Housing Market Performance Update

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Housing Market Performance Update

We look back at how Australia’s housing market fared in July, and what might be ahead in the months to come.

Property values continue to climb, rising 2.8% across the capital cities in July 2015 to be 11.1% higher over the past year, according to the CoreLogic Home Value Index.

New Land Estates




Australian property is now worth $6 trillion, according to CoreLogic.

Again, the gains were almost all in Sydney and Melbourne. Melbourne values rose 4.9% over the month, followed by Sydney at 3.3%. Next best was Hobart, at 1.1%.

Over the quarter, Melbourne was on top, with a 6.1% rise, followed by Sydney’s 5.4%. Canberra was third, at 2.3%.

Looking back over 12 months, Sydney values were up 18.4% and Melbourne values up 11.5%. Third on the list, Brisbane, could only report a 3.9% rise.

“There is starting to be a very significant disparity between dwelling price growth in Sydney and Melbourne and the rest of Australia,” says our economist, Diana Mousina.

“To some extent, this disparity may continue given indicators of continued solid demand for Sydney and Melbourne dwellings. But, significant rises in dwelling prices along with some slowing in rental growth and a pick up in vacancy rates means that rental yields look lower.  These factors may act as a drag on demand for housing in the two largest capital cities.”

Property values, July 2015 and year-on-year (YOY)

·              Sydney +3.3% (+18.4% YOY)

·              Melbourne +4.9% (+11.5% YOY)

·              Brisbane +0.5% (+3.9% YOY)

·              Adelaide -1.1% (+3.4% YOY)

·              Perth +0.1% (-0.3% YOY)

·              Hobart +1.1% (+2.5% YOY)

·              Darwin +0.4% (-5.3% YOY)

·              Canberra +0.3% (+1.2% YOY)

·              Combined capitals +2.8% (+11.1% YOY)
SOURCE: CoreLogic

Rental yields

Capital city rents rose just 0.9% over the 12 months to the end of July, which is the slowest pace on record, CoreLogic says.

The highest gross rental yields could be found in Darwin houses (5.7%), and Darwin and Brisbane units (5.5%).

In Sydney and Melbourne, where there has been the highest capital growth, houses were returning record low gross rental yields (3.2% in Sydney and 3.0% in Melbourne). Units were very close to record lows too (4.2% in Sydney and 4.1% in Melbourne).1 

“Low rental yields are expected to put downward pressure on investor demand,” Mousina says.

For help with choosing an investment property location, contact one our property specialists today

Building approvals                                                   

The number of residential building approvals fell 8.2% in June, according to the latest figures from the Australian Bureau of Statistics, but was up 8.6% compared with the same time last year.

Our senior economist, John Peters, says: “Despite the monthly fall in approvals, overall the latest data confirms ongoing solid housing sector activity.”

Our economists expect a record level of construction in 2015, with about 220,000 new dwelling commencements.

“Ongoing growth of housing supply will at least partially address some of the ongoing housing affordability issues causing a great deal of angst among potential buyers, especially in the Sydney and Melbourne housing markets,” Peters says.2  

Access property listings, comparable sales, suburb profiles and rental insights in your area with our complimentary Property Reports.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. You should consider seeking independent financial advice before making any decision based on this information.


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Whats involved when it comes to selling your home

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Whats involved when it comes to selling your home

Outgrown your home? If this is your first time selling a property, or if it’s just been a while, we’ve got some tips to help make the process easier.

You want to sell your home, but where do you start? Here are a few pointers to help your sale go as smoothly as possible.

 

Family Selling & New Home Loan

 

 

Do your property research

First things first: get an idea of what your property is worth, and find out what competition you’ll be up against. The level of competition may affect how quickly your property will sell and what price you’ll be able to get.

For access to property listings, comparable sales, suburb profiles and rental insights in your area, find out more about our complimentary Property Reports.

Meet Real Estate Agents

It’s a good idea to meet more than one agent before you decide who you’ll enlist to sell your home. Agents should talk to you about price expectations, marketing campaigns, what you can do to improve your home’s appeal, and whether you should sell by auction or private treaty.

In turn, you should ask plenty of questions to get to know them and how they work. You might also want to seek the recommendations of other recent sellers before you decide on an agent.

Understand the Costs to Selling

Make sure you factor in all the costs of selling and purchasing to get a realistic idea of how much you will have to spend on your new home.

Apart from the sale price, there are other costs involved with buying and selling property that need to be factored into your budget. These include any repairs, agent’s fees, marketing, building and pest inspections, legal or conveyancing fees, stamp duty, removals and refinancing your home loan.

Consider adding value

There may be simple ways to give your home more sales appeal, such as a lick of paint or some interior styling. Talk to your agent about this.

You may find it helpful to visit other properties to see what you’re up against and find out what styles are most popular with buyers in the area.

You might be considering renovating before your sell. Bear in mind that this will take time and money. You’ll need to consider carefully what your return on investment would be, definitely have the conversation with your agent to confirm if any additions will drive further interest

Think about the timing

Should you sell your home before you buy a new place to live? Or should you find your new home then put your old one on the market? There are a few factors to consider.

Find somewhere new

Whether you’re planning to buy or sell first, it pays to start your research for your next home early. Our home loan calculator can help you work out how much you can borrow and what your repayments will be.

Speak to one of our Home Lending Specialists about your next property move.

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Reserve Bank of Australia cuts interest rates to 2%

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Reserve Bank of Australia cuts interest rates to 2%

A 55 Year Record Low


More good news for mortgage holders but more bad news for savers as the RBA reduces rates to another new 55 year record low.

The RBA statement issued today provides limited disclosure to the reasons as to why it cut rates today and not last month.

From the conversations held with some of lenders relationship managers earlier today, the RBA’s rate cut decision could be overshadowed by the release of the Budget.

However the key message noted in this statement was to support further borrowings for residential and business purposes where moderate growth has been achieved by previous rate cuts.



What ths means for us mortgage holders?

Should banks pass on the full rate cut, borrowers who are not on fixed term loans will save approxiately $600 per annum in interest based on an borrowings of $300,000.

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Home Owners Vs Property Investors.

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Home Owners Vs Property Investors.


With property a hot topic of conversation amongst home buyers and investors, find out how they’re approaching the purchasing process today. Knowing how other buyers are approaching their next property purchase may help you work out your next move.

Recent research1 revealed that there is a strong desire to invest in property, with almost half (47%) of buyers saying they either purchased, or intend to purchase, an investment property.

Out of the remaining 53% looking to buy their next home:

  • nearly half (45%) are looking to upgrade

  • one third (33%) are looking to relocate, and

  • 14% are looking to downsize

So what’s motivating these different property buyers? And how are they approaching their next purchase to get the most out of it?

Experienced home buyers


For buyers looking to purchase their next home, the top three motivations are:

 

  • wanting to live in a new or better area (56%)

  • their family is expanding (22%), and

  • relocating e.g. for a new job (22%).

The size (94%), location (93%) and type of property (90%) are all key considerations for these buyers. The top things they consider essential to know before buying a property are the building inspection report (55%) and comparable sales in the area (48%).

What is interesting is that many experienced home buyers (78%) think work needs to be done on their existing property to get it ready for sale, and are spending on average more than $12,300 to maximise its selling price.

Investors


Investors are more likely to be motivated by financial considerations when it comes to purchasing property, with:

 

  • more than half (54%) feeling that property is the best investment,

  • nearly one third (30%) wanting to take advantage of low interest rates. and

  • 27% planning for retirement.

Key things investors consider essential to know before purchasing a property are the expected rental income (67%) and expected growth in property value of the area (51%).

The location (96%), an easy to maintain property (94%) and being close to amenities (94%) are also things investors are likely to consider important for their next purchase.

While the majority of investors are home owners looking to purchase a new investment property (65%), others are approaching investment differently:

 

  • 17% are looking to turn their current property into an investment and purchase another home to live in, and

  • 15% are currently renting and purchasing a new investment property.

Depending on the reason for your next property purchase, keep in mind that you will have different motivations and considerations shaping your purchasing decisions. It’s a good idea to speak with a lending expert to help you with the new and unfamiliar aspects of your next move. 

1 The study was conducted by Lonergan Research among 1,030 Australians aged 18 and over who have bought at least one property and: have either bought a second (or subsequent) property in the last five years or, are looking to buy their second (or subsequent) property within the next 12 months. Fieldwork commenced on Friday 31 January 2014 and was completed on Monday 10 February 2014. After interviewing, data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics.
2 Refers to subsequent home buyers who have recently bought or are looking to buy a property to live in (i.e. not as an investment property).

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What do Comparison Rates Actually Mean?

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What do Comparison Rates Actually Mean?

Comparison rates explained

When you’re buying a home, there are new decisions, considerations and jargon to decipher. Even interest rates can be confusing – with a ‘comparison rate’ being shown beside the advertised rate.
 

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Changes to Privacy Laws and Credit Reporting

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Changes to Privacy Laws and Credit Reporting

Major changes to credit regulations are afoot that will add to the information licensed credit providers can share with each other. Until now they had not been able to supply comprehensive repayment history, but all that is about to change. From March 12, your bill-paying habits are being watched.

What are the changes?

The changes are to the Australian Privacy Laws, which will allow information additional to default data and failed lending applications to be included on your credit report.

This information now includes 24 months of your repayment history for loans, credit cards and other credit. So if you haven't been paying your bills on time, perhaps you should be concerned. But on the positive side, if you pay regularly, this is new information that a credit issuer will be able to consider.

The peak body for credit providers and credit reporting bodies, the Australian Retail Credit Association (ARCA), has launched a website (creditsmart.org.au) to inform consumers about the changes. The launch follows research that found many consumers were not only ill-prepared, but also unaware - 59 per cent - of what was about to happen.

''What awareness existed was negative,'' says the ARCA's chief executive, Damian Paull. ''We were concerned that consumers … wouldn't have access to, or might not be able to understand, what the changes mean.''

The new data

It's important to realise that credit providers will be able to collect and disseminate only repayment history information from other licensed credit providers. This means that your repayment history for your telephone, mobile, internet, utilities, etc, will not go on record.

However, other information about whether you have any of the above products will be able to be collected. ''Telcos and utilities can share the additional four data elements,'' says David Grafton,an executive general manager with credit bureau Veda.

Those data elements are: The type of consumer credit; the terms and conditions; the credit limit and the day on which the consumer credit begins and the day it is terminated. ''That will also help consumers who don't have a credit file now because they are not in the credit system, but a lot of people do have mobile phones. While repayment history won't be there for those products, the fact that they [consumers] have them could be,'' Paull says.

Communications

Paull says there are no requirements about how banks must notify you before they start collecting information. ''Certainly there is a requirement under the legislation - organisations entitled to collect that information are required to disclose,'' he says.

Most credit providers will have notified their customers of the changes and you should have already received a letter. For example, ANZ has sent a brochure to all existing customers, and is notifying customers who have signed up for products since then.

Commonwealth Bank notified all its customers with a letter accompanying its statements in January. Westpac said it was ''working through how we will communicate to customers about these changes''.

Your credit report

All this information now forms part of your credit report. This has always been available to you, but it can now include the extra data.

''Remember also that credit providers are not going to suddenly be supplying this information from day one,'' Grafton says. ''It's going to take a couple of years [for all the information to become available].''

Organisations, such as Veda, Dun & Bradstreet and Experian Australia Credit Services, provide credit reports and credit scores in some instances, but you also have the right to obtain once a year one free credit report from each credit reporting body, as their reports might be different. You can also get a free credit report if an application for credit was declined in the past three months.

According to research conducted by Veda, many of us don't even know we have credit reports. ''[We found] 80 per cent of Australians hadn't checked their credit report and more than half of them didn't realise they had one,'' says Veda marketing manager, Belinda Diprose.

The best reason to obtain your credit report, particularly if you're having problems obtaining credit or loans, is to work out how to fix it. There could be a mistake by the credit reporting agency, or the creditor, which could be easily fixed. If the creditor won't help, contact the Financial Ombudsman Service or the Credit Ombudsman Service.

Of course, the best way to make sure you've got a clean record is to make sure you pay all your bills on time.

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Competitive Home Loans Spark Real Estate Sales

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Competitive Home Loans Spark Real Estate Sales

Home buyers are tapping into new discount loans to service larger mortgages and it's adding plenty of fuel to Melbourne's real estate market.

Despite the Reserve Bank's resolve to hold official rates at 2.5 per cent, mortgage rates are falling as banks and other lenders compete for market share.

Property commentators say the lender competition in a low-interest rate environment is proving to be a decisive factor for buyers, particularly for upgraders.

An upbeat mood was evident at many auctions and open homes on Saturday, with agents reporting competitive bidding and large crowds. The market appears to have resumed from where it left off last year.

''It may even be a little stronger,'' said buyers' advocate Kim Easterbrook, from Elite. She attended auctions in Prahran, Collingwood and Northcote on Saturday, and said each sale drew a big crowd and achieved prices 10 per cent to 20 per cent above reserve.

Sales conditions have a measured tempo in many suburbs. Buyers don't seem to be panicking, most are sticking to their spending limits, and for every runaway sales result there are other properties that just get over the line or sell for a price that's slightly below reserve.

Fairfax-owned Australian Property Monitors reported a clearance rate of 74 per cent from 436 auctions. The Real Estate Institute of Victoria, which unlike APM includes Geelong sales in its results, said 432 properties sold from 600 auctions to give a clearance rate of 72 per cent.

On Saturday, many vendors were owner-occupiers who had bought new homes last year. They were keen to sell, with some prepared to discount.

Jellis Craig director Richard Earle said there hadn't yet been enough auctions to draw hard conclusions.

''But we are getting very strong numbers through open-for-inspections, and the auctions that we have conducted so far this year have been well fought out,'' he said. ''The market is still robust and buyers of Asian origin are out there purchasing property.''

Low interest rates give an affordability advantage to buyers.

APM senior economist Andrew Wilson said the average weekly mortgage repayment for Melbourne home owners was $50 less compared to two years ago. ''That's what is really driving the market - mortgages are more affordable in terms of repayments,'' he said.

Buyers' advocate Catherine Cashmore stressed there was a difference between mortgage serviceability and affordability.

''That's what buyers should be aware of,'' she said. ''You are taking on a heck of a lot of debt - by the time you've paid off the debt on a medium-priced apartment in Melbourne on a 30-year mortgage, you have paid well over $1 million.''

Commentators are cautioning buyers to focus on infrastructure and scarcity.

Monique Sasson, of Wakelin Property Advisory, said there were now three distinct markets in Melbourne: the new unit market, established properties in the middle and inner suburbs, and housing estates on the city's outskirts.

''If someone asks me about the Melbourne market, my response is: 'Which bit of it?''' she said. ''You can't talk about the market as a whole any longer.''

Ms Sasson expects new unit prices to be hit by oversupply. She said the need for heavy private car travel in the outer estate areas had an impact on price growth. ''It has a direct drag on values and on demand,'' she added.

More than 1000 auctions are scheduled by the REIV for next weekend.

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Chance To Own Jennifer Aniston’s Former Rental Home

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Chance To Own Jennifer Aniston’s Former Rental Home

Such a deal! Usually an A-List celebrity presence in a home raises the value by at least a million, but the asking price of the Trousdale Estates home rented by Jennifer Aniston and Justin Theroux while their Bel Air mansion was being remodeled, has recently been reduced by $4.6 million.

The owners wanted $14.5 million for the modern home, described as “Southeast Asian Zen,” when they first put it on the market in July 2011. By May 2012 they had reduced the price to $11.5 million, but decided to take it off the market when Aniston and Theroux offered to rent it for a whopping $40,000 per month. The celebrity couple lived there for about a year and a half while they renovated their $21 million Bel Air mansion, and now that rental is back on the market for a more modest $9.9 million.

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Reserve Bank of NZ  lifts Interest Rates, Australia could follow

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Reserve Bank of NZ lifts Interest Rates, Australia could follow

The Reserve Bank of New Zealand's interest rate rise has cemented its status at the head of the developed world's economic cycle, but Australia's huge jobs gain means it may not be far behind.

The RBNZ raised the cash rate one-quarter of a percentage point to 2.75 per cent on Thursday, as expected, before Australian employment figures showed the best jobs growth in two years, with 47,000 new positions created during February. The employment data suggests the jobs market has caught up with the acceleration in the rest of the economy and resolves a worrying lag.

New Zealand is further ahead of Australia, thanks to a terms-of-trade boom that is underpinned by demand for Kiwi dairy exports, mostly attributed to China and India. RBNZ governor Graeme Wheeler said: ''By increasing the [official cash rate] as needed to keep future average inflation near the 2 per cent target mid-point, the bank is seeking to ensure that the economic expansion can be sustained.''

The RBNZ also upgraded its growth forecast to 3 per cent from 2.8 per cent for 2014, thanks to $NZ40 billion ($37.79 billion) in construction activity in Christchurch and the expansion of the housing supply elsewhere in New Zealand.

With that comes an inflation risk that needs to be contained.

The New Zealand Manufacturers and Exporters Association said it was yet to see a policy response from the RBNZ that addressed the high currency.

''Early increases in our OCR put us further out of line with the rest of the world in terms of monetary policy, which will have the effect of appreciating our already overvalued exchange rate,'' chief executive John Walley said.

''This is a major concern for exporters and import-competing manufacturers. For the traded sector the exchange rate determines what sort of margin gets banked, and margins are thin right now.''

HSBC chief economist Paul Bloxham said by the second half of this year, interest rate rises should push the New Zealand dollar to parity with the Aussie.

''That would be the first time in 40 years that it happened if it does arrive,'' said Mr Bloxham.

''They'll pop the champagne because the NZ dollar gets to parity, but they'll have a big hangover the next day because Australia is still NZ's major trading partner.

''A high currency will make their traders less competitive.'' After the RBNZ's decision the New Zealand dollar rose to above US85¢ and was fetching A94.8¢.

Mr Bloxham said it made sense that the currency was so high.

''You have got to keep in mind that the economy in NZ is growing very strongly and it's quite broad-based, and because of that, in a world where the rest of the developed world is picking up but not particularly strongly, it makes sense that the NZ dollar is very high.''

New Zealand's official cash rate has been at a low of just 2.5 per cent since early 2009, apart from a small lift in 2010 that was reversed in early 2011. That has seen mortgage rates at their lowest levels for about 50 years, in the wake of the global financial crisis.

Last December, the RBNZ signalled that the interest rate would rise 200 basis points to 4.5 per cent by the end of 2015.

That would see rates near ''neutral'' levels, neither speeding up nor slowing down the economy.

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Tips For Saving Your Deposit

 

Saving for that all important deposit can be tough, but here are three winning tips to help set you on your way to home ownership, fast!

 

Put your goals in writing: 

Setting a financial goal will make it much easier to plan and save successfully. Make a conscious effort to track your expenses so you can see where your money’s going and cut back where you can. Small sacrifices, such as taking the bus instead of a taxi, cutting back on buying coffee or bringing your lunch to work can also go a long way towards helping you save.

Beat the credit monster: 

Credit card debt, unpaid bills and personal loan repayments can be major setbacks to your saving efforts. As part of your saving strategy get these debts paid off. Start by paying off your debts that have the highest interest rate – typically your credit card. If you can’t pay it off in one lump sum, ensure that you pay more than the minimum monthly repayment.

You’ll not only slash your debt, you’ll also have extra funds to channel into other debt commitments or even savings. 

Make your savings work harder for you:

Making cutbacks on your lifestyle is one thing, but putting that money to use is another. Remove the temptation to spend your savings by arranging a set amount to be taken out of your pay each month and put directly into a savings account. Shop around, and seek a high interest rate savings account to get the best returns– many banks now offer an online high interest account.

 

 

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Interest Rates Remain On Hold - RBA October Meeting

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Interest Rates Remain On Hold - RBA October Meeting

 

At the RBA meeting today, the Board have made the decision to leave the cash rate unchanged at 2.5 per cent.

This result is in-line of global growth running marginally below average this year, with reasonable prospects of an interest rate increase early next year..

Commodity prices have declined, however remained at optimum levels by historical standards. Inflation in most countries remains stabilised.

Overall, global financial conditions remain very accommodative. Changes in the outlook for US monetary policy have increased volatility in financial markets, however long-term interest rates remain very low as there is sufficient funding available for creditworthy borrowers.

With growth in labour costs moderating, this is expected to remain the case over the couple years, even with the effects of a marginally lower exchange rate.

The RBA determined that the monetary policy implementation remains appropriate. The Board will continue to assess and adjust policy as needed to generate growth in demand and inflation.

Industry publications forecast Novembers meeting could see an interest rate cut on Melbourne Cup Day. 

 

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Steve Wozniak-Designed iHouse For Sale

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Steve Wozniak-Designed iHouse For Sale

 

In light of the new iPhone, I thought to share with you the "iHouse" being the former Las Gatos home of Apple co-founder Steve Wozniak.


Not only is he credited as the designer for the Apple 1 personal computer, but believe it or not he designed this home too in the late 1990's, not a bad effort I must say.

This property features 6 bedrooms, 6 bathrooms and three garages on a modest 1.2 acreages in Los Gatos, California. 

According to Realtor.com, the property has recently re-listed for $4.152 million, meaning a $400,000 shortfall compared to the earlier listing this year.

 

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Interest Rates at 53 year low!


The Reserve Bank of Australia cut interest rates at the August meeting, dropping the cash rate to the lowest level seen in 53 years so get ready to take advantage of the additional savings or finally plan that trip as most of the Big 4 banks have already passed on the benefits!

After three consecutive months holding the interest rate at 2.75%, Reserve Bank of Australia (RBA) have cut the cash rate to 2.5%.

Many lenders have since reduced their Standard Variable Rates (SVR), including  the Big 4 lenders.  Westpac have even moved by more than the announced 0.25% stimulating further competition amongst the major banks.

The Big 4 lenders are now below the 6%  threshold – it’s time to start planning that family holiday or get excited about how much you’ll save each month off your mortgage!

If you’re feeling restricted with a fixed rate mortgage or not satisfied with your current lender, give the team at Assertive Financial Group a call.

A good possibility you might  be able to refinance and secure a better interest rate from our panel of lenders that include the big four.

Contact us now, or complete a free loan health check on the tab above for a free assessment.

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