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Property market update October 2019

BMT team — Tue, 08 Oct 2019 21:54:05 +0000

Australian property market recovery gathers momentum The Australian property market has continued its recovery throughout September, led by strong rebounds in Sydney and Melbourne. Property values Australia’s two largest cities led the September recovery, with Sydney and Melbourne dwelling values both increasing by 1.7 percent. The positive trend pushed the median property value to $805,424 and $634,913 respectively, however values still remain well below their peaks. CoreLogic cited low mortgage rates, improved credit access and economic factors to the current bounce-back of Sydney and Melbourne. CoreLogic head of research Tim Lawless said: “Population growth is higher, unemployment is lower and jobs growth is stronger, providing a solid platform for housing demand.” Along with this, the Sydney and Melbourne markets have seen stronger investor participation in recent months as market confidence continues to grow. Brisbane and Canberra were the only other capital cities to record a rise in dwelling values, lifting 0.1 per cent and 1 per cent. Values fell in Hobart (-0.4 per cent), Perth (-0.8 per cent) and Darwin (-0.2 per cent), while Adelaide prices remained unchanged.While Perth continued its market decline experts say the city is just at the right stage of the property cycle for growth, having achieved a balance between supply and affordability. Residential property listings Property listings remain low across the country, with existing listing numbers 10 per cent lower than a year ago across the combined capital cities and fresh listings 15 per cent lower. The reduced real estate stock is creating a sense of urgency among buyers, with the fear of missing out boosting buyer activity. Auction clearance rates The seasonal impact of spring showed in the national auction market, with CoreLogic results recording a lift in national residential property listings by almost 3 per cent in the first week of September. National auction clearance rates held around the mid-to-high 70 per cent range over the month, with the results remaining high on larger volumes. Prices also experienced a lift throughout the month. Buyers are paying above the expected sale price as sentiment continues to pick up, and purchasers compete for the few properties on the market. Vacancy and rental rates National rental rates were down 0.1 per cent over September, continuing their downward trend for the fourth consecutive month. Sydney (-1.0 per cent), Melbourne (-0.3 per cent), Perth (-0.4 per cent), Darwin (-0.2 per cent) and Canberra (-1.1 per cent) all recorded a decline in the three months to September. While gross rental yields are still trending slightly higher than 12 months ago, they’re trending lower across most areas. Finance and interest rates The Reserve Bank of Australia (RBA) has dropped the official cash rate below 1 per cent for the first time in history. The official rate is now at a record low of 0.75 per cent. In a statement issued after the call, the RBA said they made the decision in a bid to support employment growth and to provide greater confidence that inflation would be consistent with the medium-term target. A combination of drought, stagnant wage growth and trade conflict between China and the United States also contributed to the controversial interest rates decision. Commercial property New hotel development in Australia is predicted to slow as the country’s struggling apartment market contributes to a decrease in residential-led mixed use projects. Along with the slowdown in development, hotels in Australia have started offering free co-working spaces as a new phenomenon of space activation takes hold. Two hotels in Sydney’s Rushcutters Bay and the CBD have offered free desks to businesses to draw in more patrons through the lure of a busier ground floor lobby. While hotels continue to look for new ways to adapt to the market, Sydney and Melbourne’s office and industrial property sectors have offered strong returns for investors throughout September. Melbourne’s office market boom is expected to continue until 2024, with prime rents expected to rise another 30 per cent to 40 per cent.

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Everything you need to know about interest rate cuts

BMT team — Thu, 03 Oct 2019 00:17:09 +0000

The Reserve Bank of Australia (RBA) made history in the first week of October, slashing the official interest rate and signalling further cuts in the coming months. What is the current interest rate? The RBA dropped the official interest rate to just 0.75 per cent on Tuesday, 1 October. The first time the official cash rate has dropped below 1 per cent in Australia and the third rate cut since June. Interest rates are significant in affecting the economy, which is why the RBA’s decision is so important. If interest rates are lower, it’s likely to encourage more people to take out a mortgage and purchase a property or take out a loan for home renovation. Why did the RBA drop the interest rate? In a statement issued after the call, the RBA said they made the decision to lower the rate in a bid to revive consumer spending, lift Australia’s otherwise stagnant wage growth, drive employment and provide greater confidence that inflation would be consistent with the medium-term target. RBA Governor, Phillip Lowe also noted trade conflict between the United States and China as a contributing factor. “While the outlook for the global economy remains reasonable, the risks are tilted to the downside. The US–China trade and technology disputes are affecting international trade flows and investment as businesses scale back spending plans because of the increased uncertainty,” Lowe said in the statement. “At the same time, in most advanced economies, unemployment rates are low and wage growth has picked up, although inflation remains low. “Interest rates are very low around the world and further monetary easing is widely expected, as central banks respond to the persistent downside risks to the global economy and subdued inflation.” Have the banks passed on the current interest rate? So far, the big four banks have baulked at passing the official interest rate cut in full to consumers. Both the Commonwealth Bank and National Australia Bank (NAB) defied the RBA by refusing to pass on the cut in full just hours after the decision. The Commonwealth unveiled its mortgage rate changes, withholding 12 basis points from borrowers. Treasurer Josh Frydenberg blasted the two banks for failing to pass on interest rate cuts in full, saying it was “very disappointing” and that “customers should vote with their feet.” Reduce Home Loans cut interest rates by 0.20 per cent with the lowest variable rate currently at 2.69 per cent. Homestar Finance and Athena Home Loans both dropped 0.25 per cent, with variable rates at 2.74 per cent and 2.84 per cent respectively. Will there be further rate cuts? The RBA has suggested that another rate drop is expected to take place if the economy remains subdued, however when this might occur remains unclear. “It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” Lowe said. “The [RBA] Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.”

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Property market update – September 2016

BMT team — Wed, 07 Sep 2016 01:56:29 +0000

As a property investor, staying informed on any changes or statistical indicators relating to the property market is vitally important. With this in mind, we’ll be providing a monthly property market update which summarises some of the most relevant real estate and finance industry news to assist you to succeed on your investment journey. Property values For the month of August, a 1.1 per cent rise in home values was recorded according to the latest CoreLogic Hedonic Home Value Index. Sydney remains the capital city with the highest median dwelling price, currently sitting at $780,000, followed by Melbourne with a median dwelling price of $576,000. In both of these cities, dwelling values have continued to increase month-on-month by more than 1 per cent, with cumulative growth over the cycle (June 2012 to date) reaching 64 per cent in Sydney and 44 per cent in Melbourne. Hobart remains the most affordable capital city with median values sitting at $306,000. Rental rates The latest CoreLogic report on rental rates, released in August, showed that rents across the combined capital cities fell by 0.3 per cent during July. Rental rates decreased in all cities except Melbourne and Hobart, which have experienced a 0.8 per cent and 3.9 per cent increase over the past quarter respectively. Sydney is still the most expensive city to live in, with a median average weekly rent of $595, compared to a combined capital city median rent of $483, which came in at its lowest level since December 2015. Hobart is the cheapest capital for tenants to live in, with a median average weekly rent of $359. Rental vacancies Figures from SQM Research released at the end of August revealed that the number of national residential vacancies rose during the month of July. A vacancy rate of 2.5 per cent was recorded with 79,300 properties vacant. Of the capital cities, Perth recorded the highest vacancy rate during July of 5.2 per cent. The report showed 10,738 vacancies in total and an increase of 1.4 per cent for the year-to-year vacancy rate. The city also recorded the highest monthly increase in rental vacancies of 0.2 per cent during the month of July. Building approvals The latest data on building approvals from the Australian Bureau of Statistics indicates that there has been a surge in apartment approvals of 23 per cent during the month of July. There were 11,393 apartment approvals during the month, a result which was 16 per cent higher than the number approved during the same month one year ago. Despite this increase, house approvals declined by 0.5 per cent during the month, with approvals almost 3 per cent lower over the year. Finance and interest rates As predicted by most Economists leading up to yesterday’s board meeting, the Reserve Bank of Australia (RBA) decided to keep rates on hold at 1.5 per cent. The recent changes made by the RBA during August and May have encouraged many first-home owners and particularly property investors to take advantage of low interest rates and enter the property market. Recent data released by the nation’s big four banks also highlighted that those with existing home loan debts have been able to reduce their home loan debts, with the nation’s largest lender, The Commonwealth Bank, confirming that three out of every four customers are thirty three mortgage repayments ahead on average Auction clearance rates Property sales for spring were off to a strong start, as the preliminary capital city clearance rates recorded a year to date high of 78.4 per cent according to CoreLogic. A total of 1,858 homes went to auction for the weekend ending the 4th of September 2016, however was a decrease compared to the 2,153 auctions recorded during the previous weekend and the 2,297 auctions recorded one year ago. Of the capital cities, Sydney achieved the strongest preliminary clearance rate of 83.9 per cent.

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Five tips to set you up for your home loan

Chan Naylor Team — Wed, 19 Nov 2014 00:55:09 +0000

With the highest auction clearance rates seen for some time more Australians are looking to buy property than ever before, but what happens if you fall in love with a home and then discover the bank won’t lend to you? Even worse, what happens if the bank turns you down and it’s your fault? Here are 5 tips to make sure you are properly set up for that home loan. 1. Check your credit file Some of my clients were recently declined by a mid-tier bank because they had a couple of gas payment defaults on their credit file. Trouble is, this was the first that my clients knew about it because the defaults related to their old home. Thankfully, we were able to get approval with a Big Four lender – but it took a lot of work. All the stress could have been avoided if they had checked their credit file before they applied for a loan. The good news is, it’s free to check your credit file, check out the details on www.mycreditfile.com.au 2. Get your savings in order Lenders like to lend to people who can show they are responsible with money. So they like to see money in an account for at least three months without the account holder having succumbed to the temptation of spending some of it. If say a relative is going to help out with the deposit, then holding the cash in your account for some time before you apply for a home loan makes it so much easier. I once had a client whose family came from a developing country which was subject to quite a few UN sanctions. His family were gifting him some money, but getting money out of this country was very difficult so the money was appearing as odd random cash deposits made all over Australia. It took me ages to prove to the bank that the applicant wasn’t a drug runner or an arms dealer! Had the cash been ready and waiting in his Australian account for some time there again, it would have been much easier. 3. Pay your bills as soon as possible When you apply for a home loan, the first thing a bank does is check your credit file. Once upon a time, the credit file just showed if you were in default or had made too many credit inquiries. Now under a new law, credit files can show who is a prompt payer. So from now on, it’s in your interest to pay any bill as soon as you can. 4. Reduce your credit card limit It might boost your ego to have a platinum credit card with a $50,000 limit but do you need all that money? When the banks are assessing how much they will lend to you, they will take that credit card limit as money already lent (even if you pay it off every month). As a result, they may well reduce how much they will lend you based on that limit. You may want to reduce your credit card limit if you don’t need all that money. Banks have been known to first request clients to reduce their credit card limit before giving a final loan approval. 5. Know your limit Not all banks are the same. For example, if you were a brand new customer and you walked into a branch then chances are that the most they would lend you is 90 per cent of the value of the property (although some may go up to 95 per cent) – even if you are a multi-millionaire (it’s just their policy). You could be an excellent home loan candidate, but if you just go to your own bank because you think that all banks are the same then you may be in for a shock. However, good brokers know what each bank’s lending policy is and know where you are most likely to get home loan approval. For further information about how Chan & Naylor can help assist you with your Home Loan, contact Chan & Naylor today or call on 1300 306 868.

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Preparation tips for investment property profits

Mortgage Choice — Fri, 13 Jun 2014 06:41:07 +0000

Whether you’re new to property investment or you’ve been involved in this lucrative asset-building option for years, researching the latest tips about getting the most for your money can help you maximize your investment returns. Prepare for investment property ownership The Australian market is full of potential and property investing is popular right now. However, the fact that there is money to be made doesn’t mean that you’re necessarily ready to invest. Careful consideration must first be conducted to ensure you’re in a stable financial position now and into the future. Get your personal finances under control before you put money into an investment property. Paying down your debts is a must. You’re likely to be paying more in interest on your debts than you would be earning on an investment, so it just makes financial sense to get that taken care of first. Paying down debt also improves your credit score, and you’ll need to have a good score to borrow money for investing. The higher your credit score, the lower the interest rate will be on your loan. You’ll end up with a higher rate of return. Consider interest-only borrowing There are advantages to opting for interest-only loans when you’re investing in real estate. You’ll be able to borrow more, so you could invest in multiple properties. Most lenders allow you to pay down the principal as you please, so opting for interest-only loans doesn’t lock you into a high principal that never gets paid down. Increase property value The market dictates how much you can make on your investment to a point. You retain some control, so you have to be proactive about making your property worth more. Renovations offer the perfect opportunity to increase the value of a property. If you don’t have a lot of money left over to invest in renovations, consider keeping it simple. Even improving the outdoor area or a fresh coat of paint will boost property value. Get expert advice for the right investment from http://www.mortgagechoice.com.au/ This article was supplied courtesy of Mortgage Choice.

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