Source - St. George Bank Newsletter 23/01/07

The key benefit of fixing your home loan interest rate for a period of time, usually from 1 to 5 years, is to protect yourself in a rising interest rate environment. This means

Source - Charles & Stuart Newsletter

Canny purchasers recently proved that high quality apartments in prime locations are still very much in demand, despite the slow residential market. The launch of a new residential tower in the CBD, The Hyde, by Stockland saw $100 million of apartments sold over one weekend.

Source - Charles & Stuart

The news that the ATO plans to crack down on landlords claiming rental property losses has sent a shiver throughout the industry. The Tax Commissioner recently warned he will focus on investors following a sharp rise in their tax deductions claims to almost $22 billion last financial year.

While the Christmas holiday season can be a hectic time to sell your house, there are distinct advantages in marketing your property during this time.  After all, it's a chance to show your home adorned with decorations and a feeling of cheer.

If your home is on the market over Christmas, keep the following 10 tips in mind...

1. Street appeal is very important. First impressions do count so make sure your home can be seen clearly from the street.
2. Christmas lights, while attractive at night, don't do anything for your home during the day. The best option is a few well-placed lights instead of abundance.

The price of vacant land has more than doubled in the past six years, according to a new report released this week.  

The inaugural HIA-RP Data Residential Land Report shows that median residential land prices have increased by 106 per cent in the space of just six years. 

Homeowners and borrowers received an early Christmas present this week, when the Reserve Bank again slashed a percentage point off the Official Cash Rate (OCR), taking it down to 4.25 per cent.

Combined with the previous cuts of the past three months, the Official Cash Rate has gone from its highest point in twelve years to the lowest it has been since December 2001. 

Borrowers can be reassured that lending practices in Australia are not lax and bear no resemblance to that recently experienced in the US market, peak industry body Mortgage and Finance Association (MFAA) has advised.

MFAA's Chief Executive Officer, Phil Naylor, said that while there are some fringe lenders in the industry who encourage inappropriate borrowing, most are legitimate and offer a solid, reliable alternative to the traditional bank loan.

Widespread speculation now tips interest rates to fall between 3.50% and 3.75% by early 2009, so the Government can steer the country away from recession.

The Reserve Bank of Australia's (RBA) latest Statement on Monetary Policy has predicted that the economy will slow sharply in the coming months, with growth dropping to just 1.5% this financial year and 2% in FY2009/10.

NAB chief economist Alan Oster slashed the bank's interest rate forecast one day after the RBA drastically lowered its growth projections.

ANZ also slashed its forecast for the official cash rate to a new low point of 3.50% towards the end of 2009.

Housing affordability is not just about rent and mortgages - it is also about the costs of living in poorly designed houses and travelling long hours each day to work, according to a new report. 

The report, released by the Australian Conservation Foundation (ACF) and the Victorian Council of Social Service (VCOSS) highlights the social, economic and environmental costs of housing affordability and poor urban design and calls for urgent State Government action.

Even before this month's increase in incentives, buying a first home had become easier, according to recent figures showing that affordability improved in the September 2008 quarter. 

The HIA-CBA First Home Buyer Affordability Index improved by 3 per cent in the September quarter with a 1.9 per cent easing in house prices offsetting a net increase in borrowing costs over the quarter. The index nevertheless remained below that of the September 2007 quarter.

Borrowers can be reassured that lending practices in Australia are not lax and bear no resemblance to that recently experienced in the US market, peak industry body Mortgage and Finance Association (MFAA) advised this week.

MFAA's Chief Executive Officer, Phil Naylor, said that while there are some fringe lenders in the industry who encourage inappropriate borrowing, most are legitimate and offer a solid, reliable alternative to the traditional bank loan.

Understanding their right to vary their loan under conditions of `hardship' could save some home owners anxiety and the possibility of defaulting on their mortgages, according to  consumer body Choice.

Under the Uniform Consumer Credit Code, those in temporary difficulty with a loan can apply for an extension to the loan term or reduce regular repayments - but a recent Choice report shows that many borrowers are unaware of this right.

Australian borrowers celebrated this month after the Reserve Bank announced it was cutting the Official Cash Rate (OCR) by a full percentage point from 7% to 6%. 

This is the biggest cut in interest rates in sixteen years and double the 50 basis-point cut predicted by economists.

Australia's net overseas migration is at an all time high, according to figures released this week by the Australian Bureau of Statistics (ABS).

In the year ended March 2008, net overseas migration to Australia of just under 200,000 people accounted for over half (59 per cent) of Australia's population increase.

The Westpac-Melbourne Institute Index of Consumer Sentiment rose by 7 per cent in September from 86.2 in August to 92.2 in September.   

Westpac's Chief Economist, Bill Evans, commented that this type of result comes as no surprise, given the recent decision by the Reserve Bank to cut their overnight cash rate by 0.25 per cent and the swift response by the banks to reduce their variable mortgage rates by a similar amount.

When is a flood not a flood? It's a question that arises whenever homeowners seek reimbursement from their insurance company after a storm; and the answer doesn't always lie in the eye of the insurance holder, but more often the company itself.

The Australian Competition and Consumer Commission (ACCC) attempted to address the question this week when it issued a decision denying authorisation to a proposal by the Insurance Council of Australia (ICA) for a common definition of 'inland flood'.

The Australian weighted average median house price increased from $458,977 in the March quarter 2008 to reach $459,216 in June quarter, according to the REIA Real Estate Market Facts released this week.

This represents an increase of 0.05 per cent over the quarter and an increase of 6.0 per cent over the year.  

Three capital cities now have a median house price at or above $450,000, Sydney, Melbourne and Canberra. 

Despite a decrease of 2.1 per cent over the quarter, Sydney still has the highest median house price at $542,000, while Hobart has the lowest median house price in Australia at $325,000.

Lower interest rates and a growing demand for rental properties augur well for the property market, suggest the authors of a new report into housing affordability.

Noel Dyett, President of the Real Estate Institute of Australia (REIA) said this week that the Deposit Power/REIA June quarter 2008 Housing Affordability Report shows a deterioration in both rental and home loan affordability across every State and Territory in Australia for the first time since March 2004.

New South Wales continues to boast the largest population, yet it is to Queensland that most people are moving, according to figures released this week by the Australian Bureau of Statistics.

In 2007, just under a third (32.8 per cent) of Australia's population resided in New South Wales, a slight decrease since 2006 (32.9 per cent).

Economists and housing industry bodies are predicting that interest rates will fall as early as next month, after this week's publication of the minutes from the Reserve Bank's last meeting.

The minutes show that the Reserve Bank Board considered that "less restrictive conditions could soon be called for", in order to avoid a "deeper and more persistent slowing in the economy".

Prospective renters should look out for online scams targeting would-be renters in Melbourne, Consumer Affairs Minster Tony Robinson warned last month.

Mr Robinson said Consumer Affairs Victoria had received several complaints about online rental scams.

"These scams involve rogues posing as private landlords," he said.

Most houses are sold before their owners move out, but what happens if you have to move away before your home is sold? Or if you have decided to sell your investment property but the tenants have already moved out?

Even though the colder months may mean the pool becomes just a large water feature in your backyard, there is no reason to forget about it until spring. In fact, a little attention right now may be just what it needs to keep it sparkling and clear, rather than having it turn into a turgid green lagoon fit only for swamp dwellers.

With many modern day ailments such as asthma, allergies, hyper-sensitivity and hyperactivity in children being linked to chemicals, maintaining a healthy home.

There is no doubt we have entered a "buyers market". In general, properties are taking longer to sell, and sellers are feeling the pressure of negotiation swinging against them as other properties are available to the same pool of buyers.

But what is a property cycle, what are the causes and effects, and how long is this one likely to last?

Consumers who may be feeling the pinch can save hundreds of dollars in paying for the household necessities and a few little luxuries by practising some shopping and budgeting common sense, according to a new Choice report.

Tips to make the pay packet go further include being keyed into the best deals before signing up for contracts such as mobile phones and broadband; negotiating when dealing with bank fees and using creative planning to reduce grocery, insurance and even clothing costs.

A clear, sunny day in Summer or Spring can make it easy to show off your house - but what if you're looking to sell in the colder months?  The garden is bare, the skies are grey and maybe damp, and everything is cold!

But let's look at this again! Whoever buys your home won't just be living there when it's warm, so it can work to your advantage to show it in another light.

In the same way that warmer weather can be used to accentuate certain features like outdoor settings for entertaining or even a cool haven inside to escape the heat, there are things you can do to emphasise the cosier side of your home.

Everything's better in the light of day: 
Keep showings to times when daylight is at its peak - if you're showing later in the afternoon you're likely to lose a lot of natural light that can work to emphasise the positive features of your home.

Lighten up the garden:
The garden is a great place to add some colour, so trim back any fading summer plants and replace them with colourful ones that flourish in winter.  Make sure the pool is covered, or kept leaf and mould free - just because it's too cold to use right now, you still want prospective homebuyers to be able to see themselves using it in the future.  You could even brighten the area with some colourful furniture or set up a windproof shelter in a protected corner.

Despite the doomsday headlines, two thirds of borrowers Australia-wide are easily meeting repayments on their home loans - although those living in the country are finding it tougher than their city cousins, a recent survey shows.

The latest Mortgage and Finance Association of Australia (MFAA) / BankWest Home Finance Index shows that Australians living in rural and regional areas are more likely to be struggling to meet their mortgage repayments than their capital city counterparts.

CEO of the MFAA Phil Naylor said the MFAA / BankWest Index shows there is a significant association between where people live and how much they struggle with mortgage repayments.

"A bigger proportion of people in rural and regional areas are having trouble with their loans than people in our cities", Mr Naylor said.

A total of 29.3 per cent of respondents who live in the capital city of their state or territory are struggling with their loan repayments, and this increases to 39.8 per cent of respondents living in regional centres or rural areas.

Recent industry reports suggest an increasing number of homeowners are suffering from so called `mortgage stress', however statistics released recently by mortgage insurer Genworth Financial show it is not as widespread as has been suggested.

What's more, the causes of mortgage stress are more complex than just rising interest rates, says Genworth's Country Executive, Peter Hall.

"There is no doubt that rising mortgage repayments, increases in living expenses, on top of high levels of consumer indebtedness puts pressure on the family income", Mr Hall said.

"However, this, combined with a significant lifestyle event, often acts as a trigger for the borrower's inability to meet their total debt obligations."  

Genworth's report, entitled "Managing Mortgage Stress", shows that hardship can be a result of circumstances such as illness or injury (38 per cent), unemployment (15 per cent), decreased income (15 per cent), maternity leave (11 per cent) and relationship breakdown (4 per cent), as well as over commitment (2 per cent). 

Most Australians consider property to be a safe investment, according to a recent study by ASIC into Australian consumers' understanding of investments and their levels of financial literacy.

A survey of 1,200 Australian investors and several focus groups found that investors tend to believe that property investments are inherently safe, women are more likely to be at risk of under-investment and men are more likely to be attracted to risky investments.

Surprisingly, almost two-thirds of the respondents were unable to estimate a reasonable rate of return on a given property investment. 

Prices of established houses in all Australia's capital cities have increased more than ten per cent over the past year, according to figures released this week by the Australian Bureau of Statistics (ABS). 
Melbourne and Adelaide recorded the highest increases, while the high-flying Perth market slowed right back.

The Bureau's preliminary estimates show the price index for established houses for the weighted average of the eight capital cities increased 1.1 per cent in the March quarter 2008.

The capital city indexes rose in Melbourne (up by 4.1 per cent), Brisbane (up 2.8 per cent), Adelaide (2.1 per cent) and Canberra (up by just 1.0 per cent). These rises were balanced by falls in Sydney (down by 1.5 per cent), Darwin (down 1.3 per cent), Hobart (0.7 per cent) and Perth (0.6 per cent).
 
Over the year to March quarter 2008, preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities rose 13.8 per cent.

Annually, the capital city indexes all rose, particularly in Melbourne (up 25.9 per cent), Adelaide (a rise of 21.6 per cent) and Brisbane (up 20.8 per cent). Canberra recorded a rise of 14.4 per cent, Hobart 8.2 per cent, Sydney 7.1 per cent, Darwin 4.9 per cent and Perth 0.6 per cent.

We are richer, better educated and our homes are a lot safer than they used to be, according to figures released this week by the Australian Bureau of Statistics (ABS) in its snapshot of national progress over the last decade.

The report, Measures of Australia's Progress, shows that household crimes such as break-ins  fell by almost a third between 1998 and 2005.

We're generally richer. Australia's real (i.e. adjusted to remove the effects of inflation) net disposable income per person grew by 2.9 per cent on average, each year between 1996-97 and 2006-07, reaching $39,000 in 2006-07.

Australia's real net worth rose at an average rate of 0.9 per cent per year between June 1997 and June 2007, reaching over $254,000 per person in 2007.

Having a space at home where the family can relax together has become a key driver in renovations undertaken by Australians in the past few years, with a recent survey showing that kitchens and bathrooms are the top priorities for renovators.

When asked about their first priority in renovating their home, almost half (45 per cent) of the respondents nominated the kitchen.  

Just under a third of the respondents nominated the bathroom, followed by the development of indoor/outdoor areas (with 12 per cent of the votes), according to the online poll conducted by Archicentre*

The lounge and family room rated just below 10 per cent, but the home office came in a long last with less than 1 per cent of the vote.

General Manager of Archicentre David Hallett said the dominance of the kitchen reflected the major updates in kitchen technology. 

The gap between supply and demand for housing is set to continue for some time, according to the latest report card on the residential building industry.

Commenting on the release of the March 2008 quarter HIA National Outlook publication, HIA Chief Economist Harley Dale said that the national new home building cycle was unlikely to turn up until 2009/10.

"Australia is enjoying its 17th year of economic expansion at the same time as the weakness in new home building looks set to last for an unprecendented five years", Mr Dale said.

New dwelling starts are forecast to be flat in 2008/09. The last up-cycle ended in 2003/04.

"The lack of new housing supply is driving up rents and is holding up real estate prices for existing housing stock," Mr Dale said.

If your house is on the market, you will naturally want to get the best possible price for it.  And one of the best ways to ensure that is to have it looking good whenever potential buyers come around.

Here are our Top 10 Tips for showing your home:

10.  Be willing to show anytime (almost)
The more people who see your home the more likely it is to sell. So while it may be an inconvenience to show your home at dinner time, reheating your meal is a small price to pay for a quick sale.

9.  Be prepared for last minute showings
When your home goes on the market you have to be prepared to show it anytime (see point above). If this does happen your family may need to have a plan of how to prepare for it. This doesn't mean a major last minute clean up, just simple tasks such as cleaning the kitchen benches, putting dirty clothes out of sight and running the vacuum over the floor.

8.  Set the temperature
If you have a central heating system or air conditioner make sure the temperature is set to a comfortable level. An overly hot or cold house can make buyers wonder if the home is poorly insulated.

Flooding that occurs when it hasn't rained in your area such as when a river overflows due to heavy rain upstream -- is only covered by about 50 per cent of insurers.

Flooding now makes up almost one-third of all insurance pay-outs related to natural disasters, according to the Insurance Council of Australia (ICA).

When Autumn leaves fall...

Autumn - a time of crisp air alternating with warm sunshine, and trees emblazoned with the brilliance of red and gold. But what to do when the colours come off the trees onto the lawns and footpaths?

Definite no-nos are burning, blowing them into the gutter, or putting them in the garbage bin.
The simplest way would have to be raking the leaves under the nearest trees and bushes and leaving them there to rot. Or running the lawnmower over them (only advisable if there are not too many and they are already dry).

The most fun could be piling them into the wheelbarrow or a box and letting the kids trample them down. The shredded remains could then be strewn directly onto the garden as mulch.

The more complex and intellectually taxing method would have to be throwing them on the compost heap, as the serious leaf mould mulchers amongst us will be quick to warn of the science of balancing the carbon-nitrogen ratio necessary for healthy compost. Since the amount of leaves (high in carbon) must be balanced by nitrogen-rich items, such as grass clippings, food scraps, and manure at a ratio of 30:1, this exact science demands more than just a nonchalant tossing of leaves on a heap!

Plumbing Industry Commissioner Tony Arnel cautions that homeowners who dive unprepared into complex projects such as bathroom and kitchen renovations can soon find themselves in hot water.

"Beyond the technical nature of plumbing work, there are planning and regulatory requirements, environmental considerations, fixture and fitting decisions, and budget and project constraints that need careful deliberation", Mr Arnel says.

The Commission's top renovation tips for plumbing are:

1.  Know your limits and legal obligations
There is a temptation to try and install plumbing fixtures and equipment yourself by jumping in and just getting it done. 

The Commission urges consumers not to go down this path. There are legislative requirements and planning regulations that need to be adhered to. DIY renovating can result in serious damage, expensive repair bills and potential health risks.

Ever felt tired of your life? Wished you could just pack up and leave everything? That's what an Englishman living in Australia has decided to do - and he's looking to walk away with nothing more than the clothes on his back and a bank account full of cash.

Forty-four year old Ian Usher has decided to sell his life on the international bidding forum Ebay.

After a recent divorce, Usher concluded that sorting through and selling all their possessions separately would be too painful and time consuming, and with a clean break and fresh start in mind, has decided to sell the whole lot in one.

After Singapore, Sydney and Melbourne have been rated the best locations in the world for Asians to live, according to the latest Location Ranking Survey on expatriate living conditions by human resource organization ECA International.

Canberra also rates in the top ten, at number 6.

Undertaken annually, ECA International's Location Ranking Survey compares living standards in 254 locations globally according to categories including climate, air quality, health services, housing and utilities, isolation, social network and leisure facilities, infrastructure, personal safety and political tensions.

Overall scores are used by ECA Member companies to establish allowances which compensate expatriate staff for the difficulties of living in their assignment location.

Australia's property investors are upbeat, knowledgeable and keen to add to their portfolio, according to a national survey released this week by Mortgage Choice.

The survey found that the majority of respondents had not taken advantage of the 'rental squeeze' to glean more money from tenants, which was surprising given the hype surrounding the squeeze.

"Perhaps it is because their property portfolio strategies usually turn out to plan anyway", National Manager Corporate Affairs, Warren O'Rourke suggests.

The survey was completed by 1,000 respondents across Australia who own one or more investment properties and have purchased in the past two years. Just over half owned one investment property (53 per cent), 43 per cent owned between two and five, 3 per cent owned between six and ten and just over 2 per cent owned 11 or more. 87 per cent also owned a home.

Nearly two out of five mortgages arranged in February were for refinancing purposes as home buyers and property investors seek better deals or to lock in interest rates, according to data released this week by national mortgage broker AFG. 

AFG's figures show that refinancing has soared since September 2006, reaching an all-time high of 38.2 per cent in February 2007.

In tandem with the refinancing trend has been the increasing preference for fixed rate mortgages which now comprise 25.3 per cent of all new mortgages. 

The choice over whether to fix your home loan rate or stay variable is a vexing question many borrowers face.

While borrowers who locked into a fixed term loan a couple of years back are now looking smugly at the last few years' ever-rising interest rates, it is still a good time to consider fixing your home loan, or part of it, right now.

But it's important to note that fixing your mortgage is always a punt on the chance that rates will continue to rise. And the standard variable rate is pretty much in line with the five-year fixed loan at the moment although borrowers are facing the threat of another rate hike.