Hatch Financial Services News

The best way to buy

Wed, 02 May 2012 04:42:00 GMT

Are you planning on buying a property in the near future?

If so, it certainly pays to have a little know-how when it comes to the pros and cons of buying at auction versus purchasing via private treaty.

What’s the most effective way to start your property portfolio? Purchasing a home via private treaty or trying to snag a bargain at auction. This old debate continues to divide investment experts.

In fact, both options have their benefits and their drawbacks, so it pays to understand how they both work and what you need to consider when purchasing your investment.

While sometimes you may have a choice about which path to take, quite often you will have very little pulling power or none at all regarding how a property is sold. So it’s essential you know what’s what.

Private treaty – what you need to know

‘Private treaty’ simply refers to the process in which the home buyer and vendor meet on an agreed price and is the most common property transaction process used in Australia.

Once the home buyer and vendor have agreed on a price, a Contract of Sale will be exchanged.

This contract will outline the terms and conditions for the sale and will detail any special sale conditions, required deposit fee and length of the settlement period.

It is important to have the Contract of Sale reviewed by your legal representation to ensure from the outset that there are no elements that may work against you – or even that might be illegal. From this point, your solicitor should be involved at every stage of the purchase process.

After both parties have agreed on the terms and conditions detailed and the contracts have been exchanged, a settlement period of four to five weeks will follow. The length of this period can be negotiated by the parties.

It is important to examine and assess the property with a real estate agent or legal adviser just prior to settlement to ensure all details of the property are accurate, no fixtures and fittings included in the contract have been left out, and that there are no other nasty surprises.

Auction – what you need to know

Unlike purchasing a property via private treaty, an auction is a public event at which multiple home buyers bid against each other to secure the best price for the property.

An auctioneer will oversee the bidding until the amount offered by the highest bidder is acceptable to the vendor.

If the highest possible bid is deemed insufficient by the vendor, the property will be ‘passed in’ and the property will remain on the market.

An auction is a fast paced and exciting way to purchase a home, but there are several issues of which you need to aware.

It may be difficult not to get caught up in the heat of the moment, but when attending an auction it is vital that you know your limits and do not over commit on price. Remaining clear headed and in control is essential.

A cautionary note for property investors

Thu, 26 Apr 2012 07:37:00 GMT

The article below appeared in The Age yesterday and i thought that it was of interest and worth re-publishing.

The key take away is that you should not capitalise interest on investment loans and instead divert funds to paying down your home loan.

NOTE: This is quite different from having an interest only loan and making a payment into the loan each month to cover the accrued interest.

Alarm as taxman takes interest

Simon Johanson

Property Editor @ The Age

25 April 2012

A NEW tax ruling sounds a warning to some of Australia's 1.5 million property investors and may cost them thousands of dollars in tax breaks, experts say.

The Australian Taxation Office has flagged it will crack down on property investors claiming deductions for interest expenses on certain types of loan arrangements.

Property owners using some or all of the rental income from an investment property to pay off their own home loan while adding the interest from the investment loan to the principal and claiming it as a deduction would come under scrutiny, accountants BDO said.

''People are trying to divert all the rental income off into their home loan. That's pushing it too far and that's what the Tax Office is getting at,'' said Age columnist and tax expert Max Newnham.

The change would affect one of the ''big ticket'' items, claiming interest paid, which landlords rely on when lodging their tax return, said BDO property tax specialist Eddie Chung. ''Any loan arrangement that incorporates features that would effectively give rise to the capitalisation of interest on an investment loan while the loan repayments are used to pay down the principal of a private loan is now under the spotlight,'' he said.

Investors relying on a larger tax deduction to reduce their expenses would feel a ''real financial squeeze'', said Andrew Gardiner of the National Tax and Accountants Association.

The ATO's determination will apply retrospectively and could affect a landlord's past income and deductions, potentially costing them thousands of dollars.

Property investors should be conservative and avoid claiming deductions for any compounding interest on their investment loan, Mr Gardiner said.

It was difficult to quantify how many investors would be affected, Mr Newnham said. ''Of our clients, I'd be surprised if 10 per cent were doing it,'' he said.

How a little family help can go a long way

Wed, 25 Apr 2012 06:05:00 GMT

Offering to be a guarantor can be a great way for parents to help their children get into the property market far sooner and at the same time save a large amount of money. Faced with high house prices and the rising cost of living, many would-be first time buyers are finding home ownership well and truly out of reach.

The difficulty is that while there are many young buyers who have the financial capability to service a loan, they simply can’t raise the sizable deposit typically needed to satisfy the banks.

If you have children who are in this position, with the right strategy and approach there is a way you can help them break into the property market sooner rather than later and in the process avoid Lenders Mortgage Insurance (a cost which which can amount up to $30,000).

Putting yourself down as a guarantor will give your children the extra financial support needed to maximise their chances of meeting the requirements of their bank or other lender.

This simple process will allow you to unlock the equity built up in your own property and use this as collateral, helping your kids achieve homeownership sooner.

Best of all, this strategy does not require you to dip into any of your own savings or liquidate any assets, reducing the risks and financial strain for you.

Speak to a financial adviser or mortgage broker prior to seeking a loan as they are in the best position to advise you on the right approach.

While going guarantor can be a great way to help your children break into the property market, there are some associated risks of which you need to be aware.

When talking to your financial adviser or mortgage broker, be sure to discuss the circumstances in which you will be held accountable for loan repayments, how much of the loan you will be responsible for and for how long will you need to act as guarantor for the loan.

Once you have agreed to be a guarantor for your child’s mortgage, you will be held accountable for any late or delinquent repayments.

Before becoming a guarantor therefore, it will pay to look closely at your child’s current financial status and assess their ability to make the required repayments.

Traditionally, you would have been held accountable for the first few years of the mortgage; however, the exact period will ultimately depend on the lender and the size of the mortgage.

As the size of the mortgage decreases and the value of the property grows, you will be able to relinquish your support, allowing your child to take full responsibility for their home and mortgage.

Deciding to go guarantor on your child’s mortgage is a big decision and one which requires careful consideration.

But with the right approach and understanding, you can give your child a head start in life and place them in the right direction to secure their financial future.

ANZ ruffle reathers

Mon, 23 Apr 2012 23:37:00 GMT

ANZ is a favourite lender of mine. But its decision to raise its variable home loan interest rate beyond RBA official rate movements has ruffled my feathers and those of many clients.

I like ANZ as it has great products, competitive rates and service that is better than most of the other banks. It has been that way as long as I have been a broker. So I am loath to criticise it. After all, there are so many lenders I dislike far more whom I have never be critical of in my blog. But I do not think my criticism is unfair or unwarranted...so here it is.

At the end of last year and start of this year ANZ were aggressively chasing business offering attractive discounts to lure home loan business from other banks. Then having succeeded in this goal, they have started to increase home loan rates beyond RBA rate increases claiming the increased cost of funding has forced its hand.

These decisions really annoy me, because customers moved for what they thought represented “great deals” only to find that the deals are not that great. Sure variable rates are just that. Variable. But to move them straight after luring new substantial new business based on pricing discounts is questionable behavior. Especially as cost of funding pressures did not suddenly spring up in Feb 2012 and had existed for 6 months prior to that.

Sure the rates these new clients have in most cases still represent good value but on the "smell" test ANZ do fail. This is why ANZ have ruffled my feathers and those of many new clients…and this argument stand on its own with out even entering into the media debate over excessive bank profits.

Now that I have got this off my chest I can get back to work...but if it is still bothering you and your home loan is with ANZ then call me to discuss and we can consider the merits of moving to another lender.

Annual Home Loan Review

Fri, 23 Mar 2012 05:54:00 GMT

If there is one thing I have learnt in my time as a mortgage broker it is that clients' circumstances change with time. What is important today may not have even crossed their mind when they took out a loan.

When the loan was set up, all clients were often thinking about was the transaction/need infront of them...to buy a home, to consolidate some debt...what ever it was. Now a few years down the track they may be thinking about a holiday, building a second story on their home, buying a new car..... and wondering how they are going to pay for it.

Similarly, there may be loan products or options available now that were not in existence when clients set up their current loans. Interest rate discounts can also vary over time so the discount negotiated for you back "then" may be less than the discount available now.

So what do you do with all of this? You call me...

I can review your lending and ensure that it is structured to help you achieve your goals AND that it is going to help you get ahead financially, rather than hinder it.

It is worth taking 5 minutes every year to talk to us about your loan. A simple review could save you thousands of dollars and cut years off the life of your loan. In our review

- we check the loan is set up and functioning correctly;
- ensure the loan is meeting your current needs;
- look at your plans for the next 12 months and advise on how your lending can be set up to help achieve these plans,
- initiate any fixes, corrections or modifications that are required.

If you would like to have a 5 minute review with me, or if you have questions about your current circumstances, please contact me today.

Hatch Financial Services: 1300 442 824

Major reform to cooling off period law.

Tue, 20 Mar 2012 04:46:00 GMT

On March 1^st, a significant change to the laws concerning cooling off periods on property transactions in Victoria came into effect.

Prior to March 1^st, Victorian purchasers who signed a contract of sale had three clear business days in which they could elect to withdraw from the contract for any reason. The law existed to offer some protection to those that purchased property without legal advice the opportunity to seek such advice and then if necessary withdraw from a contract.

There were a few exceptions to this rule, notably if you signed the contract of sale within three business days either before or after a publically advertised auction, or if you had received advice from a legal practitioner before signing the contract, then there was no cooling off period.

The first of these exceptions remains but now you can receive legal advice prior to signing the contract and still retain your cooling off rights.

So now, other than if you sign a contract within three business days of a publically advertised auction, there is no way to waive or contract out of the cooling off period. This means that at any time during the cooling off period the purchaser is free to change their mind and pull out of the contract for any reason.

This change is designed to give buyers added protection but not everyone sees it as a plus. One buyers advocate expressed the view that further enshrining the cooling off rights does not necessarily help buyers. He says that it’s impossible for a buyer to offer a “good deal” that gives the vendor both a good price and finality as the vendor has to wait 3 business days after accepting an offer to be sure that the deal has been done.

Industry experts predict a significant change in the negotiation landscape for buying property. Previously, if a selling agent wanted to sell prior to an auction, they would normally only take an offer that was unconditional. So the offer was taken in the last 3 days before auction OR after the client had obtained legal advice on the contract.

Once an agent had an unconditional offer they could call around to other interested parties and chase other offers and try and drive the price up further but at the same time conclude a sale.

This would seem to no longer be an option for selling agents as any deal apparently done (unless done within 3 business days of an auction) is not really a “done deal” until the cooling off period has expired. This increased uncertainty will result in less pre-auction offers being taken, or at very least, offers only being taken in the last 3 business days before a publically advertised auction.

Other methods of sale such as “boardroom auctions”, closed envelope offers, sale by set date, tenders and expressions of interest are also not viable as they are not final.

Whilst pre-auction offers always had some success in weak markets. I expect that in a strong market the number of properties sold by private sale will drop to record lows as agents will find it easier (less work) to let properties go to auction and vendors will be hoping for windfall gains that sometimes come with an auction environment.

It will be interesting to see what practices real estate agents develop in light of this change. It is still to early to see any new trends. One industry insider has pondered whether an agent can publically advertise an auction on the internet at short notice to void the requirement for a cooling off period. In other words, could an agent who knows they are going to get an offer at 2.30pm advertise on the internet at 1.00pm, that the property will be for public auction at 5.00pm on the same day and therefore alleviate the cooling off period on the offer received?

Stay tuned for further developments.

Are you preparing a home for sale?

Wed, 08 Feb 2012 01:13:00 GMT

Preparing to sell a house can be a stressful time but if done correctly, can make or break a sale.

Smart vendors will do everything possible to sell their property for a reasonable price within a reasonable period. It is important that you understand who your likely buyers will be and what you need to do to make it valuable to them. For example, families will be looking for space, storage and safety so you need to promote these features to them.

Richard Armstrong, Director of The Makeover Group suggests the below tips to help in the process of preparing your property for sale;

Deal with faults or issues that can kill the sale - Many buyers are turned off by serious faults that need to be fixed. Money spent rectifying obvious issues is money well spent.
De Clutter - Clutter takes up space and makes your house appear smaller, remember buyers need to visualise this as their home.
Clean and de-odorise - Invest in professional cleaning to ensure your house sparkles
Styling - Furniture and accessories - positioning appropriate furniture and accessories reinforces what a great home you have and gives buyers multiple space to love.
Invest in strong photos - The strength of your photo's often determines how many people get to your front gate.
Street Appeal - Strong "street appeal" converts browsing into serious potential buyers.
Bathrooms and Kitchens - Bathrooms and kitchens have more impact in sale value than almost any other rooms.
Make your property popular - Appeal to a cross section of buyers, avoid quirky, strongly personal styling in favour of accessible, inclusive and conservatively creative presentation, designed to appeal to a broad cross-section of buyers.
Outdoor spaces - make sure your space is presented for your target market.
Look at the overall picture

Given that 70% of vendors don't present their property in it's best light, you have a great opportunity to sell your home for more, sooner.

Make sure you set your budget aiming for a return of $3 for every $1 you spend on presentation. This will help protect your investment and with luck plus a little elbow grease, you will probably get a better return than this.

The Makeover Group specialises in property presentation, home styling and staging. They

can be contacted on 1300 768 464 or visit them at www.themakeovergroup.com.au

Rates on hold

Tue, 07 Feb 2012 05:18:00 GMT

The Reserve Bank today announced that it was keeping the cash rate on hold at 4.25% pa for the time being.

Here is the full statement by the RBA Chairman Glenn Stevens:

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 4.25 per cent.

Information becoming available since the December meeting confirms that economic conditions in Europe were weakening late last year, with risks still skewed to the downside. Reflecting this, most forecasters have lowered their forecasts for world GDP growth this year to a below trend pace. That said, recent data from the United States suggest a continuing moderate expansion after a soft patch in mid 2011. Growth in China has moderated as was intended, but on most indicators remained quite robust through the second half of last year. Conditions around other parts of Asia have softened. Commodity prices declined for some months to be noticeably off their peaks, but over the past couple of months have risen somewhat and remain at quite high levels.

The acute financial pressures on banks in Europe were alleviated considerably late in 2011 by the actions of policymakers. Much remains to be done to put European sovereigns and banks on a sound footing, but some progress has been made. Financial market sentiment, though remaining skittish, has generally improved since early December. Share markets have risen and term funding markets have re-opened, including for Australian banks, albeit at increased cost compared with the situation prevailing in mid 2011.

Information on the Australian economy continues to suggest growth close to trend, with differences between sectors. Labour market conditions softened during 2011 and the unemployment rate increased slightly in mid year, though it has been steady over recent months. CPI inflation has declined as expected, as the large rises in food prices resulting from the floods a year ago have been unwinding. Year-ended CPI inflation will fall further over the next quarter or two. In underlying terms, inflation is around 2½ per cent. Over the coming one to two years, and abstracting from the effects of the carbon price, the Bank expects inflation to be in the 2–3 per cent range.

Credit growth remains modest, though there has been a slight increase in demand for credit by businesses. Housing prices showed some sign of stabilising at the end of 2011, after having declined for most of the year. The exchange rate has risen further, even though the terms of trade have started to decline. This is largely a reflection of a decline in the euro against all currencies. Nonetheless, the Australian dollar in trade-weighted terms is somewhat higher than the Bank had previously assumed.

At today's meeting, the Board noted that interest rates for borrowers have declined to be close to their medium-term average, as a result of the actions at the Board's previous two meetings. With growth expected to be close to trend and inflation close to target, the Board judged that the setting of monetary policy was appropriate for the moment. Should demand conditions weaken materially, the inflation outlook would provide scope for easier monetary policy. The Board will continue to monitor information on economic and financial conditions and adjust the cash rate as necessary to foster sustainable growth and low inflation.

Hatch Match

Tue, 25 Oct 2011 02:44:00 GMT

I am pleased to shout out to the world that I recently got engaged. Avid readers of my newsletter (all 5 of you) may recall I have talked about Heidi in previous newsletters. Well now that we are engaged I thought I would share with you a picture of us looking suitably happy. The wedding will be in March 2012.

Top 10 tips for buying at auction

Tue, 25 Oct 2011 02:26:00 GMT

Spring is here, the grand final has gone and that means another auction season is underway. If you are looking to buy a property and attending auctions here are some tips that i recently picked up from Philip Middlemiss, Director at Stockdale & Leggo.

Rule 1: Know your maximum purchase price

When looking for property it is vital to know the maximum purchase price you can afford. I suggest that once you have that figure subtract 10%! Do not over stretch yourself and bite off more than you can chew. If you are unsure what you can afford then I can help you work this out.

Rule 2: Don’t tell your friends

As soon as you tell some friends that you are interested in (or even looking at) a particular property they are likely to appear at the “open for inspection”. Before you, or they know it, the agent will have found out that they are “just looking” because a friend (you) want to buy the property…with friends like these, who needs enemies.

Signalling to the agent your strong interest in a property will increase the pressure the agent can apply to you and a good agent will always be able to use this information to extract the maximum price from you. So be careful who you tell about the properties you are looking at.

Rule 3: Know your market

Be armed with past sales information at the open home. This allows you to engage the agent around the subject of price and make them justify the asking price they are quoting. Information is power.

You can either purchase this from RP Data or you could your friendly mortgage broker or estate agent to help out. This report will also show you trends within the suburb which is vitally important when the most comparable home sold was 12 months ago.

Rule 4: Leave the rose coloured glasses at the door

There is no such thing as the perfect home. There will be something wrong with every property you look at. The key is spot the difference between a cosmetic imperfection and something far more drastic.

A building inspection report can help you identify issues with the property and distinguish between minor v major problems.

So don’t be put off by flaking paint, worn carpet or the holes in the backyard dug by Disco the dog. Generally speaking location, size and price are more important than condition.

A poorly presented home should excite you as it will put off a number of your competition and give you the chance to touch up the property in your style, which will make it feel like your home lots quicker.

Rule 5: Make an offer before auction

If the home is perfect then others will probably think so too. At auction this will probably mean lots of competition with the result that the property will go for a higher price.

So try to eliminate the competition early and ask to make an offer before auction. If the agent says no we are going to auction and the home is Owner Occupied – knock on the door! Auction campaigns give the agent 4 weeks of great branding at the vendors expense. The majority of Vendors would sell before auction if they could agree on price. Vendors are likely to be as nervous as you about the upcoming auction.

To consider this strategy you need to have your finances in order and be pre-approved by a lender already as this strategy will only succeed if you can make an unconditional offer to buy the property.

Rule 6: Express interest but keep your cards close to your chest

A few days before the auction you should expect to hear from the agent. If you like the home, tell them…but don’t tell them everything. A good agent will use reverse engineered scripts to extract a price from you. Avoid doing this at all costs. Tell them you are not sure yet.

If the agent is really pushing for information then ask them for the reserve price. They won’t be able to give you one, so your response should be that without a reserve price you could not buy it anyway. So you can leave them with the message “I am interested and I look forward to seeing you at the auction”.

Rule 7: Have a plan and stick to it

The auctioneer has a plan for the auction they will know at what price they will open the bidding, if Vendors bids can be placed and what the reserve price is. You should have a plan too. The plan should include at what price you will enter the bidding and what your maximum bid will be. Then no matter what stick to it, in particular your maximum purchase price.

Before you reach your maximum limit start to slow down the bidding. The auctioneer may be asking for increases of $10,000 ask them if they would take $1,000, if they say no, try again after the next bid and keep trying. If they do accept your bid of $1000 you may be getting close to the reserve price.

Rule 8: You are in control

Pressure will be applied by the agent at the auction. Especially as they close in on the reserve. They will say things like: “You have been with me all the way… I know you have it in you… we had interest higher than this before auction… You have been through the home many times…”.

Remember the agent has worked for 5 weeks pre auction to win the business, market the home, introduce purchasers, set reserves and ultimately get the home sold. If an agent is only a few thousand dollars away from being paid for all this work, you will know. I have heard members of the audience respond with “if you only need another $1000 why don’t you take it from your commission – Nice car by the way”.

No matter what, only bid when you want too.

Rule 9: Maintain your calm

Auctions can be a stressful experience. You need to remain calm and collected as there is lots going on and lots of pressure. A drink before the auction to calm your nerves might sound like a great idea but it is definitely not a thought that should be entertained.

If you think that you will struggle to remain in control then consider getting someone else to bid for you. You could consider asking a friend or family member to bid on your behalf.

Alternatively, you could enlist the services of a professional like a Buyers Advocate who is experienced in bidding at auctions and might be able to use their skills to help you get the property for less than if you had bid for it yourself. Either way, you should give written instructions to the person bidding on your behalf so there is no confusion.

Rule 10: Do not exceed your budget

Do not exceed your budget as it will place you under greater financial strain and the consequences of not being able to make your loan repayments are severe.

There are over 3500 properties for sale in Victoria as we speak. So whilst it seems the current property you really want is “The One”, there will always be another great property that will come along.

Interest rates remain unchanged – 7 straight months!

Sun, 28 Aug 2011 13:53:00 GMT

At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.

Statement by Glenn Stevens, Governor Monetary Policy RBA:

The global economy is continuing its expansion, led by very strong growth in the Asian region, though the recent disaster in Japan is having a major impact on Japanese production, and significant effects on production of some manufactured products further afield. Commodity prices have generally softened a little of late, but they remain at very high levels, which is weighing on income and demand in major countries and also pushing up measures of consumer price inflation. In response, a number of the countries with stronger expansions have been moving to tighten their monetary policy settings over recent months. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility.

Australia’s terms of trade are reaching very high levels and national income has been growing strongly. Private investment is picking up, led by very large capital spending programs in the resources sector, in response to high levels of commodity prices. Outside the resources sector, investment intentions have been revised lower recently. In the household sector thus far, there continues to be a degree of caution in spending and borrowing and a higher rate of saving out of current income. The impetus from earlier Australian Government spending programs is now also abating, as had been intended.

The floods and cyclones over the summer have reduced output in some key sectors. As a result there was a sharp fall in real GDP in the March quarter, despite a solid increase in aggregate demand. The resumption of coal production in flooded mines is taking longer than initially expected, but production levels are now increasing again and there will be a mild boost to demand from the broader rebuilding efforts as they get under way. Over the medium term, overall growth is likely to be at trend or higher.

Growth in employment has moderated over recent months and the unemployment rate has been little changed, near 5 per cent. Most leading indicators suggest that this slower pace of employment growth is likely to continue in the near term. Reports of skills shortages remain confined, at this point, to the resources and related sectors. After the significant decline in 2009, growth in wages has returned to rates seen prior to the downturn.

Overall credit growth remains quite modest. Signs have continued to emerge of some greater willingness to lend, and business credit has expanded this year after a period of contraction. Growth in credit to households, on the other hand, has softened, as have housing prices. The exchange rate remains, in real effective terms, close to its highest level in several decades. If sustained, this could be expected to exert continued restraint on the traded sector.

CPI inflation has risen over the past year, reflecting the effects of extreme weather and rises in utilities prices, with lower prices for traded goods providing some offset. The weather-affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring. The Bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the next 12 months.

At today’s meeting, the Board judged that the current mildly restrictive stance of monetary policy remained appropriate. In future meetings, the Board will continue to assess carefully the evolving outlook for growth and inflation.

Reduced stamp duty for first home buyers

Sun, 28 Aug 2011 13:58:00 GMT

For settlement after 1 July 2011, first home buyers are eligible for cuts to land transfer duty where they purchase a home for less than $600,000.

The reductions in transfer duty which will be implemented over the next 4 years (and are cumulative) are as follows:

1 July 2011 – 30 June 2012 20%

1 July 2012 – 30 June 2013 10%

1 July 2013 – 30 June 2014 10%

1 July 2014 – 30 June 2015 10%

On a property valued at $599,000 this will bring the transfer duty down from $33,961 to $27,169 saving first home buyers $6,792.

Increased competition amongst lenders

Sun, 28 Aug 2011 13:58:00 GMT

Over the first 5 months of 2011 we have seen an increase in competition amongst lenders in terms of the interest rates on offer. This has resulted in me being able to save clients up to 0.25% pa on their existing home loans in some cases.

Clients best positioned to take advantage of this competition are those with borrowing over $400,000. However savings have been negotiated for borrowers with as little as $250,000 in lending

In some instances clients have refinanced to get the better rates whilst in most cases we have been able to renegotiate the client’s interest rate with their existing lenders.

Call us at Hatch if you want to see if we can save you money.

House prices stumble

Sun, 28 Aug 2011 14:01:00 GMT

AUSTRALIA’S much-debated property ”bubble” may not have burst but recent data shows house prices are deflating, posting their worst quarterly decline in a decade.

Capital city prices were down 2.1 per cent nationally, to a median of $455,000, in the March quarter and fell by 0.6 per cent over the year, according to property analysts RP Data-Rismark.

This follows less marked declines recorded by Fairfax-owned Australian Property Monitors, which reported dwelling values falling 0.6 per cent over the March quarter.

”The market is essentially going sideways,” said NAB chief economist Alan Oster.

”Broadly what you’re seeing is house prices either flat or slightly down and we would expect that to continue for the rest of the year,” he said.

The biggest falls were in Brisbane and Perth, down 4.6 and 3.4 per cent respectively. Melbourne’s median dwelling price slumped 1.5 per cent and Sydney’s dropped 1.1 per cent over the first three months of 2011, RP Data said.

The most expensive 20 per cent of Australia’s homes fell 3.3 per cent in value over the year to March. The most affordable 20 per cent of homes rose in value by 0.3 per cent.

The Melbourne figures contradict recent Real Estate Institute of Victoria results, showing an even greater 6 per cent drop in local median house values.

The quarterly decline was the largest since RP Data-Rismark began recording results in 1999.

Housing affordability under pressure again

Sun, 28 Aug 2011 14:02:00 GMT

I do not think that this headline will be “news” to many but thought that those wishing to understand the housing market might find this information helpful to know and understand…

Due to increasing house prices and interest rates, the proportion of the average family income required to pay the average loan increased from 30 per cent a year ago to 36.1 per cent in the December quarter. The main reason for this is that incomes have increased at a slower rate than loan repayments have.

This will not surprise anyone with a mortgage as they have seen the bank standard variable rate increase by almost 1% over this time. That has translated to an average of $470 per month to service an average loan compared to an increase in median family income of $191 over the same time.

The average home loan was $313,808 compared to $287,331 a year ago, so not only have interest rates increased but so, too, has the size of loans. This is because over the same time house prices have also increased strongly.