According to new data, buying is now cheaper than renting for nearly a third of Australian homes, although expected rate increases are making it harder for homeowners to make mortgage repayments. In Australia, 27% of homes are more cost-effective to buy than rent over the next 10 years based on current prices, according to PropTrack’s latest Buy or Rent Report. Cheaper prices in regions and smaller capital cities mean buyers can get better value for their purchase there than in Sydney and Melbourne, The Australian reported. In New South Wales, it is currently cheaper to buy than rent only 9% of properties thanks to the massive price increases during the recent housing boom, The Australian reported. In Queensland, 51% of properties are cheaper to buy than rent compared to South Australia, where it’s cheaper to buy 34% of properties.  On the other hand, buying is cheaper than renting in 7% of cases in Victoria.  While renting may be cheaper than buying in many places in the short term, Ray White Chief Economist, Nerida Conisbee said that homeownership is a long game. “The reality is, it is always cheaper to buy as you get growth in equity, and repayments over time will be cheaper in relative value to your home,” she told The Australian.   Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter.

When looking to buy a new home, you will likely find a wide range of options available from builders and real estate agents. On your search, you may come across the terms ‘fixed price’ and ‘turn-key’. But what and how do these two mean and differ? To define, turn-key means that once your new home is completed, you can turn the key and start living. In short, the build price of a turn-key home encompasses everything a home should have when the purchase is made. This is in contrast with a not-turn-key home that comes with separate additional costs for the extra inclusions. Thus, along with purchasing a new turn-key home, the builder will provide you with a full encouraging list of inclusions for that package, such as: Landscaping & Fencing Turf & Letterbox Driveway & Paths Blinds to windows & Sliding Doors Fly/Security Screens Air Conditioning Kitchen Appliances + Dishwasher Bedroom Fans Carpet /Tiles throughout the home   Meanwhile, a fixed price contract simply means that you as a client and the builder agree to a set price for contracted services at the onset of a project. This only means your new home’s purchase price will include everything in your contract. This then will give you an assurance that you will not face any unexpected build or site costs that may occur during construction, as the builder will be the one who will shoulder these costs.    Call us now for 45 minutes one on one free financial consultation session. 1300 074 675 or message us on WhatsApp +61 488 859 637

Australia’s property rental market is experiencing unprecedented growth. Rental prices are soaring to record highs, and occupancy rates are reaching new peaks. As the country returns to a semblance of normalcy after the COVID-19 pandemic, the market is expected to face further challenges due to the persistent supply-demand imbalance. In this article, we examine market trends and the reasons behind the surging rental prices. We will also discuss the implications for property investment. Rising Rental Prices and Market Dynamics According to a recent report by The Australian, rental prices in the major capital cities have spiked by 19.7% over the past five years. The average weekly rental prices range between $420 and $575, with the Australian Capital Territory (ACT) being the most expensive. The director of Economic Research at Proptrack, Cameron Kusher, highlights the intensifying market conditions, attributing them to factors such as increased demand from students returning to universities and the resumption of overseas travel. Market Trends and Investor Behavior Despite traditionally slower growth, cities like Sydney and Melbourne have witnessed substantial rent increases of 8.4% and 9%, respectively, for units over the past year. Concurrently, the vacancy rates for units in these cities have plummeted, indicating high demand and limited supply. Kusher also notes a trend of investors selling properties, with many opting for private ownership or using the funds to renovate their primary residences. These factors contribute to the tightening rental market and further exacerbate the supply shortage. Property Investment Outlook While rising interest rates may lead to a potential decline in property prices, Kusher suggests that the same expectation may not apply to rental rates. As a result, the residential property market is anticipated to garner increased interest from investors seeking stable rental income. However, navigating the market amidst these record-high rental prices necessitates careful analysis and strategic decision-making. Conclusion: Record-high prices and soaring demand currently characterize Australia’s property rental market. This situation presents both challenges and opportunities for property investors. As rental prices continue to surge and supply remains constrained, investors should carefully assess market trends. Investors also consider the implications of rising interest rates. They also need to evaluate their investment strategies accordingly. Despite the hurdles, the residential property market is poised to attract heightened attention from investors seeking long-term rental income.   Please contact us for clarification, or further advice, regarding any of the topics covered in this newsletter.

The Reserve Bank of Australia recently raised the cash rate by 0.25 percentage points, resulting in banks announcing that this increase would be passed on to their customers. As a consequence, mortgage holders may experience an additional financial burden, with an estimated $68 per month increase in repayments on a $500,000 loan. However, there are several options available to help reduce the financial pain of increasing Mortgage Repayments.   Here are some of some effective strategies you may consider: 1. Extend the Length of your Loan  While not ideal, as it would mean the borrower would pay a lot more in interest over time, extending the length of the loan would reduce their repayments. In fact, those who have had a mortgage for a long time are almost guaranteed to be paying a higher rate – so it’s time to negotiate as stated by Alan Kirkland, the Choice CEO.  Meanwhile, according to the Australian Competition and Consumer Commission (ACCC), borrowers with home loans between three and five years old paid on average about 58 basis points (around half a percent) more than the average rate paid for new loans, news.com.au reported. For instance, someone with a home loan of $250,000 could save $1,400 in interest in the first year by switching to a loan with a lower rate – that is $17,000 in total savings by the end of their loan term!    2. Find Other Ways to Save Money  Aside from housing loans, people should also look at their personal loans, credit cards, and other forms of debt often at higher interest rates, Annette Morgan, Curtin University tax clinic founder and director, told NCA NewsWire. She also mentioned: “They could consider consolidating all their debts into one or into their housing loan if they have enough equity in their home to do so,” Morgan said. “This of course means you are paying the debts off over a longer period, but the benefit is only one payout per month and usually a much lower interest rate.” Along with this, Morgan also advised people to look at their service providers, including electricity, gas, and various insurance to “see if there are any savings to be made in changing policies or providers.”   3. Pause your Repayments Many probably are not aware of this, but borrowers under genuine financial hardship can ask their bank for a temporary moratorium on their repayments to offer them some relief. Aside from this, banks may add arrears to the mortgage on some occasions.   4. Lock in a Fixed Loan  As advised by News.com.au, people who are highly risk-averse may opt for a fixed-rate loan, instead of a variable, which means their repayments will remain the same. They also added that borrowers may also opt to fix a portion of their loan, and leave the rest as a variable loan with an offset facility so they can put extra money in and reduce their repayments.   5. Get on Top of Further Rate Rises  People who were lucky enough to have already locked in low-fixed loans should know they will likely be paying much more once these end. They should consider their future household budget. There is also a need to put money aside to ensure the increased payments are not too much of a shock, news.com.au reported. Hence, considering these strategies might be helpful to reduce the financial pain of increasing mortgage repayments, which may lead to eradicating people’s household finances strains in consecutive years. 

With the recent rise in interest rates, property investors are presented with an opportunity to review their lending arrangements and potentially benefit from refinancing their loan portfolios. This article discusses the advantages of refinancing in the current market and highlights attractive offerings that make the process more enticing for property investors.   Seizing the Opportunity to Refinance The increase in interest rates serves as a prompt for property investors to evaluate their current circumstances and lending arrangements. Refinancing provides an opportunity to secure a more favorable loan structure, potentially reducing monthly repayments or accessing additional features that align better with investment goals.   Attractive Offerings for Refinancing Lenders are aware of the growing demand for refinancing and are introducing enticing offerings to support property investors. One such example is the Life of Loan package, which includes fee waivers, cashback incentives. Additionally, it rewards customers who have or plan to have solar panels installed on their investment property. These perks add value to the refinancing process, making it even more beneficial for investors.   Competitive Interest Rates In the current market, lenders like ubank are committed to staying competitive on interest rates. Furthermore, by ensuring that property investors seeking to refinance can access favorable terms and potentially secure lower interest rates. It effectively reduces the overall cost of their loan and increases potential savings.   Simplified Refinancing Process To support investors who wish to refinance, lenders are continuously striving to simplify the refinancing process. Streamlined applications, minimal documentation requirements, and dedicated support teams make it easier for investors to navigate through the refinancing journey. This enhanced convenience encourages more investors to explore refinancing options.   Conclusion As interest rates continue to rise, property investors should consider the benefits of refinancing their loan portfolios. The current market presents an opportunity to secure more favorable terms, reduce monthly repayments, and access attractive offerings provided by lenders. By taking advantage of refinancing, investors can optimize their lending arrangements, potentially saving money and aligning their loans with their investment goals.   Call us now for 45 minutes one on one free financial consultation session. 1300 074 675 or message us on WhatsApp +61 488 859 637

The Help to Buy Scheme is a government initiative designed to make property ownership more accessible for Australians. The scheme aims to tackle the housing crisis and enable more households to enter the property market by providing an equity contribution toward the purchase price of a new or existing home. This article explores the key features and advantages of the Help to Buy Scheme. It will highlight its potential benefits for aspiring homeowners.   Lower Deposit Requirements Under the Help to Buy Scheme, home buyers are required to have a deposit of only 2 percent or more to qualify for a standard home loan with participating lenders. This lower deposit requirement reduces the barrier to entry, allowing more individuals and families to take the first step toward homeownership.   Incremental Homeownership One unique aspect of the Help to Buy Scheme is the option for homebuyers to gradually purchase additional stakes in the property during the loan period. Starting with a minimum stake of 5 percent, buyers can increase their ownership over time. This incremental homeownership approach provides flexibility and the opportunity to build equity in the property gradually.   Waiver of Lenders’ Mortgage Insurance (LMI) Unlike traditional home loans, the Help to Buy Scheme does not require borrowers to pay lenders’ mortgage insurance (LMI). Typically, lenders require this insurance when the borrower has a deposit of less than 20 percent. By waiving LMI, the scheme further reduces upfront costs for homebuyers, making property ownership more affordable.   Repayment of Financial Contribution If the homebuyer’s income exceeds the Help to Buy gross annual income threshold for two consecutive years in certain circumstances, the government may require them to repay a portion or the entire financial contribution provided. This repayment requirement ensures the scheme remains sustainable and assists those who genuinely need support.   Enhanced Affordability and Financial Freedom The Help to Buy Scheme aims to empower Australians to purchase a home with a smaller deposit. This scheme will result in a smaller mortgage and reduced mortgage repayments. Individuals and families can build equity in their property by making homeownership more affordable. Additionally, they can also enjoy the benefits of stable housing and increased financial freedom.   Conclusion The Help to Buy Scheme offers a lifeline to Australians aspiring to own a home by providing a government equity contribution and reducing deposit requirements. With lower upfront costs, incremental homeownership opportunities, and waived LMI, the scheme makes property ownership more accessible and affordable. By taking advantage of this initiative, individuals and families can transition from renting to homeownership. They can realize their dreams of long-term stability and financial security.