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.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook

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.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook

Given the ever-fluctuating landscape of Australia’s property market and the current uncertainty as to what to expect for interest rates, it’s a challenging time for would-be home buyers and even for those with a mortgage.

Homebuyers are navigating this landscape cautiously, mindful of economic indicators and market shifts.

Throw into the mix the complexities of choosing the right mortgage loan and it’s no wonder many would-be buyers are feeling uncertain.

As uncertainty looms, securing a mortgage or even getting ready to buy can feel like navigating a maze without a map. That’s where it can be helpful to have an expert on your side to help light the way. Here are some of the ways we can lend a hand.

Expert guidance to navigate changing lending conditions

We stay abreast of changes in interest rates between lenders (which are independent of the RBA’s decisions on the cash rate) and keep up to date with changes in lending criteria, ensuring that you receive the most competitive rates available at the time, mitigating the risk of overpaying in a dynamic market.

Certainty in a dynamic market

It can also be helpful to have some certainty amidst a lot of other fluctuating factors so we can help you determine how much you may be able to borrow. We can also help you arrange a pre-approval which is like having a roadmap and a green light to go after your dream home.

Access to exclusive deals and rates

Securing the most favourable mortgage rates requires more than just good timing – it demands insider knowledge and industry relationships. Our extensive network enables access to exclusive deals and rates that may not be available through traditional channels which can translate into significant savings over the life of your loan.

In-depth knowledge of government grants

There’s plenty of government support available to first-home buyers in Australia, such as low deposit schemes, cash grants and shared equity programs, to name a few. We can help determine your eligibility, as well as which grant might be the most appropriate for your circumstances.

The value of expert negotiation

Negotiating terms with lenders requires a nuanced understanding of constantly changing market dynamics and lender practices. We advocate on your behalf to secure favourable terms, including lower interest rates, reduced fees, and flexible repayment options.

Tailored for you

We work with you to understand your financial situation and determine the best solution for your circumstances. Even if you have a unique financial situation—such as being self-employed, having variable income, or previous credit challenges we can offer suitable financing options and strategies to strengthen your mortgage application.

Acting in your best interests

We act in your best interest, prioritising your financial well-being over lender interests. We streamline the lending journey, offering clarity on fees, and ensuring you understand the implications of each decision. In a complex industry filled with jargon and fine print, we explain mortgage terms in plain language, ensuring you fully understand the commitments you’re making.

Clarity whether you are getting ready to buy – or reviewing your options

In uncertain times it makes sense to have some certainty. Getting help with the lending side of things, which can be complex and confusing, allows you to focus your efforts on finding and securing the ideal property.

If you are getting ready to buy it can be helpful to have an initial chat to get a sense of what you might be able to borrow and if you decide to get serious, we help with sourcing the right loan – and with all the paperwork to ensure everything is submitted correctly and on time.

If you have an existing mortgage reviewing your loan and whether it still suits your circumstances and future goals can be beneficial. Refinancing offers an opportunity to save on long-term interest costs amidst market fluctuations.

As you embark on your homeownership journey or seek to refinance in today’s economic climate, we can help you avoid problems and provide some stability and certainty.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook

Tax breaks are always good news, but for house hunters they can have an added bonus. Not only do tax cuts mean potential buyers have more cash in their pocket at the end of the financial year, but they’re also looking at increased borrowing power.

A typical homebuyer’s borrowing capacity could rise by tens of thousands of dollars after July 1 as a result of this year’s Federal Budget.

Ways the Budget could boost your borrowing power

To put it simply, with lower income taxes you may have more disposable income available to repay your loans. Every Australian taxpayer will get a tax cut from July 1, 2024 under the updated stage three tax cuts – regardless of their income – with the exact amount depending on how much you earn.

Let’s take a potential single homebuyer on a $100,000 income looking at a 30-year loan with a typical interest rate of 6.19% and a loan-to-value ratio (LVR) of 80% or less. Their borrowing capacity will increase by about $25,000 in the new financial year. A future purchaser earning $150,000 could look at borrowing approximately $37,000 more than in the 2022/2023 financial year. Couples will likely be in an even stronger position.

While a tax cut is a much needed helping hand in the midst of a cost-of-living crisis, these tax breaks alone will not significantly improve your borrowing power.

How to improve your borrowing power

Borrowing capacities have fallen by about 30% since interest rates started rising in May 2022. With many top economists forecasting that a rate cut seems unlikely before the end of 2024, it pays for potential buyers to consider all the tools in your financial tool belt to improve your borrowing power and increase your chances of securing a larger loan.

Reduce your expenses

One of the most effective ways to improve your borrowing power is to reduce outgoings and unnecessary discretionary spending. Lenders take a close look at a borrower’s living expenses when calculating borrowing power, so tightening the budget belt can free up more income for loan repayments. Create a realistic budget for your household, track spending with the help of an app or spreadsheet and identify areas where you can cut costs.

Increase your income

Of course, it’s not rocket science, but if you earn more you’ll be able to borrow more. There are the traditional ways of boosting your income such as asking for a raise or picking up a second job. Then there are alternative “side hustle” or “gig” options like taking on freelance work, renting out belongings such as power tools, your car or car space, and selling items online. A higher income can boost borrowing capacity and make it easier to meet lender requirements for loan approval however it’s important to understand any tax implications that come with the additional earnings.

Review and reduce your credit card limits

Even if you keep your lines of credit at $0, lenders consider your limits as money already spent – with interest. High credit card limits can indicate a higher future level of debt with additional payments to navigate alongside a home loan. Review your credit card limits, their interest levels and reduce them where possible.

Reducing your debts

A debt-free (or low debt) mortgage applicant looks great on paper, so think about paying off as many of your existing debts as possible. Focus on those with the highest interest and try to pay them off first. Alternatively, talk to your lender about consolidating debts which will enhance your borrowing power by decreasing the debt to income (DTI) ratio.

Saving a larger deposit

Finally, a larger deposit will always make the biggest impact on your borrowing power as it reduces the LVR and demonstrates financial stability to prospective lenders. If you’re able to save a deposit of 20 per cent or more, there can be other savings. You may be able to access more competitive home loan interest rates and lenders won’t charge lenders mortgage insurance.

To discover how the 2024 Federal Budget’s tax cuts could improve your borrowing power, give me a call on 039723 0522..

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook

Refinancing your home loan has the potential to save you thousands, reduce your monthly repayments and free up your finances to achieve your goals.

However, mastering the art of refinancing requires strategic planning, an understanding of the process and taking numerous considerations into account. Whether you plan on external or internal refinancing, here’s what to keep in mind.

Understand the different types of refinancing

While many people think of refinancing as switching lenders, you can also choose a better deal but stay with your original lender. Refinancing through your original lender but opting for a different deal is referred to as an internal refinance; external refinance is where you find a different lender.

In 2023, it was reported that Australia had the largest boom in mortgage refinances in history over the past three years. And according to Finder’s Housing Market Report 2023, while in 2019 just over half of refinancers were external refinancers, by mid-2023, this had jumped to 72%.

Know the market and interest rate movements

As the stats show, in recent times more mortgage holders than ever, are swapping lenders in order to chase a better deal. Often this is the main goal – to refinance to get a lower interest rate.

Given the fluctuations in the market and the rise and fall of interest rates, it’s smart to keep informed as to what’s happening. It’s also a good idea to touch base with a financial expert to get their take on whether now is a good time to refinance.

Assess your financial health

It’s then time to look at your financial situation, so you have a clear understanding of your credit score, current financial position and equity, income, and debt-to-income ratio.

It may have been some time ago that you last did this and it’s likely that some things have shifted, especially given the higher cost of living at the moment.

Understand your loan

Whatever your reasons for wanting to refinance are, you need to understand what your current commitment is and what changes you want to make.

Read through your current loan’s terms and conditions, as it may have been a while since you’ve checked them. You can chat to your current lender to see if there are any benefits you haven’t been utilising or costs you are unaware of.

Understand refinancing costs

A follow-up from knowing your loan is ensuring you have a clear understanding of refinancing costs. While the lure of a better deal can be hard to resist, you may find that it may cost you more than you had thought.

Calculate your break-even point to determining if refinancing is beneficial – this includes taking any valuation fees and payout costs (such as exit fees) into consideration. If you are on a fixed rate home loan, you may need to pay a break free if you refinance.

Consider the impact on your credit score and LVR

Another thing to be aware of is how refinancing can impact your credit score. Aspects that come along with refinancing, such as ending a loan and needing another credit check, can cause your credit score to dip. And if there is the possibility that you skip out on a mortgage payment (should the refinancing process take longer than expected, for example), this will further damage your credit score.

Loan to Value Ratio (LVR) is the difference between the amount you’re borrowing to the value of the property. If your LVR is over 80%, you need to pay Lender’s Mortgage Insurance (LMI). When refinancing, it’s likely that your LVR has shifted due to your mortgage repayments, so your LVR tends to be lower as a result. However, if your property has fallen in value and your LVR has risen, then you may need to pay LMI when refinancing.

We can assist with refinancing to ensure it’s not only beneficial for you, but that it also frees up your finances. Get in touch today so we can discuss your options.

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

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook

If you are building or undertaking major renovations to your home, you may be looking for a construction loan. Unlike a standard loan, a construction loan allows you to pay for each stage of the build without having to come up with all the funds upfront.

How construction loans work

Also referred to as building loans, this type of loan is aimed at people either building a new home or making significant structural changes, such as adding a room or changing the roof, to their pre-existing home.

Construction loans allow for flexibility throughout the build or renovation, through the process of drawing down progress payments.

Draw down progress payments

A key feature of a construction loan is the flexibility to draw down your loan in instalments throughout the building process, which is referred to as a draw down or progress payments, rather receiving the full loan at the start of your major project.

There are usually five to six stages in which you’ll receive the instalments, including the deposit, foundation works, the framework, lock-up, fixing (plumbing and electrical) and completion.

While this payment arrangement, rather than receiving a lump sum at the beginning, can seem cumbersome, it means that you’ll only be drawing down on your loan to pay your builder and other contractors as they complete stages of work.

This can be beneficial as you will only be charged interest on the amount drawn down, not the total. You also don’t have to pay back the principal loan amount until after construction has been completed. helping you manage your cashflow throughout the project.

Fixed price contract

Construction loans are usually based on a fixed price contract, whether that be the land you are building on or the property you are renovating. This means that there is little room for change while the building or renovations are going ahead.

This loan tends to be interest only for the period of building/renovations, then become principal and interest once completed. You may be able to negotiate that the interest only term can be continued, so discuss this with us if it is something that appeals to you.

Should changes need be made to your build along the way, you must discuss this with your lender as this can be likely to vary the forecast costs. As variations are very common in building and renovating, it’s wise to make sure you have accounted for possible changes when applying for the loan.

How to apply

To apply for a construction loan, you will need to show the lender your council approved building plans and fixed price building contract from a registered builder. Usually, you will also be asked to make a deposit of 10% – 20% of the total cost, it’s worth noting that you might have to pay Lenders Mortgage Insurance if your deposit is less than 20%.

Having a licensed builder greatly increases your chances of getting the loan, though in some instances you can still apply for the loan as an owner builder. Applying as an owner builder involves more paperwork and can be more arduous, so be prepared that this process may take longer.

You may be visited by a valuer during the construction/renovation process, to ensure that everything is running to plan. Based on the valuer’s report, the lender will either continue the payments or alert you of a problem.

Be aware of the dates of your loan, such as when the build must be completed by (for example, within 24 months from the date of your first draw down). If the build has been delayed, keep us informed, as we will need to discuss your moving timelines with the lender.

Once the building or renovations are completed, you will need to provide the final paperwork, such as the builder’s final invoice or receipt, building insurance policy and certificate of occupancy.

The building and renovating process can be stressful as it is, so chat to us today to see how we can help you navigate construction loans. We can step you through the process to get you on your way to securing the money to fix up or create your home.

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

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

Integrity One Facebook

Integrity Edge Facebook