Demand drops for fixed-interest loans
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Demand drops for fixed-interest loans
Posted on Wednesday, January 07 2015 at 1:38 PM
Data released by mortgage broker Mortgage Choice shows demand for fixed-interest rate loans has fallen to a 22-month low.
The
analysis revealed fixed loans accounted for 22.29 per cent of total loans in
December 2014, down from 26.98 per cent in the previous month.
Jessica Darnbrough, spokesperson for Mortgage
Choice, says recent speculation of a potential interest rate cut in 2015 has
seen borrowers opting towards variable rate loans.
“At the beginning of December last year,
speculation was rife that the Reserve Bank of Australia could cut the cash rate
throughout 2015.”
With the Australian and global economies
remaining weak, some analysts are changing their cash rate forecasts to include
up to two further cuts this year, according to Darnbrough.
“While future cash rate cuts are purely
speculation at the moment, it would seem the chatter has been enough to
encourage more homebuyers to take out a variable rate mortgage.”
On a state-by-state basis, variable loan were most
popular in Victoria, with South Australia and Western Australia not far behind.
Variable rates were least popular in New South
Wales.
Darnbrough says regardless of the loan type,
lenders continue to be competitive.
“Australia’s lenders are offering some very
sharply priced products at the moment, so regardless of what type of home loan
product you eventually decide upon, now is a good time to be a homebuyer.”
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Inner Sydney vacancy rate hits 22-month low
Inner Sydney vacancy rate hits 22-month low
Posted on Wednesday, December 17 2014 at 2:49 PM
Vacancy rates across Sydney remain flat as a result of the inner city carrying outer suburbs, according to the Real Estate Institute of New South Wales (REINSW).
The November 2014 REINSW Vacancy Rate Survey saw
the overall number of available properties at 1.7 per cent.
Availability in Inner Sydney fell 0.1 per cent to
1.5 per cent, a figure not seen since February 2013.
Outer Sydney vacancy rates increased 0.3 per
cent to 1.7 per cent and Middle Sydney fell 0.2 per cent to two per cent.
Malcolm
Gunning, chief executive offier of the REINSW, says near city suburbs are obviously
carrying those further afield.
“Declines in the Inner and Middle Sydney were
leveled out by the increase in the outer areas.
“It is a third month in a row that vacancy rates
have been stable at 1.7 per cent.”
Gunning believes current rates show supply isn’t
meeting demand with parity recognised as being two per cent.
“Therefore we question the Australian Prudential
Regulation Authority’s concerns and recommendations for banks to tighten their
lending criteria to investors.”
Vacancy rates in the Illawarra were down two per
cent to 1.7 per cent, while Wollongong was up 0.1 per cent to 2.3 per cent.
In regional areas, the Northern Rivers was the
hardest place to find rental accommodation at one per cent, down 1.2 per cent,
and Murrumbidgee was up 0.2 per cent to 1.5 per cent.
New England was up 0.8 per cent to 3.7 per cent,
Albury was up 0.3 per cent to 2.2 per cent and South Eastern rose 1.6 per cent
to 5.0 per cent, according to the survey.
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2015 outlook mainly positive
2015 outlook mainly positive
Posted on Thursday, December 18 2014 at 10:05 AM
According to CoreLogic RP Data head of research Tim Lawless the housing market is moving into the 2015 calendar year with some substantial momentum, with dwelling values 8.5 per cent higher compared with a year ago across the combined capitals. The growth comes on a backdrop of slowing conditions though, with the annual rate of capital gain peaking early in the year at 11.5 per cent over the 12 months ending April.
While values are still rising at a healthy rate, at least at a high level
and in trend terms, Lawless anticipates that 2015 will see the housing market
dynamic shift geographically. According to Lawless:
Sydney: Housing market conditions
have been nation-leading over the current cycle with dwelling values up by 31
per cent over the cycle to date. The rate of capital gain is slowing down
though, after the annual rate of growth peaked in April last year at 16.7 per cent.
By the end of 2014 we expect the annual rate
of growth will have slowed to approximately 12.5 per cent. We expect the
trend towards a more sustainable rate of capital gain to continue over the 2015
due to natural affordability constraints that are becoming increasingly evident
in the market, as well as a reduction in investor demand, which will likely be
attributable to the low yield environment as well as tougher investment lending
requirements from the banking sector.
Melbourne: The Melbourne housing market has played
second fiddle to Sydney’s rate of capital gain over the current growth cycle,
with values moving a cumulative 17.6 per cent higher by the end of November
this year. The rate of annual growth across the Melbourne housing market
has been slowing since January when dwelling values had moved 11.9 per cent
higher over the 12-month period. By the end of 2014 we expect the annual
rate of capital gain to have drifted back to approximately eight per cent.
This slowing trend is likely to continue through 2014 as investor demand is
dampened by the low rental yield scenario as well as tighter finance controls
around investment lending from the banking sector. New housing supply
across the inner city area of Melbourne and the outer fringes has been
sufficient when compared with population growth, which is also likely to soften
the level of capital gains over the coming year.
Brisbane:
Brisbane (along with Adelaide and Hobart) is one of only three capital cities
where the annual rate of capital gain is likely to be higher this year than it
was last year. We are expecting the annual rate of capital gain to finish
the year around the seven per cent mark, compared with a 5.1 per cent capital
gain over the 2013 calendar year. With the rate of capital gain holding
relatively firm over the second half of 2014, fewer affordability pressures and
better rental yields than Sydney or Melbourne, we’re expecting growth in
Brisbane dwelling values to outperform the capital city average over the coming
year.
Adelaide: Despite
the uncertainty in the local economy, the Adelaide housing market is likely to
finish the 2014 calendar year with a higher rate of capital gain compared with
the 2013 calendar year. We’re expecting Adelaide values will have
increased by approximately 3.5 per cent in 2014 compared with a growth rate of
2.8 per cent over 2013. Transaction numbers have been rising over the
second half of the year indicating a rise in buyer demand, affordability
pressures are relatively tame and rental yields are higher than what can
typically be found in Sydney and Melbourne. While we aren’t expecting
values to surge across Adelaide in 2015, a steady market with values continuing
to show a modest rise is the likely outcome.
Perth:
The Perth housing market moved through the peak of its growth cycle in December
2013 when then annual rate of growth was recorded at 9.9 per cent. Since
then the annual rate of growth has drifted substantially lower and we expect by
the end of 2014 the annual rate of growth will be closer to one per cent.
Population growth into Western Australia has slowed sharply, which is reducing
demand for housing at a time when there is a large amount of new detached housing
approved for construction. Additionally, the previously strong Western
Australian economy is progressively weakening as the pipeline of large infrastructure
projects winds down. Dwelling values are likely to continue their weak
trend and may potentially end the next calendar year lower.
Hobart: The
Hobart housing market has been the weakest of any capital city post GFC. In
fact, Hobart dwelling values remain 3.9 per cent lower than what they were at
the beginning of 2009. More recently, housing market conditions have
started to improve across Hobart. Transaction numbers have recorded a sharp
rise from a low base and dwellings show a remarkable level of affordability
compared to other capital cities and gross rental yields are the second highest
of any capital city after Darwin. Dwelling values are likely to finish the
2014 calendar year about six per cent higher, and as demand from lifestyle
buyers continues to rise, we expect Hobart home values to continue their
moderate trend higher during 2015.
Darwin:
The Darwin housing market has been a solid long-term performer, recording the
highest rate of capital gain over the past decade across the capital
cities. Dwelling values have increased by 17.5 per cent over the length
of the current growth cycle, however growth in dwelling values has been
trending lower over the second half of 2014. The 2014 calendar year is
likely to see Darwin dwelling values increase by approximately 1.5 per cent. Prospects
for further growth over 2015 are diminishing due to a wind down in the major
infrastructure projects that are currently under way in Darwin. The Darwin
housing market is still providing the highest gross rental yields of any capital
city market, however it’s likely investor demand will taper in line with
capital growth.
Canberra:
The national capital’s housing market saw a material slowdown over the second
half of 2014 with dwelling values likely to finish the second half the calendar
year approximately one per cent lower. Uncertainty surrounding the local
labour market, Federal Government job cuts and potentially an oversupply of
housing are all factors that are likely to contribute flat to falling housing
values during 2015.
Regionally: We’re expecting ‘lifestyle’ markets to continue their bounce back in
buyer demand and values. At the same time, the downturn in commodity
prices and mining-related infrastructure spending is likely to continue to
dampen housing markets across resource intensive regions.
Lawless says central to housing
market performance will be the direction of interest rates. There’s
growing debate that the next rates movement may be down rather than up. A
further reduction in the cash rate will bring mortgage rates even lower than
their current record low settings. Theoretically, lower rates should
provide a boost to housing market conditions, however if this stimulus does
transpire, it’s likely to be balanced by pervasively low consumer confidence
and softer labour markets, which show unemployment is already at its highest
level in a decade and forecast by Treasury to move higher over the coming
months.
Additionally, Lawless says, the impact of the
recent APRA announcement around investment lending may act to restrict the
availability of finance to investors. The banking sector will be under
scrutiny to keep growth in investor loans at slower than 10 per cent pace of
growth, which is likely to have some downwards pressure on investor-related
housing demand.
Overall, we’re expecting another solid year of
housing market conditions and further capital gains, albeit at a more
sustainable rate that what we’ve seen over 2014.
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Top sellers in the south
Top sellers in the south
Posted on Monday, December 15 2014 at 10:49 AM
National residential property website realestate.com.au has released its quarterly ‘Top Sellers’ Markets’ figures, which reveal that South Australia is in the lead when it comes to demand from potential buyers searching on the website.
The
most recent list of top 10 suburbs with the most people looking per listing is
as follows:
For
the previous quarter, June-August 2014, New South Wales suburbs dominated the
list, while a year previously, both NSW and SA were strong contenders:
Previous quarter, June-August
2014
The
top suburb, Parkside, along with Norwood, Cherrybrook and Bella Vista, all
feature again this quarter showing their continued strength.
Continuing
to hold the hottest suburb in Australia title, Parkside has now featured at the
top seven times over the past 11 quarters. Parkside, Norwood and Cherrybrook
have all featured in Top Sellers’ Markets since last year. Since last year, two
Victorian suburbs have emerged this quarter – Albert Park and Ringwood North –
demonstrating that state’s popularity.
Principal
at Harcourt Brock Williams John Williams explains that locals in SA are house
proud, and the character homes that define Parkside are houses that people are
definitely proud of.
“South
Australians love their character homes,” Williams says, “and there are plenty
in Parkside that are really affordable… You don’t really see this in other
states, which is why properties in SA are consistently in high demand.”
Realestate.com.au’s
head of sales, Tom Ainsworth, says that a position in the Top Sellers’ Markets
is favourable for sellers, as it highlights high demand for properties in these
suburbs.
“If
a suburb is consistently featuring on the Top Sellers’ Markets list,” he says,
“it shows that buyers are determined to find a property in this area and are
always checking the site to see if a listing has come up.”
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SMSF recommendations “unhelpful and self-defeating”
SMSF recommendations “unhelpful and self-defeating”
Posted on Wednesday, December 10 2014 at 4:39 PM
A recommendation to abolish leveraging in self-managed super funds (SMSF) has received stern criticism from advisory firm Chan and Naylor.
The accounting and wealth advisory group says taking away the opportunity to borrow within SMSFs means many Australians won’t be able to purchase
long-term growth assets that pay for their retirement.
“The Financial System Inquiry’s (FSI) recommendation that the government
consider abolishing the ability to leverage debt within self-managed super
funds is unhelpful and self-defeating counsel that ignores Australia’s future
retirement needs and reflects the ongoing hypocrisy of the broader financial
services sector.”
The FSI suggested the action in order to improve
SMSF resilience in the wake of the GFC.
Ken Raiss, managing director at Chan
Naylor, says rather than discouraging investors by restricting borrowing,
government needs to look at encouraging more investment via SMSFs.
“With Australia’s welfare safety net already
under severe strain, more Australians must be encouraged to prepare for an
independent retirement, and being able to purchase and retain an asset that
grows in value over the next 30 years within a prudently managed SMSF is an
excellent way of achieving this outcome.”
Raiss also says the recommendation is
hypocritical as the same rules won’t apply to geared managed funds dealing in
securities and shares.
“The ultimate irony is that should these funds
implode for whatever reason, then it is the Government who will be left to pick
up the pieces via tax payer funded compensation arrangements,” he says.
“Clearly as money devalues and the cost of
living continues to increase, being able to purchase and retain a growth asset
within super is an excellent means of accumulating wealth to contribute towards
an independent retirement.”
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WA housing affordability improves
WA housing affordability improves
Posted on Monday, December 08 2014 at 10:29 AM
There’s good news for homebuyers according to the latest Adelaide Bank/ Real Estate Institute of Australia housing affordability report for the September quarter.
The
report shows an improvement across Australia in housing affordability with the
proportion of income required to meet loan repayments decreasing by 0.5 per
cent points to 30.4 per cent during the September quarter.
President
of the Real Estate Institute of Western Australia (REIWA), David Airey, says the
market in WA is even more favourable because the proportion of family income
needed to meet average loan repayments dropped from 26.6 per cent in the June
quarter to 25.9 per cent in the September quarter.
“This means that homebuyers in WA can avoid ‘housing
stress’ by remaining under the 30 per cent threshold regarded by economists as
the safest benchmark for comfortable living with a balance between income and
housing expenditure,” Airey says.
The median purchase price for first homebuyers in
September was $450,000 in metropolitan Perth and $355,000 in the regions. Of
all Australian first homebuyers who purchased during the September quarter,
25.1 per cent were from WA.
The Reserve Bank left the cash rate on hold at 2.5 per
cent this year, which marks one of the longest periods of interest rate
stability.
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Entire year of steady rate for first time in a decade
Posted on Tuesday, December 02 2014 at 2:30 PM
In its final announcement for 2014, the Reserve Bank of Australia (RBA) has today announced that there will be no change to the official cash rate this year, keeping it at 2.5 per cent for the 15th meeting in a row.
RBA
governor Glenn Stevens said at the Monetary Policy Decision meeting in Sydney:
“While weakening property markets present a challenge in the near term,
economic policies have been responding in a way that should support growth.”
He
went on to report that global financial conditions remain accommodative and
long-term interest rates and risk spreads remain low.
“Overall,
the Bank still expects growth to be a little below trend for the next several
quarters,” he said. “Inflation is running between two and three per cent, as expected, with recent data
confirming subdued rises in labour costs. Although some forward indicators of
employment have been firming this year, the unemployment rate has edged
higher.”
Noting
that dwelling prices have continued to rise and the exchange rate has been
trading lower recently, he concluded: “The most prudent course is likely to be
a period of stability in interest rates.”
Reacting to the announcement, CoreLogic RP Data
research analyst Cameron Kusher said: “With
home value growth continuing to moderate in November and dwelling and work
approvals recently slipping, there may be some concern that the housing market
alone is not providing enough economic stimulus as the mining and resources
investment activity subsides and commodity prices fall. Nevertheless the
RBA has again kept official interest rates on hold this month.”
Housing
Industry Association chief economist Harley Dale said: “The odds are shortening
on Australia experiencing its longest period of interest rate stability in
modern history.
“We
would reach that milestone in March next year and today’s RBA statement
strongly points toward that outcome.”
Dale
went on: “In reflection of the uncertain and challenging economic environment
we face, steady interest rates would more likely be interrupted in the short-term
by a further reduction rather than an interest rate hike, although there is no
hint from the RBA that such action is in prospect.”
He
concluded: “We’ve just seen an impressive update for ABS building approvals
supportive of very elevated levels of new home construction persisting into
next year. However, approvals have effectively tracked sideways through most of
2014. New home building taking a further step up will require policy makers to
step in and undertake significant reform, not sit back and expect record low
borrowing costs to generate a fresh round of upward momentum.”
The
next rate decision will take place in February 2015, after a break in January.
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Surprise GDP slowdown
Surprise GDP slowdown
Posted on Wednesday, December 03 2014 at 1:54 PM
Third quarter GDP data released by the Australian Bureau of Statistics (ABS) shows an unexpected drop in activity.
A spokesperson for the Housing Industry
Association (HIA) says the numbers reveal Australia’s economy grew by just 0.3
per cent, an annual rate of 2.7 per cent when compared to the September quarter
last year.
This result compares poorly with growth of
0.5 per cent during the previous quarter.
The declining domestic demand affects
dwelling construction, government investment and private business investment.
Shane Garrett, HIA senior economist, says
most analysts were expecting growth well above the 0.5 per cent mark.
“At this stage, exports are the crucial
ingredient to keeping the economy on its feet, although new dwelling investment
remains healthy in terms of annual growth,” Garrett says.
New dwelling investment
contracted by 1.1 per cent during the September 2014 quarter, while renovations
activity experienced a decline of 0.7 per cent. Total dwelling investment
therefore fell by 0.9 per cent during the quarter. Compared with 12 months
earlier, new dwelling activity was 10.2 per cent higher, with renovations
activity up by 1.5 per cent.
Garrett believes the figures
will fuel appetite for more rate drops.
“Coming at a time when a more downbeat
perspective regarding Australia’s economic prospects was already in the
ascendancy, an elevated focus on a possible further rate cut is likely to be
one consequence of today’s result.”
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Homebuyers aren’t establishing auction strategy
Homebuyers aren’t establishing auction strategy
Posted on Monday, December 01 2014 at 2:48 PM
New research conducted by St George Bank has revealed that six out of 10 homebuyers don’t have a strategy in place to help secure that winning bid under the hammer, and nearly half (48 per cent) admit to not being as prepared as they could be ahead of an auction.
The survey found more than half of Australians have missed out on
purchasing their dream home simply because it became too competitive during the
buying process.
The research shows the top three most difficult house hunting and buying
processes are:
- Making an offer or bidding at auctions
- Evaluating which properties provide good value
- Choosing the right suburb to buy in.
More than half say they’d be more confident about securing a home if
there was an easier and simpler way to evaluate and compare properties for
sale.
Ahead of attending an auction, one in two Aussies experience anxiety and
nearly half said it had a negative impact on their sleep patterns.
Andy Fell, retail banking general manager at St George, says the survey
results show some Australians are finding it challenging to take steps on the
property ladder and goes on to describe a new online hub designed to help
customers be more prepared.
“HomeHero.com.au will help buyers make the right choices to set up for
the future with a wide range of content from finding out if a property is a
great deal, to knowing what to look for in building, pest and strata
inspections,” he says.
Some more findings from the survey
- When attending an auction, 48 per cent of respondents
didn’t feel as prepared as they could have been. - Ahead of attending an auction, 51 per cent of
respondents experience anxiety, followed by insomnia (18 per cent) and sweaty
palms (17 per cent). - Activities/commitments respondents have missed out on
by having to attend property searches or auctions are housework/cleaning (52
per cent), catching up with friends (39 per cent) and exercise (38 per cent). - Most respondents
feel confident when it comes to knowing what to look for in a property
inspection (49 per cent) and organising a building inspection or strata (43 per
cent). - During the house-hunting process, 48 per cent said
sleep patterns were the biggest negative impact on their lives, followed by
productivity at work (33 per cent) and relationship with their partner (23 per
cent).
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Australians comfortable with mortgage debt
Australians comfortable with mortgage debt
Posted on Wednesday, November 26 2014 at 4:26 PM
Data released by one Australian bank indicates that that 68 per cent of Australian households are ‘very comfortable’ with their home loan.
The ING Direct Household Financial Wellbeing Index for the September 2014 quarter shows almost one in
three households are mortgage-free and 44 per cent of Australian borrowers are
paying down their loan ahead of time.
The index
rates household comfort levels across six key aspects of personal financial wellbeing
including credit card and mortgage debt, savings, investments, household income
and ability to pay bills.
Mark Woolnough, head of third party
distribution at ING Direct, says consumers are taking advantage of the current
low cost of borrowing.
“Almost
half of all homeowners are making the most of the current low interest rate
environment and are getting ahead with their home loan repayments, which is a
good strategy that will help them to maintain their financial health well into
the New Year.”
The
ING report shows New South Wales as the state most comfortable with its
mortgages.
Financial wellbeing across
all five mainland states are:
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