Okay… So the Federal Budget has now been delivered, dissected, debated and most of us are already pretty sick of hearing about it!
In case you have been living in a cave, or visiting another planet during the last couple of days (or just don’t care), some of the key initiatives contained in this year’s budget are:
- The Medicare levy will increase by 0.5% to 2% pa from 1 July 2014.
- The $5,000 Baby Bonus will be removed from 1 March 2014. Instead, families eligible for Family Tax Benefit (Part A) will receive $2,000 following the birth of their first child, and $1,000 for each subsequent child.
- From 1 July 2014, all pension asset earnings above $100,000 will be treated as income and taxed at 15%.
For the more serious budget watchers among us, please find attached a brief from the NAB around key changes for individuals.
Of more interest to me, is the fact that the actual document containing the complete Budget Report is over 1400 pages in length and includes many weird and wonderful ways for the Government to spend our hard earned tax dollars.
A recent article in the Courier Mail (below) outlines a few of the Government’s “more interesting” initiatives….
I especially like Number 5. Why wouldn’t you spend $7.3mil encouraging the general public to vote – in a country where voting is compulsory??
Check out the latest edition of The Smartline Report where:
- Michael Matusik, Founder, Matusik Property Insights, ask “Where you are at in the Property Cycle???”
- John McGrath, CEO, McGrath Estate Agents, notes that clearance rates rise as the market improves, showing that buyers and sellers are increasingly on the same page when it comes to property prices;
- And many more great articles!!!
Click on this link to find out all the details – Smartline Report – May 2013
By now you would have heard, that the Reserve Bank of Australia has announced a CUT in official interest rates to 2.75% at its meeting in May 2013!!!
Check out the RBA Statement at the following link – RBA Statement - May 2013
The RBA’s decision to cut the official cash rate to 2.75% p.a. not only represents a historical low, but also a significant opportunity for anyone that might want to buy an investment property!!!
Seven of the eight Australian capital cities now have a median annual rental yield that is higher than most new variable mortgage interest rates.
Take Sydney as a conservative example. As you can see on the Residex table below, the annual rent on a $490,000 unit is 5.30%, or $25,740. The annual interest expense on an investment loan of $465,500 (with a 5% deposit) is $24,206 (@5.20% p.a.).
Rental yields are historically high and interest rates are historically low. This just means that if you invest (and borrow) wisely you should be able to own property with little impact on your cash flow.
One could also argue that buyer competition for a typical investment property has reduced significantly in recent times with many State Governments removing the first home buyer incentives. In NSW & QLD for example, first home buyer mortgage market share has dropped from approximately 18% to around 6%.
Additionally, with many people now opting to use their superannuation savings to by property rather than shares, the prospect of owning an investment property is far more achievable than many people believe.
If you are keen to start investigating your investment property options, the following report is a fantastic resource.
This free report from RP Data shows every single suburb and town in Australia. The information they have listed for every suburb is as follows:
- Median value
- 5yr average annual value growth;
- Median rent;
- 5yr average annual rental change; and
- Gross rental yield
Please select the following link to download the RP Data report: RP DATA “Every Suburb in Australia” Report – APRIL 2013
Please note: This is a terrific report but it is a 119 page pdf file, which could take a minute or two to download.
As always, I would love to get together to discuss financing options for your property purchase. Just give me a call on 0407 642 484.
I am only too happy to help!!!Read more
There’s gold in them there hills!!!
Well not exactly, but the two tables below, while appearing to be nothing more than a large jumble of numbers, or an overwhelming amount of mind numbing data, provides “gold” for any prospective property investor.
Here are Smartline, we love numbers, but to save you from all the hassles of reviewing and interpretting the numbers on your own, we have summarised some key points from the latest Residex quarterly report:
- Perth houses have had an average median capital growth rate of 8.47% p.a. for the last 20 years. Perth’s median unit values have also grown at the very impressive rate of 7.78% p.a. over this time. One could think that this dream run is about to end, however, a typical indicator of an asset bubble is usually seen via declining rental yields (as Sydney experienced in 2004 with yields of 2.4%p.a.), Perth is experiencing the opposite. In fact, rental yields in Perth are very high (around 5% p.a.) and both house and unit rents grew faster in Perth that any other capital city in Australia;
- Brisbane has seen median house and unit prices drop significantly over the last 4 years but it is now interesting to note that rental yields are well over 5% p.a. (approaching 6% p.a. for units) and growing at nearly double the inflation rate. Sales activity in the Brisbane market is recovering at a double digit percentage growth rate. The drop in the median dwelling prices, relative to Sydney is starting to work in QLD’s favour;
- Sydney is experiencing some relatively flat capital growth rates and record low sales activity but at the same time the rental yields are continuing to grow at levels above the inflation rate. Houses are the only area of rental yield weakness in Sydney with the median yields at 4.29% p.a. (which is still strong when compared to the last 15 year average of just over 3% p.a.);
- Melbourne has seen more house sales over the last year than Sydney. We suspect this might be the first time this has ever occurred and considering the population differential it is a surprising result. Rental yields for houses are the lowest in the country at 3.88% and this may be impacting capital values that have declined by 6.23% over the last 12 months. Units are experiencing a similar outcome with declining capital values and relatively low rental yields. The below average rent and deteriorating capital situation may seem pessimistic but the silver lining is an improved affordability level; and
- On a per capita basis, Adelaide is the second most active market in Australia for houses (behind Perth). Affordability is the strength in this market given the median house price is only $392,500. The median rental yield is relatively low against most other capitals but historically strong at 4.69% p.a.. Median capital values have declined by 5.40% p.a. over the last 12 months but the latest positive quarter seems to indicate that this fall may have ended.
Smartline has purchased the most recent Residex report that attempts to forecasts the top suburbs for future capital growth over the next 8 years. This report looks at every state and territory and is a terrific guide that can help you narrow down your own investment property research.
With the exploding popularity of people buying investment properties with their self managed superannuation fund money, this report could prove invaluable.
Unfortunately, due to copyright laws, I cannot give you a copy of this report.
But I can discuss the findings with you over the phone, or preferrably over a good coffee!!!Read more
Did you know that our Federal Government has just passed legislation that gives them the power to take your money from your bank account if you have not used it for 3 years???
Yes, you did read this correctly.
From the 31st of May this year, the Federal Government will have the power to transfer your bank balance to their coffers.
The definition of “using” a bank account involves either withdrawing or depositing. Interest payments ARE NOT considered to be deposits and fees ARE NOT considered withdrawals under this legislation.
What to do NOW?
1. Check all of your bank accounts and make sure you have transacted over the last 3 years. If you haven’t used your account during this time, make a withdrawal or deposit. Otherwise you will lose it.
2. If you cannot remember where a long lost account may reside, use this ASIC tool to conduct a search https://www.moneysmart.gov.au/tools-and-resources/find-unclaimed-money
If, for some reason, your money is taken by the Government under this law, you will be able to apply to ASIC to have it returned. However, this in not likely to be a quick process.
I hope this heads up will help save you and your friends money.Read more
Property Analysis firm, RP Data, regularly publish a property blog around key topics that are in the market place.
RP Data’s most recent effort covered the impact of migration on this market. We have summarised this blog to some degree to highlight the key points for you.
1. NSW is leaking like a sieve to QLD and WA. However, it is important to note that this net loss of 18,448 people for NSW is well below the 10 year average loss which sits at around 30,000 per annum.
2. During the decade that preceded the softening of the QLD property market in 2010, 90% of NSW departures headed north across the border. QLD’s share of the NSW bounty has now halved because WA has muscled in on the action.
3. Interstate migration is hotly sought after by State Governments because Australians are very quick to economically integrate and nearly always offer relatively high levels of skill and education.
4. The housing construction industry is one of the main beneficiaries of both interstate and overseas migration. Approximately 300+ new dwellings need to be constructed for every new 1000 migrants.
5. The chart below shows how quickly the Australian population is currently growing as a result of overseas migration. If you add WA’s interstate and overseas numbers together you can see why they have a housing construction boom under way. WA currently need to build approximately 80 new homes every single working day. Interestingly, QLD is not far behind.
6. Whilst NSW has a relatively low net migration result of just 41,000 new people per annum, this state is not well placed to meet the demand for new housing that this will create. The short supply and growing demand should at the very least continue to support current home prices.
7. We have always held the belief that Australians migrate to other states for two primary reasons, jobs and housing. Whilst QLD property prices are relatively attractive to their southern neighbours, the jobs market is not so great. WA on the other hand is a terrific jobs market but the rising cost of housing could be a dampener.
Australia’s population has grown by 370,000 people over the last 12 months (1000 per day) and we are about to break through the 23 million mark. This rate of growth (particularly in Sydney, Melbourne, Brisbane and Perth) will see the housing construction market placed under considerable supply pressure.
It will be very interesting to see the impact on house prices that this situation will deliver!!!Read more
Check out the latest edition of The Smartline Report where:
- Michael Witts, Chief Economist from ING Direct, provides some insights into why the RBA remained on the sidelines at its meeting in April; while
- Monique Wakelin, Director, Wakelin Property Advisory, explains that buying an investment property is a vastly different process to that of buying your own home;
- John McGrath, CEO, McGrath Estate Agents, comments that,identifying hidden problem with properties
may just lead to a potential great investment;
- In addition, John identified a series of pros and cons in respect of buying property through a SMSFs
Click on this link to find out all the details – Smartline Report – April 2013
By now you would have heard, that the Reserve Bank of Australia has announced that official interest rates will remain unchanged at 3.00% for April 2013!!!
Check out the RBA Statement at the following link – RBA Statement – April 2013
The RBA have now hinted that they are unlikely to cut the cash rate below 3.00%.
One could now logically assume that we will not be seeing further cuts to our home loan rates. However, we think that future rate cuts might come from the retail banks rather than the RBA.
We have TWO very good reasons to think that there might be some good news from our banks in the near future:
- The cost of bank funding is on the decline - we all remember those frustrating times when the RBA would drop by 0.25% and the banks would only drop home loan rates by 0.15%. People were outraged but the justification for not passing on the full RBA cut was always that the cost of funding was going up. Which is fair enough, if your costs are rising then you must increase your prices. However, when costs drop, so should prices;
- Mortgage brokers now represent around 50% of the market – the mortgage broking channel is a tough place for a bank. The moment a lender decides to offer a special rate they get inundated with broker loan submissions, however, the moment they end that special the volumes disappear.
We think these two points will compliment each other!!!
As the banks find their costs reducing they will be tempted to go for greater market share. They will achieve this growth via discounted products and the broker channel will deliver that growth because they best represent their clients interests.
As you can see from our chart below, the average basic variable interest rate amongst the big four banks is around 5.60%. We have eight non major lenders that are offering headline variable rates that are lower than the cheapest major bank. These lenders are already proving our theory.
Competition is alive and well, especially for mortgage broker clients!!!
As always, I will keep you informed of anything changes as they come to hand.
Should you wish to discuss any property finance related matters, please just email me at email@example.com and I will give you a call.
Remember, I am only too happy to help out.Read more
If you are living with a home loan, it pays to take a moment on a regular basis to review whether your finances are working for you – OR AGAINST YOU!!!
If you find that your loan is working the latter is the case, it might be time for a change. Many Australians turn to home loan refinancing for a variety of reasons, and here are some of the most common.
Pay your loan off FASTER
There are many ways you can do this. By switching to a lower interest rate but retaining your current monthly repayment, you’ll be paying down more of the loan principal each month – meaning you’ll pay off your loan quicker.
Alternatively, changing to a higher repayment amount or opting for weekly mortgage payments instead of monthly ones can have the same effect.
One thing home owners can do after several years of building their stake in a property is access their equity to fund projects such as renovation or new home building.
Renovations don’t just improve your living experience or fulfil long-held wishes or structural deficiencies in your house – they also boost the value of your chief asset.
Refinancing to access your equity can help you fund such projects, or other ones such as the purchase of an investment property to create a rental income.
If you are finding it hard to make repayments on credit cards, personal loans or other high interest debts, consolidating your debt can help make meeting your repayment obligations more manageable.
That’s because by collecting all your debts into one payment you can save on loan fees and get a more competitive interest rate that results in you paying less each month overall.
Just get in contact with me on firstname.lastname@example.org or 0407 642 484.
Remember, I am here to help out in anyway!!!Read more
Guess what??? A home loan is THE biggest commitment (apart from getting married!!!) and one you will most probably be living with for a few decades.
That’s why using an experienced Smartline Personal Mortgage Adviser can be particularly helpful in making sure you get the right home loan for your circumstances when you are buying property.
Everybody’s circumstances are different when it comes to picking the right kind of mortgage finance, which is why it is important to discuss your personal situation in depth with an expert mortgage adviser.
Once you are a home owner however, that doesn’t mean that you needn’t give your home loan any further thought beyond your monthly repayment.
That’s because just as everybody has different needs at the time of buying property, they can also have similarly disparate circumstances three or five years down the track.
You may find that the loan structure that was perfect for you just a few years ago now doesn’t quite work as well in your current situation. Children, employment, lifestyle can all contribute to changing your circumstances dramatically.
Home owners who choose to change how their mortgage finance is structured, do so for a variety of reasons.
They may wish to restructure their loan to better take advantage of market conditions, which could have changed significantly since buying their house.
It could be that they now have more debts and would like to consolidate these with their home loan so that they can get a more competitive interest rate and one simple, REDUCED monthly payment.
Alternatively, if your income has increased, you might like to join other home owners in seeking a way to increase your mortgage repayments so that you can get mortgage free faster.
Home loan refinancing may be able to help you achieve one or more of these goals, which is why it is good to check in with your mortgage adviser for a home loan health check.
Just give me a call on 0407 642 484, or email me at email@example.com, to see how we can make your home loan work harder for you.Read more