Tuesday, November 30, 2010

Perth Houses drop 3.8% in three months

According to RP Data released today, Perth has received the wooden spoon amongst all the capital cities in Australia, with the real estate prices in last three months to October dropping by 3.8%. Canberra, Darwin, Sydney and Melbourne all recorded rises. These figures do not even factor in the following November rate rises which should put further downward pressure on housing prices in the coming figures. Perth unit prices have also dropped 3% in October.

So when do first homebuyers start to come back into the market? As a typical first homebuyer, these price drops have not inspired me to start looking just yet. What about you?

Tuesday, November 23, 2010

When Oprah says "Perth"

Today, Oprah has announced that next week, two of her lucky viewers will receive a free trip to Perth as part of the Oprah downunder tour. It all started when lobbyists trying to attract Oprah to Australia offered to rename the Sydney icon Sydney Oprah House for a day. Tourism ministers are always talking about the "Oprah impact" and how much of an impact the Oprah effect has on tourist dollars with estimates that already $33 million dollars worth of advertising has been generated by the upcoming visit. So, this little blog in Perth will put that to the test. If you have come here as a result of Oprah, leave a comment, anonymous even.

Monday, November 22, 2010

Sellers Warned to Pull Out of Market

The Real Estate Institute of WA is warning property sellers to take their investments off the market or risk selling below their asking price.
REIWA figures show property sales in Western Australia are down 30 per cent compared to last year. The Institute's deputy president David Airey says there is a 40 per cent over-supply of property in Perth which has created a buyers market.
"There's around 17,500 residential properties on the market which is somewhere like 5,000 properties more than our normal long term average," he said.
"It's a fabulous time to buy, certainly not a good time to be selling if you don't have a reason to sell."
More here

Wednesday, November 17, 2010

Top 5 North and South of River

The Real Estate Institute of WA has released last week's top five performing suburbs in Perth. Canning Vale seems to have a blitz of a week with 24 properties changing hands. What were the factors affecting sales last week? 

Top Selling Suburbs
North of the River
Scarborough 17
Yokine 15
Dianella 14
East Perth 14
Wanneroo 13

South of the River
Canning Vale 24
Armadale 20
Gosnells 16
Como 15
Byford 14

Friday, November 12, 2010

Refinancing Mortgage Brokers - Who did you switch to and from?

OK so now Westpac and NAB have finally shown their hand. From highest to lowest, these are the standard variable rates: 

  • Westpac increased theirs by 0.35% to 7.86%
  • CBA started first with 0.45% increase to 7.81% 
  • ANZ recently increased 0.39% to 7.80%
  • NAB increased their standard variable rate by 0.43% to 7.67% 
There has been a lot of talk about getting mortgage brokers to help find a better deal so we'd like to hear where everyone has decided on moving their loans to and whether they have been successful in cutting a deal with one of the Big Four. 

Tuesday, November 9, 2010

Currrent standard variable rates

Commonwealth Bank's three friends have left standing alone in Bank wilderness after increasing their standard variable rates by 0.45% to 7.81% after the RBA increased the cash rate by only 0.25%. Currently, the three banks that have left their standard variable rates unchanged are
  • Westpac is 7.51%
  • ANZ is at 7.41%
  • NAB's is at 7.24%
Commonwealth Bank has had to bring in 40 extra staff to the Home Loans division in order to cope with the massive spike in customer enquiries with people wanting to switch to another bank following the interest rate hike. It has been reported that customers are waiting up to 10 days for assistance with their home loans. 

Monday, November 8, 2010

Best Mortgage Rate plus $1000?

ING Direct announced that they will give $1000 cash to anyone who moves their home loan to them by the end of November. One of their variable home loans is called the Mortgage Simplifier which has no ongoing fees, allows extra payments, home loan redraws, and a current interest rate of 6.74% (with a 0.06% discount if your loan is more than $300k). I am quite new to this game but that looks very competitive. What do veteran home loan experts think?

Friday, November 5, 2010

Top 4 Tips to Beat Bank Mortgages

With the mood turning completely against the banks this week, especially the Commonwealth Bank for raising more of their fair share of the rate rise, the Barefoot Investor recently shared four tips to beat banks at their game. 
1. Make sure you understand any potential exit fees that you may be charged if you choose to switch, and use this as a basis to compare any new loan.
2. If you’ve bought a home in the last three years, check to see that you’re not going to be recharged Lenders Mortgage Insurance (LMI). One of the dirty tricks of the industry is that if you switch banks, the new lender will hit you with LMI again – even if your bank uses the same insurer.
It’s like paying car insurance twice. And it can cost you thousands more than any exit penalty (are you listening Mister Swan?).
3. Make sure you go to a mortgage broker that rebates to you the dirty little kickbacks that the banks pay to grease the palms of the people who flog its products.
Ensure their policy is to rebate the entire trailing commission and that they apply it to your principle. Over the life of your loan, this can slash tens of thousands of dollars in interest and years off your mortgage.
4. A while back I had the opportunity to chat to Ken Fisher, a self-made billionaire, and one of the most influential money managers on the planet – here’s the gist of what was said.
Barefoot: “If you could only invest in one Australian company – what would it be?”
Fisher: “A bank. Buy any of them. Buy all of them – they’ve basically got a license to print money. There’s not much competition, they’re paying great returns to shareholders, and your nation’s prosperity is all but underwritten by China”.
He’s got a point. My mortgage went up this week, but hopefully so did the dividends on my bank shares. If you can’t beat them, join them!
In your dealings with the banks, what tips would you give a first homebuyer such as myself? 

Thursday, November 4, 2010

Top Suburbs in Perth Last Week

Some more statistics from REIWA for last week's sales and top selling suburbs in Perth last week

Property Sales for Perth #
Last Week 1045
4 weeks ago^ 960
Same week last year 1155
# Contract Sales reported by REIWA members
^May have changed due to sales falling through

Top Selling Suburbs

North of the River
Scarborough 18
Cottesloe 13
Ellenbrook 13
Nollamara 13
Morley 12

South of the River
Como 23
Baldivis 19
Gosnells 19
Armadale 13
Byford 13

Properties listed for Sale
Total* 16 833
Houses 11 068
Units 3 322
Land 2 443
*Listed on reiwa.com and other sources

3 months to September 2010
Average Selling Days 63
Average discount* 6.0%
*Difference between original listing and selling price

Whilst we saw an increase in activity last week, this week's interest rate announcement is likely to send a shudder through the market. So where to from here? Probably more sideways and even some downward movement in prices until the burgeoning stock of listings subsides.

Wednesday, November 3, 2010

Two Years of No Property Price Growth?

There is also another article suggesting that Perth house prices will not recover for another 2 years thanks to the interest rate rise yesterday as well as other factors. Sluggish population growth and the continuing issue of housing affordability means that there are not as many buyers as there are sellers.  With an increase in interest rates, perhaps the more sensible thing to do is set up a saving account and work on building up a good deposit for a purchase in the coming years. What do you think about the housing market?

Everyone Except Australians Believes in Housing Bubble

I came across this interesting article today which indicates why Commonwealth Bank increased their interest rates by 0.45%, almost double the official 0.25% lift in the cash rate yesterday. The problem is that Australian banks get most of the money for your mortgage, from overseas sources. Due to the fallout from the global financial crisis borrowing money from those sources is not as cheap as before. And these sources need to believe that their investment in Australia is safe. Apparently they are not that convinced. 

The Australian Bankers' Association, the industry's main lobby group, today attributed worries about Australian house prices on overseas markets as part of the reason for any extra rate hikes by its members.

“Over the last few weeks, we've had a lot of international investors asking very detailed and probing questions about why it is Australia thinks it doesn't have a housing bubble,” said ABA's chief Steven Munchenberg.
"Bankers were grilled at length as to why investors should not be worried Australia has a housing bubble,” he said. Australia's banks remain “very conscious of the risks of international investors becoming nervous about investing in Australia. “ [via]
Keep that in mind as we enter 2011. 

RBA Shocks Experts with Rate Rise 0.25%

The Reserve Bank of Australia looks to continue the housing slump in the coming month as they lifted interest rates on Melbourne Cup day today by 25 basis points which was enough to send the Australian Dollar past the US Dollar a couple of times in the hours following the rate rise decision. 

Last week, there were various reports in WA about the slowing housing market and this will also play into buyers' decisions and may put added pressure on those trying to sell second properties. If it wasn't before, now seems to very much be a buyer's market. 

Here is what the Reserve Bank had to say about the decision to raise interest rates.

At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.75 per cent, effective 3 November 2010.
The global economy grew faster than trend over the year to mid 2010. Global growth will probably ease back to about trend pace over the coming year as strong recoveries in the emerging world give way to a more sustainable pace of expansion and growth remains subdued in the United States and Europe. At the same time, concerns about the possibility of a larger than expected slowing in Chinese growth have lessened recently and most commodity prices have firmed, after a fall earlier in the year. The prices most important to Australia remain at very high levels, with the result that the terms of trade are at their highest since the early 1950s. The turmoil in financial markets earlier in the year has abated, though sentiment remains fragile.
Information on the Australian economy indicates growth around trend over the past year. Public spending was prominent in driving aggregate demand for several quarters but this impact is now lessening. While there has been a degree of caution in private spending behaviour thus far, the rise in the terms of trade, which is now boosting national income very substantially, is likely to lead to stronger private spending over the next couple of years, especially in business investment.
Asset values are not moving notably in either direction, and overall credit growth remains quite subdued at this stage notwithstanding evidence of some greater willingness to lend. The exchange rate has risen significantly this year, reflecting the high level of commodity prices and the respective outlooks for monetary policy in Australia and the major countries. This will assist, at the margin, in containing pressure on inflation.
The demand for labour has continued to firm. While the labour market is not as tight as in 2007 and 2008, some further strengthening would appear to be in prospect, judging by the trends in job vacancies. After the significant decline last year, growth in wages has picked up somewhat, as had been expected. Some further increase is likely over the coming year.
Given these conditions, the moderation in inflation that has been under way for the past two years is probably now close to ending. Recent information suggests underlying inflation running at about 2½ per cent, with the CPI inflation rate a little higher due mainly to increases in tobacco taxes. Both results were helped somewhat in the latest quarter by unusual softness in food prices. Inflation is likely to rise over the next few years. This outlook, which is largely unchanged from the Bank's earlier forecasts, assumes some tightening in monetary policy.
For some time, the Board has held the stance of monetary policy steady, which has resulted in interest rates to borrowers being close to their average of the past decade. This allowed some time to observe the early effects of previous policy changes and to monitor the uncertain global outlook. The Board is also cognisant of differences in the degree of economic strength by industry and by region.
However, the economy is now subject to a large expansionary shock from the high terms of trade and has relatively modest amounts of spare capacity. Looking ahead, notwithstanding recent good results on inflation, the risk of inflation rising again over the medium term remains. At today's meeting, the Board concluded that the balance of risks had shifted to the point where an early, modest tightening of monetary policy was prudent.

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