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.
Rate hikes: Blow for homeowners as Westpac lifts home loan rates
While the RBA interest rates remain on hold, it would seem one bank it taking its own measures on home loan rates.
This article from The Herald Sun looks at Wetpac’s decision to raise rates.
WESTPAC has jacked up its home loan rates, firing the starting gun on a round of hikes across the big banks in a blow for millions of Australians with mortgages.
Westpac will lift all of its variable home loan rates by 0.14 percentage points, adding about $430 a year to repayments on a $400,000 mortgage.
Based on previous “out of cycle” rate hikes, other major banks are now likely to follow Westpac in hiking their mortgage rates.
The rate hike at Westpac will take effect on September 19.
Westpac’s move comes after AMP Bank, Macquarie Bank, Bank of Queensland, ING and a raft of other smaller lenders lifted home loan rates in recent months, citing increasing funding costs.
Before the hike today, ANZ had the lowest standard variable rate for owner occupiers paying principal and interest, pegged at 5.2 per cent.
This was followed by the Commonwealth Bank at 5.22 per cent.
National Australia Bank and Westpac were both at 5.24 per cent.
Westpac’s standard variable rate is now 5.38 per cent.
Standard variable rates are barometers for other home loan rates at the big banks: when their standard rates increase, all their variable mortgage rates generally go up by the same amount.
Banks have been paying more in recent months for the money they lend out to home loan customers, particularly the money they borrow in international markets.
Industry experts had been tipping that as a result, the major banks would follow the trail blazed by smaller lenders and lift rates to bolster their earnings.
Westpac consumer chief executive George Frazis said in a statement: “This is a tough decision but we have a responsibility to price our mortgage products in a way that reflects the reality of our funding costs”.
“We initially hoped that this increase would be temporary, and therefore we have incurred these costs over the last six months,” Mr Frazis said.
“The rate changes announced today will not recover these costs.
We now believe wholesale funding costs will remain high for the foreseeable future.
“Given the step change in our funding costs, we have made what we believe is the appropriate decision: to balance the interests of all of our stakeholders by remaining both unquestionably strong and competitive in the market,” Mr Frazis said.
Analysts at investment bank Citi said in a report for investors in recent weeks that bank funding costs had spiked to a year-long high.
“The major banks are facing similar pressures (to their smaller counterparts) and are now expected to follow suit,” they said.
“We are expecting announcements by September to shore up financial year 2019 earnings expectations.”
They forecast an average increase in home loan rates across the big four of 0.08 percentage points, adding about $230 a year to repayments on a $400,000 mortgage.
Some months ago I wrote about the prospect of a ‘rental crisis’ being the next big housing market story (even leading some readers to question my mental health – isn’t social media the best?).
Of course, these trends play out over a period of years rather than in tune with today’s 24-hours news cycle.
And just as I was lambasted for flagging overbuilding of units in some pockets in 2013 I don’t expect much support this time around either.
Despite record dwelling construction through this cycle, rental vacancies have actually fallen over the past year, with only Sydney holding the numbers up as record supply comes online (a huge number of investors bought off the plan in this cycle).
In some markets such as Hobart and a number of regional towns rental vacancies have sunk as close to zero as you’ll ever see (there’ll always be some frictional vacancies) – and Canberra is heading in that direction – but these episodes may be explained by local factors.
The acid test will be what plays out in Victoria.
And the signs aren’t looking good for renters, with the latest REIV figures showing the state’s vacancy rate plunging to the lowest level on record.
Source: ABC News/REIV
As Melbourne accelerates towards full employment on the back of a record construction boom, the state is attracting migrants from all over Australia as well as overseas.
Is giving up smashed avocado a small price to pay when it comes to owning a home?
According to an article on news.com.au it would seem so – with wannabe homebuyers unwilling to give up their lifestyle for a property.
Victoria’s budding home buyers are more willing to give up overseas trips and their dream jobs to break into the market than life’s smaller pleasures, like coffee and avocado, a new survey reveals.
Victoria’s wannabe home buyers are more willing to give up overseas trips, having a pet and their dream jobs to break into the market than life’s smaller pleasures.
A new survey by property investment platform BrickX has found just 2.3 per cent of respondents from the state would give up coffee and 3.4 per cent, avocados, if it meant they could own a property sooner.
Almost three quarters of the 266 Victorians quizzed also said they didn’t feel guilty about buying avos when they knew the money could be put towards a property.
But a resounding 48.9 per cent said they’d ditch overseas holiday plans for three years for a shot at home ownership, while 39.1 per cent pledged to forgo all personal shopping for items like clothes, gadgets and makeup for a year.
Others told the survey they’d sacrifice living in a city (33.5 per cent), having a child in the near future (26.7 per cent), having a pet (26.3 per cent), their dream job (15 per cent) and having children at all (14.3 per cent) to break into the market sooner.
BrickX chief executive Anthony Millet said while there was “desperation” among budding buyers, many were reluctant to give up their small luxuries.
“They think, ‘why can’t we enjoy ourselves on the savings journey?’”
Melbourne baker and aspirational homeowner Darren Kovach said he hadn’t sacrificed any lifestyle perks on his mission to save a deposit, as he was confident he’d achieve the Great Australian Dream in the long-term.
The 25-year-old is relying on BrickX — which buys properties in high-performing Aussie suburbs and divides them into 10,000 shares or “bricks” people can then invest in — to do so.
“It’s great having this thing I can’t just go and pull money out of on a whim,” Mr Kovach said.
Australia’s housing market has softened over the past year.
Prices have been falling for the past 10 months, led by declines in Sydney, with other indicators such as auction clearance rates, housing finance and new home sales all weaker than a year ago, largely reflecting the impact of tighter lending standards introduced by Australia’s banking regulator, APRA, in late 2014.
Sales volumes have also fallen, dropping to the lowest level in 28 years, according to analysis from Westpac Bank.
“New listings are tracking at just under 100,000 per month versus a historical average of 105,000 per month,” says Matthew Hassan, Senior Economist at Westpac.
“The sales to new listings ratio is sitting in the 0.20-0.21 range, well below the average of 0.24 but above cycle lows in 2011 (0.19) and 2008 (0.17).
“The implication is that sellers are pulling back, unwilling to test the thin market and not ‘forced’ by circumstance to do so.”
Based on the current pace of sales, and after seasonally adjusting the CoreLogic data, Hassan says it would take nearly five months to clear all outstanding stock for sale, above the historical average of four months but below the peak of six months in 2012.
However, that only tells half the story.
Rather than being uniform in nature, the increase in the average sale time has largely being driven by one property type in particular: units.
While we try to resist the urge to judge, there’s no doubt that first impressions count.
Whether you’re expecting guests, or you’re hoping to transform your spare room into a rental, experts agree there are are five key areas that friends notice first about your house. Thankfully, it takes minutes to correct them.
Here, Miranda Cresswell, brand director at OneFineStay, and Ariel Kaye, CEO of Parachute and the newly opened Parachute Hotel, explain the most effective ways to update your home before guests arrive.
A styled entryway
“A clean and welcoming entryway is crucial in leaving a good first impression – it’s the first thing a guest sees.” says Cresswell.
When transforming a home into a OneFineStay property, she says it’s crucial that the entrance introduces a design theme.
“A clean and welcoming entryway is crucial in leaving a good first impression.” Photo: iStock
“A good first impression – that moment when a guest’s breath is taken away – comes from stepping into a home with striking, deliberate design,” she says.
“Think bright, organised, and neutral. There’s a place for the eclectic or quirky, but the entryway is not that place.”
Instant fix: If you don’t have time to restyle your entryway, Cresswell says updating wall decor is a simple way to unify the space.
“Rather than cobbling a bunch of different frames or odds and ends together, choose a few specific things that pair perfectly.
A precisely placed mirror can make a space look much bigger and brighter.”
An uplifting scent
If you only pay attention to the look of your home, you’re missing one of the most important factors that influence guests: fragrance. “Scent can be one of the most immediate factors in making a first impression, and it is often overlooked,” says Cresswell.
A Trulia study suggests it could also increase the value of your home; 30 per cent of real estate agents said scent was the single most important sense during an open house and named vanilla and fresh scents as the most popular among house hunters.
Instant fix: Light a vanilla or citrus candle in the living room or near the entrance to infuse your home with an uplifting scent.
If you’re turning your home into a rental, be sure to use a tall lantern to shield the open flame.
“Flowers always add an elegant but subtle fragrance, and baking cookies is another great way to get a welcoming air on arrival,” says Cresswell.
A lack of clutter
It’s time to address that discarded pile of magazines or strewn shoes – when it comes to first impressions, clutter counts.
73 per cent of real estate agents said cleanliness is the most important sight-based feature during a viewing, possibly because unnecessary furniture and decor can make a space feel small.
When it comes to first impressions, clutter counts. Photo: Stocksy
“A foyer should have absolutely no clutter,” says Cresswell. “Everything, from decorative knickknacks to practical things like shoes, should have a designated place.
Keys should be hung neatly on a key rack, and shoes should have a rack or boot tray.
As for cleanliness, dusting and vacuuming go a long way.”
Instant fix: Use decorative baskets to mask mess.
Position them by the doorway, under a coffee table, or beside a sofa to fake a cleaner-looking home without removing any items.
The colour you choose to paint your home can have a big impact on its value.
If you’re painting a guest room, real estate agents told Trulia that white, ivory, and eggshell are the most appealing shades to create an inviting space.
The colour you choose to paint your home can have a big impact on its value. Photo: Stocksy
Instant fix: If repainting your home isn’t an option, pay attention to lighting.
A carefully chosen floor lamp with the right coloured bulb can subtly change the intensity of paint and is a perfect way to make a slate-gray room feel bright and fresh.
To turn a good first impression into a lasting one, Kaye says personal touches matter most.
“A well-made bed is the most important thing you can offer your guests.
It is the key to making your visitors feel completely comfortable, cosy, and relaxed.”
When creating the brand’s first-ever hotel, Kaye channelled five-star vibes with a few expert touches.
“A well-made bed is the most important thing you can offer your guests.” Photo: Stocksy
“You should always provide at least two pillows of varying firmness per guest and dedicate a few sets of towels and sheets for guest use only.
This will allow them to last longer than if you added them to your daily rotation of linens.”
Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au