Category: Finance

First quarter of the year sees home values stabilise

The recent release of the RP Data-Rismark Hedonic Daily Home Value Index results for March showed that national home values rose 0.2 per cent in March 2012 – a potential sign that the Australian housing market is stabilising.  The market has remained unchanged for the quarter ending 31 March 2012; this flat result is the strongest result since March 2011 when values increased by 0.7 per cent.  

According to the managing director of Rismark International, Ben Skilbeck: “While the housing market remains soft, the zero per cent change over the first quarter of 2012 demonstrates that it is consolidating its position following the decline seen in the calendar year 2011.”

Over the month, the resource rich states delivered the strongest gains with Perth rising 1.4 per cent, Darwin up 1.1 per cent and Brisbane increasing by 0.8 per cent.  

The Index saw that the flat result seen over the March quarter was largely driven by the Sydney housing market which achieved the strongest gains over the quarter, with values rising 1.1 per cent.  Values were down across many of the other capital cities with the most significant drop recorded in Adelaide where dwelling values were down 1.5 per cent.  

Rismark’s Ben Skilbeck points out a number of factors that indicate an improvement in housing market conditions may have occurred over the past few months.  

“The ratio of national house prices to household disposable incomes is currently below the decade average.  Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwellings are at levels not seen since November 2009.  First home buyers as a proportion of home loans approved are back to levels not seen for two years,” said Mr Skilbeck.  

Charles Tarbey, Owner and Chairman of CENTURY 21 Australia said of the results: “While we must note that much of the improvement seen in the housing market is due in part to the Sydney market which rose 1.1 per cent over the quarter, we are nonetheless seeing signs of a potential stabilisation of home values. 

“Other factors such as strengthening auction clearance rates and improving demand from first home buyers are certainly encouraging indicators of both the current state of the national housing market and the potential for continued improvements over the course of 2012,” concluded Mr Tarbey.  

For more information about available property purchase opportunities in your area, please contact your local CENTURY 21 agent. 


0 comments | Posted by Charles Tarbey on 10/04/2012 at 10:17 AM | Categories: Finance - Property Management - Investors - First Home Buyers - State of the Market -

A good time for buyers in the housing market

The residential property market can sometimes be a confusing space to navigate, especially with the media attention it often generates and receives.  The views of property commentators, as well as the constant flow of data released, often appear to be conflicting, with the media conveying sometimes contradictory signals to buy, sell, or hold. 

I consider myself fortunate to be in the position I am, as I have access to our internal company data as well as the experience and opinions of the thousands of real estate agents in the Century 21 network, who are spread right across the entire country.  Having contact with such sources allows me to keep a firm grip on what’s happening in the market, in both capital cities and rural areas. 

At the moment, with the conditions that we’re seeing across the national market, it is my feeling that those who are ready to buy are positioned quite nicely.  According to internal CENTURY 21 data, which is a reflection of all CENTURY 21 offices across Australia, residential sales volumes are down of late – we have seen a decrease of 30 per cent from where they were around this time last year. 

And with transactions down, there are still significant levels of stock on the market; our figures indicate that there are approximately 67 per cent more properties for sale across the national CENTURY 21 network than there were at around the same time last year. 

Add to these figures the findings of the recently released RPData-Rismark Home Value Index, which saw a national decline of 1.3 per cent in capital city home values over the quarter to February 2011. 

So what does all of this mean for buyers? The fact that property transaction volumes are down could suggest that the market is currently wary and approaching purchase decisions with some trepidation.  If this is the case, then we are looking at a period where demand is low, which ironically can help to create favourable conditions for buyers.  The levels of competition that would otherwise need to be contended with are lower, which allows for some breathing space when it comes to making a decision, as well as giving you room to negotiate on price. 

And with the Reserve Bank of Australia deciding last week to keep interest rates on hold for the next month at least, buyers who require financing have another window of opportunity to obtain mortgages with favourable interest rates. 

It would appear therefore, that the property market in its current state may hold some good opportunities for those who are in a position to make a purchase.  I would suggest that these people make the most of this period and devote some time to researching and comparing the various properties and financing opportunities that are available.

Remember that our CENTURY 21 real estate agents all over the country are happy to answer any questions you may have about the properties that are available for purchase and general market conditions in your specific area. 


0 comments | Posted by Charles Tarbey on 08/04/2011 at 11:25 AM | Categories: Finance - Investors - First Home Buyers - State of the Market -

Relief as RBA keeps interest rates on hold

In a move that was not too surprising, the Reserve Bank of Australia decided to leave the official cash rate on hold at 4.75 per cent when it met last week.  This was the third meeting in a row that the decision to keep rates steady has been made.

In his statement following the announcement, the RBA Governor Glenn Stevens seemed to indicate that rates would remain at current levels for awhile yet, saying the Board judged that the mildly restrictive stance of monetary policy remained appropriate in view of the general macroeconomic outlook.  He also referred to the bank’s expectation that inflation over the year ahead will continue to be within the 2 – 3 per cent medium term target.

For the residential property market, this decision is excellent news and one that I think will provide relief for many homeowners, prospective buyers and investors. 

The decision has come at a good time as over recent months the release of data regarding the housing market has been a mixed bag, with some pieces of news putting a bit of a dent in market confidence. 

One such piece was the release of the Housing Industry Association/Commonwealth Bank housing affordability index, in which worsening housing affordability was evident at a national level.  The index decreased by 1.8 per cent in the final quarter of 2010, ending the year ten per cent lower than the same point in 2009. 

Additionally, residential construction activity seemed to exhibit subdued growth in the last three months of 2010, with figures from the Australian Bureau of Statistics showing that the value of residential building work fell by 1.1 per cent in the December quarter. 

It is evident that for many Australians the goal of home ownership, and then actually holding on to that property, is becoming more challenging.   Therefore, news that interest rates have been kept on hold for another month should help to alleviate some of the pressures felt in the housing market, at least for the short term.  At the very least, this reprieve allows people to prepare for future rises which are expected at some point in 2011.     

I would definitely advise anyone with a mortgage to be practical in their assessment of rates – there is a strong possibility that the RBA will decide to increase them at some point before the end of 2011.  Any change in rates will have an effect on your monthly interest repayments, and thus need to be factored into your budget.  The further ahead you can plan for these changes and prepare, the better placed you will be.


0 comments | Posted by Charles Tarbey on 07/03/2011 at 4:14 PM | Categories: Finance - State of the Market -

The RBA leaves interest rates on hold

At its meeting last week, the Reserve Bank of Australia decided to leave the official cash rate unchanged at 4.75 per cent.  This choice is good news for the residential property market and will definitely help to ease the pressures felt by many Australian home owners and prospective buyers. 

From where we sit at CENTURY 21 Australia, this decision was the appropriate one for the RBA to make.  Parts of our nation have recently been devastated by flooding, the full impact of which we are yet to understand.  Additionally, recent figures suggest that underlying inflation is currently falling within the RBA’s medium-term target range. 

In his statement that followed the meeting, the Governor of the RBA, Glenn Stevens, referred to several aspects of economic activity, including the impact of the Queensland and Victoria floods and current inflation,  that were influencers of the bank’s decision to leave rates unchanged and give some idea as to how the bank will move in future months.   

According to the bank, inflation is consistent with the medium-term objective of monetary policy, with recent data showing underlying inflation at around 2 ¼ per cent in 2010.  The RBA expects that inflation over the year ahead will continue to be consistent with the 2 – 3 per cent target. 

The flooding that has occurred in Queensland and Victoria is currently having a temporary adverse effect on economic activity and prices, according to Governor.  However he also stated that the bank’s preliminary assessment is that the net additional demand from the required rebuilding that will take place is unlikely to have a major impact on the medium-term outlook for inflation. 

Essentially the RBA looks to remain cautious about interest rates.   However with some generally positive comments about the Australian economy, as well as a prediction that inflation will continue to remain consistent with the bank’s target over the year, it seems that for the next little while at least, borrowers can take comfort that rates shouldn’t drastically change. 

Having said that, I would still encourage mortgage holders to take advantage of this rate reprieve and use it as a time to prepare for the increased mortgage payments that will come with rising interest rates in the future, which is a very real possibility. 

And for those of you who are preparing to enter or re-enter the property market, this period of steady interest rates may be a good time for you to act, if of course you are in a ready financial position to do so.


0 comments | Posted by Charles Tarbey on 07/02/2011 at 12:22 PM | Categories: Finance -

Finance figures suggest real estate off to a positive start in 2011

The real estate industry had what looked to be some positive news last week with the release of housing finance figures from the Australian Bureau of Statistics.  The figures considered the level of finance commitments in November 2010, taking into account the different classes of borrowers as well as the varying purposes for seeking finance (e.g. purchase of a new home, construction of a home, etc). 

In what was a positive sign for the Australian real estate market, the figures showed a 2.5 per cent increase in the number of mortgages obtained by owner-occupiers in November 2010.  This was the largest monthly increase seen in the figures since May 2010. 

My colleagues and I at CENTURY 21 Australia are hopeful that such an increase may suggest that Australian home buyers are regaining confidence in the property market.  Last week, our Chairman and Owner, Charles Tarbey, said that the figures were pleasing and represent a gradual recovery in the housing market from the lows in issued mortgages that were seen in mid-2010.

In further good news, the ABS data also showed that finance for the construction of new dwellings rose 2.7 per cent, while new owner-occupied home finance grew by 9.7 per cent over the period.   

Understanding the true meaning of the figures may prove to be somewhat tricky due to the fact that the Reserve Bank raised interest rates in November, of which the total impact remains to be seen.  However, the data is still encouraging news for the housing industry and may indicate a strengthening demand amongst buyers. 

The only concerning aspect of the figures is the fact that there was only a slight increase in the number of first home buyer finance commitments (as a proportion of the total housing finance market) – rising from 15.4 per cent in October 2010 to 15.6 per cent in November 2010. 

It is becoming fairly clear that first-time property purchasers are feeling the impact of the rise in interest rates that we saw last year, along with the climbing prices of homes.    It may be time for governments throughout Australia to go back to the drawing board and consider the best ways to incentivise and encourage our citizens to purchase their first properties. 

With the exception of the first-home buyer figures, the ABS data represented some good news for real estate and its outlook for the coming year.  As I mentioned, we are mindful that the full impact of the November rate rise may yet to be realised, and as such will await the December 2010 data to get a better picture of what is likely to be in store for the year.   

 


2 comments | Posted by Charles Tarbey on 24/01/2011 at 2:44 PM | Categories: Finance -

Banking reforms see Home Loan exit fees abolished

In a package announced last week which included a variety of different banking reforms, the Treasurer Wayne Swan revealed the Government’s proposal to abolish home loan exit fees.  This package in its entirety was put together to afford Australian consumers greater flexibility and choice when it comes to their banking. 

Under the reforms proposed by the Treasurer, home loan exit fees will be abolished on all mortgages taken out from July 1, 2011. 

In many ways, the package will be a win for consumers.  I have found it to be quite unfair that after working so hard and for so long (many people pay off their mortgages over a period of more than twenty years), consumers should be hit with often significant administration charges for ending their mortgage contract. 

In other cases, the existence of exit fees also means that people cannot take advantage of better deals that are released onto the market.  When you enter a contract that lasts for such an extended period as is the case with a mortgage, it is not surprising that improved offers become available.  

Essentially, the abolition of home loan exit fees should give consumers more freedom to move between mortgage options as lending conditions change over the life of a loan.  In turn, this could go some way in forcing greater competition in the banking sector. 

And while consumers should benefit from this increased competition, I would say that it will also be prudent for borrowers to remain vigilant when comparing mortgage products after July 1 next year.  Unless extra legislation is introduced to prevent banks from bringing in different charges, the reality may be that consumers are faced with a variety of new costs when it comes to searching for the best mortgage deal. 

I’m not saying that these costs will outweigh the benefits of the abolished exit fees, but it may be the case that the basis for the comparison of different mortgage options will change.  Consumers need to understand that banks could decide to implement other charges in order to make up for the lost exit fee income. 

In any case, increased competition within the banking sector is a good thing as it should help to make it somewhat easier for people to obtain better financing for home purchases.  And the cutting of exit fees does have the potential to save Australian borrowers substantially.  I would just encourage consumers to remain abreast of the issues and take advantage of the opportunities to save on costs that the reforms will provide.


0 comments | Posted by Charles Tarbey on 20/12/2010 at 2:55 PM | Categories: Finance - Investors -

Interest rates on hold over Christmas

I think we all breathed a sigh of relief last Tuesday when the Reserve Bank of Australia decided to leave interest rates unchanged for the month of December after raising them to 4.75 per cent from 4.5 per cent last month. 

In his statement after the announcement, RBA governor Glenn Stevens commented that the board saw the current monetary policy setting as appropriate for the economic outlook.  He also noted inflation is expected to see little change over the next few quarters, which suggests that the RBA may just leave rates on hold for a little while yet. 

In any case, the RBA does not meet in January unless under exceptional circumstances, so it seems borrowers and prospective buyers are safe until February at least. 

For mortgage holders the decision is a welcome one and means we don’t have to worry about finding the extra money needed to meet increased mortgage repayments for the time being; instead we can relax and focus on enjoying Christmas and the upcoming holiday period. 

For those who are looking to take on a mortgage to buy a property, hopefully this hold on rates will afford a little bit more certainty about making a purchase and committing to a loan.  

Good news aside, as I have said in other blogs regarding interest rate holds, this RBA decision provides an excellent opportunity for current and soon-to-be mortgage holders to prepare for future rate increases.  Economists are already predicting that the RBA may see a need to tighten monetary policy by the second quarter of next year. 

Try to use this time to plan for interest rate increases.  Consider your budget and look at where you can afford to put little bits away here and there so that if your monthly repayments get larger, your household resources will not be strained too much. 

For example, if one month a bill is less than expected, instead of spending, save the extra amount that you had allocated to the expense.  It is definitely true that a little can go a long way, and you will appreciate having a pool of savings to help lessen the impact of larger mortgage repayments if they arise. 

But for the meantime, you’ve now got at least another month where you don’t have to worry about interest rate rises, so enjoy! 


0 comments | Posted by Charles Tarbey on 13/12/2010 at 9:37 AM | Categories: Finance - State of the Market -

RBA lifts interest rates

For the past five months, the first Tuesday of every month has seen us here at Century 21 breathe a sigh of relief as the Reserve Bank of Australia delivered their decision to keep interest rates on hold.  We assumed that the inevitable – a change in rates – would come at some stage, however each month brought the good news that reprieve had been granted for a little while longer.   

But apparently this wasn’t to last with November bringing the (somewhat unexpected) news that the RBA had decided to lift the official cash rate by 25 basis points to 4.75 per cent after five consecutive months of keeping it on hold at 4.5 per cent. 

In his explanatory statement, Glenn Stevens, Governor of the RBA, cited the reasons for the bank’s decision.  He explained that as Australia is currently experiencing historically high terms of trade the economy is now subject to a large expansionary shock and has relatively modest amounts of spare capacity.  He also noted that there is a risk of inflation rising over the medium term. 

The board’s decision therefore was that the “balance of risks had shifted to the point where an early, modest tightening of monetary policy was prudent.”

For ordinary Australians with mortgages, the rate rise of 25 basis points will see around $50 added to the monthly repayments on an average $300,000 home loan.  However we’ve already seen two (at time of writing) of Australia’s big banks, the Commonwealth Bank and ANZ, raise the rates on their standard variable home loans by significantly more than the RBA. 

This rate rise therefore has the potential to make things difficult for many Australian families leading into Christmas and perhaps next year as well, as the possibility for further rate increases remains. 

So what can mortgage holders do to lessen the blow? I for one am a firm believer in the effectiveness of forward thinking and practical household budget management. 

It could be an incredibly worthwhile exercise to sit down and plan out your month to month expenses as well in advance as is possible.  By factoring in any expenses that you know are coming, such as water and electricity bills and home loan repayments, you will be able to reduce the likelihood of overspending and be in a better position to incorporate the additional mortgage repayments less painfully into your budget. 

Mortgage holders should be aware that future rate rises (and therefore increased mortgage repayments) are definite possibilities.  However the simple act of planning can go a long way to lessen the financial impact on your family.  


0 comments | Posted by Charles Tarbey on 15/11/2010 at 11:37 AM | Categories: Finance - State of the Market -

Have you considered refinancing your home loan?

Home loans can be quite interesting.  They are often a topic of interest in the media and most people know of their existence even if they don’t actually have a mortgage themselves.  However the finer details of what a home loan involves and how they work are often misunderstood, even to people who are mortgage holders. 

Did you know, for example, that even if it takes you twenty plus years to repay the amount you originally borrowed to purchase a property, you do not have to stay in the same home loan and there are often options for you to change lenders? In some cases the process of refinancing allows people the flexibility to improve their mortgage. 

Mortgage holders refinance for different reasons, however a common motivation is usually because an alternative home loan product has become more suitable.  Changing personal circumstances, for instance, may mean that different home loan features are needed.  In addition, interest rates movements over the years could see less expensive mortgage options become available.

The best way to start the refinancing process is often to take a good look at your current home loan and make sure that you fully understand your interest rate, all fees and the benefits you receive.  You may find that your current loan has features that were relevant when you first needed finance, however are no longer necessary (or vice versa).  Altering these features could have an effect on the interest rate you must pay. 

With a comprehensive knowledge of your current mortgage, you will now be in the best position to consider alternative home loan products and compare them with your own.
 
In order to see what mortgage products are on offer in the marketplace, a home loans broker may be your best starting point.  Brokers such as CENTURY 21 Home Loans will be able to show you a wide variety of loan choices from both your own lender and others, allowing you to easily compare the majority of options available and assess their suitability.  

Be sure to take into account all of the extra charges associated with each option, as well as any exit fees that may be incurred if you close your current mortgage.  Although you could find a mortgage with a lower interest rate, there may be no point in switching if the exit fee you will incur is larger than the monetary savings you could make. 

In the end, even the simple research process of comparing your loan to other mortgage products and talking to a mortgage broker, such as those at CENTURY 21 Home Loans, can set your mind at ease that your current loan is the best product for you. 


4 comments | Posted by Charles Tarbey on 25/08/2010 at 2:40 PM | Categories: Finance -

Dealing with your mortgage to avoid stress

After six interest rate rises since October last year, the past couple of months have been somewhat of a relief for mortgage holders, with the Reserve Bank of Australia keeping interest rates on hold at 4.5 per cent.  But rates won’t stay on hold forever and the RBA has already said that it will lift rates in August if it is uncomfortable with inflation levels. 

For those of you dealing with a mortgage, such uncertain conditions can often be tricky and usually require some forward planning. 

It is generally best to start considering your mortgage when your situation is relatively comfortable and not under stress.  At this point, an honest assessment of your household spending is a great way to arm yourself against future pressures.  By way of example, a rise in interest rates to 4.75 per cent would add $48 per month to a $300,000 mortgage.  By understanding the breakdown of how much you are spending on luxuries compared with necessities, if times get tough you will already know what you can start to cut back on, easing difficulties quickly. 

No matter how comfortable you are with your mortgage repayments, it is generally always a good idea to contribute more to your mortgage when rates are lower.  You will appreciate these  extra contributions if interest rates go up and you find yourself not able to deal as well as you thought you would.  If on the other hand interest rates don’t affect you too much, then these extra payments will simply enable you to pay off your mortgage more quickly, saving yourself interest in the process. 

Many people often get themselves into a spot of bother with their mortgage.  Normal life situations, such as job loss, can arise which understandably make it difficult to meet mortgage obligations.  In these circumstances, the best course of action is usually to sit down and explain the situation to your mortgage lender.  Depending on your lender, and the specifics of the situation, there could be a variety of options available to make things easier for you.   

In any case your lender will appreciate the fact that you have come forward to explain the situation and should work to determine a solution that suits everybody.  After all, a happy mortgage customer is generally always in the best interests of a lender. 

Although interest rates can pose some uncertainty, there are ways to handle your mortgage in a manner that isn’t too stress-provoking.  I would encourage all mortgage-holders to stay on top of things and build equity wherever possible.  CENTURY 21 Home Loans may also be able assist with your home finance questions - for more information, just take a look at the website - http://www.century21homeloans.com.au

 

 


1 comments | Posted by Charles Tarbey on 27/07/2010 at 1:52 PM | Categories: Finance -