Resources: Market Update

NEW HOME SALES RISE

Posted 29/11/08

October has seen the sale of new homes rise strongly.  This has coincided with the tripling of the first home buyers grant as well as further cuts in interest rates.

The Housing Industry Association's (HIA) despite this increase believe a recovery in this sector is still some way off.   The New Home Sales Report compiled from a sample of the largest 100 residential builders shows sales rose by 6.7 per cent in October.

HIA chief economist Harley Dale said in a statement "It will be a long road back, but it is hoped that an improvement in new home sales in October could mark the beginning of a stabilisation followed by improvement in leading housing indicators over 2009," The rise in home sales follows the tripling of the first home owners grant to $21,000 for the purchase of new homes in mid-October.

Sales varied across the country however overall residential sales in Queensland, South Australia and Victoria increased whilst Western Australia and NSW fell heavily.


FIRSTMAC  3.99% LOAN

Posted 26/11/08

Australian owned finance lender FirstMac has launched its "FightBack" loan with an introductory 1 year fixed rate of 3.99%.  The product comes as a result of the Federal Government's $8 billion investment in the Residential Mortgage Backed Security market.

Founder and Managing Director Kim Cannon said "This is a product which we believe really delivers what our customers want and need and it will potentially take years off their home loan.

"Even with the loan rate reverting to the standard variable rate after one year, we still believe that borrowers will be way ahead financially compared to current comparable bank loans.

The main features of the "FightBack" loan are:

• 1 year fixed rate of 3.99% reverting to the standard variable rate
• Redraw at no cost
• FullDoc loan
• 100% redraw offset
• Max LVR of 80%
• Visa Debit card
• Minimum loan $50,000; Maximum loan $750,000
• Full transactional facilities

LANDLORDS PAIN BEING EASED WITH RATE CUTS

Posted 14/11/08

The rate cuts have been wonderful news for investors as the mounting pressure on landlords is easing.

Since September the RBA has wiped 2% off the cash rate saving investors hundreds of dollars per month in interest.  The banks have passed most of this on so it couldn't come at a better time for those battling to repay investment property loans as well as their own mortgages.

These falling interest rates have given investors the opportunity to renew a fixed rate loan at a lower cost as well as provide a much-needed boost to the market.

With speculation that rents will increase as supply contracts, some investors are finding that their returns are the highest they have been for years.

PREDICTION OF FURTHER RATE CUTS AS BUSINESS CONFIDENCE PLUNGES

Posted 12/11/08

According to the NAB's latest monthly business survey, confidence has slumped to its lowest level on record since the survey began in 1997.

This survey has fuelled speculation that the RBA will continue to cut the cash rate in the coming months with some economists predicting at least further cuts of up to 125 basis points likely.  Most believe it will be cut by 50 basis points when the RBA board next meets in December.

The latest slump in business confidence comes despite some big cuts recently; Prime Minister Kevin Rudd recently told parliament "Business confidence is bad here, as it is in practically every other developed economy in the world ... that's because of the global financial crisis."

The latest RBA forecast has annual economic growth to fall to 1.5% by June next year which is lower than the Treasury's prediction of 2%. 

It looks like the predictions may come true...


REIA WELCOMES INTEREST RATE REDUCTION

Posted 5/11/08

In a media release from the Real Estate Institute of Australia Acting President, Mr Chris Fitzpatrick states "The latest decrease in interest rates together with the cuts in September and October mean we have the lowest interest rates since December 2003."

Mr Fitzpatrick also mentioned that "A reduction in official interest rates of 2.0% since September is great news for home owners or those contemplating home ownership... The cumulative effect of the last three interest rate reductions for homeowners is that an average mortgage of $256,000 is now costing $427 less per month to service. 

He concluded that "The recently announced increase in the First Home Owners Grant, the interest rate cut and the improvement to housing affordability makes now an opportune time to enter the housing market."

RBA CUTS RATES AGAIN

Posted 5/11/08

Great news for home owners with the RBA cutting official rates from 6% to 5.25%.

The RBA are now of the belief that inflation will fall as a result of spending activity being weaker than expected.

RBA governor Glenn Stevens said in a statement "Weighing up these international and domestic developments, the board judged that a further significant reduction in the cash rate was warranted. The board will continue to monitor developments and make adjustments as needed to promote sustainable growth consistent with achieving the 2-3% inflation target over time."

We all wait to see if the banks pass on the full advantages of this rate cut.

BOOST FOR FIRST HOME BUYERS

Posted 3/11/08

The Federal Government has now made significant increases to the Grant available to first home buyers with estimates of those to benefit expected to be more than 150,000.  The Rudd Government will make an investment of around $1.5 billion in the housing market through this initiative.

The increase for first home buyers building a new home or a newly constructed home has tripled to $21,000 with the housing industry applauding the scheme.

HIA spokesman Chris Lamont says the tripling of the grant will arrest the slide that has affected the housing industry in recent times.

"We think that this will provide the necessary assistance in a downturn in respect to new housing activity that will make it worthwhile for first home buyers to consider a new home of their own," he said.

To be eligible first home buyers must have entered into contracts from 14 October 2008 to 30 June 2009.

Each State and Territory in Australia has its own grant scheme. If purchasing or building your first home, visit the Revenue Office of the State or Territory where your new home is located.