Stay up to date with the latest developments in the property market over the past month.

The big story on the global economic front continues to be inflation, and how high interest rates will go to tame it.

In Australia, Reserve Bank governor Philip Lowe is watching consumer spending, where higher interest rates are having an impact. Retail trade fell 0.1% for the first time this year.

The ASX200 index demonstrated steady gains over the month, rising more than 5% in November.

Click here for our December update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Values decline as the cash rate continues to climb

It took the Reserve Bank just seven months to move the official cash rate from an historic low of 0.10% in April to 2.85% by November. The last time the RBA sent the rate up by 2.75% it took more than six years. Therefore, it isn’t any wonder why home values are falling – there’s been a shock to the system.

Although this shock has been short and sharp, and values are declining as a result, prices across the country are still well above pre-pandemic levels. Property experts are not yet willing to call the ‘bottom’ of the cycle, however, the RBA’s change from 0.50% to 0.25% increments is expected to calm the immediate panic.

Property past its peak

Figures from PropTrack (realestate.com.au data business), show national values are -3.81% off their peak. National annual price growth is now sitting at -1.08%, the slowest pace since August 2019.

Sydney is the city with the biggest gap between November 30 and its peak, down -6.28% according to PropTrack while Melbourne is -4.75%.

Across the capitals, Darwin (-0.49%) led the price declines. In Canberra, prices are now 0.54% below their level a year ago. Hobart prices fell 0.27% in November to sit 2.92% below their peak in April. However, prices remain 1.06% higher than levels seen in November last year. Adelaide is currently at its peak.

PropTrack senior economist and report author Eleanor Creagh said after several months of value declines – plus the fastest rise in the cash rate since 1994 – both buyers and sellers are gradually acclimatising.

“Sellers are adapting to market conditions after several months of price falls, whilst buyers are taking advantage of the less competitive conditions relative to spring last year and sentiment is finding a floor,” she said.

Ms Creagh added that as the RBA slows the pace of its hikes prospective buyers are regaining confidence. In other good news for purchasers, there is an increase in supply compared to this time last year.

“From here, further rate rises will increase borrowing costs and reduce maximum borrowing capacities, weighing on prices. However, this will be offset by tight rental markets and rental price pressures, rebounding foreign migration, low unemployment, and housing supply pressures.”

It’s all in the numbers

According to the CoreLogic national Home Value Index, by November’s close there had been seven months of consistent declines. The index revealed that over the last three months, national home values were down to a median of $714,475.

During the same quarter, Brisbane has been home to the sharpest decline, recording -5.6%.

Sydney and Hobart followed with identical declines of-4.4%.

Canberra recorded a -3.8% dip, with Melbourne recording -2.7%.

Adelaide, Darwin and Perth felt minimal movement under 1% with falls of -0.8%, -0.6% and -0.5% respectively.

When CoreLogic number crunchers put the capital cities together there had been a combined slump of -3.5% and regionally values fell similarly by -3.6%.

Although values are falling across the country, data shows the pace of declines has actually eased over the past three months across Sydney and the past four months in Melbourne, with many other smaller capitals and most regional markets also seen the pace of declines decelerate.

Tim Lawless, CoreLogic’s research director, said while values have been in negative territory for several months now, it’s still too soon to call the trough of the market just yet.

“There is still the possibility that the pace of declines could reaccelerate, especially if the current hiking cycle persists longer than expected,” he said.

“To-date, the housing downturn has remained orderly, at least in the context of the significant upswing in values. This is supported by a below-average flow of new listings that is keeping overall inventory levels contained,” Mr Lawless added that we’re yet to see the full impact of rate rises as households likely still hold excess savings accumulated during lockdown, plus there is a large cohort of fixed rate borrowers who’ve so far been insulated from rapid rate rises.

Despite the nationwide price falls, CoreLogic reports housing values are still above pre-Covid levels, which would imply most homeowners are sitting in a positive valuation position relative to their purchase price – as long as they bought before the pandemic.

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (November 2022)

If you have any questions or need any information please give us a call on 039723 0522.

Stay up to date with the latest developments in the property market over the past month.

The Federal Reserve Bank has announced a rise to the official cash rate, increasing it by 25 basis points from 2.60% to 2.85% in response to continued inflationary pressures.

Our video also takes you through an overview of the state of the property market, including a breakdown across all capital cities of the changes in dwelling values over the past month, as well as over a period of 12 months.

Click here for our November update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

In his first Budget, Treasurer Jim Chalmers’ emphasised the three Rs – responsible budget repair and restrained spending, right for the times.

For good measure, resilience also got a mention with spending targeted at building a more modern economy to deal with the challenges ahead.

This is the first budget from a federal Labor government in almost a decade, barely five months since Labor was elected and seven months since the Coalition’s pre-election budget in March, so it was bound to be a little different. The Treasurer used the opportunity to update the shifting economic sands and reset spending priorities to align with the new government’s policy agenda.

For Australians wondering what the Albanese Labor government will mean for them and their family, this is the first piece of a puzzle that will be completed over the next three years.

The big picture

The Labor government has inherited an improving bottom line, with the deficit for 2022-23 expected to come in at $36.9 billion, an improvement of more than $40 billion on the pre-election forecast. This was due to high commodity prices for our exports and higher tax receipts from a strong labour market and robust corporate profits.

The deficits of $224.7 billion previously forecast for the next four years have shrunk to $182 billion. The difference of around $40 billion will go towards funding the government’s election promises and budget repair.

Labor has also found $22 billion in savings by cancelling or redirecting programs planned by the previous Coalition government, and a further $3.6 billion in cuts to external consultants, marketing, travel and legal expenses. Savings will also come from clamping down on tax avoidance by individuals and foreign corporations.

But as the Treasurer is fond of saying, storm clouds are looming, and he singled out inflation as the biggest challenge.

Economic challenges ahead

Inflation is forecast to peak at 7.75% by year’s end, before returning to 3.5% in 2023-24. Despite low unemployment currently at 3.75% it is tipped to rise to 4.5% by 2023-24, the surge in inflation means wages are unlikely to grow in real terms until 2024 at the earliest. Wages growth is forecast to be 3.75% in 2023-24, overtaking inflation of 3.5%.

With more interest rate hikes expected to tame inflation, debt is also set to climb from $895.3 billion last financial year to a forecast of $927 billion in 2022-23 and upwards over the forward estimates.

With global economic headwinds building to gale force, Australia’s economic growth is expected to slow as cost-of-living pressures bite into household budgets.

While Dr Chalmers does not expect Australia to slide into recession like many of our trading partners, economic growth is already slowing. Real gross domestic product (GDP) is forecast to be 3.25% in 2022-23, down from 3.9% last financial year, and 1.5% in 2023-24, 1 percentage point lower than predicted in the March Budget.

Support for families

Childcare and improved parental leave are a priority area for the new government, in an effort to support families, reduce cost-of-living pressures and improve women’s workforce participation.

Already, $4.7 billion has been earmarked for childcare over the next four years, with families earning less than $530,000 to receive extra childcare subsidies from 1 July 2023. An extension of paid parental leave from the current 18 weeks to 26 weeks is also set to be phased in from next July, so neither initiative will add to the current Budget.

Health and aged care

Pressures on the federal health and aged care budget are mounting in the wake of COVID and an $8.8 billion blowout in the NDIS budget which will reach $166.4 billion over four years. An extra 380 staff will be hired at a cost of $158.2 million to speed up claims and make the system more efficient.

$750 million will be spent strengthening Medicare and $235 million over four years to roll out Urgent Care Clinics to reduce pressure on public hospitals.

Following revelations from the Aged Care Royal Commission and lessons learned during the pandemic, the government has pledged to fund an increase in aged care workers’ wages.

And the cost of subsidised prescription medications will be cut from $42.50 to $30 from January 1, at a cost of $756 million over four years.

More affordable housing

A centrepiece of the Budget to improve housing affordability and chronic shortages is a new Housing Accord to build 1 million new houses in five years beginning in 2024.

The new $10 billion Housing Australia Future Fund will provide a sustainable funding source to increase housing supply, including 20,000 new social housing dwellings, 4,000 of which will be allocated to women and children impacted by family and domestic violence and older women at risk of homelessness.

The plan paves the way for significant public and private investment in new housing across the country, following an historic agreement between the federal government, the states and private investors including superannuation funds.

Jobs, skills and education

Federal, state and territory governments have committed to a $1 billion one-year agreement to deliver 180,000 fee-free TAFE and community-based vocational education places from January 2023. Support will be targeted to priority groups, including First Nations people, and priority areas such as care sectors.

The government will also create 20,000 more subsidised university places over 2023 and 2024. The initiative will be targeted at disadvantaged groups to study courses where there are skills shortages.

Nation building and future-proofing

As part of its budget review, the government will ‘’realign” $6.5 billion of existing infrastructure spending. It will spend $8.1 billion on key infrastructure projects including the Suburban Rail Loop East in Melbourne, the Bruce Highway and other important freight highways.

The government has also committed to at least $40 billion in new borrowing to set up funds and companies to invest in policy promises. These include the $20 billion Rewiring the Nation Corporation to invest in the electricity grid, $15 billion National Reconstruction Fund for local manufacturing and the $10 billion Housing Australia Future Fund to invest in social housing.

In an acknowledgement of the increased frequency and severity of natural disaster, up to $200 million per year will be set aside for disaster prevention and resilience.

Climate change

A more comprehensive approach to climate change is also back on the agenda, with total climate-related spending of $24.9 billion over 2022-23.

As many of the nation’s largest emitters are in regional areas, the government will establish a $1.9 billion Powering the Regions Fund to help transition regional industries to net zero. And $345 million will be made available to increase uptake of electric vehicles.

Superannuation, pensioners and tax

What’s not in the Budget is also important. There was little new spending to help retirees and welfare recipients, but pensions and payments will increase due to indexation.

As previously announced, the amount Age Pensioners can earn before they begin to lose pension entitlements will temporarily increase from $7,800 to $11,800 this financial year.

Almost $70m has been allocated to increase the income threshold for the seniors’ health card from $61,284 to $90,000 for singles and from $98,054 to $144,000 (combined) for couples.

And $74m will be provided to encourage pensioners to downsize homes, including by extending the assets test exemption for principal home sale proceeds from 12 months to 24 months.

While most superannuation fund members will welcome the lack of tinkering to the super rules, the investment potential of the new affordable housing initiatives should provide a valuable source of income to super funds and their members.

Women’s safety

The Treasurer pledged a record investment of $1.7 billion to support implementation of the new National Plan to End Violence Against Women and Children. This will include funding for 500 new frontline service and community workers to support women in crisis.

The Government is also legislating 10 days of paid family and domestic violence leave for all types of employees.

Looking ahead

The next 12 months are likely to be challenging for the economy and for households trying to budget for rising prices and interest rates, including higher mortgage repayments, at a time when home values are falling and real wages are going backwards.

The Treasurer has tried to walk a fine line between budget repair and responsible spending with long-term economic benefits for individuals and the nation.

Coming just months after the federal election, this Budget should be seen as laying the groundwork for the three Budgets to follow.

Information in this article has been sourced from the Budget Speech 2022-23 and Federal Budget Support documents.

It is important to note that the policies outlined in this publication are yet to be passed as legislation and therefore may be subject to change.

If you have any concerns or questions regarding the potential impacts this budget may have on your financial plan please give us a call.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Stay up to date with what’s happened in the Australian economy and markets over the past month.

In September, persistently high inflation and aggressive rate hikes by the world’s central banks put global share and bond markets under pressure.

Sharemarkets globally recorded a volatile month, driven by growing fears of the risk of recession and the British pound crashing to a record low.

The ASX 200 reflected global sentiment finishing the month down around 7% – its lowest level in over three months.

Click here for our October update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

The excitement of heading towards retirement and a new stage of life can be tinged with concern over how to manage finances. For many people, seniors’ concession cards are a good way to help make ends meet.

While discounts on goods and services are always welcome, they’re even more valued right now as living costs continue to climb.

Concession cards for seniors provide significant discounts on medicines, public transport, rates and power bills. Many private businesses – from cinemas to hairdressers – also offer reduced prices to concession card holders.

There are different types of concession cards offered by federal, state and territory governments. While some are for those receiving government benefits, others are available to almost anyone aged over 60.

The cards are free and should not be confused with commercial discount cards that require an upfront fee or ongoing subscription.

Seniors Card

The Seniors Card is offered by all state and territory governments when you turn 60 (64 years in Western Australia) and are no longer working full time. This card is offered to everyone, regardless of their assets or income.

The Card will allow you to claim discounts on things like public transport fares, council rates and power bills. Thousands of businesses across Australia also offer reduced prices to Seniors Card holders. In some states, a separate card is offered to access discounts provided by private businesses and another card is provided for public transport.

For eligibility requirements and the range of services offered in your state or territory, click on a link below:

Victoria
South Australia
Western Australia
Northern Territory
Queensland
New South Wales
Australian Capital Territory
Tasmania

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.