Banks overhaul code of conduct in bid to rebuild trust

Banks have vowed to make it easier for customers to cancel their credit cards, they will stop charging statement fees, and borrowers will be alerted when their interest-free period is about to end, as part of a new code of conduct.
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The Australian Bankers’ Association will on Wednesday unveil a swag of changes intended to put a greater focus on ethical behaviour in an industry that has copped a backlash from government.

Changes in the code include a commitment to allow customers to close a credit card online, rather than needing to do so in a branch or over the phone.

Banks also say they will waive or refund “statement fees” for customers without access to electronic statements, and remind customers when a credit card’s interest-free period is about to end.

With more parents acting as guarantors to help their children enter the housing market, the code also includes changes targeted at people guaranteeing the loans of others.

It says guarantors who have not received legal advice must have a three-day waiting period before signing up. Guarantors will also be informed if the borrower is struggling financially, it says.

Banks decided to revamp the code last year as political pressure on the industry started to mount following a series of scandals.

“Banks are committed to change and the new code is stronger, broader and written in simple to understand language,” ABA chief executive Anna Bligh said.

“It has been completely rewritten to better meet community expectations and service the needs of customers.”

The code includes an already-announced commitment by banks to no longer have tellers selling “add-on insurance” with credit cards, which is intended to cover consumers if they get sick or lose their job. The corporate regulator has said such insurance is problematic, and many customers end up being ineligible when they attempt to make a claim.

In a sign of the finance sector’s problems with add-on insurance, it was announced on Tuesday that Swann Insurance had refunded $39 million in premiums to 67,960 customers. The refunds covered six types of add-on insurance sold by Swann, owned by Insurance Australia Group.

Separately, the federal government has this year cracked down on the banks’ credit card businesses, including new restrictions on how banks can determine customers’ credit limits. Banks are also being banned from making unsolicited credit card offers to customers.

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Smith and Australians in line for $1 million Ashes bonus

Steve Smith’s Ashes-winning Australian team will collect a bonus of nearly $1 million if they can complete a 5-0 whitewash of England in the final two matches of the Test series in Melbourne and Sydney.
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The Australians left Perth on Tuesday glowing after reaching an unassailable 3-0 lead with a comprehensive victory in the third Test, regaining the title they surrendered on their tour of England in 2015.

The result automatically triggered a $432,000 series-win bonus and the members of the squad stand to pocket further financial reward for winning back possession of the urn.

There is an additional pool of $438,000 available to the Australians for match-win bonuses in the Ashes. They have already secured a majority of that by winning three out of the five matches but can grab the lot if they complete victories in the Boxing Day Test and in the first week of January at the SCG.

The bonuses were thrashed out during the long and bitterly fought pay negotiation between Cricket Australia and the Australian Cricketers’ Association that was resolved in August.

Under the terms of the new five-year memorandum of understanding, the players retained their guaranteed share of the game’s revenue, which is at its greatest during a home Ashes summer, and also won a new incentive scheme that offered lucrative reward for major series victories.

The richest of the bonuses under the new structure are available against opposition countries ranked in the top four on the International Cricket Council Test rankings, as England were entering this series. And with match-win bonuses built in on top of players’ retainers and match payments, the five-Test Ashes series provides an even greater opportunity to cash in.

The pending windfall provides more motivation for Smith’s side to clean-sweep the tourists in the final two matches.

They will be feeling driven towards repeating the feat of Michael Clarke’s team in 2013-14, with only Smith, David Warner and Nathan Lyon having experienced that famous whitewash.

Australian coach Darren Lehmann said the team would not be taking its foot off the pedal, but could now approach the rest of the series free from much of the pressure that built in the lead-up to the summer.

“It’s a lot more relaxed, which is a good thing,” Lehmann said. “Ashes cricket is high pressure, everybody is nervous every ball, every session.

“It’s been that way for 15 days so far, so they can go and express themselves a little bit more. We’ll be playing the same brand of cricket but obviously with less pressure on us. It will be interesting to see how we respond to that. Boxing Day and SCG are fantastic Test matches to be a part of.”

The Australians will head to Melbourne after two days’ break, aiming for a 5-0 result but not taking it for granted. Lehmann said Joe Root’s tourists had been closer to the hosts than the final margins – the latest an innings and 41-run defeat – suggested.

“It was extremely satisfying for the lads … they’ve worked so hard over the last few months to get the prep right, the way we played,” Lehmann said.

“The planning came together, so all credit to the players and the support staff were fantastic. The work behind the scenes was great. I’ve loved the way we have gone about it in all three Tests.

“It was a lot closer than what the scores relate to. Certainly in Brisbane they had the upper hand at certain stages, but the captain was brilliant there. Obviously the bowlers were great in the second innings to get the job done.

“Adelaide was close and this one – albeit by an innings – it was still close, it come down to magnificent bowling from our quicks on the last day.”

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No real gift in giving: culture of Christmas must change

Christmas, we’re assured, brings out our best selves. We’re full of goodwill to all men (and women). We get together with family and friends – even those we don’t get on with – eat and drink and give each other presents.
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We make an effort for the kiddies. Some of us even get a good feeling out of helping ensure the homeless get a decent feed on the day.

And this magnanimous spirit is owed to The Man Who Invented Christmas, Charles Dickens. (You weren’t thinking of someone else, surely?)

According to a new survey of 1421 people, conducted by the Australia Institute, three-quarters of respondents like buying Christmas gifts.

Almost half – 47 per cent – like having people buy them gifts. And 41 per cent don’t expect to get presents they’ll never use.

Well, isn’t that lovely. Merry Christmas, one and all!

Of course, there’s a darker, less charitable, more Scrooge-like interpretation of what Christmas has become since A Christmas Carol.

Under the influence of more than a century of relentless advertising and commercialisation – including the soft-drink-company-created Santa – its original significance as a religious holy-day has been submerged beneath an orgy of consumerism, materialism and over-indulgence.

We rush from shop to shop, silently cursing those of our rellos who are hard to buy for. We attend party after party, stuffing ourselves with food and drinking more than we should.

All those children who can’t wait to get up early on Christmas morning and tear open their small mountain of presents are being groomed as the next generation of consumerists. Next, try the joys of retail therapy, sonny.

But the survey also reveals a (growing?) minority of respondents who don’t enjoy the indulgence and wastefulness of Christmas.

A fifth of respondents – more males than females – don’t like buying gifts for people at Christmas. Almost a third expect to get gifts they won’t use and 42 per cent – far more males and females – would prefer others not to buy them gifts.

The plain fact is that a hugely disproportionate share of economic activity – particularly consumer spending – occurs in one month of the year, December.

And just think of all the waste – not just the over-catering, but all the clothes and gadgets that sit around in cupboards until they’re thrown out. All the stuff that could be returned to the store, but isn’t.

At least the new practice of regifting helps. Unwanted gifts are passed from hand to hand, rather like an adult game of pass-the-parcel, until someone summons the moral courage to throw them out.

Still, buying things that don’t get used is a good way to create jobs and improve the lives of Australians, no?

Not really. The survey finds only 23 per cent of respondents agree with this sentiment, while 62 per cent disagree.

One change since Scrooge’s day is that those who worry most about waste – at Christmas or any other time – do so not for reasons of miserliness, but because of the avoidable cost to the natural environment.

Rich people like us need to reduce our demands on the environment to make room for the poorer people of the world to lift their material standard of living without our joint efforts wrecking the planet.

This doesn’t require us to accept a significantly lower standard of living, just move to an economy where our energy comes from renewable sources and our use of natural resources – renewable and non-renewable – is much less profligate.

This is the thinking behind the book Curing Affluenza, by the Australia Institute’s chief economist – and instigator of the survey – Dr Richard Denniss.

He says we can stay as materialists (lovers of things) so long as we give up being consumerists (lovers of buying new things). We can love our homes and cars and clothes and household equipment – so long as that love means we look after them, maintain and repair them, and delay replacing them for as long as we reasonably can.

The survey shows we’re most likely to repair cars, bikes and tools and gardening equipment, but least likely to repair clothing, shoes and kitchen appliances, such as blenders, toasters and microwaves.

What would encourage us to get more things repaired? Almost two-thirds of respondents would do more if repairs were covered by a warranty. More than 60 per cent would do more if repairs were cheaper. And 46 per cent if repairs were more convenient – which I take to mean if it was easier to find a repairer.

How about making repair work cheaper by removing the 10 per cent goods and services tax on it? Two-thirds support the idea; only 19 per cent oppose.

Point is, there are straight-forward things the government could do to encourage us to repair more and waste less. Were it to do so, this would help restore older attitudes in favour of repairing rather than replacing.

Trouble is, politicians tend to be followers rather than leaders on such matters. So the first thing we need is a shift in the culture that makes more of us more conscious of the damage our everyday consumption is doing to the environment. That putting out the recycling once a week ain’t enough.

We could start by changing the culture of Christmas.

Ross Gittins is the Herald’s economics editor.

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Three times as many houses selling before auction in Brisbane as market tightens

A recent surge in properties selling ahead of scheduled auctions could point to a potential swing in the Brisbane market, according to agents and auctioneers.
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Owner of Apollo Auctions Justin Nickerson said he’d seen a three-fold increase over the past two months from five per cent of homes selling ahead of auction in Queensland, to nearly 15 per cent.

Mr Nickerson said the primary reason for the surge was because of the looming Christmas period.

“There’s always a bit of a seasonal reason,” he said. “We notice this a bit around before Easter as well. People want to have it married and done before the holidays.”

Both buyers and sellers can be impatient at this time of year, Mr Nickerson said. Buyers are keen to have their new home in time for Christmas, and sellers can be keen to avoid a stressful auction day and potentially leaving their home on the market into the new year.

“The major worry from a seller’s point of view is they don’t want to go through the stress of the day. They don’t want it to not sell and feel like it’s a failure,” he said.

Mr Nickerson warned against vendors rushing to accept offers prior to auction however, because it can give buyers the upper hand. “For the sellers, the two things they’ve got to a achieve is a price they’re comfortable with and peace of mind.” Related: “Overly confident” Aussies rate themselves financially savvyRelated: Inside Brisbane rentals that cost as much as a $2m homeRelated: What Queensland homeowners can expect under Palaszczuk

To give sellers peace of mind, buyers need to make sure their price is enough to take the gamble of an auction off the table, Mr Nickerson said.

“Buyers need to know they’ll be paying a premium to secure the property without competition.”

That’s why it’s an indication the market is about to pick up. For so many properties to sell before going under the hammer, buyers must know they face serious competition, and they must be willing to pay a premium, Mr Nickerson said.

Space Property principal and auctioneer Nick Penklis said his vendors in Paddington and other inner west suburbs hadn’t displayed the same behaviour.

“We’re seeing a lot of post-auction activity,” he said. “We’re experiencing a lot of buyer activity; whether it’s prior, on the day or a bit after, it’s all about the result.”

Mr Penklis said he was still seeing offers before auction, he just wasn’t seeing them taken up.

“We’re still getting offers, prior to but we’re taking it to auction, we’re getting the best prices on the day,” he said. “Entering into a strong market, a good indicator is strong offers before auction.

“Seeing really good post auction activity, that’s a good sign too.”

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Donut King’s sharemarket bloodbath as investors bail

retail food group. tony alford ceo of retail food group [donut king & bb s cafe] at the launch on the bne asx. SPECIALX 52869When a company falls more than 55 per cent in 10 days, it speaks volumes about its credibility.
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In the case of Retail Food Group, the sharemarket bloodbath continued afresh on Tuesday with the shares falling 25 per cent after the franchisor of iconic brands including Donut King, Brumby’s and Gloria Jeans, slashed earnings for the first half by 34 per cent.

That the company made the shock revelation days after reaffirming first half profit guidance to shareholders, did little to instil confidence.

That it blamed everyone and everything but itself, added to investor concern.

“Consistent with recent trading updates from other retailers, particularly those retailers with shopping centre exposures, RFG domestic franchisee revenue continues to track lower than expected,” it told the market.

Besides blaming “persistent challenging domestic retail conditions” and one off costs, it pointed the finger at the recent negative media coverage of the $170 billion franchise sector – and RFG in particular.

It said the negative publicity had resulted in a noticeable decline in the momentum of new and renewing franchise sales.

“Associated revenues are now forecast to be below prior expectations and future franchise trading revenue is also likely to be impacted,” the company said in an announcement to the ASX.

What it failed to do was acknowledge its own central role in this sad and sorry tale.

Until management stops with the blame game and starts addressing the real problem, things won’t get any better.

The reality is franchisees operating under the RFG umbrella have been suffering in silence for years.

The Fairfax Media investigation uncovered a brutal business model that has sent many franchisees to the wall.

The network is littered with franchisees who have lost their homes, suffered marriage breakdowns and decimated retirement savings.

Many lament that when they tried to sell their stores there were no buyers – not at any price.

Hundreds of stores have closed in the past 12 months and there are at least 200 stores for sale on Seek and in Chinese newspapers.

This is an issue for RFG as the lifeblood of a franchisor is opening new stores and renewing franchise agreements.

The more franchisees, the more fees and revenue.

To put it into perspective, any franchise network with more than 10 per cent of stores for sale is thought be under pressure.

Fairfax Media estimates 17 per cent of Gloria Jeans stores are for sale; at least 25 per cent of Pizza Capers are for sale. Michel’s Patisserie is also another target of discontent.

Some of the problems facing the stores are linked to the well-documented problems facing shopping centres over the past few years.

But much is attributed to a squeeze on franchisees from crippling fees, rising labour costs as well as higher rent and food imposts.

At the same time franchisees claim reduced support from head office as RFG attempts to cut costs to preserve margins.

They complain of too little product innovation, too little advertising and, in the case of Michel’s, poor quality food.

Since the stories broke, hundreds of franchisees and ex-franchisees have emailed, asking for help.

One RFG franchisees said “RFG are just raping us! Thats how violated and helpless you feel.”

A key area of concern is the company’s debt and whether the banks will continue to support the corporate entity as well as franchisees.

In a statement to the Australian Securities Exchange RFG said it was continuing negotiations with bankers to roll over a $150 million three year loan facility into longer dated maturities due to expire in 12 months.

There is also the spectre of a class action, regulatory intervention and a parliamentary inquiry into the franchise industry.

Then there are the hedge funds which started attacking RFG earlier this year when it was forced to restate its accounts.

In recent years RFG has been diversifying by opening up overseas and vertically integrating the business.

In its market update, it said these areas were tracking expectations.

But when it comes to full year guidance, it was unable to give any certainty for the franchise system.

If the company wants to regain the trust of shareholders, staff and franchisees, it will need to do a lot more than it is.

RFG management owe everyone a lot more than this.

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It’s the vibe: With or without the Comm Games, the Gold Coast is flourishing

The Gold Coast Aquatic Centre is seen at Southport on the Gold Coast, Wednesday, May 17, 2017. The Aquatics venue will host swimming and diving competition at the 2018 Commonwealth Games which will be held April 4-15 next year. (AAP Image/Dave Hunt) NO ARCHIVING satsep23cover – THE NEXT 100 GREAT THINGS IN TRAVELIn 1997, a classic line was coined in the closing scenes of the movie The Castle, when Denis Denuto said: “In summing up, it’s the constitution, it’s Mabo, it’s justice, it’s law, it’s the vibe and aah, no that’s it, it’s the vibe.”
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Twenty years later, real estate agents are making a case about a new “vibe”, this time to describe the Gold Coast, which, all jokes aside, will likely give new meaning to the word when it plays host to the 2018 Commonwealth Games in a matter of months.

As a property market, it has once again outperformed just about every other region in Queensland, with Domain Group data showing the median house price has grown by nearly 8 per cent in the past year to a new median of $615,000.

That’s nearly double Brisbane’s growth of 3.6 per cent, putting the Gold Coast’s median only $40,000 behind Brisbane’s.

It’s unit market, the largest in Queensland, has defied trends throughout the rest of the state, growing by 3.7 per cent to a new median of $420,000 – making it one of the most expensive unit markets in the state.

Real estate veteran and CEO of Ray White Surfers Paradise Andrew Bell has worked through four boom and busts on the Gold Coast and says that right now, the vibe on the glitter strip couldn’t get much better.

“I don’t know about a vibe,” he laughed. “It’s even more than a vibe. There is a definite degree of confidence and an air of positivity – prosperity – pervading the coast.”

As it moves in to 2018, edging closer to the long-awaited and highly-anticipated Commonwealth Games, the Gold Coast is poised to unleash its natural beauty and spectacular coastline on to a world stage.

But Mr Bell says that while the Gold Coast’s success may have started with the Games, it won’t end there.

“It’s not about a 10-day sporting event,” he said. “Yes, the Games will provide a window to the coast for the rest of the world but it will continue to go from strength to strength long after the Games is over.”

Mr Bell said the Gold Coast’s success goes back to when the city won the rights to host the Games, and Jupiters Casino (now called Star), had to make good on a promise they’d made to spend $345 million to rejuvenate the hotel.

“Certainly, there was a significant turn around from then,” he said.

“Jupiters spent a couple of hundred million more than that in the end. Then, across the road, Pacific Fair saw it happening and thought ‘we’d better not get left behind’, so they spent $800 million rejuvenating it.”

The significant projects began rolling in, one after the other, most notable the extension to the light rail system.

“I could name work after work that started to pump money into our region. We’ve been enjoying the ‘Commonwealth Games effect’ for five years,” Mr Bell said.

“So for people to say that there will be a ‘Commonwealth Games effect’ just next year for the Games, they’re wrong. This prosperity has been emerging over a number of years.”

Interstate migration, particularly from Sydney, is up. A renewed local economy means more jobs, which is what was stopping people from Sydney and Melbourne from moving to the coast before, Mr Bell said.

“We’ve really broadened our economic base – we’re not just a tourist centre, we’ve got genuine long-term jobs,” he said.

“In the past here were no jobs for them but now there is, which is why we’re getting an inflow of interstate migration. There’s this really positive attitude towards the Gold Coast – and we haven’t even had the Commonwealth Games yet.

“We’ve got some of the best schools and universities in the country. A lot of people in Sydney in particular, and to a lesser degree Melbourne, have reached that point where they’ve gone ‘this is crazy’. For $1 million, you can buy a substantial property on the Gold Coast and have a beautiful lifestyle.”

Not surprisingly, the positivity has spilled over into the local property market. Moreover, its growth has been measured and sustainable, rather than morphing into a boom situation.

“What I love most is we’ve remained a sustainable market. We’ve been growing at a great rate, but a sustainable rate. We’re nowhere near a bubble; it’s a great, sensible market,” Mr Bell said.

“I’ve been through booms and busts and I hate them. If we had seen surges in prices there would have been a reason for it. There’s been no suburbs that have had prices that have gone up as a result of a direct association with the Games. People have handled it well.”

Mermaid Beach has been the jewel in the Gold Coast’s crown this year, recording the strongest growth for houses. It’s median price is up by nearly 10 per cent, according to the REIQ, reaching a median of $1.53 million.

Even better, the Gold Coast property market has managed not just to survive the slow down in Chinese investment this year, but flourish in spite of it.

Earlier this year the federal budget slugged foreign buyers with steeper charges on purchases and new fees on property left vacant for six months or more.

These measures were taken after the FIRB annual report revealed Chinese buyers led a 19 per cent jump in residential applications, equating to a peak of proposed investment worth $72.4 billion for the 2015-16 financial year.

Mr Bell said the Gold Coast had handled the slow down well, with the exodus of foreign buyers revealing the strength of the local and interstate market.

“I think we were less aware of the local market before then. Sydney in particular, in the last four months, has been an incredibly strong market,” he said.

“There’s certainly been less foreign buyers but we haven’t suffered for it. It hasn’t knocked prices around.”

REIQ CEO Antonia Mercorella said the Gold Coast’s growth surge was helped along by a boost in tourism numbers.

“Tourism is one of the largest contributors to Queensland’s gross state product [GSP], with almost 8 per cent of GSP coming from tourism,” she said.

“This is roughly $25 billion in the year to June 2016, which means when that sector grows it offers employment opportunities and this attracts workers who need somewhere to live.”

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Secular society Christianity’s greatest challenge: bishop

Outgoing Anglican bishop Stuart Robinson has listed a secular society without an understanding of Christianity and Jesus as the greatest challenge facing people of his faith.
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Describing recent same-sex marriage legislation as “as balanced as it can be”, the bishop of Canberra and Goulburn said he was keen to impress upon his successor the importance of addressing a secular Australia, urging Christians to “present as credible, rational, faith-filled people who have got a great story to tell”.

“[Building a relationship with secular society is] achieved through individual Christian people being clear in their faith, by offering consistent witness to their faith, speaking about their faith and getting involved in local communities and making a difference, so people say ‘Oh, those Christians really are trustworthy and true’,” Bishop Robinson said.

Bishop Robinson will leave the diocese in March for Vaucluse in Sydney.

His 10-year tenure was marked by the Royal Commission into Institutional Child Sex Abuse, which revealed 28 allegations against 24 perpetrators in the diocese of Canberra and Goulburn between 1980 and 2015.

Bishop Robinson said the royal commission had highlighted “terrifying deficiencies within our organisational structure and within our pastoral care”.

He described the ongoing treatment of people who had been abused and mistreated by church leaders as ongoing and conceded the process had taken a personal toll.

“I think the depth of the depravity and the pain that it caused, not only in the lives of those directly affected but in the friendships they had, the community pain, they’re the kind of things that struck me with great force and will remain with me forever,” he said.

Bishop Robinson listed his greatest achievements over the past decade as “remaining sane, being faithful to my wife, being a good dad to my children and grandchildren while at the same time trying to be a faithful pastor and bishop”.

“For the last decade I’ve had the privilege of working across the archdiocese with hundreds or thousands of people, hearing their stories, sharing in their different ministries and being part of their church life and seeing them make a difference in their local communities,” he said.

“For me, that’s been a great highlight.”

The diocese of Canberra and Goulburn will be led by long-serving Vicar-General Assistant Bishop Trevor Edwards until a new bishop is elected by the diocesan synod in mid-2018.

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Public servants feel like bit players in game: Parkinson

One of parliament’s major forums to hold governments accountable at times leaves public servants feeling like bit players in a political exercise to embarrass governments with “gotcha” moments, Australia’s most senior public servant says.
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Prime Minister and Cabinet department secretary Martin Parkinson said Senate estimates hearings held an important role in government, but the regular hearings to grill ministers and senior public servants about their work could descend into political point scoring.

“Where it becomes problematic is when it moves from genuine efforts focused on improving public administration to simply trying to embarrass the government of the day,” he said. Latest public service news

“This has been true for a long time. You understand why it’s all about trying to embarrass the government of the day, but there are times when public servants sit there and think, ‘we really don’t need to be here, because we’re simply bit players in this whole exercise and you’re not actually interested in improving the quality of public administration’.”

Government agencies had not moved far enough to keep pace with changes in public expectations about what services they delivered and how they engaged with people and listened to them, Dr Parkinson said.

The public service had also erred in how it had viewed other “disruptions”, including eroding trust in government and changes in the global strategic balance.

“If you think about all of those things, what have we done as public services? We’ve responded to them as if they are incremental changes, and I actually think they are much more paradigm shifts and that’s why I keep coming back and I use the word ‘disruption’ really as short hand for that,” Dr Parkinson said.

Social media users regarded its platforms as a way to quickly enter conservations with other people, something the public service was yet to understand, he said.

“What’ve we essentially done? We’ve treated it as a post box, we’ve taken a message and shoved it down social media, out to you.”

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Five property market trends to expect in Australia in 2018

It’s the question on the lips of Australia’s property punters, homeowners and wannabe buyers: what will the property market do in 2018?
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It’s now clear that 2017 will go down as the year that saw some of Australia’s hottest property markets switch gear following a five-year streak that saw Sydney’s median house price pile on over $530,000 and Melbourne’s add more than $352,000.

Explosive house price gains slowed to a trickle in Melbourne and even turned into decline in Sydney in response to new policies designed to safeguard some of the cornerstones of the economy – property prices and debt levels.

Several trends will present themselves in the year ahead as these regulations filter through banks, buyers and markets – here are five of them. 1. Mortgage rates are expected to keep rising

Financial markets predict the Reserve Bank will lift the official cash rate off the record low 1.5 per cent level late in 2018, which would have a measurable impact on household mortgage payments, according to ME Bank head of loans Patrick Nolan.

“[Higher RBA rates] mean repayments will also increase, typically $50 for every 25 basis point rise on a $400,000 loan,” Mr Nolan said.

But even if that doesn’t happen, borrowers should prepare themselves for higher mortgage rates.

Though the Reserve Bank delivered sets of rate cuts in 2011-13 and again in 2015-16, major banks opted not to pass the cuts on in full to borrowers, and although the cash rate has not moved in 15 months, mortgage rates have been creeping higher.

The Australian Prudential Regulation Authority has tightened lending policy, which compelled the banks to lift interest rates out-of-sync with the Reserve Bank – as a result, the gap between the official-set RBA interest rate and what a standard variable mortgage borrower is offered at the bank is the widest it has been since 1994.

“Banks have been using their oligopoly pricing power to lift home loan standard variable rates relative to the RBA’s cash rate since 2008, primarily by cutting standard variable rates less than the cash rate during the RBA’s easing cycles,” Morgan Stanley analysts wrote this week.

Whether the Reserve Bank does find a way to raise interest rates in 2018 or not, one thing is clear – mortgage rates are unlikely to decrease in the near future. Source: ANZ Research2. Property prices will continue to cool

Sydney property prices have begun to slip after several years of double-digit percentage price gains, while Melbourne’s growth has noticeably slowed towards the end of the year – experts predict these trends will continue in 2018.

“Banking regulators want to see a slowdown in house price growth, and that’s what we expect in 2018,” Mr Nolan said.

ANZ economists, who are among the only ones predicting multiple RBA rate hikes next year, say APRA’s policy tightening has caused weakness in the property sector, but declines will remain localised.

“APRA’s tightening on investor borrowing and interest-only loans has resulted in higher interest rates for those borrowers, and lowered demand for housing,” senior economists Daniel Gradwell and Joanne Masters said in a report.

“Weaker auction results point toward further slowing as we move into 2018. Our forecast that the RBA will increase interest rates next year will also work to lower price growth. But if the RBA doesn’t tighten, then prices will likely slow less than we forecast. Importantly, there is still nothing to suggest to us that prices are going to enter widespread declines.” Source: ANZ Research3. First-home buyers will make a comeback

“With investors taking a step back, first-home buyers will find more opportunities in 2018,” Mr Nolan said.

“They will continue to benefit from competitive interest rates, new concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys.”

But while ABS data does appear to show first-home buyers leaping at stamp duty concessions in NSW and Victoria, they still need a leg-up, according to ANZ.

“The deposit burden for first-home buyers continues to rise, and more people require assistance getting the deposit together,” Mr Gradwell and Ms Masters said.

“But once they are in the market, low interest rates mean that repayments are affordable, and the interest bill has been falling.” Source: ANZ Research4. Upgraders will stay put, opting to renovate

Eye-watering stamp duty taxes on property transfers act as an anchor, pinning Australians to their current home. As the stamp duty due on a median-priced house in Sydney and Melbourne hovers about $50,000, homeowners increasingly opt to stay where they are and renovate.

“We’ve seen a substantial increase in renovation loan applications in 2017, a trend that we’re likely to see well into 2018, as households chose to renovate over moving,” Mr Nolan said.

“Upgraders are avoiding costly moving costs such as stamp duty. We’re also seeing some more top ups as people take advantage of lower interest rates and leverage the extra equity in their property in order to finance renovations.”

The issue worsened significantly as annual house price gains soared. Specifically, the stamp duty owed on a median-priced property in Sydney 20 years ago was, adjusted for inflation, $10,916 but it is now $50,302 – a rise big enough to shape homeowner behaviour.

The thought process is clearly shifting, with recent Westpac research showing a 14 per cent rise in the number of homeowners considering renovating in the next five years, compared with 2015, while HIA economists predict a strong growth in the renovations market through into the early 2020s. 5. Owner occupiers to win from competitive lending rates

Mortgage repricing in 2017 has been largely centred around investor loans, which leaves fewer investors walking into banks looking for finance.

As a result, owner-occupier borrowers are making their way back onto centre stage.

“With limits on investor and interest-only growth, banks are competing over a smaller piece of the lending pie, and are offering some great deals for owner-occupiers,” Mr Nolan said.

Morgan Stanley analysts confirm that while investor interest rates have been significantly tightened, owner-occupier principal and interest loans have seen smaller increases.

“We have argued that differentiated home loan repricing on [owner-occupier] would continue, but it has actually become even more pronounced,” the analysts wrote.

“In the past year, the major banks’ interest-only investment property loans have been repriced ~90 basis points, while principal and interest owner occupier loans have been lifted just 10-15 basis points.”

This story Administrator ready to work first appeared on Nanjing Night Net.

ATO cuts 4600 jobs in four years

A cut to the Australian Taxation Office’s headcount reaching 4600 in four years has left remaining staff struggling and the agency under-resourced, Labor says.
Nanjing Night Net

Agency annual reports show the magnitude of its recent downsizing under Coalition efforts to reduce the number of public servants.

Labor’s acting shadow Assistant Treasurer Matt Thistlethwaite said the cuts had made life for the office’s remaining staff harder.

“ATO staff are trying as hard as they can, but they’ve been left struggling thanks to these cuts by the Coalition, job cuts that have coincided not only with multiple web outages, but also billions of dollars in consultancy fees,” he said.

“Labor believes in a strong, sufficiently resourced tax system that can work with parliament on important reforms like closing down loopholes for dodgy multinationals.”

The ATO cut its headcount of staff from 25,093 at the end of the 2012-13 financial year to 20,435 last June as part of the Coalition’s push to downsize the public service.

An ATO spokeswoman said it managed cuts to prevent any impact on revenue collections or service delivery, and had maintained balanced workloads for staff.

“We achieved this by making judgements about what is priority work, how we get the work done, and what work we could stop or reduce to maintain delivery of our commitments to government and the community,” she said.

“We also reshaped and rebalanced our workforce, to ensure we have the right people with a combination of the right capabilities for now and for the next generation of tax and compliance experts.”

But the Australian Services Union representing tax officers said the reduction left questions whether the ATO had the resources to enact an ambitious agenda set out by its boss, Chris Jordan.

ASU official Jeff Lapidos said while the agency recently had money needed to employ more staff, caps on staffing levels had stopped it from growing.

The office had a difficult few years since cuts in 2013 and following years, he said.

The ATO said staffing cuts played no role in problems with its IT systems.

“The nature of the unplanned outages experienced is varied and there is no single systemic or underlying cause of these issues,” its spokeswoman said.

A series of IT outages has hit the ATO this year, stopping businesses and individuals from lodging their tax returns online.

Major ATO meltdowns in December, 2016 and July this year prompted widespread criticism and an admission from Tax Commissioner Chris Jordan that the ATO’s reputation was being damaged.

In February, the ATO’s website, online portals, Australian Business Register and business reporting channels were unavailable for two business days, while a series of outages hit users on April 19 and four separate dates in May.

This story Administrator ready to work first appeared on Nanjing Night Net.