- Inflation fears subside
- February bounce-back for new home sales
- New options sought for home deposits
- Australia's population reaches 20.4 million
Inflation fears subside
Your Mortgage Magazine 30 January 2007
Mortgage-paying and renting households are likely to be spared from another interest rate hike this year after the main measure of inflation showed an unexpected drop in the closely watched data.
The Australian Bureau of Statistics said the consumer price index fell by 0.1% in the December quarter - the lowest quarterly reading on inflation in almost eight years. The annual inflation rate fell from 3.9% to 3.3% - a range closer to the Reserve Bank of Australia's target band of 2-3%. The lower-than-expected consumer price index data caught economists by surprise as the majority were expecting a 0.20% increase for the same period.
The upbeat inflation data is boosted by the dramatic drop in the cost of petrol prices and bananas, which have skyrocketed in the last year. In the December quarter, petrol prices dropped 12.4%, while fruits fell 5.2%.
"This is a tremendous result on inflation and means that interest rates have now peaked," said Craig James, chief economist with CommSec. "With inflationary pressures in retreat, the good news is that the Reserve Bank of Australia will be in a position to cut rates if the economy starts to flag."
James predicted that with interest rate settings on hold, a recovery in the housing sector is a real possibility in the second half of the year. "Up until now, there has been little need for investors to consider asset classes apart form equities. But the property market is now looming larger, especially with rents soaring and the prospects of higher property prices in the coming year."
However, James warned homebuyers to be cautious when reassessing their mortgages in light of the current interest rate environment. "Borrowers should consider their personal situations rather than trying to predict interest rate changes," he said. "Whether rates are expected to rise or fall, it is always best for borrowers to factor in a worst-case situation of higher rates - at least a 25 basis point rate hike. If your job is less secure, then fixed rates appeal, particularly at current interest rate levels (7.35% fixed 5 years, vs 8.05% standard variable). You may also consider fixing part of your loan with the rest variable to effectively hedge the interest rate risk," James added.
February bounce-back for new home sales - April 2006
Your Mortgage Magazine 4 April 2006
After a sluggish start to 2006 and a disappointing five-month period, new home sales recovered slightly in all five mainland states during February.
According to the latest Housing Industry Association (HIA) New Home Sales figures, the sale of new homes and units among Australia's largest builders and developers increased by 7.6% in February to 8644 dwellings. Sales of new houses increased by 7.4%. The sale of multi-unit dwellings increased by 9.8%, the first rise since October last year
"It was a disappointing start to 2006 so recovery in sales across the board in February certainly provides a more positive sign for the new housing industry," said HIA's chief economist, Harley Dale.
"We've yet to see any kind of sustained recovery in lead indicators for new housing. We would hope that evidence of such a recovery will build over the course of this year," Dale added.
HIA's New Homes Sales Survey is compiled from a sample of the 100 largest residential builders in Australia and is a leading indicator on new housing activity. For the month of February, detached house sales increased by 15% in Queensland, 12% in WA, 9% in SA, 5% in NSW, and 2% in Victoria.
"House levels in NSW lifted once more, but the level remains very low as Sydney continues to buckle under excessive housing affordability constraints," Dale said. "Sales were up in the other four mainland states, with the strongest growth coming, not surprisingly, from WA and Queensland."
New options sought for home deposits
Your Mortgage Magazine 4 April 2006
The Real Estate Institute of Australia (REIA) has backed the NSW Iemma government in its efforts to persuade the federal government to allow first homebuyers access to some of their superannuation to use as a home deposit.
Despite the cooling Sydney housing market, home loans in NSW remain the least affordable in Australia. In the December quarter 2005, the proportion of family income required for payment of the average mortgage in NSW was 36.5%
With most lenders requiring at least a 5% deposit, first homebuyers are struggling to save and are forced to wait longer to enter the market, or are alternatively taking on higher risk loan products. There has been growing pressure on the federal government to help young Australians raise a deposit. One option put forward is to allow first homebuyers access to their superannuation.
REIA president Tony Brasier said: "Many first homebuyers are also paying rents of around $260 per week, starting or raising a family, paying off accumulated HECS debts, and generally trying to realise some of the aspirations Australians hold for their adult lives.
"It's not only Sydney where first homebuyers face difficulty. Right across Australia, the increase in house prices and the decline in home loan affordability has squeezed first homebuyers right out of the market. In the December quarter 2005, only 18.7% of all dwellings financed were first homebuyer purchases, compared with an average of 21.8% from July 1991 to June 2002, when prices started to rise.
"The REIA supports access to voluntary superannuation contributions for first homebuyers to make a deposit on their home."
Shopping Online: Buy safely and wisely
If the thought of facing long lines and crowded parking lots is distasteful to you, then consider shopping online! Just be sure to do your homework first to ensure that the bargains you're finding are truly as good as they sound. Here are some guidelines to assist you:
- Locate the online retailer's contact information and verify that there is a mailing address and phone number. This will enable you to contact the company if there is a problem with your purchase.
- Review the product description carefully to ensure that the item is not used or refurbished.
- Once you have selected a product, compare prices through other websites like. Don't forget to include shipping and handling costs in your tally, these can vary widely.
- Review the return policy. Is there a restocking fee? Who is responsible for return shipping?
- Examine the website's privacy policy to see what type of information they are obtaining and how they will use it. Verify that your information will not be sold or rented to third parties.
- Before entering your credit card number, be sure that the web page is secure. Never email financial information.
- Print out receipts from all online purchases and reconcile them with your credit card statements.
Hopefully these tips will help you to have a successful and calm shopping experience!
Australia's population reaches 20.4 million
Australia's population reached 20.4 million in September 2005, according to figures released by the Australian Bureau of Statistics (ABS).
In the year ended September 2005, Australia's population increased by 238,800 people, representing an annual growth rate of 1.2%, consistent with levels recorded in recent years.
Natural increase (the excess of births over deaths) was 129,100 people, contributing to over half (54%) of the total population growth over this period. The remainder of the increase was due to net overseas migration (109,800 people).
All states and territories increased in population, with Queensland experiencing the largest increase (75,100 people) and the Australian Capital Territory the smallest (1,700 people).
The Northern Territory experienced its largest population increase, both in absolute number and percentage terms, since the year ended September 1997, with an annual growth rate of 1.7% (3,400 people). Natural increase was the main contributor to the Territory's population growth (2,800 people) while net overseas migration added a further 350 people. During this period the Northern Territory also recorded a net interstate migration gain of 210 people.
Further details about recent trends in Australia's population were released today inAustralian Demographic Statistics, September quarter 2005 (cat. no. 3101.0) available free of charge from the ABS web site <www.abs.gov.au>.
