A recent survey by credit agency Veda shows that a staggering 79% of 1000 credit active Australians are unaware of changes to credit reporting that took effect last March, an alarming number considering that more Australians are eligible for credit as their scores improve over the year.

Veda credit scores have improved to an average of 760 from last year’s 751, with risk of defaults improving from 15% to 13% this year. This came after 78% of the respondents admitted to have never checked their credit report. Individuals are strongly encouraged to harness the power of credit reporting, as it not only benefits the lenders, but the borrowers in such a way that they will have a clear understanding of their current financial standing.

Read more about this on the Adviser website.

 
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Overall housing debt to income ratio has reached a record breaking 137.1%, 5 percentage points higher than what was recorded prior to the Global Financial Crisis, according to the Reserve Bank of Australia.

The shocking news was revealed in a recent report by the RBA, showing a drastic growth in mortgages as opposed to incomes. Owner occupied debt to income ratio has also shattered the pre – GFC record, currently at 90.9% from a then high of 86.7%. Mortgages have a critical impact over the economy as home loans cover around $200 billion in annual borrowings. Property remains in demand as recent national auctions finished at a decent 70% clearance rate.

Read more about this on the Financial Review website.

 
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The International Monetary Fund has a suggestion for the Reserve Bank to counter the rising house prices without having to raise rates – set up lending limits for home loans.

With banks now having the ability to play around with economic tools that allow them to offer varying loan types, IMF managing director Christine Lagarde has stated that that ”The Australian Central Bank, under the strong leadership of its governor, will able to deal with it.”

Banks have yet to comment on the situation, as loan limits will eventually require the Big 4 banks to increase their capital, as the chances of a taxpayer funded bailout are reduced and will require the banks to raise more money – significantly reducing their profitability.

Read more about this on the Yahoo Finance website.

 
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Are you just starting out with property? Here are 7 free online resources that you can use to broaden your existing knowledge on property. Note that these resources are meant to educate and as always, it is still best to consult a financial planner to ensure that your decisions are based on what’s best for your own circumstances.

First Home Owners Grant. If you are a First home buyer, this website is a good starting point. This provides extensive information about grants, concessions as well as the government authority in charge, categorized according to state and territory.

Real Estate View. Buy and sell information gives you a realistic view of property prices in a certain area.

Money Smart. This website from the Australian Securities and Investments commission gives you a comprehensive database for information regarding your financial health, from mortgage, shares to property.

.ID. This provides investors with demographic information up to the suburb level, backed by economic profiles and the latest census data.

RP Data. Data providers offer you free market information that you can use to monitor an area’s health, including official statistics from the ABS.

Australian Securities and Investments Commission. If you’re into policies about property, the regulating body website is the perfect fit for you. The ASIC website gives you extensive information about products, policy and important consumer warnings.

Houzz Australia. Looking for design inspirations for your property? Houzz provides you with the much needed information from interior designers and allows you to store information and images in albums, identical to Pinterest.

Read more about this on the Property Observer website.

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A surprise drop was recorded in August as the unemployment rate finished at 6.1%, a slight improvement from July’s 6.4%. 121,000 jobs were added to the labour sector, with participation rates increasing to 65.2%.

Employment was driven up by an increase on part time employment, with 65,400 males and 41,300 females employed, according to the Australian Bureau of Statistics. The Australian dollar has increased to US92 cents as news of the job increase surfaced – the first time it has been in the 92 – 95 cent range since March this year.

Read more about this on the Sydney Morning Herald website.

 
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So you think small financial blunders won’t make a huge financial impact? Read through these 10 mistakes that you may be guilty of.

Spending more than you earn. This is the perfect recipe for disaster, guaranteed to make you poor. If you are shelling out more than what you are earning, this accumulates debt, and debt – no matter how small can have a significant impact on your financial standing.

Not setting a budget. Setting a monthly budget gives you a bird’s eye view of your expenses and financial allocations. Frivolous spending is often a result of having no budget set. Keeping track of your budget can also help as it allows you to check how much you can save after expenses.

Ignoring retirement. Small savings accumulated over time is better than saving a bigger amount for a shorter period. Saving for retirement should start as early as possible.

Credit scoring. This is an important tool that we can use to evaluate our current financial standing, as well as financial performance over time. The better the credit score, the bigger the chance of you getting financed for investments, such as purchasing property.

Debt. This reduces cash flow and decreases savings. Paying debt over by another is the worst way to go about your finances. Evaluate your finances and take into account how much you can set aside to pay off your debt. It may be hard at first, but this is a crucial step to achieve financial freedom.

Investments. In its entirety, investments are good. But investing too much or for the wrong reasons is bound to do more harm than good. Be mindful of the expenses that come with your investment and make sure that these are things you can […]

When planning to purchase property, it is important that you have a clear understanding as to what factors should be considered a necessity. Here are10 important home requirements you should be mindful of when purchasing a home:

Energy efficiency. Savings are one of the key considerations when purchasing property. When the household budget comes in, all homes deal with energy expenses. The more you can save on energy, the better.

Storage. Storage space is another high priority. Modern home buyers prefer walk – in closets, pantries and other built in storage.

Technology. The latest innovations are sure to attract home buyers, especially if these are modern innovations, such as LED lighting and temperature controls.

Security. Property buyers also look into security solutions that are available such as glass and motion sensors. This is a big plus when buyers are purchasing property.

Space. As with any property, any ingenious ideas to save and maximize space is sure to attract home buyers.

Kitchen. Recently, kitchens have become a selling point for property buyers. Add in a modern finish and energy efficient appliances and you’re sure to get people interested.

Laundry. A basic requirement for homes – and surprisingly, one of the top features required when purchasing a home, according to recently conducted surveys.

Upkeep. Large homes are slowly losing steam. Newer homes that are easier to maintain are attracting more buyers.

Location. What’s a perfect home if it’s not in a perfect location? this is still a top priority when purchasing property.

Read more about this on the Property Observer website.

 
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Are you tied to any financial institution? Do ask your financial planner if they are receiving any form of commission from other businesses to ensure that your best interest is prioritized and you will be aware of other conflicting influences. When hiring a financial planner, always follow the money trail.

Can you explain your fee structure? For financial planners, less doesn’t mean the best. Some financial planners cost more than others as they specialize and are licensed in certain areas. Always check if the fees are justifiable, and understand why.

What are your affiliations? Is your financial planner a member of a financial body? It is important that you ask who they are affiliated with, as it may be of benefit to you in the future. Investigate the legitimacy of the affiliation for your own peace of mind.

Are you licensed? There are several forms of financial licenses available, so it is very important that you check what type of advice your financial planner is licensed to provide.

How far down the line can you support? Explain your goals and verify if your financial planner can guide you all the way through or whether you’ll have to be passed on to someone else.

What is your specialization? Property advisers specialize in a vast array of dwellings, so it is imperative that you ask what type of property they specialize in. Ensure that the property type is aligned with your investment goals.

Do you have professional indemnity insurance? This gives you protection in case something goes wrong, most especially for buyers’ agents. The coverage and rules of this insurance type varies between states and territories.

Is there a way to file a complaint or feedback? Not only does this promote an open line […]

The Australian Bureau of Statistics have released the Construction Work Done report for the June quarter, showing an increase in residential building work increase of 3.6%, valued at $13.379 billion.

The increase was attributed to strong construction work in Victoria, New South Wales and Tasmania, where construction work has been the strongest, posting an increase for the last 3 quarters. The Australian Capital Territory posted an increase after a two year decline in construction work. Meanwhile, declines in construction were seen in Queensland, South Australia, the Northern Territory and Western Australia.

Residential construction also increased to 3.2% this quarter, with detached house construction driving the growth of the residential sector.

Read more about this on the Property Observer website.

 
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A former economist at the Reserve Bank of Australia has expressed concern over the increase in house prices, stating that house prices in the country are overpriced by as much as 30%.

Jeremy Lawson was a senior economist for the RBA and currently works for Standard Life. He points out several factors that will negatively impact households in the future, as household debt to income ratio reaches unsustainable levels. He is mostly concerned about the Chinese growth slowdown, where majority of investments on the country depend on, making households vulnerable in case the interest rate increases. Current household debt is growing more than twice than wages.

The RBA has downplayed these issues, stating that credit growth is at a sustainable level. The annual housing credit growth of the country sits at 6%.

Read more about this on the Property Observer website.

 
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