Housing in Australia is at its most affordable level in seven years, according to the Housing Industry Association (HIA).
The HIA-CBA First Home Buyer Affordability Index showed there was a 14.6 per cent improvement in affordability for the March 2009 quarter, which followed a 40 per cent surge at the end of 2008.
Over the same period the average home loan repayment fell by 11 per cent to $1831 per month, compared to the previous amount of $2056.
The HIA attributes the current affordability of housing to the boost to the First Home Owners Grant, record low interest rates and relatively stable house prices.
Affordability improved in all capital cities and regional areas in the March 2009 quarter, with the largest improvement found in Hobart, Adelaide and Sydney.
Aside from the current economic climate, the HIA's chief executive Chris Lamont says for many homebuyers there has never been a better time to buy.
"The boosted grant, which now provides a minimum of $21,000 for new homes across Australia along with the significant builder discounts on house-and-land packages, is increasing the number of first homebuyers entering the new home market."
Lamont notes that the grant has created and secured jobs in the residential construction sector.
"It is also assisting in boosting the supply of housing which we know to be grossly short of the nation's requirements."
Housing affordability is expected to improve even further for the June quarter.
Editor of Australian Property Investor magazine Eynas Brodie says it's pleasing to see the door opening wider for people who want to enter the housing market but haven't been able to in recent times.
Tuesday, May 19, 2009
Monday, May 11, 2009
How to profit from the next property boom
Property investors need to plan ahead in order to take advantage of the next upturn in the property cycle, according to quantity surveying firm Asset Economics.
"Property booms never last (and) neither do property busts," the firm says in its latest newsletter.
To take advantage of the next boom, investors need to buy for long-term capital growth and anticipate the ripple effect.
"As our next property cycle comes around, it will be the most desirable, the most sought-after areas that start growing first," Asset Economics says. "These are usually the most affluent areas."
From there, capital growth starts to "ripple outwards" through adjoining suburbs, it adds.
Asset Economics has identified a number of suburbs around southeast Queensland that it says will be among the first to move in a positive direction. These are:
- Bayside areas east of Oxley Avenue in Redcliffe, Woody Point and Scarborough;
- Stafford (must have city views), Kelvin Grove and The Grange in northern Brisbane;
- Murarrie, Carina and Mount Gravatt in Brisbane's east;
- Fairfield and Greenslopes on Brisbane's southside;
- Indooroopilly and Chelmer in the city's west;
- All areas east of the Nicklin Way and the Sunshine Motorway on the Sunshine Coast, including Mooloolaba, Buddina and Currimundi;
- Southport and Hope Island on the Gold Coast.
"Property booms never last (and) neither do property busts," the firm says in its latest newsletter.
To take advantage of the next boom, investors need to buy for long-term capital growth and anticipate the ripple effect.
"As our next property cycle comes around, it will be the most desirable, the most sought-after areas that start growing first," Asset Economics says. "These are usually the most affluent areas."
From there, capital growth starts to "ripple outwards" through adjoining suburbs, it adds.
Asset Economics has identified a number of suburbs around southeast Queensland that it says will be among the first to move in a positive direction. These are:
- Bayside areas east of Oxley Avenue in Redcliffe, Woody Point and Scarborough;
- Stafford (must have city views), Kelvin Grove and The Grange in northern Brisbane;
- Murarrie, Carina and Mount Gravatt in Brisbane's east;
- Fairfield and Greenslopes on Brisbane's southside;
- Indooroopilly and Chelmer in the city's west;
- All areas east of the Nicklin Way and the Sunshine Motorway on the Sunshine Coast, including Mooloolaba, Buddina and Currimundi;
- Southport and Hope Island on the Gold Coast.
Changes to First Homers Grant to Affect Prices
If the First Home Owners Boost ends after the June 30 deadline it's likely property prices will be pushed up in the short term, according to new research.
The boost has been responsible for increased activity in the residential property market since it was introduced in October last year.
Research conducted by BIS Shrapnel for QBE LMI shows that if it's extended beyond June 30, first homebuyer demand could peak at 180,000 loans next year.
But if it isn't continued demand for new and established housing will be pulled forward, resulting in short term rises in property prices of five per cent.
The amount of loans taken out by first homebuyers has been on the rise as current conditions provide incentive, including the boost to the grant, rising rents and lower interest rates.
First homebuyers have also typically been borrowing more money, with research showing their average loan size has increased from $264,500 in October last year to $280,600 in February this year.
CEO of QBE LMI Ian Graham warns government incentives alone shouldn't be the main motivation for buying.
"First homebuyers, irrespective of whether the first homeowners grant boost scheme is extended or not, need to ask whether they are buying for the right reasons as a home purchase or mortgage is a long term commitment and they need to be able to service interest rate increases in the future," he says.
"This is particularly important if the boost scheme is not extended beyond June 30, 2009, as this may result in a hasty decision by first homebuyers on their choice and the price they are prepared to pay for their home."
The boost has been responsible for increased activity in the residential property market since it was introduced in October last year.
Research conducted by BIS Shrapnel for QBE LMI shows that if it's extended beyond June 30, first homebuyer demand could peak at 180,000 loans next year.
But if it isn't continued demand for new and established housing will be pulled forward, resulting in short term rises in property prices of five per cent.
The amount of loans taken out by first homebuyers has been on the rise as current conditions provide incentive, including the boost to the grant, rising rents and lower interest rates.
First homebuyers have also typically been borrowing more money, with research showing their average loan size has increased from $264,500 in October last year to $280,600 in February this year.
CEO of QBE LMI Ian Graham warns government incentives alone shouldn't be the main motivation for buying.
"First homebuyers, irrespective of whether the first homeowners grant boost scheme is extended or not, need to ask whether they are buying for the right reasons as a home purchase or mortgage is a long term commitment and they need to be able to service interest rate increases in the future," he says.
"This is particularly important if the boost scheme is not extended beyond June 30, 2009, as this may result in a hasty decision by first homebuyers on their choice and the price they are prepared to pay for their home."
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