Home prices and superannuation, are contenders for top of the chat charts around dining tables, water coolers and bbq’s.
Take home prices; slowing thanks to six interest rates rises since October, and despite continuing high levels of immigration and job creation.
The National Australia Bank said in its latest quarterly residential property survey that expectations for home price gains have flattened nationwide, with Melbourne seeing the most dramatic pullback.
That’s because Melbourne home prices escalated by the most in any Australian market, up more than 20% in the year to March, according to the Australian Bureau of Statistics’ Home Price Index.
The NAB said that real estate agents, developers, owners and fund managers see Melbourne prices rising only 0.7% in the 12 months to June, 2011, down from 5.8% growth expected over the 12 months from the March.
Sydney-based respondents also expect more modest price increases for the coming year to just 2%, down from the 5% rise seen for the 12 months to next March in the last survey.
Besides Sydney, the NAB said Adelaide (2.2%), Perth (2.0%) and Brisbane (0.8%), have all seen expectations fall over the past quarter.
"Canberra, whilst also having fallen from +5.1% last quarter to a current +2.9%, is now leading the way for national house price growth expectations," the NAB commented.
"While residential house prices are still generally tipped to increase over the next 12 months, we have seen a significant cooling off since the last quarterly survey," NAB chief economist Alan Oster said in the report
"There has been a very big change in expectations." (It’s amazing what the cumulative effect of six rate rises, lots of bad publicity about offshore economies, some political instability and an easing in confidence, can do to price expectations).
Nationally, expectations for house price increases over the next year are for a 1.4% gain, slower than the 5.4% foreseen for the year to next March.
Auction clearance rates in major state capitals have fallen from February highs, a sign of less confidence among buyers.
The NAB said respondents to the survey were divided about the causes for lowered price gain expectation.
While developers blamed access to credit as one of the major constraints on building new homes, buyers pointed to rising interest rates.
Elsewhere in the survey, the NAB forecast that "sub-$500,000 properties will outperform the market, with prices predicted to fall in properties over $2 million.
And foreign buyers are expected to account for around 9% of all purchases (existing & new) over the next 12 months."
"Properties traditionally favoured by first home buyers ($250,000-$500,000), are expected to realise the highest percentage capital growth over the next 12 months, for both housing and apartment stock.
"In contrast, homes and apartments over $2 million are considered the worst investment options (perhaps impacted by share market volatility) according to our survey participants.
"Demand for existing property is expected to favour houses (both semis and stand alone) in the middle and outer suburban rings, closely followed by inner city detached and semi detached product.
"Demand for new developments mirrors these results. Apartment stock is not expected to drive strong demand within the current development cycle, particularly outside of the city/CBD area.
"In terms of rental expectations, SA and Victoria were considered the top States for rental growth over the next 6 and 12 months (between 2.3% – 2.4%), with NSW, WA and QLD expected to record 1.6% – 1.9% growth and the ACT a distant last at 0.3% growth."
PS: later today the Rismark/RP Data home price survey for June, the June quarter and the year to June will be released.
And some glum news for super funds from measurement group, SuperRatings.
It said this week that despite most funds earning a median of close to 11% in 2010 financial year, the effect of fees and charges will cut that to just under 10% for the majority of Australians superannuants.
The upshot is that the median return for Australia’s largest Balanced investment options will be set at 9.8% for the 2010 financial year.
"Whilst the result was pleasing, and a confidence boosting turnaround from a 12.7% loss in 2008/09 and a 6.4% loss of 2007/08, the magnitude of the Global Financial Crisis is only now starting to bite into the longer term super fund returns, with the rolling 10 year compound return declining from 5.4% as at 30 June 2009 to 4.5% as at 30 June 2010, now less than 2% per annum ahead of prevailing inflation, SuperRatings said.
Managing Director of SuperRatings, Jeff Bresnahan said in the statement that "Whilst not looking great on paper, in a relative sense balanced options have achieved what they set out to do, namely to prevent significant losses through diversification.
"Pity the poor fund member who thought the success of International Shares in the 1990s would continue into the 2000s.
"Over the last decade international share options in super funds have lost a median of 5.0% per annum, every year for a decade.
"Over the same period, Balanced options have gained 4.5% per annum.
"So, despite not being handsomely rewarded for risk in relation to cash and inflation over the same period, Balanced options
