New data shows house values in Sydney have jumped more than five times faster than wages in each of the past two years... Bank profits plummet amid real estate fears... Non-major announces commission overhaul on life insurance...
Sydney house prices jump as wages grow
New CoreLogic data has shown that house values in Australia's biggest city have jumped more than five times faster than wages in each of the past two years. According to Bloomberg stats), wages in New South Wales went up 2.5 per cent in 2013 and 2.4 per cent in 2014, “compared to gains of 12.4 per cent and 14.5 per cent respectively for homes in Sydney. Sixty per cent of NSW’s population resides in Sydney.
However, the data also showed Sydney house and apartment prices have jumped 40 per cent from May 2012. The report claims regulators were forced to call on banks to strengthen lending standards and warn of the potential for values to drop. The rise in property values comes as income growth among households “slows to the lowest on record, rental yields approach an all-time low in Sydney and Moody's Investors Service said housing affordability in the city has deteriorated”.
"When you compare home-price surges between early 2000s and now, this time income is static or lower in real terms," said Martin North, a Sydney-based principal at research agency Digital Finance Analytics, as quoted by The Australian Financial Review.
Meanwhile, Moody’s latest report released this week said Sydney households spent an average 35.1%of their income on mortgage repayments up from 32.8 per cent in 2014.
Bank profits plummet amid real estate fears
According to an article in the Brisbane Times, almost $20 billion has been wiped off the value of the big four banks by share-market investors this week, due in large part to expectations the regulator will take quicker-than-expected action to deal with the threat posed by rampant property speculation.
New figures showed the banks expanded loans for property investments in the year ended March by 10.4 per cent, the highest rate since 2008 and more than the 10 per cent threshold imposed by the Australian Prudential Regulation Authority in December to stop a property bubble building in Sydney and elsewhere.
National Australia Bank expanded its investor lending book the fastest of the big four, at an annualised pace of 13.8 per cent in March, Macquarie analysis showed. Westpac Banking Group's loans grew by 10.3 per cent, ANZ Bank by 10.2 per cent and Commonwealth Bank of Australia by 9.4 per cent.
Non-major announces commission overhaul on life insurance
AMP has announced reforms to payment structures, which will reduce upfront commissions on all life insurance policies. The move comes as Mortgage Choice denounced recommendations calling for an overhaul of “conflicted” commissions in the life insurance sector. Mortgage Choice Financial Planning’s general manager Tania Milnes said the proposed recommendation could potentially harm consumers.
This announcement also comes the Trowbridge Report, released last month, sounded the alarm on commission structures in the life insurance advice, recommending that the industry introduces a $1,200 cap on upfront commissions and limits remuneration to a 20 per cent level commission.
“While Mortgage Choice is extremely supportive of the need for change, highlighted by the fact that we have already mandated a hybrid commission model, if Mr Trowbridge’s specific recommendations relating to adviser remuneration are ratified it would make life insurance more expensive for Australian consumers. And as a result, fewer Australians would be able to access affordable insurance-related financial advice,” she said.
New CoreLogic data has shown that house values in Australia's biggest city have jumped more than five times faster than wages in each of the past two years. According to Bloomberg stats), wages in New South Wales went up 2.5 per cent in 2013 and 2.4 per cent in 2014, “compared to gains of 12.4 per cent and 14.5 per cent respectively for homes in Sydney. Sixty per cent of NSW’s population resides in Sydney.
However, the data also showed Sydney house and apartment prices have jumped 40 per cent from May 2012. The report claims regulators were forced to call on banks to strengthen lending standards and warn of the potential for values to drop. The rise in property values comes as income growth among households “slows to the lowest on record, rental yields approach an all-time low in Sydney and Moody's Investors Service said housing affordability in the city has deteriorated”.
"When you compare home-price surges between early 2000s and now, this time income is static or lower in real terms," said Martin North, a Sydney-based principal at research agency Digital Finance Analytics, as quoted by The Australian Financial Review.
Meanwhile, Moody’s latest report released this week said Sydney households spent an average 35.1%of their income on mortgage repayments up from 32.8 per cent in 2014.
Bank profits plummet amid real estate fears
According to an article in the Brisbane Times, almost $20 billion has been wiped off the value of the big four banks by share-market investors this week, due in large part to expectations the regulator will take quicker-than-expected action to deal with the threat posed by rampant property speculation.
New figures showed the banks expanded loans for property investments in the year ended March by 10.4 per cent, the highest rate since 2008 and more than the 10 per cent threshold imposed by the Australian Prudential Regulation Authority in December to stop a property bubble building in Sydney and elsewhere.
National Australia Bank expanded its investor lending book the fastest of the big four, at an annualised pace of 13.8 per cent in March, Macquarie analysis showed. Westpac Banking Group's loans grew by 10.3 per cent, ANZ Bank by 10.2 per cent and Commonwealth Bank of Australia by 9.4 per cent.
Non-major announces commission overhaul on life insurance
AMP has announced reforms to payment structures, which will reduce upfront commissions on all life insurance policies. The move comes as Mortgage Choice denounced recommendations calling for an overhaul of “conflicted” commissions in the life insurance sector. Mortgage Choice Financial Planning’s general manager Tania Milnes said the proposed recommendation could potentially harm consumers.
This announcement also comes the Trowbridge Report, released last month, sounded the alarm on commission structures in the life insurance advice, recommending that the industry introduces a $1,200 cap on upfront commissions and limits remuneration to a 20 per cent level commission.
“While Mortgage Choice is extremely supportive of the need for change, highlighted by the fact that we have already mandated a hybrid commission model, if Mr Trowbridge’s specific recommendations relating to adviser remuneration are ratified it would make life insurance more expensive for Australian consumers. And as a result, fewer Australians would be able to access affordable insurance-related financial advice,” she said.
