First-home buyers will struggle with prices

First time home buyers would find it increasingly difficult to purchase a home in Melbourne as property prices moved back to record highs, an industry group warned.
The higher house prices combined with further home loan interest rate hikes and the planned reduction in the state government assistance could see a movement back to regional areas where median prices fell significantly over the last quarter.
According to data released by the Real Estate Institute of Victoria today, the Melbourne real estate market has continued its steady appreciation with a rise in the median price of 1.5 per cent since the June quarter.
REIV chief executive Enzo Raimondo said if this trend continued Melbourne's median house price would return to the all-time high of $380,000 recorded in December 2003.
The September Melbourne quarterly median price rose to $377,000 up $5,500 from a revised June quarter. "This quarter's price data shows that all the fundamentals of the Melbourne property market are on track, the median price is steadily appreciating, stock availability at auctions has increased 11 per cent on 2005 and the clearance rate is up five per cent," Mr Raimondo said.
However he said the news was not good for those trying to break into the market. "The steady appreciation continues to affect affordability," Mr Raimondo said. "The most recent ABS data showed that first home buyers have reduced from 19.88 per cent of the local market in June to 17.76 per cent in August.
"Further (interest) rate increases, taxes and charges and the planned reduction in the state government assistance for first home buyers in the middle of next year will only make it harder for young families. "This could push young families back to regional areas like Greater Shepparton in the central north were median prices for properties dropped by almost five per cent.
Geelong's median house price fell by 4.6 per cent and Ballarat's dipped 0.5 per cent.
Greater Bendigo's median house price was up 3.2 per cent.
Newport in Melbourne's inner west was the only area to make the top 20 growth suburbs in both quarters.
Doncaster, a leafy eastern suburb, recorded the biggest increase in median house price up 16.1 per cent to $520,000 while Melbourne's northern suburb of Broadmeadows reported a 13.4 per cent increase to $216,000.

Source: AAP

First-home buyers will struggle with prices

First time home buyers would find it increasingly difficult to purchase a home in Melbourne as property prices moved back to record highs, an industry group warned.
The higher house prices combined with further home loan interest rate hikes and the planned reduction in the state government assistance could see a movement back to regional areas where median prices fell significantly over the last quarter.
According to data released by the Real Estate Institute of Victoria today, the Melbourne real estate market has continued its steady appreciation with a rise in the median price of 1.5 per cent since the June quarter.
REIV chief executive Enzo Raimondo said if this trend continued Melbourne's median house price would return to the all-time high of $380,000 recorded in December 2003.
The September Melbourne quarterly median price rose to $377,000 up $5,500 from a revised June quarter. "This quarter's price data shows that all the fundamentals of the Melbourne property market are on track, the median price is steadily appreciating, stock availability at auctions has increased 11 per cent on 2005 and the clearance rate is up five per cent," Mr Raimondo said.
However he said the news was not good for those trying to break into the market. "The steady appreciation continues to affect affordability," Mr Raimondo said. "The most recent ABS data showed that first home buyers have reduced from 19.88 per cent of the local market in June to 17.76 per cent in August.
"Further (interest) rate increases, taxes and charges and the planned reduction in the state government assistance for first home buyers in the middle of next year will only make it harder for young families. "This could push young families back to regional areas like Greater Shepparton in the central north were median prices for properties dropped by almost five per cent.
Geelong's median house price fell by 4.6 per cent and Ballarat's dipped 0.5 per cent.
Greater Bendigo's median house price was up 3.2 per cent.
Newport in Melbourne's inner west was the only area to make the top 20 growth suburbs in both quarters.
Doncaster, a leafy eastern suburb, recorded the biggest increase in median house price up 16.1 per cent to $520,000 while Melbourne's northern suburb of Broadmeadows reported a 13.4 per cent increase to $216,000.

Source: AAP

First time home buyer boost as effective home loan rate fall.

First time home buyers can't believe their luck! As the mortgage market softens the major players are trying to grow their share of the mortgage market by lowering home loan rates to new mortgage customers.
Many major banks are slashing margins to lower the effective mortgage interest rates to attract first time home buyers and mortgage refinance business
Consumer finance research firm Cannex said that lenders had reported cuts to 54 fixed rate mortgages since the beginning of October.
Cannex financial analyst Harry Senlitonga said now may be a good time to consider a fixed rate loan with competition for customers in the increasingly popular fixed market driving lenders to cut rates.
"We are expecting to see more lenders follow in the next few weeks," he said.
Mr Senlitonga said rates had fallen an average 0.12 per cent in three-year fixed mortgages, while the five-year fixed rate category had dropped an average 0.17 per cent.
Fixed rate mortgages have gained popularity since the Reserve Bank of Australia (RBA) raised interest rates in May and August this year, bringing the official interest rate to 6.0 per cent.
Following the latest move, the number of fixed rate loans taken out by owner-occupiers jumped to 20.4 per cent in August from 16.2 per cent in July, according to Australian Bureau of Statistics (ABS) data.
As a result, lenders are now trying to capitalise on the increased demand for fixed rate loans as they scramble for customers in a shrinking market.
The ABS figures showed that both the number of mortgages taken out and the amount borrowed by consumers fell in August, dropping 1 per cent and 1.3 per cent respectively.
RESI Mortgage national consumer advocacy manager Lisa Montgomery said there were some great fixed rates because of the increased competition.
"We are actually seeing that there are a lot of good rates out there for consumers to fix into," Ms Montgomery said.
But she warned borrowers that fixing 100 per cent of their loan may not be the best financial move.
"There needs to be some caution displayed because when you do fix in - someone is going to lose - and it's either going to be the institution or it will be the consumer," she said.
While RBA governor Glenn Stevens said this week that the chances of another interest rate rise were high, most economists believe that rates have neared their peak and some even think rates may begin to come down next year.
"If you are looking to fix in, sit on the fence with perhaps 50 per cent of your loan and keep the other 50 per cent variable," Ms Montgomery said.
She said that by doing this, borrowers effectively had the comfort and piece of mind that came with a fixed rate but also the flexibility to make extra payments, which generally cannot be done with fixed mortgages.
As well, by only fixing part of the loan, borrowers could also take advantage of any potential falls in interest rates.
"So you're actually getting the best of both worlds," she said.
Source AAP

Pressure on first time home buyers to act as rents rise

Prospective first time home buyers are being nudged to buy their own home as landlords raise rents in the wake of falling home rental vacancy rates, causing rental property to be in short supply. This is occurring in many parts of Australia including Melbourne, even in the previously over-supplied inner-city market, according to government data.
A combination of weak house prices over the past three years and typical rent yields of only 3 per cent and lower effective tax incentives, have throttled back investor returns and desire to acquire more property.
Some of the strongest growth in the June quarter was in inner Melbourne which includes the Docklands, St Kilda and Fitzroy where rents leapt 5.2 per cent to $305 a week, according to the Office of Housing.
That would add about $15 a week, or $780 a year, to a typical household's rent.
The Office of Housing data is regarded as the most comprehensive because it is sourced from Residential Tenancies Bond Authority records.
Industry observers say much of the increase is due to a dramatic fall in vacancy rates as excess stock is sucked up.
"Vacancy rates are one of the drivers at putting some positive pressure into the market for owners," said Nathan Cher, chief executive of rent roll manager RUN Corp.
"Over the six months to June, we re-let in the vicinity of 1450 properties and raised the rent on 85 per cent of them," he said.
Vacancy rates in inner Melbourne have nearly halved, to 1.5 per cent, over the year to June 30. For Melbourne as a whole, vacancies have fallen from 2.6 per cent in June last year to 1.7 per cent.
A market is regarded as being evenly balanced between supply and demand when vacancy rates are about 3 per cent. Other areas of Melbourne to record higher rents were the south which includes Caulfield and Malvern and the north-east, which includes Fairfield and Preston.
Mr Cher said that since the end of June the pressure on rents had continued, with vacancies remaining at nine-year lows.
"In that respect, it is a good time for owners," he said.
Tenants Union of Victoria research and policy worker Rebecca Harrison said there was a lack of supply.
"There's a real shortage of rental properties at the moment," she said. "Obviously this does not bode well for renters.
"It's very difficult, particularly for low-income households."
She said more would-be home buyers were staying longer in the rental market because the housing boom had priced them out of the market. The data also revealed how flat the rental market in inner-Melbourne has been over the past five years, with rents rising just 2.2 per cent or 0.44 per cent a year more than inflation.

Agent fined over sale of Paul Hogans house

A real estate agent who sold Paul Hogan's Sydney harbourside home for $11 million has been forced to pay $100,000 in damages after a judge found he misled the buyer about the property's waterfront access.
Shaun Bonett, 35, one of the nation's youngest multi-millionaire property tycoons, sued the Barron and Dowling Property Group and agent Tony Barron for more than $2 million three months after he bought the five-bedroom Vaucluse home in June 2004 and discovered it was not a "deep waterfront" with uninhibited access to Sydney Harbour as promised. But he won only $100,000 after the NSW Supreme Court this week found the agent, based in the eastern suburb of Double Bay, deceived him into believing he would own the foreshore at the rear of the house, when in reality it was waterside parkland.
The agent was also found to have exaggerated the size of the block on which the home was built by nearly 20 per cent. Documents tendered to the court show that lawyers for Hogan and his wife Linda Kozlowski were aware when they bought the property that it was just 1110sqm, rather than the 1366sqm used to promote the home in 2003, and that a rocky waterside strip was public land.
Judge Paddy Bergin found Mr Bonett was not misled about the likelihood he could build a jetty for his boat. Mr Barron said yesterday he planned to appeal the decision.
Mr Bonett, a property developer originally from Adelaide, debuted at No3 on BRW's Young Rich List this year with an estimated wealth of $250 million. He is chief executive, founder and owner of property company Precision Group, which has about $1 billion in property assets in Sydney, Adelaide and Brisbane. The home, on one of the eastern suburbs' most exclusive streets, The Crescent, was bought for him to live in after his opulent wedding to 27-year-old former model Vanessa Baron two years ago.
The Hogans bought the house through Mr Barron in March 2002 for $8.5 million, and made a $2.5 million profit on the sale to Mr Bonett two years later. Hogan, 66, is under investigation for allegedly holding $40 million in secret trusts and offshore companies administered in Switzerland and not declared to the tax office. The court heard Mr Hogan's accountant and financial adviser, Anthony Stewart, contacted Mr Barron to advise him the Hogans were interested in selling the property in a "quiet sale". Hogan has quietly sold more than $13 million worth of residential property in the past two years.
Source: The Australian