Residential property investors should take heart from the predicted bounce-back in the economy over 2022 – but with a few caveats.
While the uplift in the expected economic growth rate from 1.5 per cent in 2020/21 to 3.75 per cent in 2021/22 could prove a major boost, a sooner-than-forecast rise in interest rates and delays in re-opening international borders could inhibit returns.
The federal government’s Mid-Year Economic and Fiscal Outlook, released in December, provided a rosier picture, with a drop in unemployment to 4.5 per cent and 4.25 per cent in 2022/23, and wage growth of 2.25 per cent and 2.75 per cent.
“The economy and the Australian property market are always significantly intertwined and as the economy – and wage and profit conditions – improve, then people have a lot more confidence about investing in property,” says Hayden Groves, the national president of the Real Estate Institute of Australia.
“Their family balance sheets are looking healthier, they see the value of their own homes increase, they’re ready to move to homes that better suit their aspirational lifestyle, and they’re happy to put more money into property.”
As borders open, Groves also believes rents will rise because of more demand for rental properties, with vacancy rates already low in many places around the country.
That, in time, will also feed into properties’ capital growth.
“We won’t see that at the record levels we saw in 2021, but we do anticipate continued steadier price growth,” he says.
One limiting factor, however, may well be an earlier lift in interest rates, says Jeremy Thorpe, the chief economist of financial services firm PwC Australia.
Most onlookers are convinced it will happen much sooner than the Reserve Bank’s original insistence on 2024.
“We believe it’s going to happen much faster – this year, or late 2023 – but they could be the biggest challenge to come out in the current environment for those investing in property,” Thorpe says.
“The other factor is that we were optimistic with the borders about to free up and having more international visitors and overseas students to contribute to the labour market and economy, but this looks like being delayed by Omicron.”
Generally, however, prospects do look promising for the year.
The pandemic has increased savings, which means many more buyers have been able to put more money down as a deposit to reduce the size of their home loans.
At mortgage and home loan brokers Eventus Financial, chief executive Alex Veljancevski says even if interest rates do rise sooner rather than later, they will still remain at historically low levels, and there are plenty of towns where prices are still low and yields strong.
His latest research has found the top place in Australia for returns is Safety Beach in Coffs Harbour on NSW’s north coast with a 4.1 yield and a $765,000 median price, and in second place is Tyabb on Victoria’s Mornington Peninsula with 3.6 per cent yield and a median of $715,000.
“We’re still talking about low interest rates and lots of areas that offer investors opportunity,” he says.
“And for those investors who’ve already bought, they’re seeing so much growth in the price of their properties that many are using the equity created to invest further.”
Article Source: www.domain.com.au
You Should Check These 4 Things Before Buying a Used Car
It is no secret that the Global Economy is in a bad shape with growth projected to slow down from 6.1% in 2021 to 3.6% in 2022 and 2023. From the COVID-19 pandemic to the war in Ukraine, coupled with rising food and fuel prices you have to ask yourself: Is it really a good time to buy a brand new car? I know you’ve worked hard and you deserve the best bang for your buck, however, buying used cars instead of new ones can be the solution!
First of all, those eye-catching lower price tags are the main benefit. But there is a catch to everything, you can’t buy used cars carelessly. You need to ensure that your money is invested into four wheels that will relieve your headaches, not give you one. You can follow the guidelines below to ensure that you are on the right track in your checklist.
1. The Exterior
You can’t judge a book by its cover, however, assessing the exterior can discover scratches, dents, or rust. Look out for cracks on the windshield, find out if the headlights need fixing and if the rear and side-view mirrors are working. You can also look at the wheels for dents and holes in the tires.
2. Under the Hood
The engine is one of the first things that you need to look at to ensure that it is working properly. It needs to be clean with no leaking fluid or gas. Depending on your location, some countries/ cities/ provinces require used cars to pass a safety and smog test. The wiring harnesses & looms are other critical things to look out for in order to ensure that the electrical circuit in your car is intact. A damaged electrical circuit can cause accidents; I’m sure you don’t want that.
3. Vehicle History Report
There’s a lot of information in a report that can help you decide if you really want a used car. This includes mileage, accidents, and service history. Some vehicles (Honda) can accumulate large mileage figures without experiencing much wear and tear, however, others do not. Accident history is important because it is better to stay away from vehicles that have been in major wrecks and require a new engine or a lot of bodywork.
Most new cars can lose up to 60% of their value because of depreciation. This fact can be of great use to you when asking for lower selling prices because you can use the car’s age and how the make and model lose value over time as a negotiating point.
Buying a car is quite a big deal for most people. Used cars have become quite an affordable and reliable solution. Buying a used car that is just 2-3 years old is a wise move as you can save quite a penny and still get a virtually new car. After reading this article you are now equipped with what you should look out for. Good luck with your used car journey!
6 Main Steps For Anyone Who Wants To Migrate To Australia
Australia is one of the best countries in the world to live in. In addition to its strong economy, it has an amazing infrastructure as well as beautiful places to explore. All of the states provide a great lifestyle and a flourishing environment. Even though choosing to migrate to another country is difficult, Australia is worth it.
To migrate successfully and comfortably, a number of things need to be taken into consideration. To be able to migrate with relative ease, you need to know step-by-step what the procedures are. There’s no doubt that it can be overwhelming to leave your country and try to settle elsewhere. Moreover, it can be hard to find the best approach and know the right procedures for immigration. In this article, we’ll look at 6 main steps for anyone who wants to immigrate to Australia.
1. Research Your Options
Research plays a vital role if you’re looking to move to another country. To ensure that you thrive there, you need to have knowledge about their culture and the way people live their life. You need to research everything and find out which state of the country would suit you the most. Although researching can be difficult and potentially tiring at times, it’s of great importance. There are plenty of states in Australia, and all of them have different costs of living. Find out which state would be beneficial for you and where you can have a good lifestyle. You will need a job to be able to stay and thrive there. Employment opportunities also differ according to different states, so it is important to include this factor in your research.
2. Apply for a Visa
After you’ve researched thoroughly and you’ve decided which state you’d like to relocate to, it’s time to apply for a visa. The employment status and visa application go side by side. You can either get a job offer letter first and use that as a base to apply for the visa, or you can apply for the visa first and then look for employment afterwards. You’ll need to give the required information to the embassy to start this process. Usually, processing and approving a visa takes time. You can use this processing time to make some initial plans because moving to another country can be an overwhelming task.
3. Hire a Migration Agent
Moving to another country can be both physically and emotionally very challenging. If you have made up your mind to move, it’s imperative that you hire a migration agent. The process of migration to Australia can be tricky and it’s always helpful to have an agent by your side to guide you. Agents have up-to-date information and they’re well aware of the context in Australia. They offer the best advice and help with all sorts of legal problems and bureaucracy. Moreover, they’re experts at what they do so you’ll encounter few problems in your immigration process. Although they don’t guarantee that your visa will be approved, they make the process much easier and smoother.
4. Look for Employment
Most countries require specific reasons for immigration. If you’re an employee in that country, the process becomes much easier. You need to know about the opportunities that might be available. Melbourne and Sydney are the two most beautiful cities in Australia. Finding a job there might be much more difficult. You can try looking for employment opportunities in Victoria. Job security plays a crucial role in getting a visa. Australia welcomes skilled professionals, so if you’re a skilled individual, it won’t take long before you find a job. A good way to do that is secure a position on Australia’s Priority Migration Skilled Occupation List. It’s a list of skilled individuals that Australia welcomes with open arms.
5. Look For a Home
Once you find a job in a good state and city, the next step would be to look for a suitable and affordable home. Living expenses vary from state to state but overall, Australia can be a bit expensive to live in. Find a home that is affordable for you and where you can easily pay its mortgage. Initially, you can even rent and once you settle in properly, start looking for affordable homes to buy. Try to find somewhere close to your workplace so it can make your life a bit easier.
6. Plan Your Move and Hire a Moving Service
At this point, you’ve got a job and your visa has been approved. The next step is to immediately start planning your move. As mentioned earlier, preparing to move can be a hectic task and has many components. It demands a lot of time and can be tiring as well. You’ll need to pack all your essentials. After that, you’ll need to move your luggage to Australia. A good way to do that is to hire a moving service because they’re much more efficient and do things quickly. There are plenty of moving services, so you’ll have a variety of options. When everything is done and your visa has been approved, all you need to do is to get a plane ticket and be on your way to starting a new chapter in your life.
Moving to a new country to settle in and start a life can be scary. It’s a completely new chapter in your book. Even though it can be frightening to leave everything behind and immigrate to a new country, it has its perks. If you wish to immigrate to Australia, you’re going to have to go through a tough procedure. To be able to immigrate successfully, you need to research as much as you can about Australia and its states. Finding a job will be essential because the Australian government requires a reason from you to live there. After you get a job, things will get easier. All you need to do is head down to the embassy and apply for a visa. Once you have that, start packing and hire a mover to transport your luggage. Once everything is finalized, book a flight and say your farewells.
It now takes more than a decade to save a home deposit
Housing affordability has worsened by every measure since the start of the pandemic, according to new research, and is unlikely to improve as interest rates rise.
The time it takes to save for a home deposit has blown out to a record 11.4 years, while the national median dwelling now costs a record 8.5 times the median household income, the latest ANZ/CoreLogic Housing Affordability Report has found.
The share of household income needed to either pay rent or pay off a mortgage has also risen, the report, which measures affordability to the end of March, said.
It’s a bleak picture for long-term residents of regional Australia, who are facing a steeper jump in the ratio of house prices to incomes and a sharper deterioration in rental affordability than their city counterparts.
Despite early forecasts that the pandemic would send unemployment soaring and push property prices down, effective stimulus and ultra-low interest rates sparked a property boom. The shift to remote working also prompted a spate of sea-changers, putting pressure on regional housing markets.
“There’s been a broad-based deterioration in housing affordability over the past couple of years,” ANZ senior economist Felicity Emmett said.
“The deterioration in affordability has been much more marked in regional areas on average because we’ve seen prices and rents go up there generally at a faster rate.
“With the push to flexible working, capital city workers have been able to move to the regions. Often these are knowledge workers that are relatively highly paid, and so they’re able to afford to pay higher prices for homes or pay more for their rent.”
Nationally, the median dwelling value is 8.5 times the median household income, a record high and up from 6.8 since the pandemic. But across regional Australia, the ratio is 7.9 times, up from 5.9 pre-pandemic.
For someone earning the median capital city income and looking to tree-change into the median regional home, the ratio is only six times, making the move an attractive option for higher-income workers.
The house price boom has outstripped wages growth, so it takes longer to save a deposit on average.
For someone who could save 15 per cent of their income, it would now take a record 11.4 years to save a 20 per cent deposit for the median home. That’s an increase of 2.2 years since March 2020, the fastest gain in this metric ever.
Once a buyer manages to save a deposit, they will need to set aside a higher share of income to pay off their mortgage, with the portion of household income needed to service new mortgage repayments rising to 41.4 per cent, well below record levels but above the decade average of 36.5 per cent, and the third consecutive increase.
Potential buyers trying to save a deposit are also facing higher rents, with the share of income needed to service rent on a new lease lifting to 30.6 per cent, higher than two years earlier.
Rental affordability has worsened more in regional areas, where tenants need to spend 34 per cent of income on rents, compared to 28 per cent in capital cities.
Smaller capital cities also face more pressure on their rental markets, while in Sydney and Melbourne, the share of income needed to pay rent is still lower than in March 2020.
“What we’ve ended up with is a really challenging environment for the long-standing residents of these regional areas,” Emmett said.
She said many first-home buyers are getting help with their deposit from parents or grandparents, although hard data remains scant.
“It’s increasingly becoming the case that whether you’re able to buy a home and become a first-home owner increasingly depends on what sort of job your mum and dad had, and I suppose the question is – is that really, as a society, what we want?” she said.
She doubted housing affordability would improve much this year when rates rise, as mortgage repayments will be higher and property prices are not likely to fall enough to move the needle.
Damien Walker, mortgage broker at Atelier Wealth, said some first-home buyers are bridging the deposit gap by turning to lenders that offer loans with a low 15 per cent or 10 per cent deposit and no lenders’ mortgage insurance.
Others are getting help from parents in the form of cash gifts or guarantor loans, and some are using the federal government’s First Home Guarantee scheme.
He said it is important for first-time buyers using a small deposit to make sure they can make their repayments as the property market softens.
“If there is a small drop in the market, you will be at a higher loan to valuation ratio because you are already paying a small deposit,” he said.
Emma Greenhalgh, chief executive of housing peak body National Shelter, warned of the dire situation for renters.
“It is incredibly difficult for very low- and even moderate-income households,” she said.
“Every time there’s a housing crisis, people will say, ‘I’ve never seen it like this before’, but I think this truly is a case where services and organisations haven’t seen it like this, and I think the big difference is what’s occurring in the regions.
“People may have been making decisions to move to somewhere more affordable [in the past]. Those options aren’t available.”
She called for an increase in the Commonwealth Rent Assistance payment, as almost half of its recipients remain in housing stress, and for a national framework of tenancy legislations to offer consistency on dwelling standards, rent increases and no-grounds evictions.
Regional Australia Institute chief executive Liz Ritchie said regional residents had put off moving to cities over the past couple of years, adding to pressure on the rental supply as city dwellers arrived.
She called for greater commitments to social and affordable housing in regional areas for key workers, as well as more investment in diverse types of housing, such as apartments and townhouses.
“If we don’t have a barista, what sort of community do we have, [or] if we don’t have our key health workers?” she said.
“If you look at the monetary policy changes, people are hopeful that’s going to slow down some of that [price growth], but that remains to be seen.”
Article source: www.brisbanetimes.com.au
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