There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some weekend reading…and please forward to your friends by clicking the social link buttons.
Interest-only mortgage borrowers in hot water as data shows less financial responsibility
The sand in the hourglass seems to be running out for interest-only mortgage borrows according to research results.
This article on Domain.com.au looks at the risks that have come about as a results of poor financial responsibility from interest-only mortgage borrowers.
Pressure is mounting on interest-only mortgage borrowers as new research shows they tend to be poorer money managers and present as “risk flags” to financial institutions.
An apparent propensity to spend their way further into debt and forgo savings when faced with higher costs, and an increased tendency to sell their property if interest rates rise, make interest-only borrowers a higher risk, according to Morgan Stanley analysts.
The research coincides with a fresh plea from Australian Prudential Regulation Authority (APRA) chairman Wayne Byres for banks to show more caution in their lending practices amid “heightened risk” in the home loan market.
If the exposure to interest-only risks aren’t further reined in by regulators and major lenders, banks could see a rise in non-housing loss rates, according to Morgan Stanley’s AlphaWise research arm, leading to further instability in Australian property and debt markets.
Risks relating to interest-only borrowers are twofold.
First, rather than dipping into savings or cutting back on living costs, interest-only borrowers are more likely than others to sell their property if rates rise.
“This gap is particularly large among owner-occupiers, where [around] 20 per cent of interest-only loan holders would consider selling versus around 5 per cent of principal and interest (P+I) borrowers, suggesting that being on interest-only is a risk flag,” said Morgan Stanley analysts led by Richard Wiles and Andrei Stadnik.
And second, a 53 per cent majority of interest-only borrowers are likely to use credit cards or consumer finance to manage higher costs compared with 29 per cent of principal and interest borrowers.
This is the case despite interest-only borrowers’ mortgage payments being around 40 per cent lower than principal and interest on average, according to the report.
“This is consistent with our findings that interest-only mortgage holders are saving less than P+I customers, with this gap most pronounced for owner occupiers,” the analysts said.
The researchers say APRA could step up its crackdown on interest-only lending, after limiting the amount banks can have on their balance sheets earlier this year.
Read the full article here
Sydney unemployment still dropping
When it comes to job opportunities – all roads are leading to Sydney.
Sydney unemployment falling
Greater Sydney has been creating thousands of new jobs per month, and the harbour city’s unemployment rate has been trending down now for 44 months, hitting an annual average of just 4.65 per cent.
Brisbane recorded a nice fall in the month, but seems to be creating a dearth of full time positions.
Sydney’s monthly unemployment rate dropped to just 3.9 per cent in October.
Read the full article here
South East Queensland – property hotspot
Is South East Queensland the new property hot spot?
In this article for Switzer, John McGrath looks at the results from the latest McGrath Report 2018 and discusses what’s going on in the sunny state.
In our recently released McGrath Report 2018, we discuss how the affordability of South East Queensland is attracting record levels of interstate migration as well as rising interest from investors and first home buyers, with its housing market continuing to produce solid results, despite a sluggish economy.
According to CoreLogic statistics, Brisbane’s median house price increased by 3.0% to $520,000 in the 12 months to June 2017.
However, the apartment market posted a loss, with its median price falling 2.4% to $410,000, which is largely a reflection of the inner city oversupply.
Housing affordability compared to Sydney and Melbourne continues to be Brisbane’s calling card for home owners, investors and first home buyers alike.
A significant price gap between the cities will underpin rising demand over the next few years.
Queensland currently has the strongest first home buyer market in the nation, with loans to first time buyers surging to 20% of all owner occupier loans in June – the highest proportion since 2009, according to Domain.
In July 2017, the $20,000 First Home Owner Grant Boost was extended to December 2017 for the purchase of new homes up to a value of $750,000, with about 4,900 applications received for the grant so far, according to the State Government.
Our agents are reporting far more interest from Sydney and Melbourne investors this year.
Brisbane’s prospects for capital growth, plus superior rental yields of 4.1% for houses and 4.9% for apartments, continues to make it an attractive option for investors.
Owner occupiers are also increasingly realising the appeal of South East Queensland, which has become a major hot spot for internal migration, according to the Australian Bureau of Statistics (ABS).
Queensland welcomed 11,581 new interstate residents in the year ending June 2016 – a marked increase on 6,417 the year before.
In addition, Brisbane recorded its highest internal migration in at least a decade.
Among regional centres, the Gold Coast and the Sunshine Coast led the country with 6,428 and 6,200 new residents respectively.
The Gold Coast’s growth was the highest internal migration ever recorded by the ABS since they began this data series in FY07.
Compared with FY15, the Gold Coast’s internal migration was up an astounding 39%.
We see a once in a lifetime opportunity for young families to transform their lives with a move to South East Queensland.
The massive new equity that home owners in Sydney and Melbourne have gained could buy them an amazing new lifestyle and far less mortgage stress.
Read the full article here
Australian property prices have stalled as a wave of sellers hit the market
The weather may be heating up – but Australian property prices seem to have taken a cooler turn.
According to this article from Business Insider results show Australian property prices have stalled.
Sydney property prices are down 0.5% over the past month, leading a continued cooling in Australian housing market.
Data from CoreLogic showed price growth in Sydney was flat last week, which extended to markets nationally as average weekly growth across Australia’s five biggest capital cities was unchanged.
Melbourne property prices edged higher after falling flat in the week prior, while gains in Adelaide and Perth markets offset the previous week’s falls of 0.1% and 0.2% respectively.
On a monthly basis, last week’s price moves returned the markets in Brisbane, Adelaide and Perth to flat growth while the Sydney market continues to drag average prices lower for the month of November.
That leaves the national average for annual price growth at 6.1%, down from 6.4% in the previous week and 9.7% in the 12 months to the end of June.
The price action comes amid a noticeable downturn in auction clearance rates in the larger Sydney and Melbourne markets.
The weekend data showed a preliminary clearance rate of 61.5% in Sydney, which may fall closer to 55% when final figures are released on Thursday.
Melbourne’s preliminary clearance rates slipped to 69.6% — down from 71.4% in the week prior — as 1,717 homes hit the market, up from 1,303 auctions at the same time last year.
Nationally, it was busy weekend of auction activity as clearance rates continue to track lower from levels above 70% back in June.
“The combined capital cities returned a preliminary auction clearance rate of 65.4 per cent this week across 3,335 auctions making it the third busiest week for auctions so far this year,” CoreLogic said.
“The final clearance rate has remained below 65 per cent for the last 4 weeks and it’s likely that this will be the case again on Thursday when the final results are released.”
The total number of properties listed for sale across Australia rose to 116,197 last week, up from 115,487 in the previous week.
Read the full article here
Creating the ideal space for spring entertaining
Whether you’re entertaining in spring or summer – creating the perfect outdoor space is essential.
Ar article The Herald Sun looks takes you though some creative idea to make this entertaining season the best yet.
With the return of long lunches, brunches and BBQs upon us, it’s time to get our homes ready for spring.
From transforming your backyard into a blissful oasis to refreshing your outdoor space, here are eight effortless ways to freshen up you home this season.
Plants can help purify the air and add life to your humble abode.
Whether in the form of freshly cut flowers or plants, use foliage to freshen things up.
If your outdoor area needs some work, buy bulbs to plant.
Peonies and roses can be a little pricier, so swap out for budget-friendly options such as daffodils and tulips.
It’s time to let the stale air out!
Get a head start on the season by making a list of supplies you’ll need to tackle tasks.
After preparing your spring-cleaning checklist, roll up those sleeves and clean your windows, wash your curtains, update bed sheets and pillows, dust surfaces, clean the patio and prepare to welcome spring.
PREPARE THE PORCH
While the inside of your home is important throughout winter, the outside of your home trumps all else in spring. Invest in stylish outdoor furniture such as day beds, stools and sofas for lazy afternoons with friends or family.
Don’t forget to tend to your yard either – control pests, prune your flowerbeds and install water features to properly hydrate spring produce and plant
With the wooden scent of winter slowly disappearing, it’s time to re-energise your space with the fresh, clean smells of spring.
Fill your home with bunches of hydrangeas and hibiscus, scatter nectarine and honey candles throughout and infuse clean sheets and towels with citrus refreshing spray.
ADD SOME COLOUR
Bright, bold colours are an easy update for the new season. While a fresh coat of paint reinvents old, stuffy spaces, adding a dose of colour through décor can also brighten up the mood.
A statement rug, textured cushions or big blooms can give life to a dull colour scheme, while an overstated lamp doubles as a focal point.
WASH THE WINDOWS
As the days get longer, you’re more likely to open the curtains and windows to let the light in. Getting a window cleaner round, or tackling the job yourself, is a simple way to prepare your home for spring.
Maximise natural light by keeping those curtains open and strategically placing mirrors around your home to brighten up the room.
SOFTEN YOUR FURNISHINGS
Swapping out your heavy, winter scatter cushions is the perfect way to add warmth to your space.
For spring, incorporate lighter linens, seasonal hues and relaxed patterns to give a crisp new look.
If the urge to de-clutter has struck, spring is the perfect time to do so.
The simplest way of resolving clutter is by using the Four-Box Method. Label four boxes “Put away”, “Give away/sell”, “Put in storage” and “Toss”, working room-by-room to sort items into appropriate boxes.
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