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May 2023 Sales Update
almost 2 years ago
May 2023 Sales Update
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HOUSING VALUES APPEAR TO HAVE BOTTOMED OUT


In our March newsletter, we asked the question ‘could prices have nearly finished falling?’ Now, after falling -9.1% between May 2022 and February 2023, Australian housing values look to have bottomed out, posting a second consecutive monthly rise.

CoreLogic’s national Home Value Index (HVI) increased by half a percent in April, following a 0.6% lift in March to be 1.0% higher over the past three months.

Sydney increased 1.3% in April and is leading the positive turn in housing conditions, with dwelling values rising each month since February. Sydney values are now 3.0% higher than the recent trough recorded in January. In further evidence that a positive growth trend has emerged, the four largest capital cities all recorded a rise in housing values over the rolling quarter.

Housing market ‘has moved through an inflection point’

According to CoreLogic’s Research Director, Tim Lawless, it is becoming increasingly clear the housing market has moved through an inflection point.

‘Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales are trending around the previous five-year average,’ he said.

Worsening imbalance between supply and demand

The more positive trend in housing values comes amid a worsening imbalance between supply and demand, according to Lawless.

‘A significant lift in net overseas migration has run headlong into a lack of housing supply. While overseas migration would normally have a more direct correlation with rental demand, with vacancy rates holding around 1% in most cities, it’s reasonable to assume more people are fast tracking a purchasing 

decision simply because they can’t find rental accommodation,” Mr Lawless said.

‘Many prospective vendors have stayed on the sidelines through the downturn, keeping inventory at below average levels and providing sellers with some leverage at the negotiation table.'

Mr Lawless said the growing expectation the rate hiking cycle is over, or nearly over, following a sharp decline in values was another likely factor supporting housing demand.

‘This could be contributing to a broader perception that the market has bottomed out, and for those attempting to time the market, that it is considered to be a good time to buy,’ he said.

‘As interest rates stabilise there is a good chance consumer sentiment will improve, bolstering housing market activity from both a purchasing and a selling perspective.’

The shift to more positive housing market conditions has occurred while interest rates remain well above average. “The last time we saw housing values trending higher through a rising interest rate environment was during the mid-to-late 2000’s when the mining boom was underway. This period was also characterised by surging net overseas migration that contributed significantly to housing demand,” Mr Lawless said.

Monthly change in capital city home values

                                                                  MONTHLY                               ANNUAL

 

Sydney                                                      p 1.3%                                       q 10.7%

Melbourne                                              p0.1%                                        q 8.9%

Brisbane                                                   p 0.3%                                       q 9.8%

Adelaide                                                  p 0.2%                                      p 1.3%

Perth                                                          p0.6%                                       p 1.3%

Hobart                                                        0.0%                                       q 12.7%

Darwin                                                       q1.2%                                        q 0.5%

Canberra                                                   0.0%                                       q 9.3%

 


TOP 5 FRAGRANCES TO SEDUCE BUYERS


Viewing a property is a multi-sensory exercise and nothing will deter a buyer more than a bad smell. Fragrances need to not only create a welcoming, clean and friendly atmosphere, they also need to have a top note of aspiration.

Coffee and a crackling fire: The days of scented candles and baking cookies are over. Freshly brewed coffee and the hint of smoke from a cosy crackling fire are evocative of a future life being lived.

Fresh flowers: Placing a bunch of colourful and lightly fragranced fresh flowers on an entry table provides immediate sensory pleasure as buyers enter. Roses are great – especially if they’re from your garden, as are some varieties of lilies, or a posy with lavender or rosemary in it.    

Essential oils: Oil burners and diffusers are a useful way of dispersing fragrance through the home. Stick to plant-based scents that bring a sense of nature into the home. Citrus based smells like lemon myrtle and mandarin are widely popular. Scents like ylang ylang and geranium may overpower.

Freshly cleaned: Dousing everything in bleach will leave a cold, clinical smell, so schedule the deep clean in advance of the open house. Give everything the ‘once over’ the day before with cleaning products that contain lavender, eucalyptus, or lemon. Bicarbonate of soda absorbs odours.  


HOW TO PAY OFF YOUR MORTGAGE SOONER


Feeling that you will be chained to a mortgage for three decades or more can be daunting. There are ways you can mix up your strategy, however, with the reward of reducing the balance of your mortgage, as well as the time y0u’ll take paying it off.

Adjust your psychology

Nobody likes the idea of short-term sacrifice for long term gain but thinking about pockets of sacrifice throughout the lifetime of your mortgage can make it more digestible.

Over 30 years there will be as many lean times as there will be times of prosperity. Career aspirations should be considered in line with your mortgage too – double income households that are both benefiting from pay rises as they progress professionally will be in a great position to really carve a chunk out of a mortgage by living off one salary and directing the other to the loan repayments for example.

Tightening the budget for 2 to 5 years and reducing the mortgage as much as you can during that time, then relaxing into a more manageable balance, is much easier than living a restricted lifestyle for most of your life.

Tighten the purse strings

Whatever strategy you choose in terms of repayments through the lifetime of your loan, tightening your budget will always make a difference.

If you don’t currently track your spending, make the change now. There are plenty of apps that will do the job, or you can use the humble spreadsheet, or even handwrite it in a notebook. Every month there will be something that can be skipped, reduced or removed altogether.

Delaying things from one month to another to spread the expenses across the year will help boost your month-to-month repayments, without impacting on your lifestyle too much.

Maximise an offset account

If you don’t already have an offset account for your mortgage, you should get one!

The balance of your offset account is used to calculate the interest payable on your mortgage – if you have $10,000 in your offset account and a $600,000 mortgage, then interest will be calculated against $590,000 instead.

The higher the balance of your offset account, the less interest you will pay. Getting a salary paid into your offset account is a great way of increasing its balance, as is transferring savings or your buffer account balance. 

Increase your mortgage repayments

Paying more off your mortgage from month to month is of course the best way to fast track paying off your mortgage, but it’s also the most challenging.

If you tighten your budget and pay a big chunk of it down early on, then reduce your interest via your offset account, you’ll definitely make some progress.

Finding ways to increase the money you’re actually paying across will also make a big difference. This isn’t always easy, but as mentioned previously, identifying blocks of time across the lifetime of you mortgage where you can boost your payments, such as when your salary increases or once block expenses like school fees are finished will all make incremental but rewarding differences.