Borrowers could see rate hikes in 2014

interestrateriseno2 thumb Borrowers could see rate hikes in 2014

The interest rate tide has turned, and homeowners are being told to prepare for possible rate hikes by year-end.

Australia’s cash rate currently sits at a record low of 2.5 per cent.

Some economists were expecting another cut in 2014, but higher than expected inflation figures on Wednesday have sent that door "slamming shut", says TD Securities head of Asia-Pacific research Annette Beacher.

"I think you need to enter into a mortgage contract with eyes wide open that interest rates are going to be rising from here," she said.

TD Securities expects the cash rate will be 3.0 per cent by year end.

Mortgage Choice’s Jessica Darnbrough said homeowners have been flocking to fixed rate mortgages since late last year in a bid to lock in low rates.

Some fixed rates had reached historical lows thanks to aggressive competition among lenders, she said.

"Our December figures show 33 per cent of all loans written through Mortgage Choice were fixed loans – wholly or partly fixed – it’s definitely the highest we’ve seen in six years, since March 2008," she said.

"That doubled since the beginning of the year – in January, 16.35 per cent of all loans written were fixed rate and by the end of the year, it was 33 per cent.

"We expect that trend to continue as people are looking for that security and that stability and that piece of mind."

Michelle Hutchison, from comparison website, said it was important to work out whether the interest paid on a fixed rate was worth the security and stability.

If you can find a fixed rate loan lower than the variable rate you’re currently paying, you’re onto a good deal, she said.

Those looking to buy a property may need to consider lowering their budget or saving a bigger deposit, she said.

Bigger deposits help lessen the effect of rate hikes but homebuyers also need to consider lenders mortgage insurance, a significant additional expense if you have less than a 20 per cent deposit, she said.

"If you think you will have trouble making your loan repayments if there is a rate hike then you might want to consider waiting until you have a bigger deposit saved or lowering your borrowing budget," Ms Hutchison said.

Story:   Reported by AAP     Source:

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First-home grants keep young off property ladder

Firsthomebuyersno3 thumb First home grants keep young off property ladder

FIRST-HOME owner grants are one of the biggest failures of government policy in the past 50 years, with the extra cash encouraging owners to bump up the selling price, making it harder for the young and those on lower incomes to get a foot on the housing ladder.

Leading economist Saul Eslake has attacked the policy of providing grants for first-home buyers, saying they have cost taxpayers more than $22.5 billion since 1964 and fuelled the fall in first-home owner levels to record lows of 12.3 per cent in November.

The grants had also stoked property ownership by the wealthy, with the top 20 per cent of income earners owning 36 per cent of Australian homes, Mr Eslake said.

In a personal submission to the Senate economics references committee, Mr Eslake, who is the chief economist at Bank of America Merrill Lynch, wrote a scathing criticism of the lack of affordable housing in Australia, caused by a fall in the number of homes built compared to the population increase.

Mr Eslake put the onus on Australia’s political leaders, saying there was more political capital in overseeing the increase in housing prices for the country’s eight million home owners. He was most critical of cash grants to first-home buyers, along with negative gearing, which he said had served to inflate the demand for existing housing while doing little to increase the overall supply.

The highest level of Australian home ownership appeared in the 1961 census, three years before the Menzies government initiated a first-home owners grant, Mr Eslake said.

"It’s hard to think of any government policy that has been pursued for so long, in the face of such incontrovertible evidence that it doesn’t work, than the policy of giving cash to first-home buyers in the belief that doing so will promote home ownership," Mr Eslake wrote in the submission.

"Cash grants and other forms of assistance to first-time home buyers have served simply to exacerbate the already substantial imbalance between the underlying demand for housing and the supply of it,"

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It pays to know if a home is ‘normal’

SteepBackyard thumb It pays to know if a home is normal

What is normal? By definition it is conforming to the standard, the common type, and the regular, or just plain usual.

Understanding the normal elements of an area can really help you either as a seller, or as a buyer. Knowing this means less wasted time seeking features that homes in that area just don’t have, or worrying unnecessarily about a negative with your home that in fact is so common it isn’t really an issue.

Imagine you are a buyer, you see a home you really like, it suits you perfectly but the backyard is really steep. It would be prohibitively expensive to change this. You don’t mind, but you are worried if you came to sell in the future buyers would be deterred.

Firstly note in your property search how many other homes have steep gardens. Let’s say more than a third. If that’s the case you really have very little to worry about providing you pay the right price. How much is that? Well it is slightly less than a similar home with the perfect level yard.

If few properties have steep yards and this home is unusual, you want pay a figure that reflects this substantial negative.

This rule can apply to anything from main road positions to power lines, railway tracks and even flight paths. It can even by an architectural style, or typical size of a home, block, or aspect.

These ‘normals’ can be good or bad. That great view of the bush, in some areas, may be seen from half the housing stock or more, so its impact is less important in terms of value and desirability. In an area where open bush views are rare, this could be a real positive and you, as a buyer, would be expected to pay a premium.

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Baby boomers continue to squeeze out first-timers

Firsthomebuyerssqueezed thumb Baby boomers continue to squeeze out first timers

First-home buyers continue to be squeezed out of the property market, with their share of home-loan approvals falling to a record low, despite growth in investor activity slowing.

While the home loan market strengthened amid low interest rates in November, as a proportion of total borrowers, first-home buyer activity fell to 12.3 per cent nationally, new figures from the Bureau of Statistics show. The previous low was 12.5 per cent in October.

Sydney auctioneer Will Hampson said the data reflected what he saw at auctions every week: ”We were consistently seeing first-home buyers being outbid with competition from cashed-up baby boomers and overseas buyers.”

Mr Hampson said in Sydney’s inner suburbs many successful first-timers were quite clearly being helped by their parents.

He was expecting the ”Kippers” – kids in parents’ pockets eroding their savings – trend to continue this year. ”This could be the year to help [their kids] out, through using some of the equity in their own homes or going 50-50 on a reasonable deposit.”

The latest figures came as an ANZ survey found job advertisements declined by 0.7 per cent in December, but were stabilising in some states, after an annual drop of 9 per cent.

In NSW, first-home buyer activity remained at 7.4 per cent, just above the record low of 6.8 per cent in September.

Investor finance was up 45 per cent compared to last year, according to October numbers.

Home buyers with a budget of up to $400,000 are being advised to look for apartments in Dee Why or Manly Vale, and for houses at half a million dollars or less, to try western suburbs such as Fairfield, Blacktown, Kings Langley or Quakers Hill.

Yet Starr Partners chief executive Douglas Driscoll, who has 10 offices across Sydney’s west, said even there, first-home buyers were struggling against investors.

”There is an argument to suggest that it is too easy for investors to buy at the moment,” Mr Driscoll said. ”I think 2014 is going to get even worse for first-home buyers, sadly.”

Mr Driscoll advocates the state government bringing back stamp duty concessions to help first-time buyers compete with investors.

”There has even been talk of allowing first-home buyers to use part of their super for a deposit, which should be considered as well,” he said.

Separate figures released by mortgage broker AFG on Monday showed that the number of mortgages it processed in the second-half of last year soared by 18.9 per cent on the back of demand from Sydney investors.

NSW recorded the country’s highest increase at 33 per cent.

”The dearth of first-home buyers in NSW continues to be a long-term concern,” AFG’s sales and operations general manager, Mark Hewitt, said.

The strength of the housing market, coupled with rising prices and the continued boom in residential building approvals meant the Reserve Bank was likely to keep the cash rate on hold this year, economists said.

Story:   Glenda Kwek, Stephen Nicholls, Toby Johnstone     Source:

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Seven tips for a more organised home in 2014

organisedhome thumb Seven tips for a more organised home in 2014

You don’t have to be a hoarder to feel overwhelmed by the prospect of an organised home. For most of us, an environment where every paper is in its place is nothing more than an elusive fantasy.

How to get organised? "Start somewhere," said Los Angeles organising consultant Kim Anker-Paddon. "It doesn’t matter where. I usually start with something that is bothering the client but is not so big that it’s overwhelming."

Acknowledging that organised living takes commitment, time and loads of effort (and in some cases, finances), Anker-Paddon shared some simple tips on how to get organised in 2014:

1. Bring less into your house. I encourage people to raise the bar on what they buy and what they keep. Most of the people I work with have a lot of stuff. Instead of just liking something, keep the things you love that add to your life in some way. Once things are in the house, it’s harder to get rid of stuff. Donate things to the best charity possible rather than sell them, unless you are really good at it. A lot of times you just don’t get much money for your things. And if your goal is to get organised, it’s best to get the stuff out of the house.

2. Know exactly where you will put what you’re bringing into the house. Think about it before you acquire the object. Many clients can’t find what they are looking for so they go out and buy it again.

3. Find a convenient home for items. Putting things away should be just as easy as putting them down. Think about where you use objects. Create zones or areas where you do certain activities. Keep supplies for those activities together. Make it convenient so you can put supplies down and come back to it later.

4. Know exactly why you keep each piece of paper. Paper is the biggest problem that I encounter. We all keep too much of it. Set up systems to streamline the paper flow. Keep important papers near your desk. Right now you should be keeping tax-related papers as they arrive. I encourage people not to spend too much time on filing. If you have an overly detailed filing system, you’ll have a harder time finding things. It should be really simple. Assign big categories: credit cards, taxes. The same is true with your desktop.

5. Have fun organising. When inspiration hits, run with it. Trade with a friend: Have someone help you with a closet or a pantry and help them in return. You will have some company and it’s more enjoyable. If organisation doesn’t come easily to you, get some help. You can have someone help you set up a system and then you can maintain it.

6. Watch out for perfectionism. This really impedes getting organised. People think they have to be perfect. It’s not always a neat and tidy process.

7. Delegate. All of my clients work really hard and have a lot going on in their lives. Getting some help makes all the difference for them. Hire a housekeeper. It doesn’t have to be every week. An excellent housekeeper can help you stay on track. Or a bookkeeper. I encourage my clients to work in the areas of their strength and delegate what they can’t do or really dislike.

Story:  Lisa Boone     Source:

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Canny homebuyers on top of the world

CannyBuyers thumb Canny homebuyers on top of the world

Local economic circumstances will drive the best and worst property growth across the country this year, with improved prospects for gas pushing up prices in Queeensland’s Toowoomba and car industry job losses sending prices sliding in the Adelaide suburb of Kilburn.

Forecasts by property consultancy firms MacroPlan Dimasi and Australian Property Monitors show that Queensland will host four of the six best performing suburbs for home value growth this year, with the low Australian dollar boosting key industries in the state.

Suburbs in South Australia, Canberra and some iron-ore producing towns in Western Australia will stall, as the industries that employ large numbers of people in these areas face a tougher year.

Brisbane’s Dutton Park on the fringe of the city and the outer western Redbank Plains will be two of the country’s top performers, growing by a forecast 10 per cent, with the whole city expected to reap the rewards of renewed confidence.

MacroPlan Dimasi chief economist Jason Anderson said that rising inner city rents in Brisbane this year would see more demand for city fringe apartments, while the affordability of Redbank Plains would stoke the interest of a more confident first-home buyer cohort, returning to the market after low levels last year.

Brisbane local David Cowling plans to take advantage of the prospect of more demand from renters in Dutton Park, buying an apartment off-the-plan last year for $525,000. The 65-apartment complex, developed by Silverstone, will be finished in May, with all apartments sold, most within the first two weeks of marketing.

Mr Cowling said that Dutton Park had all the amenities that the close by but more expensive West End did, but was better value for money as it did not have the "hip" reputation.

"It’s just outside that city ring and I think it could be the next place to move," he said.

"If this happens then the rents will rise and the value of the place will rise, which is a great opportunity," Mr Cowling said.

A couple of areas in the still hot, but cooling Sydney will be the only ones to match Brisbane, with the inner west set to grow by 10 per cent, and outer western Penrith by 8 per cent.

The worst performers will fall in value by about 5 per cent, with Adelaide’s Kilburn to suffer from Holden’s manufacturing exodus, Canberra’s Tuggeranong to feel the pain from the expected public service cuts, and apartments in the Melbourne central business district and Docklands to feel the pinch from an oversupply of residential buildings.

The iron ore and coal producing resource towns of the Pilbara in Western Australia and Gladstone in northern Queensland are likely to feel the headwinds from a drop in mining construction – especially Gladstone, with home values expected to drop by about 3 per cent.

Back in Queensland, tourism-reliant Cairns will fare well from a falling dollar, with property prices rising by about 7 per cent.

And Toowoomba will surge by 8 per cent, being close to the Surat Basin gas industry, which is in the early stages of a growth cycle.

Story:   Greg Brown   Source:

tt twitter micro3 Canny homebuyers on top of the world

Brush up on colours before painting

colourchart thumb Brush up on colours before painting

THERE is no doubt repainting your home will refresh and rejuvenate it, making it look like a brand-new building.

But with thousands of paint colours to choose from how do you know where to start?

Firstly you need to think about how you want your house to look. Do you want a modern look or are you trying to play on some of its character features?

A good idea is to take a drive and do a bit of house spotting, taking pictures of some of the colour schemes and styles that you like.

Once you have an idea of the overall vision it’s time to get some sample pots and put some colour on your walls.

Selecting colours from tiny pieces of cardboard under the fluorescent lights of a hardware store is incredibly difficult. Getting the right one is more pot luck than anything. So it’s vital you get a minimum of three different colours to try.

When painting samples onto your walls, paint a patch at least 500mm x 500mm and apply two to three coats so that you get a true indication of the colour.

Also, it’s a good idea to paint a few different spots on the house to see how the colour reacts in different light conditions.

Grey colours are very modern at the moment. Light or blue greys give a subtle, less dramatic look, whereas dark greys add drama and impact to a house.

If you want a fresh and bright scheme, then whites and light creams are the way to go.

If you want a more sophisticated look, go for a colour such as a duck egg blue or deep beige. When it comes to the trim – doorframes, windowsills and other architectural details – you can go wrong with a crisp white.

Black is also a good option for the trims of your house, but make sure you paint a large sample area of your house before you make your final decision as it ‘s quite a dramatic look.

Your front door can really be an expression of your personality and a way to add a splash of colour to the property.

I like to use a high gloss paint here to contrast the low sheens used on the body of the house. High gloss paint also draws the eye directly to the front door and heightens its impact.

- Charlie Albone is co-host of Selling Houses Australia on Lifestyle channel and runs a business.


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Residents turn unused car parks into cash

carparks thumb Residents turn unused car parks into cash

The growing deficit and high cost of parking in much of Melbourne is behind the emergence of a new online marketplace where residents lease unused private spaces to motorists who need a spot to park.

Home owners and renters have begun leasing spare space in their garages and driveways, in apartment building car parks and even on the street, to people who drive each day to areas that lack adequate parking.

Melbourne IT workers Robert Crocitti and Michael Nuciforo launched the online marketplace in September under the name Parkhound, and have since brokered more than 220 deals in Melbourne and other Australian cities, using social media and a website they built to spread the word.

Mr Crocitti said the pair hoped to have made their 1000th deal by March, in the belief that "there’s about 10,000 spaces we could tap into in the next year".The idea came to them, he said, in August when the pair tried in vain to find a parking space near the MCG, and noticed East Melbourne’s streets were full of empty driveways.

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Reserve Bank Governor Glenn Stevens says interest rates could fall further

interestratesno2 thumb Reserve Bank Governor Glenn Stevens says interest rates could fall further

INTEREST rates could come down further, with Reserve Bank Governor Glenn Stevens indicating the central bank has an "open mind" about further shifts on monetary policy.

Fronting a parliamentary committee in Canberra this morning Mr Stevens said the economic year had not been as good as the RBA had hoped, but not as bad as it could possibly have been.

He said it was not out of the question that the official cash rate could come down further from the current 2.5 per cent.

"The board has an open mind about whether need to lower interest rates further," Mr Stevens said.

Consumers have enjoyed record low interest rates post the global financial crisis, resulting in more first-time homeowners getting into the market.

However Mr Stevens said that a further lowering of interest rates may not be enough to encourage spending and investment in other areas.

"Monetary policy can’t force spending to occur," he said.

"In the end, though, firms and individuals have to have the confidence to take advantage of that situation."

Mr Stevens said that mining investment had "reached its peak" but that there was a concern that non-mining investment was still at a "low ebb".

He said in the short term below trend growth in GDP "will probably continue for a little bit longer".

But Mr Stevens hoped in the medium term future growth would pick up and the economy could return to full strength.

His comments today come after Treasurer Joe Hockey yesterday released the Midyear Economic and Fiscal Outlook.

The budget update showed conditions had worsened for the Australian economy, with the deficit this year blowing out from $30 billion to $47 billion.

Without changes to government policy, taxpayers would be staring down the barrel of a $667 billion debt bomb within the next ten years, the document stated.


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SMSF property investors exposed to rule changes

SMSFProperty thumb SMSF property investors exposed to rule changes

THE $530 billion squirrelled away by mums and dads in self-managed super fund has never had much exposure to real estate, nothing they need to lose sleep over … until the government changes the rules.

Australian governments of all persuasions have long had a frustrating habit of changing the rules on superannuation as frequently as most of us change our clothes.

Well, they’re at it again, but at least this time it’s something that is positive for property investors.

The Coalition government’s decision this month to axe Labour’s plan to slap a tax on superannuation pension earnings above $100,000 appears on the surface to benefit rich retirees, but in reality is a nice boost for the growing army of self-managed super fund members who are buying real estate in their funds.

Financial advisers say the axed tax would have been extremely difficult to collect, and any high-earner with a decent financial planner would have been able to use advanced strategies avoid paying it, leaving the average Aussie who buys a property in their SMSF with the biggest financial hit.

That’s because property is a large asset that can’t be sold in pieces like shares can. So under Labor’s system, someone who bought a $500,000 investment property in their SMSF and sold it for, say, $2 million 20 or 30 years from now would have been hit with a tax bill of around $200,000.

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