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PPG_Blog_August_image 3_own your own home this spring

The spring property market is fast approaching, and if you are looking to purchase a new home or investment, here are few tips to prepare you for success.

The key to a successful home purchase is using research and facts – not emotions – to make the right choice. The process may require patience, but here are three keys steps to helping you make the right decision:

1. Decide on your budget

Looking carefully at your finances will determine how much you can afford to spend on a home. Look at your income, assets and current debt level. Don’t be swayed by what a lender may offer you, it’s what your financial position says you can afford that matters. If your lender says you can repay $1,200 a month, but you know you are struggling with a rental of $1,000 a month, you probably know that you don’t need any more than you already have.

Don’t forget to consider the 10% deposit required to secure your home at purchase, plus legal costs and stamp duty – usually about another 7% of the purchase price will cover these amounts depending on rates in your state.

You don’t have to have a house in mind before you apply for a mortgage. It is a good idea to be pre-approved when you are looking for a home. It will give you the security of knowing that you have funding and the buyer will know you mean business.

2. Research

Spend the time to find the home you want. Talk to your local PPG agent who can help guide you through the home search. Start by checking out neighborhoods and then narrow it down to a few streets. You should consider the schools, parks, public transport and lifestyle advantages.

When choosing between homes, look at the size, number of bedrooms and baths, design and amenities. Decide what your "must haves" are and what the "nice to haves" are. For example, you might be willing to trade a large kitchen for a swimming pool.

3. Negotiate the right price

Once you have the funding in place and have found one (but hopefully more) potential properties, you will need to either make an offer (private sale) or bid at auction. Even if a property is listed for auction, the vendor may be receptive to offers before. You will need to discuss with the agent representing the seller.

Whichever method you must use, don’t get caught up in having to get the home and lose sight of how much you can afford. You don’t want to pay more for the home than it is worth. Recent sales in the area will give you a fairly accurate guide to the home’s value. If you are bidding at auction, make sure you have attended a few before you bid yourself. This will help you understand the process and develop confidence. You can also choose to have a friend or professional buyer’s agent bid on your behalf.

Terms of settlement are usually outlined in the contract. It is recommended that an independent legal representative look over the contract before making an offer privately or at auction. Once the contract is signed, it’s a matter of waiting until settlement date when the bank, your legal representative and the real estate agent finalise the transaction and your dream home is yours!

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PPG_Blog_July_image 1_rising damp

Rising damp is a global phenomenon and can be the source of decay to masonry materials such as stone, brick and mortar. It can cause crumbling of exterior masonry as well as staining of internal finishes. It may also cause musty smells in poorly ventilated rooms which can lead to health problems for the property’s occupants. Here in Melbourne, older homes are more likely to succumb to rising damp than newly constructed ones.

Rising damp occurs when moisture from the ground is sucked up into the porous building materials. The moisture evaporates from either side of the wall (inside or outside), allowing more to be drawn from below. Rising damp may be visible as a high-tide-like stain on the interior finishes or as blistering of paint and loss of plaster.

To prevent rising damp it is now normal practice to build-in a watertight barrier at the base of the wall just above ground level. This is known as the damp-proof course (DPC) or sometimes as the damp course. Unfortunately, many 19th century buildings in Australia were built without DPCs, and some early DPCs have proved ineffective. As a result, a substantial proportion of our historic buildings have inadequate damp-proofing.

If you are planning to purchase an older home, or any home for that matter, it’s wise to have the property inspected by a fully qualified building inspector who can quickly determine if rising damp is an issue. A specialist is required in order to fix rising damp. They may use such remedies as improving ventilation, adding new DPCs, and refining the property’s drainage.

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June Market Update

Red arrow up on white brick wall and concrete stairs

New REIV data shows there has been solid price growth in Melbourne in the June quarter, defying a slowing economy and moderating national market.  

In the three months to June 30, Melbourne’s median house price increased 3.6 per cent to a record high $725,000 – the largest price growth since September 2015.

Growth was widespread across Melbourne and at both ends of the market – from Toorak to Wyndham Vale and Roxburgh Park. Double-digit growth was experienced in Camberwell, Prahran and Richmond. 

Significant growth was also recorded in affordable suburbs – Hillside in the city’s outer north west, St Albans, Sunshine West and Sunbury.  

REIV Chief Executive Officer, Geoff White, said the latest quarterly figures indicate real strength in the Victorian market.

“Recent national data from the Real Estate Institute of Australia shows that most states, apart from Melbourne and Adelaide, have experienced moderating home prices in the opening months of 2016.”

At the same time, Mr White said that price growth is slower than at the market peak in late 2014 and early 2015.

“Just over a year ago we were seeing quarterly price growth just above five per cent,” he said.
“While growth is now below four per cent, it is still solid, given market conditions.”

Mr White added that there have been fewer property listings this quarter, down by around 300 weekly across Melbourne in comparison to last year.

“While fewer sellers are putting their homes on the market, prices are still extremely solid,” he said. 

“The message to vendors is that the market is still bubbling along nicely – and that, given the sales results and prices, those looking to list their homes should do so prior to spring. Now is a great time to sell.”

Information courtesy of the REIV

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RBA

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.50 per cent, effective 3 August 2016.

The global economy is continuing to grow, at a lower than average pace. Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies. Actions by Chinese policymakers are supporting the near-term growth outlook, but the underlying pace of China’s growth appears to be moderating.

Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years. Australia’s terms of trade remain much lower than they had been in recent years.

Financial markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.

In Australia, recent data suggest that overall growth is continuing at a moderate pace, despite a very large decline in business investment. Other areas of domestic demand, as well as exports, have been expanding at a pace at or above trend. Labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term. 

Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished. 

Story source: www.rba.gov.au

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PPG_Blog_July_image 3_post election wrap up

Now that the federal election is behind us, many Melburnians are wondering how the outcome will affect our local property market.

During the election campaign, as predicted, buyers were more cautious with some adopting a ‘wait and see’ approach. There are fewer auctions scheduled across the election weekend and sales numbers were down. It’s usually how the situation plays out during any pre-election period, so no surprises this time around!

The Liberal Party made a pledge during their campaign to keep negative gearing laws as they are, if re-elected. Their re-election is therefore widely considered a positive outcome for local investors and renters. Confidence has already returned to the investment sector with buyers eager to enhance their property portfolios without fear of losing tax concessions.

With over 500 auctions citywide across the July 16-17 weekend, the success rate sat just below 80%, the highest rate recorded since June last year.

Domain and the Australian Bureau of Statistics reported the value of investor lending in Victoria had increased 17.3% during May, in comparison to April. There was a total of $3.6 billion borrowed in May alone, the highest monthly figure for 2016.

The Fair Work Building and Construction (FWBC) Act is an initiative introduced by the Liberal Government which is also thought to further increase buyers sentiment. The act is designed to regulate the construction industry and boost the volume of quality real estate available whilst keeping process affordable. The Act is already in place.

The Liberal Government is also forthright in advocating foreign investment in Australia. It’s their belief that it drives industry development as well as capital growth for local owners. Because of this, we should therefore see further growth across the property market as the government takes us through the next few years.

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Moderating Housing Finance

 

housing affordability

The latest housing finance figures released this month by the Australian Bureau of Statistics (ABS) confirm a moderating housing market.

The Real Estate Institute of Australia (REIA) says the figures for May 2016 show, in trend terms that the number of owner-occupied finance commitments fell by 0.2 per cent – the fourth consecutive month of slight declines.

If refinancing is excluded, in trend terms for May,the number of owner-occupied finance commitments decreased by 0.3per cent–the sixth consecutive month of decreases.

REIA President, Neville Sanders said “decreases were recorded in all states except South Australia and the Australian Capital Territory with the Northern Territory having the largest decrease of 1.4per cent. The largest increase of 1.2per cent was in the Australian Capital Territory.Tasmania and Victoria were flat.”

“In trend terms, the number of established dwellings purchase commitments was flat while new dwelling construction decreased by 0.9per cent and the purchase of new dwellings decreased by 2.3 per cent.”

“The value of investment housing commitments declined by 0.1percent in May and is well down from its 2015 peak in response to the increase in mortgage rates for investors and the strengthening of banks’ non-price lending terms.”

“The proportion of first home buyers, as part of the total owner-occupied housing finance commitments, fell to 13.9per cent and is the lowest since April 2004.”

“The lending figures show that owner occupiers are the dominant force in the moderating market in which investor activity has declined following the introduction of macro prudential measures. Disappointingly the proportion of first home buyers appears to be a downward spiral and is at its lowest for over two decades,”concluded Mr Sanders.

Story source: www.reia.asn.gov

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PPG_blog_June_image 4_airbnb ruling

The popularity of global accommodation website, Airbnb continues to grow. In Melbourne alone, the number of properties available to rent via the site has doubled in the past year to more than 6500.

As a result, both landlords and tenants alike are wondering where they stand when it comes to leasing out a rental property through online accommodation sites such as Airbnb or Stayz.

On its website, Airbnb advises tenants to ‘check regulations to make sure there is no prohibition against subletting — or any other restriction against hosting. Read your lease agreement and check with your landlord if applicable.’

Yet there are stories across Australia and the world of tenants ignoring this advice and sub-letting on Airbnb or Stayz — often without their landlord’s knowledge.

A recent Supreme Court court ruling in Melbourne has provided welcome clarity to both landlords and tenants. When landlord Catherine Swan discovered tenants were renting out her apartment on Airbnb, she initially tried to evict them but was blocked by VCAT – who ruled that the Airbnb agreements did not constitute subletting, but rather a ‘licence to occupy’.

At the Supreme Court that ruling was overturned.

"I am of the opinion that the particular Airbnb agreement in issue in this appeal, for occupation of the whole of the apartment, constitutes a lease," said Supreme Court Justice Croft, who ordered the tenants be evicted. "By entering into the Airbnb agreement, they were sub-letting the apartment."

Airbnb spokesperson, Dylan Smith, was quoted in The Age as saying the case shows current laws and leases are difficult to understand and out-dated, with many written before the rise of ‘house sharing’ or even the internet.

Clauses added to rental agreements only offer so much protection. At the heart of the issue is the Residential Tenancies Act, which was written in 1997. It has not been updated to include any clarity around subletting through online agencies such as Airbnb. Industry experts are calling for the Act to include relevant information for both tenants and landlords.

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reserve bank

At its meeting today, the Board decided to leave the cash rate unchanged at 1.75 per cent. 

The global economy is continuing to grow, at a lower than average pace. Several advanced economies have recorded improved conditions over the past year, but conditions have become more difficult for a number of emerging market economies. China’s growth rate has moderated further, though recent actions by Chinese policymakers are supporting the near-term outlook.

Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years. Australia’s terms of trade remain much lower than they had been in recent years.

Financial markets have been volatile recently as investors have re-priced assets after the UK referendum. But most markets have continued to function effectively. Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative. Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the UK economy itself, may be hard to discern.

In Australia, recent data suggest overall growth is continuing, despite a very large decline in business investment. 

Inflation has been quite low.

Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 is helping the traded sector.

Indications are that the effects of supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. Dwelling prices have risen again in many parts of the country over recent months. But considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities.

Story source: www.rba.gov.au

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woman hands holding paper house

Often overlooked as the ‘poor cousin’ compared to spring, winter is actually one of the most desirable months to sell property. There are a few reasons for this:

1. Typically there are fewer properties on the market which means your property stands out against the competition.

2. A reduction in the number of potential interruptions during your sales campaign with fewer public holidays. Spring, summer and autumn might bring better weather, but there are plenty of stop-starts with school holidays, Australia Day, ANZAC day, Labour Day, Easter etc.

3. Buyer demand remains constant regardless of the time of year leading to greater competition on auction day! If there are 200 people looking for a three bedroom family house like yours with fewer options to choose from, it can only mean one thing – strong bidding from more buyers.

There is a now a good clean run of auction weekends through to the September school holidays – a great time to consider your options before the busy spring period.

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living room

Industry experts are calling Melbourne’s property market a ‘moderate market’ as we head into the winter months. The city’s median price of $713,000 has remained fairly steady for the first two quarters of 2016, coming off the back of what has been a bumper 12-18 months of growth.

Buyers seem particularly keen on properties in the outer suburbs (more than 20 kilometres from the CBD) largely due to the value for money those neighbourhoods represent and the increase in development. In fact 12 of the top 20 performing suburbs across the city are in the outer areas including Werribee, Caroline Springs, Langwarrin and Keysborough.

However, inner city suburbs are still out performing all other areas over an extended 12 month period. These areas have risen around 16% since March 2015. Malvern East is leading the pack with a 13% increase just during the first quarter of 2016.

In the first five months of this year 12,700 auctions have been conducted across Melbourne, down just 1.4% on the same time last year with 12,877 listed. Most agents are reporting good numbers at auctions with robust bidding and prices well above the reserve regularly achieved. Our auction clearance rate is buoyant at approximately 72%.

Consistent buyer activity in Melbourne reflects the positive impact of low and falling interest rates and perhaps the re-invigoration of the investor market driven by the prospect of possible changes to property taxes. The decline that some economists keep predicting is still not on the horizon.

The rental market across the city remains largely unchanged with vacancy rates and median rents sitting mostly unmoved. Melbourne’s latest vacancy rate is at 3.1%. New figures are due out shortly.

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