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Big is not always best!

Marble bedroom with poster, front, toned

Two-bedroom houses are outperforming the typical family home in Melbourne’s inner and outer rings as buyers look to enter the market below the suburb’s median house price.

New REIV data shows the median price for two-bedroom homes in Melbourne’s inner ring rose 14.7 per cent over the year to March to $1,015,000 – a $130,000 increase.

By comparison, the median price for three-bedroom homes rose 12 per cent over the year to $1,310,000 while four-bedroom homes within 10km of the CBD increased 8.5 per cent to $1.9 million.

REIV President Joseph Walton said two-bedroom homes offer buyers an entry point to some of Melbourne’s most expensive suburbs.

“Smaller, single-fronted homes deliver value for money, particular at the top end of the market where the median house price is currently just over $1.5 million,” he said.

“Given space is at a premium across the city, two-bedroom homes are ideal for couples and downsizers who want the backyard but don’t necessarily need the three-bedrooms.”

Mr Walton added that buyers were also seeking value at the affordable end of the market with two-bedroom homes in outer Melbourne performing better than any other property type in outer Melbourne.

“While larger family homes are typically the norm in outer Melbourne, the strongest price growth has actually been in the two-bedroom market where the median has increased almost 12 per cent over the year to $460,000.

“A two-bedroom home allows buyers on a budget to enter the market well below the suburb’s median house price without needing to consider an apartment.”

“A backyard is still a priority for many buyers and this factor is really driving growth for smaller homes across the city.”

Information courtesy of the REIV

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Autumn market update

Carlton Gardens, Melbourne, Australia

Following the Reserve Bank meeting this month, the cash rate was left unchanged at 1.5 per cent. The chance of a rate cut to 1.25 per cent was at 9.0 per cent according to the ASX RBA Rate indicator, however the rates were left on hold.

Auctions have continued strongly in the March 2017 quarter with 4,416 auctions held in March. The local government areas of Glen Eira (275 auctions), Boroondara (270 auctions), Stonnington (246 auctions) and Monash (228 auctions) had the highest number of auctions in March 2017, with all reporting a clearance rate of over 75 per cent.

Victoria’s vacancy rate was 2.3 per cent in March 2017. The weekly median rent for houses in metropolitan Melbourne fell by nine dollars to $426 in March although rents rose to $600 per week in inner Melbourne. In regional Victoria, the weekly median rent for houses rose ten dollars to $310 per week in March. The weekly median rent for units remained stable at $410 per week in metropolitan Melbourne while the median rent for units in regional Victoria rose by five dollars to $255 per week.

The REIV House Price Index (HPI) for Melbourne rose 1.7 per cent over March to 196.2, and the index is currently 6.6 per cent higher than its value a year ago. The HPI for regional Victoria is 2.0 per cent higher than its value a year ago, now at 142.2.

There were an estimated 11,470 house and unit sales transacted in Victoria in March 2017, and about 129,410 sales in the past 12 months. Based on these estimates, the share of auctions sold as a percentage of overall sales was 23.7 per cent in the past 12 months.

Information courtesy of the REIV

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At its meeting today, the Board decided to leave the cash rate unchanged at 1.50 per cent.

Headline inflation rates in most countries have moved higher over the past year, partly reflecting the higher commodity prices. Core inflation remains low, as do long-term bond yields. Further increases in US interest rates are expected over the year ahead and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively.

Wage growth remains low and this is likely to continue for a while yet. Inflation is expected to increase gradually as the economy strengthens. Slow growth in real wages is restraining growth in household consumption.

The outlook continues to be supported by the low level of interest rates. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Conditions in the housing market vary considerably around the country. Prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.

Story source: www.rba.gov.au

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PPG_Blog_April_image 3_insurance

The devastation wrought by Cyclone Debbie reinforces the need for all home and commercial property owners to ensure they have adequate house and contents insurance.

But it’s not even catastrophic natural events that we all need to be covered for. It can be the simple things, like a leaking washing machine, a fallen branch or defunct hot water system.

What is house and contents insurance?

ASIC’s www.moneysmart.com.au describes home insurance (sometimes called building insurance) as insurance that covers the cost of rebuilding or repairing the home you own. Contents insurance covers the cost of loss or damage to your possessions, which can include things like furniture, clothes, computers, fridges, electrical equipment, tools, and jewellery.

These policies are often bundled together as a ‘home and contents insurance’ package, but they are actually separate policies that cover different things, so you need to work out what cover best suits your needs.

Types of insurance

There are two types of home building insurance. Make sure you understand the difference between them so you can decide which one suits you best:

  • Total replacement cover – includes all the costs of rebuilding your home to the standard it was prior to an event, so you don’t need to worry about any shortfalls between what it costs to repair or rebuild and the amount you are insured for. Having a total replacement policy will reduce your risk of underinsurance, but it’s only available from a few insurers.
  • Sum-insured cover – is more common and will cover you up to a set amount to repair or rebuild your home. This set amount is referred to as ‘the sum insured’. Some sum-insured policies also offer an ‘extended cover’ policy that provides up to 30% on top of the sum insured in the event of a total loss – this could be a good way to reduce the risk of underinsurance.

All insurance policies have exclusions, caps, limits and other conditions, which can vary between insurers, so it is important to ask questions and read the product disclosure statement when comparing different policies.

For more information on how to adequately insure your property and its contents, as well as compare policies, visit www.smartmoney.com.au

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PPG_Blog_April_image 4_Guide to rental property landscaping

An attractive backyard can initially entice tenants and add value to a rental property. However, care and maintenance of rental property landscaping can be a headache for property managers as well as the tenant. Low maintenance gardens are generally the best option.

Hardscaping – The key to low maintenance landscaping is relying on fewer living plants, without compromising on aesthetics. One solution is to invest in hardscaping. As the name suggests, this is the practice of using stones, rocks, paving, and other hard surfaces instead of grass, plant beds, and flowers. In the end, you get more outdoor living space and don’t have to spend nearly as much time mowing the grass or tending to lawn related issues.

Grass – The debate over the pros and cons of synthetic grass is ongoing. Some people love the idea of artificial turf, while others feel like it’s a ridiculous concept that negatively impacts any outdoor space. However, there’s one point nobody can argue against: Synthetic grass requires very little maintenance over its lifetime. And this is a huge plus for rental properties.

Colour – For landlords, one of the biggest challenges is adding some color to a rental property’s landscaping. It’s unrealistic to expect tenants to plant flowers. The easiest and most cost-effective solution is to plant native perennials. Small beds of perennials will add enough color to a property, without requiring too much attention. Most perennials will need some steady watering when they’re first planted but they typically survive on their own after that.

Creating an attractive yet low maintenance garden is not difficult. Nevertheless, if you feel it’s a bit beyond your DIY capabilities, engaging a professional is well worth the time and money. The benefits will continue for years to come.

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PPG_BLog_April_image 2_house v apartment

According to the Real Estate Institute of Victoria, there’s not a huge difference in price growth between houses and apartments, although it’s not identical. Over the past ten years, median house prices have increased by over 100%, while median apartment prices increased by around 80%. The REIV graph below provides a great visual perspective.


There are many pros and cons to the debate of investing in a house or apartment. Whilst houses do perform better in the capital growth department, they generally require more attention in terms of ongoing maintenance than units. Units have much of the maintenance and care of the building and surrounds undertaken through the body corporate.

Houses also generally cost more than units, so units often appeal to first time investors with a more limited budget. The current median price in Melbourne for a home is $826,000, while for a unit it is $583,000.

In terms of rentability, both houses and units are in demand right now. To optimise your investment, it pays to look for places where rental demand is always high, such as around schools and universities, public transport or lifestyle areas with easy access to parks, cafes, shops or beaches.

The right investment choice for you will depend on your financial position and investment strategy. Are you looking for regular long-term income, or do you plan to renovate and sell the property as soon as you can? Before making any decision it’s vitally important to have your investment plan well mapped out.

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PPG_Blog_April_image 1_march quarter breaks new records

Melbourne’s median house price has recorded its strongest quarterly price growth since 2013 to smash the $800,000 barrier for the first time, new data from the REIV shows.
The citywide median increased 7.6 per cent in the first three months of 2017 to a record high $826,000 – up more than $55,000 on December figures.
REIV President Joseph Walton said a range of factors had contributed to significant price growth across the city.
“Melbourne’s property market is experiencing a perfect storm with price increases driven by strong buyer demand, solid population growth, record low interest rates and low stock on market.
“Competition for homes, particularly in Melbourne’s inner and middle rings, has encouraged more vendors to take their home to market with multiple auction records falling this year.
“The city’s buoyant auction market, combined with the strongest private sale market in seven years, has undoubtedly boosted Melbourne’s median house price.”
While increases were recorded across the city, Melbourne’s middle suburbs were the main growth driver with the median house price increasing 6.1 per cent over the quarter to just over $960,000.
House prices in Templestowe in the north-east experienced the largest growth, up 17.6 per cent in the March quarter to a median of more than $1.5 million.
Meanwhile suburbs in Melbourne’s outer ring dominated the list of top growth suburbs this quarter with increases of more than 14.5 per cent recorded in Mount Eliza, Cranbourne North, Kilsyth and Mornington.
Mr Walton added price growth was also recorded at the top end of the market with house prices in inner Melbourne increasing 5.8 per cent to break the $1.5 million mark for the first time.
Solid price growth was also recorded in the apartment sector with the metropolitan Melbourne median up 3.8 per cent to $583,000.
“We’re not seeing any slowing in Melbourne’s property market with demand continuing to outstrip supply.”
Regional Victoria also performed strongly in the March quarter, with the median house price up 4.1 per cent to $377,000.

Information courtesy of the REIV.

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PPG_Blog_March_image 4_defacto

You’ve been in a stable de facto relationship for a while now. In fact, your partner has moved into your property. If something sours and you split up, the home is still yours, right?

In fact when it comes to property settlements, de facto couples have the same rights and liabilities as married couples, so before you take your relationship to ‘let’s move in together’, consider the following:

What is a de facto relationship?

A de facto relationship is defined in Section 4AA of the Family Law Act 1975. The law requires that you and your partner, who may be of the same or opposite sex, have a relationship as a couple living together on a genuine domestic basis. Your relationship is not a de facto relationship if you were legally married to one another or if you are related by family.

Property settlement

In the unfortunate event of a separation, de facto couples have a time limit of two years from the date their relationship ending to make a property claim against a former de facto partner.

Since 1 March 2009, parties to an eligible de facto relationship which has broken down may apply to the Family Court or the Federal Circuit Court to have financial matters determined in the same way as married couples. After this two-year time period has lapsed you will need the Court’s permission to apply.

Before the Court can determine your financial dispute, you must satisfy a number of criteria.

Safeguards for de facto couples

De facto couples who want financial security can enter into a Binding Financial Agreement at any time during their relationship. Binding Financial Agreements are similar to pre-nuptial agreements, in that a couple can use them to set out how their property and other assets would be divided if they were to part ways.

Couples can also use a Binding Financial Agreement to deal with issues such as spousal maintenance e.g. exempting each other from making a claim for maintenance, or specifying maintenance terms in the event of a separation.

For guidance surrounding your own de facto relationship and settling any financial or property dispute, seek professional legal advice as your first step.

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PPG_Blog_March_image 3_strong auction market

Auctions started strongly in 2017 with 3,214 auctions held in February, the highest February on record. The local government areas of Glen Eira (179 auctions), Boroondara (162 auctions), Kingston (156 auctions) and Stonnington (153 auctions) had the highest number of auctions in February 2017, with all but Glen Eira reporting a clearance rate of over 80 per cent.

There were about 39,200 auctions held in Victoria in the last 12 months with 75.6 per cent selling. The middle Melbourne region recorded the highest number of properties sold by auction in the past 12 months, with around 11,950 sales, and a clearance rate of 77.8 per cent.

At the suburb level, Reservoir had the most auctions for the month, with 40 auctions held in February 2017 followed by St Kilda (38), Richmond (34), Epping (32) and Hoppers Crossing (31). Reservoir (33 sales), Epping (29 sales) and St Kilda (28 sales) had the highest number of properties sold by auction in February.

Thomastown and Williamstown had the highest clearance rates in February, with clearance rates of 100 per cent and 96 per cent respectively.

Information courtesy of the REIV

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At its meeting yesterday, the Board decided to leave the cash rate unchanged at 1.50 per cent.

Conditions in the housing market continue to vary considerably around the country. In some markets, conditions are strong and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades.

Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income. By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions. A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.

Story Source: www.rba.gov.au

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