Demand for home loans misses forecasts

demandforhomeloans thumb Demand for home loans misses forecasts

DEMAND for home loans rose in July, official data showed, but by much less than expected, as loans for owner-occupied homes slipped in the month.

According to the Australian Bureau of Statistics, the number of home loans granted in July rose 0.3 per cent in seasonally adjusted terms to 52,251.

Economists surveyed by Bloomberg had expected the number of housing finance commitments to rise by 1 per cent in the month.

Total housing finance by value rose 2.7 per cent in June, seasonally adjusted, to $28.571 billion.

The value of investor lending surged 6.8 per cent in the month to $11.513bn.

The number of loan approvals for refinancing rose by 2.4 in July.

Loan approvals for owner-occupiers, excluding refinancing, fell by 0.7 per cent in the month, to be also be 0.7 per cent lower over the year.

At 12.2 per cent, first-home buyers accounted for the smallest share of housing finance in the history of the data.

 

Story:   Mitchell Neems   Source:  www.theaustralian.com.au

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Sales surge sees house prices defy talk of winter slowdown

housepricesremainsteady thumb Sales surge sees house prices defy talk of winter slowdown

HOUSE prices have defied predictions of a gradual slow down, posting the biggest jump over the three months of winter since 2007 as low interest rates continue to fuel the market.

Figures from RP Data, released ahead of today’s Reserve Bank of Australia monthly meeting on the cash rate, found prices across the capital cities increased 4.2 per cent to a median of $520,000 for the quarter to August 31.

Interactive: Growth in property prices

Sydney’s median price surged 5 per cent to $650,000 and Melbourne’s prices jumped up 6.4 per cent to $523,750, a growth rate far ahead of the other capital cities.

Canberra homes were up 2.4 per cent, Adelaide prices increased 1.5 per cent, Brisbane was up 1.3 per cent and Perth was up by 1 per cent.

Hobart was down 0.8 per cent while Darwin dropped 0.6 per cent.

Cameron Kusher, a senior researcher at RP Data, said while spring generally saw higher price growth than winter, he wouldn’t be surprised if this had reversed. “We saw a strong winter because of a lack of supply at the same time as low interest rates. Buyers could have a lot more supply to choose from in spring,” he said.

Worried about continued price growth, Megan Harold and husband Chris decided to sell their house in Sydenham, in Sydney’s inner west last weekend, moving to a larger house they purchased at the same time. “The way the market was going, we knew if we didn’t make the move now we wouldn’t get the kind of property we wanted,” Megan said.

The Harolds purchased in Earlwood, where larger block sizes mean it will be easier to ­reconfigure the house as their family grows.

Sydney realtor Maria Hodgson-Smith, from Day & Hodgson, said there weren’t enough houses to satisfy demand, with many selling before auction date as buyers became more aggressive.

Brian White, chairman of real estate agency Ray White, said the housing market was mimicking the economy with the resources-driven cities of Perth, Brisbane and Adelaide performing well, but completely outshone by the financial services-oriented cities of Sydney and Melbourne. Offshore investment had also underpinned those markets, he said.

Mr Kusher said price growth was encouraging many to invest in property, although he said once interest rates began to rise this should pull back as investors moved on to other markets. “Sydney prices have increased by 50 per cent since 2009, and Melbourne by 45 per cent, so a lot of people have built up a lot of equity in their home to invest, and there’s not been a lot of returns to be had with money parked at the bank,” he said.

Scott Haslem, chief economist at investment bank UBS, interest rates would begin to “normalise” around May next year, increasing again in June.

Story:  Kylar Loussikian and Turi Condon    Source:   www.theaustralian.com.au

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5 tips to cut the clutter

Declutter thumb 5 tips to cut the clutter

Ever said any of the following to yourself?

Even if I can’t use it, I’ll keep it for someone who can. It was too expensive to get rid of now. It reminds me of a special time or person.

What about these?

  • One day it might fit me.
  • I’ll read it when I have more time.
  • It may look like a mess to others but it’s organised chaos to me.

We use a zillion excuses to justify the physical clutter that collects on our desks, in our wardrobes, on our bench tops and on other unsuspecting surfaces around our homes.

But instead of rationalising our behaviour to self and others, it may be more helpful to ask: how do I feel when I live, sleep or work amongst the clutter? Or what emotions come up for me when I think about sorting through the piles and files to clear the mess?

For many would-be hoarders, the mere idea of getting rid of clutter can create varying degrees of anxiety, guilt, embarrassment, shame, paralysis and insecurity.

In order to placate the overwhelming bubble of discomfort growing within, the clutter-bug clings a little tighter to the pile in question, which results in a sense of relief (at least in the short term) thereby reinforcing the unhelpful behaviour.

For others who struggle to sort and clear their clutter, there is often a misled belief that the items represent some kind of extension of who we are at our very core, therefore to get rid of the mess is erroneously perceived as akin to losing some sense of self.

In order to make progress in the battle of the mess, it’s important to understand what our relationship with the clutter represents. Only then can we hope to taste the sweetness of empowered lightness that freedom from the stuff we no longer need will bring.

For those drowning in a sea of insignificant memorabilia, bedside table pick-up sticks, a mounting floordrobe, or dust-coated items untouched in years, there is help at hand, and you can start today.

5 tips to cut the clutter

1. Start small

Bite sized chunks are key. Start with one pile, one shelf or one drawer. The act of sorting even one area free from clutter can help clear the physical and mental cloud to get the ball rolling.

2. Get real

What’s really important to you? If you haven’t worn or used an item for several years, give it to a charity or bin it.

3. Find clutter a home

Aim to sort and file papers and items to a permanent home, behind closed doors and drawers, rather than leave them on open shelves and surfaces. Keeping the items out of sight reduces the often overwhelming assault on our already overloaded senses.

4. Picture this…

Imagine a life without clutter. Picture how you will operate at your desk with the papers gone or how it will feel to sleep in a room minus the maze of clothing or books.

5. Document it

Take before and after pictures as a reminder of the progress you’ve made and the state you choose not to return to.

Story:   Sabina Read     Source:   www.realestate.com.au

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Most investors miss out on tax rebates

TaxTime thumb Most investors miss out on tax rebates

Even small items like smoke alarms and shower curtains can be claimed on rental properties.

Four out of every five property investors are missing out on potentially thousands of dollars in tax rebates, by forgetting to claim on everyday household items.

Shower curtains, smoke alarms, lawnmowers, roller-door motors, microwaves and garbage bins are among the dozens of minor objects in the average rental home that landlords routinely forget to claim depreciation on.

New research conducted by tax depreciation specialists BMT has revealed that figuring in these assets can increase the cash flow generated by a property by around 15 per cent.

“Property investors tend to focus on the larger-ticket depreciation items available, such as the structure of the house and large plant items in the house,” said BMT managing director Brad Beer.

“However it’s often the smaller items which can make a significant difference to an investor’s cash flow.”

Beer, who recommends investors engage a qualified quantity surveyor to create a deprecation schedule for their property, says investors can often name a few depreciable items, such as carpet, hot water systems and light fittings. “But a range of less obvious items, such as garbage bins, exhaust fans or smoke alarms, are often overlooked,” he says.

BMT conducted their survey among their 190 staff Australia-wide, asking them which items their clients found “very surprising” when told they could be depreciated or which they’d missed out in their DIY filing of depreciable items. The company has more than 8000 regular referrers to their business, including property professionals and accountants who recommend their services to property investors.

They found the most common assets never claimed for were items like garden sheds which have, on average, a depreciable value – the purchase price of the item minus its salvage value which can then be claimed for over its useful life – of around $855 and ceiling fans ($265) right down to smaller expenses like shower curtains ($30). Frequently missed were other assets like solar-powered generating systems ($5500), automatic window shutters ($800) and intercom systems ($745).

Story source: www.domain.com.au ; Story by Sue Williams

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Reserve Banks Interest Rate Policy Decision

 

Reserve bank no 2 thumb Reserve Banks Interest Rate Policy Decision

At its meeting yesterday, the Reserve Bank Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy is continuing at a moderate pace, helped by firmer conditions in the advanced countries. China’s growth remains generally in line with policymakers’ objectives. Commodity prices in historical terms remain high, but some of those important to Australia have declined this year.

Financial conditions overall remain very accommodative. Long-term interest rates and risk spreads remain very low. Emerging market economies are receiving capital inflows. Volatility in many financial prices is currently unusually low. Markets appear to be attaching a very low probability to any rise in global interest rates, or other adverse event, over the period ahead.

In Australia, growth was firmer around the turn of the year, but this resulted mainly from very strong increases in resource exports as new capacity came on line; smaller increases in such exports are likely in coming quarters. Moderate growth has been occurring in consumer demand. A strong expansion in housing construction is now under way. At the same time, resources sector investment spending is starting to decline significantly. Signs of improvement in investment intentions in some other sectors are emerging, but these plans remain tentative as firms wait for more evidence of improved conditions before committing to significant expansion. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend over the year ahead.

Interest rates are very low and for some borrowers have continued to edge lower over recent months. Savers continue to look for higher returns in response to low rates on safe instruments. Credit growth has picked up a little, including most recently to businesses. The increase in dwelling prices has been slower this year than last year, though prices continue to rise. The exchange rate remains high by historical standards, particularly given the declines in key commodity prices, and hence is offering less assistance than it might in achieving balanced growth in the economy.

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Home Owners Paying Off Loans Faster

Home loan thumb Home Owners Paying Off Loans Faster

Home owners are taking advantage of record low interest rates to pay off their mortgages faster.

The National Australia Bank says new figures show 85 percent of its mortgage customers pay more than their minimum monthly repayments, Fairfax Media reports.

Such NAB customers are ahead by an average of 13 months now, compared with 12 months a year ago — a "meaningful" shift considering the size of the bank’s mortgage book, said Antony Cahill, NAB’s executive general manager of lending and deposits.

The bank has about 16 percent of the mortgage market with a home loan book worth $241 billion.

NAB said its customers are also paying off credit card debt faster, with the number of accounts paid in full rising six percent in the past year.

"These are themes that point to the Australian consumer being a little bit more careful, a little bit more prudent in terms of understanding debt and ensuring they keep that under control," Mr Cahill was quoted as saying.

Last week the major banks cut fixed interest rates to new lows of less than five percent.

Story source: www.finance.ninemsn.com.au


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When does it make sense to turn your home into investment property?

Investing and making money thumb When does it make sense to turn your home into investment property?

Before you decide to convert your current home into a rental property, there are serious financial and tax considerations that you need to take into account. Margaret Lomas explains.

So, you have made the decision to move out of your home, buy something new to live in, and rent out the home you are moving from. Have you made the right decision? And if so, what do you need to do to your present financing arrangements to ensure that they become tax effective and, more importantly, remain within the tax laws?

Too many people undervalue the importance of getting this all right, and I see many investors who end up in trouble with the Tax Office because they made claims which they simply were not allowed to make.

There are many considerations to make when initiating this kind of move – from whether you are actually making the right financial decision right through to ensuring that your structures are correct and you are making all of the tax claims you can. Here is a guide to help you through the minefield.

Is it right financially?
You have decided to move from the house you live in for any one of a number of reasons. It could be that you are being transferred with work, but think you may be coming back again to the home you are vacating.

You may have decided to upgrade to a bigger and better property for yourself, and because you like the one you are moving out of so much, believe it will make a good investment. Or, you might be moving for a number of reasons, but just cannot bear the thought of letting go of the house you have known and loved so much. Let’s put all these reasons into perspective to be sure that you are operating from your brain, and not from your heart!

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Turning a Home Into an Investment

Turning your home into an investment thumb Turning a Home Into an Investment

As life inevitably changes, a property may need to fulfil a variety of purposes. Evolving circumstances, like a new relationship, a baby or a job transfer can cause buyers to re-evaluate a purchase.

Therefore it may be ideal to buy a primary residence that can be rented out and converted into an investment.

An investment property that has a strong rental yield is always underpinned by the qualities that made it a desirable owner-occupied home in the first place, according to agents.

Swimming pools and verdant gardens, as well as decorative exterior finishes, can marginally boost the rental value, but at the same time add enormously to the cost of upkeep, he said.

The combination of capital growth and solid rental return is the Holy Grail of acquiring a home that will later be a rental investment

A position near schools, shops, doctor surgeries and public transport, as well as a property that is easy to maintain, is a recipe for a good rental return.

But perhaps the most important factor – and the least known – is that two bedrooms, no more, no less, will attract the right sort of renter. It’s the real estate baby bear equivalent in the Goldilocks story – two bedrooms are just right.

Three bedrooms often attract groups of young singles and one beders are limiting in their appeal.

However, two bedrooms will attract young professionals and couples who require room for a study or are planning to have a baby, and therefore tend to be long-term renters who look after the property.

Story source: www.domain.com.au

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Are Australians missing investment opportunities?

Property as an investment thumb Are Australians missing investment opportunities?

Many Australians with home loans are aware of the ability to use the existing equity in their properties in order to further their real estate investment goals but many individuals aren’t actually utilising their equity as they could.

New research from Westpac shows that just 11 percent of Australian homeowners are planning to use their equity to upgrade.

That said, upgrading isn’t the only option. Those with sufficient equity in their properties can also use it to invest in real estate, too.

What is home equity?

A property’s equity can be calculated by deducting the loan balance from the home’s value. If homeowners have purchased real estate in high-growth suburbs, their equity will not only rise as they pay off their mortgages, but also in conjunction with capital growth.

This equity can be used for home renovations, property investment and more.

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Australians sacrificing lifestyle for mortgages

Australians are making financial sacrifices in order to secure home loans, according to new research from Westpac.

Saving up sufficient funds for a home deposit requires discipline — there’s nothing new about that. However, it appears that soon-to-be homeowners are sacrificing their spending in order to get on the property ladder faster.

The findings outline some of the challenges involved with becoming a homeowner, though those who have secured real estate will no doubt be glad with the security it provides.

What’s holding Aussies back?

According to the 2014 Westpac Home Ownership Report, 40 percent of homeowners say the single most difficult aspect of buying a home is saving a deposit.

A high-interest savings account is a sage option for those looking to save an appropriate deposit, particularly as it has an incentive to refrain from making withdrawals from the account.

This option was reinforced by Gai McGrath, Westpac General Manager of Retail Banking.

"You can also make your money work harder for you by putting your savings in a high interest savings account, which rewards you for making regular contributions," McGrath said.

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