispute Resolution Service may be able to assist.

I have recently lodged a bond with the RTA. What will happen to the bond receipt?
The RTA is processing bond lodgements as normal and sending out mail through the normal channels. Australia Post will hold mail in flood affected areas, and distribute it when they are able to.

I'm trying to get my bond back, but the mail has been stopped in my area. What do I do?
For disputed bonds, the RTA has put a hold on all deadlines for Notices of Claim and Notices of Unresolved Dispute in flood affected areas from 20 December 2010, to ensure flood victims are not unfairly disadvantaged by the disruption in mail services. Bond money for disputed bonds in flood affected areas will not be released until mid-January or so, depending on the flood situation. The RTA will continue to monitor the situation and respond as appropriate.

If the lessor/agent and tenant had previously disagreed on how the bond should be refunded but have since come to an agreement, they should contact the RTA and the bond will be released in accordance with normal practices.

If the lessor/agent and tenant had agreed on how the bond should be refunded, the bond will be refunded as normal. In such situations, it is even more important to have bonds refunded automatically, and not by cheque.

Source: Queensland Residential Tenancy Authority

The great migration and interest rate debate

As everybody knows by now, Australia’s housing market is facing a dwelling undersupply that is set to become critical in the near future. Many are pointing the finger at our rapidly growing population and suggesting that affordability issues are going to become insurmountable for first home buyers soon if we don’t slow down the influx of new residents into the country.

Concerns about migration are not just centered on property prices though, with a lot of talk about increasing pressure on some of our already over-populated inner cities and infrastructure that just can’t cope, such as roads, public transport and hospitals. 

But according to an article published on domain, the political push to put the brakes on population growth has increased the likelihood of interest rate rises over the long term by igniting critical skills shortages.  

The article examines findings published in Access Economics' Business Outlook for the September quarter, which predicts that growth in the nation’s working-age population is set to decline significantly over the next two years, to just 1% in 2012. This is less than half the 2.2% rate from 2008-09.

The report suggests that with pressure placed on both major political parties to curb population growth in marginal seats, annual net migration is likely to fall to around 170,000 within a few years, down from 231,000 in the last financial year.

According to the report, “Changed rules for foreign students plus a populist election … mean migrant numbers are falling fast. Not even a lift in the participation rate will stop the next few years being marked by rising skills shortages.”

It is anticipated that job markets will find it tough going due to the combined forces of lower migration and the commodity boom, which will in turn place upward pressure on inflation. And we all know what that means…an increased likelihood of further interest rate rises next year.

Consumers remain surprisingly confident about our property markets

The Melbourne Institute and Westpac Bank released their Consumer Sentiment Index results this week.
The October Index results reported an increase of 3.3% over the month with the Index recorded at 117.0 points.
The result highlights that the Australian consumer is significantly more optimistic than pessimistic in the current economic climate.
A subset of the consumer sentiment index is the Time to Buy a Dwelling Index which was recorded at 110.3 points for the months. This result is a little surprising, indicating that consumers remain optimistic that it is a good time to buy property despite the fact that property value growth is clearly slowing and there is a strong likelihood of further interest rate hikes.
The results would appear to be at odds with housing finance data which shows continuing weakness amongst commitments for finance.
Housing finance data released this week by the ABS shows that finance commitments continue to report weak results.
The data showed that total owner occupier finance commitments increased by 1.0% during August however, they remain -22.8% lower over the year.
Although total owner occupier commitments increased over the month, this was entirely as a result of the increase in the number of finance commitments for established dwellings (1.4%). Finance commitments for new construction (-1.0%) and the purchase of new dwellings (-2.0%) continued to ease over the month and are now -27.9% and -18.7% lower respectively over the year.
The total value of housing finance commitments to investors also fell to $6.5 billion during August, the third consecutive month in which the value has eased which suggests that investors are becoming less active in the current market as value growth continues to slow.
Finally, the number of first home buyer housing finance commitments fell by -2.5% for the month and is down by -49.3% for the year. First home buyer commitments have not been as low since January 2005.
Finance commitments are a leading indicator - the show waht's ahead as homebuyers and invesotrs organise their fiannce a ffew months before the purchase their property. Few people getting finance and more proeprties on the market mean we have moved for a sellers market into a buyers market.

Auction Clearance Rates slip in Sydney and Melbourne

The housing market was slightly cooler in both Sydney and Melbourne over the weekend.

According to Australian Property Monitors, clearance rates in Melbourne slipped to 63%, down from an overall September result of 69%.

The trend coincides with an increase in auction listings. Last Saturday, 863 properties were listed compared with 698 for the same Saturday last year.

The weekend auction clearance rate in Sydney fell slightly to 57% of 360 auctions, compared to 61% from the previous weekend.

This is a striking contrast to results at the beginning of the year when auction clearance rates were considerably higher. But it is not surprising. There are fewer buyers around but still plenty of properties for sale.