Slowly but surely: Home values are on the way up

Home values across the country have largely settled into positive territory despite interest rates remaining elevated. Perhaps it’s the talk of impending rate cuts and easing inflation that has caused prices to inch up in every capital over the quarter, except for Melbourne and Hobart.

Values gaining momentum

In the three months to February 29, CoreLogic’s Home Value Index (HVI) reported national values had risen by 1.3%. Over the same period, the combined capital cities increased by 1.2% and the combined regions were up by 1.3%.

During the quarter, Perth surged ahead jumping 5.2% in three months taking the 12-month hike in the West Australian capital to an incredible 18.3%.

CoreLogic research director Tim Lawless said ongoing financial challenges haven’t overwhelmingly dampened the Australian demand for bricks and mortar.“Housing values have been more than resilient in the face of high interest rates and cost of living pressures,” he said. “The ongoing rise in housing values reflects a persistent imbalance between supply and demand which varies in magnitude across our cities and regions.”

Home values moving forward

Historically, the major capitals of Sydney and Melbourne do a lot of the heavy lifting when it comes to housing values. The HVI demonstrated that Melbourne values had just come out of a “three-month slump” to record a modest 0.1% rise in February and in Sydney values returned to positive territory by February after recording declines late last year.

“Potentially we are seeing some early signs of a boost to housing confidence as inflation eases and expectations for a rate cut, or cuts, later this year firm up,” Mr Lawless added.

However, Mr Lawless said multiple factors are holding the domestic housing market back from a “significant rebound”.“Affordability constraints, rising unemployment, a slowdown in the rate of household savings and a cautious lending environment, are all factors likely to keep a lid on value growth over the near term.”

Eleanor Creagh, senior economist at REA Group’s data business PropTrack, was more optimistic. “Housing demand is being buoyed by population growth, tight rental markets, resilient labour market conditions and recent home equity gains. Meanwhile, the sharp rise in construction costs and labour and materials shortages have slowed the delivery of new builds, hampering the supply of new housing,” she said.

Rents still on the rise

The start of the calendar year has always been a strong period for rental growth and the beginning of 2024 has been no exception. CoreLogic figures show national rental values had risen by 0.9% in February, the highest reading since March 2023. As a result, the rolling quarterly change in rents rose to 2.4%, the highest since May last year.

Dwelling values over the quarter

Melbourne
The Victorian capital has once again recorded a median dwelling value below Brisbane at $778,941 – sitting close to the national median of $765,762. The city saw negative growth across the quarter with a -0.6% change in dwelling values, however, this last month figures moved into positive territory, up 0.1%. The annual increase for Melbourne was 4%.

Sydney
Maintaining its place as the country’s most expensive city, quarterly figures show that the Harbour City had a very subtle movement in dwelling values rising only 0.6% to $1.128 million. The annual figure demonstrates a more impressive number having jumped 10.6% in 12 months.

Brisbane
Brisbane’s median home price is now $805,593 after a quarterly increase of 2.9%, but it is a longer term picture that showcases the Queensland capital’s impressive year in property. During the 12 months to February 29, median dwelling prices jumped 15.6%.

Canberra
Sitting in its relatively new position as Australia’s second priciest city for property, Canberra had a quarterly home price movement of just 0.3% taking the current median to $840,103. Over the past year, the nation’s capital rose by 1.6%.

Perth
Often proving to be a city that dances to the beat of its own drum, Perth has leapt streets ahead over other capitals with an annual home value surge of 18.3% to a median of $687,004. It has also been a strong quarter with a local home value growth of 5.2%.

For more information about how you might be able to purchase a property in the current market, get in touch with us today.

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (March 2024)

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

Among all the voices analysing the Australian property market, you’ve probably heard many truisms about how to secure a home loan. The real truth is that there are lots of options.

We thought it was time to correct some frequent misconceptions we hear from our clients. Hopefully this will help you identify the path to home ownership that best suits your circumstances.

Beat the deposit treadmill

A common belief is that you need the holy grail of a 20% deposit before the banks will even look at you. It may be their ideal, but they also realise it’s out of reach for many – even with the help of mum and dad. The vast majority of lenders have a variety of deposit options. These include deposits as low as 5% and, if you qualify for a government guarantee, not having to pay mortgage insurance.

Guarantor home loans are becoming more common. These allow you to avoid stumping up a cash deposit by having a guarantor (usually a close relative) pledging their home equity to cover the equivalent of your 20% deposit.

You may also qualify for the Government Equity Scheme where the government pays 50% of your home loan. This lets you to enter the market with less deposit and reduces your repayments. However, it also means the government owns half the equity in your home.

When 30 years is too long

Most people want the longest mortgage possible as it means smaller monthly repayments. Of course, the downside to a 30-year mortgage is paying more interest over the long-term. For some situations, like if you want to increase your equity quickly, it might be better to opt for a shorter term where you pay more interest each month but less over entire the length of the loan. Knowing your timeline and expected cash flow will help decide what’s right for you.

The pros and cons of fixed rates

Now that there’s serious talk of interest rates falling, people are once again seeing the value of not locking in their interest rates for long periods. When deciding on a fixed or fluctuating mortgage you need to think about your long- and short-term financial goals and cash flow.

For example, at the time of choosing your mortgage, the fixed rate is usually higher than the fluctuating rate so you need to ask yourself if you can afford it. Many buyers decide to hedge their bets by splitting between the two. You can also fix rates for different time spans. Again, in general, the longer the ‘fix’, the higher the rate.

When interest-only makes sense

Getting an interest-only loan is often seen as risky and isn’t as popular as it once was. However, some people still find them useful, especially property investors. With an interest-only loan you just pay back the interest on your home loan and not any of the capital. This results in smaller monthly repayments but limits your equity growth in the property. Some people choose to start out interest-only so they can pay for renovations or get on top of their cash flow. They then switch to an interest and principal repayment structure later on.

Pre-approval is no guarantee

Estate agents love you to have ‘pre-approval’ for a home loan. It tells them you are serious about buying and that you know your limit. Pre-approval also speeds up the buying process because some of the basic paperwork has been submitted.

What it doesn’t do is guarantee that you will get the loan. Lenders still need to go through due diligence before approving you. You also need to be aware that pre-approvals last three months. After that, you have to apply to have it renewed.

With all the advice out there, identifying your individual path to home loan approval can appear tricky, but that’s only because you have options. There is no one size fits all. So, why not start the ball rolling by having a chat with us about your goals and options. We can arm you with the facts and help you set off on your property-owning path.

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

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

The economic indicators for February were mixed.

Inflation has remained at a two-year low, giving confidence of a possible rate cut in the coming months, and business capital investment rose in the December quarter.

However, the Australian dollar remained in the doldrums and retail figures from January remained weak, after a 2.1% loss in December.

Click here for our March 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.

A big congratulations to Nic Berry & Matt Borg on successfully completing the 2024 Oxfam Trailwalker event!

After 25 years and raising more than $100 million to help eliminate poverty, Oxfam celebrated the final Trailwalker event last weekend. Recent extreme weather events in the Dandenong and surrounds damaged sections of the planned Oxfam Trailwalker course which necessitated route changes that made the overall route 87km. As Oxfam Trailwalker veterans, Matt (3) and Nic (2), our boys were having none of this and did an extra 13km before their official start to match the traditional length of the event!.

The team, Dbl Trouble, which included Nick Hartrup, Matthew Donald & Steve Donald completed the course in 19 hrs 58min crossing the finish line at 2.15am at Silvan finishing 17th of approximately 500 teams.

So far the team has raised $7,776 for Oxfam, and donations are still open and can be made here – https://trailwalker.oxfam.org.au/t/dbl-trouble.

Well done lads, we are very proud of you!

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.

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.

When getting ready to buy property, there are many things to keep track of as settlement approaches. An important consideration is what you will need in terms of insurance – admittedly not the most exciting part of buying a new home, but one which can save you money and stress in the future.

Why lenders often require insurance

While not a legal requirement, insurance is often required by lenders, and they may want to see your policy before either the exchange of contracts or ahead of the settlement.

As the lender has a stake in the property during the life of the loan, they will want to know should the property be damaged or destroyed, if any large insurance claims are made, and if your insurance lapses.

Types of insurance

There are various forms of insurance relating to your property, these include:

• Home or building insurance – to protect you against damage to the property (such as due to an extreme weather event like fire or floods).
• Contents insurance – to safeguard you against theft or accidental damage to your belongings.
• Lenders Mortgage Insurance (LMI) – to cover the lender should you default on your repayments (note: LMI is a one-off payment by the buyer, not the lender).
• Landlord insurance – to protect your property if you are renting it out.
• Mortgage protection insurance – to cover your mortgage payments in case you or your partner become unemployed, seriously ill or die.

Home and contents insurance

Home and contents insurance, is often what buyers think of when it comes to getting insurance.

There are two main types of home insurance: sum-insured cover (which means the insurer will pay for repairs or a rebuild up to an estimated amount you specify in your policy) and total replacement cover (which means you will be covered for your home to be repaired or rebuilt as it was without you having to set a specific sum-insured limit).

Total replacement cover is more expensive and not all lenders offer it, so keep that in mind. As for contents insurance, you tend to be covered for the replacement value of your belongings.

According to statistics from Finder in January 2023, 60% of survey respondents have some form of home insurance policy. An interesting finding was that only 43% of respondents with home insurance said that they fully understood their home insurance policy. While 48% said they partially understood it, 8% didn’t understand the benefits and inclusion of their policy.

It’s important to know what you are covered for, such as which type of event. Home and contents insurance don’t cover everything, so check the exclusions – these might be a house left unoccupied that is then damaged, doing renovations, any existing damage and damage caused by pets.

You can usually request additional insurance, for example, covering high value items such as expensive jewelry or fixing that hole in the wall, so it’s worth checking what is included in your policy and whether it’s worth paying extra.

Do you need insurance before settlement?

As mentioned above, some lenders will ask to see proof of insurance before any contracts are exchanged. In some instances, the lender will ask that your insurance be effective from the date you sign the contract or before the loan becomes conditional.

Depending on which state or territory you live in, you may be responsible for damage to the property as soon as contracts are exchanged. Here is a list on each area’s requirements:

• ACT, TAS & SA – the buyer is responsible for damage to the property as soon as contracts are exchanged.
• NSW & VIC – the buyer is responsible for damage to the property on settlement.
• QLD – the buyer is responsible for damage to the property from 5.00pm the next business day after the contract date (before settlement).
• WA & NT – the buyer is responsible for damage to the property on whichever comes first: either the date the whole purchase price is paid, or the date the buyer is entitled to or is given possession of the property.

Please feel free to contact us if you have any questions about this or any other mortgage related matter – we are here to help.