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The Mercury Real Estate Guide : January 10th 2013
46 --- MERCURY Thursday, January 10, 2013 goodmanconveyancing CONVEYANCING Fixed Price Conveyancing Personalised Service Obtain a free quote at www.goodconvey.com or call us on 6223 3888 100A Collins Street Hobart money matters Why you should buy in 2013 TIME IS RIPE: A combination of low interest rates, low property prices and relatively stable employment all point to it being an ideal time to invest in property, if you dare. Picture: JIM TRIFYLLIS0 Doom, gloom and caution have plagued the property market in the past few years, but Kylie Davis looks at why the time is now right to see through the pessimism CONFIDENCE -- or a lack of it -- has been a major factor in the property market over the past two years. With the economic news from Europe miserable and the US threatening to fall off the fiscal cliff, consumers steadfastly refused to believe talk of Australia surviving the global economic slowdown and instead, paid down debt and put off as long as possible the decision to buy or sell a home. Slowly but surely, however, the fundamentals in most local property markets are changing. It doesn't mean that we're about to see prices take off -- far from it -- but it does mean that the risk of catastrophic price falls are subsiding. So if you have been thinking about getting into the property market, have a long-term goal and are prepared to do the research into your local area, here are seven reasons why 2013 should be the year when you feel the fear, but do it anyway. 1. Interest rates are low The recent cut by the Reserve Bank of Australia took the official cash rate to 3 per cent. Variable interest rates on mortgages range between 5.27 per cent to 7 per cent from the big banks while fixed interest rates can be locked in for between three and five years for less than 5.4 per cent. The Commonwealth Bank's home loans general manager, Clive van Horen, says fixed-rate loans are becoming increasingly attractive for customers looking for certainty. ''With some fixed-rate home loans now the lowest they have been in more than 20 years, it is a good time for customers to consider this as an option,'' Mr van Horen said. ''We are seeing more customers splitting their loan with both fixed and variable components, as they choose to get the best of both worlds and take some of the guess work out of rate changes.'' The governor of the Reserve Bank of Australia, Glen Stevens flagged at the December meeting of the bank, the bank is unlikely to continue to drop rates, saying that there were signs in the economy of ''easier conditions'' created by recent cuts to the cash rate. 2. Prices are rock bottom If the market is a clock, and the top is 12 and the bottom is six, then the market, if it is not at half past, is at about 27 minutes past, says Tim Lawless, head of research at RP Data, the country's largest supplier of property market information. The RP Data-Rismark Hedonic Daily Index for November, shows values across the combined eight capital cities are unchanged for the month at 0.0 per cent, while across the quarter, values rose by 0.4 per cent nationally. Markets such as Darwin, Perth and Sydney have already come through the worst and have started recovery, while Melbourne, Hobart and Adelaide are still easing. Recovery doesn't mean leaping price but more a gentle drift upwards. These numbers, however, are capital city macro numbers. There are suburbs and areas in each capital that are behaving differently -- both better or worse -- than the capital, so research the area you want to buy in carefully and use the capital city as your comparison point. According to the ANZ, housing affordability has now improved significantly. 3. Employment is stable Labour force figures from Australian Bureau of Statistics show unemployment is currently at 5.2 per cent and that number has been fairly consistent all year. How do you feel about your job? If you're in an industry that is relatively stable and your prospects of remaining employed are good, you should not let negative sentiment scare you off from taking out a modest mortgage and buying sensibly. 4. It's a buyers' market. Residential property sales are running at 17-year lows according to the ANZ and most vendors in today's market understand that property prices are considerably down from their peaks in 2008 and there is a shortage of buyers out there. Buyers' agent Patrick Bright says in a quieter market, negotiating tips include having your finance ready to go, and understanding what settlement period will work for the vendor. If the property has been on the market for a long time, offering a fast settlement can shave thousands off the price. And then there is the tip of ''showing the money''. ''An excellent way to make your offer much more attractive to the vendor is to staple a cheque for the deposit to a signed contract,'' Mr Bright says. ''It costs you nothing as the vendor's solicitor or agent can't bank the cheque until the vendor countersigns the contract but a signed contract with a 10 per cent deposit cheque is an extremely powerful incentive to sign.'' 5. Time is on your side Quieter markets are great to buy in because you can take your time says the host of Selling Houses Australia, Andrew Winter. Without the stress of prices leaping week by week and strong competition for places, all the fear of missing out on your dream home dissipates and you can take your time to find the right place, look at it as many times as you need to and make an offer, Mr Winter says. What you lose on the swings, you will also gain on the roundabouts, he says. ''If you sell a home that you thought was worth $450,000 for just $410,000 you have taken a 10 per cent hit on the price. But if selling that house means you can now afford to buy a place that used to be on the market for $600,000 at the peak for $540,000, then you have got your $10,000 back plus another $10,000 for your trouble, and seriously upgraded,'' he says. ''I see many sellers hanging on for an extra $10,000 on their sale price, when really they should take the hit and get that money back on the saving they make on their new home.'' 6. Finance access is easier National savings rates are close to the highest levels in 25 years as people pay off their credit cards and their mortgages and start putting money into savings. Year on year however, the number of people apply for mortgages nationally had grown by 0.6 per cent according to Veda, the country's largest supplier of consumer and commercial data. The RBA, however, reports that Australian banks have had no difficulty accessing funding and recent changes by the Federal Government to introduce positive credit reporting could offer more good news for those wanting to take out a loan. The reform, the biggest credit reporting reform in a generation, means banks and lending institutions will no longer just see where your credit history has been bad, but see records of positive and consistent payments which in many cases outstrips the negative. Veda is predicting that the changes will lead to more people being offered credit. 7. We are tied to China There have been a host of international experts arguing that Australian property is highly overvalued compared to the US and Europe. US real estate analyst Jordan Wirsz, and US economist Harry Dent, both visited Australia claiming the market was overvalued and prices would plummet by 60 per cent or more by the end of 2012. The end result was a lot of scary headlines which sold a lot of the books they were spruiking -- but the cataclysm never came. And according to local economists and the RBA, it's not going to. Reserve Bank governor Glenn Stevens said recent data suggests that the US economy is recording moderate growth. Internationally growth in China has stabilised and the stability of the Australian banking system has protected us from the worst excesses of Europe and the US. Just because it happened over there, does not mean it is inevitable here. Home Fixed Rates Intro Intro Variable Equity Institution Title Phone Rate Months Rate Rate 1 Yr 3 Yr 5 Yr Total Fees AMP 133030 5.49f 12 6.5 6.9 5.49 5.29 5.99 $295-895 ANZ 131314 - - 6.4 6.55 5.54 5.54 5.99 $600 Aussie 131 333 - - 6.48 6.48 5.39 5.39 5.69 $100-463 B&E Personal Banking 1300 306 716 5.99f 12 6.39 6.59 6.39 5.89 6.89 $650 bankmecu 132 888 - - 5.99 6.09 5.53 5.53 - $595 Citibank 132484 - - 6.69 7.06 5.54 5.54 5.69 $649 Commonwealth Bank 132 221 5.34f 12 6.4 6.55 5.49 5.54 5.84 $600 CUA 133 282 5.47v 12 5.85 6.35 5.3 5.3 5.79 $795 ING DIRECT 133 464 - - 5.84 6.32 5.59 5.54 5.94 $220-719 Members Equity Bank Pty Ltd 13 15 63 - - 5.88 - 5.39 5.39 5.79 $300 MyRate.com.au 1300 663 558 - - 5.67 6.15 5.8 5.9 6.3 NAB 131312 - - 6.38 5.86 5.44 5.49 5.94 Nationwide Mortgage (02) 9265 1700 - - 5.52 7.53 - - - $150-730 QuickDirect 1300796980 - - 5.85 - 5.44 5.54 6.32 Resi Home Loans 136 126 5.56v 24 5.76 5.99 5.64 5.29 6.42 $660 St.George 133330 5.39f 12 6.49 6.64 5.54 5.54 5.94 $700-800 Suncorp Bank 131175 - - 6.49 6.49 5.6 5.52 5.65 $600 Westpac 132 032 - - 6.51 6.66 5.69 5.59 5.89 $600 Source: www.infochoice.com.au Introductory Rate: v = Variable f = Fixed
January 3rd 2013
January 17th 2013