Black and White Finance update - November 2017
Where to invest or develop? Isn’t it overpriced? Which banks are offering the cheapest home loans or business loans? Welcome to the Black and White Finance update for November 2017. We’ve summarised for you the trending finance and property related topics of the month with a focus on these three common questions.
Over the September quarter, Corelogic’s Home Value Index showed Hobart to be the strongest performer in dwelling values out of all Australia’s capital cities, recording a 3.3% increase – quarter on quarter. Melbourne’s was up 1.9%, Canberra recorded an increase of 1.1%, Brisbane a smaller gain of 0.6% whereas Sydney recorded a fall of -0.06%.
Experts believe that the increasing levels of migration to Tasmania, affordable housing, limited property for sale, sound employment conditions and great lifestyle opportunities have all been key factors contributing to this growth.
In terms of vacancy rates – a measure of demand for residential rental accommodation, Hobart is leading the charge. Data from SQM research, who specialise in providing ratings and data across all major asset classes in Australia, revealed in October a rate of just 0.3%, meaning that out of all the rental accommodation available, only 0.3% is free. This is in comparison to Sydney’s 2.0% and Melbourne’s 1.8%.
Across the country, SQM research shows that 67,781 properties across all capital cities in the nation were vacant in October 2017, compared to 74,368 in October 2016. These numbers show tighter rental markets for our capital cities with Hobart leading the charge – encouraging signs for investors.
If you’re looking for lifestyle or owner occupied purposes, then it is really challenging to look past Sydney or Melbourne given the diversity of contrasting qualities each main city provides. Preliminary auction clearance rates are lower this time this year, in comparison to last. Given auction clearance rates are usually a reliable forward indicator of property price movements, it’s potentially a sign that we could see more of a plateau or downward movement. According to CoreLogic’s preliminary data, auction clearance rates in Sydney last week were at 61.5%, down slightly from 64.4% the week before.
High prices and lower yields as a result, are causing investors, first home buyers and those at certain price points to look at alternative locations for better value. Experts say Newcastle, Wollongong and Western Sydney provide good value if you can buy close to amenities.
Home loan rates and Business loan facilities are really cheap, so once investors factor in their acquisition costs and then the holding cost, there’s still money to be made if the price is right.
Home loan rates, if you’re making principal and interest repayments are as low as 3.69%. For investment purposes, again making principle and interest repayments, you’re looking at about 3.99% and above. If you want to make interest only repayments, then expect to be paying a lot more for your loan. Commercial or business banking rates on the other hand are still also very cheap at around 4.5%, depending on the risk profile of the client.
Is Hobart the place to invest now? Maybe according to the data.
Peter Vassilis