Westpac chief economist Bill Evans (pictured) says regulators are set to get tougher on investor loans. Photo: Glenn BarnesWestpac chief economist, Bill Evans, said a nervous regulator will look to ease investor activity in the property market during 2017.Speaking in Brisbane today at an Australian Property Institute event, Mr Evans said high house prices fuelled by investor demand are causing concern for the Reserve Bank of Australia.“We find ourselves with a high increase in house prices and a worried central bank with considerable concern about over-leverage in the housing sector,” he said.“What they’ll be doing next, I believe, is they’ll implement another round of macro-prudential controls and I have little doubt the investor will be under the microscope for this.”Mr Evans suggests lowering loan-to-value ratios for investors, increasing the capital the banks need to hold against investor loans and capping growth in each bank’s investor loan book are all possible.“Over the course of the next six months — no interest rate cuts, no interest rate increases but certainly a focus on investor lending to try and contain those pressures in the housing market,” he said.More from newsMould, age, not enough to stop 17 bidders fighting for this home1 hour agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor7 hours agoDespite the moves, Mr Evans said talk of a ‘housing bubble’ is overstated and the analysis doesn’t indicate a lack of affordability in the sector.He said that housing affordability as serviceability-to-debt measure is running at about the long-term average.“There’s no, what I would call, ‘major threat’ out there to say that house prices have gone too far and we’re about to see a major bursting of the bubble.“Even if they raise rates by one per cent you’d be back at the 10 years average level of affordability — still pretty safe.”Mr Evans said the relative affordability of Brisbane compared to southern capitals is good news for the city’s real estate and is starting to fuel demand from Sydney buyers.“The risk is it’s fine to be more affordable, however if you’re going to be more affordable you’ve got to offer the jobs as well, and that’s been where Queensland is falling down.”Mr Evans said, however, a recent upswing in population growth for Queensland could indicate the shift is underway.“It may well be that this huge gap that Brisbane has in terms of affordability is starting to at least stabilise the slowdown in population growth, because without population growth, you can’t get real growth.”
The lounge room at Chermside West.He said they had lovely neighbours, and often helped one of them with their gardening.“She’s a really lovely lady, and she makes really great Malaysia curries,” he said.The property, on a 465sq m block, is being marketed by Place — Aspley agent Chris Winkler with offers over $549,000. More from newsMould, age, not enough to stop 17 bidders fighting for this home6 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor6 hours agoThe home at Chermside West.Mr Auden said they had been building their “realistic dream home” with a swimming pool at Alderley, which was closer to the CBD.Describing their Chermside West home as a “nice little block”, Mr Auden said it had been a great place to live with their two pugs.“We wanted something on the northside and we were looking for affordability and space,” he said.“We took pride in our property and we want that legacy to live on.” Brisbane weatherman Tony Auden is selling his Chermside West home.Channel Seven weather guru Tony Auden and his wife Alicia are making the move to Alderley.After more than five years, the couple are selling their three-bedroom, one-bathroom home at Chermside West.
The living area at 26 Vakuta St, Fig Tree PocketThe house is on a 1494sq m block and has expansive indoor and outdoor living spaces, a resort style pool and bar with wine cellar and cinema room with a secret entrance hidden by a bookcase. The master bedroom has a marble ensuite, walk-in robe and private balcony and there is a fully self-contained apartment with two bedrooms, kitchen, balcony and laundry. In Robertson, another grand home is also going under the hammer on Saturday.The auction of the six-bedroom property at 45 Parnassus St is scheduled for 4pm on May 27. More from newsMould, age, not enough to stop 17 bidders fighting for this home4 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor4 hours ago The home at 62 Vale St, Kelvin Grove.Marketing agent Janine McDonald of Ray White Alderley said the four-bedroom home at 62 Vale St had been renovated but still retained its original style. On the ground floor of the home there is a timber panel entrance hall, a combined lounge and dining room and a modern kitchen with big windows looking out to the back courtyard and garden. The home at 26 Vakuta St, Fig Tree PocketPlace Paddington marketing agent, Simon Wheelans said the home was a “luxurious treetop retreat” with impeccable finishes, high quality craftsmanship, floor to ceiling windows and big, open spaces. “(Buyers) absolutely love it,” Mr Wheelans said. “It has great views and looks out to a rainforest that can never be built out.“It’s a huge home and has beautiful timber features throughout including spotted gum tree trunks that were on the block (when the property was being built in 2004).” The living area at 45 Parnassus St, Robertson.Marketing agent Tom Zhang of Yong Real Estate Sunnybank Hills said the owners of the modern residence were relocating.Spread across two levels, the house has high ceilings, multiple living areas and luxurious extras including a cinema room, gym and an outdoor kitchen.On the ground level there is an open-plan living, dining and kitchen area with high ceilings, modern lighting and sliding doors that open to outdoor spaces. The master bedroom has a massive walk-in robe with built in cabinetry, an ensuite with spa, and patio access. The kitchen at 45 Parnassus St, Robertson.Outside there is an entertaining area with built-in barbecue, range hood, cabinetry and sink and a second garage has been converted into a gym. In Kelvin Grove a home designed by its original architect owner in the 1960s is going under the hammer at 4pm on Saturday. A Fig Tree Pocket property with grand proportions and feature spotted gum tree trunks is one of 153 Brisbane homes going under the hammer this week. According to CoreLogic, auctions numbers are steady in the river city this week while the clearance rate is down.Brisbane recorded 163 auctions last week, which was a solid increase of the 128 the previous week. Last week’s clearance rate of 46.3 per cent was down from the previous week’s clearance rate of 59.6 per cent.CoreLogic auction expert, Kevin Brogan said there was no question that the drop in clearance rate was significant. “We have had a couple of weeks in the second half of April where we had low clearance rates and then we saw a bit of a bounce back,” he said.“I don’t think this clearance rate drop is the start of a trend but what we need to do is keeping it under review.” In Fig Tree Pocket, the owners of 26 Vakuta St are hoping for a strong sale when the five-bedroom property goes to auction at 1pm on Saturday, May 27. FREE: Get the latest real estate news direct to your inbox here The entrance hall at 62 Vale St, Kelvin Grove.There is also a bedroom, bathroom and garage on this level. Upstairs there are three double bedrooms, sitting room, renovated main bathroom and a deck running the length of the home.The property is close to the Brisbane CBD, shops, schools and cafes. Follow Courtney Todd on Twitter @courtjtodd.
Phillip and Gianna Di Bella at Di Bella Coffee in Bowen Hills. Picture: Annette Dew“It was actually my first home when I was single,” Mrs Di Bella said.“When we were married, we lived there for a few years. I bought it as it had a beautiful courtyard and it was very safe and secure as there are internal steps to the garage. $230,000 refund in mortgage fees Piece of history set to pay off Muscle flexed in mega home sale Coffee king Phillip Di Bella is selling his Brisbane townhouse. Picture: Alex Coppel.A HUMBLE brick townhouse is where it all began for coffee king Phillip Di Bella and his wife, Gianna. The two-bedroom property at 2/578 Lower Bowen Tce, New Farm, is where the couple lived 15 years ago when they started their coffee roasting empire.But now they’ve decided to close that chapter and reluctantly put the property up for sale. This is the townhouse Phillip Di Bella lived in when he started his coffee roasting empire. Picture supplied by Ray White.“This is a genuine opportunity to buy a split-level home right in the middle of Brisbane’s most sought after suburb,” Mr Lyne said.“This is your chance to purchase the perfect house alternative without the associated price tag.”The property will be auctioned through Ray White New Farm on August 19. The view from Brisbane coffee king Phillip Di Bella’s New Farm townhouse. Picture supplied by Ray White.“I love it, and I’d like to see it go to a young person who will love it like I did.”Di Bella Coffee began as a small coffee roasting operation in Brisbane in 2002 and has steadily grown from there.Ray White New Farm agent Tom Lyne said townhouses were in high demand as affordable alternatives to houses in the heart of New Farm. GET THE LATEST REAL ESTATE NEWS DIRECT TO YOUR INBOX HERE Brisbane coffee king Phillip Di Bella is selling his New Farm townhouse. Picture supplied by Ray WhiteMore from newsMould, age, not enough to stop 17 bidders fighting for this home2 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor2 hours ago“So it is a bit emotional for me to be selling but the time is right.”The Di Bellas never roasted any beans there, but they did bag a lot of coffee in the garage. “When we were starting out we did the New Farm markets on a Saturday and Phillip used to drive the truck down with the coffee kart at 4am and I would join him later,” Mrs Di Bella said.
Inside 35 Tullylease Place, Chermside West.Spanning 360 sqm, the modern home is spread over two levels and offers the potential for dual living.It is perched on an elevated block on Milne Hill overlooking Chermside Hills Reserve, with two decks for taking in the views.“The views are amazing,” Mrs Hicks said. “It’s a beautiful home.”Mrs Hicks said Chermside West was a popular market because of its accessibility to the airport and leafy neighbourhood. Chermside is 9km from Brisbane’s CBD and has a median house price of $565,000, according to property research firm CoreLogic. The home at 35 Tullylease Place, Chermside West.AN EXECUTIVE home in one of the northside’s most elite hidden pockets has sold for $1.1 million.The property at 3/35 Tullylease Place, Chermside West, was taken to market via tender and sold in under 2½ weeks.Selling agent Madeleine Hicks, of Madeleine Hicks Real Estate, said the tender process was an effective method, even though it wasn’t used as often for residential transactions.More from newsFor under $10m you can buy a luxurious home with a two-lane bowling alley5 Apr 2017Military and railway history come together on bush block24 Apr 2019The four-bedroom, three-bathroom house attracted three tenders and the winning buyer was an older couple relocating to Brisbane from the Sunshine Coast to be closer to family.
ZAMBIA’S Ministry of Transport & Communications announced on November 22 that agreement had been reached for Swedish consultants to take over the management of Zambia Railways for two years, in order to rescue the struggling company and allow bulk freight including export copper traffic to be switched back from road to rail. The consultants are expected to help the railways overcome recent operational problems and train a new generation of Zambian management able to take control from 1999.Ministry spokesman Robert Makuma said that the technical assistance package had been agreed by the Zambian government, subject to the finance ministry allocating the local funding element. The total cost is put at 12bn kwacha, of which one-third will come as aid from the Swedish government. o
The decision, however, was a temporary one, according to Van Vlier, “as the social partners could not agree on the direction at the time”.Van Vlier, who declined to provide further details on the differing opinions, said the investigation into the scheme’s options came as a consequence of the nationwide debate on the viability of smaller pension funds.“It is a sensitive issue, and there is a lot of emotion,” she said.“Many participants are proud having their own pension fund.”According to the scheme’s annual report, the parties involved have agreed that a solution will be implemented on 1 January 2017.Roozemond, who has chaired Waterbouw since September, said the pension fund was preparing for various scenarios but had to wait for decisions from the social partners before any implementation could begin.She said many scenarios were possible, as, in addition to the mandatory plan for the 1,000 workers in the Netherlands, there were three voluntary arrangements for 2,000 employees abroad.Previous negotiations to merge with BpfBouw, the €47bn scheme for the Dutch building industry, broke down, as did talks with PGB and Koopvaardij, due to differences over investment policy.Waterbouw has approximately 12,000 workers, former workers and pensioners, affiliated with 70 employers. Waterbouw, the €1.1bn pension fund for the Dutch maritime construction sector, is considering its future as an independent scheme.Member companies and employees are now looking into whether the accrual of pension rights should remain with the pension fund, according to Lea van Vlier, secretary for the social partners.Kitty Roozemond, Waterbouw’s recently appointed chair, said the pension fund, which is responsible for existing pension rights, was preparing itself for the implementation of a number of different scenarios. The social partners and trustees decided last year to maintain the pension fund’s independence after a study concluded that placing Waterbouw’s pensions with another scheme or an insurer would fail to satisfy all parties.
The Danish Risk Council has given a strong warning that sudden changes in how the markets view risk could lead to big falls in asset prices and fire sales.The council, chaired by the director of the Danish central bank Lars Rohde, said after its latest quarterly meeting: “Sudden changes in risk perception in the financial markets combined with low market liquidity may still lead to significant falls in asset prices and fire sales.”It warned about behaviour that could be unleashed by the availability of cheap credit.“Due caution should be exerted in relation to the low level of interest rates, which may lead to excessive risk-taking and risk illusion among borrowers and credit institutions,” the council said. The Danish Risk Council was set up in 2013 by the country’s government to address systemic risks in the financial sphere.In its statement, the council said that, in the last few months, the risk of a rapid and marked fall in asset prices in some of the global financial markets had appeared to some extent.“The large fluctuations in the financial markets in early 2016 have not had systemic consequences in Denmark,” it said, but it warned that sudden changes in the perception of risk could prompt big asset price falls.Seasonally adjusted prices in the housing market continued to rise in the second half of last year, it said, even though this was at a more moderate pace than in the first half for single-family houses. Expectations of future price developments remains high, it said. “While growth in housing loans in Copenhagen and Aarhus has subsided, market expectations of low interest rates several years ahead may still lead to excessive risk-taking and risk illusion among borrowers and credit institutions,” the council said.It said this could be the case if the risks of higher interest rates and a reversal in house prices were not taken into account to a sufficient degree. The council said the observation it made in March last year about low interest rates and the build-up of systemic risks still applied.Back then, it said the conditions for a rapid build-up of systemic financial risks were in place due to the extraordinarily low interest rates, especially if these were “embedded into the expectations of borrowers and credit institutions”.The council said yesterday that it also discussed potential systemic risks stemming from the insurance and pension fund sectors at its latest meeting. “The Council considers it crucial that companies be appropriately capitalised to avoid fire sales in periods of sudden changes in asset prices,” it said, adding that it would continue the analysis of systemic risks in the insurance and pension fund sectors.Meanwhile, in its regulation statistics publications, the Danish central bank (Danmarks Nationalbank) reported that, even though interest rates on overnight deposits remain negative in Denmark, companies in the country are still putting more money into banks.It said the average interest rate for the overnight deposits had been negative since April 2015 but that deposits grew in February by DKK21bn (€2.8bn) to stand at DKK218bn at the end of the month.“Overnight deposits account for more than 94% of total corporate deposits, while time deposits account for an ever smaller proportion, even though the interest rate on these is still positive, albeit declining,” the central bank said.The average interest rate on all overnight deposits for business was just below zero in February.The bank said the insurance and pension sector, as well as unit trusts, were now getting the lowest average deposit interest rates at around -0.6% on their total deposits.
Italian banking group UniCredit confirmed it has received offers from other parties to acquire Pioneer Investments and that it is now in talks with potential buyers.The group put out a statement in response to “media speculations regarding asset sales”, saying offers had been received for the subsidiary.It said: “As announced on 11 July 2016, UniCredit is undertaking an in-depth group-wide strategic review, focusing on how to reinforce and optimise the group’s capital position, improve profitability and ensure continuous transformation of operations whilst maintaining flexibility to seize value-creating opportunities.”The review encompassed all major areas of the bank, it said. “The outcome of this strategic review will be unveiled at a capital markets day in London on 13 December 2016,” it said.“As regards Pioneer Investments, there can be no certainty these discussions will lead to any transaction nor any certainty as to the terms upon which any such transaction might potentially proceed.”Italy’s postal service Poste Italiane confirmed it had presented a bid for Pioneer to UniCredit, in cooperation with Italian bank Cassa Depositi e Prestiti (CDP) and Italian independent asset manager ANIMA.Poste Italiane said the three firms had come together to acquire Pioneer jointly and create a leading asset management operator.The postal firm said the joint project was intended to create value for the three companies’ respective shareholders, and be capable of making the most of private savings in Italy.French asset manager Amundi has also said it is interested in buying Pioneer, and other parties reportedly in the bidding include Australian group Macquarie and the UK’s Aberdeen Asset Management.Offers for Pioneer, according to Italian press reports, are said to be around €3.6bn.
Joseph Mariathasan explores how India might get its financial house in order after a botched currency demonetisationIndia’s radical and many would say misguided move to ban “high-denomination” notes overnight on 8 November during the peak wedding season in a largely cash economy has caused chaos and will reduce GDP in the short term by significant amounts. Moreover, the notes that were banned – Rs.500 and Rs.1000 – are not that high a denomination and account for 86% of currency in circulation. It is not analogous to withdrawing $500 bills or €500 notes in Europe or the US, which are hardly used.Whether India will benefit in the long term remains to be seen. Prime minister Narendra Modi’s aims were certainly laudable – to attack corruption and the ‘black economy’ with a surprise and bold move. It is likely to also benefit the exchequer, as much of the money may never be exchanged.One real problem, though, is that it has not been just the corrupt who have suffered but the mass of the general population. Arguably, the big-time crooks would have been storing undocumented and untaxed wealth in other assets such as gold and property rather than cash. The events are happening against a backdrop of massive changes in India that still leave much to be done. China is experiencing a financial Big Bang that is transforming its economy. But in India, more people have mobile phones than bank accounts. The cost of finance is exorbitant for everyone bar the very largest companies. As economist Ajay Shah argues, in India, the financial system is simultaneously hostile to innovation and competition, and vulnerable to crises.India has seen major reforms in certain sectors after 1991, such as telecommunications. Import restrictions were loosened for manufacturing, which led to major improvements. But in finance, Shah argues the existing laws were built for a different age and need to be reorientated to the needs of the India of the next 20 years. So far, only the equity market has been “fixed”. The rest of finance is mostly unchanged – banking, for example – or has new parts that are as yet small, such as the New Pension System.Modi is halfway through his term. Shah believes there have been six wins in Indian finance that bode well for the future. The full solution for the country lies in the draft Indian Financial Code (IFC), put together between 2011 and 2015.Enacting and implementing the IFC at one shot has not happened. But a lot has, says Shah: Commodity futures have been classified as securities and are now regulated by SEBI. This should lead to convergence of financial markets and big gains to the economy.A basic concept of the rule of law is that orders of a financial agency should be subject to judicial review. After 2015, a tribunal hears orders against all financial agencies other than RBI. RBI is now the only financial agency where orders are not subject to judicial review.The Indian system of capital controls has failed. The first step towards fixing this was taken in February 2015, where the power to write regulations for non-debt capital flows (both in-bound and out-bound) shifted from RBI to the Ministry of Finance.Two new agencies envisaged in the IFC are the Financial Data Management Centre (FDMC) and the Resolution Corporation (RC). The FDMC will, for the first time, make possible a full view of Indian finance and thus an assessment of systemic risk. The RC is a specialised bankruptcy code for financial firms. If high-quality laws are enacted, and the implementation plans in hand are pulled off, this will give two big steps in reform.Inflation targeting and the monetary policy committee were once heretical ideas when they were in committee reports and in the IFC. In February 2016, for the first time in its history, RBI had an objective (4% inflation) and power shifted from the governor to the MPC.At this historic moment in RBI’s history, the new governor, Urjit Patel, will now refashion RBI as an agency that will consistently deliver on its objective. This is harder than merely announcing the target. For Shah and others, there are grounds for optimism that he will be able to get this done. It may, however, be dependent on his surviving the fallout from the botched currency demonetisation.Joseph Mariathasan is a contributing editor at IPE