Housing affordability the best it’s been since 1999: HIA

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Great news for home buyers – housing affordability is the best it’s been since 1999, according to new data released by the nation’s peak housing and building body.

That’s right – housing affordability is comparable to the days when the Y2K bug had us fearing for our lives, Nokia Snake was the pinnacle of mobile gaming, and median house prices in Australia ranged between $112,000 (Hobart) to $272,000 (Sydney).

These days, however, median prices range from $420,000 (Hobart) to $840,000 (Sydney).

But here’s where it gets a little interesting.

For a home buyer with an average income purchasing a median-priced dwelling (assuming a 10% deposit), mortgage repayments will consume the smallest proportion of their earnings since 1999, according to the Housing Industry Association (HIA) Affordability Index.

Hang on, how is this possible?

The main reason housing affordability is comparable with levels seen in 1999, despite house prices rising significantly faster than incomes over the last 20 years, is that interest rates are (in the vicinity of) 4.6% today compared with 6.7% in 1999, says HIA senior economist Geordan Murray.

Average earnings have also increased by 113% over the past 20 years.

While the median home price has increased by 228%, the lower interest rates have kept the cost of servicing a loan the same, points out Murray.

“The combination of lower home prices, improvements in wage growth and lower interest rates have contributed to the ongoing improvement in the HIA Affordability Index for the June 2019 quarter,” adds Murray.

What does the HIA Affordability Index measure?

HIA’s Affordability Index is calculated for each of the eight capital cities and regional areas on a quarterly basis and takes into account the latest dwelling prices, mortgage interest rates and wage developments.

All eight capital cities saw an improvement in the affordability index over the quarter to June 2019, with Darwin seeing the greatest improvement with its index up by 4.8%.

This was followed by Melbourne (+3.0%), Perth (+2.6%), Brisbane (+2.6%), Sydney (+2.4%), Canberra (+2.4%), Hobart (+ 2.2%) and Adelaide (+1.0%).

It gets even better

There are a number of recent initiatives that are not reflected in HIA’s Affordability Index but are nonetheless providing further benefit to purchasers, HIA points out.

There’s the reduction in income tax, the easing of APRA restrictions on mortgage lending, and the Australian government’s First Home Loan Deposit Scheme.

“The passing of the federal government’s income tax package means that millions of Australians will have extra income to put towards a deposit for a new home,” says HIA managing director Graham Wolfe.

Get in touch

If you’d like to take advantage of the current housing affordability conditions, then get in touch.

We can help arrange a home loan that’ll put a smile on your face and get you partying like it’s 1999.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

RBA goes back-to-back with cash rate cuts

The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 1%. Yep, that’s right, back-to-back rate cuts within just one month.

The RBA last cut the official cash rate to the previously historic low of 1.25% on June 4, which also happened to be the first rate cut in almost three years (since August 2016).

Why the RBA has made back-to-back cuts

RBA Governor Philip Lowe says this second rate cut in as many meetings was made to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.

“The outlook for the global economy remains reasonable. However, the uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy are tilted to the downside,” he says.

Lowe adds that while conditions in most housing markets remain soft, there are some tentative signs that prices are now stabilising in Sydney and Melbourne. Growth in housing credit has also stabilised recently.

“Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target,” Lowe says.

Want to know what this rate cut means for your home loan?

On the back of this RBA decision, you may see a number of lenders advertising interest rate cuts.

You’ll also probably hear a lot of talk about whether lenders will pass on the full cut, a partial cut, or not at all.

Now, with two RBA cuts so close together, it might get a bit confusing as to whether lenders have passed on this rate cut, or only the one before it.

The good news is we’re following the market closely and can tell which lenders are passing this second rate cut on to their customers in full, and which lenders aren’t.

So if you’d like to find out, then please get in touch – we’d love to help break it down for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 to find a bank with strong corporate social responsibility

Yes, we’re well aware that this may sound like an oxymoron to some! But cheeky jokes aside, this is a question we’ve been increasingly receiving. So today we thought we’d look into what good corporate social responsibility means, and how you can find it in a bank.

What do you look for when pairing with a bank?

An attractive rate? Convenience? Low fees? High transparency?

What about good corporate social responsibility?

In the wake of the Banking Royal Commission, it’s a question we’re seeing pop up more and more.

In fact, even before the royal commission a report found that 4 in 5 Australians would consider moving their investments to another provider if their current provider engaged in activities not consistent with their values.

So, as property is likely one of your biggest investments, today we thought we’d take a look at what exactly corporate social responsibility means and how you can find out if your bank embraces it.

What is corporate social responsibility?

Corporate Social Responsibility (CSR) is generally understood to mean that corporations have a degree of responsibility not only for the economic consequences of their activities, but also for the social and environmental implications, according to the Australian Human Right’s Commission.

Some lenders sponsor rescue helicopters, many provide community grants, while others throw their support behind social causes.

If you’d like to know what type of CSR work your bank does, simply google your bank’s name + CSR. The more recent the result the better, especially in the wake of the banking royal commission.

That said, as Dr Stephanie Schleimer from the Griffith Business School points out to the ABC, “CSR reports are not meant to be glossy brochures that look like advertising.”

In other words: it’s one thing for banks to make a snazzy list of their CSR activities, it’s entirely another for them to make a meaningful impact.

So how do I find a bank with strong CSR principles?

Well, you see, if you google “banks ranked corporate social responsibility” you’ll find…

Huh, not much. Basically banks tooting their own horn in their own reports.

Not to worry.

Maybe, if you try googling “best bank CSR” you’ll find… Nevermind…

You see, this is where it gets a bit tricky.

What you consider ethical, or to be a bank displaying strong CSR principles, will be completely different from the next person.

It’s a bit of a case of horses for courses, if you will.

Hmmm. So are there any other ways to identify strong CSR lenders?

Absolutely! Come and have a chat with us.

Everyone’s ethical compass points a slightly different way, so we can give you a pretty good idea of lenders on our panel that are making efforts in the areas of CSR that you may identify with.

It’s definitely a topic we’re seeing come up more frequently, so rest assured we’re watching this space closely.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Is the housing market finally about to reach rock bottom?

‘Are we there yet?’ That seems to be the million dollar question on everyone’s lips. Today we’ll take a look at whether or not the property market is finally starting to stabilise, as well as when we might start seeing some positive changes in the market.

Shhh. Can you hear it?

It’s the sound of optimism breathing its way through the Australian property landscape once more.

Let’s run through what some of the property market’s leading experts and reports have said recently.

CoreLogic

CoreLogic says the housing downturn is losing steam as the pace of declining values continued to reduce in May.

With Australia’s average housing affordability the best it has been since 2016, CoreLogic’s Head of Research for Australia, Cameron Kusher predicts “that price falls will settle later this year, followed by modest price growth starting from 2020”.

Westpac

Consumers think now’s a pretty good time to buy a house, according to the Westpac sentiment survey’s ‘time to buy a dwelling’ index.

“Housing-related sentiment showed a clear response to the lowering in interest rates, although again some of the gains were more muted than seen in past rate cuts,” Westpac senior economist Matthew Hassan said.

AMP Capital

Since peaking in October 2017, house prices in capital cities have fallen about 10%. Forecasts had suggested they’d fall as far as 15%, but AMP Capital believes they’ll now only bottom out at 12% later this year.

“The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting,” said Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.

ANZ

ANZ’s Home Owners Lead, Kate Gibson, says they’re seeing suburbs and towns in every state where it is more affordable to buy than rent. Here’s the list if you’re interested.

“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market,” Ms Gibson said.

The Australian Bureau of Statistics (ABS)

According to the latest ABS data, the value of lending commitments to households rose 0.6% in April 2019.

“The steep decline in owner-occupier lending commitments seen since late 2017 appears to be slowing,” said ABS Chief Economist, Bruce Hockman.

Want to know more?

Sure, the nationwide property market might still be trending down. But optimism seems to be on the way up.

If you’d like to know how this shifting landscape might affect your lending situation, then please get in touch – we’d love to run through it with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

Getting hounded by ATO impersonators? Don’t get scammed this tax season

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Tax time is just around the corner, which means ATO impersonators are pulling out their bag of tricks to try and scam you. Here are the main scams currently doing the rounds.

It’s fair to say that no one likes getting on the wrong side of the ATO. And this is one of the main reasons why ATO tax scams are so effective.

The other main reason is that these scams are becoming increasingly sophisticated and tech-savvy.

Not only do they look more convincing, but they’re also reaching more people through a wider number of distribution channels, such as SMS, robo-calls, and emails.

Below we’ve outlined some of the latest scams to ensure your monthly budget, mortgage repayments or savings account doesn’t get thrown into disarray.

Fake tax agent (phone scam)

The scam: a scammer pretending to be from the ATO sets up a three-way phone call between themselves, the victim and another scammer, who pretends to be an accountant who works at the same practice as the victim’s tax agent (the fake tax agent advises that the victim’s actual tax agent is currently unavailable).

The two scammers then work together to convince the victim that they owe thousands of dollars to the ATO, and that they need to immediately pay off the debt to avoid going to jail.

They’ll then ask the victim to pay using unusual methods of payment such as iTunes, Bitcoin cryptocurrency, store gift cards or pre-paid visa cards.

Avoid being scammed: know the status of your tax affairs by checking your details via myGov. Or hang up and independently call your tax agent or the ATO on 1800 008 540.

Extra tip: a variation of this scam is when the scammer offers a tax refund but advises that you have to provide a personal credit card number for the funds to be deposited into. Instead of the scammer depositing money they’ll instead steal funds from these cards.

Tax refund notification (SMS scam)

The scam: scammers are texting people informing them that they are due to receive a tax refund.

However, if you click on the link it will take you to a fake ‘Tax Refund’ form, where it will ask you to fill out your personal information (which the scammers will then steal!).

Avoid being scammed: the ATO doesn’t have an online ‘Tax Refund’ form and will never send you an email or SMS that asks you to access online services via a hyperlink.

Extra tip: all online management of your tax affairs should be carried out via your genuine myGov account, which you should only ever access by typing out my.gov.au into your URL address bar.

Imitating ATO phone numbers (phone scam)

The scam: the ATO is reporting an increased number of scammers contacting people using phone numbers that make it look like they’re genuinely from the ATO.

The numbers that have been appearing most frequently are 6216 1111 and 1800 467 033, but numbers for individual ATO staff members have been used as well.

The scammer will usually claim the potential victim has an outstanding tax debt and threaten them with arrest if it’s not paid immediately. Sometimes voicemail messages are left.

Avoid being scammed: remember that the ATO will never threaten you with arrest, demand immediate payment, refuse to allow you to speak with a trusted advisor or tax agent, or present a phone number on caller ID.

Extra tip: never call a scammer back on the number they provide. If you are in any doubt about an ATO call, hang up and phone the ATO directly (on 1800 008 540) to check if the call was legitimate.

myGov tax refund notification (email scam)

The scam: scammers are emailing people from a fake myGov email address, asking them to fill out an application to receive a tax refund – similar to the SMS scam above.

This scam is currently tricking victims because it displays the ATO’s myGov logo and the links look as though they’ll send you to the myGov website (spoiler: they don’t).

Avoid being scammed: do not click anywhere in these emails as they contain malicious links. As mentioned in the SMS scam, the ATO doesn’t have an online ‘Tax Refund’ form.

Extra tip: if the bottom of the suspected scammer’s email contains a line that says ‘If you feel you received this email by mistake or wish to unsubscribe, click here’, don’t click. It’s most likely another nefarious link.

Final word

If you ever suspect that you’re being scammed, don’t feel obliged to stay on the phone to be polite.

Simply hang up the phone straight away (or close the email) and either check your myGov account or directly contact your accountant or financial adviser.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.