The housing sector is stabilising as talk of an interest rate rise wanes and Australians are encouraged to borrow more, economists say.

The number of home loans approved in August rose 1.2 per cent to 50,965, official figures show. Economists’ forecasts had centred on a 1 per cent rise in housing finance commitments for the month.

August was the fifth straight month that housing finance commitments had risen.

The Australian Bureau of Statistics said total housing finance by value rose 1.0 per cent in August, seasonally adjusted, to $20.848 billion.

JPMorgan economist Ben Jarman said the figures showed the housing sector was stabilising rather than rebounding.

‘‘It certainly means it’s not falling into a hole,’’ Mr Jarman said. ‘‘In the last few months worth of data, the housing finance figures have benefited from the perception that the RBA won’t be doing much in the near term.

‘‘So, if you went back to the start of this year, the RBA didn’t hike rates but there was all the forecast and all the language were making noises that you would get a couple of hikes this year.

‘‘Those aren’t being delivered and things offshore have turned a little bit sour.

‘‘What you’ve seen in the last few months in the home loans data is these fading expectations are helping out and people are coming back and they are happy to take on new debt.

‘‘We’re kind of calling this a mini-rally, but don’t think that this is the start of a tear away in the housing market.

‘‘There’s still a lot of uncertainty globally and that’s what’s keeping the RBA on the sidelines.’’

Mr Jarman said JPMorgan still expected the RBA not to change the cash rate from its current 4.75 per cent until at least the middle of 2012.

‘‘You’ve got a lot uncertainty offshore counterbalancing the domestic inflationary situation here and we see the RBA not doing very much for a while.’’

ICAP senior economist Adam Carr said August’s housing finance figure was a good result and continued a 13 per cent increase in lending since April.

‘‘The pattern we’ve witnessed over the last year is that home lending is posting a dramatic improvement after a GFC induced slump, interrupted only by the floods and the disasters,’’ Mr Carr said. ‘‘Now we’re back on track.’’He expected housing finance data to continue to be strong in the coming months.

‘‘Financial conditions are not too tight, we’ve had an easing in financial conditions (and) lending rates are going sharply lower.

‘‘Don’t forget the unemployment rate is low and income growth is strong, so the prospects are really good.’’

The data also highlighted why a cut in the cash rate was not needed, he said.

‘‘The reason I say that is because the economy is healthy – we don’t need one or two rate cuts.

‘‘We’re either going to get 100 basis points worth of cuts or more because Europe collapses and we have another GFC or, I would imagine, we get none.

‘‘That’s because retailing is accelerating, home lending is accelerating, approvals are accelerating and the unemployment rate is low.

‘‘To argue that we need one or two rate cuts is just absurd.’’

AAP

Source: www.domain.com.au

One of the biggest trends in renovating we might be about to see emerge is the mini-makeover.

Think: paints, cupboard handles, tap fittings, wallpapers (yes, wallpapers going up, not coming down) and the polishing of timber floors. Also light fittings and window treatments. Anything that changes the feel and adds a bit of pizzazz without spending the big bucks.

If that sounds like the ’70s revisited, perhaps it is. Hopefully not with such garish results, though.

And yes, if you are thinking – ‘hang on, hasn’t everyone been doing this all along?’ In part you are right. But the difference is the mini-makeover will be used by householders to make do for much longer than in recent years.

Why will we see this replace bigger aspirations – at least for now? It’s a meeting of several forces.

First, the property market isn’t going anywhere in a hurry at the moment – so the belief that you can do a big reno and flip the property to make a good quid is quickly dissolving.

Second, Australians are saving more than we have in years and there’s a propensity to pay down debt. That means making do with what we have and not taking on huge loans to expand our lifestyles.

It’s also dawning on some people that one way to make money off housing in this current market is not to buy and sell in a hurry, but to shake the housing debt as fast as you can and that way lower your overall costs of acquiring an asset that is free from capital gains tax.

More broadly, employers continue to report that the biggest thing employees are chasing isn’t dollars but work-life balance. Money is still important, yes, but there’s a greater focus on living a life outside of the office, and people aren’t jumping ship for an extra $5,000 or $10,000 like they were a few years ago.

So if they are working less and aren’t prepared to move for a bit more cash, it’s a fairly reasonable conclusion that people will be looking to make their dollar stretch further by extending the life of their current home.

There’s another force – again related to the slowdown in the property market. Industry talk says there’s been a general shift in the mindsets of homeowners – people now expect to stay in their homes for longer. And if you’re in for the long haul, you’ve got the luxury to plan and think – ‘right, I’ll paint that old laundry for now and make it last a few more years before we get around to building a new one’.

After all, you’ve got years to live in the house, and you’re not in such a hurry to get it sorted to flick it back on to the market.

It’s all happening at the same time that we are hearing of the re-emergence of the three-bedder as the house to have – but this time with a second toilet attached. For many, that could mean bye-bye to the media room, the fourth bedroom and the extra study. And who needs those, anyway, when you’re watching movies on your iPad and emailing on your smartphone?

A comfy chair and a flip-down desk that can be discreetly packed away into the wall when not in use might suffice for a study.

And with books, DVDs and music all going digital, there’ll be more space in lounge rooms to accommodate that kind of nifty set up.

I’m not suggesting houses will be totally devoid of all books but you can see collections will get smaller – for example why buy a hard copy dictionary for the study when it’s much simpler and easier to use an app on your phone?

There’s been a school of thought in recent years – which persists today, driven in part by property marketing – that it’s cheaper to detonate a house and start again, than renovate. Homeowners are often lulled by the lower prices that large home-building companies advertise.

True, looked at on a square-metre basis, it might be cheaper to build anew than renovate – some say it costs half as much on average. But if you are being more frugal and making use of what you have, then perhaps the renovation would involve a much smaller extra footprint and be cheaper overall.

The awakening on the cost of debt since the GFC is intermingled with this mini-makeover trend. Obviously it’s an awful lot cheaper to use the money you have saved to fund renovations rather than keep increasing the size of your home loan. And if you can spend a few thousand dollars to make your house more liveable and avoid or put off for several years having to borrow $100,000, $200,000, $300,000, you could be much better off financially in the long run.

When working out how much you should spend on a mini-makeover, it’s helpful to calculate what borrowing the money for the major renovation would cost you and do your sums backwards from there.

The trick to extending the life of what you’ve already got without pouring money down the drain, is getting a good picture of where you want to take your property in the long term (which might involve getting a building designer or architect in), and working out what you can – and can’t – live with for now.

For example, if you want to make do with your ratty old kitchen for a few more years, painting it, and replacing the door handles, taps and even the lights might be a good investment. But upgrading the oven or the range hood to something you may or may not use in the new kitchen is possibly a waste of money.

And of course, like any renovation, you need to be well-researched and enter with eyes wide open so you know what the hidden costs might be.

Story by Carolyn Boyd www.domain.com.au

It’s not just houses among gum trees on ¼ acre blocks under threat from the supposed death of the Australian Dream; a report shows man’s best friend is also victim to a shift in where and how we live.

Dog and cat ownership is down across Australia, according to a report from the Australian Companion Animal Council that found high-density living, changing lifestyles and government legislation to blame.

The ACAC paper found that in the past decade Australia’s dog population has decreased by at least 14per cent and its cat population has dropped by about 10 per cent, as latest figures from the Australian Bureau of Statistics shows a decline in the rate of home ownership and rise human population.

Queensland figures from the Office of Economic and Statistical Research reflected the national downturn in pet ownership, with dog ownership in the state falling by 2.1 per cent from 2008 to 2010 as cats dropped by 1.4per cent.

The ACAC paper found slightly more than half of the state’s households accommodated cats and/or dogs in 2010.

And though pooches were more popular than pussies overall, Brisbane was among the survey regions with the lowest proportion of households with dogs.

Speaking from the inaugural Putting Pets Back Into Our Lives thinktank in Sydney, ACAC president Kersti Seksel said the steady decline in pet ownership had brought a $6.02billion pet-care industry to its knees.

But it wasn’t just commerce at risk as communities without pets were worse off as well, Ms Seksel said.

“There’s been lots of research showing pets are not just good for an individual’s physical health and mental health – if you own a dog for instance, you’re less likely to be lonely and more likely to get physical exercise – but you’re also more likely to interact with your community,” she said.

“All pets are down, but we’re focusing particularly on a decline in cat and dog ownership because there’s a lot of research that demonstrates the valuable relationships they share with owners.”

Ms Seksel said the costs associated with maintaining pets, difficulty in finding care during holidays, time constraints and moving to rented accommodation, particularly apartments, were the most common reasons why people no longer included animals in their households.

“There’s a perception that renting or apartment living don’t work with owning a dog but that’s just not true,” she said.

“If you look at America, you see that dog ownership in small space is fine as long as you’re caring properly for the pet.”

A change in Australia’s favourite breed of dog reflected a shift to inner-city living Ms Seksel said, with the diminutive Maltese ousting the German Shepherd from the top spot that the larger dog enjoyed 10 years ago.

Ms Seksel said the 150 participants in today’s Putting Pets Back Into Our Lives conference, including the RSPCA, hoped to find suitable solutions to the problem.

“Whether it’s changing the laws and regulations around pet ownership or educating the public about finding the right pet for them, we want people to realise just how good owning a pet can be,” Ms Seksel said.

Story source: www.domain.com.au

There’s good news for house hunters with lower mortgage rates and higher wages helping to improve affordability even as house prices edged higher.

A separate report, meanwhile, shows that people are staying put longer, underscoring how the property market has cooled in recent years.

The Housing Industry Association-Commonwealth Bank housing affordability index rose by 0.8 per cent in the June quarter, to 56.2 from 55.7 per cent.

Lending data from CBA, used in the index, showed an 0.8 per cent increase in the April-June period of Australia’s median home price to $471,400.

“Earnings growth and a small decrease in mortgage lending rates worked to improve housing affordability over the June 2011 quarter,’’ said HIA senior economist Mr Andrew Harvey. ‘‘These factors more than offset a small increase in the median house price.’’

Other recent reports point to stagnating or falling home prices in many regions around the country as concerns about the wider economy deter some people from the property market.

Still, unemployment levels remain low, at just above 5 per cent, and commercial banks have been trimming their fixed-term mortgage rates in recent weeks.

The Reserve Bank may also cut its key cash rate in coming months to reflect softening demand in the economy and reduced inflation risks

“Improved affordability is good news for home buyers,’’ said Mr Harvey. ‘‘If we look through the (global financial crisis) period which was skewed by unprecedented cuts to interest rates, we have not seen affordability reach its current level since 2006.’’

The home prices used in the HIA/CBA index are median loans financed by the Commonwealth Bank.

“They cannot and do not take account of changes in the mix of size, location and quality of dwellings financed,” the report said.

“Quarter-to-quarter variations therefore reflect any changes in the composition of housing financed, as well as changes in the price of a dwelling of a given size, location, and quality.

Home price trends

By most measures, however, home prices have been sinking in the new year. RP Data-Rismark information shows capital city home prices down 2 per cent in the year to June, on a seasonally adjusted basis. Home prices fell 0.2 per cent in June, according to RP Data-Rismark.

Borrowing for and building homes has slowed in 2011 while affordability remains constrained for many would-be buyers.

The pace of building has stalled amid uncertainty about the economy and about the direction of interest rates to come. Residential construction work fell by 4.1 per cent in the June quarter to $11.4 billion, the Australian Bureau of Statistics said yesterday.

The RBA will meet September 6 to decide on interest rates, with the market currently pricing in a 55 per cent chance of a 25 basis point cut.

Staying put

The slowing conditions in the property market, combined with higher transaction costs, are also keeping Australians in the same home longer, RP Data said today.

In 2001, the average hold period for a property between sales was 6.8 years. Now, it is 8.6 years, RP Data said today, with Melbourne residents the slowest to leave.

In Melbourne, the average hold period – the time between property sales – is currently 10 years, up from 8.3 years a decade ago. In Sydney the average hold period has risen to 9.5 years from 6.3 years a decade ago.

Story by Chris Zappone www.domain.com.au

Tags: housing, news, property, real estate, research

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Borrowers’ uptake of fixed interest rate home loans rose by less than one percent of approvals over August despite lenders introducing large reductions to the cost of their fixed term loans, according to Australia’s largest independently-owned mortgage broker.

Fixed rates accounted for 14.1% of Mortgage Choice’s home loan approvals last month, up only slightly from 13.3% in July (though rising for the third consecutive month), while the popularity of ongoing discount loans continued its steady increase, up from 38.6% to 41.5% of approvals.

Company spokesperson Kristy Sheppard said, “New borrowers’ appetite for ongoing discount home loans has steamed ahead for 10 consecutive months now. We have reached a point where demand for such mortgages is more than double that for any other, at 41.5% of all our August approvals.”

“This loan type, where the interest rate is discounted over the loan term usually in return for an annual fee, overtook standard variable as the favourite in April and hasn’t looked back. The trend speaks volumes about new borrowers’ and refinancers’ mindset around interest rate rises and the value they place – or rather, don’t place – on locking in their rate at the moment.

“I expected the take-up of fixed rate home loans to grow noticeably in August due to the well publicised reductions many lenders have been applying to their fixed term pricing. Despite our lender panel’s average three-year fixed rate falling half a percent in the past four weeks alone, fewer than one in seven new mortgage holders fixed part or all of their rate last month.

“Borrowers’ reticence to fix may also be influenced by memories of the break costs many people faced when considering switching out of their fixed terms during Spring 2008 to Autumn 2009 when the cash rate fell from 7.25% to 3.00% and home loan interest rates followed.

Demand for standard variable and basic variable home loans fell in August, to 19.2% and 18.2% of approvals, as did that for line of credit and introductory rate loans, to 4.7% and 2.4%.

Note: Mortgage Choice currently writes one in 25 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 19 year old mortgage broker has a loan book of over $42 billion.

Tags: brokers, finance, home loans, mortgage, news, research

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RP Data – Rismark Home Value Index Release

While dwelling values in Australia’s combined capital cities declined by a seasonally adjusted (s.a.) 0.6% in the month of July, and regional markets fell by a similar 0.7% (s.a.), homes in Sydney (+0.1% s.a.), Darwin (+0.6% s.a.) and Canberra (+1.9% s.a.) managed to produce small capital gains.

Based on approximately 178,000 home sales over the year to July, the market-leading RP Data-Rismark Hedonic Home Value Index recorded a seasonally-adjusted fall of -0.6 per cent in capital city home values over the month of July (-0.9 per cent in raw terms).

Canberra (+1.9 per cent s.a.), Darwin (+0.6 per cent s.a.) and Sydney (+0.1 per cent s.a.) bucked the soft trend set by the other cities, which, led by Melbourne homes (down -1.4 per cent s.a.), all registered declines during July.

Over the first seven months of 2011, Australian capital city home values were down -3.4 per cent. According to RP Data research director Tim Lawless, this national result conceals wide divergences across the individual cities.

Mr Lawless pointed to the example of Melbourne homes, which after rising by a stunning 29 per cent over 2009 and 2010 had now corrected by -5.3 per cent in 2011. In contrast, dwelling values in Canberra had actually risen in value by 1.8 per cent over the course of 2011.

Over the 12 months to July 2011, Australian capital city home values are off -2.9 per cent. Mr Lawless said that it looks like a multi-speed housing market: Brisbane (-6.6 per cent), Perth (-6.3 per cent), and Melbourne (-4.3 per cent) have all experienced significant declines over the last year, whereas the 35 per cent of Australia’s capital city population that lives in Canberra (+1.9 per cent) and Sydney (+0.5 per cent) had realised capital gains.

According to Christopher Joye, Rismark International’s economist, “Over the last 11 years, Sydney home values increased by a modest 5.6 per cent per annum compared to an Australian capital city average of 7.8 per cent per annum. Sydney housing has massively underperformed Perth (10.4 per cent per annum), Brisbane (9.7 per cent per annum) and Melbourne (8.9 per cent per annum) housing over this period. After years of being the perennial laggard, Sydney housing now looks to be a relatively resilient store of wealth.”

Mr Joye added that Australia’s housing market could be at a crucial inflexion point.

“The financial markets are pricing in five rate cuts while leading economists from Goldman Sachs, Deutsche Bank, Westpac and Macquarie Bank all believe that the RBA’s next move will be down.

As the most interest rate sensitive sector of the economy, the housing market will be the chief beneficiary of any decision by the RBA to reduce the cost of debt. Indeed, borrowers are already benefiting from de facto rate cuts.

The inversion in the yield curve has seen many banks start to slash the cost of fixed-rate home loans. Today lenders like Members Equity Bank are offering 3 year, fixed-rate loans of just 6.35 per cent, which is well below the standard variable rate benchmark of 7.8 per cent.

And while the rhetoric coming out of the central bank of late has been conflicting, UBS believes that the Governor’s testimony to Parliament last week shifted the RBA to a ‘neutral’ stance,” Mr Joye said.

“If rates do remain on hold, or begin to fall, we would expect to see Australia’s housing market find a base and begin to generate capital gains again. If the RBA has really come to the end of its tightening cycle – which we would find surprising given the high core inflation revealed over the last six months – 2011-12 will likely be judged one of the best buying windows seen in quite some time. The turning point will arrive when otherwise hawkish Australian consumers accept the notion that rates are not going to inexorably increase,” Mr Joye said.

Mr Lawless said that the current weakness in housing market conditions is related to the ongoing anxiety consumers have about their future finances as reflected in the latest consumer confidence data.

“According to the August Westpac-Melbourne Institute Consumer Sentiment survey, Australians still expect two interest rate hikes over the next 12 months. Combined with volatile equity prices, global financial market instability, and soft house prices, Australians are understandably reluctant to make high commitment decisions at the moment,” Mr Lawless said.

Mr Lawless also highlighted the premium housing market where comparatively larger declines in value will likely present patient investors with attractive opportunities during the next six months.

“Dwelling values across the most expensive capital city suburbs are down -6.2 per cent over the first seven months of year. This compares with a much smaller -2.3 per cent fall across ‘middle priced suburbs’ and a -2.1 per cent decline in the cheapest suburbs. Clearly, the ongoing financial market volatility is having a more marked impact on wealthier households, as are weak business conditions outside of the resources sector,” Mr Lawless said.

Despite some improvements in selling times in previous months, the average number of days it takes to sell a home has increased in June and July. Other key leading indicators also imply that market conditions remain soft.

“The build up in the number of homes being advertised for sale together with the slow-down in buyer demand has once again seen average selling times expand. Across the capital cities the average house is taking 55 days to sell compared with 45 days at the same time last year. We have also seen the level of vendor discounting expand to -7.2 per cent from -5.7 per cent in July 2010, which is in line with the lowest reading recorded during 2008. Finally, the weighted average auction clearance rate across Australia’s capital cities has remained slightly below 50 per cent over the past seven weeks”.

“If these soft trends persist, the Spring Selling Season is likely to open up some attractive investment opportunities for prospective buyers. In contrast, the selling environment is likely to be challenging for vendors, particularly if they have unrealistic price expectations,” Mr Lawless said.

Source: RP Data

Tags: economy, housing, market, news, real estate, research

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Householders are being warned to watch out for scammers cold calling purporting to sell green products, or even offering them for free thanks to “rebates” in an effort to elicit funds or individuals’ bank account details.

The warning comes after earlier this month residents in northern Victoria received phone calls offering free solar panels thanks to their homes supposedly being rezoned by the council.

The calls, which appeared to listeners as though they were backed by the local council and the state government, contained automated messages that asked receivers to dial certain numbers to move to the next stage.

The pre-recorded message also claimed consumers would save up to $1500 a year in electricity costs, and then asked for their bank account or credit card details.

Rural City of Wangaratta Mayor Cr Anthony Griffiths has warned residents in other areas of Australia to be on the lookout for similar phone calls.

“The advice from the other relevant government departments seemed to be that there had been reports of it in other areas, they didn’t actually outline where, but it didn’t seem that we were an isolated case,” he says.

Griffiths became aware of the scam after ratepayers began calling asking if their homes had been rezoned.

“People were saying ‘well hang on, how can we be rezoned, we haven’t had any notification?’” he says.

“There was a good reason they hadn’t had any notification, it was completely bogus.”

Griffiths thinks his area may have been targeted as seven local councils in the region have bandied together in a group-buying exercise for solar panels to offer ratepayers discounts.

“[Perhaps] the scam decided to piggyback on that publicity, that’s the main reason we can focus on,” Griffiths says.

Although he is not aware of anyone being taken in by the fraudsters, Griffiths says there’s still reports of scattered cases of the phone calls coming through.

A Victorian Government spokesman says there is no “widespread problem”, however, admits it is hard to know if anyone has been conned by the scam.

“It’s often the case in these incidents that people are embarrassed to come forward if they’ve lost money to scams, that’s generally the case across the board with scams, so there is in fact, we believe, significant underreporting of this sort of thing,” the spokesman says.

“There’s no epidemic of it but that doesn’t mean it’s not occurring elsewhere and our Consumer Affairs people are keeping a very close eye on it.

“Wherever there’s new technology and claimed cost savings, there are also swindlers out to make a quick buck. So with things like renewable energy, solar panels, water efficiency and so forth, there are, in all those areas … instances of people trying to scam [others].”

For ways to spot a scam and avoid it, see SCAMwatch, a website run by the Australian Competition and Consumer Commission.

Source: www.domain.com.au

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A week ago experts were warning interest rates were going up. Now lenders are cutting them.

Sydney-based banks – Commonwealth, Westpac and St George – led the pack yesterday reducing their interest rates on fixed-term loans.

The fixed-term rates offered by these lenders are now well below the average discount variable rates which rise and fall with movements in the Reserve Bank’s official cash rate.

Variable rates are favoured by the vast majority of home borrowers but the head of retail banking services at Commonwealth Bank, Ross McEwan, said yesterday many borrowers wanted certainty with their home loan repayments and that fixed loans offered “that peace of mind”.

The cuts to fixed-loan rates follow a dramatic shift in global economic sentiment over the past few weeks. Growing concern about the euro zone debt crisis and the possibility of a double dip recession in the US triggered turmoil on international financial markets.

The decision by ratings agency Standard & Poor’s to downgrade the sovereign credit rating of the United States to AA+ from AAA has contributed to the volatility.

The interest rates on long-term bonds have also fallen sharply, making it cheaper for lenders to fund mortgages. This has helped banks offer lower interest rates for fixed-term home loans.

However, despite the stiff competition in the home lending market, figures released by the Bureau of Statistics yesterday showed the number of new loans to owner occupiers was stagnant in June.

Australia’s biggest home lender, Commonwealth Bank, cut the interest rates on its fixed home loans by between 0.25 and 0.6 percentage points yesterday. Westpac reduced its three-year fixed rate by 0.2 of a percentage point while the Westpac-owned St George Bank cut both its two- and three-year fixed home loan rates by 0.2 of a percentage point. ING Direct also reduced its fixed home loan rates.

Some three-year fixed mortgage interest rates are now more than 0.5 of a percentage point lower than the basic variable mortgage interest rates offered by the big banks.

But money market investors are betting that official interest rates – and therefore variable rate mortgages – will fall soon. The bill futures traded on local financial markets that predict the future movement of the Reserve Bank’s cash rate are pricing in a 0.5 of a percentage point cut next month and a further 1 percentage point of cuts by March next year.

Despite this, many market economists believe the Reserve Bank will leave rates unchanged until global economic and financial conditions becomes clearer. Last week, the Reserve Bank Governor, Glenn Stevens, said “the acute sense of uncertainty in global financial markets over recent weeks” had been a factor in leaving rates on hold.

The relative health of the economy was underscored yesterday when the National Australia Bank revealed earnings of $1.4 billion for the June quarter.

Story source: www.domain.com.au

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The Federal Government aims to introduce, by as soon as next year, mandatory energy star ratings for homes being sold or rented out.

Under the favoured system, vendors and landlords would have to pay about $200 to have their property assessed, with a total cost to homeowners and property investors of $1.1 billion over the next 10 years.

Housing experts said most McMansions would score very poorly on the ratings system, which would be similar to the methodology used to identify the energy efficiency of whitegoods.

Mick Fabar, director of private energy-ratings firm Green Homes Australia, said: “Through our experience with our rating tool, those two-storey McMansions would not get over zero.”

There are significant financial implications for owners of these homes – and most older dwellings which are also likely to rate lowly.

Owners would need to either spend up on going green or face the prospect of a lower sale price.

A Federal Government study into a similar ACT scheme operating since 1999, which rates properties out of 10 stars, found that a 1-star difference affected selling prices by 3 per cent.

Asked whether the scheme would have a negative effect on the sale price of some homes, a spokeswoman for Climate Change and Energy Efficiency Minister Greg Combet said: “It will allow buyers and renters to better compare different properties, making it easier to identify a property which uses less energy or water and thereby save money.”

But the Federal Opposition’s spokesman for climate action, environment and heritage, Greg Hunt, said such a scheme would create “enormous uncertainty”.

“It could push up the cost of rent for people just when they are feeling cost-of-living pressures,” Mr Hunt said.

“It’s another cost imposed on people from the Government.”

The new federal system is expected to replace the Bligh Government’s so-called Sustainability Declaration which was introduced in 2009.

Under the scheme, sellers were meant to sign a form detailing their home’s energy-efficient features.

But the property industry complained the forms were too complex and buyers were not interested in the information.

Story source: www.couriermail.com.au

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Reality TV shows about DIY renovating are BIG at the moment! The Block, Top Designs and The Renovators are all ratings winners. These programs have an uncanny ability to draw us in night after night until we feel just as fretful and exhausted as the quirky contestants themselves. But we just can’t get enough!

So how authentic are these shows and what impact are they having on real Australian home owners? Well, most professionals and experienced DIY enthusiasts would agree that if you take off the rose-coloured glasses and look behind the scenes, the renovating picture is somewhat different. Whilst the shows have a positive impact on getting people thinking about style and design, they don’t necessarily reflect the reality of a renovation. In the real world home owners are faced with designing a renovation well beforehand, getting planning and building approvals (which can take months) and mapping out the construction course. These shows are obviously more driven by entertainment needs and time constraints where the contestants and renovation activity are packaged into a prime time production.

Renovating programs can, however, provide excellent ideas and invaluable information to viewers who are thinking of undertaking a major overhaul. Things like sticking to a budget, using good trades people and only tackling one room at a time, are all important renovation principles. Marketing tips such as creating street appeal and a good first impression are also uncovered, which adds to the overall value of these shows. But if nothing else The Block and its rivals provide an interesting insight into how we as mere mortals cope with extreme sleep deprivation and intense pressure – and don’t we just love the fights, the tantrums and the major dummy spits!

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The clouds of economic gloom gathering over the US and Europe could have a silver lining for Australian borrowers – a double rate cut is now predicted for next month.

After global shares sustained $2.5 trillion losses last week and US government had its credit rating cut by Standard & Poor’s late on Friday (US time), investors are now pricing in a 50 basis point cut by the Reserve Bank when its board meets on September 6, according to Credit Suisse data.

A move of that size would lop the official cash rate from 4.75 per cent down to 4.25 per cent and save the holder of a $300,000 mortgage about $93 a month if passed on in full by the commercial lenders.

Until a little over a week ago, most commentators had been tipping the next rates move by the central bank to be an increase following sharply higher inflation figures in the June quarter. That sentiment took a 180-degree turn during last week’s global sharemarket rout, a slide that looks like continuing into this week.

In early trading, local shares had shed another $27 billion in value – before a modest bounce – adding to the $100 billion lost last week.

Russell Jones, Westpac’s global head of interest rate strategy, said Europe’s debt woes and developments in the US including the country’s first-ever debt downgrade, would be on the RBA’s radar.

“During the GFC, it was very willing and able to cut rates aggressively when things deteriorated,” he told BusinessDay. “If it continues to get worse, they could well pull the trigger.”

Westpac broke ranks with other major Australian banks last month by predicting rate cuts by the end of the year, and a total of four by the end of 2012. ANZ, for instance, forecast the RBA would lift rates at its board meeting last Tuesday.

The prospect of lower interest rates may help shore up the real estate market in Australian capitals. The auction clearance rate remained steady in Sydney and Melbourne over the past weekend, at 56.2 per cent and 58.1 per cent, respectively.

RBA view

Investors this morning were betting that the trigger will be pulled, with the equivalent of two typical moves of 25 basis points likely to be wrapped into the one meeting in September. In a year’s time, the cut may be triple the size, with markets tipping the RBA’s cash rate will be slashed to 3.25 per cent – not far above the 3 per cent 50-year low reached during the depths of the global recession in April 2009.

In recent comments on interest rates, the RBA board has stuck with its cautionary language. The bank said that the “current mildly restrictive stance of monetary policy [was] appropriate”, and that although “year-end inflation was high”, it was most likely caused by “extreme weather events earlier in the year”.

But the RBA said measures that better indicate the trend in inflation had “begun to rise over the past six months after declining for the previous two years”.

“While they have, to date, remained consistent with the 2–3 per cent target on a year-ended basis, the board remains concerned about the medium-term outlook for inflation,” the RBA said last week.

Commonwealth Bank chief economist Michael Blythe was less confident of a rate cut, saying there was “a bit of divergence” between interest rate futures and other views on rate moves.

Mr Blythe said that while the odds had shifted towards a cut in the last few days, a move downward was still “a long way off”.

“A survey last Friday showed [most economists] expect no change at the September meeting. The RBA also signalled on Friday that a rate rise at some point was more likely than a cut. They refused to endorse market pricing for rate cuts in their forecasting assumptions,” he said.

Story by Thomas Hunter & Chris Zappone – www.domain.com.au

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It’s tax time and property investors should show caution when preparing their returns.

Here are some tips:

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You have to hand over your phone number and can be told to take off your shoes. Now visitors to open homes for sale across Sydney could find their every move scrutinised by security guards.

Sales agents will soon offer the security personnel to vendors ”for as little as $995” a month to prevent items being stolen or damaged. They will also offer insurance policies costing between $295 and $925.

You may have thought that peace of mind would come from the vendor’s regular home and contents insurance, but generally this is not the case.

”Any insurance you may have is made void once you have willingly invited people into your home,” says a buyers agent, Peter Kellaher, whose new business Open Home Insurance and Security will provide the services.

Mr Kellaher says there have been reports of ”hundreds and hundreds” of cases of theft and damage at open homes in the past decade.

”People are getting more desperate,” Mr Kellahar said.

He introduced the Herald to Tom Teal, 49, whose wife had earrings, jewellery and sunglasses stolen from a bedside table at an Abbotsford open home in 2005.

”You would think people coming into your premises at an open home are going to be fairly trustworthy, but you live and learn,” Mr Teal said.

Channel Nine wasn’t taking any chances last weekend during the first open homes for The Block in Melbourne, where 30 of Mr Kellaher’s guards kept an eye on the 25,000 people who trekked through the four houses.

”While I don’t think there’s any chance fans of our show would come to steal something, we do have $5000 laptops sitting there,” says the show’s executive producer, Julian Cress.

Property sales agents are also keen to promote the idea of security and insurance for regular open homes.

Agents say they are not liable when it comes to vendors, though Mr Kellaher says that in the case of tenants, they are. He points to last year’s reforms to the Residential Tenancies Act (clause 61) which state that if a tenant is forced to open their home and something is damaged or stolen, landlords or their agents could be forced to pay compensation.

The senior policy officer at the Tenants Union of NSW, Chris Martin, is reluctant to endorse any insurance policy and is not sure tenants have to agree to an open home.

”They can show prospective purchasers, but that doesn’t mean the next-door neighbour or any old stickybeak,” he said

Story by Stephen Nicholls www.smh.com.au

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Balancing lifestyle desires with budgeting necessities is a greater challenge as living costs rise and the economy looks uncertain. How are you preparing to cope with tougher times?

Australia’s largest independently-owned mortgage broker, Mortgage Choice suggests thinking hard about making changes to your home loan situation now to reap rewards over the long haul.

Spokesperson Kristy Sheppard said, “Revisiting your loan repayment strategy during a tumultuous period such as the one we are experiencing now will help prepare you for what may lie ahead.”

“For example, increasing your repayments by any amount above the minimum will reduce the principal loan amount owed, thereby reducing the loan’s term and interest paid over its lifetime. So too will contributing lump sum payments such as your tax return or end of year bonus. This builds a safeguard, helping prepare your financial position for unforeseen changes.

“Importantly, if misfortune doesn’t come your way you will be living debt free sooner. This can open the doors to other investment opportunities from which you can build a stronger financial future.”

Mortgage Choice offers the following helpful hints to get you ahead:

Round ’em up!

Consider rounding up your home loan repayment amount. Take a loan of $350,000 at 7% over 30 years. If the monthly repayments of $2,329 were rounded up to $2,500 at five years in and that continued until the end of the loan term, the loan will be repaid approximately four years earlier and the interest owed is reduced by over $69,200 (if all loan aspects remained as is).

Visit your loan more frequently

Depending on the loan type and lender, you may save thousands of dollars in interest by paying a loan fortnightly. For example, a borrower with monthly repayments of $2,000 will pay $24,000 off their loan by year end. If they paid fortnightly, by splitting their monthly repayment in half and making repayments of $1,000, they will pay $26,000 as there are 26 fortnights in a year.

Take advantage of extra funds

An offset account attached to the home loan account acts as savings that reduce the interest accumulated on the loan amount. For example, if the above-mentioned loan has $5,000 deposited in a full offset account from day one, the term is reduced by approximately 14 months and the interest owed is reduced by around $33,856. Note some lenders offer partial offset only.

Health check it

Review your loan and decide if you need all the features you may be paying a premium for. Compare it against others by getting a home loan health check from an experienced mortgage broker, to see if you can save money by negotiating a better deal with your current lender or by switching lenders.

Weigh up good vs. bad of switching

When deciding whether to refinance take a good look at the pros and cons, including the costs and what you really need as opposed to want. Remember to factor in all loan aspects, like features, rate, repayment type and frequency, accessibility and fees. It may be cheaper to keep your existing loan rather than pay new loan costs such as application fees, lenders mortgage insurance, registration fees, account fees, discharge fees, etc. Check with your broker to help you make the final call.

For home loan tips, trends, facts, data and other information, visit MortgageChoice.com.au,

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Commonwealth Bank of Australia has launched an online game created by ad agency BMF to allow would-be investors to simulate life in the property market.  

The announcement:

“Commonwealth Bank today released Investorville, an online simulation tool for budding property investors. Investorville helps users de-mystify the often complex world of property investment, including simulating ongoing costs, without ever putting any of their own capital at risk.

Commonwealth Bank and creative agency BMF created the unique property investment tool, which combines market insights from RP Data and innovative web-based technology. Investorville mimics reality to provide people with real-time exposure to the property market, allowing them to make more informed property decisions.

Investorville is aimed at existing home owners who may not realise their potential to invest in real estate, as well as those who already own an investment property. Available online, the site is designed to be as fun and engaging as it is educational and informative.

Mark Murray, General Manager Commonwealth Bank Consumer Marketing, explains the rationale behind the development of Investorville:

“Making the leap from owning your own property to buying an investment property can seem quite daunting to a lot of people. Investorville helps to break down common misconceptions and show the practicalities of property investment.

“The really beneficial part of Investorville is that users can, in the true sense of the term, try before they buy. The properties and data are reflective of the Australian property market and the types of properties available” Mr Murray went on to say.

Aaron Michie, Interactive Concepts Director at BMF, the creators of Investorville, explains further:

“We’d seen property games and property investment planners before, but none seemed to offer an experience that a person could apply to the real-life challenges they were facing. Investorville combines sophisticated economic modelling and real market data with a simple user-friendly gameplay to give people realism and simplicity.”

Commonwealth Bank’s Investorville is the second online innovation developed by the Bank to enable people to be better informed when it comes to real estate. Launched in 2010, the Commonwealth Bank Property Guide iPhone App uses augmented reality to overlay data and tools onto the phone’s screen, providing property information on almost any premises the phone is pointed at. Since launch the Commonwealth Bank Property Guide iPhone App has been downloaded over 160,000 times.”

Investorville can be found at www.investorville.com.au

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