A slow and steady race to the 2023 finish line

Whichever way you look at it, the Australian property market is finishing the year on a fairly even keel. Values are on a slight upward trajectory, but it’s clear the head-turning price jumps of the recent past are now in the rear view mirror.

CoreLogic’s national Home Value Index (HVI) has reported a quarterly increase of 2.1%, but a monthly movement of just 0.6% – the smallest monthly gain since the growth cycle commenced in February. As December begins, the median dwelling price in Australia now sits at $753,654, up on the same time last year at $714,475.

Over the past three months the combined capitals figure just edged out the combined regions rising 2.2% to $827,659 compared with a 1.8% rise to a median of $602,645. A year ago, the capital median was $778,368 while the regional median was $578,506.

November shows a V-shaped recovery

Although prices have experienced a notable slowdown, CoreLogic’s national HVI reached a new record high in November. After a peak to trough fall of -7.5% between April 2022 and January 2023, housing values bounced 8.3% in just 10 months – what CoreLogic’s research director Tim Lawless said demonstrated a clear ‘V’ shaped recovery.

Figures show Perth with its 5.4% rise in values, as well as Adelaide and Brisbane both experiencing a 3.9% jump, are the clear quarterly standouts. Mr Lawless cited low stock levels as the reason behind the positive price performances. “This imbalance between available supply and demonstrated demand is keeping strong upwards pressure on housing values across these markets, despite the downside factors leading to weaker housing market conditions across the lower eastern seaboard,” he explained.

On the other hand, Darwin had the most negative quarter with a subtle -0.7% decline, Hobart only inched up 0.1% while Melbourne and Sydney moved by 0.6% and 1.8% respectively. “The Melbourne Cup day rate hike has clearly taken some heat out of the market, but other factors like rising advertised stock levels, worsening affordability and persistently low consumer sentiment are also acting as a drag on value growth in some markets,” Mr Lawless said, while adding Sydney home values had slipped into negative growth during the last week of November which could push Harbour City prices back by early 2024.

Luxury end looking lacklustre

Top end markets across our nation’s most expensive cities appear to be experiencing a wind down. CoreLogic reported seeing slower growth conditions across the upper quartile for Sydney and Melbourne as the priciest quarter of those markets is now showing the lowest rate of growth both on a monthly and rolling quarterly basis. This could be a sign of things to come. Historically, how the most expensive markets in Sydney and Melbourne track gives an insight into the future performance of the wider market.

“As borrowing capacity reduces, we may be seeing more demand deflected towards lower housing price points, with the broad middle of the market now recording the strongest rate of growth in Sydney and Melbourne,” Mr Lawless said.

Interest rate impact

Despite what was a surprise rise in the cash rate in November, PropTrack data shows national home prices have so far defied interest rate pressures. In fact, values lifted to a record high in November according to the PropTrack Home Price Index by REA Group.

Eleanor Creagh, senior economist at PropTrack, said although national home price growth slowed in November, spring offered increased choice for buyers. “Strong housing demand, buoyed by record net overseas migration, tight rental markets, low unemployment and home equity gains, has worked alongside limited housing stock to offset the impacts of higher interest rates this year,” she said.

“Despite interest rates climbing again in November and the flow of listings hitting the market increasing, housing demand has remained strong and national prices have now risen for 11 straight months.”

Whether the RBA will introduce yet another hike when it meets next week remains to be seen, but all signs point to a positive start to 2024 according to Ms Creagh.

“Looking ahead, price growth is expected to continue as the positive tailwinds for housing demand and a slowdown in the completion of new homes counter the sharp deterioration in affordability and slowing economy. However, prices are likely to lift at a slower pace than they have across 2023.”

Dwelling values over the quarter

Melbourne
Although the quarterly movement was 0.6% for all dwellings to a median price of $779,914, values are up 3% annually. The highest annual dwelling change was in the SA3 of Monash where there was an annual increase of 7.9% to a median of $1.247 million. Investors looking at the Victorian capital can expect an average gross rental yield of 3.4%.

Sydney
The Harbour City saw values increase by 1.8% over the quarter to a median of $1.125 million, but annually values are still up 10.2%. The Marrickville/Sydenham/Petersham SA3 in Sydney’s inner west saw the greatest dwelling value growth at 14.4% to $1.694 million. The average gross rental yield for Sydney is 3%.

Brisbane
Queensland’s capital experienced a healthy quarter of 3.9%, but a significant annual increase of 10.7%. Dwellings in the Nathan SA3 experienced the highest growth for the year to October 31 with a jump of 15.1% per cent. The median dwelling value in Brisbane is $779,270 and the average rental yield in the city is 4%.

Canberra
The median dwelling price in Canberra is still the second priciest in the country at $842,677 after a quarterly change of 1.1%, but an annual decrease of -0.3%. Molongo’s dwelling price increased 5.5% annually to $758,556 making it the highest performing suburb in the nation’s capital. Currently, rental yields in the city are at 3.9%.

Perth
The West Australian capital is still home to some of the cheapest metropolitan property in the country with a dwelling median of $646,520 (only behind Darwin’s $496,792). Values rose 5.4% over the past quarter and the annual growth is sitting at 13.5%. Perth’s rental yield is 4.6% and the suburb of Armadale saw the greatest annual change with a rise of 21.5% to a median of $551,197.

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (December 2023)

To find out how you might be able to purchase a property in the current market, reach out to your trusted broker today.

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 markets and the Australian economy over the past month.

Consumer prices eased by more than expected in October. The news that inflation may have been tamed means interest rate rises may be behind us, for now.

Even the Organization for Economic Cooperation and Development (OECD) is optimistic about our economic recovery, predicting rate cuts from late 2024.

The ASX200 regained most of its October losses through November. Hopes the US may be ceasing its interest rate hikes impacted investor sentiment, as did the better than expected inflation figures locally.

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.

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

October was a volatile month on the global stock markets and in Australia. The local sharemarket finished October down 3.8 per cent, representing a third straight month of losses.

Investor sentiment reflected heightened anxiety regarding inflationary pressures and uncertainty over rate rises, mixed economic data and concerns about the Israel-Hamas conflict.

Investors are continuing to keep a close eye on oil price movements over fears of an escalation of conflict in the Middle East.

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

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.

It can be difficult to think about a property purchase if you don’t meet all the criteria for a loan. Perhaps you work for yourself, have recently moved jobs, taken time out of the workforce to raise a family, or your credit history isn’t squeaky clean.

Rest assured that there are still loan options to suit your circumstances, which a broker is well positioned to help you access. Here is the rundown on some options you might not have considered.

Non-conforming loans

Non-conforming loans are suited to people whose situations aren’t clear cut and therefore are likely to face barriers when applying for traditional loans. They provide an opportunity for people with irregular incomes – such as freelancers, those at the end of their careers or who are returning to the workforce – to access financing.

Low documentation loan

One type of a non-conforming loan is known as a low documentation (low doc) loan. These are geared towards people who are self-employed – who have an income and assets, but who may not have all the documents usually required for a loan (such as years of tax returns and income statements).

Instead, a self-verification process is in place, where you sign a declaration stating your earnings. As the name low doc suggests, the reduced documentation needed for these type of loans enables borrowers who wouldn’t usually be able to provide the required information to access a loan.

It’s a misconception with this type of loan that you don’t have to provide any documents, however. As well as submitting an income declaration form, you will likely also need to provide your bank statements and a letter from your accountant that confirms your financial standing. You may also be asked for your ABN, a BAS statement and GST registration details, if applicable.

For those who are self-employed, keep in mind you may still be eligible for a traditional loan. While low doc loans were initially designed for small business owners and self-employed, if you have the necessary financials and tax returns available for assessment you could still be successful in a full doc loan application. We can help guide you and advise the best loan for your circumstances.

Signs you may not be a ‘perfect match’ for some of the lenders:

• You have a solid income, but only have a small deposit
• Your work means you regularly change jobs. This can imply you don’t have job stability, however for some it could just be the nature of your particular industry
• You need to consolidate a few other debts such as personal loans, credit cards or business debt
• You don’t have a perfect credit history. This may be that you have missed loan/ bill payments in the past or have previously declared bankruptcy
• You have recently started a business or a new job
• You are self-employed

Bad credit loans

It’s not the most appealing name, but this type of loan is geared towards people who have difficulty qualifying for a loan due to their credit score. It can also be an option for people with little to no credit history, for example those who have never had a credit card.

If you have a credit score of lower than 700, traditionally a bank would consider you too high a financial risk to approve. This type of non-conforming loan can help you access funds.

Generally, bad credit loans only allow you to borrow a small amount of money, so you’re unlikely to be in a position to make a big purchase, such as property.

Things to keep in mind

It’s also worthwhile knowing that non-conforming loans (including low doc loans) often come with higher interest rates than traditional home loans – this is because they are deemed riskier for the lender with a higher risk you not being able to make the repayments. Therefore, they may have a risk fee attached to them and there might also be stricter loan terms, such as larger deposits required.

Unfortunately, you may not be able to borrow as much as you would ordinally be able to with a traditional loan, so re-approval is key to ensuring you’re aware of how much you are able to borrow before making a purchase.

Another factor to consider is that as non-conforming loans aren’t very common, you’re likely to be limited in terms of your choice of lender. Finally, even non-conventional loans aren’t guaranteed – not all applications are successful.

What you will need

There is a common misconception that you don’t require much documentation for these types of loans, which is not the case. While your circumstances may be more complex than a straightforward application, you will need to be able to show your income and demonstrate the capacity to make the repayments for your potential loan.

As with a traditional loan, you’ll be required to complete an application form and, generally speaking, at a minimum you will need to provide a copy of your ID, bank statements and proof of income.

Finding the right fit

Non-conforming loans can be beneficial but they’re not the right choice for everyone. Having the assistance of a broker can help you navigate the different loan options and find the best fit for your circumstances.

If you don’t tick all the boxes when it comes to applying for a home loan, we can guide you through the loan application process and can help find the right solution for your circumstances.

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.