Christian Carrillo, the head of interest rate strategy of Societé Generale Asia Pacific based in Tokyo, said that available data from the Reserve Bank and the bank regulator Australian Prudential Regulation Authority (APRA) could not confirm the higher funding costs which the banks claimed. Carrillo shared on ABC Radio, “What we have seen over the past six months is overall funding costs for Australian banks actually come down. Research suggests that, effectively, every source of funding that they use in terms of domestic deposits short-term funding, onshore long-term funding, onshore short-term funding has actually gone down.”

CHOICE wants consumers to take action as more evidence backs the reality that the big four is only giving consumers a raw deal. Christopher Zinn, CHOICE’s director of campaigns and communications stated, “We have launched the CHOICE Move Your Money campaign calling on consumers around Australia to stand up to the big four banks and say ‘enough is enough’. As we have seen over recent weeks, the banks would much rather have a complex argument about funding costs than be forced to justify the very real costs they are passing on to Australian consumers.”

“This new research shows that the funding costs argument appears to not stack up, and that it’s really a case of major banks choosing to make record profits rather than compete for consumers’ business,” added Zinn. The Move Your Money campaign intends to bring competitive pressure to Australian banks as they give tools which help consumers switch institutions. “We know there are better deals beyond the ‘big four’ banks, and we know switching is easier than before – that’s why we’re calling on Australians to go to choice.com.au/moveyourmoney and send the ‘big four’ banks a message they can’t ignore,” commented Zinn.

Consumers are urged to sign the petition as CHOICE guarantees to help them, “find a better deal with independent and trusted information on home loans, credit cards, savings and transaction accounts.”

The Move Your Money campaign is sending a message to the big four as a spokesperson says, “We think it’s wrong that at a time of record profits, Australia’s major banks are willing to take their customers for granted. The major banks rely on perceptions that switching is too much hassle or that there are no better deals out there. But experience shows that consumers can save by also ‘thinking small’, and moving your money is now easier than before.”

Let’s hope this isn’t another big switch flop for the consumer advocate – they need some credibility in this area. We have recently been inundated with clients looking to refinance home loans, with Westpac being the lender most commonly complained about

Smoli stated, “In many ways it makes more sense for individuals, couples or families with a comparatively lower income to invest in property as it can provide financial security and reliable returns well into the future, not just for the purchaser but for generations thereafter.”

Duke points out that statistics from RP Data indicate that many properties that promise decent returns are still available for under $200,000. Brisbane’s Bellara units, with a $115,180 median price reported yields of 12 per cent, while NSW’s Wellington houses with a $100,000, median price reported yields of nine per cent. January RP Data statistics revealed Blacktown LGA’s Blackett in Sydney, have $230,000 priced properties with a reported regular yields of seven per cent.

Of course the downside of these high yield low cost properties is the typically low or even no capital growth, let’s face it how much capital growth has Wellington seen if the median price is $100,000. At Peach we have many clients with multiple low cost high yield property portfolios, these clients are targeting a positively geared investment strategy that will produce income flow with a down side is little or no capital growth.  Lenders can often be reluctant to discount on refinancing this type of portfolio unless cross collateralised since although the loan amount may be significant the ROI is low due to the cost of processing so many mortgage securities.

Duke reports that Kevin Lee, an adviser for Smart Property shares how important it is to make sure, especially for those who belong in the lower income bracket, to not be under financial stress while they are engaged in investing. Lower income investors are recommended to look for neutrally geared properties in other directions and tip them over into positive territory.

Rob Miller of Domain Property Advocates shares his view in his blog about the tender process. According to Miller, the tender process from a buyer’s perspective is “like a secret maze, it’s a nightmare.” The reason behind why he thinks of tenders this way is the fact with how most people connect tenders with “government bodies or business organisations who require specific goods and services.” People believe that all tenders have conditions and special terms and that with tenders, the lowest quote is always successful. In the world of real estate however, the highest or the best tender doesn’t matter as there is always an estimated reserve price. Sometimes, when the reserve price has not been disclosed, the agent needs to give out what the estimated selling price is so as to comply with legal guidelines. The problem then lies when the agent’s assessment doesn’t meet with the vendor’s expectations.

The problem with the tender process is the lack of transparency. Tenders are confidential having sealed bids, security measures, locked boxes, closing dates, etc. and the agent is the only one telling the buyer the estimated price. The buyer will never know if what was given is accurate or if it is within the reserve price or if the agent has other interests to the property. It is the confidentiality behind the tender that affects the credibility of the tender process.

Auctions are more reliable as buyers can see who they’re bidding against. These are the reasons why successful tenders tend to be the bid significantly higher than the others. Buyers could lose as much as $100,000 on the fear of not getting the property only to find out in the end that they were played or was the only one who submitted an offer.

It is what happens after the tender process has closed that is most disturbing. What happens to those who bid within the reserve price? What if there’s a highest bidder, does the agent pick him directly and talk to him or does the agent ask everyone else to do another submission of bids making the highest priced bid as basis? These scenarios are likely to happen in a tender process which is a nightmare to buyers.

The difference from a tender process for commercial intents and real estate sale is that the commercial depends on a fairly simplistic commercial outcome while the other is controlled by strict statutory guidelines where the duty of the agent to take care of his buyer is severely compromised by the tender process’ confidential nature. The best thing to do is to conduct business with reliable agents, the ones who will put your needs before their own.

Dale stated, “The contemporary climate for housing in Queensland is very tough, but there are some signs of recovery emerging. Low confidence has been a killer in the Queensland market for a considerable time and it is important to focus on the positive signs emerging while still recognising the long road ahead.”

Warwick Temby, Queensland HIA executive director said that a boost to first homes and the lower interest rates brought in small improvements to late 2011’s new housing figures.

Temby declared, “This year is about adding to that promising start through creating a policy environment where the obstacles to residential building are reduced so that a sustained recovery in confidence and activity can emerge.”

Tony Crabb, national head of research for Savills mentioned that it takes three to five years for a correction over the last few years’ price deterioration. “We are in that correction period at the moment, we’re well into that three to five year period, it has certainly corrected and now stabilized. I don’t see it deteriorating much further from where it is now because I don’t see the fundamentals changing to the point where it ought to deteriorate. It has hit a base now. I would say that it has taken the hardest hit; the question now is: ‘What does the recovery look like?’”

Matusik believes that investors are being kept out of the market due to high vacancy rates and low confidence. Matusik said on the conference of Urban Development Institute of Australia (UDIA) in Melbourne, “The Victorian market is now oversupplied with both new and existing stock.”

Matusik showed in a presentation, comparing Victoria to other territories and states in Australia, the difference between current underlying demand and new supply for residential property, saying, “Melbourne is past its peak and is at 1 o’clock on the property clock. It might take two to three years to recover, at best.”

Aside from the issues of oversupply, Melbourne is the highest among Australian capitals with over 4 per cent now has vacancy rate. “Confidence is low, end prices are high and there are fewer jobs being created. Rental growth is still positive, but sluggish and likely to remain so,” stated Matusik.

Though Melbourne’s market has softened, it still has a decent market conducive for investors, this according to industry figures.

Robert Larocca, a Real Estate Institute of Victoria (REIV) spokesperson shared that investors should consider the fact that the median house prices for nine out of 10 Melbourne suburbs are below their peaks.

Larocca stated, “Homes are less expensive than they were a year ago, the cost of money is less expensive than it was a year ago, so I can’t imagine there being a better time to be buying. I think in a year or so people may look back on this time in the market and wonder why they didn’t act on their impulse and buy.”

A senior official of the Reserve Bank of Australia confirmed the banks’ reasons that funding costs are significantly higher due to Europe’s debt crisis. Guy Debelle, assistant governor at the RBA, said at a Bloomberg Seminar in Sydney, “”Investors are demanding much higher compensation for bank credit risk now than they were in mid-2011. This global repricing of bank debt has clearly affected the Australian banks’ wholesale funding costs.”

The big four’s decision, to move rates independently from the RBA, has drawn criticism from the public and elevated Wayne Swan’s strong emotions against them to the extent of having him urge borrowers to go find a better deal.

Wholesale borrowing costs, according to Debelle, had declined recently and Europe, despite troubles in the Eurozone, for the time being, appeared to have stay away from the “worst-case outcomes.” The decision by the European Central Bank, lending commercial banks €500 billion ($620.31 billion) in December, increased liquidity and gave them the funds which were then used to pay obligations.

Debelle however remains cautious with regards to his outlook for Europe saying, “So far this year, that has been a more positive story than it was at the end of the last year. Whether this happier state of affairs persists is difficult to tell. There have been outbreaks of optimism over the past couple of years which were dashed.”

Debelle also commented about the Australian currency which in recent days has been surging. The Australian dollar’s strength came from the Australian federal government debt increasing offshore purchases. The RBA estimates that about 75% of this stock is held offshore with the recent purchases’ sizeable share being carried out by sovereign asset managers.

“This portfolio shift by foreign asset managers appears to be having an effect on the currency. The Australian dollar is close to its recent highs despite the terms of trade declining from their peak in the September quarter,” stated Debelle.

Overall, Debelle believes that the start of 2012 is more positive compared to the end of last year. Debelle warns however, “Whether this happier state of affairs persists is difficult to tell. There have been outbreaks of optimism over the past couple of years which were dashed. I think the only thing which is certain, is that uncertainty is likely to persist for some time to come.”

Terry Mulder, the Federal Parliamentary secretary for Infrastructure and Transport and Ballarat Catherine King member and Victorian minister for Roads shared that the infrastructure is going to be a four-lane highway, which is going to be a milestone for the duplication as a whole.

King stated, “We are working in partnership with the Victorian Government to renew and expand our transport infrastructure to support the national economy, and to better connect people living and working in regional Victoria.”

Ballarat and Stawell will be linked by the duplication, whereas the latest development is centered on a divided highway section from Trawalla to Burrumbeet. A bypass going to the south of the township of Trawalla will also be done.

King added, “The new works will improve the efficiency of freight movement to make the Western Highway much safer for the local communities and for through traffic. It’s pleasing to see this important project for regional Victoria moving ahead, and we look forward to the opening of the first additional lanes in coming months.”

This was the comment of Residex CEO John Edwards on the RBA’s decision on keeping the cash rate on hold at 4.25% saying how the RBA missed the opportunity to help boost weakening property markets. Edwards believe that, “housing is particularly rate sensitive, rate cuts can be an important confidence boost for buyers and sellers.”

There was a small but significant improvement in property affordability during the two cuts made in November and December 2011 mostly “due to the combination of lower mortgage rates and lower house prices.”  Most of the capital cities’ transaction numbers however remained lower during that same time last year suggesting a cautious behavior in both buyers and sellers.

The latest figures for January’s national housing market show a continued improvement with a median national house price decline of 1.2% ($424,500 median). Median unit price fell by 0.67% to a $395,500 median.

Edwards pointed only a little evidence of recovery as house prices in Melbourne slipped 1.65%, Sydney by 1.18% and Perth 0.32%. “Prices continued to weaken in almost every capital city over January,” noted Edwards.

“Our data suggests we are moving beyond the bottom of the cycle, however the trend is not pronounced.”

Along with house and land, the market’s less affordable end remained weak. “On an Australia-wide basis we do not look as if we are through the worst of the correction phase. In most capital cities, while we may have reached the bottom of the cycle, there is no strong movement towards positive territory,” said Edwards.

“The next few months will be crucial in determining where markets head. However, as the reality of the actual performance of housing markets becomes evident we can expect to see further weakness and potentially ongoing price corrections.”

Edwards believe the RBA remains under pressure in to cutting rates in early 2012.

“The property market is on a knife edge. A rate cut would have had an important impact on affordability and boosting confidence.”

“While Australia’s property market does not face the same risks as those that led to the collapse in US housing prices, we face continued headwinds including the high Australian dollar and the high cost of housing. We need to encourage home ownership otherwise we will arrive at a situation where the cost of rentals is unacceptably very high,” concluded Edwards.

The official interest rate cuts which happened on November and December last year had a positive impact on new home loans and home buyer confidence, this according to December 2011’s latest housing finance figures.

Andrew Harvey, HIA’s senior economist said, “The 2.1 per cent increase in new home lending in the month of December 2011 suggests the potential of a modest revival in the lending market. Let’s hope, however, that the decision by our big banks to independently lift their variable lending rates does not undo the work of the Reserve Bank.”

“The improvement in lending for established homes also continued, with the number of loans up by 2.3 per cent in December, again highlighting the impact that the changed interest rate cycle had begun to have on homebuyer confidence.”

The recovery on first time buyers’ total number of loans also continued, with them making up 20.9 per cent for December 2011’s financed dwellings, compared to December 2010’s 16.9 per cent.

“While modest, the improvement in lending following the late-2011 interest rate cuts suggests a growing number of people are preparing to enter the housing market. There is a risk, however, that the recent action of the banks could undo the modest improvement in demand,” stated Harvey.

“The decision by the banks could dash more than four months of work on improving sentiment, and in an economy for which the Reserve Bank has just downgraded its growth forecasts the last thing we need is this additional weight in the saddle-bags already dragging on consumer sentiment,” concluded Harvey.

Peter Whalan, PRDnationwide’s Dubbo principal believes that the fall on the number of listings might be due to vendors holding out properties, taking advantage of the improving Dubbo market as they see prices picking up.

Whalan shared, “Dubbo is about to enter into an exciting time with a lot of new development about to come on. Dubbo is well placed to cope with any increase in growth, with new land releases including The Outlook Delroy Park consisting of 400 blocks ready to come on to the market and two other estates to release building blocks. Other big new releases soon to be announced will set Dubbo up for the place to be.”

Whalan observed that smaller towns which are going through a rapid mining population growth expansion are finding it hard to cope with the growth that they look and move to other places with infrastructure just like what happened with Mudgee to Dubbo.

PRDnationwide’s Dubbo Market Overview reveals an increase of up to 4 per cent rents on a three-bedroom house rental as the town’s rental market experienced high activity and low vacancy rates.

Reuveni-Etzioni stated, “Investors are prevalent in the market, seeking dwellings in the lower price brackets with a gross yield of 6.5 per cent-plus.”

Dubbo and its surrounding towns have strong employment prospects, according to the researcher, as developer investments are made certain by the newly published Local Environment Plan as tons of residential lots are expected to be released in 2012.

“Despite softer economic conditions in Australia and overseas, the Dubbo region has been benefiting from strong investment,” shared Reuveni-Etzioni.