Melbourne outstrips ‘subdued’ Sydney auction weekend

The Sydney action market made a cautious launch into 2016 on the weekend following a month of volatility on global financial markets and expectations that Australian interest rates are on hold.

Volumes were more than half of what they were a year ago in Sydney but Melbourne was the opposite reporting strong volumes and solid clearances.

The RBA is tipped to keep rates on hold at 2 per cent at its meeting on Tuesday, despite global uncertainty and sharemarket turmoil, according to The Australian National University RBA shadow board.

In Sydney Domain had just 44 properties scheduled to go under the hammer and put the clearance rate at 43 per cent.

Domain Group chief economist Andrew Wilson said though the number of listings was small the results still provided a barometer of the housing market.

“The numbers tell the story. This weekend was another sign of the Sydney market certainly being subdued,” Dr Wilson said.

“But we must be mindful of small volumes. There was not a large spread of inner city property so it was not enough variety to reflect all the price groups and regions.”

But on Saturday there were still regions experiencing strong demand.

In Kirribilli, around the corner from the Prime Minister’s second abode, Kirribilli House, a two-bedroom apartment sold for $1.931 million, $351,000 above its reserve price.

Signifying the importance of location, about 100 people turned up at the steamy afternoon auction of the sixth-floor apartment at 98 Kirribilli Avenue. It had spectacular panoramic views of the harbour.

The auction started at $1.5 million but quickly moved up between four bidders. There was collective shock from the crowd when it got to $1.87 million.

“It’s not expensive considering the views and its size at 67 sq m,” a Chinese buyer who did not bid said.

McGrath agent Nigel Mukhi said the sale – clinched by a local owner-occupier couple – was a record in the area.

MELBOURNE MARKET ‘SOLID’

Meanwhile Melbourne hosted more than twice the amount of auctions that Sydney did. The Victorian capital was the complete opposite to Sydney. At 98 auctions, its scheduled listings double what they were the same time last year.

“Melbourne had a solid clearance rate of 74 per cent,” Dr Wilson said. “Again as with Sydney the mix was not representative of all price ranges and regions but Melbourne is certainly up on where the market ended last year.”

The real test will be the official start to the auction market the first weekend in February. Sydney listings will be around 200, versus more than 300 last year. In Melbourne the amount of auctions will be twice that of the same week in 2015.

Next weekend’s auction will follow the first cash rate decision of 2016 from the Reserve Bank of Australia on Tuesday.

Even without a rate cut experts said the surprisingly strong January for residential sales and inquiries is an indication 2016 will remain buoyant despite the cooling which commenced late last year.

Nationally, demand for valuations and inquiries at agencies have increased.

“Appraisals are up by 30 per cent compared to January 2015,” Raine & Horne executive chairman Angus Raine said.

“The jump in early year appraisals indicates that many owners are considering an autumn sale. The vendor inquiries also indicate plenty of owners are still considering recouping some profits generated by their real estate investments over the past four years.”

Sydney home values ticked up slightly in January, with a 0.5 per cent increase partially offsetting the market’s larger decline in December.

“The slowdown in Sydney house prices that characterised the end of 2015 has seen sales this month return to levels consistent with a typical January,” Laing+Simmons managing director Leanne Pilkington said.

“There are positive signs in Laing+Simmons offices … enjoying a busy start to the year.”

SYDNEY ‘NOT AS BAD’

Sydney’s lower north shore enjoyed a particularly bumper January. McGrath Limited clinched an $8.7 million sale in waterfront Cremorne.

“A lot of people from last year are still waiting. I issued 100 brochures in two weeks,” Raine & Horne Neutral Bay’s Nicole Combes said.

“While pricing has come back a bit, buyers are taking longer, there’s definitely strong confident numbers out there. It’s not as bad as what the press makes out.”

In Sydney’s east, LJ Hooker Maroubra’s Anthony Rizzo sold all his carried over stock from last year and said “things are steady”.

Sydney’s north-west had a spot of trouble but not with buyers and sellers. Developers who have acquired top-priced sites along the Sydney northwest corridor are starting to flip sites as demand and pricing cools.

The west has settled down with sellers becoming “sensible” with price expectations.

“We were struggling to educate them last year, now they’ve wised up,” Starr Partners’ Doug Driscoll said.

His western Sydney counterpart Daniel Starr fielded a lot of call from first home buyers in January.

Melbourne also performed well. Stock was scarce, which was unusual for this time of the year.

“Anything we’ve just listed is getting an incredible response online from buyers echoing their frustration they haven’t had much to look at,” Greg Hocking Real Estate Group’s Greg Hocking said.

The third biggest market, Brisbane was quieter however.

“This being the first week of the new sales year, there’s not a lot to report. What does give encouragement is the number of buyers already making their buying intentions clear…greater numbers of buyers from interstate and overseas,” Johnston Dixon’s John Johnston said.

 

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Lenders ease conditions for property borrowers

Lenders are easing rates and conditions for borrowers in the lucrative investment property market following six months of tougher terms in response to regulatory concerns about excessive risk.

Fourteen lenders have increased loan-to-value ratios, others have slashed investor rates by up to 30 basis points, and new products are being launched priced for additional risk involved with investors.

“It’s a bit of a contrast from mid last year,” said Heritage Bank chief executive Peter Lock. “Genuine demand for investment lending exists and needs to be met. There are strong applicants demonstrating good servicing history that may find their existing bank can’t help them with an important aspect of their wealth creation strategies.”

Heritage Bank recently increased the loan-to-value ratio, which is the size of a loan compared to the value of a property expressed as a percentage, from 80 per cent to 90 per cent.

“We are well within Australian Prudential Regulation Authority guidelines and have the appetite to grow our investment lending book,” Mr Lock said.

The regulator attempted to cool investor exuberance, particularly in Sydney and Melbourne, by requesting lenders tighten lending criteria, such as increasing deposits from 5 per cent to more than 20 per cent of the purchase price.

For example, Australia and New Zealand Banking Group’s LVR for investment lending is 80 per cent while Westpac, and affiliated banks, are between 90 and 95 per cent.

FAMILY MARKETS

About 20 lenders lowered the maximum loan-to-value (LVR) ratio for investment products, typically from about 95 to 90 per cent, according to Canstar, a company that compares rates and charges for financial products.

Fourteen have since increased the LVR with some restructuring the investment product so that borrowers are paying a higher interest rate or charges.

Both falling and rising LVRs are based on a $500,000 investment loan on variable rates.

Borrowers also face tougher scrutiny on their capacity to repay, such as reviews of income from all sources, other debts, expected rental from investment properties and the impact of higher rates on family markets.

Other lenders, such as Newcastle Permanent Building Society, have reduced their investment loans by 30 basis points – from 4.09 per cent to 3.79 per cent – for a one-year fixed rate mortgage .

“We introduced a number of measures to meet the APRA guidelines that proved very effective,” a bank spokesman said.

“While remaining in line with these recommendations, the decision has been made to remove the differential pricing between investment and owner-occupied fixed rate home loans.”

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ANZ’s Asian strategy gets a new coat of paint

The era of the rock star banker that was loved by the media and hated by banking analysts was buried this week at ANZ Banking Group along with its integrated Asian banking strategy.

New chief executive Shayne Elliott made it clear on his first major public outing that he and former CEO Mike Smith are like chalk and cheese.

Smith’s eight-year reign at the top of ANZ was characterised by regular bouts of robust commentary including criticism of regulators, politicians and banking analysts.

Smith regularly lamented the market’s failure to understand his super regional strategy which involved providing financial services, primarily institutional banking, in the high-growth economies of Asia.

ANZ was going to deliver higher returns by becoming the premier banking intermediary for Australian and New Zealand companies doing business in Asia.

The super regional strategy was modelled on the integrated banking operations of Smith’s former employer HSBC. It included a retail banking network across Asia which employs about 3500 people. This network targeted affluent customers.

Rival bankers always wondered why ANZ with its strong business and retail banking franchise in Australia and New Zealand would be able to achieve superior returns when up against banks with long-standing Asian businesses such as HSBC, Standard Chartered and Citi.

Smith laid out ambitious growth targets for revenue from its Asian business and for the overall return on equity for the entire bank. In doing so Smith was lauded by many including Chanticleer for his focus on taking an Australian business to Asia.

Smith’s reputation as a rock star banker was cemented by the reaction he elicited in Asia and at multi-lateral meetings of global bodies such as the G-20.

As one regulator visitor to Asian business forums told Chanticleer: “Mike could light up an entire room.”

But as the years went by and ANZ’s returns from Asia were less than had been promised, Smith became increasingly frustrated with the impatience of local investors. He made it clear Asia was a long game and this required patient capital.

But his protestations lost some credibility because many believed that ANZ had juggled its Asian and institutional businesses to make the revenue numbers from the super regional strategy look as favourable as possible.

Elliott is not in the business of commenting on Smith’s legacy. Nor is he completely dismantling the Asian business built by Smith.

But his restructure of the management team at ANZ will mean that the integrated banking model which underpinned the super regional strategy is dead.

The holistic entity that reported to one person and included institutional banking, retail banking and wealth management has been broken apart.

Asian retail banking, which included partnerships with banks in Indonesia, Malaysia, China and the Philippines, has been broken into two separate bits in readiness for disposal.

Deputy CEO Graham Hodges now has responsibility for the partnerships which can only be sold with the agreements of the partners. That will release about $4.5 billion in capital.

The retail banking network owned directly by ANZ will now be the responsibility of David Hisco, who is the group executive and CEO of New Zealand. It is now part of the Pacific banking network.

It is hard to see this part of the Asian operations surviving in the long term because Elliott’s focus is on institutional banking not retail. Sale of the business would recognise that ANZ does not have a competitive edge against HSBC and Standard Chartered.

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David and Partners provided an exceptional service. David was able to organise the finance for our property purchase very quickly and efficiently. We were having difficulty dealing with the Australian banks directly from Singapore, David was able resolve the situation and organise everything quickly. If you are planning to purchase a property in Australia we recommend you contact David and Partners.

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Banks get picky with mortgage deals, with lower interest rates given to cashed-up owner-occupiers

Banks began charging housing investors aloft seductiveness rates in 2015 amid a regulatory crackdown.

Banks began charging housing investors aloft seductiveness rates in 2015 amid a regulatory crackdown.

New total exhibit a widening opening between a seductiveness rates that banks offer owner-occupier borrowers with large deposits and what they’re prepared to give other forms of borrowers in a home loan market.

Last year saw a reemergence of a two-tier debt market, in which investors are charged some-more than people profitable off a loan for a residence they live in. This had been a normal during many banks until a late 1990s.

The trend resurfaced after skill investors copped dual rounds of seductiveness rate hikes from a vital banks in 2015, compared with one seductiveness rate arise for owner-occupiers, as lenders sought to delayed rapid growth in housing investment lending.

Now, analysis from RateCity shows that in a past 6 months banks have become increasingly picky about that forms of borrowers accept a sharpest interest rates, renting a best deals for owner-occupiers with bigger deposits.

Competition is extreme for owner-occupiers with deposits of some-more than 20 per cent.

Competition is extreme for owner-occupiers with deposits of some-more than 20 per cent.

The information shows banks have even cut a seductiveness rates offering to owner-occupiers who have a deposition of some-more than 20 per cent, while charging other forms of borrowers more.

RateCity researcher Peter Arnold said the normal seductiveness rates being offering to owner-occupiers with a 20 per cent deposit have dipped by 0.07 of a commission point since June, to 4.35 per cent.

“There’s a lot some-more movement in a market, with tiered pricing,” Mr Arnold said. “These borrowers are fundamentally profitable reduction than they were behind in June.”

In contrast, other forms of borrowers are offering aloft seductiveness rates than they were 6 months ago, RateCity found. Its total cover the rates banks are promotion for new customers, rather than what banks assign their existent borrowers.

For skill investors with deposits of reduction than 20 per cent, a normal rate on offer has increasing to 4.9 per cent from 4.68 per cent, it says.

This means that skill investors, generally those with smaller deposits, are being charged seductiveness rates as most as 0.55 of a commission point higher than owner-occupiers.

Interest rates offering to owner-occupiers with deposits of reduction than 20 per cent have also edged up, despite by usually 0.03 of a commission point, to 4.71 per cent.

The changes have occurred since banks are competing some-more fiercely for owner-occupiers, as a regulators will not let them enhance their loan books some-more fast than 10 per cent in a financier market.

At a same time, banks are penetrating to attract borrowers with large deposits, since these tend to be lower-risk loans.

The changes in bank credit policies, including tighter lending to housing investors, is one reason experts are forecasting softer conditions in a housing marketplace in 2016.

Commonwealth Bank economists final week foresee residence cost expansion between 0 and 2 per cent in Sydney and Melbourne this year, citing a softer lending to investors as one cause behind a slowdown.

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Craig Mason- Singapore

Just settled on our property in Melbourne. After being completely messed around by our existing Aussie bank we decided to engage a broker and thankfully David Moss. His advice was excellent sourcing us a superior loan package…and everything was sorted here in Singapore. Highly recommended!

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Expect another cash rate drop, says economist

The Reserve Bank of Australia (RBA) will be forced to cut the cash rate below 2% before year end, a prominent economist has predicted.

According to Dr Shane Oliver, the chief economist at AMP Capital, recent global economic instability will pressure the RBA to shave the cash rate by a further 25 basis points this year.

“The latest bout of global growth worries warns that the global environment Australia faces remains messy. So while rebalancing away from mining will continue to help we may face another year with growth stuck around 2.5%,” Oliver said.

“Ongoing commodity price weakness means ongoing pressure on the budget deficit, points to more downwards pressure on the $A and more pressure on the RBA to cut interest rates again. Expect the $A to fall to around $US0.60 by year end and the RBA to cut the cash rate to 1.75%.”

The main global concerns, according to Oliver, are uncertainty regarding the Chinese economy, wariness about the Fed raising interest rates and the impact of a rising US dollar and falling Chinese Renminbi.

2016 has also seen a bad start to the share markets. Share markets around the globe have seen sharp declines so far this year, says Oliver, with US shares down 5.2%, Eurozone shares down 6.2%, Japanese shares down 9.5%, Chinese shares down a significant 14.6% and Australian shares down 6.8%.

Oliver says these latest falls have taken global shares back to around the lows seen during the second half of last year. In addition, commodity prices are down further with the oil price falling to its lowest since 2009.

However, Oliver says while we should expect weak growth and accommodative monetary policy to hang around longer, there should be no concern about a global recession.

“But while risks remain high in the short term there are several reasons not to be too concerned. In other words, if we do go into a bear market in developed market shares it is likely to be relatively shallow unlike say the GFC falls of 50% plus and we continue to see shares having a better year this year than last,” Oliver said.

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New home building reaches record high

New residential housing construction reached a record high in the September 2015 quarter, official figures have revealed, which will bring substantial benefits to Australia’s slowing economy.

The construction of new homes over the quarter rose 0.5% with a quarterly record of 55,532 new building starts, according to figures from the Australian Bureau of Statistics (ABS). This means that at the September quarter, a record 194,252 homes in total were being built – the most in Australian history. Just over 65% of dwellings being built are apartments.

Over the year to September 2015, work started on a record 215,053 new dwellings, up 13.4% on the year before.

According to Dr Harley Dale, chief economist at the Housing Industry Association, the new home building figures are a stellar result not only for the residential construction industry, but for the wider economy.

“Over recent years households and businesses have faced a barrage of negative chatter about below trend growth and downside risks to the economic outlook,” he said.

“Throughout this time new home construction has posted one of its longest upcycles in history – providing substantial support to Australia’s economic output and levels of employment… [N]ew home construction and its massive spin-off benefits has propped up the Australian economy at a time when no other sector has come to the party.”

Craig James, the chief economist at CommSec agrees, saying the strength in residential construction will prop up the economy and ward off further rate cuts in the near future. However, he says the economy should be mindful of “ingestion problems” in the longer term.

“Strong home building activity will support the economy over the next 12-18 months. As a result, CommSec expects no change to interest rate settings in coming months,” James said.

“There could be an ‘ingestion’ problem as residential projects get completed. If investors can’t find tenants, new homes may be put up for sales, depressing home prices.”

According to the ABS figures, there were 33,713 homes in the September quarter that had been approved for construction but where work hadn’t commenced, down 2% from record highs.

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Home loan demand makes comeback

New data from the Australian Bureau of Statistics show that 56,798 owner-occupied home loans were approved over the month of November, up 1.8% from October.

It wasn’t just the total number of home loans approved that increased either. According to the data, the total value of all home loans also grew 1.8% over the course of the month.

“In November, more than $33 billion worth of home loans were written,” Mortgage Choice chief executive officer John Flavell said.

“This spike in both the number and value of all home loans written can largely be attributed to the growth in lending for owner occupied housing.”

The total value of all owner occupied home loans written was $21.753 billion, up 2.4% on the month prior. The total value of investment loans written climbed 0.7% over the course of November.

According to Flavell, the growth in the value of investment loans written is surprising given that banks have made sweeping changes to their investment policy and pricing in recent months.

“Last month, we saw a significant drop in the total value of investment loans written – a drop we attributed to the recent investment lending changes,” he said.

“This month, we have seen investment lending increase slightly, which is very pleasing as it suggests the housing market remains robust.”

However, Flavell said he was pleased to see a spike in the total value of owner occupied loans written, as research conducted by RP Data had shown that property values across the combined capital city fell throughout the month of November.

“In November, property values across the combined capital cities fell 1.5%. Sydney and Melbourne led the charge, with the capital cities recording a 1.4% and 3.5% fall in values respectively,” he said.

“Despite this, the total value of all home loans written remained strong, which is a really good sign for the future.

“Even if growth in the property market stagnates over the coming months, the reality is the market itself is incredibly strong and will remain so for the foreseeable future.”

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Teachers Mutual Bank joins our lender panel!

I am pleased to announce Australian based Teachers Mutual Bank has joined our lender panel.

Key points:

· Newly launched Classic Home Loan with a variable rate of 4.11% for owner occupied purposes to 85% LVR including LMI $150k-$1M for new lending only, no offset however free redraw with no minimum amount.

· 100% Mortgage Offset on Fixed as well as variable rate loans.

· Competitive Fixed Rate Home Loan Rates (O/O starting at 4.15% – 4.57%, 1 year to 5 year terms).

· All loan applications individually assessed – no credit scoring, Panel valuers (i.e. no Valex).

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Aussie dollar falls below S$1

SINGAPORE — The Australian dollar dipped to below the S$1.00 level this morning (Jan 14), in a first since November last year. Bloomberg data, as of 10.25am (Singapore time), showed that the Australian dollar was trading at around 99.9 Singapore cents, compared to S$1.0047 the day before. Last July, the Australian dollar had fallen below S$1 for the first time since 2009. Since then, the Australian dollar has fluctuated between S$0.9842 and S$1.0333. Both the Australian and New Zealand dollars slid to multi-month lows today as a vicious selloff in commodities and equities revived worries about global growth. The Aussie has skidded nearly 5 per cent this year on worries that China could be losing its grip on managing the slowdown of its economy. Not helping risk sentiment were sharp falls in commodities and equities. Bourses in Australia, Korea and Shanghai shaved off 2 per cent and Japan shed almost 4 per cent. Prices of iron ore, Australia’s top export earner, are down 8 per cent so far this year. AGENCIES

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Almost one in five home loans are fixed

Demand for fixed rate home loans has continued to rise with these types of loan accounting for almost one in five loans written in December. Fixed rate home loans accounted for 19.44% of all loans written throughout the month of December, according to national data from mortgage franchise Mortgage Choice. This is up from 17.39% recorded in November. Mortgage Choice chief executive officer John Flavell said this was the second consecutive month that fixed rate demand had increased. “This spike in demand for fixed rates comes just months after the majority of Australia’s lenders lifted the interest rates across their suite of variable rate home loans. “A lot of mortgage holders are now acutely aware that Australia’s banks can and will lift their variable rates as they see fit. As such, it isn’t surprising to see an increasing number of Australians opting for the security of a fixed rate home loan.” Across the country, demand for fixed rate home loans was highest in New South Wales, with this type of product accounting for 25.35% of all loans written. This was followed by South Australia and Queensland, where fixed rate products accounted for 20.25% and 19.13% respectively. At the other end of the spectrum, fixed rate demand was lowest in Victoria, with this type of loan accounting for 10.65% of all loans written in the month of December. Flavell said he expects the increased demand for fixed rates will continue. “Moving forward, and depending on what the Reserve Bank does with the official cash rate next month, I wouldn’t be surprised to see an increasing number of Australians looking to fix part or all of their mortgage.” Australian Finance Group (AFG) also reported a lift in demand for fixed loans in the quarter to December. In its Mortgage Index released this week, the group saw fixed rate lending lift by nearly 3% to 14.2% of the product mix. This figure, as a percentage of AFG’s overall volume saw its first increase since the final quarter of 2013.

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Non major slashes rates

Non-major lender Suncorp has discounted its interest rates by up to 1.55% across selected standard variable and fixed rate home loans. The new rates, effective 13 January 2016, will be applied on the standard variable rate and three year fixed owner occupied and investor Home Package Plus products. The standard variable rate for new owner-occupied Home Package Plus Special Offer loans of at least $150,000 has been cut by 1.55% to 4.15% (comparison rate 4.54%). The three-year fixed rate has been reduced by 0.35% to 4.09% (comparison rate 4.52%). The standard variable rate for new investment Home Package Plus Special Offer loans of at least $150,000 has also been slashed by 1.55% to 4.42% (comparison rate 4.80%). The three-year fixed rate has been reduced by 0.35% to 4.34% (comparison rate 4.78%). All of these discounts apply to loans with a loan-to-valuation ration (LVR) of 80% or less. Suncorp Bank head of intermediaries, Steve Degetto, said the new offers will provide brokers with greater flexibility. “The Suncorp Bank Home Package Plus product provides customers with flexibility and a wide range of benefits by combining their home loan with other banking products. The new discounted rates only strengthen the value of this award-winning product, and provide brokers with a competitive proposition to deliver to their customers.” Degetto also announced the Home Package Plus annual package fee will be waived. This is normally $375 for new Home Package Plus customers taking out new lending of at least $150,000. “We’ve started the New Year with new thinking. We’ve listened to broker feedback, and made progressive changes to improve our processes and simplify some policies,” Degetto said. “This improved service, combined with our new competitive offers, will support our broker partners to hit the ground running in 2016.”

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Ms J Leong-Singapore

Professional, efficient and responsive. David was able to provide proper information to assist in your mortgage loan decision. Document arrangement was smooth and timely, and the team was able to expedite the process to ensure benefit from timely process in settlement. I am happy with the David & Partners’s service.

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Mr P Wittber- Singapore

It was a pleasure dealing with David to obtain a mortgage for a house in Australia. The advice provided was excellent and David made the process efficient and easy. I would highly recommend David & Partners to others

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Dr D Cheong- Singapore

David was friendly and made the process of obtaining a loan so much easier for us. We are impressed by his experience and in depth knowledge which gave us confidence to use his services. Highly recommended

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Mr A Awang- Kuala Lumpur

David has been very helpful, efficient and professional. From recommending a sensible financing package, efficient processing and handling or documentary requirements, responding to queries about the financing, David has performed his part diligently and in a most timely manner. I have utmost respect for his dedication and professionalism.

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S & A Reddy-Singapore

David Moss had helped us with organising a mortgage loan for our investment property in Australia. We were very pleased with his professionalism, in handling the entire process. David had provided us with adequate information on the types of loans that were available and advised us on what was more suited for us. He handled the documentation process efficiently enabling a seamless approval of our loan in a timely manner. We are very happy with the services provided and would strongly recommend David to other clients like us. Anitha&Surender

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Ms G Hagopian- Singapore

Great service, fast and experienced. My loan was approved within 2 days and valuation was done within less than a week! I was very impressed with the loan package they offered me and how they made sure the whole process was smooth and efficient. I would def recommend David & Partners to all my contacts as i have 100% trust in the quality of their work. They’re also great people to work with!

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Jake Jacob Singapore/HK

David Moss offered a highly professional end-to-end process to arrange a mortgage with ANZ Australia. He checked in regularly to keep things moving and always responded in a timely manner. I wouldn’t hesitate in recommending David as a mortgage broker to anyone who is based in Asia.

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Permanent ban for Melbourne-based mortgage broker

The Australian Securities and Investments Commission (ASIC) has handed a Melbourne based mortgage broker a lifetime ban following an investigation into his conduct. ASIC this week permanently banned John Cilmi from engaging in credit activities and cancelled the Australian Credit Licence of his company Northern Securities (Victoria) Pty Ltd (NSV). ASIC’s decision to ban Cilmi came after an investigation found he failed to meet standards set by the regulator in four areas. ASIC found Cilmi acted recklessly by submitting false or misleading documents to secure three separate loan applications, including bank and income documents and lacked an enquiring mind and failed to be vigilant in the exercise of his duties by submitting false documents in support of loan applications for five customers. ASIC’s investigation also found that Cilmi was uncertain as to what was required of him as a key person on the credit licence and had little concept of compliance and training requirements for credit assistance providers. Cilmi also failed to ensure that NSV complied with a number of Australian credit licence conditions. The credit license of NSV was cancelled after ASIC found it failed to carry out its general conduct obligations under the National Consumer Credit Protection Act 2009. ASIC deputy chairman Peter Kell said the penalties show the serious repercussions that face finance professionals that don’t comply with professional standards. “ASIC banned Mr Cilmi after finding that the management of his credit practice was severely wanting,” Kell said. “This case demonstrates the significant penalties that can be imposed against those who demonstrate a lack of understanding and regard for compliance.”

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Customer satisfaction for big four remains lower than other lenders

In the six months to September 2015, the overall satisfaction level of home loan customers of Australia’s four major banks was at 80%, according to data from Roy Morgan’s Single Source survey. While it is an improvement from 78.2% 12 months ago, the big four banks scored much lower than other major banks. Indeed, the next seven major banks all had home loan customer satisfaction levels of more than 85%, with the top performers hitting over 92%. Of the eleven major home loan banks, ME’s customers posted the highest satisfaction levels at 92.8% and ING Direct followed with 92.7%. So high were the scores of these two banks that the second runner up Bank SA was only at 88.7%, with Bendigo Bank was not far behind at 87.6%. Among the four major banks, CBA had the most satisfaction with 82.0%. Westpac was second with 80.8%, NAB takes third at 78.9%, and ANZ last with 77.5%. The survey discovered other points of interest. For instance, although there were reductions in home loan rates in recent years, ANZ, CBA, and NAB continued to post lower satisfaction levels for their home loan customers versus their non-home loan customers. Over the last 12 months, CBA improved the most among the big four, going up 1.4%. NAB was up 0.6%, ANZ down 0.3%, and Westpac decreased by 1.0%. Despite CBA’s improvement, it still trails behind the much higher satisfaction levels of banks outside of the big four, who maintained an average satisfaction level of 86.7% in the six months to September.

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Sydney drives down capital city clearance rates

The final auction clearance rate last week fell to 64.9% from the previous week’s 67.4%; lower than last year’s 68.1%. The decrease in capital auction clearance rates can be associated with Sydney’s weaker performance last week, being the second largest capital city auction market, according to data gathered by CoreLogic RP Data. Melbourne was at its busiest for the year the previous week, with 1,690 auctions held. With the Melbourne Cup next Tuesday, however, auction activity in the city for the weekend is anticipated to quiet down; only 621 have been scheduled on the week of the Cup. Incidentally, Melbourne was the strongest performing capital city last week, with 69.7% of its auctions reported as successes. CoreLogic estimated that in the previous week, about 1,150 auctions were attributed to Melbourne alone. Sydney posted 1,024 auctions with a clearance rate of 61.3%, which was far weaker than its previous performance earlier this year—a 22-consecutive-weeks streak of 80% or above. Despite the lower values, there were 1,450 homes in the city scheduled for auction this week, higher than last year’s 1,259 and the highest number of weekly auctions seen since the final week of this year’s March. Adelaide had 155 auctions slated for this week, higher than 103 the previous week. Canberra arranged 131 for this week versus the previous 58. Perth has 49 for the week, compared to its showing last week at 33. Of the various capital cities, it was Brisbane where auction volumes went down for this week. Previously at 223, this week’s auctions fell to 197, which was the busiest week for auctions across the city to date. Although there was increased activity, Brisbane’s final auction clearance rate the previous week revealed that only 48.8% resulted in a transaction. Melbourne’s lower volumes this week diversified the list of the busiest individual suburbs for auctions. Formerly, the list was dominated by Melbourne suburbs.

• 20 auctions in Reservoir (Vic)
• 18 auctions in Bellevue Hill (NSW)
• 16 auctions in Paddington (NSW)
• 15 auctions in Coogee (NSW), Killara (NSW) and St Ives (NSW)

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CPI data reveals house costs dropping in some cities

Consumer price index (CPI) data released recently by the Australian Bureau of Statistics for the September quarter reveals downward pressure on new housing costs in Perth and Darwin. On the other hand, costs for new housing in most other cities continued to rise, including in Sydney. “[The] Sydney housing market remains strong due to increases in the cost of materials and labour and strong demand, which is putting upward pressure on dwelling construction [costs],” the ABS noted in its report. The report also found that rents in select cities are also falling. Perth, Darwin, Hobart, and Canberra all posted negative contributions to their costs of living. On the other hand, rental costs are rising in Sydney, Melbourne, and Adelaide. first home buyers are likely to be enticed into purchasing property this year, with the record low variable interest rates and improving affordability of new homes in certain capital cities, said Amanda Watt, head of banking business for act. “While house prices continue to rise strongly in Sydney, trends have been much more varied elsewhere and the CPI data indicate that new housing costs are in fact going backwards in some locations, in particular in Darwin and Perth which have been hard hit by the commodities downturn. This can only benefit first homebuyers in those cities, who will be welcoming the financial reprieve,” Watt stated. “This will help to stimulate the home loan market, with the level of first-time buyers taking out home loans expected to rise in the second half of 2015 back towards 20% of all new home loans from current levels of around 15% of all new home loans.” Another ABS report detailed that since the 1994-1995 period, the proportion of households that own their home outright declined to 31% in 2013-2014 from 42%. The proportion of households with a mortgage increased from 18% to 26% between 1994-1995 and 2013-2014. Watt remains positive despite the data. “[The] latest price data could help to reverse this trend, as the housing market tentatively slows,” she said.

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