Greetings from Scoutable and welcome to our May Wrap Up.
May saw 1,943 properties scheduled for auction across Sydney, with an average clearance rate of 66%. This is up 3% from last years May average of 63% (3,018 properties).
Melbourne saw 2,621 properties scheduled, with an average clearance rate of 61%, down 2% from last years 63% average (4,387 properties).
Brisbane saw 387 properties scheduled for auction, with an average clearance rate of 36%, down 8% from last years 44% average (590 properties).
The election is finally over! It feels like we have been speculating the outcome for most of the year. It turns out the polls were wrong and the Liberal party has retained government. The property industry welcomes the result as Labor’s proposals on negative gearing and capital gains tax will not be going ahead. Peter Switzer, business and financial commentator, reports that the less controversial Coalition promises are likely to lead to a rebound in business and consumer confidence.
Adding to the election news, there are a number of recent announcements which are likely to have an impact on the property market: -
The Reserve Bank has given indication of an interest rate cut in June
The Australian Prudential Regulation Authority (APRA), the banking regulator, has proposed a relaxation of lending restrictions
The Government will guarantee first home owner mortgages with 5% deposit and no LMI (Lenders Mortgage Insurance)
All of the above will provide more buying power, especially to first home buyers.
APRA lending restrictions – Since 2014, Banks were required to assess the serviceability of a borrower on an interest rate of 7%, or a 2% buffer over the loan's actual interest rate - whichever was higher. As interest rates are averaging below 4% and are forecast to remain low, APRA is proposing to eliminate the required 7% assessment rate and let the bank set their own minimum assessment rates. This will provide borrowers with an ability to access more funds.
First Home Loan Deposit Scheme – First home buyers with a deposit of only 5% will no longer have to pay lenders mortgage insurance (LMI). The government will guarantee loans up to 20% of the value of the home. Buyers won’t need to have a full 20% deposit and will save around $10,000 by not having to pay LMI. First home buyers earning up to $125,000 annually or $200,000 for couples, will be eligible. The value of homes that can be purchased under the Scheme will be determined on a regional basis, reflecting the different property markets across Australia. The scheme is currently capped at 10,000 borrowers. Approximately 127,000 first home buyers purchased last year, meaning not everyone eligible for the scheme will be able to access the benefits.
Many industry experts are predicting we are at the bottom of the market. Shane Oliver, Head of Investment Strategy and Chief Economist at AMP Capital, quoted in the Business Insider, May 23rd, “The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting”. Josh Williamson, senior economist at Citi Research, agrees and is predicting price growth towards the end of 2020. “We’ve upgraded our house price forecasts, we now expect house prices to show year-on-year growth of 3.0% by December 2020.”
If you are thinking of buying or investing in Australian property, get in touch to learn about Scoutable's services and how we can assist with your property search.
Until next month,
Kellie Landrey | Principal Buyers Agent
IN THE NEWS
POST ELECTION PRICE RISE
https://www.businessinsider.com.au/australia-property-market-election-rba-apra-home-prices-2019-5
RBA RATE CUT POISED FOR JUNE
https://www.abc.net.au/news/2019-05-21/reserve-bank-poised-to-cut-interest-rates-in-june/11134160
BORROWING CAPACITY INCREASES AS APRA LOOSENS KEY CONSTRAINT
https://www.smh.com.au/business/banking-and-finance/apra-moves-to-scrap-7-percent-mortgage-rate-floor-20190521-p51pht.html
PROPERTY OF THE MONTH
PETERSHAM STREET, PETERSHAM - OFF MARKET
This month, we present to you an off market opportunity in Petersham - a suburb of Sydney's inner west. Once an award winning agricultural area, also popular for kangaroo hunting, it is now commonly known to Sydney siders as "Little Portugal" due to it's many commercial Portuguese offerings. Its proximity to the CBD, the RPA Hospital and University of Sydney, ensures the suburb provides solid rental returns for investors, with low vacancy rates and above average potential for capital growth.
Petersham Street is located approximately 6km southwest of Sydney’s CBD and 700 metres from Petersham Station. The semidetached home is situated on 90sqm of land. The layout comprises open plan kitchen / living / dining, master bedroom with built-ins, bathroom incorporating laundry and courtyard with rear lane access. The property is east and west facing. There is no parking.
The price guide is $800,000, with a rental guide of $600 per week. Should these figures be achieved, the resulting gross yield would be 3.9%.
We love the use of skylights, the established mandarin tree out the back that's currently loaded with fruit, the cute park across the road, the proximity to retail facilities of Petersham and Leichhardt and the potential to add future value.
If you'd like to know more about this property or any others, please get in touch.
