Thursday, August 27, 2015

$1.3m house under offer for $420k

Interesting article today showed the massive change that can happen in real estate in four years. A house that was sold in Port Headland in 2011 for $1.3 million is finally under offer today for only $420,000, about a third of the price that it was bought for. This is quite an extreme example because we're talking about a house in Port Headland, not suburban Perth. However, it shows that there is nothing guaranteed in real estate, as much as real estate agents swear hand on heart about.
Read the article here.

Saturday, August 15, 2015

How Well are You REALLY Saving for Your First Home?

Interest rates are at an incredibly low point at the moment and if you are one of those saving for their first home, this can be greatly frustrating. However, with such low interest rates, it is even more critical that you get your act together when it comes to choosing the right savings account for your money.

With the price of homes today, it would not be unlikely that first homebuyers have $200,000 sitting in a savings account. There is a savings account with ING which gives you up to 3.50% with their variable Savings Maximiser. The only condition -  transfer $1000 or more into their account every month (even if you transfer it back out and repeat).

If you are with the ANZ Online Saver account, after three months, you would be getting only 2% for your savings. Assuming you have $200,000, if the differential between ING and ANZ kept going for a year, you could lose $3,500 in one year of saving! If you kept that going for three years, that's $11,500! You can also look at Commbank's woeful offerings here or Westpac over here.

Even for a savvy saver who chooses a more competitive account like Ubank's Usaver account, for a $200,000 saving is $2,380 per year at the current differential rates.

Bankwest offers 3.25% with their Hero Saver account IF you don't touch your money each month. If you do, you get 0.01% and for that month if you had $200,000 in it, you would have lost $540 of interest for that month! Westpac does a similar account here offering 2.50% (and 0.01% if you withdraw any amount during the month). However, ING does not penalise you for moving money in and out of their 3.50% 2.75% (their rate has dropped 0.75% in the last year so in August 2016 this is the new rate) account which you can see can make a serious difference.

How to Apply?

If you would like to sign up to the ING Savings Maximiser, you will need to open an Orange Everyday account (a debit card which gives you 2% cashback for every purchase you make on paypass - a very good offer!). (ING Direct is no longer offering 2% cashback). If you want to get serious with your first home saving, our suggestion is to sign up with ING Direct and get $75 cashback by applying here.

Friday, August 14, 2015

5 Years of Perth Real Estate in One Heatmap Going Cold

Wow. This is a very useful graphic produced by Australian Property Monitors showing the last five years in Perth compared to the other capital cities in Australia. It seems that the mining boom has reversed Perth's fortunes in the real estate market with Perth becoming the most difficult market to sell in July with an average time on market of 112 days, as well as the average discount of  7.2%.

Tuesday, August 4, 2015

RBA Maintains Record Low 2% Cash Rate

At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. Much of this trend appears to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless.

The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite fluctuations in markets associated with the respective developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low.

In Australia, the available information suggests that the economy has continued to grow. While the rate of growth has been somewhat below longer-term averages, it has been associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. Recent information confirms that domestic inflationary pressures have been contained. That should remain the case for some time, given the very slow growth in labour costs. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.

In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates. The Australian dollar is adjusting to the significant declines in key commodity prices.

The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.


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Information Department
Reserve Bank of Australia
Phone: +61 2 9551 9720
Fax: +61 2 9551 8033

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