House Prices Archives - Atelier Wealth

You’ve heard the saying ‘safe as houses’, right? Well, it seems that old adage may ring true even in the current pandemic, with many of the nation’s top economic experts saying that’s where they’d put their money right now.

A Finder survey asked 28 leading experts and economists to weigh in on future cash rate moves and other issues related to the state of the Australian economy.

When asked: “Where do you think is the best place to invest your money right now?”, the leading response was “property”, with 1 in 3 experts (32%) backing it as their top option.

This was followed by shares (21%), gold (14%), superannuation (11%) and then cash (7%).

But hang on, isn’t the property market meant to be in trouble?

Rest assured it’s not all doom and gloom out there.

According to CoreLogic’s latest data, nationwide median housing values fell just 0.6% in July and fell 1.6% for the quarter, bringing the median dwelling value to $552,912.

However, to put that into context, over the past year national housing values have risen by 7.1%.

Sydney property prices led the way with a 12.1% increase in median value, followed by Melbourne (8.7%), Canberra (7.2%), Hobart (5.9%), Brisbane (3.8%) and Adelaide (2.4%).

Perth (-2.5%) and Darwin (-2.2%) were the only capital cities to record negative growth in housing values over the past 12 months.

Tim Lawless, CoreLogic’s head of research, said housing markets have remained relatively resilient through the COVID-19 period so far.

“The impact from COVID-19 on housing values has been orderly to-date,” says Lawless.

“Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn.”

However, with fiscal support set to taper from October, and repayment holidays expiring at the end of March next year, Lawless says the medium-term outlook remains skewed to the downside.

“Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience,” adds Lawless.

Other interesting property market predictions

Here are a few other interesting stats and predictions we took out of the Finder survey:

– Almost half of experts (42%) believe now is a good time for homeowners to put their property on the market, while a quarter said homeowners should wait two years.

– Two-thirds of surveyed experts (65%) believe Australia will see GDP growth in 2020, despite the Treasurer confirming in June that the nation is now in recession.

– All experts believe no further cash rate cuts will be implemented this year. However, more than two-thirds (72%) of experts forecast an increase in 2021 or 2022.

– More than half of experts surveyed (58%) believe other banks will follow in St George’s footsteps to reduce lenders mortgage insurance (LMI) to $1 for first home buyers with a deposit of just 15%.

Seen a property you like? Get in touch

As mentioned earlier, it’s expected that properties priced for a quick sale will hit the market in the coming months – properties that may prove difficult for some buyers to resist.

So whether you’re looking to add to your property portfolio, looking for a change of scene, or keen to buy your first home and break into the market, get in touch today.

We’re here to help you find a loan that’s just right for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

If you’ve been thinking about purchasing your first property, 2020 might be the time to pounce.
Following a long-awaited correction, many property markets across Australia appear to have
plateaued and are now once again increasing in value.

According to Corelogic, in January house price values in Sydney alone rose by 1.5 per cent, 6.7 per
cent over the past quarter. While the average increase across the nation’s capital cities in just the
first month of the year was 1.1 per cent.

Depending on who you speak to, this renewed growth may be attributed to a variety of factors.
This week we saw the Reserve Bank once again leave rates on hold at a record low 0.75 per cent.
The central bank is widely expected to reduce the rate further to 0.5 per cent in the coming months.
Meanwhile, competition to lend money continues to heat up, helping to ensure lender interest rates
remain low. Anecdotal evidence also points to an increased willingness from lenders to offer home
loans to potential borrowers.

In addition, the Government’s First Home Loan Deposit Scheme is helping more people to gain a foot
hold on the property ladder. The scheme works by providing a guarantee that will allow eligible first
home buyers on low and middle incomes to purchase a home with a deposit of as little as five per
cent (lender’s criteria apply).

Long story short the market is on the up and fear of missing out (FOMO) is a real thing. But it doesn’t
need to be. Sometimes taking the first step towards a goal is enough to allay concerns and set a
person on the right path.

Contacting a mortgage broker early in your search is often a wise idea as it may allow the broker
time to understand your circumstances and potentially help prepare you for a successful loan
application when the time is right.

To find your nearest Mortgage and Finance Association of Australia accredited mortgage broker,
click here and search your postcode.

The property price caps in each state have been revealed for the federal government’s new first home buyer scheme. Read on to find out the maximum value of a property you can purchase under the scheme.

Imagine buying your first home with a 5% deposit and not having to pay lenders mortgage insurance (LMI).

Sounds good, right?

Well, the federal government has finally revealed more details in a draft mandate for the scheme, including the property price caps in each state.

The property price caps

Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.

– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)

– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)

– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)

– WA: $400,000 (Perth) and $300,000 (rest of state)

– SA: $400,000 (Adelaide) and $250,000 (rest of state)

– TAS: $400,000 (Hobart) and $300,000 (rest of state)

– ACT: $500,000

– NT: $375,000

Great, but what’s this scheme again?

Ok, so currently people with a deposit of less than 20% usually have to pay LMI.

But under the government scheme, eligible first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.

Now, it’s important to note that this is not a handout – it’s simply a government guarantee.

But this guarantee could be very helpful, as it could save you as much as $10,000 in insurance.

Any more details?

The scheme is due to commence on 1 January 2020.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

But here’s the catch: the offer is limited to just 10,000 first home buyer loans each year. That’s less than 10% of the 110,000 Australians who bought their first home in 2018.

So who gets first dibs?

That’s the million-dollar question! (or, depending on where you live, the $400,000 question).

It looks as though applications will be granted on a “first come, first served” basis.

So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through the scheme in more detail and help you plan ahead for the new year.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Marge, Marge, the rains are ‘ere! Home prices have recorded their first rise since October 2017, with national dwelling values increasing 0.8% over August, according to the latest CoreLogic report.

Housing values across capital cities rose by 1%, with Sydney (1.6%), Melbourne (1.4%), Canberra (0.8%), Hobart (0.5%) and Brisbane (0.2%) leading the way.

While the lift in annual housing values is substantial, the recent growth is a continuation of the trend seen throughout the year whereby value falls were consistently losing momentum, and have now started to rise.

Indeed, while Adelaide (-0.2%), Perth (-0.5%) and Darwin (-1.2%) recorded losses, the figures are a substantial improvement on what the three cities recorded over the last quarter and year.

Likewise, while the combined regional figure was -0.1%, this was much better than the quarter (-0.6%) and annual (-2.9%) figures recorded for that market.

What’s driving the improvement?

The significant lift in values in August aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low, says CoreLogic research director Tim Lawless.

“It’s likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy,” says Lawless.

“While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities.”

Is a big bounce nigh?

Lawless says while he had previously believed the housing market recovery would be a “slow and steady one”, this might not necessarily be the case.

“With housing credit restrictions easing and mortgage rates likely to reduce further, this rebound could potentially turn into a ‘v-shaped’ recovery,” Lawless says.

“At the outset, it appears that a rapid recovery would confirm that low interest rates and a loosening in credit policy is reigniting some market exuberance.”

The spring selling season will be a timely test of the market’s depth.

“A key contributor to the housing recovery has been the increase in buyers, but also a lack of advertised stock. As stock levels continue to rise throughout spring, we will get a much better understanding of the depth of the current recovery,” Lawless says.

“As listing numbers and auction volumes rise, clearance rates may soften if buyer demand doesn’t lift to match the increase in supply.”

Interested in jumping in?

These latest figures indicate that the housing market recovery is underway, so if you’re interested in making a purchase, then please don’t hesitate to get in touch.

As mentioned above, spring tends to bring more properties onto the market, so if you’ve got your eye on one, let us know and we’ll be happy to help you obtain finance for it.

Great news for home buyers – housing affordability is the best it’s been since 1999, according to new data released by the nation’s peak housing and building body.

That’s right – housing affordability is comparable to the days when the Y2K bug had us fearing for our lives, Nokia Snake was the pinnacle of mobile gaming, and median house prices in Australia ranged between $112,000 (Hobart) to $272,000 (Sydney).

These days, however, median prices range from $420,000 (Hobart) to $840,000 (Sydney).

But here’s where it gets a little interesting.

For a home buyer with an average income purchasing a median-priced dwelling (assuming a 10% deposit), mortgage repayments will consume the smallest proportion of their earnings since 1999, according to the Housing Industry Association (HIA) Affordability Index.

Hang on, how is this possible?

The main reason housing affordability is comparable with levels seen in 1999, despite house prices rising significantly faster than incomes over the last 20 years, is that interest rates are (in the vicinity of) 4.6% today compared with 6.7% in 1999, says HIA senior economist Geordan Murray.

Average earnings have also increased by 113% over the past 20 years.

While the median home price has increased by 228%, the lower interest rates have kept the cost of servicing a loan the same, points out Murray.

“The combination of lower home prices, improvements in wage growth and lower interest rates have contributed to the ongoing improvement in the HIA Affordability Index for the June 2019 quarter,” adds Murray.

What does the HIA Affordability Index measure?

HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

All eight capital cities saw an improvement in the affordability index over the quarter to June 2019, with Darwin seeing the greatest improvement with its index up by 4.8%.

This was followed by Melbourne (+3.0%), Perth (+2.6%), Brisbane (+2.6%), Sydney (+2.4%), Canberra (+2.4%), Hobart (+ 2.2%) and Adelaide (+1.0%).

It gets even better

There are a number of recent initiatives that are not reflected in HIA’s Affordability Index but are nonetheless providing further benefit to purchasers, HIA points out.

There’s the reduction in income tax, the easing of APRA restrictions on mortgage lending, and the Australian government’s First Home Loan Deposit Scheme.

“The passing of the federal government’s income tax package means that millions of Australians will have extra income to put towards a deposit for a new home,” says HIA managing director Graham Wolfe.

Get in touch

If you’d like to take advantage of the current housing affordability conditions, then get in touch.

We can help arrange a home loan that’ll put a smile on your face and get you partying like it’s 1999.

[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”3.22.3″][et_pb_row admin_label=”row” _builder_version=”3.22.3″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″ _builder_version=”3.0.47″][et_pb_text admin_label=”Text” _builder_version=”3.0.74″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”]

Backyard cricket pitch not getting much of a workout these days? Sick of your weekends being taken up with mowing and gardening? Installing a granny flat could be a lucrative solution – boosting the value of your home by 30% and adding around 27% to rental income.

That’s according to a combined analysis by CoreLogic and Archistar, which shows more than half a million east coast homeowners have enough free yard space to build a granny flat at least 60sqm in size.

Constructing a two bedroom granny flat would require an initial investment of up to $200,000, while the outlay for a one bedroom dwelling would be approximately $120,000. The full report is here.

The benefits of a granny flat

The report found that for a house worth $500,000, building a granny flat could add around $150,000 to the value of the property.

It also found that building a two bedroom self-contained granny flat apartment could add an additional 27% in rent each week.

CoreLogic head of research Tim Lawless says building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market.

“Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas,” says Lawless.

Archistar co-founder Robert Coorey says many home-owners “are sitting on a pot of gold” in the form of excess land.

“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors,” Coorey says.

How to assess your property’s granny flat potential

Got a big backyard and want to see what you can do with it?

Granny flats can’t be built just anywhere. The property must have appropriate town planning rules, the land area needs to be large enough, and the existing property must be located in a position that allows for the development.

As it happens, Archistar has developed a platform that can help you view in 3D the potential to add a granny flat on your property.

“Archistar’s platform helps home-owners by instantly assessing thousands of zoning and planning laws and producing a report, so it’s worth taking this step and consulting a local planning expert before you proceed,” says Coorey.

Last but not least – finance!

If you’re interested in ripping up the backyard cricket pitch and adding a granny flat to your property, feel free to get in touch.

As discussed, granny flats require an initial investment of $120,000 to $200,000. So if you’d like to run through your financing options, you know where to find us!

[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

‘Are we there yet?’ That seems to be the million dollar question on everyone’s lips. Today we’ll take a look at whether or not the property market is finally starting to stabilise, as well as when we might start seeing some positive changes in the market.

Shhh. Can you hear it?

It’s the sound of optimism breathing its way through the Australian property landscape once more.

Let’s run through what some of the property market’s leading experts and reports have said recently.

CoreLogic

CoreLogic says the housing downturn is losing steam as the pace of declining values continued to reduce in May.

With Australia’s average housing affordability the best it has been since 2016, CoreLogic’s Head of Research for Australia, Cameron Kusher predicts “that price falls will settle later this year, followed by modest price growth starting from 2020”.

Westpac

Consumers think now’s a pretty good time to buy a house, according to the Westpac sentiment survey’s ‘time to buy a dwelling’ index.

“Housing-related sentiment showed a clear response to the lowering in interest rates, although again some of the gains were more muted than seen in past rate cuts,” Westpac senior economist Matthew Hassan said.

AMP Capital

Since peaking in October 2017, house prices in capital cities have fallen about 10%. Forecasts had suggested they’d fall as far as 15%, but AMP Capital believes they’ll now only bottom out at 12% later this year.

“The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting,” said Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.

ANZ

ANZ’s Home Owners Lead, Kate Gibson, says they’re seeing suburbs and towns in every state where it is more affordable to buy than rent. Here’s the list if you’re interested.

“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market,” Ms Gibson said.

The Australian Bureau of Statistics (ABS)

According to the latest ABS data, the value of lending commitments to households rose 0.6% in April 2019.

“The steep decline in owner-occupier lending commitments seen since late 2017 appears to be slowing,” said ABS Chief Economist, Bruce Hockman.

Want to know more?

Sure, the nationwide property market might still be trending down. But optimism seems to be on the way up.

If you’d like to know how this shifting landscape might affect your lending situation, then please get in touch – we’d love to run through it with you.

Did you know that it takes four to seven years for the average household to save a 20% deposit for their first home and avoid paying lender’s mortgage insurance? However, a new scheme promises to drastically reduce that time by dropping the required deposit to just 5%.

As you may have seen, the Coalition government recently announced a plan to let first home buyers borrow up to 95% of the value of a property and still avoid paying lenders mortgage insurance (LMI).

Now, the First Home Loan Deposit Scheme “isn’t free money”, points out Prime Minister Scott Morrison, but it means fewer young Australians will need to ask the “bank of mum and dad” for cash upfront.

Labor has matched the proposal, meaning it should go ahead no matter who wins government this election, so today we’ll break the scheme down for you.

Why is this a big deal?

Ok, so as it stands, it is possible to get a home loan with just a 5% deposit.

But people with a deposit of less than 20% usually have to pay LMI, which can be a pretty big deterrent if you’re wanting to crack into the market.

Basically, LMI is the insurance that reimburses a lender if a property is repossessed and sold for less than its outstanding mortgage debt.

The insurance covers the backside of the lender, but the premium is paid by the borrower.

Under the new scheme, the government would guarantee the additional amount needed to reach the 20% threshold, which would save borrowers thousands of dollars in LMI.

How much could I save?

Ok, let’s say you want to purchase a $400,000 home to get your foot in the property market.

Currently, if you have saved up $62,000 for the deposit and fees, you’ll have around a 15% deposit. In that case, you’ll pay about $3,500 in LMI.

If you have pulled together a 10% deposit ($42,000 in savings), you’ll be up for $6,500 in LMI.

And if you’ve only put away a 5% deposit ($22,000 in savings), you’ll face $12,500 in LMI.

As you can see, that’s quite a lot of money you’ll be able to save in LMI under the new scheme.

The government’s policy in a nutshell

We’ve gone through the government’s policy and pulled out some of the more relevant tidbits. They are as follows:

– The scheme will commence on 1 January 2020.

– Eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

– The First Home Loan Deposit Scheme will be limited to 10,000 first home buyer loans each year.

– The lender will still have to undertake the full normal credit check process (meeting all their legal obligations) to ensure that you’re in a position to afford your repayments.

– If the borrower refinances, or the loan comes to an end, the Commonwealth support will terminate.

– Eligible first home buyers will be able to use the scheme in conjunction with the First Home Super Saver Scheme as well as relevant State or Territory first home buyer grants and duty concessions.

Other factors to consider

Keep in mind that having a 5% deposit, rather than a 20% deposit, means that the monthly repayments on your home loan will be larger.

You’ll also likely pay tens of thousands more dollars in interest over the life of a 20-30 year home loan.

That said, this scheme will enable many young Australians to start growing their property portfolio years earlier than they otherwise could have.

And for most people, it will also mean they can save a few years paying rent.

For example, if you’re paying $400 a week in rent while saving for a deposit, that’s $62,000 over three years that could have gone towards the mortgage on your first property instead.

Basically, it’s a decision each prospective first home buyer will need to make according to their own personal circumstances.

Final word

If you’d like help cracking into the property market, or know a family member who would, please get in touch.

As we’ve alluded to, lenders will still be required to go through all the checks and balances to ensure a first home buyer has genuinely saved up their deposit and can afford their mortgage.

We’d love to provide you with some helpful tips and techniques to ensure that when lenders look through your accounts in 2020, you’ll be well and truly prepared.

Buy low, sell high – That’s the general idea of earning a return on any investment including real estate.

But like any investment, the challenge comes from knowing when to buy and when to sell. Buy at a high price and it can take years to recover your position if the market turns. Sell too soon and you risk losing out on significant capital gains.

If you’ve done any kind of investing, then you’re likely familiar with the phrase “timing the market”. It’s an investment strategy that entails buying or selling financial assets based on future movements. Let’s use stock trading as an example. If you believe that a company’s position will move up based on an earnings report or a new product reveal, you buy stocks and sell for a profit if it increases. Likewise, you can also short positions if you believe a stock will drop.

Timing the market sounds great in theory and you may even be able to pull off some major wins. But doing so consistently is difficult even for seasoned investors. If you’re looking to maximise your capital gains, then this investment strategy may not be in your best interest.

Here we’ll look at why it’s difficult to time the real estate market and a better investment strategy instead.

The Difficulty of Timing Property Prices

Real estate markets are incredibly unpredictable.

Even if you buy at the low end of the market, there’s no telling when the market will suddenly shift. A downturn in economic activity or increase interest rates are both factors that are completely out of your control. Yet either could decrease the demand for housing and bring prices down.

Now you’re left with an asset that depreciated from the time you bought. It can months or even years for the market to swing upwards.

You’re left with two choices – Cut your losses now and recover what you can or wait. The latter ultimately means holding onto a property for longer than anticipated. Holding costs like property taxes and insurance will also take a chunk out of your profits.

Either scenario presents a tough choice and time is certainly not on your side.

Alternative to Timing the Market

Investors like to think they can beat the odds. Timing the market can certainly work for those with the time and resources. But there are still considerable risks involved given how unpredictable the market can be.

So what are your options then? It’s clear that the longer you deliberate the more you risk lowering your position or missing out on gains.

An alternative to timing the market is with dollar cost averaging – A strategy where you invest a fixed amount at regular intervals (e.g. $1,000 a month). It allows you to reduce your market risk and build your investments over time.

With real estate crowdfunding, you can leverage dollar cost averaging and pool your funds with other investors into development projects and even generate a passive income.

They may be smaller amounts but regular investments lead to steady gains over time. They also take the stress out of timing the market and worrying about whether you entered at the right time. It may sound dull but time and the power of compounding interest are still one of the best investment strategies.

Author’s Bio

Kym Wallis, the founding director of Higher Ranking has over 15 years of advertising sales, digital strategy, and business development experience. He is currently working as Digital Adviser for Vergola NSW.

Australia, and Sydney, in particular, have always been magnets for foreign investors. Our strong economy, multicultural society, and beautiful natural landscapes, entice many foreigners to buy property. However, some developers and property experts fear that foreign demand may be weakening after both federal and state governments recently tightened rules for foreign buyers.

What are the New Rules for Foreign Investors?

Recent crackdowns by state governments include:

NSW Government – stamp duty doubled for foreign buyers from 4% to 8% and land tax surcharge increased from 0.75% to 2%.
VIC Government – introduced a vacant residential land tax where owners can be fined up to 1% of the property’s value if they leave their properties empty.
Federal Government – capital gains tax exemptions removed for overseas buyers and a 50% ownership cap for new residential developments.
ATO given the power to fine foreign investors up to $5,500 a year if their properties are left vacant and up to $52,500 for failing to lodge their forms.

Is Foreign Investor Demand Weakening?

Business Insider reported earlier this month:

“According to the latest ANZ-Property Council of Australia survey for the March quarter — released today — foreign demand doesn’t appear to be falling off a cliff, at least not yet.”

The survey also revealed

The percentage of properties sold to foreigners in New South Wales fell from 21.6% to 18.1% during a three-month period.
In Victoria, properties sales fell from 21.6% to 21%.
In Queensland, the percentage of properties bought by overseas buyers fell from 15.4% to 13.8%.

While these figures do show a drop in sales to foreign buyers, overseas investors still represent a significant proportion of overall sales.

Will Property Prices Be Affected?

December CoreLogic data showed that national house values dropped by 0.3% and while the new rules for foreign investors caused only a modest decline in the number of properties sold to overseas buyers, experts believe that they are likely to impact property prices. Dr Shane Oliver, chief economist at AMP Capital, believes the Sydney and Melbourne property boom will continue to deflate.

“Tighter lending standards, rising levels of unit supply, slower Chinese demand and reduced investor enthusiasm for property are all impacting and are likely to lead to further declines in Sydney and Melbourne property prices this year of around five percent — maybe a bit more in Sydney and a bit less in Melbourne,”

Our thoughts? As a Sydney Mortgage Broker, we believe that property in this city will always be in high demand. Prices may drop slightly in the coming year but we’ll have to wait and see. Exciting times!