More Generation X parents are rejecting the suburban dream to raise their family closer to the city, fueling steep housing price rises.

The trading-up market is already seen as one of the strongest in Sydney’s property market, particularly among four-bedroom houses in inner-ring suburbs, according to the Australian Property Monitors economist Matthew Bell. "Most of those housing upgrades have been selling into what has been a strong first-home buyers market in previous years and the ripple effect of that is flowing upwards."

That market has also been boosted by a lack of stock.

APM figures show the median price for four-bedroom houses in inner-ring suburbs has increased 12.4 per cent in the year to June (to $1,595,000), compared with only 6.3 per cent (to $520,000) for similarly sized houses in the outer ring.

Inner suburbs well stocked with four-bedroom properties showed among the best median price growth in the past year, such as Longueville (up 43.75 per cent), Lane Cove (35.3 per cent), Randwick (31.25 per cent), Queens Park (21.2 per cent), South Coogee (36.9 per cent), Haberfield (10.9 per cent) and Marrickville (19.2 per cent).

The figures reflect comments by the demographer Bernard Salt about Generation X, aged in their 30s and early 40s, forming a "critical mass" of parents choosing to remain close to the city rather than move to fringes.

"Gen X are very lifestyle driven,” research director of RP Data, Tim Lawless said. ”They tend to want to work and play in the same area … the city usually. Gen X don’t want a yard to maintain. They want a short commute, with friends and retail nearby."

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Top tips to get you home sooner
It is estimated that 469,000 households will be suffering some degree of mortgage discomfort by December and the number of those in severe stress (facing a potential sale, foreclosure or forced refinance) could be as high as 267,000*.

How can borrowers at risk of mortgage stress reverse the trend, save money and own the property sooner?

Spokesperson for Mortgage Choice, Kristy Sheppard said, “There are shortcuts that can help borrowers avoid mortgage stress, reduce their loan term and the interest paid. It’s about taking control of their finances by managing their mortgage instead of letting it manage them.”

“Avoiding mortgage stress is often a greater challenge for new borrowers, many of whom are adapting to a budget for the first time. Of course, some common causes of mortgage stress are higher interest rates and rising living costs. However, another very common cause is over-indulgence in post-mortgage debt.

“Mortgage Choice’s 2010 Recent First Homeowner Survey revealed 15% of respondents had taken on within the first two years what they saw as ‘significant’ post-mortgage debt. Of those, 70% had spent between $0 and $20,000, 26% had racked up between $21,000 and $50,000, and 4% had really splurged, with extra debt of $51,000 or more.

“If these borrowers and others facing a similar situation want to better their mortgage situation they need to be proactive in their repayment strategy. By maintaining regular repayments above current interest rates, being disciplined in keeping to budget, making extra contributions, fully utilising the loan facilities available and regularly ‘shopping around’, borrowers can potentially fast track their way to outright ownership.”

Australia’s largest independently-owned mortgage broker, Mortgage Choice recommends these top tips:

Contribute to your change
Paying a little extra every month can have a big impact in the long run. Based on a loan of $300,000 at 7% over 30 years, if you round the monthly repayments of $1,996 up to $2,050, the loan will be repaid approximately one year and eight months earlier, saving you over $25,000 in interest.

Make a dent
Making a lump sum payment (big or small) into a loan can make a substantial difference. If you deposited your tax return of, say, $500 into the above mentioned loan, it would reduce the overall term by one month and the total repayments by just over $2,350. Doing so annually would make a significantly larger dent.

Make the most of loan features
Loans with offset accounts enable borrowers to link a savings account with their home loan account and ‘offset’ or use that amount to reduce the interest accumulated on their mortgage. For example, if a borrower has $5,000 in an offset account, then on a $300,000 loan (at 7% interest pa) the term would be reduced by around 1 year and the borrower would save over $33,000. It’s worth enquiring about but be aware there could be an ongoing cost for keeping the account, such as a monthly fee.

Don’t settle for second best
If you went for a premium loan you may be repaying at a higher interest rate for facilities and features you don’t need or use. Consider refinancing to a more basic product offering a lower interest rate – your repayments will be lower, and therefore you’ll be able to afford to pay your loan off quicker. When refinancing to a new loan and/or lender, be aware you may incur exit fees.

Give your loan a check up
If you already have a home loan, look at doing a home loan health check regularly because the mortgage market changes all the time. You might be able to get a better package now.

Keep your eye open for bargains
You might also investigate your eligibility for a ‘professional package’ home loan, where you can receive a reduced interest rate, no application or other fees, gold credit cards, and home insurance and other product discounts and benefits.

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Homes will be where the easy access is, says new building code to promote mobility.

A minimalist step-free shower; a corridor wide enough for a sofa; and a front entry you don’t have to wrestle the pram up.

These features are part of a voluntary building code to be released today by the Parliamentary Secretary for Disabilities, Bill Shorten. The code would improve a home’s value and also make life easier for Australians with mobility issues, advocates said.

An ageing population of baby boomers who dislike stairs and young parents wanting better safety for toddlers are key targets for the Liveable Housing Design, the consumer-facing brand of the code developed with the property industry.

The national convener of the advocacy group Australian Network for Universal Housing Design, Amelia Starr, said the fashionable step-free shower was already standard in homemaker magazines, while wider corridors were useful to anyone moving furniture.

US research showed 90 per cent of newly built homes would at some point have someone with a mobility issue residing there. Too many Australian homes were unable to adapt to a family’s evolving needs, let alone wheelchair use, Ms Starr said.

”We hope people will say I want that brand in my home because then it can be sold off to the widest range of people possible,” she said.

The Property Council of Australia chief executive, Peter Verwer, said: ”It makes good sense to design homes so they evolve with their users. It works as well for mums to be as it does for senior Australians.”

The new standards grew from several meetings between Mr Shorten and Therese Rein with industry groups including the Master Builders, Australian Institute of Architects, the Property Council and the Herald journalist Cynthia Banham. The last meeting was held two days before Kevin Rudd stepped down as prime minister.

The code will be launched today by Mr Shorten at a Penrith housing development that already adopts its features.

The Master Builders chief executive, Wilhelm Harnisch, said: ”Improving the safety of kitchens and other areas means people can stay longer in the home instead of going to an aged care facility.”

Story by Kirsty Needham www.smh.com.au

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HALF of Australian households are worried interest rates will rise but only one in five expect their debt levels to increase in coming months.

Dun & Bradstreet’s latest survey of the consumer credit expectations of 1,205 adults across Australia found 49 per cent anticipated a further rise in interest rates would put a dent in their household finances.

The credit reporting agency completed the survey in June, one month after the Reserve Bank of Australia (RBA) lifted the official cash rate to 4.5 per cent, its sixth rise in eight months.

Households with dependent children will face more stress, with 55 per cent of respondents with children saying another rate rise would have a negative impact on their finances, compared with 43 per cent of households without children.

However, more financial stress would translate into more debt for just 20 per cent of households, Dun & Bradstreet said in a statement on Wednesday.

Expectations of spending in the September quarter show almost half of respondents aged under 50 intended to use credit to pay for planned expenses over this period.

One quarter of Australians aged over 50 years planned to do the same, Dun & Bradstreet said.

The RBA’s credit and charge card statistics for May 2010 showed the average credit card balance reached $3,248 in May, an increase of five per cent in 12 months.

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Despite a second consecutive rate reprieve from the RBA this month, economists believe the ongoing strength in the domestic labour market could result in an interest rate hike as early as August.

Australia’s unemployment rate was unchanged at 5.1 per cent in June, from a downwardly revised 5.1 per cent the previous month, according to an Australian Bureau of Statistics (ABS) report.

It is the lowest jobless rate as well as the fewest number of unemployed workers, 598,400, since January 2009.

A total of 45,900 jobs were created in June, triple the market forecast of 15,000, statistics revealed.

Part-time positions rose by 27,500 in June, while full-time staff increased 18,400.

Employment has increased in nine of the past 10 months, with 356,300 jobs added to the national economy since June 2009.

JP Morgan economist Helen Kevans said the improvement in the labour market could accelerate wage rises and add to pressures on inflation.

“Further evidence of building wage pressure will add to an already worrisome inflation outlook, with headline inflation likely to remain above the RBA’s 2-3 per cent target range this year and next, and core inflation to be above target by year end,” Ms Kevans said.

“We believe an elevated print on the upcoming second quarter CPI on both the headline and core measures will be enough to trigger another rate move, with our forecast calling for a further 25 basis point hike to the cash rate in August, providing conditions do not deteriorate offshore.”

The RBA’s decision to hold the interest rate steady recently, followed six increases from 3.0 per cent to 4.5 per cent between October 2009 and May 2010.

National Australia Bank senior ?economist David de Garis said the jobs data reflected the strong local economy against a backdrop of weak Atlantic economies and brought into focus the consumer price index (CPI) report on July 28.

For the RBA, this reasserts the importance of the upcoming second quarter CPI,” Mr de Garis said.

If underlying inflation is running at a year to 3.0 per cent or more (rather than the RBA’s 2.75 per cent forecast) then the RBA would have to seriously consider another rate hike to crimp interest s?ensitive? demand to make room for the resources boom that now looks to be coming to the fore.

Commonwealth Bank senior economist Michael Workman said the mining states had usurped Victoria in ?leading the nation’s employment growth.?? ?

The unemployment rate in Queensland fell from 5.5 to 5.3 per cent and Western Australia dropped 0.1 percentage point to 4.0 per cent.

“So most probably you’d argue here that some of the mining states are starting to show more consistent and stronger jobs growth than the east coast states, Mr Workman said.

In WA, 18,000 part-time jobs were added during the month, ABS data showed.

Mr Workman said if inflation and the jobs market remained strong, the RBA could possibly lift interest rates twice by year end.

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New research has revealed that Australians are willing to pay more for residential property, despite the likelihood of interest rates rising.

The realestate.com.au Consumer Insights Survey found that around one in six (16 per cent) (1) property seekers were willing to spend 10% or more above the asking price when looking to buy a home.

The findings come despite the fact that two out of three (66 per cent) (1) property seekers who took part in the survey believed interest rates were likely to rise in the next three months.

Realestate.com.au spokesperson Peter Wright said the survey findings reinforced the boom the property market had experienced recently and peoples’ willingness to achieve the great Australian dream of home ownership.

“The most common perceived reasons for growth include a shortage of properties for sale (54 per cent) that has driven up demand, a resurgence in a growing economy (40 per cent) and the fact that household incomes are rising (11 per cent) (1),” Mr Wright explained.

“While we are now starting to see some stability, the realestate.com.au Consumer Insights Report reinforces the buoyancy the property market experienced in the first half of 2010.

“The report also indicates that consumers expect the property market to remain strong (50 per cent) (1) well into the second half of this year,” he added.

The survey also saw a positive trend in the job market with confidence growing by 11 per cent from April 2009 from 45 per cent to 56 per cent (1) during the May-June 2010 period.

* (1) The realestate.com.au Consumer Insights Report is an online survey conducted on a regular basis to investigate the attitudes of buyers, renters and sellers. The survey ran from 31 May to 3 June 2010 with 4,082 Australian property buyers taking part.

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It’s one of those clichés you’ll often hear in real estate … properties that are priced appropriately are selling. It seems so obvious, really. When you’re making such a big investment surely you’d only do it at the right price? But of course buying houses is emotional and there’s so much more that goes into it than rational thinking about whether it is money well spent. It could be the look and feel, the layout, or the location that sways one buyer to pay a whole lot more than the rest.

If you want to look at how complicated human decision-making is just look at how we pick which political parties will win government. Now that there’s a federal election looming, we’ll all have more than enough opportunity to gawk from the sidelines as votes are won or lost on looks, tone, sound, hair colour, and a little bit of policy, real or perceived.

Nevertheless, when it comes to houses, a lot of real estate agents are saying that buyers are being a lot more careful, and really weighing up where to put their dollars. Less competition from other buyers is providing house hunters with more choices, and they’re taking their time, choosing wisely, and demanding properties are up to scratch.

It’s one of those clichés you’ll often hear in real estate … properties that are priced appropriately are selling. It seems so obvious, really. When you’re making such a big investment surely you’d only do it at the right price? But of course buying houses is emotional and there’s so much more that goes into it than rational thinking about whether it is money well spent. It could be the look and feel, the layout, or the location that sways one buyer to pay a whole lot more than the rest.

If you want to look at how complicated human decision-making is just look at how we pick which political parties will win government. Now that there’s a federal election looming, we’ll all have more than enough opportunity to gawk from the sidelines as votes are won or lost on looks, tone, sound, hair colour, and a little bit of policy, real or perceived.

Nevertheless, when it comes to houses, a lot of real estate agents are saying that buyers are being a lot more careful, and really weighing up where to put their dollars. Less competition from other buyers is providing house hunters with more choices, and they’re taking their time, choosing wisely, and demanding properties are up to scratch.

Agents are saying many vendors are yet to catch up with the swift market cooling of the last couple of months and want higher prices than buyers are prepared to fork out.

I saw a great example of the old price-is-right mantra this week when I spied a sandstone home for sale. Double fronted, it looked like the perfect family pad – except that its immediate neighbour was the car park of a sex shop, and only four doors down, across the road, was a train line. Oh and it had a pretty busy road a few doors the other way.

It could have easily been a house that languished on the market while the vendor held out hoping that the prestige of the neighbourhood that it bordered might rub off. But the vendor was either in a hurry to sell or had a good sense of where the market was at because the home was priced at about $200,000 less than comparable places just a few streets away. On the first open there was a surprising buzz – not quite a swarm – but a healthy hum of activity from house hunters.  And less than a week later, a big SOLD sign was slapped up out the front.

Part of the problem for vendors is the market has been moving so fast lately that it’s hard to keep up. One moment it’s hot and the next it’s not. In pockets there’s still plenty of buying action, for example one Sydney agent says she had 53 people inspect a property in the trendy inner west over the weekend. But in others, real estate agents are ringing around trying to drum up interest.

When you’re selling working out what price you should go for is hard. But just as house hunters are told to find up to a dozen recent comparable sales when they are researching a house’s value, vendors can do that too. The advice for house hunters is to look at the prices places nearby have sold for in the last six months, being careful to compare apples with apples by finding properties that have similar land size, bedroom numbers, layouts and car parking. Sales in the last three months are particularly telling.

If you’re a vendor and you want to find out where the buyers’ thinking is in terms of money, you’d do well to do that research. That way you will find out which direction the market is going in your area, and will be using the same pricing method as your buyers. Of course, if you decide your home has special features and it’s worth holding out for a better price, you might just be lucky – after all spring is just around the corner and the warmer weather brings out the buyers.

Story by Carolyn Boyd – Domain.com.au

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