News Archives | Page 3 of 17

Loan limits: the IMF’s solution to rising house prices

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.

There’s still so much to learn about credit

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.

The investor’s mental block: Analysis Paralysis

Investors are often encouraged to research and analyze market trends before they dive into property, but little do we know that overanalyzing and failing to buy when the time is right has been pointed out as a dilemma that affects new property investors called analysis paralysis.

There are several questions that you should be ready to answer when you are investing. Once these questions have been fulfilled you should then decide whether you want to buy, or move on to the next property.

Am I financially prepared? Am I confident in the area? Have I done my research and am I confident with my decision? Investing in property is a matter of researching and appropriate action. For individuals that fear making a wrong decision, it may be a good time for you to seek help from a financial planner who will provide you with the appropriate guidance.

Read more about this on the Property Observer website.

Investors dominate loan market

Investors share on the loan market have increased to 40.6% for August, well above the average of 30.9% for the past 23 years, clear signs that the insatiable appetite for property are far from satisfied.

Refinanced owner occupied home loans have also increased to a record high 49.7%, well above the long term average of 36.5%. Despite these numbers, home lending for investors has actually slowed down, rising just 6% in 6 months, compared to a 21% increase 6 months before. Home buyers are clearly outgunned as lending dropped by 4% in the past 6 months, as opposed to a 9% gain 6 months prior.

Despite the Reserve Bank’s warning on the glaring disparity between home buyers and investors, the building industry has remained as one of the most optimistic sectors in the economy as the mining boom starts to fade.

Read more about this on the Australian website.

First Home Buyers: The 5 facts

First Home Buyers are slowly losing hold of the property market as it posted a record low share of 11.8%, according to the Australian Bureau of Statistics.

Here are 5 facts about the current situation of First Home Buyers in the country:

First Home Buyers financed loans have dropped by 10% in August at 6,055 compared to the previous month’6,718.
First Home Buyer numbers have remained unchanged for the past decade, despite increases in Median Price and lesser concessions.
First Home Buyers are having a hard time as the First Home Owners Grant has gone through several changes, the most important of which is adding a cap depending on the value of the property. In 2004, First Home Owners Grant was uncapped.
If predictions are correct and the interest rates increase next year, repayment for a $300,000 home loan is expected to increase by $300 every month.
Median house prices have ballooned by 72% over the past decade.

Read more about this on the Property Observer website.

Digital currency to change the landscape of the Financial Industry

Labor senator Sam Dastyari has urged banks not to turn a blind eye with the rise of Bitcoin, the digital currency that is headed to change transactions in the future.

74 banks and organizations such as the Reserve Bank of Australia, ANZ Banking Group, Commonwealth Bank of Australia, National Australia Bank and Westpac have been approached by the inquiry committee to provide feedback as to how Bitcoins can be controlled, as online transactions with the digital currency have remained unregulated across the globe.

Banks have been highly cautious, and at times, confused with how to treat digital currencies. The National Australia Bank has kept distance from Bitcoins, saying they were too risky, with other banks still yet to make a stand on digital currencies.

Because of its popularity, Bitcoin values have surged to as much as $US 1,000 a unit, compared to around $US 1.00 just two years ago.

Read more about this on the Sydney Morning Herald website.

Investment tips for choosing the right suburb

Are you supposed to believe the new property hotspots advertised in the market, or is there a need for you to investigate and tread carefully?

Property hotspots are indeed areas where properties do well, but it often benefits the people selling the property more than the actual buyer. Property values are at their peak price, but this doesn’t mean that rents will follow suit. Relying on hotspots can increase the risk of being unable to recover the premium through rental income.

Rather than relying on hotspots, it is best to investigate areas with solid properties – even in lesser desired areas. They have the potential of bringing in more people as they are more affordable and will increase in value as people move in. Also consider looking at planned projects – such as new amenities as this is a key factor in driving up demand.

Read more about this on the Your Investment Property website.

House median price at record high

The Capital city median house price increased by 1.1% for the month of October, reaching a staggering record high of $681,640, according to ANZ research.

Melbourne and Sydney median house prices increased by 2.2% and 1.2% respectively and were pointed out as the main reasons for the price jump. All other capital cities increased less than 1% or dropped in value. Sydney leads all capital cities with a median house value of $868,866, while Hobart has the cheapest, at a value of $340,461.

Read more about this on the Property Observer website.

Auction price guides banned in Queensland

Auctions in Queensland are set to go through perhaps one of the most drastic – and illogical changes in legislation.

Price guides has been used to align buyers expectations with properties sold at auctions. Starting December of this year, it will be deemed illegal for real estate agents to provide a price guide, or at the very least, discuss prices of properties – both auctioned and even prices of surrounding homes. This legislation is supported by the Real Estate Institute of Queensland.

Read more about this on the Property Observer website.

Sydney property prices soar

Sydney continues to lead all capital cities in property price as it increased by 2.7% for the 3^rd quarter of the year, according to the Australian Bureau of Statistics.

Property prices have also increased by 1% in Melbourne, Brisbane, Adelaide and Hobart. Overall, national house prices have increased by 1.5%. Sydney’s housing market recorded the strongest performance 12 months to September, recording a staggering 14.6% increase, followed by Melbourne and Brisbane, at 6.9% and 6.7% respectively.

The strong performance in the property market was attributed to high investor activity, with finance from investors increasing by 25.4% for 12 months to September. Meanwhile, owner – occupied finance comprised a measly 1.8% for the same period.

Read more about this on the Age website.