ACT’s Professional Advantage: Save $70,000+ in Australia’s Most Stable Market
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Australian property values appeared to stabilise with a 0.1% increase in national dwelling values for February. There was a –2.3% drop over the quarter according to CoreLogic’s national Home Value Index (HVI).
Although median property prices are still falling across the country there are signs some wind has come out of the housing downturn’s sails. While the 0.1% dip continues into negative territory, the February statistic was an improvement on the -1% fall seen in January, and was the smallest month-on-month decline since June.
All in all, CoreLogic’s Index is –9.1% off its April peak. However, it pays to put this dwelling downturn in context. “Record declines in home values follow a record upswing, both in magnitude and speed. The national HVI was up a stunning 28.6% in the space of just 19 months,” said CoreLogic research director Tim Lawless.
While they aren’t the only driver of the downturn, interest rates have played a major role in steering the ship. Once the Reserve Bank decides to hit the pause button – which is largely tipped to be in the first half of 2023 – economic experts predict housing values are likely to stabilise.
At its first meeting for 2023, the RBA increased the cash rate by 0.25 percentage points on February 7, pushing the cash rate to a decade-high of 3.35%.
The upper quartile of the combined capital city housing market drove this month’s stabilising trend, increasing by 0.1% in February.
This trend was most obvious across Sydney’s upper quartile, which recorded a 0.7% rise in values over the month, compared with a -0.2% fall in values across the lower quartile of the Sydney market.
After extraordinary price growth in 2021, values in all regions are declining. Regional dwelling values were down -0.3% in February compared with a -0.1% fall across the combined capital cities. However, the weaker regional result relative to the combined capitals was mostly a factor of the monthly rise in Sydney housing values rather than a larger fall in regional market values.
Overall, CoreLogic recorded a combined regional market fall of -2.1% for the quarter to February 28. That’s a modest movement backwards after the combined non-capital city areas saw housing values surge 41.6% through the most recent upswing. Since peaking in June, the combined regionals index is only down -7.7%.
Melbourne’s median dwelling value is down –2.7% over the quarter. Data shows the Victorian capital has had a Covid trough to peak of 17.3%. After peaking in February 2022, the median dropped by -9.6%. Regionally, Victoria is –7.0% off its most recent peak in May 2022.
The quarter to January’s close saw the median dwelling price in the Harbour City fall by –2.4%. Although In February Sydney was the only capital city to record an increase, gaining 0.3%. Sydney’s median peaked in January 2022 and has since experienced a -13.5% decline. The city’s trough to peak was 27.7%. After hitting its peak in May 2022, regional NSW closed the most recent quarter –10.1% off that high.
By February Brisbane’s median dwelling price was down –3.2% for the quarter. The capital of the Sunshine State had an exceptional trough to peak throughout the pandemic with the media skyrocketing 42.7%. Post peak in June 2022, the drop has been –11.0%. Across regional Queensland the median has come -7.3% off the June 2022 high.
The ACT experienced a –2.7% decline of its median dwelling price during the three months to February’s end. Australia’s capital reached its price peak in June 2022 and has since come off the boil by –9.0%.
The Perth median appears to be plateauing with a modest quarterly move of just -0.2%. According to CoreLogic data the West Australian capital’s market only reached its peak in July 2022 and has come off just -0.9% since. The full trough to peak figure for Perth has been 25.9%. Regionally, the state is reportedly at its peak after experiencing a 32.4% increase through the recent growth phase.
To find out more about the current property landscape, reach out to us today.
In its first cash rate decision for 2023, the Federal Reserve Bank has announced a rise to the official cash rate, increasing it by 25 basis points from 3.10% to 3.35% in response to continued inflationary pressures.
Our video also takes you through an overview of the state of the property market, including a breakdown across all capital cities of the changes in dwelling values over the past month, as well as over a period of 12 months.
Click the video below to view our February update.
With interest rates increasing, contact us today to get a better understanding of how market changes will impact your next property purchase.
Many of us have dreamed of owning a holiday home, creating an escape from the hustle and bustle of city life. Holiday homes are great for bringing family and friends together and making memories. Whether it’s a beach house or a place in the bush, it’s a place to unwind and relax. It can also be used to generate income as a short-term rental property when you’re not using it.
If this is on your bucket list, then here are some things you need to keep in mind.
Firstly, plan how you’re going to use the property and finance it. For example, if you want somewhere to escape to every weekend, can you realistically afford to buy somewhere a few hours away and keep it just for family and friends? Would you consider buying with other family members? Or would you prefer to rent it out to cover costs, and how many weeks rental would you need to rent it to become profitable?
Most holiday homes charge peak rental for school holidays, the summer break or the snow season – times when you probably want to stay there yourself. So, be honest about the trade-offs you’re willing to make.
If you would need to let your property at least part of the time, then location is key. The home will need to be easy to maintain as well as have the amenities and aesthetics that paying guests want. Including things like a BBQ, pool, ceiling fans or heating and comfortable furnishings. All of these can bump up what a rent-worthy property costs to set up and the time you need to commit to it. It’s a good idea to check out other rentals in your preferred areas to see what successful holiday lets offer and what fees they charge.
Lenders and the ATO view a holiday home as an investment property – whether or not you rent it out. Lenders want a bigger deposit and higher interest rate than for an owner-occupied property. While you may be able to use the equity you have in your main home for the deposit, lenders still want to see that you can service the loan. Some take proven short-term rental income from the property into account. Otherwise, they only accept long-term lease rental projections. We can review your circumstances and prepare an investment plan to help identify properties that may have a greater chance of being approved by lenders.
You can get an idea of what properties earn on sites such as Airbnb’s AirDNA.i
While it’s true short-term holiday lets could earn much higher rents, the income may not be year-round, even though the property’s ongoing expenses and upkeep are. These include extras like specialised landlord insurance, property listing website costs, regular maintenance, cleaning, utilities and the replacement of household items such as towels and kitchen items. You’ll also need to consider the current council rules for short-term lets. In some areas there are restrictions such as the number of weeks a property can be let. These rules can change and it’s the landlord’s responsibility to stay up-to-date.
The good news is that you can claim property-related costs as a tax deduction. If you’re only renting for part of the year, then the deductions are for the rentable period only. And, if you’re thinking of buying the property through your Self-Managed Super Fund, remember that it can only be used for maximum income generation and not family use. It’s a good idea to check with the ATO website or your accountant about the tax rules around rental income and any capital gains you’d have to pay if you sell.ii
While a holiday home can become your own piece of paradise and create many happy memories, organising how to finance it takes preparation.
Please get in touch if you’d like to chat through your options so we can start getting things organised for a successful completion on your dream holiday home.
It’s challenging to get a foot on the property ladder and coming up with a large enough deposit can seem like an impossible task at times. One way of increasing your savings is to boost the amount of money you have coming in.
When it comes to boosting your income, every little bit helps, so let’s look at some of the ways you can top up your savings.
The first step is to look at what you are currently earning and see if there is the potential to earn more by working overtime or by increasing your contribution or responsibilities.
Is it time to ask for a raise? With wage growth stagnating, it’s important to present a compelling argument for a salary increase. It’s not just about summoning the courage to have ‘the talk’ with your boss – you need to maximise your chances of receiving that increase. Think about how you can demonstrate where you have added value, taken on more in your role, or achieved cost or efficiency savings for the company. It might even be an idea to consider doing further study and developing additional skills that could see you increase your earning capacity.
The employment market has swung in favour of job seekers of late so it can be a good time to see what else is on offer as a way of increasing your income. In fact, data shows workers who move jobs received pay rises of between 8 per cent and 10 per cent, while research out of the Reserve Bank of Australia suggests a more modest 5 per cent pay rise for switching jobs is in the normal range.i
On a cautionary note – consider your overall career objectives and don’t just jump ship for more money. You don’t want to move to a higher paying job to find that it makes you miserable.
We all have stuff lying around that we don’t need that can generate extra income and ‘one man’s trash is another man’s treasure’. Sites that are good for selling items online include Facebook marketplace, Gumtree and Ebay and you may also want to consider second hand markets in your local area or having a garage sale. Make sure you do your research and know what things are worth as you don’t want to give away a sought-after collectable for a song when it’s worth a bomb!
It’s also possible to get income from renting out your stuff you are not using. Do you have tools in the garage that someone would pay to access? Or camping equipment that others would want to use for their get-away? Australian company Releaseit provides a renting platform where you can list your items and accept booking requests from members of the public.
A side hustle does not have to be a second job. Think about what skills you have that may be marketable. For example, are you a whizz with words? If so, you could earn some money writing cover letters and CV’s for job applicants. If you are a gardening green thumb you might be able to help others with their garden design and plant selection. Or if you are creative, selling your work on a platform like Etsy can be financially worthwhile. Even just sharing your opinion can earn you money as participating in paid market research can earn up to $100-$150 per session. ii
Boosting your income is a great way to reach your property goals faster than focusing solely on saving but saving is still an important part of getting your deposit together. Paying any extra income into a dedicated account can make sure you don’t touch it.
It’s also helpful to have a firm figure in mind to be aiming for, so please reach out if we can be of assistance in exploring your borrowing capacity and options.
i https://www.afr.com/policy/economy/want-a-pay-rise-then-you-should-switch-jobs-20220330-p5a9ds
Property investors say that succeeding in real estate is all about timing. Buying at the bottom and selling at the top is easier said than done as there is no easy way to predict exactly when the market is at its peak or trough.
Many real estate experts agree that “time” is everything and it’s more about “time in the market” rather than “timing the market”.
Some real estate analysts use a clock analogy to explain market cycles. The hands moving around the clockface represent where local markets are, at any one point in time.
While the idea of a property clock is logical, the notion of a top and a bottom should be taken at face value.
Experts break down the major capital city performance into “house” and “unit” markets and refer to “regional” figures separately, consolidating hundreds of regional cities and towns into one collective data group.
Cities and towns might be heading one way as a whole but dig deeper and some suburbs can be running their own individual race.
Buyers and sellers should narrow their research to fit their own personal circumstances. The big picture is great, but knowing exactly what is happening where you plan to buy, or sell is more relevant.
During the pandemic, people were looking to get out of the city and choosing to move to regional areas with more space and tranquility as they worked from home.
Interest rates were at record lows allowing some people to secure their dream property. As a result, inner city apartments were out, as people were opting for larger homes meaning houses and regional properties boomed.
In early 2022, many locations moved from the “12 o’clock” spot transitioning away from their market peak. Houses started to become even more unaffordable for many and with interest rates rising swiftly, the desire (and the ability) to pay top dollar dropped.
Apartments gradually started coming back into favour and less demand for high-priced houses saw values slip. It’s not yet determined whether the property market has reached the “6 o’clock bottom”. Unfortunately, pinpointing when values hit a trough is usually declared once the moment has passed.
Australia has a diverse property market with varying cycles. Although, as a population we might experience the same external economic factors – such as inflation pressures and interest rate rises – how each of them impact each corner of the country, can vary greatly.
Experts cannot predict exactly how long each cycle will be or the extent of the rises and falls. For example, when Covid hit many economists were signalling a property market crash – the market proved them wrong.
Sophisticated property investors look for real estate in desirable locations that may appear more likely to hold their value and increase over time.
“Time” can also refer to the right time for you as a buyer as you need to have your financial ducks in a row to purchase a property.
Whether you’re an investor or a homebuyer, holding out to buy at the bottom means you may risk missing out on time in the market because as history has shown us – the longer you hold a home, the more valuable it may become.
To talk about the right time for you to make your next step onto the property ladder, speak to us today.
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