Strong demand for housing amid a growing population and record low levels of property construction will help to tighten rental markets considerably, pushing rents higher in 2010 and beyond, a report says.

BIS Shrapnel’s latest Residential Property Prospects report found rents are expected to rise by an average of 5.8 per cent a year over the next three years.

This compares with a 5.7 per cent increase in 2009 and an average annual rate of 4.4 per cent between 2002 and 2008.

If realised, the anticipated rental increases would result in landlords pocketing an extra $1.9 billion in rents between 2010 and 2012.

BIS Shrapnel senior economist Jason Anderson said the supply of housing had “plunged” while demand remained very strong.
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The flow of credit for housing is now running $6.2 billion per month faster than it was a year ago, when the global financial crisis was hitting hardest.

Approvals for housing finance hit $23.847 billion per month in September, a level exceeded only on one previous occasion, in June 2007.

That was the month the sub-prime loans crisis really hit the headlines with the failure of two hedge funds run by Bear Stearns, which subsequently dragged the US investment bank to the brink of collapse the March, when it was snapped up for a pittance by JPMorgan Chase.

The low point for housing lending in Australia was reached in September 2008, when the better-known failure of Lehman Brothers pushed the world’s financial system to the brink.

In that month, the value of housing finance approved dropped to $17.616 billion, its lowest for two years.
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Reserve Bank of Australia (RBA) deputy governor Ric Battellino says fears about Chinese investment are overblown.

He says that while China has figured prominently in the public consciousness regarding foreign investment, it accounts for but a tiny fraction of foreign capital invested in Australia.

“Australian Bureau of Statistics (ABS) data indicate that, at the end of 2008, Australian assets owned by Chinese entities stood at around $8 billion,” he said.

“This is less than half of one per cent of total foreign investment in Australia, and puts China a long way down the list in terms of importance as a source of investment,” Mr Battellino said in a statement.

Mr Battellino told the 3rd Annual Australian Parliamentary Conference in Perth that, from China’s perspective, Australia accounts for an even smaller share of its total offshore investment less than one quarter of one per cent.
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Perpetual and Axa Asia Pacific have led a freeze of $5.5 billion of investors’ savings, as mortgage funds continue to suffer from being excluded from the Rudd government’s deposit guarantee scheme.

The mortgage funds yesterday moved to halt a cash exodus as investors sought the added security of the federal government’s guarantee on bank deposits.

Perpetual Investment Management froze $2 billion of investor funds, joined by Axa Asia Pacific ($2.1 billion) and Australian Unity ($1.4 billion), according to an Australian Financial Review report, .
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More than half of all Australian companies plan to put major investments on hold and three quarters expect not to hire new staff as the credit crunch hits home, a report shows.

And while two-thirds of firms were worried about getting credit even before the latest turmoil on Wall Street, they expect the domestic economy to recover by 2011.

The PricewaterhouseCoopers Private Business Barometer survey of 750 private firms, found the credit crunch to be a big concern, with 66.8 per cent of businesses identifying the availability of credit as a hurdle to meeting targets in the year ahead.
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