New Year. New Home. New scheme.

*This article first appeared in the February 2020 Midland Express.

First-home buyers will need to move fast to benefit from a new federal government guarantee scheme.

The First Home Loan Deposit Scheme began on January 1 and allows first-home buyers to get a loan with a 5 percent deposit, rather than the standard 20 percent. The government will then guarantee the remaining 15 percent – effectively allowing buyers to avoid taking out lenders mortgage insurance.

But there is a catch. Just 10,000 loans will be approved each financial year.

It’s important to clarify the guarantee is not a cash payment to the first-time buyer. Rather, it’s like a promise from the government to the buyer’s home loan lender that if the buyer fails to repay their home loan, the government will pay the lender the guaranteed amount (15 percent balance based on a 5 percent deposit).

The guarantee of 10,000 loans each year to first home buyers is on a first-in, best-dressed basis, and only applies to owner-occupied loans with principal and interest repayments.

Applicants will be subject to eligibility criteria, including having taxable incomes up to $125,000 a year for singles and up to $200,000 a year for couples, as well as dwelling price thresholds.

The scheme – which also involves 25 non-major lenders whose guaranteed loans will be rolled out from 1 February. Only two of the big banks, NAB and Commonwealth are currently offering the loans.

All lenders have committed not to charge eligible customers higher interest rates than equivalent customers outside of the scheme, and many will be offering other incentives.

With applications coming in thick and fast, and the scheme being essentially a lottery it is advisable that if you are eligible and interested that you get on board as soon as possible.

For more real estate insights, head to jenniferpearce.com.au

 

What does Climate Change mean for the property market?

 

*this article first appeared in the January 2020 Midland Express

As climate change makes extreme weather events increasingly frequent and severe, could the Australian property market take a hit?

 

A Climate Council study warns the value of Australian property could plunge over the next decade unless governments have the political will to deal with climate change.

 

The Climate Council report estimates $4 trillion could be wiped off economic growth over the next 80 years if carbon emissions do not fall.

 

The research estimates residential property value losses of $571 billion by 2030 related to increased extreme weather events, along with higher insurance premiums, particularly for those in bush fire prone and coastal areas. That would wipe approximately 9% of the total residential property value in Australia.

 

The report also indicates that these losses would not be evenly spread, as an estimated 6 % of property owners would bear the brunt of climate change risks, most likely through insurance costs.

 

Insurers, however, will continue to underwrite the risk at an individual property level. Where the risk is high, it will be reflected in the individual premium. Increasingly, Australians are going to struggle to pay for insurance. On current trends, by 2030 one in every 19 property owners faces the prospect of insurance premiums that will be effectively unaffordable if they are living in higher-risk areas.

 

Homebuyers can now find out whether climate change will hurt the value of the home they’re interested in by predicting the costs of various climate-related scenarios.

 

Online tools like VicPlan can generate a property report, including bushfire hazards, or the My Hazards App supports understanding weather-related and natural disaster risks that could potentially affect homes and businesses.

 

Real estate will always be a business of location. But as the climate change era marches on, buyers and sellers need to be aware of what risks might come with their investment.

 

For more on real estate, visit jenniferpearce.com.au

Buying before Christmas could be the best gift you give yourself

*this article first appeared in the December 2019 Midland Express

Many real estate agents close between the Christmas New Year period. It’s also a time of year where families are preoccupied with school holidays, Christmas celebrations and impending trips. Predictably, property sales start to slow down.

However, for the savvy property seller or buyer, there can be golden opportunities in the lead-up to Christmas. Many of buyers are picking up the pace of their property hunt because while most people are out celebrating and enjoying the festive season and not searching for property, the hunters have a greater opportunity to grab a bargain.

One of the advantages of buying in December is that some sellers might wish to wrap up a deal before the end of year. This might mean they are more open to offers, especially if you can move quickly and settle early. This can lead to a better price for the buyer and peace of mind for the seller moving into the new year. Another potential advantage for buyers is that there can be an opportunity to pick up residual stock, as other buyers drop out of the market.

By this point in the year, many buyers are likely to be experiencing buyer fatigue. They’ve likely been looking at property after property since at least spring and can become frustrated. This can work for or against the seller. Some buyers will end up withdrawing from the market, meaning there will be fewer potential buyers.

Many vendors are reluctant to compete with new stock that comes onto the market in the new year so the opportunity to sell before Christmas is another motivating factor.

There are more advantages then disadvantages for buyers and sellers during the December period, but the greatest opportunity lies in transitioning into a new year (and decade!) without the concerns that come with buying and selling

Richard Branson once said, “When you find yourself on the side of the majority, then you’re on the wrong side”. This is especially true of buying property at Christmas.

Merry Christmas.

For more real estate insights, visit jenniferpearce.com.au

 

Why is the Kyneton market so strong?

*This article was originally published in the November 2019 Midland Express

If you live in Central Victoria, it won’t come as a surprise to you that the property market remains buoyant.

Over the decade, an influx of tree-changers and retiree downsizers have steadily moved into the area. With promises of a more affordable home, an engaging community lifestyle and proximity to Melbourne’s CBD, Kyneton has seen unprecedented growth over the last couple of years.

Prices in Kyneton have risen 12.7 per cent in over a year with median house prices sitting at $580,000 (the national median is around $485,00). The previous year saw a growth of 8.2 per cent.

While the demand for properties in Kyneton remaining high and with limited stock within the local township area for both sale and rent being available, agents are finding interest in areas like Malmsbury, Trentham and Taradale is becoming common.

But it isn’t just first home buyers moving into the community. A sophisticated creative class and professional community, along with couples and individuals who are at the end of their working careers who support the strength of the property market.

Rentals continue to be in hot demand in and around the Macedon Ranges. Tourists and weekenders who delight in the prospect of a move to the country often seek a rental opportunity to “try before they buy”. Add to that a burgeoning seasonal workforce requiring accommodation while working for agribusiness and livestock producers, the rental yield for investors is fantastic to say the least.

With limited stock and land releases in and around Kyneton, and the continued demand for housing, the Kyneton market does not look to be cooling any time soon.

Life in the country sure is sweet, but maybe more so for those considering a sale.

For more on the property market, head to Jenniferpearce.com.au

What happens to the property market in recession

*This article appeared in the October 2019 Midland Express

With the US-China trade wars shaking up global stock markets, concerns have been raised that a US recession could be on the cards. A US recession would nonetheless have direct implications for global growth – which will ultimately hit Australia’s already struggling economy.

So if a recession did hit Australia (two negative quarters of GDP), what would happen to the national housing market? Is the Australian real estate sector really as safe-as-houses?

The last time Australia went into recession was in the early 1990s. Research conducted by Propertyology confirm that the property markets of various locations in Australia produce growth as high as 20 per cent during our last recession and also during the Global Financial Crisis (2008-09).

While an international or national economic downturn is never good for our property markets in a broad sense, the fundamentals of individual cities and towns comes into play when understanding how a downturn might affect the market.

Let’s look at what happened to house prices back then. Nationwide, house prices had been flat or falling even before the start of the recession. The flat spot continued for a while, but before the recession ended, house prices nationally (with the exception of Sydney and Melbourne) quickly began to bend back up.  Sydney and Melbourne eventually rebounded.

The idea that house prices can move very differently in different parts of the country is not an unfamiliar one in Western Australia, where house prices sank dramatically as the mining boom receded. Consider also that the offices of many multi-national corporations have offices in Sydney and Melbourne, and you are getting a sense of how reductions in employment during a recession can impact the market.

The relationship between house prices and economic growth is not direct and simple. Serviceability of loans remains a critical factor when we consider the impacts of a recession and property.

For more on property and how it impacts you, head to jenniferpearce.com.au