March 8, 2013
Now that we’re well into 2103, homebuyers and investors looking to the property markets for direction are seeing positive signs and responding with renewed interest.
BY MICHAEL YARDNEY
This is reflected in more people attending open homes, offers being made to buy properties, higher auction clearance rates and property values slowly rising.
March 6, 2013
Positive data. It’s almost everywhere you look lately. Jobs, house prices, new home sales, retail spending and consumer confidence to a name a few. So, why has there been a mass exodus of first-time buyers from most markets?
BY SHANNON MOLLOY
An economist once described first homebuyers as the “key ingredient” to market momentum. When they emerge in force, demand for lower-end properties soars and the folks who own and live in those types of homes are buoyed to move on and up.
It’s that upgrader market that really drives things, he told me. You can have a good number of mums and dads, investors and top end buyers out there, but it won’t make much of a difference without the first-timers in the mix.
Australian Bureau of Statistics figures released last month showed first homebuyers made up just 15.8 per cent of all home loans financed in November – the lowest level since July 2004. And that’s smack bang in the traditionally busy buying period.
On a state-by-state basis, the figures are grim. In New South Wales, first homebuyer numbers are now at a 20-year low and collapsed to 9.5 per cent of all home loans financed in November. In Queensland, the number of first-timers is down a whopping 33 per cent.
Both of these states ditched their First Home Owner Grant (FHOG) schemes last year and replaced them with bonus incentives for people building a new home. These figures indicate they’ve been a resounding failure, as I tipped they might be.
Last September when the Queensland Government axed its FHOG for existing properties in place of a First Home Owners’ Construction Grant for new dwellings, I declared that it’d have “all the success of a one-legged giraffe trying to parallel park a Volkswagen in a swimming pool”.
Who knew it’d be worse. Since launching the scheme, just 126 people have taken up the $15,000 grant. Wow. That’s what I called a failed experiment.
In New South Wales, the FHOG for existing dwellings was also axed in favour of a grant for new builds. Andrew Wilson, senior economist for Australian Property Monitors, believes the collapse of first homebuyer numbers late last year was due to an earlier rush to take up the old grant before it ended.
“Demand (was) brought forward earlier in the year as a consequence of changes to State Government buyer incentive schemes,” he says. “Numbers have collapsed in New South Wales and Queensland.”
Getting into your first home is hard enough since the GFC. Lending criteria is stricter and you need a much larger deposit. A grant for an established property would provide a big help and instill a greater sense of confidence. Plus, it’d almost certainly be for a home near where these people work and play – not a house-and-land package in some manufactured outer suburbs community.
Sure, some first-timers want to live in a brand spanking new house in a masterplanned community… but I dare say they’re the minority. The numbers surely prove that.
I think Real Estate Institute of New South Wales president Christian Payne says it best: “First homebuyers are an essential link in the chain of the entire market and by excluding them it causes a great disturbance.”
In his view, the idea of ditching incentives for established homes in favour of building grants is severely flawed. If governments really want to help, they should get out of the way – and take convoluted planning schemes and outrageous taxation with them.
We’ve got so many pieces of the puzzle in place for market stability and wider recovery. It’s frustrating to see inept politicians making decisions on a whim without considering the wider implications – that first-time buyers will be stuck in a painful rental cycle for longer, unable to kick-start their version of the Australian dream.
The final word goes to Payne, who sounds about as frustrated as me about these grants.
“First homebuyers are a unique category of property consumers and the jump they have to make from a standing start to acquiring a property can be the biggest that any property buyer has to make.
“We need to recognise they need special assistance… it’s imperative that the first homebuyer incentives for the purchase of existing property be reintroduced.”
Shannon Molloy is the deputy editor of Australia Property Investor magazine www.apimagazine.com.au
March 1, 2013
Is property still a good investment? The last few flat years in our markets and concerns about the potential for future capital growth has some investors worried.
BY MICHAEL YARDNEY
Some people might be wondering what’s ahead for property, especially as they’re hearing some commentators suggesting we’re in unprecedented times. You just have to look back further.
February 27, 2013
I was chatting to a buyers’ agent recently about new trends in different buyer groups and he made an interesting prediction. When it comes to sniffing out the next big urban market, he reckons the key is to follow the hipsters.
BY SHANNON MOLLOY
You might find them lazing in an organic teahouse, bashing out their memoirs on a 60-year-old typewriter they found in an op shop. Or they might be attending some uber cool but very off-the-grid art or music festival in a disused warehouse in the middle of the day. Failing that, they’ll be riding around on a repurposed pushbike with a basket but no gears.
February 22, 2013
For much of last year, Australian housing markets were a ‘tug-of-war’ with low interest rates pulling hard on one end of the rope and poor consumer confidence at the other.
BY MICHAEL YARDNEY
Despite many of the fundamentals being sound, consumers were sitting on the sidelines waiting to see how the economy played out or perhaps for someone to ring the bell indicating that markets had bottomed.
February 20, 2013
For the past few years, property investors have been obsessed with mining towns. It’s understandable – the dizzying profits and yields on offer in resource-rich regional backwaters were pretty incredible. The accelerated development of major projects and ballooning workforces meant the going was pretty good.
BY SHANNON MOLLOY
Sure, fortunes have shifted in some industry-driven parts since those post-GFC glory days – Moranbah in the Bowen Basin region in central Queensland is a good example. However, for a long time it was those mining towns that presented one of the few success stories in properties.
Podcast: Download (Duration: 8:33 — 4.0MB)
Intro: Welcome to the monthly podcast of Australian Property Investor, Australia’s most trusted and widely-read property investment magazine. For information on how to subscribe to either our print or online magazine, as well as other great property investing information, please visit our website, www.apimagazine.com.au
Shannon Molloy (SM): Hello, I’m Shannon Molloy – deputy editor of Australian Property Investor magazine – and in this episode we’re talking all things home loans.
There’s no doubt it’s been a while since the going was this good for borrowers. For one, banks are sharing a smaller pool of potential customers, thanks to the GFC. So, needless to say, they’re increasingly keen to be competitive. Plus, the Reserve Bank has slashed interest rates several times in the past year or so. It looks like there’ll be a few more reductions across 2013.
But are you taking advantage of these ideal conditions? Could you be saving even more on your home loan? To find out, I’m joined by Loan Market mortgage broker Josh Bartlett. Josh, thanks for your time.
Josh Bartlet (JB): No problem at all.
SM: Tell me, how competitive is the mortgage market at the moment?
JB: As far as a broker’s concerned, there are a lot of people out there looking at the moment. I’d suggest as far as brokers and bankers competing, we’re all starting to up our game as far as professionalism is concerned. We’re now realising we’re not back in 2009 or 2010 anymore. Our service levels need to jump to the next level to give customers what they need.
SM: What’s the best way a borrower can nab the lowest possible rate with a lender? Is it simply a case of asking for a better deal?
JB: It’s a very interesting question. I often speak to a lot of clients who say they’re going to a CBA, Westpac of NAB. If they walk into a bank, I think they’re doing themselves an injustice. A lot of clients probably don’t realise what a broker does enough, to an extent.
As soon as I sit down and go through what we have on our panel – 30 to 40 different lenders, a whole lot of different packages and finding the best structure and rate for them – they start realising how beneficial we really are.
We can start looking at whether they want an offset account, a no-frills kind of product, interest only, principal and interest… that’s when we can start playing the banks off against each other.
It’s important to look at what banks are doing with discounts at the time. A lot of customers wouldn’t realise that at any one time some banks are discounting heavily because they’re trying to build their book.
Sitting down with a broker, it’s a great opportunity to find out which banks are discounting the highest.
SM: There’s plenty to consider when it comes to loan features. What are some of the frills and are they worth it?
JB: It depends on each client’s situation. If you’ve got a high disposable income, sometimes I like to sit down and talk about possibly having a package. A lot of banks charge an annual fee to have a package but sometimes it can benefit the client, depending on their income.
When you get a package you might get an offset account, credit cards available to you and different little niches available. A lot of the time, people don’t use it. If you’re not an investor or have a few different loans, sometimes it’s not worth it at all.
SM: Opting to pay interest-only is popular with some investors. What are the risks and is it for everyone?
JB: Look, definitely not. It sometimes comes down to chatting to your accountant to see if it’s beneficial. It comes down to each individual’s circumstances to see if there’s a negative gearing benefit there.
Other times, it comes down to generational preferences. Everyone has an opinion about what you should do. Old school investors, the older generation, they probably like to make sure their loan is being paid down all the time.
If you’re looking for a taxable advantage, I believe it might be better off to go down the interest-only path. Every single person’s situation is totally different. I like to go through options for customers…
SM: And finally, it’s a hot topic at the moment – fixed or variable. Which would you suggest?
JB: It’s one of those things. As a broker or a banker, anywhere you are, you should never tell people what to do. It’s a hot topic with clients, they always want to know what I’d do.
I always talk about where rates are now, what variables are, the fixed rates and what repayments would be with adjustments. It comes down to options.
At the moment, I’d suggest a 4.9 (per cent) fixed rate is pretty cheap; that’s cheap money. There are a lot of people in the market at least splitting their loans and fixing part of it. It’s kind of hedging your bets.
I mean, 4.99 (per cent) is quite cheap. A lot of people are liking the idea of a fixed rate.
SM: Sounds very tempting. Thanks for joining me, Josh.
JB: Not a problem at all.
SM: Check out the March issue of Australian Property Investor for a special look at fixed versus variable interest rates. Plus, in our cover story, we find out how three young gun investors have amassed more than $1 million in equity.
We also reveal 60 property hotspots where prices are set to shoot up. And, in a special API exclusive, property bear Steve Keen and property bull Christopher Joye face off over the future of house prices.
All of that and more in the new issue of API magazine, on sale now. For subscriptions and more information, visit our website – www.apimagazine.com.au. I’m Shannon Molloy, thanks for listening.
February 18, 2013
There still seems to be a bit of doom and gloom about so I thought it was time I looked at the statistics to see whether the future looks bright or if it’ll be more of the same.
BY PETER KOULIZOS
Firstly, let’s look at property prices. According to RP Data, home values fell 0.4 per cent across the combined capital cities in 2012. Some cities like Darwin, Sydney and Perth increased in value but the rest dropped in value. Read more →
February 15, 2013
Last week I wrote about how Australians are now the wealthiest they’ve been in five years. I bet if you asked the average person how they feel, they wouldn’t be too optimistic about their financial position. Why?
BY MICHAEL YARDNEY
The continual barrage of negative media is still spooking many Australians. With all the overseas worries as well as local concerns – things like the mining boom slowing and pessimism about the state of our economy – folks have been saving rather than spending since the GFC.
February 13, 2013
Sometimes love doesn’t last. What once seemed like such a sure thing in the grips of passion occasionally frosts over without warning, leaving you alone with a heavy heart. Other times, you just don’t feel that way anymore and make a dash for it. And from time to time, no one’s to blame.
BY SHANNON MOLLOY
Like in life, nothing is black and white when it comes to property. The best conditions aren’t always conducive to success and sometimes, against all the odds, you’re left heartbroken.
Read more →
