Shared-Equity Trial for NSW Home Buyers

The state government has revealed plans to trial a shared-equity scheme for prospective home owners in NSW as part of the housing initiatives tied to the latest state budget.

The NSW Premier said that during the next 2 years, 6,000 places would be available in the trial which will see the state government contribute an equity share of up to 40%  for a new property or up to 30% for an existing property purchased by eligible buyers.

Nurses, teachers and police – as well as older singles over 50 and single parents with a child or children under the age of 18, who are first home buyers, have a maximum gross income of $90,000 for singles and $120,000 for couples and have saved a minimum deposit of 2 per cent of the purchase price, will qualify for the NSW’s trail.

The maximum value of the property they can seek to buy is $950,000 in Sydney and regional centres, including Lake Macquarie, Newcastle, the Central Coast, Illawarra, and the North Coast of NSW, and $600,000 in other parts of NSW.

The total estimated cost of the trial is $780.4 million.

The Premier, Mr Perrottet, has conveyed that housing affordability will be one of his government’s key areas of focus. Mr Perrottet also intends on pushing ahead with the stamp duty reform in this financial cycle.

The NSW governments priorities are to make home ownership a reality for more people throughout NSW and allow people to live closer to where they want to work.

The NSW government has also committed to unlocking land and accelerating housing infrastructure to accelerate new housing projects.

 

 

 

RBA Predicts Inflation to hit 7% by end of year

 

The RBA governor, Philip Lowe, is warning Australians to be prepared for higher interest rates, saying inflation will likely reach 7% by the end of the year.  That compares with current inflation of 5.1%.

“That’s a very high number and we need to be able to chart a course back to 2-3%.”

It was only last year the RBA had been expecting to keep the cash rate low until 2024, but Lowe said that was never a promise.

Lowe said the economy didn’t evolve as expected. It’s been much more resilient and inflation has been higher. Adding further, the economy was in remarkable shape with the unemployment rate at a 50-year low, households having built up financial buffers of around $250bn and the number of people falling behind on their mortgage repayments actually declining.

These comments came as global share markets are in turmoil fearing the US economy could fall into recession if the Federal Reserve raises interest rates aggressively to combat its own inflation problem. US inflation is at 8.6%, its highest level in 40 years.

But the governor is confident the Australian economy will continue to grow strongly over the next 6 to 12 months believing people will continue to spend the money they saved during the Covid-19 restrictions.

He also said there was a big backlog of construction work to be undertaken and the number of job vacancies was extraordinarily high.  So with jobs being available, people will be employed and will keep spending!

Let’s see if his predictions come to fruition.  That inflation rates increasing to 7% by the end of the year, the Australian economy continue to grow strongly over the next 6 to 12 months and then the inflation rate returning to 2-3% next year.

 

 

10 Things a Good Handyman Can Do For You When Renovating

When renovating a good handyman is paramount. When you find a good handyman they will be reliable, use their time efficiently, have a great attitude and be cost-effective.  They can also help to provide solutions you may not have thought about too!

Over the years I’ve learnt a lot from doing my own renovations, from my uncle who was a builder and I’m still learning from my positions as a sales agent and property manager too!

Here are 10 things that a good handyman will be able to do for you when renovating your investment project or home.

Tasks For Your Handyman When Renovating

  1. Carpentry
  2. Patching & painting
  3. Finishing touches both inside & out eg. rehanging curtains at the right height
  4. Installing off-the-shelf products eg. weather strips
  5. Storage renovations eg. wardrobes
  6. Implementing design ideas
  7. Replace or rehang doors including hardware
  8. Floating floors
  9. Installing technology
  10. Landscaping & fencing

These are all tasks that your handyman will be able to do that will add value to your investment or home and will increase the potential for a faster sale and at a higher sale price.

There are many more jobs a good handyman could help you with.  Do you have a trusty handyman?  What have they done for you?

How to Get the Best Price When Selling Your Home in a Buyer’s Market

 

When home sale prices are on a downward slide, it’s generally a buyer’s market. But for those who are buying a more expensive home at this time, they will find that the price difference between their current and their next home has likely gotten smaller.

While homeowners are likely to save thousands of dollars by upgrading in a slump, sellers can also gain an upper hand by using easy techniques to maximise their sale price.

  1. Create a good presentation

Because buyers tend to go for safe investments when home prices begin to retract, well-presented properties are protected from price slumps. With tightened lending conditions, buyers are rejecting renovation projects and bargaining hard on homes that need even the simplest repairs.

When a property is not well-presented, buyers will chip away at it until the sale price is down to almost a bargain. In a seller’s market, buyers will ignore simple flaws because they just want to get into the market.

Sellers who want to attract the best buyers should invest in their property if it is not up to standard. Even the most minor improvements can result in a stronger sale price.

  1. Private sale, or auction?

Though auction clearance rates are currently just less than 50% now, sellers in traditional auction markets will still realise the highest possible price through auctions. Auction cuts the days on the market, which produces better results for owners. 

A home doesn’t need to undergo an actual auction to reap success. Buyers can make an offer anytime throughout the process and buy the property prior to auction.

In a lower clearance rate environment, an agent’s negotiating skill is important. So, choose an agent with the skill to seal the deal quickly.

Aside from public auction, private sale by deadline date is another way to create urgency among buyers.  This is often known as a Tender.

In a deadline sale, buyers have a date to focus on without disclosing how strong or weak the demand is from other buyers, which is different in auctions. It offers a lot of the benefits from an auction without the risk.

  1. Reduce pressure

It was once possible for sellers to buy before selling, but that is now loaded with risks. In the present market conditions, selling is not as easy as it was 12 months ago, thus most buyers are easing their worry by selling before buying.

By selling first, sellers get an idea of their budget. Your property’s value is unclear, so it is important to have financing prior to buying.

Buying first puts you in a much tougher negotiating position because time is not on your side. If you are a seller, don’t put yourself under this pressure. The best strategy is to sell your house first, even if you have to rent in the meantime.

Both buyer and seller can also benefit from longer settlement periods. If buyers want it, it could be beneficial for the seller as it allows them more time to find the right home. 

 

 

An Economist’s View of the Labor Party’s Housing Plans

The Labor Party, which won over the Coalition Party in the recent federal elections, is set to launch a raft of policy changes to address the various concerns facing Australia’s property market, including housing affordability and availability.

CoreLogic research director Tim Lawless expects the government’s primary initiative, the Help to Buy scheme, to be popular for prospective home buyers. This is because the scheme provides low-to-middle-income-earners a more affordable access to the real estate market, creating more equality in home ownership while also opening more opportunities for employees to reside in more central suburbs.

With the government providing up to 40% of the purchase price, plus only a small deposit and potential savings on lenders mortgage insurance, helps people through the obstacles of home ownership.

However, home buyers still have to shoulder the cost of transactional fees, including stamp duties, legal fees and bank fees.

Help to Buy Scheme

Under the Help to Buy Scheme, 10,000 slots will open for owner-occupier buyers from 1 July 2022 with income restricted at $90,000 for singles and $120,000 for couples. The purchase region will determine the eligible home price caps, which is set from $400,000 to $950,000.

According to Mr Lawless, increasing building costs, the ensuing building constraints and the vagueness surrounding interest rate increases could block the interest for new homes under the new scheme.

But on the other hand, a higher interest rate, which may lead to lower prices, could make home buyers more careful of purchasing, weakening demand for the scheme in the short term.

Mr. Lawless cautions buyers who may be considering availing of the scheme to weigh the risks related to buying a property with a small deposit. he says, the housing market is expected to weaken in the coming years, so some buyers may end up with a home that is worth less than the mortgage they’re holding.

Buyers should determine if the government will shoulder its share of the downside risk if the home is sold in a negative equity environment.

While commending the benefits of the Help to Buy scheme, Mr Lawless is reminding Australians that the scheme does not address the underlying problems of home ownership, admitting that its aim is promoting home ownership rather than helping in lowering house prices.

Schemes that trigger demand can add upward pressure to home prices. With Help to Buy, the limited number of slots, together with price caps and income caps, should help curb the surplus demand that could be caused by upward pressure on home prices.

Other Housing Schemes

The new Labor government also pledged more schemes to support Australia’s housing market. This includes the Regional First Home Buyer Support Scheme, which will offer a deposit guarantee for regional home buyers with a minimum deposit of 5%, beginning January 2023.

Similar to the Help to Buy Scheme, it will be open to only 10,000 first-time owner-occupier buyers who have lived within their chosen region for a minimum of one year, with income capped at $125,000 for singles and $200,000 for couples. Caps on home prices, which will be reviewed every six months, range from $350,000 up to $800,000, depending on region.

The Labor Party also promised to set up a national Housing Supply and Affordability Council, which will:

  • Lead in identifying land supply targets in collaboration with state and territory governments
  • Build a housing data warehouse for housing supply, demand and affordability
  • Participate in drafting town planning policies and land supply
  • Present reports on government-owned land releases, rental affordability, homelessness, and the number of social and affordable homes constructed yearly
  • Provide guidance on the right housing policies within all present and future city and regional deals.