Flat chat: why units could soon become hot property

Apartments stand out as an affordable choice when it comes to cracking the property market, not to mention downsizing. But a looming shortage may soon push unit values higher.

For many of us, buying a house on its own block of land is the ‘great Australian dream’.

While plenty of people achieve this goal, our property journey is often book-ended by apartment living.

For first home buyers, units can be an affordable choice, costing around 30% less than houses according to CoreLogic.

Then, as we head into our senior years, an apartment offers secure, low-maintenance living, often with a wealth of amenities right on the doorstep.

Apartment demand is outstripping supply

Apartments may be affordable today, but a lack of new apartment construction, coupled with rising immigration levels, points to a looming apartment shortage according to CoreLogic.

And that could push values higher.

Over the next few years, new apartment construction is forecast to be 40% lower in the 2010s, leading to a shortfall of over 100,000 homes by 2027.

Close to 60% of the new home shortfall is expected to be in the apartment market.

On the demand side, CoreLogic says a stronger-than-expected level of migration into Australia has seen overall housing demand “skyrocket”.

Historically, new migrants head to the high-density areas of our big cities, putting extra pressure on the unit market.

As CoreLogic explains, with interest rates potentially easing in 2024, greater demand and tight supply could fuel a “price boom” in the unit market.

Why more of us are choosing apartment living

Modern apartments are packed with the latest design and sustainability features, meaning they are no longer the poor relation of freestanding houses.

Across our major cities, apartments now account for 30% of all homes, up from 23% in 2010.

And the appeal doesn’t just lie with affordability.

Today’s apartments usually come with a wealth of benefits, including:

Government schemes: because apartments are generally cheaper than houses, they’re more often under the price caps for a range of government schemes, including the Home Guarantee Scheme, stamp duty concessions, and first home owner grants (usually for new builds). These schemes can be combined to potentially save you tens of thousands of dollars and get you into the property market years sooner.

Sought-after locations: apartment living can be the difference between living close to work, or facing a long daily commute from the outer suburbs.

Lifestyle advantages: the days of apartments being cramped and lacklustre are over. A variety of on-site amenities, from barbecue areas to pools, gyms and car-wash bays, make unit living convenient and relaxing.

Low maintenance living: not interested in spending precious spare time mowing the lawns or cleaning the gutters? It turns out plenty of others aren’t either. Unlike houses, units require minimal upkeep, letting residents enjoy more quality time.

Improved security: if you’re after a lock-and-leave lifestyle, modern apartments fit the bill. Advanced security features add up to a safe and secure living environment.

Is now the time to take the leap?

Right now, apartments still present an affordable option for first-home buyers, downsizers and investors.

The median apartment price across our state capitals is currently $637,593 – but if CoreLogic is correct, that figure could soon increase as demand outstrips supply.

So if you’d like help exploring your options to purchase your first property – for example, with just a 5% deposit via the Home Guarantee Scheme – then get in touch today to discover your borrowing power.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

3 ways pre-approval can give buyers an edge

There’s a lot to be said for having your home loan pre-approved. But does pre-approval mean you’re putting the cart before the horse? Definitely not. Here are three ways pre-approval can help you get ahead of the competition.

Here’s a handy tip: you don’t have to wait until you’ve found a home you’d like to buy before making mortgage enquiries with a lender.

It’s possible to have a home loan pre-approved before you’ve even started to wear out shoe leather at open home inspections.

It can mean you’re ready to go with your loan, with only a few formalities to sort out, as soon as you’ve found the right place.

Even better, pre-approval doesn’t mean you’re committed to taking out a loan. It’s not a problem if you have a change of plans.

Here are three ways home loan pre-approval can put you in front in today’s market.

1. Pre-approval gives you a budget to stick to

When it comes to a major step like buying a home, there’s no room for guesswork.

With a pre-approved home loan, you know exactly how much you can borrow, and that’s the foundation for your home-buying budget.

It means you can focus on homes within your price range, and make an offer with confidence.

Pre-approval is especially important if you plan to bid at auction. It sets a clear line in the sand for your highest bid.

2. You can act fast

In today’s market, homes are selling in turbo-charged timeframes.

Figures from CoreLogic show the median selling time across our capital cities is just 27 days. That’s less than a month!

So you need to act fast to avoid missing out. Sellers might not wait around while you head to the bank to see if you qualify for a home loan.

Having pre-approval in place means you can get the ball rolling as soon as you find the right home, without getting pipped by a more organised buyer.

3. Pre-approval can show you’re a serious buyer

Nothing says ‘genuine buyer’ like home loan pre-approval.

Don’t be shy about letting real estate agents know your loan is pre-approved. It adds clout to your negotiations and gives vendors confidence that you have the finance to follow up any offer you make.

Just consider keeping some information up your sleeve, such as how much you’ve been pre-approved for.

After all, the real estate agent’s goal is to get the best price for the vendor, not the buyer!

How reliable is pre-approval?

Home loan pre-approval is not a guarantee that you’ll get a home loan.

You won’t get the green light for sure until you’ve found a place to buy, and the bank has checked that the property meets their lending criteria.

Your lender will also want to see that your personal finances haven’t changed since your loan was pre-approved.

It’s also worth keeping in mind that while there aren’t many downsides to obtaining a single pre-approval, getting too many over a short period of time with multiple lenders can potentially negatively impact your credit score and ability to take out a loan – as lenders might suspect you’re financially unstable.

Which pre-approval is better?

Home buyers are often surprised to learn that pre-approval isn’t available with every lender.

Even among banks that do offer this service, not all pre-approvals work the same. One sort is especially worth aiming for.

You may come across two types of pre-approvals:

1. System-generated pre-approvals

This sort of pre-approval is generated by a lender’s computer based on the information you enter about yourself. You can get a result quickly this way. The catch is that the analysis isn’t thorough, making the outcome unreliable.

In particular, if any of the details you enter are incorrect, the bank’s IT system may wrongly say you don’t qualify for a home loan.

2. Fully assessed pre-approvals

As the name suggests, this type of pre-approval involves your bank’s credit team taking a close look at your finances, credit score and other personal and financial details to be sure you can comfortably manage a home loan.

A full assessment takes more time, but it’s worth the wait. It can help you feel more confident that you’ll be offered a home loan when you find your ideal property.

Want to find out more about pre-approval?

If you’re looking to buy a home and want to get an edge over the competition (to put in an early offer, for example), then pre-approval might be a much-needed ace up your sleeve.

We can help you work out which lender and which loan product is a good fit for your pre-approval situation.

So call us today to take the guesswork out of home loan pre-approval, and give yourself a head start over other buyers in the market.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Property market climbs towards new peak

The property market has thumbed its nose at higher interest rates, with values rising almost 5% since March. Here’s why national housing prices are climbing higher.

Australia’s housing market is making a bigger comeback than Barbie.

Despite interest rates rising 4% in a year and a cost of living crunch, home values have skyrocketed with prices soaring 4.9% nationally since March 2023.

The strength of the rebound has wiped out about half the losses recorded in the downturn between April 2022 and February 2023, when home values fell 9.1%.

In fact, the value of Australia’s housing market just hit $10 trillion again – the first time the total estimated value hit double digits since June 2022.

So what’s driving home prices higher?

CoreLogic says three factors are pushing up property values:

– Net overseas migration: more people are arriving from overseas than are leaving. That’s a lot of extra people looking for a place to live.

– Use of savings, profit and equity: upgraders are using savings, equity or profits from their home to buy their next place instead of borrowing more. This has seen demand for property stay strong even though rates have climbed higher.

– Tight supply: the volume of homes listed for sale is a lot lower than in previous years. That spells competition between buyers, which is putting pressure on prices.

Will property prices keep rising?

Home values have been rising steadily over the past six months. What happens from here hinges on how interest rates move, and whether the economy stays in good shape.

As a guide, CoreLogic is expecting some heat to come out of the market recovery by the end of 2023.

That’s great news for home buyers – as long as cooler prices aren’t the result of more rate hikes or a sluggish economy.

How to get ready to buy your next home

In today’s environment of rapidly rising home values, home buyers can score a winning edge by having their ducks in a row before inspecting homes listed for sale.

This increasing need to be organised is one of the key reasons why 67% of Australians turn to a mortgage broker for expert support when they buy their home.

And according to research by Helia, prospective home buyers are getting support in the areas of:

– determining their borrowing power – 63% of those surveyed;
– help choosing the right loan – 60%;
– getting a home loan pre-approved – 56%; and
– applying for a loan – 55%.

So if you’d like help in any of these areas, or you want to get into the market before prices rise further, call us today to explore your home loan options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How does your home loan compare?

No change to the cash rate again this month, but lenders’ mortgage rates have been jumping around more than a bunch of toddlers at a Wiggles concert. We reveal the current average rates to see how your loan compares.

Home owners are celebrating the official cash rate staying on hold for several months. But behind the scenes, Mozo reports that lenders have been “astonishingly busy” adjusting their home loan rates – both up and down.

Key movements over the last month include NAB, CommBank and Bank of Queensland lifting some of their variable rates.

However, in the fixed rate market, plenty of lenders including big banks such as CommBank, ING and Macquarie have slashed their fixed rates.

It goes to show, you can’t assume your home loan still offers a competitive rate just because the official cash rate hasn’t budged.

Question is, how does your loan shape up against the market?

Average variable home loan rate

Across owner-occupied home loans, the average variable rate right now is 6.60%.

Remember though, this is an average. It can be possible to pay far less.

We are still seeing home loan rates starting with a ‘5’ rather than a ‘6’. This makes it worth checking to see what you’re currently paying.

Fixed rates prove a mixed bunch

As of early September, fixed rates are averaging:

– 6.36% – one year
– 6.57% – two years
– 6.60% – three years

If you’re bold enough to fix for five years, the average rate is currently 6.49%.

These fixed rates assume a $400,000 loan with a 20% deposit, meaning a loan-to-value ratio (LVR) of 80%.

When could we see rate cuts?

It’s the question everyone is asking: when will interest rates start to fall?

First the good news.

A number of banks, including ANZ and Westpac, are tipping the cash rate has peaked and could stay the same for some time.

Westpac thinks we could see the cash rate fall by September 2024. AMP meanwhile is forecasting rate cuts even sooner.

But … not everyone agrees.

NAB economists expect one more rate hike before the end of 2023, with rates likely to fall by next Spring.

And the Reserve Bank of Australia (RBA), which makes the official rate calls, is warning we could see more rate hikes depending on how inflation and the economy are tracking.

Make a rate cut of your own

Even the experts can’t agree on where rates are heading.

But the banks aren’t waiting around for the RBA to drive their rate decisions, and neither should you.

Call us today to see how your home loan rate compares to the broader market. Chances are there’s a better deal out there just waiting to be claimed.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Low deposit first home buyers now have $82,000 in equity

First home buyers who bought into the market using the federal government’s 5% deposit scheme have racked up $82,000 in home equity on average, new data shows.

It’s been three years since the First Home Loan Deposit Scheme was launched, and while it’s known today as the Home Guarantee Scheme (HGS), it’s still helping first home buyers get into the market with just a 5% deposit and no lenders’ mortgage insurance (LMI).

The HGS attracted criticism from some circles – some pundits pointed to the low deposit as a stumbling block that could land homeowners in trouble if property values fell or interest rates rose.

It turns out both have happened, yet first homeowners haven’t let it hold them back.

From $35,000 deposit to $82,000 home equity

New data from the National Housing Finance and Investment Corporation (NHFIC), which runs the HGS, shows that first buyers who tapped into the 5% deposit scheme are now sitting on impressive piles of equity.

On average, these first-time homeowners have racked up $82,000 in home equity.

It’s a great result, especially when you consider that the average first home deposit across the scheme was just $35,200 in 2020, rising to $36,400 in mid-2023.

Compare that to the average deposit of $159,000 across the broader first-home buyer market, and it’s easy to see how the 5% deposit scheme gives first-home buyers a valuable leg-up into the market sooner.

What is the Home Guarantee Scheme?

Getting a deposit together can be a massive hurdle when buying a home.

Research by Finder shows it can take 12 years for a young Australian to save a deposit for an average-priced apartment, or 16 years to accumulate the deposit for a house.

But if your deposit is lower than 20%, you can get stung with LMI, which can cost you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

But through the NHFIC, the federal government has three low deposit, no LMI schemes – all under the HGS umbrella.

The first two, the First Home Guarantee and Regional First Home Buyer Guarantee, support eligible buyers to purchase a home with a low 5% deposit and no LMI.

The Family Home Guarantee, meanwhile, assists eligible single parents and guardians to buy a home with a deposit of just 2% and no LMI.

Want to crack the market sooner?

Along with the HGS, there can be other options such as family pledge loans, or the use of a guarantor, that could slash the time it takes to buy a home of your own.

So if you want to crack the property market sooner rather than later, call us today to find out if you’re eligible to buy a first home with just a 5% deposit.

You could be in a place of your own by Christmas!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.