Australia’s housing recovery gains momentum in August

Interest rates continue to be a hot topic of conversation among commentators, economists and mortgage holders. There is cautious optimism that rates are approaching stabilisation with rates remaining unchanged over the last two months of the quarter.

National growth back in the black

The CoreLogic National Home Value Index reached a milestone over the winter period, clawing back loses over the last 12 months to grow by 0.8% in August. The National HVI rose for the sixth consecutive month in August since bottoming out in February with growth broadly recorded across the country, the rate of growth increased again in August after the previous two-month trend slowing capital gains.

While the upper quartile of the market drove growth earlier in the year, the nation’s slowdown in the growth rate earlier in the quarter was largely being driven by easing gains in this segment of the market. There was, however, resilience in the middle and more affordable segments of the market, thanks to a bounce back from first home buyers and investors in recent months.

What impact are interest rates having?

Eleanor Creagh, Senior Economist at PropTrack shares that “stronger housing demand and a limited flow of new listings hitting the market have offset the impact of interest rate rises” over the quarter.

She believes with interest rates are nearing their peak, this will likely sustain current market confidence and maintain the lift in home values. However, she cautions, “the full impact of recent rate rises is yet to be felt, and the potential for further tightening remains a headwind for the market.”

Spring starts with a bang

The strong winter momentum looks set to flow into the spring selling season. Spring is set to start with a bang, with PropTrack data showing that the number of auctions scheduled for the first week of spring is up 13% compared to the same time in 2022.

PropTrack economist Anne Flaherty believes the unusually high number of auctions could be due to sellers holding off selling their properties over the first half of this year and late last year, a general improvement in selling sentiment and confidence increasing amid signs that interest rates may have peaked.

The influx of new properties hitting the market could be good news for buyers working to alleviate some of the competition.

Dwelling values over the quarter

The national Home Index Value grew by 2.5% over the quarter, with Brisbane leading the way. Within the capital cities, house values rather than unit values generally showed a sharper recovery trend.

Sydney
Sydney grew 3.8% over the quarter, with the Harbour City’s ongoing recovery now placing dwelling values at 1.2% higher over the last 12 months. Sydney’s monthly pace of growth has increased to 1.1% in August, with the rental yield holding relatively steady at 3.1%.

Melbourne
The Victorian capital continued its steady growth with 1.6% over the quarter, growth slowing slightly in August compared to July. The rental yield unchanged in August with 3.5% returns.

Brisbane
Brisbane led the growth for the nation’s capital cities in August with 1.5% growth and increasing by 4.2% over the quarter. In Brisbane, renters can take note of the 4.2% gross rental yield in August.

Canberra
Canberra recorded an increase of 0.5% over the quarter. After a decline in growth in July, dwelling values rebounded to grow by 0.3% in August. The nation’s capital has a current gross rental return of 4.0%.

Perth
Perth saw a 2.9% jump in values over the quarter, building on its annual growth of 4.5% and recording a new cyclical high through August. One of the few cities to do so. Investors will be happy with the country’s second highest gross rental return (behind Darwin) at 4.9%.

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

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

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Email: integrityone@iplan.com.au

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A mortgage is a long-term commitment, one in which many people enter with a ‘set and forget’ mentality. Most loans are around 30 years – a long time in which many things can change, not just in your personal circumstances but in the financial world, seeing the introduction of new loan products and fluctuations in interest rates.

If you haven’t reviewed your loan for a while, now is a good time to consider whether it still suits your circumstances or whether you’re better off making some changes. It’s what many Aussies are doing, with the ABS reporting the value of owner-occupier refinancing of $13.4 billion last November.i

Reviewing your loan

It is a good idea to review your loan annually and there’s no better time than the present.

While this can seem like an arduous task, it doesn’t need to be complicated. Read back over your loan’s terms as a starting point. To ensure you’re receiving the best interest rate for your loan – and whether your loan is still fit for purpose – ask yourself a few things:

• Has there been a change in your employment status?
• Has there been a change in your family situation?
• Have your financial goals changed?
• Are there pressing matters that need financing (i.e. renovations, needing a new car, etc)?
• Are you wanting to invest or change your existing investments?

Knowing where you are standing financially can help you then decide whether it’s worth refinancing and chasing a better interest rate, or whether your existing mortgage is still working for you.

Types of refinance loans

There’s not just one type of refinancing, but many different types of refinance loans, including:

Rate-and-term refinance loan

This is where you replace your loan with a new loan that is the same amount, but at a changed interest rate and/or term. This is the most common refinancing option and often what people think of when it comes to refinancing.

Cash-out/cash-in refinance

A cash-out refinance loan enables you to access the equity in your home by taking out a new loan with a higher loan balance than your existing loan.

A cash-in refinance loan has you lowering your overall loan amount by contributing a lump sum – this is done by taking out a new loan less than your old loan, paying out the difference to close your old loan.

Fixing your interest rate

As opposed to a variable rate, a fixed loan guarantees a locked interest rate for a period of time (usually between 1-5 years). This is a popular option during a time of rate hikes. However, it can come with drawbacks such as not being able to take advantage of any rate cuts.

Split loans

As its name suggests, a split loan allows you to split your loan into multiple parts with different interest rates and terms. For instance, you could have part of your loan at a variable interest rate and another part as a variable rate.

Consolidation refinance

This is where you combine all your various debts into the one debt (including credit cards, car loans, etc) and therefore one repayment. This can make your debts easier to manage but can mean your short terms debts are stretched over the life of your new home loan.

Things to keep in mind

While (generally speaking) the goal of refinancing is to save money, there are a few considerations to be aware of, so you don’t end up paying more in your quest to save.

Refinancing can impact your credit rating, causing it to drop. However, it’s worth keeping in mind that this dip is short-term and shouldn’t have too big an effect on your credit score in the future.

Another thing to be mindful of is that you may need to pay Lender Mortgage Insurance (LMI) again. As LMI protects lenders, your original LMI payment won’t cover a new lender, which is why you can expect to pay this again. For most borrowers, you’ll need 20% of the property’s current value to avoid paying LMI again, keep in mind the value of your property may have changed since you first took out your loan. You might also need to pay LMI even if you stick with the same lender, but you’ll likely be given a discount.

There are also costs related to refinancing, such as application fees, discharge/break fees and valuation fees. Some lenders waive these costs or offer a discount, so be sure to ask what you will be expected to pay and see what you can negotiate.

You may also find that your bid for refinancing is rejected if you have accumulated too much debt or if your living expenses are now too high. Changes to your loan could also stretch out the repayment period, leading you to pay more in the long run.

Keeping on friendly terms with your mortgage

Whether you decide to refinance or stick with your current loan, by refamiliarising yourself with the conditions of your loan and assessing your financial situation, you’ll be better placed than if you ‘set and forget’.

Set a reminder to do this once a year – it can be easier to remember come the end of the financial year or the start or end of the calendar year.

You don’t have to go through the process alone. Give us a call on 039723 0522 to discuss your existing loan and circumstances and to chat about your future financial goals.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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The new financial year marks the opportunity to access a raft of grants and incentives aimed at helping more people buy a home. That means now is the perfect time to sort through all the national and state schemes, and finding the ones that are right for you.

To get you started, here’s a quick rundown of what’s on offer. Don’t forget that they could combine to get you on the property ladder this year.

Three National Home Guarantee Schemes

The National Home Guarantee Scheme (HGS) has expanded to offer help to more groups that find it difficult to buy their own home.

All three offer a government guarantee of your below 20% deposit loan. This saves you adding the cost of Lenders Mortgage Insurance (LMI) to your repayments.

No money changes hands, but as that ever-harder-to-save 20% deposit slips out of reach for more people, having a loan with a deposit of 5% or even 2% guaranteed by the government could help you get into the market sooner. Let’s take a brief look at what’s on offer.

The First Home Buyer Guarantee (FHBG) supports up to 35,000 eligible first home buyers each financial year. Your minimum deposit is 5%, while the maximum price and other conditions vary from state to state. The new news is that the scheme now accepts joint applications from friends, siblings, and other family members. Buyers who have previously owned a home may also be allowed to apply as long as their last ownership was at least 10 years ago.

Eligibility criteria for the First Home Buyer Guarantee

To apply home buyers must be:

• applying as an individual or couple (married / de facto)
• an Australian citizen(s) at the time they enter the loan
• at least 18 years of age
• earning up to $125,000 for individuals or $200,000 for couples, as shown on the Notice of Assessment (issued by the Australian Taxation Office)
• intending to be owner-occupiers of the purchased property
• first home buyers who have not previously owned, or had an interest in, a property in Australia.

The Regional First Home Buyer Guarantee (RFHBG) is for eligible first home buyers in regional areas. There are 10,000 places available each financial year to 30 June 2025. Again, the maximum cost of the home and the applicant’s annual income varies state to state but a minimum 5% deposit is needed wherever you are.

The Family Home Guarantee (FHG) supports eligible single parents and single legal guardians with at least one dependent child. That now includes single aunts, uncles and grandparents caring for a child. The minimum deposit needed is just 2%, with 5,000 places available each financial year to 30 June 2025. Again, there are limits on annual income and the cost of the home.

One thing to keep in mind when looking at the National Home Guarantee Schemes is that most, but not all, lenders will include the schemes when assessing your home loan application. Different lenders also have different minimum deposits they will accept, and of course different interest rates. It may save you valuable time and keep your banking record clean if you check with us before applying for any scheme or loan.

State specific grants, stamp duty and shared equity schemes

Regardless of where you are buying, you’ll find that each state and territory has some form of support for first home buyers. Usually, these offer payments or discounts to first home buyers purchasing new properties or house and land packages. These grants are not taxed and don’t have to be repaid, making them worth considering.

Stamp duty is a huge up-front cost for buyers, adding thousands to the price of a property. All the states have a minimum price threshold before stamp duty is charged. They also offer one-off stamp duty concessions for first homebuyers paying below certain amounts. In some states, first homebuyers can also opt to pay a much smaller annual land tax instead of stamp duty.

Shared equity schemes are also broadening the people who qualify. Shared equity is when the state government buys a portion of your home. This reduces your deposit, loan amount and repayments. In return, if and when you sell, they will take that percentage of the sale price. Shared equity is traditionally only offered to key workers. However, in some states, single parents and singles aged over 50 can also apply.

First Home Super Savers Scheme

Another scheme is the national First Home Super Savers Scheme. In this, you make contributions into your super fund to save for your first home. Depending on how many years you’re registered with the scheme, you can withdraw a maximum of $50,000, plus the calculated earnings from those investments. You find out how much you can access by asking for a FHSS determination, and then request a withdrawal when you sign the contract for your home. This takes a minimum of 20 days, so planning is crucial. Because it affects your super, it’s wise to get some financial advice before you do it.

While having more schemes to choose from provides options, sorting through your options can be complicated and time consuming. The capped number on some offers means it’s best to get in touch with us sooner rather than later.

We can work out which schemes you qualify for and put together a buying roadmap, to help you get into your own home sooner.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

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Has Australia’s housing downturn come to an end?

Interest rates have been the hot topic of conversation among homebuyers for a year now. In May 2022 the RBA made its first tactical move, raising the official rate for the first time since November 2010. And it’s all we’ve seemed to hear about since – with much speculation as to whether the RBA will increase rates or hit “pause”.

As a result of rate increases, home values slipped across the country for the best part of 2022, only beginning to rebound modestly in recent months. Some industry experts believe the worst of the rates hikes could be behind us, while others are taking a ‘wait and see’ approach. In any case the property market appears to be reacting with optimism, with June’s CoreLogic Home Value Index showing the strongest monthly growth since November 2021.

Capital city uplift

Figures released by CoreLogic at the start of June showed the third monthly rise in national housing values with each of the four largest capitals recording a lift over the quarter. After falling -9.1% between May 2022 and February 2023, have Australian housing values finally bottomed out? “Our anticipation is the market will continue to level out on the expectation that interest rates have peaked and the imbalance between housing demand and supply will persist for some time yet,” Mr Lawless wrote in the May Home Value Index (HVI), citing the significant lift in overseas migration will likely put further strain on availability.

Eleanor Creagh, senior economic at PropTrack, said interest rates cannot solely be held responsible for market sentiment. “This stabilisation in the housing market has occurred despite further rate rises. It appears the impact of interest rate rises is being counterbalanced by stronger housing demand and tight supply conditions,” she said in response to the May rate rise. “The surprise increase in interest rates is unlikely to outweigh these factors, though may dampen confidence in the nascent recovery and in the near-term impact the pace of monthly price increases.”

Ultimately, housing prices are on a knife’s edge while larger economic factors continue to fluctuate. “The path for home prices in the months ahead will be influenced by many factors, including the strength in housing demand, the level of supply hitting the market, as well as the trajectory of interest rates,” Ms Creagh added.

Dwelling values over the quarter

CoreLogic’s national HVI increased by 1.2% in May, following a 0.5% lift in April to be 2.3% higher over the quarter. The combined capital values have improved by 2.8% over the past three months while the combined regions improved by 0.8% during the same time period.

All signs are pointing to the fact the housing market has moved through an inflection point according to Mr Lawless. “Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted, and home sales are trending around the previous five-year average,” said Mr Lawless.

Sydney

Sydney is by far leading the positive turn in housing conditions, albeit coming from the deepest price slump. While the median dwelling value in the Harbour City is up 4.5% for the quarter, it’s still -13.8% down since its January 2022 Peak – the greatest peak to trough change in the country. Investors could take note that Sydney’s current gross rental yield sits at 3.2%.

Melbourne

Home to the mildest pandemic cycle in the country, the heavily locked down city experienced a 10.7% increase during that time. After the Victorian capital’s housing values peaked in February 2022, the market fell -9.6% to hit its trough by February this year. Now in recovery, Melbourne values have crept up 1.6% this quarter. In Melbourne, the gross rental yield is currently 3.5%.

Brisbane

After going through one of the most impressive Covid booms in the country as values soared an incredible 41.8%, Brisbane’s peak arrived in June 2022. The bottom of the local market came in February this year with a -11% cyclical fall, but values have since corrected, recording an increase of 1.8% over the quarter. For the Queensland capital, gross rental yields are sitting at 4.3%.

Canberra

Home values skyrocketed 38.8% during the post-pandemic run with a peak arriving in Canberra by June last year. The city has since seen values come off -9.5%, recording -0.1% this quarter and is now in its “cyclical trough” accord to CoreLogic data. Australia’s capital has a current gross rental yield of 4.1%.

Perth

The West Australian capital saw dwelling values jump by 24.5% during the recent boom. The peak to trough (July 2022 to February 2023) fall in Perth was only mild with a -0.9% change and since then values are already up by 2.4% in the last quarter. Home to the second highest rental yield in the country (only behind Darwin’s at 6.4%), Perth’s is sitting at 4.9%.

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

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

Suite 2, 1 Railway Crescent
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Email: integrityone@iplan.com.au

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The year in property has begun with some stabilisation in values

Australian property values appeared to stabilise with a 0.1% increase in national dwelling values for February. There was a –2.3% drop over the quarter according to CoreLogic’s national Home Value Index (HVI).

Although median property prices are still falling across the country there are signs some wind has come out of the housing downturn’s sails. While the 0.1% dip continues into negative territory, the February statistic was an improvement on the -1% fall seen in January, and was the smallest month-on-month decline since June.

All in all, CoreLogic’s Index is –9.1% off its April peak, making this the largest and fastest decline in values since 1980 when their record-keeping began. However, it pays to put this dwelling downturn in context. “Record declines in home values follow a record upswing, both in magnitude and speed. The national HVI was up a stunning 28.6% in the space of just 19 months,” said CoreLogic research director Tim Lawless.

“Despite the recent sharp drop in values, every capital city and rest-of-state region is still recording home values above pre-pandemic levels.

All eyes on interest rates

While they aren’t the only driver of the downturn, interest rates have played a major role in steering the ship. Once the Reserve Bank decides to hit the pause button – which is largely tipped to be in the first half of 2023 – economic experts predict housing values are likely to stabilise. Mr Lawless said there may be a few month’s lag before declines actually flatten out, but for a growth phase to begin the market needs to see some form of stimulation. “The most obvious stimulus would come from a drop in interest rates, but any cut to the cash rate probably won’t occur until late this year at the earliest.”

At its first meeting for 2023, the RBA increased the cash rate yet again by 0.25 percentage points on February 7, for the ninth time in a row, pushing the cash rate to a decade-high of 3.35%.

Top end price performance

The upper quartile of the combined capital city housing market drove this month’s stabilising trend, increasing by 0.1% in February.

This trend was most obvious across Sydney’s upper quartile, which recorded a 0.7% rise in values over the month, compared with a -0.2% fall in values across the lower quartile of the Sydney market. Upper quartile housing values have led the downturn to date, dropping -13.5% in value across the combined capital cities over the past 12 months, compared with a 1.7% rise in values across the lower quartile. Previous cycles have seen a similar trend, where the upper quartile tends to lead both the upswing and the downturn.

Regions still in favour

After extraordinary price growth in 2021, values in all regions are declining. Regional dwelling values were down -0.3% in February compared with a -0.1% fall across the combined capital cities. However, the weaker regional result relative to the combined capitals was mostly a factor of the monthly rise in Sydney housing values rather than a larger fall in regional market values.

Overall, CoreLogic recorded a combined regional market fall of -2.1% for the quarter to February 28. That’s a modest movement backwards after the combined non-capital city areas saw housing values surge 41.6% through the most recent upswing. Since peaking in June, the combined regionals index is only down -7.7%.

Melbourne

Melbourne’s median dwelling value is down –2.7% over the quarter. Data shows the Victorian capital has had a Covid trough to peak of 17.3%. After peaking in February 2022, the median dropped by -9.6%. Regionally, Victoria is –7.0% off its most recent peak in May 2022.

Sydney

The quarter to January’s close saw the median dwelling price in the Harbour City fall by –2.4%. Although In February Sydney was the only capital city to record an increase, gaining 0.3%. Sydney’s median peaked in January 2022 and has since experienced a -13.5% decline. The city’s trough to peak was 27.7%. After hitting its peak in May 2022, regional NSW closed the most recent quarter –10.1% off that high.

Brisbane

By February Brisbane’s median dwelling price was down –3.2% for the quarter. The capital of the Sunshine State had an exceptional trough to peak throughout the pandemic with the media skyrocketing 42.7%. Post peak in June 2022, the drop has been –11.0%. Across regional Queensland the median has come -7.3% off the June 2022 high.

Canberra

The ACT experienced a –2.7% decline of its median dwelling price during the three months to February’s end. Australia’s capital reached its price peak in June 2022 and has since come off the boil by –9.0%.

Perth

The Perth median appears to be plateauing with a modest quarterly move of just -0.2%. According to CoreLogic data the West Australian capital’s market only reached its peak in July 2022 and has come off just -0.9% since. The full trough to peak figure for Perth has been 25.9%. Regionally, the state is reportedly at its peak after experiencing a 32.4% increase through the recent growth phase.

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

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

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