New world order: Surprise cities climbing the residential ranks

There’s been yet another changing of the guard in Australian property along with the arrival of spring.

Rarely seen in close to four decades of real estate record keeping, Melbourne values have dipped below those of Adelaide and Perth, signalling a shake up for capital city property prices.

In June, Brisbane’s median dwelling value had already surpassed the Victorian capital and Canberra to take out second place on the CoreLogic totem pole, and now just two months later, it has fallen to fifth on the list.

Cost of living pressures and a continued plateau in the official cash rate by the RBA has resulted in a quieter than average winter in real estate. CoreLogic’s September Home Value Index revealed that national home values rose only 0.5% during August, representing 19 months of consecutive increases.

Smaller city standouts

For much of the past two years, Perth, Adelaide and Brisbane have led the pack in terms of growth rates among Australia’s capital cities. Perth, in particular, has seen extraordinary growth with values up 23.24% annually, followed by Adelaide at 15.12% and Brisbane at 13.95%.

This rapid rise has propelled both Perth and Adelaide prices past Melbourne. The South Australian capital’s median dwelling value is now at $790,800 while Perth’s is $785,250, compared to $776,044 for Melbourne – now the third lowest median among the capital city markets. Only Darwin and Hobart are now cheaper.

Melbourne’s market explained

It’s the first time Perth’s median dwelling value has been higher than Melbourne’s since February 2015, when the city was coming off an iron-ore boom. Adelaide has never recorded a median value higher than Melbourne in CoreLogic’s 40-year dwelling value series.

Melbourne’s real estate landscape has been on a downward trend for six consecutive months, which is attributed to a range of factors, from affordability constraints and elevated interest rates, to changes in investor sentiment and Victorian tax levies.

What’s also worth noting is that Melbourne is a unit-heavy market, where apartments account for approximately a third of the city’s housing stock—compared to just 16 per cent in Perth and Adelaide. This skew toward unit prices drags down the overall median dwelling value and, in reality, median house and unit values across Perth and Adelaide are still lower than in Melbourne.

Dwelling values over the quarter

Melbourne

Currently with a dwelling median sitting at $776,044, after a quarterly fall of -1.2%, Melbourne is  now one of Australia’s more affordable cities according to CoreLogic data. Since the onset of Covid in March 2020, the Victorian capital’s median has increased by 10.1 per cent, representing an average $71,196 move in home prices. Currently, the gross rental yield is 3.7%, however investors are collectively reevaluating their property portfolios since the introduction of a new Victorian land tax on non-primary residences.

Sydney

The median value of homes in Sydney is $1.18 million after a modest three-month movement of 0.8%. At the beginning of the pandemic, Sydney’s median was $263,838 less but has since risen 28.8%. The gross rental yield for investment properties in the Harbour City is currently 3.1 per cent.

Brisbane

Still holding its spot as Australia’s second priciest city for residential real estate, Brisbane’s median dwelling value is $875,040 after a quarterly increase of 2.9 per cent. Back at the start of Covid, the Queensland capital’s median was $344,896 less but has subsequently soared by 65.1%. Today the gross rental yield for the city is 3.7%.

Canberra

The national capital was knocked out of second place back in June and recorded a slight -0.2% decrease in the median dwelling value for the quarter to $845,875. Home values have risen an average of $201,558, or 31.3 per cent, since the start of the pandemic. The gross rental yield in Canberra is 4.1%.

Perth

On an incredible trajectory since March 2020, Perth’s median home value has skyrocketed 72.5% to $785,250. Over the last three months it was also home to the country’s largest capital city quarterly increase of 5.7%. Perth’s gross rental yield is sitting at 4.3%.

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

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

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

Global stock markets – including the ASX – largely stabilised by the end of August after a turbulent month.

It was a rocky start when markets everywhere fell after news of high unemployment figures in the US and an interest rate move by Japan’s central bank.

Click here for our September update video.

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

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Email: integrityone@iplan.com.au

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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.

If you are worried about the need to access aged care, you are not alone. When the time comes it can be daunting, with a lot of new information to take in and many decisions to make.  The responsibility to make the right decision for yourself, or a loved one, may weigh heavily on your mind. 

From our experience, the four of the most common worries that people raise include:

Quality of care: One of the main concerns is whether the quality of care provided will meet needs and expectations. Reports of inadequate staffing, neglect, or instances of abuse have contributed to this worry. People are often afraid that they might not receive the attention and respect they deserve and want assurance that care will be provided by competent and compassionate carers.

Cost and affordability: Financial considerations are likely to be a significant worry. Costs can vary widely depending on the type of care required and your financial situation. Understanding what government subsidies are available and how much you will be asked to contribute, as well as how to fund other expenses, requires careful planning.

Access and availability: Many people are experiencing waiting lists and long delays to access aged care services, in both residential and home care. Concerns about the availability of suitable aged care services that meet specific health and lifestyle needs can add to the stress and are a reason for planning ahead.

Transparency and accountability: There is a growing demand for transparency and accountability within the aged care sector. People want clear information about the standards of care and safety records of aged care providers. They also want assurance that mechanisms are in place to address any concerns or complaints promptly.

The government has been embarking on a program of change, with aged care reforms to address concerns. The aim is to instil greater confidence that the aged care sector is safe and effective, while improving the overall experience for older people.

Fear of the unknown adds to stress levels, so start your planning early. Don’t wait for the crisis to occur.

Start by talking to us about your future plans and concerns. We can help you sort the financial aspects and direct you to other services and resources where you need further help with choosing, evaluating or understanding how aged care will work. Star ratings on the MyAgedCare website can also help to evaluate and compare providers.

Addressing your worries will require a comprehensive understanding of available options, financial planning, and advocating for the best possible care. These are decisions that are best not to make alone.

Call us on 03 9723 0522 to get started and remove some of the stress and worry from your future care needs.

Retirement is filled with opportunities and choices. There’s the time to travel more, work on long-delayed personal projects or volunteer your help to worthwhile causes.

You also have a host of choices to make when it comes to funding your new life away from paid work. Here are four different options to consider.

Account-Based Pension

An account-based pension (ABP) using your superannuation is one of the most common retirement income options. The amount you receive depends on the balance of your account and the drawdown rate you choose, subject to the minimum pension requirements set by the government.

Some considerations:

• Tax benefits – Investment earnings, capital gains and withdrawals are tax-free, unless you have an untaxed component within your super.
• Payment flexibility – Subject to pension minimums, most super funds allow you to adjust the payment amount and frequency, and even make partial or full lump-sum withdrawals if needed. You can also return to work and continue to receive a pension.
• Longevity and market risks – You might outlive your account balance, especially if your withdrawals are high or your investment returns are poor.

Transition to Retirement

A transition to retirement (TTR) strategy allows access to some of your superannuation while still working, if you have reached age 60 (based on current rules).

Some considerations:

• Flexible work options – You can reduce your working hours and supplement your income from your super.
• Limits on pension rates – Similar to an ABP, there is a minimum annual pension rate. However, there is also a maximum annual withdrawal of 10 per cent of your TTR account balance.
• Reduced retirement savings – Drawing on your superannuation while still working means your retirement savings might grow more slowly.

Annuities

An annuity is a financial product that provides a guaranteed income for a specified period or for the rest of your life. There are various types of annuities, including fixed, variable, and indexed annuities. You can purchase annuities or lifetime income streams using your superannuation.

Some considerations:

• Predictable income – Provides a stable income stream, which can be reassuring for financial stability and provide an income for as long as you live.
• Lack of flexibility – Once you purchase an annuity, the terms are generally fixed and you cannot alter the income amount. There’s a restriction on capital withdrawals or in some instances no access to capital at all.
• Inflation risk – Fixed non-inflation-linked annuities may not keep pace with inflation unless specifically indexed to inflation.

Innovative Retirement Income Stream

An Innovative Retirement Income Stream (IRIS) is provided by a newer range of products. These were introduced after changes to regulations designed to deliver more certainty to retirement income by paying a pension for life without running out of funds.

Some considerations:

• Age Pension benefits – Centrelink only counts 60 per cent of the pension payments received as assessable income and only 60 per cent of the purchase price of the product counts as an assessable asset until age 84 when it is reduced.
• Certainty – Some IRIS products offer a stable guaranteed income stream, providing financial security.
• No minimum requirements – IRIS products do not require an annual minimum amount, instead just requiring at least one annual payment.
• Complexity – Features vary widely between different IRIS products and may involve complex terms or conditions.

Next steps

How do these different options suit your personal needs and how would they affect your retirement income? Consulting with a financial advisor can help you navigate these choices and tailor a plan that best suits your needs. Speak to us, so we can help you structure a plan to fund the retirement lifestyle you’ve worked so hard for.

As the real estate market begins to bloom with opportunities for homebuyers, for those who wish to buy in the next few months understanding the distinctions between pre-qualification and pre-approval for a home loan can be pivotal in securing your dream home.

If you are starting your journey to buy a home, one of the first things you need to do is determine what you will be able to borrow so you are narrowing the field to hone in on properties you will likely be able to afford.

A couple of the terms you may have come across when you are at this stage of determining your borrowing power are ‘pre-qualification’ and ‘pre-approval.’ While these sound like they might be the same thing, there are some important distinctions between them a home buyer needs to understand.

Differentiating between pre-qualification and pre-approval

When applying for a loan, the main difference between pre-qualification and pre-approval lies in the depth of scrutiny and commitment from the lender, with pre-qualification being more of a guideline and pre-approval being more solid.

Pre-qualification – a non-binding estimate

Pre-qualification is the first step in the mortgage process, providing an estimate of how much you may be able to borrow based on self-reported financial information. This preliminary assessment typically involves a basic questionnaire or a conversation regarding your income, assets, debts, and credit score.

There are some benefits to going through the pre-qualification process. It gives you a general idea of the price range of homes you can consider, guiding your initial search.

Pre-qualification usually does not involve a hard credit inquiry, so does not have any impact on your credit score and finally it provides early insights into potential financing options.

However, it’s important not to make the mistake of thinking a pre-qualification and pre-approval is a binding indication of how much a lender is willing to provide. As the information you provide is not verified, it’s considered less reliable and it’s a good idea to consider a pre-qualification as more of a ballpark figure of what you could potentially borrow.

Pre-approval – a detailed commitment

Pre-approval is a more rigorous process where a lender verifies your financial information and provides a conditional commitment to lend up to a specified amount under certain conditions. This involves submitting documentation such as wages, bank statements, and tax returns for thorough evaluation so you’ll need to get your financial house in order prior to the pre-qualification process.

At this stage we’ll work with you to review your options in terms of mortgage products and lenders. When you are ready to apply for pre-approval, the selected lender then verifies this information and performs a credit check to assess your financial situation in detail. Based on this verification, the lender provides a conditional commitment to lend you a specified amount under certain conditions.

The advantages of pre-approval for property purchases

As we enter the warmer months the housing market typically sees increased activity and competition among buyers, which is why obtaining pre-approval should be a priority if you are getting serious about buying. Pre-approval does not just provide potential lenders with a comprehensive view of your financial health, it also empowers and informs your decisions. Knowing your approved loan amount allows for more precise budgeting and confident negotiations.

Armed with a pre-approval letter, you can concentrate on properties within your budget range, optimising your time and efforts. In a bustling market, sellers are more likely to favour offers from pre-approved buyers due to greater assurance of financial capacity and the potential for a swift transaction.

Pre-approval will also enable you to move faster and speed up the process of finalising your loan should you be successful in your bid for your new property. When you find the right home, the last thing you want is to miss out as your finances took too long.

Planning ahead for a successful purchase

If you want to purchase in the next few months, now is the ideal time to start preparing for your home purchase journey.

Start your journey with confidence by chatting to us at the pre-qualification stage and obtaining pre-approval early, ensuring you’re well-positioned to capitalise on opportunities and achieve your homeownership dreams as the property market warms up alongside the weather.

Rising property prices have led many people to look for ways to unlock the increased equity in their homes so they can enjoy a comfortable lifestyle in their golden years.

For most of us, our homes represent the biggest or most significant portion of our wealth. But it’s an asset that can’t necessarily be realised quickly. It might take some time to sell your home and, in any case, you still need somewhere to live. And, if you’re selling in a rising market, you’re also buying in a rising market.

There are a number of ways to access the equity in your home, although be mindful of the consequences for your particular circumstances. With such a big decision and the complex financial products available, it’s best to get independent financial advice, we can help clarify how you might be affected now and in the future.

Reverse mortgages

Reverse mortgages are more popular than ever, allowing you to borrow money using the equity in your home as security.

Following the introduction of tougher regulatory requirements, today, reverse mortgages are provided by a number of small bank and non-bank lenders.

The highest amount you can borrow, using your home as security, varies according to your age. At age 60, it’s likely you will be able to borrow around 20% of the value of your home. This amount usually increases as you get older so by 65, you may be able to borrow about 20-25%.

The advantage of a reverse mortgage is that, while you’re living in your home, you don’t make any repayments on the loan. The loan, including interest and fees, is repaid when you move out or sell your home. Interest charged on the loan is usually higher than for standard mortgages. Currently, rates average just over 8 per cent to just under 10%.

The Australian Securities and Investments Commission MoneySmart website provides a reverse mortgage calculator to help you decide if it’s the right course of action for you.

A Government scheme

The Federal Government’s Home Equity Access Scheme is a popular alternative to private reverse mortgages products, with the scheme growing by about 60% a year.

The Scheme provides loans to eligible older people, secured against your home. You can choose to receive a lump sum or a fortnightly tax-free payment.

The loan and any costs must be repaid to the government but you can make repayments or stop them at any time. If you sell the property you can repay the loan on settlement or transfer the loan to another property.

If there’s an outstanding loan after your death, the government will seek repayment from your estate.

The current interest rate is 3.95%.

Home reversion

Slightly different to a reverse mortgage, home reversion is another way of accessing the equity in your home while still living in the property.

You don’t pay interest because it’s not a loan but there are transaction fees. The provider pays you a discounted amount for the percentage of the property you sell based on today’s value. Then, when the property is sold, the provider receives the same percentage of the sale price, meaning that the more your home increases in value, the more the provider receives.

Other options

Another way of taking advantage of the equity in your home is to sell it and buy a smaller one. Downsizing could allow you to clear the mortgage and invest or spend anything left over.

Those aged 55 or older can contribute up to $300,000 (for each spouse) from the sale into your superannuation fund. It’s considered a non-concessional contribution, but it doesn’t count towards the contribution cap.

You could also consider converting your home to a dual occupancy or, if you’re on a large block, subdividing.

Get in touch with us for a review of the options available to you, so you can look forward to enjoying your golden years with confidence.