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

Ready, Set, Spring Sale Planning, Go!

*This article first appeared in the September 2019 Midland Express.

Are you looking to sell your home, but waiting until Spring?

Spring is one of the most popular times to buy and sell properties in Kyneton and across Australia.

While we are about a month away, there are a few things you can do now to prepare your home before putting your property on the market this spring.

Every sale needs to start with a plan. Here are some of my key planning tips for you to consider.

Make your repairs

Buyers love a house that is well-maintained and repaired. Why? Because it’s less they have to do after they buy! Even better, they’re willing to pay more for it too.

Repairs take time so it’s smart to get these things rolling now so your home is in great shape by spring.

Declutter now!

Cleaning and decluttering are paramount for first impressions. Declutter by donating or disposing of any items you no longer need – paperwork, kids’ toys, unused furniture. Consider whether you need to replace older furniture or if you transform pieces by using throw rugs or cushions to give your home an affordable “makeover”.

Think garden!

While Spring is the growing season, establishing a good foundation prior can help with the overall presentation at sale time. Plan out your garden now, buy some nice plants and pots, do the manure fertilisation now (better now before buyers arrive!) and you’ll have a garden that springs to life over the coming weeks.

Talk to an agent

Approach local real estate agents and ask them for an appraisal. It is important to get a good idea of where your home is sitting in the market and the prices you should be looking at. An agent can also advise on any changes required that might support the sale.

Selling a home can be a stressful time for many, but early preparation your home will be in tip top shape ready for the sale. For more on real estate, visit jenniferpearce.com.au

Tips to keep your energy bills down this winter

*This article first appeared in the July 2019 Midland Express.

Living in Central Victoria, compared to metropolitan areas it is a few degrees cooler in temperature during the winter months. This can take some adjustment for residents– both physically and financially.

So other than sitting on the heater sipping hot drinks with multiple woolly jumpers on, there are a number of things you can do without scarifying comfort or spiking your energy bill.

Curtains and Blinds

Decorate your windows in your home with good quality curtains and blinds. Using curtains that are lined helps keep the heat in and the cold out by reducing the heat loss through your windows.

Save on appliance use, particularly the clothes dryer

One of the most expensive appliances to run in your house is a clothes dryer. Place an indoor clothes-drying rack in a room that you are heating (such as a living room). The heater is then warming you as well as drying your clothes. To avoid fire risk, never place clothes too close to any heater.

Harness natural heat

Taking simple measures to harness existing free sources of heating in your home by using the heat of the sun to warm up your house. During the day open up all your south and west facing curtains to allow the sun’s rays to stream in the windows and heat up your home. As soon as the sun begins to set, conserve the heat by closing all your curtains and blinds to insulate against heat loss.

Consider an energy audit

Engaging an experienced electrician to conduct an audit will help you measure how much energy each appliance is using, identify which appliances are wasting power due to age or maintenance issues and what you can do to make the move to a more energy efficient home.

Asking for monthly energy bills from your retailer is a great way to measure the impacts of any changes you make. Whatever you choose to do, preparing your house year-round can support the reduction of energy bills.

A Fence is not just a fence

Recently, I listed a gorgeous Victorian home in Kyneton. It is the kind of house that would generally sell very quickly in the current market but this one took a bit longer.

Why? Because the house was hidden behind a green colourbond that did not suit the home and its character appeal.

The owner soon replaced it with a white picket fence which immediately lifted the street appeal to potential buyers. The house was soon sold with a happy vendor and new owner in possession of a true Kyneton home of distinction.

Replacing or repairing boundary fences is often a simple thing to do to lift the charm of a home, support swifter selling and approving the overall amenity. If you want to replace your fence and you share a boundary, as many people do, you should reach out to your neighbour and discuss your intentions. Whether it is a replacement or a repair, generally your neighbours will need to agree to share the cost.

A good place to start is familiarising yourself with the Victorian Fences Act. The Fences Act contains rules about who pays for a dividing fence, the type of fence to be built, notices that neighbours need to give one another and how to resolve disputes that come up when discussing fencing works with your neighbour.

Secondly you should familiarise yourself with the Macedon Ranges Shire Council fence height restrictions and covenants. It is important to do this as if your fence is in breach of restrictions, you may need to remove it altogether or modify it until it complies.

In rare cases, where neighbours don’t wish to proceed with a new fence and refuse to pay, mediation may need to occur to bring the parties together in order to resolve the matters.

Whether it’s for privacy, keeping pets and kids inside or as a decorative feature, fencing adds safety, security and style to your home. Making sure you have happy neighbours or thinking long term about sales opportunities is something you might want to consider along the way.

Finding it hard to secure a home loan?

*This article first appeared in the May 2019 Midland Express.

The last year has brought some changes to the home loan landscape. A lot of this has been driven by governments, regulators, and banks, with decisions made at boardroom tables.

These changes have been brought in to make sure our financial system remains unquestionably strong, however, there have been unintended consequences.

A frustrating consequence of this is that many would be borrowers are being rejected for a home loan.

There are a number of things you can do when the bank declines your loan application, so you can put yourself in the best possible position for an approval.

Shop Around

Keep in mind that not all lenders are the same. While one (or more) banks might say no, it isn’t an indicator that others will be the same. Lenders who are not banks – or 2nd tier lenders-often distribute their loan offering via a mortgage broker which means the shopping and qualifying is done for you.

Get your debt in check
Car loans with high monthly payments, credit cards or even short-term loans have a considerable impact on your monthly outgoings. Lenders factors this in when determining whether you have the capacity to not default on your mortgage repayment. Consider consolidation of your debts into a longer-term mortgage loan so as to reduce your monthly outgoing payment amounts and possibly even open up to borrowing more.

Check in on your spending

Your discretionary spending will be a factor in your loan application. Lenders will ask you to estimate your living expenses. They will then take the higher part of the Household Expenditure Method (HEM) of your declared expenses.

A way to support your application is to adopt a money management system several months (6 months is best) before. By breaking down your expense items into essential and discretionary spending, you are able to identify significant savings with your discretionary spending.

If you have cut down on your spending significantly, it will greatly improve your chances of getting a loan because as part of the lending process, the banks will look into your transactional banking and credit card spending to see what you’re spending your money on.

Missing out on a loan doesn’t mean you wont get one. Understanding the new system will support you better.