Banks unwilling to finance new residential projects

The banks have come under attack for their unwillingness to finance the development of new residential projects in Sydney and are potentially holding back the recovery of the new housing market, says BIS Shrapnel managing director Robert Mellor.Speaking at the recent QBE LMI Housing Outlook breakfast, Mellor said developers had been telling BIS Shrapnel that a more favourable planning attitude had been adopted by the O'Farrell state government, ahead of changes to the planning regime next year. "We are hearing from developers that the state government has changed its attitude significantly," said Mellor."The sorts of comments I am hearing is that the government is far more accommodative even without the new regime in place and that's a favourable thing for new construction."But he said the most important thing needed to stimulate a recovery was "the banks freeing up their attitude to lending practices"."My personal view is that banks are being very tough on developers and very tough on individual borrowers."There is this perception [among the banks] that housing could still fall through the floor like it has done in other parts of the world."They need to realise that everything has been thrown at this sector over the last three to four years – it will be nine years since the boom ended coming up this Christmas."You can't talk about prices being massively overvalued when we have seen significant correction in prices, and in real terms they have declined around 12%."Mellor says while it is more still relatively more expensive to build in Sydney, there will be a recovery in construction on Sydney fringes. However, he says the substantial recovery will need to come in medium density and high density construction because the old days of relying on owner occupiers building new houses are over. "You need investors. "We have a favourable regime, but the problem is if banks take a negative attitude on that, then it will be held back. "If that's the case there is the risk of asset price inflation – you need more supply. "The banks have a part to play in that, whether it's funding fringe development or supporting high-rise development. "People need to realise there is no oversupply risk and no collapse about to come."

Buyer beware

The New South Wales consumer watchdog is warning prospective home buyers and renters of scams which are costing unsuspecting victims thousands of dollars.Legitimate ads on reputable property websites are being copied onto dodgy sites with homes and apartments being offered at cut-price deals.In one ad, a two-bedroom property in Sydney valued at $1,300 a week was being offered for a third of the price.Consumers are asked to pay a deposit into a Western Union account without seeing the property.They then lost their money.The Commissioner for Fair Trading, Rod Stowe, says overseas students and people looking for a bargain tend to be the victims.Mr Stowe says some of the ads claim a quick sale is required, or that the property's tenant is overseas."Usually [there are] very convincing stories given as to why the properties are being sold at a particularly discounted rate," he said."Be very cautious. If it sounds too good to be true it usually is."New real estate fraud prevention guidelines have been released to combat the problem.

Australia's most expensive houses

If you want to know where Australia’s rich live, it will probably come as no surprise that Sydney tops the list.Perth and Melbourne are a distant second and third behind the harbour city which has 19 of Australia's most expensive 25 suburbs, according to the RP Data. Perth has three, Melbourne two and Eagle Bay in Western Australia's Margaret River region also gets a top 25 ranking.As in most parts of the world our rich tend to live close to the center of town and if not close to the water.Why? Because the rich can afford the convenience.Sydney’s Point Piper, around 4 kilometres form the CBD tops the list with a median value of $7.382 million.With only 11 streets, including the richest in Australia - Wolseley Road – it has only 148 detached houses and 57 percent of them are owned outright (that is without a mortgage).Not surprisingly Point Piper residents have the highest average incomes in the nation, averaging just over $182,000.Second on the list of expensive suburbs, with an average home price of $6.5 million, is Watson's Bay, only seven kilometres away from Sydney’s city center. In third place is Centennial Park, followed by Woolwich - both in Sydney.Perth's Peppermint Grove takes fifth spot, where median values are $4.3 million, while a typical mansion in Toorak, Melbourne’s top suburb, a can be bought for a measly $2.8 million.Tim Lawless, research director for RPData said suburbs on the property rich list tended be in areas near the central business district, close to the water, or featured houses with a heritage value or houses perched on larger blocks of land.Only three of the top 25 most expensive suburbs are further than 10 kilometres from the capital city central business district.It’s no coincidence that the population living in these most expensive 25 suburbs accounts for just 0.5 per cent of Australia's total population.