Sunday, July 28, 2013

Perth Prices Heating Up

Perth house prices have continued to rise in the June quarter according to the Australian Property Monitors. Perth's median house price now sits at $584,487 which is a 7.5% increase over the past 12 months and 3.2% increase from the previous quarter. Only Melbourne showed a stronger increase from the March quarter with a 5% increase, however, Perth is leading the nation in terms of year on year growth.

Nationally, Australian house prices increased over the past year by 5.4%. Much of the increase in Perth has been attributed to the mining boom but there are also many Chinese nationals looking to put an anchor down in Perth for their children to stay in when they come over for higher education. A news article reported yesterday that the devaluation of the Aussie dollar has increased interest overseas and that searches for Perth properties on a Chinese international property website increased 1000% in the first half of this year! With the Australian dollar looking to continue its downward slide, who knows how much that will even further increase interest overseas.

Monday, July 15, 2013

Mt Hawthorn, Burswood, Sorrento Cheaper to Buy than Rent

    Almost a year ago, we posted the results of RP Data's "Rent or Buy" report which we showed the top 13 suburbs in Perth where the rent is more expensive than it is to buy the house. You can read that article here. Interestingly, this year's report shows 26 Perth suburbs that are cheaper to buy than it is to rent assuming a variable interest rate of 5.4% and that you repay the principal and interest. Mt Hawthorn units start the list a massive saving of $1,197 per month if you were to buy a unit rather than rent. Buying a house in Burswood will save you $693 per month and a house in Coolbellup will save on average $101 per month if you buy.

    Suburb           House/Unit    Difference
    Mount Hawthorn Unit -$1,197
    Burswood House -$693
    Sorrento Unit -$605
    Ascot Unit -$486
    Perth -$287
    East Perth Unit -$222
    Alkimos House -$168
    Girrawheen Unit -$162
    Beckenham Unit -$157
    Balga Unit -$139
    Orelia -$134
    Bibra Lake Unit -$109
    Wilson Unit -$106
    Queens Park -$104
    Coolbellup Unit -$101
    Brookdale House -$100
    Bullsbrook House -$99
    Thornlie Unit -$94
    Bassendean Unit -$83
    Seville Grove Unit -$70
    Waikiki Unit -$46
    West Perth Unit -$32
    Burswood Unit -$31
    Canning Vale Unit -$18
    Gosnells Unit -$14

    Housing Unaffordability Still a WA Problem

    Housing affordability has been largely ignored by both major parties as the Federal election nears in spite of the problem's prevalence across WA electorates. There was an article today that showed the WA electorates where mortgage stress and rental stress is highest with the south east metro electorate of Canning topping both measures of housing affordability. Mortgage and rental stress is defined as where the cost of repayments or rent is more than 30% of the household income. How stressed are your neighbours?

    Below are the WA Federal electorates, which party is holding that electorate, the percentage of households under mortgage stress and the percentage of households under rental stress.
    • CANNING (LP) 33% / 12%
    • BRAND (ALP) 29% / 11%
    • HASLUCK (LP) 28% / 11%
    • COWAN  (LP) 28% / 12%
    • PEARCE  (LP 27% / 12%
    • STIRLING (LP) 27% / 9%
    • FORREST (LP) 25% / 11%
    • MOORE (LP) 25% / 8%
    • SWAN (LP) 25% 9%
    • FREMANTLE (ALP) 24% / 9%
    • PERTH (ALP) 23% / 9%
    • TANGNEY (LP) 23% / 8%
    • CURTIN (LP) 21% / 6%
    • O’CONNOR (NP) 18% / 12%

    Monday, July 8, 2013

    Inglewood, South Hedland and Derby are "immune"

    Australian Property Investor came out to report that three places in WA are immune to price drops. Inglewood, South Hedland and Derby were among 152 places around Australia which never had a drop in average house value since 2003. Inglewood has had a 9.3% growth over the last 10 years and gross rent yield is at 4%. The other two places, South Hedland and Derby, are not in the Perth metro area and their growth has been pushed along by the mining boom.

    Wednesday, July 3, 2013

    Should I Renovate or Not?

    I found it interesting this morning to read that West Australians are the most "renovation-prone" in the country with 46% of homeowners planning a renovation. I've always wondered whether a renovation would be worth it in terms of improving the overall value of the house.

    Apparently, the Commonwealth Bank revealed that less than half of client's projects went according to plan with many compromising or cutting corners. The average WA blowout in a home renovation project was $6000 which is double the national average with projects taking on average twice as long as anticipated.

    RENOVATION DO'S AND DONT'S TO ADD VALUE

    Do:
    • Research, research, research and seek professional advice.
    • Consider simple updates such as a coat of paint or a general tidying of house and garden.
    • Make a realistic budget you can stick to, identifying various costs from the outset.
    • Save costs by attempting safe jobs yourself.
    • Consider cost-effective updates to key areas such as front exterior, kitchen, bathroom and al fresco areas.
    • Buy a good property at the lower end of the suburbs’ price bracket
    • Aim to create a bigger, brighter and better space n Revamp windows, remove old drapes, update with blinds/ venetians
    Don't:
    • Overcapitalise – make sure the cost of your renovation project doesn’t outweigh the value it will add to your property.
    • Paint or decorate to your own taste – go for neutral colours.
    • Forgo quality – a few quality key fittings can make a difference.
    • Forget to ask for detailed quotes and testimonials – find a professional who is suited to the renovations you want to do.
    • Forget street appeal – revamp the footpath with a pressure hose and a 4L can of paint for about $50.
    • Spend too much on things buyers can’t see.
    • Start without a complete cost analysis
    Source: Commonwealth Bank, Mortgage Choice, Archicentre, Planit2D design app creator Peter Castagna, Propertyobserver.com.au, Renovaingforprofit.com.au. 

    Read more from the original article here.

    Tuesday, July 2, 2013

    Australian Interest Rates On Hold at 2.75%

    At its meeting today, the Board decided to leave the cash rate unchanged at 2.75 per cent.
    "Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined further but, overall, remain at high levels by historical standards. Inflation has moderated over recent months in a number of countries.
    Globally, financial conditions remain very accommodative. However, a reassessment by the market of the outlook for monetary policy in the United States has seen a noticeable rise in sovereign bond yields from exceptionally low levels. Volatility in financial markets has increased and there has been some widening of credit spreads.
    In Australia, the recent national accounts confirmed that the economy has been growing a bit below trend over the recent period. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher over the past year and growth in labour costs has moderated. Inflation has been consistent with the medium-term target and is expected to remain so over the next one to two years, notwithstanding the effects of the recent depreciation of the exchange rate.
    The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values and further effects can be expected over time. The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.
    The Australian dollar has depreciated by around 10 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.
    At today's meeting the Board judged that the easier financial conditions now in place will contribute to a strengthening of growth over time, consistent with achieving the inflation target. It decided that the stance of monetary policy remained appropriate for the time being. The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand."

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