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Guarantor Home Loans

Category Archives: Industry News

image of older man being a home loan guarantor for a younger man

Guarantor Home Loans

As property prices have risen across the country, mortgage loans have necessarily become larger. Generally, lenders like to see a reasonable deposit on a loan or evidence of savings to minimise their lending risk. As this becomes increasingly difficult, the popularity of a guarantor home loan has spiked. Some of the frequently asked questions about these types of loans include:

What is it?
A guarantor home loan uses the equity in the guarantor’s property as collateral, to top up the value of the cash deposit. No money changes hands however the value of the home equity acts as additional security for the lender and the guarantor becomes responsible for paying back the entire loan in the event that the borrower cannot.

Who can be a guarantor?
Anyone with equity in their own property can be a guarantor, however lenders typically favour close family members of the borrower – parents, grandparents, or siblings. They will need a good credit history, be in a strong financial position and have equity in their home.

What are the benefits of having a guarantor home loan?
There are two main benefits to this type of loan. The first is the ability to get into the property market sooner. This is of benefit when the property market begins to fall, and buyers see an opportunity to enter the market at a lower cost without yet having saved enough for a deposit.
The second benefit is avoiding the cost of Lenders Mortgage Insurance (LMI). This is an insurance that is mandatory when the borrowed amount is greater than 80% of a home’s value. Using a guarantor home loan to avoid paying this insurance can save a borrower thousands of dollars.

What are the risks of being a guarantor?
It’s important to understand the risks of being a guarantor. If the borrower cannot keep up with repayments the guarantor is responsible for covering the debt. This may include having to sell their own home, or having it repossessed.
Being a guarantor on a large loan may impact their ability to be approved for a loan in the future, even if the original loan is being repaid. It may also impact credit history if the loan falls into default, making it harder to borrow in future.
The final risk, whilst not financial, is equally important – and that is the impact on personal relationships. Guarantors should ensure they feel comfortable and willing to assist if the borrower is unable to keep up with repayments as long-term damage to relationships is not easily repaired.

How long is a guarantor on the mortgage?
There is no set period for how long a guarantor remains on the mortgage. How soon they can be removed depends on how quickly the mortgage is paid down, how much equity is held on the property if it increases in value and if the history of repayments is good. In some cases, the guarantor will not be removed unless the loan is refinanced or paid off in full. Your lender or mortgage broker will be able to assist with any required changes.

What documentation do I need for a guarantor home loan?
Guarantors will need to provide the usual identification documentation, typically three forms such as drivers licence, passport, and Medicare card. In addition, lenders will have a guarantor application form and will require information on the property being used as security, such as a council rates notice and a recent mortgage statement if there is one.

Got more questions? Talk to one of our friendly team on 1300 510 045 or get in touch online to discuss guarantor home loans.


How to get financially fit

If you’re trying to save money for a house deposit, or simply want to expand your property portfolio, it’s more important than ever to get financially fit.

By getting your finances together and building a plan that will help you achieve your goals, you’ll be well on track to not only purchase that next property but begin the process of securing your financial future.

Here are three things you should do to get financially fit.

Build your budget

We all know the importance of a budget, but when you’re trying to achieve big financial goals, a budget takes on added importance.

It’s even more critical for first home buyers to have an airtight budget as lenders like to see that a potential borrower has the ability to manage money.

When building out your budget it’s important to know where all your expenses are going. Start by breaking down the different costs you have each week and then take a close look at what you consider to be necessary and which ones might not be so important.
If you’ve got a number that you need to reach with your savings then it’s important that you are putting aside enough each week to get you to your goal. If you’re not, it’s time to tighten your belt and look to cut down on things that you don’t need.

The basic rule is spend less than you earn! For many people, particularly with the access to buy now pay later companies, this exercise is easier said than done! But the discipline to regularly go to the gym, and regularly reviewing your spending habits reap similar results.

Consolidate debt

One of the most effective ways to improve your financial situation in a hurry is by getting rid of high-interest debt.

It’s always advisable to speak to a mortgage broker about your options when it comes to debt consolidation.

Debt consolidation typically involves rolling over your higher-interest debts like credit cards, and other unsecured loans into one easy to manage loan with a lower interest rate. For those with equity in their property, consolidating and restructuring your finance can improve cashflow.

By restructuring your debts, you can freeup extra cash that you can use to help pay down those debts faster, leaving you in a far stronger financial position.

Review your credit

One of the first things a lender is going to do is take a close look at your credit report to get a sense of what type of borrower you are.

If you’ve been a little sloppy when paying bills and other debts in the past, then that might show up negatively on your credit report.

One of the good things about taking control of your finances is that you can work to improve your credit score. By paying things like bills early, your credit score will improve. It’s also important to examine your credit report to make sure it doesn’t contain any errors, such as any outstanding debt that you’ve already paid off.

While these steps might seem small, when you’re financially fit, you will be in a far stronger position to approach lenders and start (or continue) to grow your property portfolio.

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How Your Parents Can Help You Buy a Property

Over the past few years, it’s become more common for parents to help their children purchase a property. As property prices have risen sharply, particularly in places like Sydney and Melbourne, entry into the property market is not as easy as it was a generation ago.

More and more parents are helping their children get a foot into the market, given that prices continue to rise each year. Here are some ways parents can help their children get that first property.

A Guarantor Loan

A guarantor loan is a way that a close family member (normally parents) can help provide a deposit for a home loan.

Generally speaking, lenders like to see that a borrower is able to come up with a 20% deposit on the property they wish to purchase. This shows the lender, that they are a borrower that can manage money, while it also gives the lender some security in the event the borrower is unable to meet their repayments and they have to step in.

A guarantor loan works by having a parent put up equity in their own property (normally the family home) as a deposit. This means the borrower can potentially get a loan and avoid things like Lenders Mortgage Insurance (LMI).

There are some considerations with this type of strategy. Significantly, the parent’s property is at risk in the event the children can’t meet the repayments. A guarantor loan also means you are effectively borrowing nearly 100% of the property’s value.

The ability to get a loan is still dependent on the borrower’s ability to service the loan, based on their current income and expenditure.

A Gift

In many instances, parents will simply give their children a sum of money to use as a down payment on their first property.

The main issue with this is a lender will likely still want to see that a borrower has some kind of genuine savings. Genuine savings is really just money a borrower has saved up over a period of time. Ideally, this would be the 20% deposit that they had been working towards saving.

Lenders will typically want to see that these funds have been sitting in a bank account for some period of time. The policy with genuine savings and gifts varies between lenders and it’s always advisable to speak with a mortgage broker about your personal situation.

Property co-ownership

While not as common, it is possible for parents and children to own a property together.

Before entering into this type of arrangement it’s advisable to speak to an accountant who can direct you on the correct tax structure to use. This is due to the capital gains implications that might not be present with just a single property owner or a couple.

Another consideration with property co-ownership is how the arrangement works on a practical level. Who pays what and when? If the children are living in the property, are they going to be paying rent to the parents and how much? These are things that you will need to outline, even before you begin searching for a suitable property.

The other consideration will be how do you actually finance the property? If both the parents and children have regular incomes to service any debts, then it might not be an issue. However, if one party does not have a regular income – for example, if the parents are retired or the children are students – then this might impact their ability to borrow.

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Investing in the City vs Regional Areas

Investing in property in Australia has proven to be a sound long-term investment, with prices growing steadily for many decades. However, when the time comes to choose exactly where you should be buying a property, there are a myriad of things for you to think about.

One of the very first questions you’re going to need to consider is whether to buy in a capital city or a regional area. While there is no correct answer, there are advantages and disadvantages to both.

Investing in a Capital City

For the most part, capital cities grow in value at a faster rate than their regional counterparts.

Cities like Sydney and Melbourne have traditionally been locations that have seen heavy levels of migration, both from overseas and interstate. With limited supply, in the form of land, prices have been trending higher for a long time, and the growth rates are very strong.

Your blue-chip areas of most capital cities normally see steady growth while also being less prone to falling during times of broader market weakness.

On the flip side, because these prices are higher, rental yields are a lot lower. While we are in a low interest rate environment at the moment, historically blue-chip areas will be negatively geared investments.

Another advantage of properties located in the city is that there is normally a steady stream of tenants available. That means properties will be easy to rent out and you can usually find high-quality tenants.

Investing in a Regional Area

One of the main reasons people choose to invest in regional areas is the fact that rental yields are often far higher. It’s not unusual to find rental yields of 5-6% in regional areas, which, in the current environment, normally means your investment will be positively geared and putting cash in your pocket each month.

The other side of this equation is that the growth is normally not as high as the blue-chip areas of our major cities. However, when you have a strong yield, it’s a lot easier to hold onto your investment property.

The other clear benefit to investing regionally is that the price of the properties is normally far lower.

If you have limited borrowing capacity, you might not have the option of investing in a major city to begin with. In many regional areas, you can buy properties under $300,000 which makes them affordable to new investors.

City vs Regional

While there is no best place to invest, as everyone has their own goals and circumstances, it is possible to get the best of both worlds.

There are cities in Australia that do have very high yields, and there are also regional areas that have a track record of strong capital growth.

Many property investors look for a combination of these factors as it allows them to grow their equity while also being able to service their loans and continue to borrow.

Rural lending for agribusiness is on rise

Rural loans for agribusiness growing at a rapid rate.

With the downturn in the mining industry over the last few years Australia has turned to agriculture to fill the void.

Fresh produce in the form of cereal, fruit, dairy and meat exports are on the increase, especially into South East Asia.

Because of this growth existing primary producers and new ones entering the industry need finance to drive the expansion.

Before you approach your bank and or Rural Loan Broker specialist make sure you are prepared with up to date  financials and or cash flows and business plans.

All the banks, non banks, and private lenders limit the loan to value ratio to maximum of 70% on rural properties. On large broad acre properties this could be as low as 50%.

To find the best options visit here today Rural/Agribusiness.




A low doc loan or low-documentation loan is for someone, generally the self-employed, who has difficulty coming up with the necessary documentation required to apply for a traditional home loan. This may include those with a poor credit history or who don’t work full time.

Low doc loans traditionally have higher rates of interest than traditional loans, as they represent greater risk to the lender. As a result borrowers applying for a low doc loan may be required to secure the loan with assets such as vehicles, homes you own or other investments.

These types of loans generally require a larger deposit than most traditional loans do, with loan to value ratios (LVR) typically ranging from 60 to 80 percent. By comparison, at the time of writing most traditional home loans had an LVR of around 95 percent, meaning just 5 percent deposit is required.

How to apply for a low doc loan

If you think a low doc loan would be suitable for you, check out our low doc loans options and start comparing now.

Using the site you can compare low doc loan options, by rate, fees and repayments. Or click on a specific product you may be interested in and you’ll be able to find out even more about the details and features of the product.

Tips to help you compare home loans

Do your homework – use a comparison site to make the job simpler
Compare at least three products when looking for a home loan
Crunch the numbers: compare more than simply the rate – fees and features shouldn’t be overlooked
Consider using the “comparison rate” rather than “advertised rate” for a better indication of the real costs of taking out the loan – the comparison rate factors in costs such as some fees
Keep an eye on the market and compare again down the track to make sure it is still the best option for you.
Use a home loan repayment calculator to estimate your monthly repayments and total interest payable for each home loan you are considering.

Read more about low doc loans at


At Selectabroker, we have our own mortgage broker panel who specialise in display home loans, not just home loans. You see, building your new display home is very different from purchasing an existing property, which is what makes us different from your everyday financial broker. We can help you choose the appropriate lender and the most suitable approach to financing your construction, in order to meet your individual financial circumstances. And the best part of the equation is that our expert home loan advice is absolutely free.

Give our Free broker service a call on 1300 510 045 to find out about our loan options available, including 5% non-genuine savings, relocation financing, self-employment eligibility, construction investment home loans for investors, land loans, and family member Guarantor options.

Australia’s Mortgage Broker Sector To Keep Expanding In 2013

The Mortgage Finance Association of Australia (MFAA) expects the country’s mortgage broker sector to witness impressive growth this year, with its share of the lending market seen growing to above 40%, it said on its website.

Recently, financial expert Deloitte published its forecast for the development of the country’s mortgage market, pegging the overall home lending growth rate at 5% for 2013 compared to the previous year. However, according to MFAA’s CEO, Phill Naylor, the market will perform better than expected as the broking industry has the potential to foster its market position thanks to increased consumer demand for professional credit advice.

The association shares Delloitte’s stance that this year, the mortgage market will see fierce competition and margin pressure, which will force lenders to adopt a pro-active approach as to book management and to look for efficiencies by making use of the broker segment. The surge in demand for broker services will also be dictated by the expected increase in mobile apps and social media use, which will help consumers to more easily find a broker or lender offering mortgage credits. Technology will also assist brokers in taking ownership of the customer earlier, the chief executive said.

The association also projects a rise in the number of people occupied in the mortgage broking industry this year. The volume of brokered mortgage loans is forecast to hit $100 billion in 2013, MFAA added.

Australian New Home Sales Rise 6.2% In December

The Australian housing construction market is poised for recovery, with new home sales rising by 6.2% on a seasonally adjusted basis in December 2012, the third monthly increase in a row, showed the HIA New Home Sales report.

In a sign that new construction is accelerating, new home sales rose by 3.3% over the December quarter, with the latest increase having a solid foundation, according to Housing Industry Association economist Geordan Murray.

Sales of detached housing and multi-units rose across all states apart from South Australia, although the rise seen in the past three months starts from a very low base and volumes remain low by recent historic standards.

Last year, the multi-unit sector saw a solid improvement with sales surging by 24.1%, but sales of detached housing plunged by 22.7%.

Murray is cautiously optimistic about the prospects of a mild rebound in 2013, but warned that further supply-side reform is needed to meet the country’s demand for housing.

In December, detached housing sales jumped 12.2% in Western Australia, 7.1% in New South Wales, 6.0% in Victoria and 3.8% in Queensland. Sales slowed by 1.8% in South Australia after three consecutive monthly increases.

Over the quarter, sales increased most in New South Wales (14.4%), which was driven by new home owner incentives. Sales were up by 9.3% in South Australia and up by 2.5% in Western Australia. They declined by 8.5% in Victoria and by 5.4% in Queensland.

Home Loan Defaults Higher In Australian Costal Areas

Australia’s coastal regions, where tourism is the main cash driver, are more likely to default on home loans, according to the latest research from global ratings service Fitch.

Gold Coast East, Sunshine Coast and South West Western Australia are among the 20 regions with the highest proportion of home loans that are over 90 days overdue, Fitch research showed.

Coastal areas that rely on tourism are more affected by the high Australian dollar and less affected by monetary policy, Fitch associate director James Zanesi said.

The highest amount of home loans in arrears is to be found in Montrose in the northern suburbs of Hobart, Tasmania, where over 3.2% of borrowers have loans over 30 days overdue. Inner city loans, especially in Melbourne and Sydney, were the best performers scoring 0.68% above the nation’s average.

Overall, the number of delinquent borrowers fell by 1.2% across Australia as a result of consecutive interest rate reductions in 2012. Results are expected to improve further in the first months of this year, taking into account that rate cuts take a couple of months to take effect on the market, Nine MSN reported.

Australia’s central bank has kept the official cash rate unchanged at 3% for February but borrowers can still switch to the lowest home loan rate available on the market through simple home loan comparisons.

Australian Banks Slash Fixed Mortgage Rates

Several large Australian lenders lowered the fixed interest rates on their home loan offerings in a sign of expected variable rate cuts in the months ahead, the Australian reported on 7 February.

Westpac has cut the fixed rate on its two-year premier advantage mortgages by 0.4 percentage points to 4.99%. After the reduction, the rate has come to the lowest two-year fixed rate offered by the bank since April 2009, it said.

Westpac unit St George has axed the fixed rates for customers of its advantage package to between 5.15% and 5.69%, with the cut spanning its one, three, four and five-year fixed rates.

Clients of CUA will also see reduced fixed mortgage rates. The financial institution has just rolled out a new home loan product with a three-year fixed rate of 5.3%.

The variable home loan rates that are currently being offered by the four biggest banks range from 6.38% to 6.51%.

The move by major banks indicates that they expect the Reserve Bank of Australia (RBA) to further slash rates this year. But even with the help of the central bank’s additional rate cuts, the fixed rate products are currently priced at a level that floating rates may need several months to reach, Paul Smith, a spokesman for home loan broker Loan Market, commented.

The cost of funds for banks is easing, as it has been stressed over the past couple of weeks, but it is still unclear whether they will make material cuts in the variable rates, he added.

Earlier in February, the RBA kept the official rate flat at 3%.

Total Of 38% Of Australians Believe RSA Will Raise Rates In 2013

Over a third of Australians think that the central bank will hike rates this year, which could potentially lead to an increased demand for fixed rate products.

A total of 38% of Aussies believe that rates will head upwards in 2013, according to the National Mortgage survey conducted by CUA. Rates will fall this year in the opinion of 37% of the respondents, while 26% believe that rates will stay intact. The survey results suggest that fixed rate offerings will become more attractive, said CUA general manager of products and marketing Jason Murray.

The findings come as Westpac and its subsidiary, St George, lowered their fixed rate offerings, with CUA making a similar move by launching a three-year fixed mortgage rate of 5.30%, which it claims is up to 29 basis points below the current three-year rate propositions by leading lenders.

As the global and local economy show signs of rebound, variable rates may go up in the coming months, so it could be the best time for locking in your mortgage rate, Murray said, as quoted by the Australian Broker.

Picking a fixed or a variable rate is a personal choice, depending on the borrower’s actual needs and risk aversion and that’s where brokers do a great job helping customers, Citibank’s mortgage expert Belen Lopez Denis commented.

The unique opportunity presented by an inverted yield curve makes fixed rates a cheap proposition for lenders and borrowers. The bank has seized this opportunity early with brokers, focusing on fixed rates and reviewing them on a weekly basis to stay updated on major money market developments, said Lopez Denis.

The bank has just rolled out a six-month fixed rate, which could be an attractive option for those who believe that the central bank’s easing cycle will continue. The newly launched product offers the borrower the flexibility to benefit from potential variable rate reductions over the next six months. Borrowers will have an additional certainty if they combined it with the bank’s 60-day free rate lock, the official added.

Online Portals Pose No Risk To Brokers MFAA Said

Online portals and the Internet present no threat to the broking industry; these are only tools that potential borrowers use to get initial information about home loans, Phil Naylor, head of the Mortgage and Finance Association of Australia (MFAA), said in response to a local broker’s warning.

Naylor’s comment follows an article published in Australian Broker on 8 February, in which Mortgage House’s managing head, Sarah Roberts, sounded the alarm by saying that big lenders were “stealing” customers from brokers by rolling out fancy interactive websites featuring direct-to-borrower loan applications which cut the brokers out.

While the Internet is an important tool for home buyers, Naylor does not believe brokers need to worry about flashy websites. Home buyers usually browse the Web to research property deals, the best locations and weigh up their finance options. However, face-to-face contact with an MFAA broker is vital when it comes to closing a deal, Naylor said.

The majority of prospective home loan borrowers (81%) are tapping the Internet as their primary source of information, according to MFAA’s own research. However, Naylor pointed out that using the Internet is only an initial step that precedes the contact with a mortgage broker.

There is no risk of the broker industry “fading away,” as Roberts alerts, as it is the broker who ultimately arranges the loan for the customer during face-to-face contact after the client has done their initial research over the Internet. It is a growing financial services sector providing over 40% of home loans to the market and the record funds spent online by industry representatives helps brokers to connect with their potential customers, Naylor added.

Australia’s Commercial Loans Gain 8.6% In December Said ABS

Commercial lending registered a solid growth in the last month of 2012, according to data from the Australian Bureau of Statistics (ABS).

The value of commercial loans increased by 8.6%, on a seasonally adjusted basis, to $31.9 billion in December 2012, the ABS said on Wednesday. The pick-up follows a 7.7% decline in November 2012 and a 4.8% rise in October 2012. Fixed commercial lending commitments rose 8.6% in December 2012, after a 10.5% drop in the previous month. Revolving commercial credit commitments expanded by 8.8%, after edging down by 0.2% in November 2012. The value of commercial finance commitments for the purchase of dwellings by individuals for rent or resale fell by 0.3% on a seasonally adjusted basis to $6.25 billion in December 2012.

By comparison, the value of housing finance for owner occupation, excluding alterations and additions, dropped 2.7% year-on-year to $13.5 billion.

The value of total lease finance commitments staged the biggest decline of 15.3% to $449 million, after a fall of 0.9% in November.

NAB Joins Australia’s Major Banks In Cutting Fixed Mortgage Rates

National Australia Bank (NAB) is the latest of the country’s major lenders to lower its fixed mortgage rates as banks seek to expand their loan books and borrowers move to lock in hot deals.

As of 14 February, NAB clients will benefit from a one-year package interest rate of 5.09%, down by 15 basis points (bps), while the fixed rate on the bank’s two-year mortgage product will be cut by 35 bps to 4.99%. The new fixed rates are the lowest NAB has made available in more than three years. NAB, which controls a 16.4% slice of the home loan market as at end-2012 and boasts the lowest variable rate of the major lenders at 6.38%, now also leads its big peers on one-year fixed offers.

Westpac last week lowered its packaged two-year fixed rate home loan by 40 bps to 4.99%, the lowest level since April 2009.

Commonwealth Bank of Australia, which has just announced a record half-year cash profit of $3.78 billion, slashed the fixed rate on its advantage package with a two-year term to 4.99%. Australia and New Zealand Banking Group is also amongst banks that have cut their fixed-rate offers, reported the Australian Broker.

Industry Body Calls For Australian Banking Sector Imbalances To Be Addressed

Abacus, the industry body representing the Australian mutual sector, including mutual building societies and credit unions, on Monday launched a national campaign aimed at addressing the imbalances in the domestic banking sector.

The Balance Banking campaign will lobby for a change through a national debate and an independent review of the nation’s banking system aiming to deliver a better banking deal for Australians.

The body cited research that reveals competition is a major issue with Australian consumers as 65% of the 1,000 Australians polled think that there is not enough competition among local banks.

The survey also showed that nearly 80% of respondents believe that the banking majors are making “excessive” profits and 71% think that the big four banks have an unfair advantage in the mortgage market.

With its national campaign, the industry organisation aims to bring more competition to the market where credit unions, mutual banks and building societies serve 4.5 million customers, or a fifth of the country’s population, by providing a level playing field for smaller players, more choice and a better service to customers.

The Balance Banking campaign seeks to address a number of specific policy areas, including the recognition of the mutual model and examination of tax incentives and funding options, as well as to expand the debate and intensify the competitive pressure on the highly-concentrated banking sector, Abacus CEO Louise Petschler told Australian Broker.

Australian Banks Face Growing Pressure To Axe Mortgage Rates

Australia’s biggest lenders are under increasing pressure to lower their mortgage rates independent of interest rate moves by the central bank, as their profits from new mortgages reach the highest level in over a decade, The Australian reported on Tuesday.

An analysis from UBS estimates that the Commonwealth Bank of Australia (CBA), the country’s largest mortgage lender, would see the net interest margin on its home book gain a further nine basis points to 131 basis points in the second half of its fiscal year ending 31 June, rebounding from a year ago when banks were losing money on new mortgages because of the adverse debt markets.

Following strong improvements in funding markets in the last six months and several mortgage repricings, lenders are now profiting more from mortgage origination than at any time before, UBS analyst Jonathan Mott said, as cited by The Australian.

Given the challenging political landscape, with a federal election due in the middle of September, pressure will build up on banks to revise down their mortgage standard variable rates and if they don’t follow suit, political interference can be largely expected as we have seen in other industries with bumpy profits, Mott added.

Fund managers also agree that borrowers would likely see some mortgage relief as funding costs are getting better, while banks questioned the findings of the UBS report.

Low Fixed Interest Rates Lure Young Aussie Home Buyers

While in previous years Australian home buyers would go for variable interest rate home loans, now we are witnessing the opposite phenomenon, with locking in mortgage repayments becoming a more attractive proposition.

Young Australian first home buyers are setting their foot on the property market with greater confidence thanks to the low fixed interest rates that they are being offered on home loans, financial website Mozo reported.

There are fixed rates that are 0.5% lower than variable rates, so it’s crystal clear to everyone that fixing at 4.95% is a good idea, said John Symonds of Aussie home loans. It is first home buyers who are seeing low fixed rates as an attractive alternative to entering the market.

Fixed rate loans are gaining increasing popularity with young buyers as they can easily do the maths and shop around for a better deal, said L Janusz Hooker, deputy chair of LJ Hooker.

With fixed rates as low as 4.79% for one-year loans and 4.99% for three-year offers, home buyers have the opportunity to plan their monthly budgets ahead and treat their home loan as a regular bill without having to worry if interest rates will change in the future.

With interest rates having dropped by 1.75% since November 2011, many Australians would probably find far better deals in the current market than the original home loan agreements they may still be stuck with.

Australian Home Loans, Prices Record Modest Uptick

Australian home loans rose slightly in January, according to data collated by the central bank. Home credits edged up by 0.4% in January after adding 0.3% in the previous month. However, the growth still pales in comparison with the 4.4% increase recorded in January 2012.

Consumers have reined in spending and borrowing for some time, prompting the Reserve Bank of Australia to put on hold further rate cuts.

Benchmark rates currently stand at 3% as the central bank looks to keep the Aussie dollar at bay while still pursuing a rebalancing of the GDP growth, analysts told Global Property Guide.

The benchmark rates were cut by 1.25 percentage points last year, but first-time home borrowers remained cautious. Meanwhile, home prices recorded monthly gains in February, according to RP Data and Rismark home value index.

To the end of February 2013, the index results showed that capital city dwelling values rose by 0.3%, following a 1.2% increase in January.

Home prices increased in five of Australia’s eight capital cities in February, largely driven by Melbourne, the country’s second-biggest housing market. Dwelling values rose by 1.5% in Melbourne, adding 2.3% in Darwin, 1.9% in Canberra and 0.1% in Sydney.

Brisbane saw the biggest monthly fall of 1.1% in February after recording a 2.0% growth in January.

Australia’s Rural Property Market Starting To Perk Up

Australia’s rural property market is starting to show some signs of revival and investors interested in deals with rural land are recommended to take advantage of the uptrend in the market, Colliers International said.

Tim Jelbart, rural and agribusiness valuation manager at the specialist marketing agency, talked recently on the sidelines of an investor and advisor conference held in Brisbane. According to the expert, the uptick in transaction volume in certain parts of the country is strong evidence of the market’s road to recovery.

The rural property market is currently seeing strong interest from investors, which has led to a small increase in mean land values. Many people have been shunning the rural property market since the first signs of distress in global financial markets started to emerge, but now they think that it’s high time for the rural property sector to take a turn for the better.

Although commodity prices are still a factor that worry future investors and keeps dictating their purchasing decisions, transactional activity will definitely pick up this year, Jelbart commented.

The expert took the Richmond cattle production area in Queensland’s northwest as an example to illustrate the recovery of the property market after a couple of years of lackluster growth. Between 2009 and 2011, there were just four deals involving the sale of properties of 5,000 hectares or more. Last year alone, the number of transactions surged to 10, with the bulk of deals taking place in the second half of the year.

Australian Households Now 14% Ahead On Mortgages

Australian households have been redeeming more than adequately their home loans and currently they are $160 billion ahead on their mortgages, The Australian reported.

Nearly 50% of the three million Australians with a home loan have made use of the unprecedented decline in interest rates to plough more money into paying off their debt and, according to data from the Reserve Bank of Australia (RBA), customers are 14% in front on their mortgages, which have a combined volume of $1.14 trillion. In March 2008, when the first signs of distress in financial markets emerged, the mortgage buffer built up by Aussies was just 11%.

The RBA, which has slashed its cash rate to the lowest level in 53 years, has estimated that Australian families are 20 months in front on their mortgage loan repayments, which means that a household with a $300,000 home loan is now $40,000 ahead.

Meanwhile, non-performing home loans, or those unpaid for more than 90 days, account for just 0.6% of the total number of mortgages extended to Australians.

Shane Oliver, chief economist at the Australian Bankers’ Association, commented that until recently, the household indebtedness had been at “very high and dangerous levels.” He considers that household debt should be taken back to acceptable levels before this becomes a problem should the country’s economy deteriorate and jobless rates suddenly increase.

House Prices Grow Slightly In Q1 2013 – ABS

In the first three months of the year, house prices across Australia’s eight capital cities edged up by 0.1% after rising by 2% the previous quarter, the latest figures from the Australian Bureau of Statistics (ABS) revealed.

In the 12 months to March, home prices in Australia went up by 2.6%, roughly matching the increase in consumer price inflation, but proving lower than the overall income increase recorded in the period.

ABS registered a distinct variation between the developments of the housing markets of the different capitals. The capital that exhibited the biggest increase in house prices was Darwin, where the house price index gained 1.9% in quarterly terms and 8% compared with the same period of 2012. It was followed by the city of Perth, which registered a 1.2% quarterly increase and an annual growth of 6.1%, ABC News reported.

Sydney, Australia’s most populous city, saw house prices go up by 3.6% on the year. Compared with the October-December quarter, house prices remained unchanged. In Canberra, residential properties were 1.5% more expensive when compared with the same period of 2012, but just 0.2% costlier than the previous three months. Melbourne scored a similar quarterly rise in house costs and a stronger improvement of 1.1% on the year.

The house market in Brisbane recorded a 1.4% annual rise and a 0.3% quarterly decline in prices, while Adelaide saw house prices slip 0.3% on the quarter but gain 0.9% on the year.

The city of Hobart failed to score a rise in prices, registering a 0.3% decline on a quarterly basis and a 1.9% drop in annual terms.

Home Loan Approvals Growth Proves Better Than Expected In March

In March, home loan approvals in Australia rose by 5.2% during the month, beating analyst’s forecasts for a more modest improvement of 4%, the latest figures from the Bureau of Statistics have shown.

This is the most significant monthly increase in home loan approvals since March 2009, suggesting that the housing sector is heading towards a better future after suffering a tough couple of years.

Compared with February, the value of loans for investment housing gained 2.1%, while finance approvals for new house construction advanced 4.6%. The number of Australians who get approval for a new home purchase rose by an impressive 21.1% month-on-month, while lending for houses that were already built went up by 4.2% in March.

Since early 2012, the country’s housing market has been mired in a prolonged slump despite the steep interest rate cuts, The Australian commented. In May, the Reserve Bank of Australia slashed the cash rate to a new record low of 2.75% to reinvigorate certain sectors of the economy, such as housing construction, as the country begins its painful shift away from a decade-long mining boom.

The strong increase in building approvals is an encouraging sign that the lower interest rates are finally helping to support Australia’s housing sector, Michael Workman, senior economist at Commonwealth Bank, said. He predicts that data for April will reveal an increase in approvals of up to 4%.

Global Investors Rush To Buy Commercial Property In Australia

Global investors are steering away from commercial property in the US and Europe and are rushing to buy office buildings in Australia, in order to take advantage of the attractive yields, Bloomberg said in an article.

Investors have been buying Australian office properties at the fastest rate since the end of 2011, with prime-office assets seeing the strongest uptick in demand since 2007, which is in line with the global results for assets delivering higher returns due to the reductions of interest rates by central banks across the globe.

Although the rental market seems subdued in the Australian context, it probably looks more stable when compared to the US and Europe, Rob Sewell, head of office investments at Jones Lang LaSalle’s Sydney office, told the news agency.

Since 2010, office values in Sydney have increased by less than 3% after recording a 6.7% decline in 2008, when Lehman Brothers filed for bankruptcy, and a 12% drop in 2009.

Data from Jones Lang LaSalle showed that between January and March 2013, prime offices in local larger cities fetched yields of around 7.9%, which is higher than the 5.25% for London City prime offices and the 4% – 5% for prime offices in business districts in New York and San Francisco.

Premium office space in Sydney had an average value of $16,235 per sq m in the period against $18,095 in 2008, broker Savills Plc estimated.

According to Real Capital Analytics, offices in Sydney had an average capitalisation rate of 8.8% as at the end of April, which is up from 5.7% in London, 5.2% in Manhattan and 3% in Hong Kong.

Rise In Home Loan Approvals Fuelled by Upgraders And Investors

Recent data published by the Reserve Bank of Australia (RBA) showed that since 2009 home loan approvals in the country have been on the rise, fuelled by homeowners’ increasing interest in moving into new homes and by the growing investor demand for mortgage funding, the Property Observer said in an article.

Between 2009 and 2013, however, the demand for mortgages from first-time buyers has been quite modest. Since the start of 2013, the RBA has seen no indication that demand for property from people looking to buy their first home will increase over the course of the year. This downtrend could be explained by the government’s decision to scrap its scheme to provide grants to first-time buyers in 2010. The programme, which was introduced in 2008 to stimulate the housing industry and boost the market, provided an additional $7,000 to people looking to buy an existing home for the first time and $14,000 for newly-built properties. In 2009, the grant was cut by half and those buying or building new homes were eligible for $7,000, while those purchasing established homes could obtain a $3,500 grant.

Australia currently has the lowest mortgage rates seen in nearly 50 years, which will result in average savings of around $140 for homeowners when covering their monthly loan repayments. According to the Sunday Telegraph, mortgage rates will reduce even further over the next 12 months as the country moves away from the dependence on its once-strong mining industry.

New Home Loan Approvals See Modest Growth In April

The number of new home loan approvals reached 48,475 in April, scoring their highest number in three and a half years, the Australian Bureau of Statistics (ABS) said this week.

Month-on-month, the number of new home loans approved edged up 0.8%, failing to meet market projections for a more material increase of 2%. The figure implies that Australians are still wary of drawing new debt and prefer to cover existing liabilities instead, Sky News reports. Compared with April 2012, home loan approvals climbed by 1.4%.

In value terms, housing finance slipped 0.2% in the fourth month of the year, while the value of loans for investment housing gained 1.1%.

Despite the improvement, the figures are still “a bit weak,” Michael Workman, senior economist at Commonwealth Bank, commented. Overall, the data suggests a very modest uptick in loans both in terms of number and value, which is in tandem with the current consumer sentiment figures. This implies that confidence is still fragile, he said. Generally, Australians believe the time is right for buying a new home, but are still nervous about committing themselves to borrowing and want to first pay off any existing debt. According to Workman, the growth in the number of new home buyers is fairly modest partly due to the exhaustion of most assistance programmes implemented by the government.

Growth like this is, however, encouraging and a step in the right direction for the property market. It indicates that, slowly but surely, confidence is growing.

Melbourne And Sydney Score Strong Auction Clearance Rates Over The Weekend

Figures from the Real Estate Institute of Victoria show that over the last weekend both Sydney and Melbourne recorded impressive results in property auctions, strongly surpassing the rates exhibited during the previous week’s long weekend.

There were a total of 740 properties auctioned in Melbourne that produced a clearance rate of 70%, pointing to one of the strongest weekend auction results in years. By comparison, the clearance rate in the city was 65% this time last year and even lower (53%) in 2011.

In Sydney, the percentage of homes that were cleared at auction on the weekend reached 76.9% out of the 458 properties listed. Currently, auction rates in Australia’s largest city are trending higher than the record levels seen three years ago, the Smart Company website reports.

Demand was particularly huge for properties located in Sydney’s northern suburbs, including Balgowlah Heights and Milsons Points, which could be a sign of stable recovery in the premium market. So far, in 2013 the premium hadn’t been as strong as investment in the lower and middle markets. In Melbourne, the number of property auctions is larger than in the last two years. By the end of June, the property market will likely see about 3,175 auctions, the institute estimates.

The solid results from last Saturday and Sunday follow reports of a cheerless Queen’s Birthday weekend, when just 245 properties were auctioned in Sydney and only 143 in Melbourne, data from the Australian Property Monitors (APM) shows.

Low Interest Rates Help Australians Get Ahead On Loan Repayments

The low interest rates in Australia will continue to assist local borrowers in servicing their loans and better managing debt, rating agency Fitch says in a report seen by news agency Bloomberg.

Analysts, led by Hai Duong Le, also expect that this year, the macroeconomic landscape will remain stable as the jobless rate will stay low and the gross domestic product will continue to increase, which will further ease debt pressure on domestic households.

Mortgage arrears in the country, which are comparatively low to other markets, are predicted to remain stable this year thanks to the record-low interest rates and healthy employment level. In the first quarter of the year, the share of prime home loans that were between 30 and 59 days overdue touched its lowest post-Christmas level since March 2006, at 0.59%. Meanwhile, the proportion of mortgages that were 30 days late edged up to 1.48% from 1.46% three months earlier. The only group bucking the trend was self-employed workers, where the share of overdue loans increased to 7.57% in January-March from 7.05% the previous quarters.

Interest rates in Australia have been hovering around low levels after the Reserve Bank slashed its main rate by two percentage points to 2.75 in November 2011. Thanks to the lower borrowing costs, many Australians managed to get ahead on loan repayments in 2012, according to nearly 50% of respondents to a survey conducted by QBE Insurance’s mortgage insurance unit.

Lending In Australia Sees Increase In May

Demand for loans in Australia recorded growth in May, new figures from the Reserve Bank of Australia reveal.

In terms of value, credits provided to home buyers advanced by 0.4% in May compared with the previous month, after seeing similar increases in April, March and February. The slight uptick in housing loans brought the annual improvement rate to 4.5%, which is still above the record-low level of 4.4% registered in January.

The latest official report from the country’s central bank also shows that the total value of loans granted to Australia’s private sector went up by 0.3% last month. The segment scored an identical monthly increase of 0.3% in April. At the same time, the value of other types of personal credit slipped by 0.1%, which took the annual decline rate for the segment to 0.2%.

Credits provided to businesses edged up by 0.1% in May after seeing a 0.2% lift in April. Year-on-year, corporate lending increased by 0.9%.

Commenting on the figures, Shane Garett, an economist at the Housing Industry Association, said that the modest increase in loan values was a result of RBA’s introduction of several reductions to interest rates so far in 2013. Garett, however, believes that credit growth remains subdued as banks are still reluctant to lend. They are chiefly concentrated on measures to foster their balance sheets in order to ensure both their long-term financial viability and compliance with regulatory standards.

Queensland Close To Obtaining $60M In Federal Funding For Farmers

Queensland is expected to soon strike a deal with the Australian government that could ensure the state with access to $60 million in concessional loan assistance, the Beef Central reports, citing Queensland agriculture minister John McVeigh.

McVeigh said he was closer to negotiating the funding with the new Federal agriculture minister Joel Fitzgibbon that could help local farmers support their activities. This happens three months after the Federal government announced the release of a $240 million emergency relief fund for farmers that could be distributed as concessional loans of a maximum of $650,000 to farmers in each of the states and the Northern Territory. The loans will be provided on the condition that businesses can prove they do need the money and have the capacity to repay the credit.

Access to the agricultural loans will be freed up once the federal government and local authorities agree on the way the funding will be delivered.

The financial package was unveiled in April, and since then Queensland has been pressuring the federal government to release the money. At present, over 40% of the state’s land is drought declared.

McVeigh assured that talks with the new minister have so far proved more than fruitful. His department has estimated that the sum, to be provided in two equal instalments over two years, will allow 150 farm businesses in the state to access low-cost loans, which will carry an interest of only 4.5%.

Recently, the Queensland government acted to protect local graziers affected by the drought, releasing $11.2 million in funding to producers in drought-declared areas in the form of land rent relief, fodder and water cartage subsidies and grants of $20,000 to producers particularly affected by water supply deficiency.

Low Interest Rates Keep Encouraging Home Buyers In Australia

The record-low interest rate in Australia contributed to a 1.8% increase in home loan approvals in May, the Australian Bureau of Statistics said earlier this month.

As many as 49,636 Australian consumers were granted mortgage approvals in May, up from 48,736 the previous month. The share of property loans provided to first-home buyers rose to 14.6% from 14.3% in April.

In money terms, housing finance advanced 2% month-on-month on a seasonally adjusted basis to $23.43 billion.

While the 1.8% uptick in mortgages was slightly lower than the 2.2% increase expected by industry experts, the lower interest rate has continued to play a critical role in the home loan market, particularly in New South Wales where demand has been dramatically low in the past eight years, ANZ head of property research Paul Braddicks said, as quoted by the Sunday Morning Herald.

Despite the higher forecast for the market, this is still a very strong figure and comes in sharp contrast to the developments observed in the broader economy last month, he added.

The home finance data is not likely to alter expectations of an additional rate cut in August, the paper noted.

The house finance market is definitely starting to show signs of recovery, Westpac senior economist Matthew Hassan told the paper.

Mortgage Applications Rise 6.9% In Q2

In the second quarter of the year, mortgage applications in Australia recorded an annual increase of 6.9%, seeing their strongest growth since June 2010. In quarterly terms, mortgage inquiries advanced 1.9%, figures from credit data provider Veda showed this week.

The housing market scored its biggest increase in demand in three years, exceeding the overall growth rate observed in consumer credit demand, which expanded by 3.9% over the previous year. The solid uptick suggests that consumers are gradually returning to the real estate market, with potential property buyers in Queensland emerging as the most cautious; applications in the region added just 1.6% in the quarter. Despite the modest increase, the results reverse the negative trend recorded in the last five quarters, Veda’s general manager of consumer risk, Angus Luffman, commented.

The strongest demand for mortgages was recorded in Western Australia, where applications soared 15%. New South Wales came second in terms of mortgage inquiry numbers, where they were 13% higher in the June quarter. The Northern Territory saw a 10.3% increase in applications and South Australia enjoyed a 7.5% rise.

The results are encouraging and suggest that house price growth will likely persist in the short run, especially in regions where demand for property loans was stronger, according to Luffman.

House Prices Score Stronger Than Expected Growth in June Quarter

Figures released this week by the Australian Bureau of Statistics (ABS) show that house prices kept increasing at a higher-than-expected pace in the quarter to June. Analysts project that growth in property values is unlikely to slow down any time soon, the Big Pond News reports.

Capital city house prices in Australia advanced 2.4% in the three months to June, exceeding analysts’ forecasts for a more modest increase of 1%. In the six months to June, the housing market observed a 5.1% spike in values.

House prices increased the most in Perth, where the ABS observed a 3.4% growth in the quarter. Next came Darwin with a 2.9% increase in prices, followed by Sydney with 2.7%, Melbourne with 2.4% and Brisbane with 1.9%. The property markets of Canberra and Adelaide showed a modest growth, seeing prices climb by just 1% and 0.3%, respectively. Hobart was the only market to see a decline in house prices, slipping 1% in the June quarter.

The figures come soon after the RBA announced yet another reduction of its cash rate, slashing it to a historic low of 2.5%. The bank attributed the reduction to sluggish economic growth and moderating commodity prices. According to JP Morgan economist Tom Kennedy, the RBA has made it quite clear it is seeking a recovery in the housing market to counterbalance dwindling resource investment. The expert projects that the housing sector will keep performing well in the short run, thanks to the low interest rate and investors’ increasing appetite for Australian property and the strong yields it generates.

Government To Release $5.9M For Rural Financial Counsellors

The Australian government is to provide an extra $5.9 million as part of a scheme intended to improve farmers’ financial wellbeing, the Weekly Times Now has reported.

The money will go to funding the work of 17 more full-time financial counsellors, who will focus on regions and sectors suffering debt hurdles. They will also help farmers who have been severely affected by natural disasters. Currently, there are 10 financial counsellors working across the country under the scheme.

The sum will be sufficient to support five additional financial counsellors in Queensland, three in New South Wales, three in Victoria, three in Western Australia, two in Tasmania and one in South Australia.

The funds, to be released as part of the government’s Farm Finance Package, will be rolled out over two years. The money will ensure farmers have access to free financial advice that will help them better handle debt and alleviate their financial burden, agriculture minister Joel Fitzgibbon said. The financial counsellors will provide assistance to farmers, fishers and small rural firms experiencing financial troubles, he added.

The counsellors will be mobile and approachable in a number of locations. They will be most active where demand is greatest, giving farmers access to financial information and options to cover debt.

Investors Drive First-Home Buyers Out Of Australia’s Home Market

The increasingly low interest rates in Australia are luring a great number of investors into the property market, driving first-home buyers out as a result, The Australian has reported.

This has caused an increase in rentals in the country’s capital cities, leading to a record-low percentage of first-home buyers tapping into the market. Meanwhile, residential investors flood the home market. According to John Symond of Aussie Home Loans, the latest developments in the market have proved a “windfall” for investors, who take advantage of the shortage of accommodation and the opportunity to fund property purchases with favourable interest rates – the lowest they have been in 50 years.

The decline in the proportion of first-home buyers on the market to an all-time low of 14%, which came despite the segment’s buoyant performance recently, was also reflected in auctions’ data. The most recent figures from the Australian Property Monitors reveal that in Sydney, the weekly auction clearance was 81.6%, while in Melbourne it was 75%, or 20% more than a week earlier. In Brisbane, the clearance rate was around 20% higher than the previous week, at 58.3%, while Adelaide scored a 40% surge to 76.5%.

The lower proportion of first-home buyers, which usually hovers around 20%, could be also a result of the suspended grants provided by the government to finance home purchases. They had served as an incentive to many Australians looking to buy their first home, according to Peter Bushby, president of the Real Estate Institute of Australia.

Home Loan Approvals Grow For 7th Month In A Row

The latest figures from the Australian Bureau of Statistics point to the continuing growth of the country’s property market, a trend highlighted by the seventh monthly increase scored in home loan approvals in July.

The report reveals that the number of home loans approved went up from 50,983 in June to 52,204 in July. This translates into a monthly growth of 2.4%, a rate that was well above market expectation for a more modest uptick of 2%. In money terms, home loans remained broadly unchanged on the month at $15.391 billion after exhibiting a 2.4% rise in June, while investment lending advanced 2.9% to $8.789 billion

Loans taken out for the purchase of new homes added 5.9% in July and loans for building residences slipped 2.1%, the statistics report also shows.

According to Ben Jarman, economist at JP Morgan, the increase in home loan approvals was chiefly fuelled by stronger demand from investors, who usually draw higher loans, noting that the average loan volume is on the decline.

Jarman believes that the main obstacle to unlocking further growth in the home market was the high cost of building, but expects that the “wind-down in the mining investment boom” would potentially ensure more resources for the sector and push prices down.

Meanwhile, CommSec chief economist Craig James is upbeat that the home market will keep picking up steam as consumers and businesses become more optimistic about the future. Days after Australians cast their votes in the federal election, they are expected to unleash spending, investing and hiring, he said.

Australia’s Housing Market Growth Well On Recovery Track

The number of home-building permits issued by Australia’s government surged by 10.8% in July compared with the previous month, the latest figures published by the country’s statistics bureau show.

The nation’s housing market was given a huge boost by the historic-low interest rates which brought the level of building approvals in July twice as high as the rate projected by economists. This strong growth in approvals, which also reflects the number of applications, is a result of the government’s efforts to foster non-mining sectors, The Wall Street Journal commented.

The statistics report also shows that year-on-year, the number of dwellings approved for construction soared by 28.3%, reaching 14,304 in July. Seasonally-adjusted, the value of residential units approved for building added 1.3%, while the value of total building approved rose by 5% after declining 10.5% in June.

The figures build on data related to property market trends in the country’s capital cities; they provide additional evidence of the property sector’s recovery. Data from researcher Australian Property Market shows that in the last couple of months, the number of sales of new property at auctions in both Sydney and Melbourne has surged to record highs, with prices of houses rising 7% since mid-2012.

Commenting on the figures, CommSec chief economist Craig James said the increase highlights the housing sector revival, predicting that the favourable interest rates will keep backstopping the market in the mid-term.

Sydney’s Housing Market To See Price Growth Of Up To 20% In 2014

SQM Research predicts that the revival of Sydney’s home market will transform into a “boom” in 2014, with price growth expected to be more than double the rate seen in Perth, Australia’s second best performer in the residential property market.

According to the researcher’s annual Housing Boom and Bust report, the housing market of Sydney will benefit from low interest rates and a rebound in consumer confidence, which will result in a jump of between 15% and 20% in property values. By comparison, property prices in Perth are forecast to show more modest growth of 4% to 8%.

On average, house prices across Australia’s biggest cities will display an increase of between 7% and 11% next year, SQM Research said. Its forecast is based on a rise in interest rates in the second half of 2014. This year, residential property values are expected to climb by up to 9%, according to the report.

SQM Research managing director and lead author of the report, Louis Christopher, said that the recovery of the country’s residential market started in the third quarter of 2012 and is about to accelerate. First-home buyers, who generally failed to take advantage of this revival, are expected to benefit from state government concessions to buy a new home next year, he added.

Christopher also noted that the rate of improvement will vary in different cities, with some failing to exhibit buoyant growth. Canberra, for instance, will most likely see values dip by 1% to 4%, while Melbourne will score a modest price increase of between 4% and 7%.

Housing Bubble Fears “Overstated,” ANZ Chief Says

Concerns that rising property prices will prompt a property bubble are “overstated,” says Philip Chronican, local CEO for Australian and New Zealand Banking Group (ANZ).

The jump in house prices observed in the last couple of months has reignited fears of a potential house price bubble, but the truth is that it is just a rebound after a period of falling prices, according to Chronican.

In a speech delivered last week, Chronican said that house prices are expected to see a 5% increase in the next 12 months. Meanwhile, there is a shortage of around 270,000 residential properties, equalling 20 months of construction. Given the strong population growth, and slow construction activity, the figure is likely to increase to 370,000 by 2015, he said.

Recent Data from the RP Data Rismark Home Value Index shows that house values in the country’s largest cities saw a 5.1% rise in the first eight months of 2013. In the six months leading up to August, prices recorded their fastest growth rate for the last three years. In light of this, the Reserve Bank of Australia recently advised banks in the country to keep their lending operations at a reasonable level amid the expanding housing market activity, Bloomberg reports.

Sydney And Melbourne Record Solid Auction Clearance Rates

It was another promising weekend of auction results for Sydney and Melbourne, with both cities recording strong clearance rates similar to those seen so far this spring, data from Australian Property Monitors (APM) shows.

The cities achieved solid property auction clearance rates despite the sporting grand finals taking place in both Victoria and New South Wales, which resulted in a smaller number of properties listed for sale in the past two weekends.

In Sydney, the clearance rate continues at above 80%, hitting 81.8% this weekend. There were, however, just 256 properties up for sale due to the NRL grand final on Sunday. Sydney’s clearance rates are now trending 20% higher than just a year ago, though higher-end properties are still proving harder to sell, restraining growth in the segment, the Smart Company website notes.

In Melbourne, the percentage of homes cleared at auctions on the weekend hit 75%, with a total of 732 properties up for grabs. By comparison, there were just 44 properties listed for sale the previous weekend, as a result of the AFL grand final event. Unlike Sydney, growth is spread across all segments of the property market, RP Data Victorian housing market expert Robert Larocca told Smart Company. Since the start of the year, there has been a 14.5% rise in the average clearance rate to around 70%, he said.

The revival of the property markets of both Sydney and Melbourne is further highlighted by the increase in house prices. According to the latest monthly house price index from RP Data and Rismark, the country’s major cities saw a 1.6% leap in house values in September, fuelled by a 2.5% increase in Sydney and a 2.4% rise in Melbourne.

National House Prices Rise 1.3% in Q3 – NAB

The latest Quarterly Australian Residential Property Survey from the National Australia Bank (NAB) showed a 1.3% rise in national house prices in the third quarter of this year, with growth recorded in all states but Western Australia.

New South Wales saw the strongest growth in home values at 1.9%, followed by Victoria with 1.5%. Queensland also performed impressively, while Western Australia emerged as the only state to score a decline.

Next year, NAB expects the market to see a 3.3% improvement, before surging further by 4.5% in 2015. All states are forecast to enjoy strong growth, with New South Wales continuing to beat average national growth.

NAB’s Residential Property Index also improved strongly, driven by the increase in house values. The index advanced by 17 points to 32 points in the quarter, achieving its second highest result since the survey started.

The report also points to a rise in demand for all types of new and existing property, particularly in the new property market from owner occupiers. First-home buyers, however, pulled out of the market in the third quarter, and demand from local investors was also modest, except in New South Wales.

Up-graders were again the most active on the established property market, where demand improved in all market segments, proving to be the most solid for houses and inner-city low rise flats.

Capital city house values are expected to grow by 3.5% through to September 2014, and then by 3% through to September 2015, NAB also said.

Home Prices In Australia’s Capital Cities Continue To Improve

Home prices across Australia’s capital cities improved by an average of 1.9% in the three months leading to September, keeping the housing market in positive territory for four quarters in a row for the first time since 2010, the latest data from the Australian Bureau of Statistics (ABS) shows.

While the growth rate failed to meet economist predictions for an increase of 2.1%, it contributed to a strong 7.6% rise in average house prices in the year to September.

The quarterly improvement was mainly driven by the 3.6% increase in house values in Sydney. Melbourne was the second best performer in July-September, seeing home prices go up by 1.9%. Hobart was third with a rise of 1.4% in prices, and Brisbane came fourth with a 1.2% improvement.

In the 12 months to September, home values in the country’s biggest property market, Sydney, advanced by 11.4%. Melbourne scored a 6.8% rise, while Brisbane prices grew by 4.1%.

The figures prove that the country’s housing market is steadily growing, especially in Sydney, where “things really are starting to heat up,” JPMorgan economist Tom Kennedy said as quoted by The Sydney Morning Herald. Melbourne is also enjoying positive market development, similar to Brisbane, where price appreciation was also solid, he said.

Kennedy believes the current developments on the housing market are also a result of measures aimed at restoring the construction industry, and higher prices are supportive of this as they stimulate activity and investment.

The surge in Sydney’s housing prices comes after years of underperformance when compared to other capital cities, and also reflects the low supply of houses available for purchase, Macquarie Bank senior economist Brian Redican commented.


According to figures released from the Australian Bureau of Statistics (ABS), growth in home loan approval in September rose by 4.4% on a seasonally-adjusted basis compared with the previous month, beating previous analyst projections of 4%.

The low interest rates continued to be a force of positive influence, helping the 5.2% increase in the value of loans for investment housing in the period in comparison to August.

The rise in home lending was apparent in all Australian regions except Western Australia and the Northern Territory, where the ABS registered seasonally-adjusted drops of 0.6% and 6.7%, respectively.

The strongest increase in the number of owner-occupied mortgages approved was recorded in Tasmania, at 5.9%. In Victoria, home loan approvals rose by 4.7%, while in Queensland the number was 3.4% higher compared with a month earlier.

The housing market is one of the economic segments continuing to show growth as the country shifts away from its once-booming mining industry. It is mainly driven by the historic-low interest rates that have been slashed eight times since late 2011 as a means to stimulate activity in sectors such as retail and housing, which have been solid economic strengths in the past, The Australian comments.

Home loan approvals have seen solid improvement since the start of the year. The sole month to see a drop in housing finance commitments was August, when they slipped by 4%.

Residential building approvals in the country also witnessed an increase, going up 1.8% in September from the previous month. Loans for purchasing new homes dropped 2.1%, while finance approvals for existing residential property advanced by a strong 5.2%.



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