SME credit demand improves, lenders begin next phase of COVID-19 support

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Things are starting to look better for small business owners across the country with just 5% of deferred business loans yet to resume repayments. Meanwhile, there are signs that business credit demand is improving, especially when it comes to asset finance.

The first bit of data comes from the Australian Banking Association (ABA), which shows just 11,263 business loans across the country are yet to resume repayments.

That’s a huge drop from the height of the pandemic back in June when more than 200,000 small business loans were deferred.

With automatic loan deferrals now coming to an end, the next phase of support for borrowers who are unable to make reduced repayments or restructure their loans will involve assistance from specialised hardship teams.

As part of this support, banks have developed an industry-wide, consistent approach to hardship and a new online assistant hub to guide customers in financial hardship and improve transparency.

“Customers can expect a thoughtful and compassionate approach, with clear and transparent explanations, regardless of who they bank with,” says ABA CEO Anna Bligh.

Credit demand improving

The other positive news for business confidence around the nation is that credit demand is showing signs of recovery, especially when it comes to asset finance.

Equifax’s Quarterly Business Credit Demand Index for the December 2020 quarter shows that while business loan applications were down 10.1% from the year before, the rate of decline has softened.

Applications in Victoria were up 7% in December 2020 compared to the September quarter, closely followed by Queensland and Western Australia (+5%).

Better yet, asset finance applications were actually 0.2% higher than the same period a year earlier.

“While overall business credit demand remains down, it is encouraging to see that there are signs of a turnaround,” says Equifax’s General Manager Commercial and Property Services Scott Mason.

“The lifting of extended restrictions in Victoria has allowed for a rebound in business credit applications driven by asset finance.”

How’s 2021 looking for your business?

If you’re starting to feel confident about your business’s outlook in 2021, and you want to explore your finance options to make the most of any upcoming opportunities, then please get in touch.

It’s worth mentioning that the federal government’s ‘temporary full expensing’ scheme – which allows businesses to immediately deduct the business portion of the cost of eligible new depreciating assets – is in place until 30 June 2022.

If you’d like to find out more about how it could assist with your business’s cash flow when purchasing assets, feel free to give us a call today.

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.

Tick tock – is time running out for first home buyers?

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The first home buyer market had a bumper year in 2020 due to modest declines in property prices, reduced investor activity, and a range of government incentives. But with those advantages tailing off, how will first home buyers compete in 2021?

Another week, another big bank tipping national property prices are set to boom.

This week it was Westpac’s turn, with their senior economist tipping property prices to increase 10% in 2021 and another 10% in 2022.

This follows AMP predicting a 5-10% property price increase in 2021, and Commonwealth Bank expecting house prices will increase by 9% in 2021 and 7% in 2022.

Meanwhile, auction clearance rates are high – in the 80% plus range, according to CoreLogic.

So is time running out for first home buyers?

Not at all, but it sure won’t get any easier as property prices increase throughout the year.

Furthermore, the federal government’s HomeBuilder scheme is set to finish at the end of March.

The scheme provides buyers with $15,000 grants to build or substantially renovate homes that are generally in the first home buyer price range.

With the above in mind, the REA Insights Property Outlook Report 2021 states that ‘first home buyers are set to moderate in 2021’.

“In 2021, it is unlikely first home buyers will continue to be as active as they were. Prices are moving quickly; investors are coming back and any incentives available to first home buyers are likely to be eased,” the recently released report says.

The REA adds that first home buyers tend to be more active in slower markets when they can take their time.

But with savvy property investors returning to the market, this can add pressure to first home buyers.

“Investors and first home buyers frequently target the same sorts of properties at similar price points,” explains the report.

So what can first home buyers do to compete in 2021?

Rest assured there are a number of strategies first home buyers can employ to crack the property market in 2021.

With competition for properties heating up, it’s important to have your ducks-in-a-row when it comes to finance before you start looking.

This can help you find properties within your price range, identify any additional costs you may not have factored in yet, and make an offer while your preferred property is still available.

It’s also worth noting that the federal government is set to release another 10,000 spots in its First Home Loan Deposit Scheme on July 1, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI).

Another consideration is shifting the focus of your property search – whether that be the location or property type.

For example, house prices are predicted to grow a lot quicker than apartment prices this year.

So if you’re not quite ready to buy just yet, and it appears that properties are rising quickly out of your price range, consider that the apartment market should move more slowly.

Get the ball rolling today

If you’d like to discuss more options when it comes to obtaining finance to pay for your much-anticipated first home, get in touch with us today.

As mentioned above, the more prepared you are when it comes to financing your first home, the less stressful the whole buying process will be.

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.

“On the cusp of a boom”: CBA’s assessment of the housing market

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Australia’s housing market is on the “cusp of a boom”, with house prices set to leap 16% over the next two years, according to the Commonwealth Bank (CBA).

The head of economics at Australia’s biggest bank, Gareth Aird, predicts national house prices will surge 9% in 2021 and a further 7% in 2022.

Apartment prices meanwhile are predicted to rise 5% in 2021 and 4% in 2022.

“The negative impact that COVID-19 had on Australian property prices turned out to be much more muted than almost any forecaster expected,” Mr Aird has written in a note to clients.

The CBA prediction is similar to that contained in an internal RBA FOI document, which projects house prices could rise by up to 30% if interest rates remain low over the next three years (which the RBA has indicated will happen).

So what can we expect across the country?

In Sydney and Melbourne, dwelling (house and apartment) prices are predicted to grow by at least 12% in the next two years, says Mr Aird.

That would see Sydney’s median dwelling price increase by a whopping $160,000 to $1.2 million, and Melbourne’s median dwelling price increase by $110,000 to $920,000.

Meanwhile, Perth values are tipped to rise 17.7% ($99,000), Brisbane 16.6% ($102,000), and Canberra 15.5% ($132,000).

Rounding out the capital cities, Adelaide is predicted to increase 14.5% ($86,000), Hobart 15% ($87,000) and Darwin 18% ($99,000).

So when and why are property prices set to increase?

Well, it appears as though the “boom” may have already just begun, Mr Aird explains in a CBA podcast.

“Over the first two weeks of February, national prices are up 0.8%. So we’re looking at over 1.5% in February alone,” says Mr Aird.

“Prices are now rising in all capital cities. And they’re rising quite quickly.”

Mr Aird says a strong indicator for property prices is lending figures, and over the last four to five months lending has picked up quite significantly.

“It’s quite intuitive when you think about it. The money that people borrow ends up going into the housing market, and that then pushes up housing prices. There’s usually about a six month lead time,” he explains.

“Initially, that (lending) was with owner-occupiers, but more recently it has spilled over to investors. And that is now feeding into house prices.”

Another strong indicator is auction clearance rates, adds Mr Aird.

“They are very, very firm at the moment. Nationally we’re seeing it sit in the 80s (percent), which historically has been consistent with double-digit dwelling price growth,” he says.

Other key momentum builders are the RBA advising that the record-low official cash rate won’t increase until 2024, says Mr Aird, and strong recovery in the labour market.

“The fact that the Reserve Bank has given explicit public guidance that rates are going to stay very, very low for a number of years, that’s given borrowers a lot of confidence to go out there and take on debt,” he says.

“All of those inputs that go into our model are screaming that house price rises could be faster than at any point we’ve seen before, and our model goes back 10 years.”

Explore your options

If you’re one of the many prospective homebuyers who are feeling confident about the housing market right now and want to explore your financing options, get in touch today.

We’re more than happy to help you determine whether you can finance that home you have your eye on before the next housing boom takes off.

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.

Back up for grabs: 1800 first home buyer scheme spots reissued

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Great news just in for first home buyers: the Australian government will reissue 1800 First Home Loan Deposit Scheme (FHLDS) spots from the 2019-20 financial year. 

The 1800 spots are back up for grabs because people who previously reserved a spot in the Australian government scheme were unable to complete the purchase of their first home.

Their loss can be your gain!

The FHLDS allows eligible first home buyers to break into the property market sooner, as you only need a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).

This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.

More locations now possible

Ok, so the FHLDS has these things called ‘property price thresholds’.

Basically, they mean you can only qualify for the scheme if you purchase a property under a certain price tag in certain locations.

The good news is that the thresholds were recently increased to allow first home buyers a greater range of options.

And helpfully, property research group CoreLogic has just identified suburbs that – due to COVID-19 and the slight impact it had on inner-city apartment prices – are now a prime option for first home buyers in Sydney, Melbourne, Brisbane and Perth.

They’ve identified 23 suburbs where median unit values have slipped below the FHLDS property price thresholds in the past 12 months.

Here’s the full list, but some highlights include:

Sydney: Strathfield, Arncliffe, Ashfield, Gladesville, Wentworth Point.

Melbourne: Brunswick, South Melbourne, St Kilda East, Thornbury, Docklands.

Brisbane: South Brisbane.

Perth: Munster.

Time’s ticking!

It’s important to note that FHLDS spots are usually reserved pretty quickly.

So if you’re thinking about purchasing your first home soon and want to make the most of the scheme, give us a call today – we’ll help you get the ball rolling on applying with one of the scheme’s participating lenders.

And even if you are unable to jag one of the 1800 reissued spots, you’ll be in a prime position to apply when a further 10,000 spots are released on July 1.

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 did your suburb fare during the COVID-19 crisis?

When coronavirus broke out across Australia, doomsday reports tipped the property market could fall as far as 30% across the country. Fortunately, that wasn’t the case. Here’s how to find out how your suburb actually fared.

A realestate.com.au analysis shows that property prices actually grew in most Australian suburbs throughout 2020.

Yep, that’s right.

Despite prolonged lockdowns in some parts of the country (especially Melbourne), most suburbs experienced year-on-year growth in 2020.

Go and have a look for yourself using this realestate.com.au interactive tool to see how your suburb did.

So which suburbs did best?

It should come as no surprise that lifestyle suburbs and coastal areas (such as Pearl Beach in NSW, pictured) ranked consistently high, given that many people had a taste of working from home and might not ever have to return to their inner-city offices.

But houses in plenty of trendy inner-city suburbs did well too, such as St Lucia in Brisbane (up 35%) and Brunswick East in Melbourne (up 20%).

Below are the suburbs that experienced the largest percentage increase in house prices in each state and territory:

NSW: Pearl Beach (46%), North Avoca (44%), Glenorie (38%), Woollahra (35%), Clovelly (34%).

VIC: Portsea (34%), Tyabb (28%), South Melbourne (23%), Collingwood (22%), Brunswick East (20%).

QLD: St Lucia (35%), Virginia (24%), Yeronga (20%), Woodford (19%), Kilcoy (19%).

WA: Kelmscott (39%), Coodanup (30%), Medina (22%), Madora Bay (20%), Mosman Park (20%).

SA: Hove (36%), Port Noarlunga South (27%), Glenelg East (22%), Blackwood (22%), Craigburn Farm (22%).

TAS: Dodges Ferry (26%), New Norfolk (25%), Berriedale (18%), Bridgewater (17%), Rokeby (17%).

ACT: Ainslie (34%), Lyneham (23%), O’Connor (21%), Palmerston (20%), Garran (20%).

NT: Berriham (12%), Zuccoli (8%), Durack (8%), Muirhead (6%), Leanyer (2%).

So why didn’t property prices take a dive?

Director of economic research at realestate.com.au Cameron Kusher says there are several reasons why property prices didn’t fall dramatically, but the key reason is the unprecedented amount of stimulus that was pumped into the economy.

“HomeBuilder has stimulated new housing, JobKeeper has kept many Australians employed and the relaxation of bankruptcy laws along with lenders offering mortgage holidays ensured we didn’t see a rise in forced sales,” Mr Kusher says.

Another key reason is record-low borrowing costs.

Indeed, the RBA cut the official cash rate three times to 0.1% in 2020, and as such interest rates are now at record low levels.

“Historic low borrowing costs at a time when people are spending less has seen more demand flow into the housing market, driving up sales and supporting price levels,” adds Mr Kusher.

How to make property more affordable

As mentioned above, interest rates are at record low levels and there are still a number of government stimulus packages available to help make your next property purchase more affordable.

If you’d like us to run you through some of the support and interest rate offers in more detail, give us a call today – we’d love to help you explore your 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.