The post Sydney to reach population of 5 million people in 2016 appeared first on Oak Laurel.

The population of Sydney is set to reach five million people in 2016

Many Australians would be aware that Sydney has been breaking Australian house price records, with the median house prices now reported to be over $1 million dollars. Did you know that Sydney is on track to become the first Australian city to have a population of five million people?

According to the Australian Bureau of Statistics, the population of Greater Sydney, which includes the Blue Mountains and Central Coast, reached a population of 4.84 million at the end of June 2014. Sydney is currently on track to grow to above 5 million people in early 2016.

The Bureau of Statistics’s latest population estimates state that Parklea-Kellyville Ridge in Sydney’s north-west growth corridor had the state’s largest growth in 2013-14, having increased by 2700 people. Waterloo-Beaconsfield in the inner-south had the second largest population increase, of 2000 people in 2013-14. The Cobbitty-Leppington area in south-western Sydney was the fastest growing area (19%) population wise followed by Parklea-Kellyville Ridge (up by 9.4%).

The continued population growth in what is already Australia’s largest city will mean that there will continue to be increased demand for housing as all of those people will need to live somewhere. This increased demand for housing will be met in part by new housing creation in an expanding city, it will also be met be infill or brown fill development where well located properties will be redeveloped to higher densities. This will mean that property in well located areas, near amenities (such as good schools, transport, employment and recreation), will only have increased demand and prices over the longer term.

Sydney may be the first Australian city to reach a population of 5 million but Sydney also has the greatest number of people leaving for other parts of Australia. Furthermore, Melbourne has the greatest population growth in total numbers than any other Australian city and will become Australia’s largest city in time.

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The post RBA to cut interest rates in 2016 appeared first on Oak Laurel.

ANZ Chief Economist Expects Reserve Bank of Australia (RBA) to Cut Rates in 2016

Researchers from ANZ, one of Australia’s biggest banks, suggests that the Reserve Bank is likely to cut the official interest rates in early 2016.

The ANZ research note published last week, expects the RBA to make two successive cuts totaling 0.5%, to the cash rate early next year. This would result in an official cash rate of 1.5%. ANZ’s Chief Economist expects that the cuts to the cash rate are likely to come in February and March 2016.

The low Australian dollar and the reduced level of support the housing industry is providing the economy are stated as key factors that would prompt the RBA decision to cut interest rates.

This latest report suggests that borrowers should demand an even lower rate if looking for a fixed rate home loan and something to seriously consider when deciding if they should fix their home loan.

If the report is correct and the Reserve Bank does cut half a percent off the cash rate in early 2016 this may continue to stimulate Australia’s property price growth.

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The post What is a low doc home loan? appeared first on Oak Laurel.

What is a low documentation home loan?

Low documentation or low doc loans are for self-employed people who cannot provide all of the documentation that is required to get a normal home loan.

Low doc home loans are not the same as non-conforming home loans.  Low doc home loan interest rates have decreased over the years but usually the interest rates available on these types of home loans are slightly higher than the standard variable rate for normal home loans.

The major differences between normal / full doc home loans and low-doc loans are as follows:

• low doc home loans do not require the usual proof of income documents such as company financials and / or tax returns;
• low doc loan applications generally require the applicant to complete a declaration that confirms they can afford the loan. This is known as income self-certification;
• Low doc loans tend to be more attractive to self-employed people or full-time investors who have a problem demonstrating a high level of income. This can be due to writing off a expenses, reinvesting profits into a business, or having not lodged recent tax returns.

Self-employed people wishing to get a low doc loan will normally need to:

• Self-certify their income;
• Confirm that they are self-employed by having an registered ABN or accountant’s letter; and
• Have a clean credit history (some lenders will allow bad credit low doc home loans for people with bad credit under certain circumstances);
• Be able to demonstrate repayment on existing or previous loans.

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The post Low Aussie Dollar to Increase Australian Property Prices appeared first on Oak Laurel.

The Low Australian Dollar is Likely to Further Increase Australian Property Prices

The Australian dollar has now decreased to new lows against the US dollar, Great Britain Pound, Chinese Yuan and a host of other currencies. The Australian dollar has not been this low since the Global Financial Crisis (GFC) also know in some circles as Good For Chinese (GFC) because they kept buying when other were worries and held back.

What does the low Aussies dollar mean for Australian property prices?

Well, nothing is certain but it would appear that the low Australian dollar will further increase demand from overseas buyers for Australian property. The low Australian dollar makes our exports comparatively cheaper, it also makes our real estate comparatively cheaper for foreigners. Hey, who does not like a bargain.

Are there other factors at play that may impact on the property market?

Yes, there is lot going on that can influence the property market in Australia. For example:

• recent capital gains in the property markets on Sydney and Melbourne;
• the Government regulator (Australian Prudential Regulatory Authority – APRA) crack down on investment loans resulting in the major banks having differential pricing for investor loans and owner occupier loans;
• a crash in the Chinese stock market, economic contraction in the Chinese economy and devaluation of the Chinese currency;
• instability in the stock markets around the world;
• below trend growth in the Australian economy.

Some of these factors could contribute to the slowdown in the price gains in the Australian property market other may contribute to further increases in property prices.

Recent capital gains in Sydney and Melbourne property

The recent capital gains in Sydney and Melbourne can act in two ways.

1. encourage more investors into the market and raise prices expectations for buyers and sellers regardless of if they are investors or not; or
2. where prices rise to very high levels, they can impact on affordability where buyers simply cannot afford to purchase or fail to see value in such high prices.

Government crackdown on investor loans

The Government Banking Regulator’s crackdown on investment lending is likely to to reduce investor demand for properties in Australia. However, only if they borrowing to buy. Rich investors especially those who do not need to borrow will not be deterred by the changes to investment loans. If they are from overseas even if they do need to borrow to invest the low Aussie dollar has just made Australian property and any loan repayments a lot cheaper. This may mean that locals (especially investors) are at a competitive disadvantage (due to the low Australian dollar) to foreigners or people with foreign incomes.

Crash in the Chinese stock market and economic slowdown in the Chinese economy

This is likely to make Chinese investors shy away from stocks and head to asset classes that are considered as lower risk. Property and Australian property is seen as a safe asset class and it is likely that there will be more interest in Australian property from foreign Chinese investors and local permanent residents that have income and assets back in China.

Instability in the stock markets around the world

Similar to the issue of the Chinese stock market crash, the instability in stock markets around the world makes people wary to invest in these assets. Some stock market speculators will continue to play the market and perhaps even make more money if they know what they are doing. The average mom and pop investor is less likely to invest but will not necessarily opt to change to property investment.

Below trend growth in the Australian economy

There appears to be an overstatement about the economy. It is not going as great as it was during the mining boom but in the great scheme the situation is not bad. Had the economy been really in trouble the Reserve Bank of Australia would have cut interest rates and there would have been another response from the Government e.g. stimulus package. We did not see this happen infact the less than trend growth in the economy is likely to keep interest rates low and the property prices heading up.

Who are the winners?

Australian expatriates (Aussie Expats) who have foreign income and find that now Australian property is comparatively cheaper.

Foreign investors that due to the currency find that Australian property is “ON SALE” at discounted prices.

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The post Investment Loan Rate Increased? Investment Loan Review appeared first on Oak Laurel.

Has your investment loan interest rate increased? Don’t be ripped off, get an investment loan review

If your investment loan rate has recently increased or it has been a while since you had it reviewed you may want to get an investment loan review to check if there are any better options available.

What is going on with investment loans?

If you have been ignoring the chatter in the media about property prices and investment lending you may not be aware that the Government Banking Regulator (Australian Prudential Regulatory Authority or APRA) has been putting pressure on the banks to curb their investment lending if they have their investment loan books growth above 10%.

The offending banks and even some banks that were not above APRA’s 10% investment loan growth limit have responded in a number of ways:

1. Raising their investment loan interest rates including for existing variable rate investor loans;
2. Changing their borrowing power calculations to make it harder for property investors to qualify for a loan;
3. Limiting investment loan to value ratios to lower levels; and
4. Decreasing their interest rates for owner occupied loans to encourage more owner occupier borrowers and even out their loan books.

Not all offending banks are doing all of the above.

Are there still good investment loan interest rates available?

Yes,there are still good investment loan interest rates available! Not all lenders have exceeded APRA’s 10% investment loan growth limit and some lenders are still actively competing to get your investment loan. These other lenders are still offering competitive investment property interest rate, fee and feature packages.

As property investors we know how important it is to have a competitive interest rate on your investment loan. If you are paying more interest than the rental income, negative gearing may make up some of the difference but even with negative gearing you are still paying money out of your own pocket. This can impact on your ability to make further investments and or your lifestyle. Lets face it no one want to pay more than they need for an investment property loan if they can avoid it.

Are higher loan to value ratio investment loans still available?

Yes, higher loan to value ratio investment loans are still available! Some lenders are also still offering higher loan to value ratio loans 90% or up to 95% LVR exclusive of lenders mortgage insurance for investment properties.

Investment loan review – Free

If your investment loan rate recently went up then you should get your investment loans reviewed by one of our finance professionals that understand investment loans. Oak Laurel has mortgage brokers that know which lenders have the good investment loan rates now. Or brokers can assist you to switch your investment loan portfolio to where there is a better loan package from another lender. If you have one investment property or many investment properties, our investment loans specialists will review your loan portfolio to identify if they can get you a better loan or loans. If you also have an owner occupied home loan(s) our finance professionals can check to see if there is something better available for that also.

We will not charge you for the review. If we cannot find any better options then there is no loss to you. However, you can be confident that you are not being ripped off. If we can find you better options then it could save you a lot of money.

Contact an Oak Laurel about an investment loan review!

Don’t delay act NOW!

+614 30129662

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The post SMSF loans will not be banned says assistant treasurer appeared first on Oak Laurel.

Self Managed Super Fund loans will not be banned but may face tougher regulation says assistant treasurer

Whilst speaking at the Tax Institute annual superannuation conference in Sydney on Friday 21 Aug 2015, Josh Frydenberg the assistant treasurer stated that the Government has no plans to ban SMSF loans, that is limited recourse borrowing arrangements (LRBAs) through SMSFs to purchase real estate according to Fairfax.

David Murray’s Financial System Inquiry, released in December 2014, warned that SMSF borrowing for property increased speculative investment which could pose a risk to the financial system over time and called for a ban on LRBAs,

“I want to emphasise that we have been considering this recommendation very carefully but flag that we want to make sure the approach we take is proportionate to the risks that have been identified,” Frydenberg said.

“To put it in context only 0.07%, perhaps 6,500 properties, were held in an SMSF through a limited recourse borrowing arrangement in 2013.

“David Murray highlighted the risks associated with increased leverage in the financial system. Increased leverage always represents a risk and we recognise that. The government also recognises that most SMSFs do the right thing.”

When asked whether there were any plans for increased regulation of SMSF loans – instead of completely prohibiting it – Fairfax reports that the assistant treasurer said it was “under consideration”.

This appears to be good news for those taking control of their Superannuation through SMSFs. Though clearly not for everyone, borrowing to investing in property through your SMSF remains an option. It is suggested that you seek advice from a qualified professional before making any investment choices though your self managed super fund. If you are considering borrowing to invest in your SMSF we can provide you with Limited Recourse Borrowing Arrangements for your SMSF.

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The post Is Melbourne overtaking Sydney as the hottest property market? Aug 2015 appeared first on Oak Laurel.

Property price growth data shows that in the last Quarter, Melbourne property has out paced Sydney’s to become Australia’s hottest property market as at Aug 2015

Property price growth in Melbourne and Sydney

Latest property price data from PRData shows that in the last quarter Melbourne property price grew 7.85% out pacing Sydney price growth at 6.66%. Month on month price data also shows a similar trend, Melbourne price growth outpacing Sydney’s, overall and for houses. Though Sydney’s unit prices grew faster than Melbourne the difference was only 0.06% between the two or in practical terms they were the same.

In recent years Melbourne has shown some reasonable price growth but until the last quarter have been outpacing Melbourne’s by a large amount. With Sydney’s property prices now so high many believe that they are unaffordable. There have also been reports that property investors looking to buy in Sydney have been turned off by the high prices and are now turning to Melbourne where prices have been rising at steady pace. Now that Melbourne’s price growth appears to have overtaken Sydney’s investors chasing capital gains may also be more attracted to Melbourne.

Melbourne property has not had the attention from property investors that Sydney has had with a larger proportion of owner occupiers. However, if investors now find Sydney too expensive or decide to target Melbourne which has in the last quarter become the hottest property market, this may be the start of a flood of investors to Melbourne property.

Auction clearance rates in Melbourne and Sydney

Recent auction clearance rates show a similar trend to the property price growth in Melbourne and Sydney. Over previous five weeks Melbourne’s auction clearance rates have shown a steady building increase from 74% five week ago to 75%, 76% , 77% to 80%.  Sydney’s auction clearance rate though having 80% last week have showed a decreasing rate previously from 78% five weeks ago to 76%, 76%, 73% before last weeks jump back to 80%.

Is Melbourne a good place to invest in property?

Invest where people want to live, especially where people who have wealth want to live as this is the demand side of what drives up property prices. People want to live in Melbourne. Melbourne has been named the world’s most liveable city for the fifth year in a row, achieving a near perfect score on the Economist Intelligence Unit’s (EIU) liveability survey of 140 cities. Each year thousands more people move from NSW, mostly Sydney to Victoria, mostly Melbourne than go the other way. Melbourne has the greatest number of people immigrating to it than any other Australian city. The ABS forecasts that given current levels of migration and fertility rates, Melbourne will overtake Sydney as Australia’s biggest city by 2053.

It is not all Melbourne’s way though. Vacancy rates in Melbourne at 2.3% are however, slightly above that in Sydney at 1.8% as of July 2015, according to SQM research data. However, both cities have lower than the national average vacancy rate at 2.4%.

Latest data also shows that rental yields are also slightly lower in Melbourne than in Sydney.

Conclusion

This data does not mean that Sydney’s property prices will not continue to grow, there is every indication that the it will continue to grow into the future. The data does suggest that Melbourne is now the hottest property market and may catch up to Sydney over the coming years.

Only time will tell if Melbourne will continue to be Australia’s hottest property market!

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