Newsletter - Inner Circle June 2022
Inner Circle
What will new housing policies mean for the market?
The much anticipated Federal Election is now over, and the question everyone in now asking is what impact the result will have on the property market.
We outlined each party’s policies in our last newsletter, but there were some last minute policy additions by each party, so here is an outline of what the ALP has promised in terms of major housing policies:
• Help to Buy Scheme – This is a shared equity scheme, where the government will contribute up to 40% of the equity for a new home and 30% for an existing home. The aim is to make it easier for buyers to get into the market by reducing the outlays.
• Regional First Home Buyer Support Scheme – This scheme is an extension of the First Home Loan Deposit Scheme. It gives eligible buyers the opportunity to purchase a home with as little as a 5% deposit as the government will provide a deposit guarantee.
• Housing Australia Future Fund – This will see the creation of a $10 billion fund to build 30,000 new social and affordable housing properties over five years.
• National Housing Supply and Affordability Council – This will help to address supply, which the industry agrees is the major factor that will assist affordability.
The real estate industry has been very supportive of these measures, particularly the supply measures and the Help to Buy Scheme. But while the Help to Buy Scheme may help some people into the market, things to consider include that it will only be available to 10,000 people per year and there may not be many participating lenders, depending on the complexity of the arrangement.
In addition, no one is buying new or Off the plan property at the moment as a result of shortages of trades, supplies and cost escalations. This will likely result in the prices of established property increasing at the entry level price point. The cap of $850,000 is generous for most regional centres of Victoria, but not for Melbourne, which means buyers will be very restricted in what they can buy in our capital. Buyers will need to make careful purchasing decisions – as always - to ensure the property grows in value and is a solid investment. The rest of state price cap is $550,000.
If you need expert advice or help – whether you’re buying or selling - Property Mavens is here to guide you through the property market. To talk to a qualified and highly-regarded buyers’ agent or sellers’ advocate, contact us today.
Expert Insight
Rising rates may be a challenge, but not a crisis
Last month we saw the RBA lift the cash rate for the first time in nearly 12 years, with an increase of 0.25% to 0.35%. Following the rise all four banks passed on the full increase, with the lowest variable rates now currently in the low to mid 2% range.
The rate rise has triggered a lot of anxiety, particularly as rates are expected to keep rising. The RBA has indicated the cash rate could rise to 2.5%, with the timeframe uncertain at the moment.
So what does this mean for real estate? It’s certainly not all doom and gloom as some are suggesting. Low rates are good because they make owning property more affordable through lower borrowing costs, and therefore encourage people to buy – and pay more. But that doesn’t necessarily mean higher rates will result in no one buying or price falls.
For starters, in reality the cash rate is likely to only move up by 0.5% this year to keep inflation in check, which means borrowers will still be paying interest rates that are at historic lows. Adding to that is the fact that most households have taken advantage of low rates in recent years to pay down their debt and are therefore now in a robust financial position and can weather the small rises predicted. Many investors also prefer higher rates because those who have properties that are positively geared will be able to claim a tax deduction for the first time in years, if their costs now exceed their income.
The worst outcomes will be for those who have made poor investments, such as high-rise apartments and urban fringe housing, while those with well-selected property are unlikely to face real difficulty.
An experienced and expert buyers’ agent such as Property Mavens can provide advice and help buyers and sellers to navigate any market and choose the right property. If you are a buyer or seller that needs assistance, contact us today for an obligation-free discussion.
Chris and Samantha were nervous, first-time investors that didn’t know where or what to invest in, so they engaged our Bendigo Buyers Agent to help.
Property Mavens were able to guide the couple through the process of selecting an investment-grade property in a suitable location. Their brief was to purchase a cash flow positive property that also had strong potential for capital gains. They also wanted to keep their budget to a minimum without compromising the quality of their investment.
We sourced an off-market property matching their brief – a 3-bedroom, 1bathroom house in a very sought after suburb of Bendigo - and negotiated to purchase without competition, despite a very competitive market. Property Mavens negotiated our ‘Special Conditions’ into the contract of sale, and secured the property under the vendor’s asking price. With a tenant already in place, Chris and Samantha are comfortable knowing they have an immediate income.
As a result of our help Chris and Samantha were able to make informed decisions without the stress and anxiety they would have otherwise endured, and they purchased a great investment property to boot.
If you want help to identify an investment-grade property like this one, whether it’s a family home or an investment property, click here to book a time with us to discuss your requirements. It’s 100% obligation-free.
Kathy and Brendan were selling their treasured family home of many years, a 3 bedroom, 2-bathroom house in Armadale and needed expert advice to guide them throughout the sales journey, so they sought the help of Property Mavens.
As a vendors’ advocate, we determined which three real estate agents best suited their needs, and from there Kathy and Brendan selected their preferred agent. The sales and marketing process then got into gear, including strong media coverage!
The result of our efforts was a sale price at the reserve set by Kathy and Brendan, with the property selling after a scheduled auction.
As professional property buyers and vendors advocates, we know the difference between a bad selling agent and a great one.
If you would like help to secure a fantastic outcome like this one, whether it’s selling a family home or an investment property, and you’re ready to get started, click here to book a time to discuss your requirements. It’s 100% obligation free.
Referred by their financial planner, Lee and Peter wanted to develop a property portfolio within their SMSF.
Adhering to the couple’s capital growth strategy and working with a strict budget, we started searching for the right investment and purchased this property, a 2-bedroom, 1-bathroom period house on behalf of our clients in the high performing suburb of Kingsville in Melbourne.
The property was purchased off-market at market value and below budget for $670,000 in November 2014.
In just three weeks after the contract – before the purchase even settled – the home had increased in value by $71,000, which is amazing in itself. But the growth didn’t stop there - in November last year the property was valued at $1.2 million. That equates to a huge 80 per cent capital gain in just seven years, or 11.4% per year!
As professional property buyers we know the difference between a bad property and a good one, where to buy to generate the strongest returns, how to buy to secure the best result, and what properties are really worth, to ensure our clients don’t pay too much. If you want similar results, click here to book a time with us to discuss your requirements. It’s 100% obligation free.
Go Forth and Prosper !
Miriam Sandkuhler
CEO
Love to talk real estate?
If you want to invest or buy the right home for your budget, or sell your property click here to book a time, or call us for a chat about securing your financial independence.
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