Buying is cheaper than renting for houses in approximately one in seven suburbs and units in approximately one in five, according to Domain.

Domain found that houses in 13.8% of suburbs around Australia were cheaper to buy than rent in September, after comparing rental prices with property prices and assuming a home loan interest rate of 4.93%.

But conditions varied significantly from location to location:

Domain also found that units in 21.0% of suburbs in Australia were cheaper to buy than rent:

Metro v regional

The Domain research revealed some other interesting nuances.

For example, while houses in 13.8% of suburbs were cheaper to buy than rent, this fell to 6.3% in the combined capitals but rose to 27.3% in the combined regions.

Also, while units in 21.0% of suburbs were cheaper to buy than rent, it was 14.5% in the capitals and 44.3% in the regions.

Meanwhile, buyers who get ahead on their mortgage – and therefore reduce their interest bill – have a greater chance of finding a home that’s cheaper to buy than rent.

As previously mentioned, houses in 13.8% of suburbs were cheaper to buy than rent – but this increased to 21.4% for buyers who contributed an extra $50 per week to their mortgage and 29.3% for $100 per week.

For units, that share increased from 21.0% to 32.3% and then 43.6%.

Your mortgage … or someone else’s?

Renting can be a great solution depending on your particular life circumstances. That said, rent money is often described as dead money. 

That’s because while renting might be cheaper than buying in many cases, your monthly rental payment is used to pay off someone else’s mortgage. Conversely, when you buy, each monthly mortgage principal and interest payment adds to your equity and therefore your wealth.

If you’d like to get on the property ladder, I can help. Reach out if you’d like me to model different repayment scenarios and organise a pre-approval for you.

With property prices falling and interest rates rising, you might be wondering if now is a good time to buy an investment property.

Ray White chief economist Nerida Conisbee said there were six questions to ask yourself as part of the decision-making process.

 

1. Can you get a home loan?

Your ability to qualify for a loan depends on your unique circumstances. Still, Ms Conisbee said that with rising interest rates making mortgages more profitable for banks, they’re keen to lend. “Provided you can pay back the loan, you’re likely to be able to get a loan relatively easily,” she said.

 

2. Can you afford higher interest rates?

The Reserve Bank has signalled that further rate rises are coming, announcing in November that it “expects to increase interest rates further over the period ahead”. So if you’re going to buy an investment property, you need to be confident you can afford higher loan repayments.

 

3. Where do you want to buy?

Australia is not one big property market; rather, it has lots of different markets, where prices and rents perform differently. This is something you need to consider during your due diligence, Ms Conisbee said. “Where and what you buy right now can lead to dramatically different investment outcomes even in the short term,” she said.

 

4. What’s your strategy?

Ms Conisbee said there’s generally a trade-off between capital growth and yield: a property that delivers more of one will generally deliver less of the other. “Investors typically concentrate on capital growth, however, rental yield is equally as important, particularly if you’re looking to hold long term. Right now, we’re seeing low capital growth overall but strong growth in rents,” she said.

 

5. How long will you hold the property?

This is not a good market for house-flipping, according to Ms Conisbee. “With price increases slowing, and in some cases falling, it’s far less likely you can make a profit in a short amount of time,” she said. “Holding long-term means that it matters less what part of the cycle you buy in.”

 

6. What are your other options?

Investing in property is not without risk. But other asset classes also have downsides. “Shares are highly volatile, putting money in a term deposit yields very little return and alternative investments such as Bitcoin are seen as even higher risk than normal,” Ms Conisbee said.

 

Interested in property investment? If so, get in touch. I’ll be happy to explain the pros and cons, crunch the numbers on your behalf and help you get finance.

It is no longer mandatory for the vast majority of workers to isolate for five days if they test positive to covid-19.

The decision, which took effect in mid-October, was made by the National Cabinet, and agreed to by all the states and territories.

While self-isolation is no longer mandatory for most Australians, health authorities are still advising people to stay home if they have any covid-19 symptoms – including a runny nose, sore throat, cough and fever – and to get tested.

 

Mandatory isolation is still in force for some people, though.

“You may still be required to isolate in some circumstances, for example workers in high-risk settings such as aged care, disability care, Aboriginal healthcare and hospital care,” according to the Fair Work Ombudsman.

“Other requirements may also apply, for example regarding covid-19 vaccinations, wearing masks and physical or social distancing. Employers and workers should check for any requirements that apply to them.”

 

How to manage covid-19 in the workplace

The Fair Work Ombudsman said both employers and employees have responsibilities under workplace health and safety laws to not put the health and safety of other people – including colleagues, customers and visitors – at risk.

Therefore, sick employees “shouldn’t attend the workplace”.

The ombudsman also advised:

Sources:

https://www.qld.gov.au/health/conditions/all/prevention/covid-19/health-advice/i-have-covid-19/guidelines

https://www.covid19.act.gov.au 

https://www.wa.gov.au/government/announcements/mandatory-covid-19-isolation-removed-positive-cases-and-close-contacts 

Businesses have been warned they need to be able to substantiate any environmental claims they make in their marketing.

Australian Competition & Consumer Commission deputy chair Delia Rickard said there have been increasing reports of businesses falsely promoting green credentials to capitalise on changing consumer preferences.

“Broad terms like ‘environmentally friendly’, ‘green’ or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing,” she said.

“It is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification or other forms of evidence. 

“Where we have concerns, we will be asking businesses to substantiate their claims. The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims.”

 

ACCC wants to protect green businesses from unfair competition

Ms Rickard said the ACCC’s campaign against greenwashing was aimed, in part, at protecting innovative businesses.

“Many businesses go to extraordinary lengths to make their processes, products and services more sustainable,” she said.

“This innovation and investment should be protected from unscrupulous behaviour of other businesses making green claims without incurring the same costs. 

“This can have a chilling effect on investment in this space, as businesses are not able to realise the full benefits of making environmental improvements.”

Ms Rickard urged businesses to think from their customers’ perspective when doing marketing.

“Consumers generally need to take at face value that claims made are truthful and accurate,” she said.

“While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers.”

 

 

The Albanese government has used its first Budget to announce two specific measures aimed at the small business sector.

First, the government will provide an energy savings grant program to reduce energy use and lower energy bills.

Second, it will fund free mental health and financial counselling support for small business owners.

In other changes, the government will increase paid parental leave for the primary caregiver from the current 18 weeks to 26 weeks by 2026. Also, from July 2023, Child Care Subsidy rates will increase by up to 90% for eligible families earning less than $530,000. This is designed to get mothers back into the workforce sooner.

 

Government targets unfair contracts

In the Budget documents, the government also highlighted its recent move to strengthen unfair contract protections.

On September 28, the government introduced legislation to crack down on unfair contract terms and increase penalties for anti-competitive behaviour.

The new legislation, if approved by parliament, would:

 

Assistant Minister for Competition Andrew Leigh said the bill provides greater protections for small businesses from unfair contract terms.

“The reforms will better protect consumers and small businesses from unfair terms, by reducing their prevalence in standard form contracts,” he said.

“This will help to improve consumer and small business confidence when entering into standard form contracts. 

“Consumers and small businesses often lack the resources and bargaining power to effectively review and negotiate terms in standard form contracts [when] they are offered by a larger party.”

 

Ombudsman welcomes reforms

Small business ombudsman Bruce Billson said he’d seen many examples of big companies imposing unfair contract terms on small businesses.

“We have seen contracts where a big company is allowed to cancel or vary the contract with two days’ verbal notice, but the small business is required to provide 90 days’ notice in writing,” he said.

“We have seen contracts where the big company is able to keep deposits for at least 12 months after the agreement with a small business ends with no fixed end date.”

Mr Billson also said it wasn’t enough just to introduce new laws; they also needed to be enforced by regulators.

Investors in student accommodation have had a tough couple of years, but even in a post-pandemic world the outlook remains uncertain, according to one of Australia’s leading commercial property analysts.

Ray White Commercial head of research Vanessa Rader said the pandemic was a trying time for student accommodation providers given that international students stopped arriving. Arrivals are still well below pre-pandemic levels, even though the international border has reopened.

“The attraction from overseas students has somewhat diminished, especially from markets such as China where there has been an 84% decrease in student arrivals,” she said.

“The ability to learn remotely has been a major obstacle in attracting students, as well as political pressures, resulting in a significant decline in international demand, which makes up the bulk of tenants in student accommodation assets.”

Ms Rader said international students were likely to gravitate towards specialised accommodation options, given that vacancy rates in the general rental market were so low right now. But that wouldn’t completely solve the demand problem.

“Looking ahead, until there is greater recovery in the international student market, occupancy levels may be under pressure together with rising interest rates, resulting in yields moving back towards pre covid-19 levels,” she said.

“This is expected to further hinder the completion of close to 5,000 new student accommodation units in the development pipeline across the country.”

 

Yields hard to predict

In the years before the pandemic, the student accommodation market became increasingly sophisticated, with a move away from purely on-campus facilities to stand-alone, purpose-built accommodation centres with quality management, according to Ms Rader.

“As a result, we saw the emergence of student accommodation as a commercial investment asset, with a range of buyers looking to take advantage of high occupancy and stable returns which the asset class had to offer,” she said.

During that time, average yields ranged from 6% to 8.5%.

“Given the reduction in interest rates, we saw yield sharply reduce over the last couple of years, with ranges reducing closer to 5% to 6%. However, as interest rates rise and international student arrivals [start] to recover, the future for student accommodation is uncertain.”

I can help you buy an investment property, whether it’s student accommodation, an industrial facility or an office site. Get in touch to discuss your options.

Sources: 

https://www.raywhitecommercial.com/research/the-resurgence-of-student-accommodation-in-australia

The Reserve Bank of Australia (RBA) today increased the cash rate for the seventh month in a row. The cash rate increased from 2.6% to 2.85%.

Australians are feeling the pinch as interest rates rise across the board. Whether paying off a mortgage or saving to purchase property, the cost to service a loan is increasing. This combined with high inflation, growing cost of living and relatively stagnant wage growth has made it an important time to double down on saving money where possible.         

While you may not be able to avoid increasing interest rates if you are on a variable interest rate or an expiring fixed rate loan, there are a number of ways you could still save money.

Six tips to save in an interest-rate-rise environment

Some ways you could save money while interest rates continue to rise include:

  1. Refinance: Get your broker to check if you can reprice or refinance your loan to a lower rate or for lower fees.
  2. Consider your package: Your broker can also check if your home loan package suits your needs. Switching to something more basic if you are not using all the features could save you in fees. Or if you would make use of additional features that could save you money, such as an offset account, your broker can run the calculations for you to determine if it is worth switching.
  3. Change the term: You could consider extending the term of your loan to lower repayments. Keep in mind this means you will be paying more over the life of the loan, but is an option if you are experiencing cash flow problems now.
  4. Check your budget: By making note of all your expenses, you could identify areas where spending could be reduced. This could include memberships, subscriptions or luxury purchases. This calculator can be a good place to start.
  5. Offset account/redraw facility: If you have an offset or redraw facility, now is a very good time to make use of them. By putting money into your offset or additional repayments on your loan, you will save on interest which becomes even more money as interest rates rise.
  6. Extra repayments: If your loan allows for it, consider making extra repayments now, which can save you money in the long run as interest rates continue to rise.

If you are looking for ways to save on your home loan, speak to us for a free, no-obligation home loan health check. We can also discuss your options and right strategy to achieve your goals.

It’s no secret that the last couple of years have been turbulent in the property market. From a boom to stagnation and even a slight dip in prices in some areas, and record-low interest rates to six jumps in the cash rate in a row. Housing supply issues were a key consideration in the Labor Government’s Federal Budget released last night.

What was included in the budget to help?

Equity contribution to get feet in the door

Up to 40,000 eligible Australians earning under $90,000 per annum (or $120,000 for couples) could make use of the government’s Help to Buy scheme. Eligible buyers will need a minimum two percent deposit with the federal government contributing up to 40% equity for a new home and 30% for an existing home. The buyer will not be required to pay rent on the stake of the home held by the government. The Labor Government estimates this could cut the cost of buying a home by up to $380,000 for a new build or $285,000 on an existing home. Price caps apply per region.

Increasing supply

With support from states and territories, investors and the construction sector, the government set an “aspirational target” of one million new, well-located homes to be built from mid 2024-2029.

This number includes 10,000 affordable dwellings funded by the federal government and an additional 10,000 affordable homes funded by state and territory governments.

“One of the big challenges that we have in our economy is we’ve got these jobs and opportunities being created, but it’s becoming harder and harder to live near where those job opportunities are,” Treasurer Jim Chalmers said.

“I have been working really closely and really hard with superannuation and other institutional investors, with the states and territories, with the building and construction industry as well and with the union movement to see what we can do to shift the needle on affordable housing,” he said. 

Additional money will also be unlocked to entice super funds to invest in social and affordable housing.

Disaster relief 

With recent severe weather events once again bringing disaster prevention and resilience front of mind, the federal government has committed $3 billion to spending toward disaster response. This includes an additional 5,000 volunteers to be deployed when future disasters occur and $200 million a year in prevention and resilience through the Disaster Ready Fund. Additional money from this pot will go toward payments and support for people who are impacted by disasters, such as floods.

Encouraging downsizers

The budget included some measures to encourage baby boomers to downsize their homes, intended to boost housing availability for younger families.

Savvy downsizers wanting to put earnings from the sale of property into their super can now do so from age 55, where it was previously only for over 60s. This enables a one-time post-tax payment of up to $300,000 per person into a super fund. The assets test exemption for the earnings from the sale of the principal home will also be extended to 24 months (where it was previously 12). 

If you’re looking to buy property, or move, get in touch to discuss how this budget could impact your plans.

 

Since its inception in 1989, over 118,000 Western Australians became homeowners thanks to Keystart, an initiative of the WA State Government that enables people with low deposits to get a home loan.

Keystart loans have low initial fees, no lenders mortgage insurance and low deposit requirements, making them popular for first home buyers looking to get into the market.

However, these loans often carry a higher interest rate than other home loan products meaning over the long term, these loans can end up costing the homeowner far more than if they are on another loan.

If you currently have a loan through Keystart, it could be worth checking to see if your loan is still in your best interest.

Some examples of times where it may be in your best interests to consider refinancing include: 

There are some factors to consider to determine if refinancing is the right move for you. 

There are costs involved in refinancing your home loan so it may not be the best financial move for everyone. These costs include government charges to switch and any lender application fees. 

When reviewing your situation, your broker will be looking for an opportunity to save you money and put you in a better financial situation.

We have access to over 60 lenders and over 1,000 products to find the right loan for you.

Reach out today for an obligation-free chat about your situation and whether you could save money.

Rental rates increased by a record 10.0% in the year to September, following an identical rise in August, according to CoreLogic.

The sharp increase in demand corresponds with a significant reduction in supply, with the number of for-rent properties in September 35.4% below the previous five-year average.

And PropTrack economist Angus Moore has forecast that rents are likely to keep rising, as migration ramps up and demand for rental accommodation increases.

As he noted, Australian Bureau of Statistics data for August showed:

Furthermore, while annual population growth has not yet reached the pre-pandemic level of 1.5%, the latest data show it has now increased for four consecutive quarters:

“That increase in population will put upward pressure on rental demand amid already tight conditions,” Mr Moore said.

Demand is growing, but more supply may be on the way

Mr Moore said this is already showing up in rental price data.

“Rents are growing especially quickly in areas that recent migrants typically move to – these are mostly inner-city areas, often near major universities,” he said.

“Unsurprisingly, this pattern is the reverse of what we saw during the pandemic when borders were shut. During 2020 and 2021, inner-city areas had very weak rental markets and saw large declines in advertised rent prices, particularly in Sydney and Melbourne.”

Mr Moore said there were signs of investors returning to the market, which would increase rental supply and therefore reduce demand – but that this would be a slow process.

“The number of new investors relative to the size of the rental market is small,” he said.

Are you considering buying an investment property? Book an appointment and we can get the ball rolling on a home loan pre-approval.