First Homebuyer grant stays

As predicted yesterday here on HomeInPerth, insiders to the May budget have indicated that the first homebuyer grant will continue, slightly changed to favour building a new house. Prime Minister Kevin Rudd would not comment on the issue yesterday - prompting Liberals to attack him for "cruelly teasing" couples weighing up their purchasing options.

First Home Buyer $14000 grant creates average $51,000 more debt

Statistics from Our Home Sweet Home has found that the average value of houses purchased by people taking up their first homebuyer grant is $51,000 more than those who purchased houses 12 months earlier without the homebuyer's grant.

Since then, there have been articles suggesting that first homebuyers may be struggling with their newfound debt.

“We have a potential debt time bomb on our hands. Lured by improved affordability and borrowing power, first time buyers are looking to suburbs and properties that traditionally were not within their reach and taking on more debt without possibly fully appreciating what will happen if and when interest rates go up,” says Peter Boehm CEO Our Home Sweet Home.

No more first homebuyer grant? Banks not coping

Today, the ABC News reported that banks are experiencing delays so long that buyers are missing their settlement dates for the houses. Most of this demand is coming from first homebuyers who today were told that the first homebuyer grant will not continue.

"A combination of factors appears to be to blame for the waiting times, but the frenzy of activity is also focussing attention on the wisdom behind the first homebuyers grant, and there is a growing debate over whether it should be extended."

Personally I think it will be extended. This is just a ploy to keep the Real Estate Market ticking over to the 30th June. If Kevin Rudd made people assume that the grant will not continue, you would see a major slump over the next few months as people take for granted the homebuyers grant.

By saying that it won't be around, he is playing salesman politics appealing to the old sales strategy called "fear of loss". You can expect him to create more demand by reintroducing the homebuyer grant in October or something when the economy free falls. This is not an expert opinion.. just based on what a sly politician would do in Kevin's shoes.

Kevin Rudd ending Homebuyer grants

"The first home owner's boost, as you know, we have indicated that will conclude within a very fixed and finite time frame,''

"It's had strong useful results so far, but I have got to say all good things must come to an end.''

- Kevin Rudd in Perth today

Perth South of River Most Crime

According to a RAC media release, the following suburbs are the top 10 most affected by burglaries and other property crime. Figures for RAC Burglary rates are based on exposed insurance policies between 01/01/2007 and 31/12/2008. The data only includes suburbs that have more than 500 policies during that time.


Top 10 burglary suburbs: 

1. Hilton
2. Koondoola
3. Stratton
4. Caversham
5. Kenwick
6. Brookdale
7. Balga
8. South Lake
9. Bentley
10. Beaconsfield

10% off the West Side of Perth

Rent and house prices in the western suburbs in Perth have dropped 10% recently, REIWA has reported. Its not a problem, they say, because the house prices have increased dramatically in the last four years and this is just a correction. Just thought you might want to know as you look for a house in Perth. Article here. 

Perth houses start going up $8,000 in Mar qtr

The next six months will be a critical time for the state's housing market which showed 2 per cent growth in the median value of homes in the March quarter. 

Preliminary figures released today by the Real Estate Institute of WA show the median home value in Perth jumped by $8,000 to reach $427,000. 

First home buyers in the state accounted for 40 per cent of all market activity during the quarter. The more affordable parts of Perth saw mixed results during the quarter with the Armadale-Serpentine median price dropping 2.6 per cent and Rockingham-Kwinana falling by 1.4 per cent. However, Gosnells grew by 3 per cent while the north-west region of Wanneroo jumped by 3.6 per cent.

"The overall sales volume was up 40 per cent in the quarter, back to a level similar to September 2006, just as the housing boom was starting to subside," Mr Druitt said. 

"Increased sales activity was experienced across the whole market, however the more affordable price band of $300,000 to $500,000 dominated turnover and provided 57 per cent of all sales."

In the rental market, rents in Perth stabilised during the quarter while softer demand lowered the vacancy rate by 0.6 per cent to 3 per cent. 

The median rent for units is $350 per week while for houses it is $370 per week. 

- Extracts taken from WA Business News  

Be nice to first homebuyers, they're keeping the economy ticking

A recent article suggests that first homebuyers are the ones keeping the economy ticking along in these uncertain times. 

"THE smattering of economic data since early March suggest first-homebuyers are the only people doing their bit for the Australian economy.

Armed with a generous grant from the government and extremely low mortgage rates, home buyers are piling into the housing market and fulfilling a dream of owning the roof above their heads. 

And with interest rates destined to go even lower in coming months, more people are likely to take the plunge. 

"It's really the only flicker of life out there," Nomura Australia's chief economist Stephen Roberts said. 

The standard variable home loan rate stands at under six per cent when just eight months ago it was above nine per cent. 

Furthermore, HSBC introduced a 12-month introductory rate of just 3.99 per cent, the lowest level seen since the 1950s. 

Money is cheap. 

More than 42,000 people have taken up a grant since the government introduced a more generous scheme in October as part of its $10.4 billion stimulus package. 

As of January, first-hombuyers made up a record 26.5 per cent of new home loans being granted. "

Auction prices for Perth Houses Drop $120,000

In the first three months of 2009, house prices sold at auctions in Perth have dropped $120,000 which is more than any other capital city in Australia. The average auction sale price fell by 24 per cent to $376,470, according to figures from Australian Property Monitors Group. 
In 2008, it was a 38% drop to $498,591. This is mainly because of the type of houses being sold at auctions and does not reflect on a drop in the VALUE of houses in Perth. Not that much anyway. Auctions included places like Maddington, Armadale, Midland, Balga and Koondoola - suburbs considered to be on the lower end of the Perth market. Perhaps this is also linked to the mortgage stress some people are facing and the fact that auctions are a quick way of gauging property value and even possibly selling it quickly.

Houses Repossessed in WA as mortgage defaults skyrocket

Recently, it was reported in the West Australian that home seizure court cases have increased by 140% in the past year!! In only the last three months to March 2009, there were 400 applications for repossession filed in the WA Supreme Court. This has been increasing every quarter for the past year.

Most likely to be repossessed - properties outside of the metropolitan area such as Bunbury. There has also been a 15% increase in bankruptcies in the past year according to SV Partners.

Most typical defaulters - non-conforming loan holders, high-risk borrowers with bad credit, because their interest rates were still high, or those with fixed-interest loans. 

Article from here

Interest Rates in Australia Lowest in 49 years

Interest rate cut by 0.25pc
BREAKING NEWS: THE Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to 3.0 per cent, the lowest level in 49 years.

Really? This is the best time to fix mortgage rates?

Fixed Rates: Lock it in, Eddie

According to the experts, yeah.. In the article Homebuyers shunning fixed-rate mortgages by
Colin Brinsden April 6, 2009, "Home buyers have all but given up on fixed-rate home loans in anticipation of the Reserve Bank of Australia (RBA) cutting interest rates further, banker and insurer Suncorp says."

Suncorp on Monday showed that only one per cent of its customers took out a fixed rate home loan in February compared with 42 per cent a year earlier.
However, mortgage broker the Loan Market Group said now was the time to be considering a fixed-rate mortgage. It says fixed rates have already started moving up, even though official rates are expected to be lower this year. Fixed-rate mortgages are based on wholesale market interest rates, while standard variable rates are usually led by official interest rate decisions.

"Many consumers are unaware that the variable rates move differently to fixed rates and by the time variable rates have bottomed they have missed the best opportunity to fix," Loan Market Group executive director John Kolenda said.

"If you are able to secure a great fixed rate in the high four per cent or low five per cent range for a three-to-five-year period then you should seriously look at it." Mr Wasmund said Suncorp's standard variable rate stands at 5.9 per cent, while a three-year fixed rate sits at 6.39 per cent. Someone taking out a $250,000 mortgage over 25 years would be paying an extra $904 per annum to fix.

"But the benefit is they do have some surety in terms of how much they have to find each month and some protection in the form of a reasonable safety net should interest rates rise again," he said.

He said it is a different situation for customers with existing fixed-rate loans as they need to assess whether break fees to exit their loan are going to be recouped in the longer term if official interest rates keep falling and stay low.

"If they chose to move to a lower variable rate, the savings wouldn't actually kick in until they'd covered the break fee associated with exiting their current loan, so interest rates would have to stay low for a considerable amount of time for any advantage to be realised."