THE Housing Industry Association (HIA) is tracking the rapid decline in the value of new housing and construction loans across Australia in reaction to the Reserve Bank of Australia's (RBA's) steeply inclining interest rates.

“The RBA’s tightening cycle has pushed down the total value of housing loans by a further 3.4 percent in August,” HIA economist, Tom Devitt said.

The Australian Bureau of Statistics (ABS) released the Lending to Households and Businesses data for August 2022 on October 4. The data provides sobering statistics on housing finance commitments. 

“The decline in August brings the value of housing loans to its lowest level in almost two years, down by 15.4 percent on three months earlier,” Mr Devitt said.

“The number of loans for the construction or purchase of new homes also declined by 4.5 percent in August, to its lowest level since the March 2020 – the first month of the pandemic in Australia.

“Today’s data is consistent with other leading indications, such as HIA’s New Home Sales Survey, showing new home sales dropped in July and August in response to higher interest rates.

“If these trends are sustained, which is expected, then the 2.25 percent increase in the cash rate so far will have brought this pandemic building boom to an end." 

On the afternoon of October 4, after Mr Devitt's analysis was issued, the RBA raised the cash rate another 0.25 percent, to 2.6 percent.

“There is still a significant volume of work under construction that is driving economic activity across the economy and keeping the unemployment rate at exceptionally low levels. When this pool of work is completed, the full impact of this rate rising cycle will emerge," he said.

“There remains a risk that this volume of ongoing work will obscure the adverse impact of rising interest rates.

“These treacherous lags that characterise this housing cycle could result in the RBA weighing too heavily on household finances and jeopardising the housing industry’s future soft landing,” Mr Devitt said.

www.hia.com.au

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THE Queensland Resources Council (QRC) has accused the Queensland Government of "flying blind about the impact of excessive new coal royalty taxes on Queensland jobs and business opportunities".

QRC chief executive Ian Macfarlane said companies had already paid as much in state royalties in the first six weeks of the new tax regime as the Treasurer said it would cost the industry over the year.

"This gives you an idea of the staggering amount of money companies are now paying to the State Government in extra taxes, which were introduced suddenly and without consultation in the June state budget," Mr Macfarlane said.

"I’m not sure how much more the resources sector can say before someone in the State Government realises the new tax regime is destabilising the Queensland economy and destroying jobs." 

Mr Macfarlane said although coal had been achieving record prices in the past 12 months, "anyone who understood export markets knows prices constantly fluctuate, depending on what’s happening globally".

"Just like the beef and grain industries, resources companies rely on using the extra money earned in the good times, to help ride out the lows when prices fall," he said.

"As anyone who lives in a resources region knows, when our sector is doing well, companies are upgrading their machinery and equipment, expanding operations, employing more people, investing in new technologies and contributing more to their local communities.

"This royalty hike is going to hurt a lot more people than the Government seems to realise," Mr Macfarlane said.

"Mine projects are already being put on hold, and there will be more. The government is shutting down a pipeline of investment opportunities in Queensland for the next 20 to 30 years. It just doesn’t make any sense."

Mr Macfarlane made the remarks yesterday at the Central Highlands Development Corporation Resources and Innovation Forum in Emerald, where he outlined the central role the Queensland resources sector would play in meeting Australia and the world’s emissions reductions targets.

"Achieving emissions reductions goals will depend on our ability to mine Queensland’s diverse commodities safely and sustainably and capitalising on Queensland’s world-leading skills," Mr Macfarlane said.

"A strong resources sector requires investor confidence. The State Government’s huge royalty increase, without consultation, is a red flag to investors in all commodities, with long-term consequences for the Queensland economy."

The QRC also hosted a cross-party group of 10 politicians at a mining industry event in Emerald on Monday night, attended by more than 120 people.

Testerday the group will tour Kestrel Coal’s underground metallurgical coal mine to learn more about the opportunities, benefits, innovation and challenges of modern mining, Mr Macfarlane said.

www.qrc.org.au

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A REPORT commissioned by the Clean Energy Council and Energy Networks Australia has highlighted the critical need to solve transmission challenges “to unlock Australia’s energy transition”.

Energy Networks Australia CEO Andrew Dillon said transmission development was critical to enable the most affordable transition to a net zero energy system. New transmission would ultimately create a modern electricity grid that ensures clean power flows from renewable energy projects to customers.

“Every dollar spent on transmission will return more than twice this in benefits to customers. It will enable cheap, renewable electricity to flow to where it is needed, and more supply will help lower wholesale prices,” Mr Dillon said. 

“Stakeholders saw value in the Federal Government’s Rewiring the Nation fund and highlighted the importance of supporting the twin objectives of least cost to customers and ensuring transmission projects are financeable and able to be built when they’re needed.  

“The stakeholder feedback also reinforced the need for policy reform and support to better address social licence and community benefit issues. The reform process needs to be conducted in collaboration with electricity customers, putting their needs at the heart of investable regulatory frameworks for new transmission.”

Facilitated by KPMG, the report was compiled from interviews with senior representatives from across the energy sector, including policy makers, market bodies, network service providers, developers and private investors.

The findings reflect stakeholder views on barriers to transmission investment, the potential path forward and the role of the Federal Government’s Rewiring the Nation Fund in supporting the financing of major projects.

Clean Energy Council chief executive Kane Thornton said delays in transmission development were hindering the transition to net zero and driving up power prices.

“These delays mean the lowest-cost, clean electricity isn’t reaching customers. Instead, they are paying a premium for unreliable coal,” he said.

“Time is of the essence. To enable a smooth transition, networks need to install more than 10,000 kilometres of new transmission lines to ensure we can connect the renewable generation our system will need. While private sector investors are prepared to underpin much of this investment, government has a clear role in ensuring the investment happens when needed.

“The stakeholder feedback in this report emphasises the crucial role that Rewiring the Nation can play alongside reform to the regulatory regime and policy settings for transmission.”

Full report available here.

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By Leon Gettler, Talking Business

THE property market has been changed by technology.

John Foong, Domain’s chief revenue officer, said the biggest change has been giving everyone access to data and insights at a much faster pace – and deeper way – than ever before.

“Now everything is at your finger-tips,” Mr Foong told Talking Business. “You can see and do comparables. You can look at valuations from multiple sources. You can read some of that great research from Domain and other providers. It’s a lot more smart.

“I would also say, on the agents’ side, there is a lot more intelligence too. They can draw insights, they can use artificial intelligence, they can aggregate things in data and make more holistic smarter recommendations,” he said.

“Both seeker and agent are a lot smarter than they were before.” 

Mr Foong said this made it challenging for buyers as there were now so many more options. 

“It’s the tyranny of choice,” he said.

“You might be competing with other buyers from out of state, or overseas, so there’s loads of possibilities, more competition and more information.”

TECH ADDS TO AGENT CHALLENGES

Mr Foong said technology had also made it more challenging for agents.

“I think as an agent, a lot of the value you would have historically provided by being an expert with access to industry knowledge has been eroded,” he said.

“So you have to be smarter with publicly available information, which is now freely available, with insights and the way you help people think, and coach them through the process, whether it’s selling or the buyer buying.”

Mr Foong said the great access to information also made it exciting for investors, although it also meant one was competing against “a much broader set of investors”.

“There is still no substitute for an investor going and walking the streets and looking at the house, but there is more information yet to figure out where you should be visiting first, than there would have been a decade ago.”

PANDEMIC CHANGES EVERYTHING

Mr Foong said COVID changed the way people used artificial intelligence because they were spending more time on their computers.

He said mobile apps were now ‘hot’ in the real estate market.

“People expect an awesome mobile app experience,” Mr Foong said.

“They expect to use the 20 seconds they spend at a bus stop or while they’re walking from one place to another to have a meaningful interaction where they find out information by reading content or by browsing a house.

“So it’s got to be easy, it’s got to be quick, it’s got to be accurate, it’s got to be easy to use, it’s got to be shareable, it’s got to be social,” he said.

Mr Foong said he could see the potential for the Internet of Things in commercial real estate.

“We are trying to help the big property managers around the world, the CBREs, the Colliers,” he said. “How do they not just make transactions, like leasing and buying and selling, but how do they develop a lot of value through property management as a service?”

“With the Internet of Things, you would have eyes all over the place. These are things where you can automate value that can be added, and they can charge a premium for that.

“It’s brilliant for commercial. We all want to outsource as much as possible.”

www.domain.com.au

www.leongettler.com  

Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness

https://play.acast.com/s/talkingbusiness/talking-business21-interview-with-john-foong-from-domain