Depending on the carbon price per tonne adopted, and its rate of increase, there will be some radical changes to the range of materials used in residential housing. High net carbon emitters such as asphalt (roads), clay bricks, steel roofing and timber flooring and framing, will be replace by concrete roads, concrete bricks, composite board roofing, flooring and framing.
House prices are dictated by affordability and supply/demand, not by “cost plus” factors. So, higher cost materials affected by the carbon tax will ultimately be replaced by materials not subjected to the tax.
There is a high demand for inflammable sheeting for walls and floors, and this technology will improve and become more competitive in price over block work and render. A high cost contributor to housing is roads, and asphaltic concrete (AC) will become user-competitive as the carbon tax increases, it being a derivative of coal.
Concrete roads will need to become more cost effective, with innovative construction methods such as polystyrene infill (known as “waffle” slabs) to compete more effectively with asphaltic concrete.
Sunday, July 24, 2011
Monday, July 4, 2011
Direction of Interest Rates Critical to Property Markets
With the property market Australia-wide on its knees, we have the Reserve Bank talking up interest rates. And at the same time we have bank lending margins at record highs coinciding with record profits.
The concentration of bank power, exacerbated by the Global Financial Crisis, has allowed the banks to collude on lending margins because there is virtually no second tier bank lending.
The current level of mortgage rates is working against investment in rental accommodation because the spread between borrowing rates and net returns is too high. We have not seen any significant investment in rental accommodation in Queensland since 2003, which has seen rents driven up at the average rate of 10% per annum.
So what is needed is a reduction in interest rates of at least 1.0% over the next 12 months.
The housing industry is a much bigger employer than the mining industry (with all its multiplier effects), but it is depressed due to unrealistic bank lending margins in a mega-bank profit environment.
The concentration of bank power, exacerbated by the Global Financial Crisis, has allowed the banks to collude on lending margins because there is virtually no second tier bank lending.
The current level of mortgage rates is working against investment in rental accommodation because the spread between borrowing rates and net returns is too high. We have not seen any significant investment in rental accommodation in Queensland since 2003, which has seen rents driven up at the average rate of 10% per annum.
So what is needed is a reduction in interest rates of at least 1.0% over the next 12 months.
The housing industry is a much bigger employer than the mining industry (with all its multiplier effects), but it is depressed due to unrealistic bank lending margins in a mega-bank profit environment.
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