War on Waste Made Easy: Cut-Price Compost Bins and Worm Farms

Reducing your household waste is a breeze thanks to the Compost Revolution’s discounts and advice

19 January 2018
It’s no secret that too much food waste is ending up in landfill. In NSW alone, the Environmental Protection Agency (EPA) says a third of the average red-lidded bin is made up of wasted food, adding up to 800,000 tonnes of edible food being thrown out each year! The good news is that compost bins and worm farms can be acquired at discounts of up to 45 per cent thanks to the council-run Compost Revolution program operating across Australia.

“Surprisingly, a lot of people love the process of worm farming and composting, and get satisfaction from the actual doing,” says Jp Williamson, regional organic waste officer for Waverley, Woollahra and Randwick councils in Sydney. “There is even research showing that contact with soil alleviates depression and nurtures happiness. And, of course, there are the obvious benefits of less landfill, less greenhouse gasses, free fertiliser and healthier, lusher-looking plants to boot.”

7 Key Things to Establish Before You Plan an Ensuite

If a new ensuite is on the cards, read the first in our two-part guide to getting the design right from the start

It’s hard for most of us to imagine now, but not too long ago the average family home had just one small bathroom and a separate toilet, which were shared by the entire family. The bathroom was seen purely as a utilitarian space, somewhere to undertake the task of personal hygiene. Fast forward 40 years or so and ensuites – secondary bathrooms adjoining the master bedroom that allow occupants to not just bathe, but also enjoy a sense of privacy and escape – have become the norm.

If you’re planning on putting an ensuite into your home, here are the main things you need to consider.

Essential Things to Consider When Planning Your Home’s Electrics

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When you’re installing new electrics in your home, it can be tricky to know where to start. That’s why it’s important to know the key questions to ask from the outset.

Follow these key steps in planning out your electrical layout, with the help from the experts and Clipsal, and you’ll soon find the right products to suit your lifestyle needs and decorating look.

Australians are suddenly confident again about their finances and the economy

Australia Day on Bondi Beach. Photo: Brendon Thorne/ Getty Images.

Australian consumer confidence, as measured by the ANZ-Roy Morgan survey, jumped to a more than four-year high in the first week of 2018.

However, with most Australians off enjoying their holidays, there was always a question as to whether or not the sharp improvement was truly driven by improved confidence levels or just temporary, one-off factors.

Indeed, as ANZ pointed out last week when the first report of 2018 was issued, confidence levels do tend to lift in the immediate aftermath of the Christmas-New Year period.

And as many of you already know, Australia is not exactly a bad place to be during summer, right?

Well, we now know the answer as to what drove the improvement: no, it was not just because you were all on holidays, but because you’re truly feeling more confident about your finances and the current state of the economy.

According to last week’s survey, confidence levels rose strongly again.

The headline ANZ-Roy Morgan Consumer Confidence index increased 1.2% to 123.5 points, leaving it at the the highest level since October 2013.

“The rise in confidence is quite encouraging and is consistent with the positive data out on building approvals and retail sales,” said David Plank, Head of Australian Economics at ANZ Bank.

“Last week, we noted a positive seasonal bias to the first reading of the year. There is no clear seasonal bias in the second week, suggesting that the improvement in confidence this year may be more than just an empty resolution.”

As seen in the chart below from ANZ, the index now sits well above its long-run average of 112.9.

Source: ANZ

According to Plank, the improvement last week reflected improved sentiment towards current financial and economic conditions, along with the outlook for household spending.

“The current finances sub-index rose 2.0% following a solid 5.8% rise the week prior,” he said, adding that “sentiment around current economic conditions rose 1.4%, bringing the index to its highest value since March 2013.”

That helped to offset small declines in sentiment towards finances in the year ahead and the economy looking five years ahead which dipped by 0.2% and 0.5% respectively, partially reversing strong gains reported in the previous week.

Along with the increase in the current finances subindex which has a reasonable relationship to changes in household spending levels, the final component in the survey — whether now was a good time to buy a household item — also offered hope on the outlook for consumption, rising by 3.4%, well above its historic average.

While a promising sign for the household sector and, as a consequence, the broader Australian economy, Plank says that upcoming wage data from the ABS will likely determine whether the recent improvement will be sustained longer-term.

“In our view, persistently low wage growth has acted to constrain rising confidence for some time<‘ he says. “As such we see the February wage data as vital to how consumer confidence plays out over the coming months. “In the near term, the employment numbers, out later this week, may also have an impact.” The ABS will release Australia’s December jobs report on Thursday, January 18. Following one month later, the ABS will also release Australia’s December quarter wage price index on February 21.

Reference: https://www.businessinsider.com.au/australia-consumer-confidence-4-year-high-2018-1

Credit Suisse has some bad news for Sydney homeowners

Photo: Getty Images.

Sydney is Australia’s largest and most expensive housing market, accounting for nearly a third of the country’s total housing wealth.

Such is its importance, what happens in the Sydney housing market is often influential on other parts of the economy, impacting interest rate settings from the RBA, the outlook for economic growth, labour market conditions and, in some circumstances, what may happen in other housing markets in the future.

As you’re no doubt aware, prices in Sydney are starting to fall after years of relentless growth.

In December, they fell by 0.9%, according to CoreLogic, extending the decline over the quarter to 2.1%.

And it looks like that trend has continued in the early parts of 2018, driven by a combination of regulatory restrictions on both domestic and foreign investors, an increase available stock for sale and ongoing affordability constraints.

To Damien Boey, Research Analyst at Credit Suisse, the recent falls are only the tip of the iceberg, forecasting that Sydney prices are likely to fall by at least another 5% in 2018.

“This is because demand has weakened, the composition of buyers has shifted unfavourably and new supply remains elevated,” he says.

Helping to underpin that view, Boey says recent data indicates there is a currently a marginal oversupply of homes in Sydney.

On the supply side of the equation, he agrees with the vast majority of economists that dwelling completions are the best indicator of marginal supply.

However, differing him from most, Boey says that housing turnover, rather than population growth, is the best measurable proxy for demand.

“Our preferred measure of demand is residential property transfers, multiplied by the investor and first home-buyer share of new housing loan approvals.”

After calculating the current demand to supply balance, Boey says the ratio of his demand and supply proxies “is a powerful leading indicator of year-end real house price movements in Sydney, with a lead time of roughly two quarters.”

Here’s what it’s currently saying on the outlook for prices.

Source: Credit Suisse

After falling by over 5% this year, Boey says the best Sydney homeowners can look forward to in 2019 is a year of flat price growth.

“The glimmer of hope is that Chinese resident capital flows appear to have spiked higher towards the end of 2017, following a policy change to outward direct investment,” he says, referring to a modest relaxation in Chinese capital controls that were implemented at the start of 2016.

“Accounting for lead time, this potentially bodes well for 2019 housing market prospects.

However, Boey says that “in lieu of negative momentum, tight credit and elevated supply, we doubt that there is enough foreign impetus to cause anything more than a stabilisation in prices in 2019”.

And that leads back nicely to the influence that the Sydney property market has on the broader Australian economy.

What happens in Sydney property does not often stay in Sydney property, after all.

While Boey says policymakers from the Reserve Bank of Australia (RBA) and APRA will initially welcome the pause in Sydney price growth, he says there is a risk the weakness could become even more entrenched.

“At first glance, this L-shaped trajectory for house prices over the course of two years may be to the liking of RBA officials. After all, they would be able to claim that macro-prudential tightening and hawkish rhetoric have been successful strategies to protect the integrity of the financial system,” he says.

“However, there are tail risks to be wary of.”

Those “tail risks”, says Boey, are twofold.

“Investor interest [could] fall faster than first home-buyer interest rises. The share of net new buyers in the market could fall, with more negative repercussions for house prices,” he says.

Also, “demand could fall in such a way that unemployment rises, contributing to higher levels of insolvency activity and greater housing supply”.

Boey says not only does this create downside risks for prices, he says it could also elicit further rate cuts from the RBA.

Yes, rate cuts, not hikes, as most currently expect will be the next move in interest rates, and only because of price declines in Sydney.

“An L-shaped trajectory in house prices implies weaker consumption growth, which in turn could contribute to unemployment, more CPI disinflation and possibly more weakness in house prices,” he says.

“All that we have presented in this article is a first-pass attempt to forecast house prices. We have not factored in the second-round consequences of unemployment and deleveraging.

“Indeed, in history, the very reason why we have not seen these effects is because RBA easing has negated them before they could get started.

“In this context, we believe that falling house prices will remain a dovish concern for Bank officials at least until they can see a sustained uplift in housing demand from outside the system.”

When the RBA Board last met in December, it described the outlook for household consumption as a “significant risk” for the economy “given that household incomes were growing slowly and debt levels were high”.

Linked to that assessment, it also noted that “nationwide measures of housing prices are little changed over the past six months, with conditions having eased in Sydney”.

And suggesting that restrictions on housing lending could actually increase, rather than reduce, in the period ahead, the board again warned that “growth in housing debt has been outpacing the slow growth in household income for some time”.

Reference: https://www.businessinsider.com.au/sydney-house-price-falls-rba-interest-rate-cuts-credit-suisse-2018-1

Crackdown on foreign buyers could send Sydney and Melbourne’s prices falling

YOUR MORTGAGE

 

 

 

By Gerv Tacadena 

The government’s severe measures on land taxes are starting to send foreign buyers offshore, and experts believe this would will eventually lead to lower property prices –  especially in Sydney and Melbourne.

A report from News.com.au enumerated the recent crackdowns by state and federal governments, starting with New South Wales’ move to double stamp duty for foreign buyers from 4% to 8% and to increase the annual land tax surcharge from 0.75% to 2%.

Additionally, the federal government removed capital gains tax exemptions for overseas buyers and established a 50% ownership cap for new residential developments. This is in addition to the Federal budget which gave the Australian Taxation Office the power to impose up to $5,500 fine a year to foreign investors who leave their properties empty.

Also Read: Climate change brings bad news for property owners

Another recent change was to Victoria’s residential land tax, which will impose fines amounting to 1% of the property’s value to owners who leave their assets idle.

According to an analysis from Credit Suisse, foreign buyers snapped up a quarter of all the new supply in New South Wales, and Chinese buyers make up almost 80% of foreign demand. With the Chinese government preventing money to flow offshore, Chinese investors are looking for somewhere else to invest.

AMP Capital chief economist Dr Shane Oliver said tighter lending standards, rising levels of unit supply, slower Chinese demand and reduced investor enthusiasm for property would likely lead to further declines in Sydney and Melbourne or around 5%.

Oliver explained that the cooling in the two cities was good news for the Australian Prudential Regulation Authority and the Reserve Bank, as it helps provide the necessary flexibility to maintain a low-interest environment until the economy is ready for a cash rate hike.

“It also provides a bit more room for first home buyers,” he said. “However, other cities are running to their own cycles with Hobart likely to continue strengthening, Perth and Darwin close to the bottom and moderate growth in Adelaide, Brisbane and Canberra,” Oliver noted.

Reference: https://www.yourmortgage.com.au/mortgage-news/crackdown-on-foreign-buyers-could-send-sydney-and-melbournes-prices-falling/245484/

 

Credit Suisse says more rate cuts are on the way as Australian households batten down the hatches

 

 

 

Australia’s household savings rate is set to rise as Aussie borrowers move to pay down debt amid falling house prices, Credit Suisse (CS) says.

And the bank’s analysts say such a scenario presents a key threat to domestic consumption in 2018 — the biggest part of the Australian economy.

“Supposing that residential investment flattens out at a high level, and that infrastructure investment growth slows, it is very hard for us to see where above potential growth will come from” Credit Suisse said.

“It is even harder to see inflation returning back to the RBA’s target band over the next few years. Therefore, we still see room for rate cuts.”

It’s a position Credit Suisse has held for some time, but the bank’s latest note provides some interesting reasoning for the outlook based on statistical analysis.

The CS research team’s view is derived from a regression model, which aims to predict the future direction of household savings based on three key indicators:

1. The net wealth effect of movements in house prices relative to disposable income;
2. Credit availability — i.e. the willingess of banks to lend; and
3. Minimum principal repayments relative to disposable income.

CS concluded Australia’s household savings rate — which currently sits at 3.2% — is around 2% below where the model suggests it should be.

“Convergence alone suggests that the saving rate needs to rise,” CS said.

“But in the near term, we also think that fundamentals are likely to evolve in a way that will require an even higher saving rate.”

So rather than just a 2% increase, the bank is forecasting household savings may have to rise by up to 3.5% — more than double the current level.

To start with, the analysts said the current savings rate is not sufficient to fund principal & interest mortgage repayments.

In fact, they said just for Australian households to meet minimum principal repayments will require an increase to the savings rate of 2%.

The analysts based their conclusion on an assessment of data on owner-occupier loans.

They applied statistical techniques to smooth the data — effectively adjusting for repayments ahead of schedule and calculating a baseline figure for minimum repayments that’s statistically robust.

The findings show the savings rate declined from the 1990’s until Aussie households battened down the hatches after the global financial crisis in 2008.

“But very recently, saving levels have been run down again to inadequate levels,” Credit Suisse said. This chart tells the story:

 

In addition to mortgage repayments, Credit Suisse said the savings rate may rise even further as households adjust to further price falls in the Sydney housing market and loan approvals decrease.

The bank’s view on the latter is based on its credit conditions index (CCI), which indicates loan approvals will continue to fall over the next 6 months:

And further analysis by the bank shows quite a strong negative correlation between loan approvals and household savings.

“Interestingly, the sharp fall in loan approvals around the time of the financial crisis foreshadowed a sharp rise in the saving rate around this time.”

Credit Suisse said an increase in the household savings rate of 3.5% will weigh on consumer spending, despite the recent strength in the labour market and tentative signs of wage growth.

“Even if the economy sustains very strong growth in hours worked of 4% per annum, and slightly more positive real wages growth, it is very hard to see consumption growth running at a strong pace,” Credit Suisse said.

The bank said the incumbent federal government may be preparing to offer tax cuts as part of the upcoming election cycle, but such an outcome remains uncertain.

It means Credit Suisse is maintaining its view that rate cuts remain an option on the table for the RBA, in an effort to boost spending and stimulate economic growth.

That puts CS on the dovish side compared to other experts, with analysts from Morgan Stanley and UBS arguing that rates are likely to stay on hold for the duration of 2018.

Reference: https://www.businessinsider.com.au/credit-suisse-says-more-rate-cuts-are-on-the-way-as-australian-households-batten-down-the-hatches-2018-1

Why we shouldn’t be too scared of dramatic house price drop predictions

The Sydney Morning Herald
By Michael Pascoe

 

Multibillionaire Meriton tsar Harry Triguboff has picked up this year where he left off last year, and the year before – decrying any and all moves to tighten up on foreign investors buying the apartments he churns out.

Harry talking his own book, who’d have thought it?

The interesting thing about Triguboff’s recent warnings in The Australian Financial Review is that the story contains good reasons to think the much-headlined cooling of the housing price boom will be mild.

“Government taxes and credit restrictions have started to hit foreign buyer demand for residential property so hard in Australia that major developers are either pulling out of the apartment market altogether or, like Meriton’s Harry Triguboff, are left grappling with Chinese investors who can’t settle on pre-sold apartments,” it says.With an estimated wealth of $11.4 billion, I suspect Triguboff will be fine.

Building approvals actually peaked back in 2016. An odd surge in Footscray high-rise approvals distorted the November figures, but the completely expected pullback from unsustainable growth is in place. And not all approvals will turn into commencements.

That’s the reassuring thing about the latest instalment in the multi-year saga of scary housing-related headlines.

Developers responding to reduced demand by reducing new supply means less chance of a fat overhang seriously damaging the market. Past property busts had developers going full tilt up to and over the edge.

A series of graphs by property analyst Peter Wargent neatly summarises how strong this week’s job vacancy figures were, including good growth in the often-maligned manufacturing and mining industries.

On the evidence, Wargent dares suggest Sydney could see record low unemployment in 18 months or so.

Not that there aren’t/won’t be pockets of actual house price stress, as opposed to exaggerated and highly subjective “mortgage stress” figures so loved by the doom-and-gloomers. (You know the “if rates rise 25 points we’ll be ruined” stories? Most people could save more than that by comparison shopping.)

But back to Triguboff. In April 2016, he was slamming the NSW government for increasing stamp duty for foreign buyers, saying Chinese buyers were disappearing.

That was when he wasn’t bagging local councils for stopping him building more apartments and criticising the Reserve Bank and Australian Prudential Regulation Authority for tightening up on local banks’ lending to foreign buyers.

By the end of the year, all was again well with Meriton’s outlook, aside from “idiots” on councils not approving his projects quickly enough.

Five months later, Triguboff said apartment prices were weakening and he would finance about $200 million of the $1.4 billion of apartment sales he expected to make in 2017 thanks to local banks’ policies and Beijing’s crackdown on money leaving the country.

In July, there was another slowdown after another NSW stamp duty hike but Triguboff said demand was slowly shifting to local buyers.

“The problem with Australians is they are very slow,” he told the AFR. “They ask their lawyer, they ask their financial adviser, they ask their family, they ask everybody. The Chinese don’t ask anybody, they come off the plane, buy their unit and go.”

But now it seems Meriton has problems with some of those hot-off-the-plane-and-plan buyers.

“Many of the Chinese can’t settle,” he said in the AFR earlier this month.

“So now we have to resell them – there is another problem. And everyone thought that the Australian buyer would come in when the prices started coming down – they haven’t – I knew they wouldn’t – it wouldn’t make any sense if they did.”

With an estimated wealth of $11.4 billion, I suspect Triguboff will be fine, and Meriton more than capable of riding the market’s ructions.

For a correction of some parts of the market to turn into a housing crash, the usual requirements are one or more of a sharp rise in unemployment, a sharp rise in interest rates or a fall in population.

The multi-year housing bears continue to be denied all three, but have seized on the idea of the “IO cliff” – the bunch of interest-only loans that the authorities are pressuring banks to turn into principle-and-interest to ensure the stability of the financial system.

That comes with a consequent jump in monthly repayments, mainly for speculators who have been betting on rapid capital growth continuing.

There was no better example of that than the recent story of a real estate marketing company’s founder claiming the outfit’s “20,000” customers couldn’t afford their mortgage repayments when their banks switched them out of IO loans.

Kevin Young, founder of Queensland’s Property Club (previously called The Investors Club) had said: “We’re advising our members to get themselves into conflict with their bank, to say they can’t afford principal and interest repayments without ending up in financial stress.

“Most of the time, the bank will acquiesce.”

Through the usual seminars and such, Property Club markets property for developers to “members” with inhouse brokers and service providers helping with the details.

When property prices are soaring and property investment is touted as a sure way to wealth, well, a rising tide lifts all boats. When the price of marginal new properties doesn’t rise and 20,000 customers have been encouraged to take IO loans during sales seminars, gee, what could go wrong?

Fortunately, for the broader market, it doesn’t look as bleak as the local UBS office likes to paint it. With the banks now well under their IO ceiling and cheaper rates available by shopping around for P&I, the “cliff” is more likely to be a hill. But don’t let that get in the way of a scary story.

 

Reference: http://www.smh.com.au/business/property/why-we-shouldnt-be-too-scared-of-any-house-price-drop-20180111-h0gu5u.html

HSBC: Reserve Bank could lift cash rate by mid-2018

YOUR MORTGAGE

By Michael Mata 

HSBC: Reserve Bank could lift cash rate by mid-2018

Improvements to the mining sector and robust economic growth should see the Reserve Bank of Australia (RBA) lift the official cash rate by mid-2018, according to HSBC.

In its Asian Economics report for Q1 2018, Paul Bloxham and Daniel Smith, economists at HSBC Australia, said the country’s economy is on a solid path to growth, with the latest national accounts indicating that GDP growth accelerated to a slightly above-trend rate of 2.8% year-on-year in the third quarter of 2017.

“The main force at work has been that mining investment is stabilising, after having fallen significantly in recent years. At the same time, growth in the non-mining sectors has remained solid,” they said.

“As conditions in the mining industry improve and the local labour market tightens up, we expect a modest pick-up in wages growth, which should, in turn, see the RBA begin to normalise its current very stimulatory cash rate setting in 2018. Our central case is for the RBA to begin to lift its cash rate from mid-2018.”

One key risk to HSBC’s forecast is the fact that wages could remain sluggish for longer than anticipated.

“This could occur if the effect of the cyclical lift in the economy and tightening of the labour market on wages growth and inflation are offset by the structural factors — such as offshoring, the changing nature of work and increased retail competition — to a greater degree than we are currently assuming,” they said.

The ongoing cooling of the housing market could also be a larger drag on growth than expected, with any pullback in Chinese household demand for Australian services presenting “considerable challenges” to HSBC’s growth forecast.

Reference: https://www.yourmortgage.com.au/mortgage-news/hsbc-reserve-bank-could-lift-cash-rate-by-mid2018/245487/