 Good news for anyone planning to buy in early 2025, with the latest data suggesting conditions have turned in favour of buyers. During this year's spring selling season, sales volumes across the country were 4% lower than the spring average in 2019-23, according to CoreLogic. At the same time, the median amount of time required to sell a home rose from 28 to 32 days between the August and November 2024 quarters. All this points to a market in which, increasingly, vendors are having to compete with other vendors to sell their home, rather than buyers having to compete with other buyers to purchase a property. That suggests there will be pressure on vendors to reduce their asking prices as we head into 2025, which will give buyers more negotiating power.  If you’re thinking about entering the market in 2025, I’d recommend that you consider:
 The federal government is aiming to improve housing affordability by increasing the supply of housing, which would be expected to reduce demand and put downward pressure on prices. As a result, the government is attempting to facilitate the building of 1.2 million homes in the five years from July 2024. So what does the latest homebuilding approvals data show? Unfortunately, it suggests the government will struggle to achieve its target. In the five years to September 2024, only 937,950 approvals were issued. This is a drop-off from the five years to September 2023, when 949,469 approvals were issued, according to the Australian Bureau of Statistics.  It’s also worth noting that because some projects never proceed after receiving the green light, the building of 1.2 million homes will require an even greater number of approvals.
But there is some good news: Housing Industry Association economist Maurice Tapang said “the market is past its trough” and more buyers are now choosing to build new homes. “The cost of homebuilding materials are growing at a more normal pace, while build times for houses are back to pre-pandemic levels,” he added. If that trend continues, it would represent good news in terms of affordability.  There’s a lot more to a home loan than just the interest rate. The features of the loan can also have a big impact on your total mortgage costs and repayment flexibility, which is why it’s important to understand the potential benefits of a redraw facility and an offset account.
Redraw and offset have one thing in common – they reduce the amount of interest you get charged. If, for example, you have $500,000 outstanding on your loan and $40,000 in either redraw or offset, you’ll be charged interest on only $460,000 (i.e. $500k minus $40k). But there are subtle differences between the two features. Redraw is a facility that sits within your loan. The way you accumulate money in redraw is by making extra home loan repayments. The lender will allow you to borrow back (or redraw) these extra repayments, subject to certain conditions. But because this money belongs to the lender, it’s technically possible the lender might decide one day not to allow you to reclaim the money, or change the conditions of redraw. Offset is a separate transaction account that’s linked to (but separate from) your home loan account. The way you accumulate money in offset is through deposits – for example, salary payments. The money in your offset belongs to you, so the lender can’t prevent you accessing it.
 More and more Australians are turning to property investment, new analysis has revealed.
CoreLogic’s head of research, Eliza Owen, found that the number of investors entering the market was exceeding the number exiting, by comparing home loans data with listings data. “Investor inferred listings have been trending higher since March this year, to 13,000, but remain well below the peak of investor listings activity in November 2021,” Ms Owen said. “As investment listings remain below these highs, the number of new loan commitments remains high at 18,400. The previous five-year average for the month was 14,516.” Why is property investing so popular? Probably because it offers three big potential benefits:
 Are you considering renovating? If so, you’re not the only one, because renovations are incredibly popular, with homeowners investing $2.84 billion on alterations and additions in the June 2024 quarter, according to the Australian Bureau of Statistics. Typical costs range from about $2,000 to $5,000 for bedrooms, $15,000 to $30,000 for bathrooms and $25,000 to $50,000 for kitchens, according to JDL Constructions.
Here are three ways to finance your renovations:
 The vast majority of home loan customers are currently choosing variable-rate loans over fixed-rate loans. In August 2024, 98% of new loans were variable, while 2% were fixed, according to the most recent data from the Australian Bureau of Statistics. By comparison, in August 2021, when interest rates were at record-low levels, 46% of borrowers decided to fix, while 54% went variable. Interest rate expectations appear to be guiding borrowers' decisions. In 2021, when rates were at ultra-low levels due to the pandemic, most borrowers assumed they would rise sooner or later – so many chose to lock in those lower rates.  Today, most borrowers assume rates have peaked, so they want a variable loan that will get cheaper if and when the Reserve Bank of Australia starts reducing the cash rate.
Fixed vs variable
 More home-hunters are looking to buy property in a different state – but why? In the year to August, 22% of all enquiries to buy property on realestate.com.au came from buyers based in a different state, compared to 17% in the previous 12-month period. Some people are looking to buy interstate for reasons of affordability. New South Wales, for example, which is the priciest state, recorded the highest share of local buyers making enquiries in other states and the lowest share of receiving enquiries from other states. Meanwhile, some investors are targeting out-of-state locations that seem to offer better returns. The prime example is Western Australia – where property prices have been booming – which experienced the biggest increase in interstate enquiry over the past year.  Here are some due-diligence tips if you're thinking about buying interstate:
 The average borrower is taking out a $636,209 home loan, with loan sizes ranging significantly in specific states, based on mortgage data from the Australian Bureau of Statistics. Check out the chart below for the figures:  Regardless of whether your mortgage is higher or lower than these figures, you probably want to reduce your loan balance. Here are some tactics to help you achieve that goal:
 Lenders are competing strongly for borrowers, especially those with strong credit profiles. As a result, borrowing activity jumped 18.2% between January 2024 and August 2024, according to the most recent data from the Australian Bureau of Statistics. During that time, owner-occupier borrowing climbed 14.9%, while investor borrowing surged 23.7% and refinancing also increased, rising 1.2%.  If you have an existing loan and have not had it reviewed in the past two years, there’s a good chance a better deal might exist, or if you are in the market to purchase, please get in touch to find out.
I can help you:
 About 20% of home owners bought their property in the past five years, CoreLogic has estimated. The data shows that 2021 was the most common year in which homes were last purchased, with 5.3% of all homes being bought in that year.
It makes perfect sense for people to buy and sell homes every few years, because as circumstances change, we may need to upgrade, downgrade or relocate. That said, if you are able to hold onto a property for the long-term, there can be enormous benefits. First, you can avoid the transaction costs associated with buying and selling. Second, you can potentially enjoy strong capital growth. CoreLogic reports that the nation's median property price has increased by 70.2% over the past 10 years, 157.9% over the past 20 years and 425.9% over the past 30 years. Depending on your financial circumstances, it might be possible to move without selling your existing home if you turned it into an investment property. While you’d then have two mortgages, some of that extra cost would be offset by the rent you’d start collecting. If you want a larger or newer home, another alternative would be to renovate instead of moving: potentially, you could finance the project by borrowing against the equity in your home.  Home hunters have considerably more stock to choose from than earlier in the year, putting buyers in a stronger negotiating position.
SQM Research has reported that the total number of listings across Australia in August was 7.9% higher than the month before and 11.1% higher than the year before, while the number of new listings (those less than 30 days old) rose 11.8% month-on-month and 8.5% year-on-year. “Going forward, the spring selling season will provide a significant level of choice for buyers, particularly in Sydney and Melbourne, with listings at their highest levels in some years,” according to SQM Research. This is good news if you’re thinking about buying a property, because it means you’ll face less competition from other buyers. But it’s not such good news if you’re thinking about selling, because you’ll face more competition from other sellers. As a result, buyers will be encouraged to make lower offers and sellers might be forced to settle for less.  The federal government's Home Guarantee Scheme (HGS) helped 43,800 buyers enter the market in the 2023-24 financial year, Housing Australia has revealed. The HGS contains three separate programs:
 The federal government has allocated a combined 50,000 places for the three programs in the 2024-25 financial year.
All three programs are reserved for owner-occupiers, have income limits ($125,000 for single applicants and $200,000 applicants) and property price caps (see table above). Please contact me if you’re thinking about taking advantage of the HGS. I can advise you if you meet the eligibility criteria and manage your home loan application.  Property investors committed to $11.71 billion of home loans in July 2024, which was the second-highest month on record, according to the Australian Bureau of Statistics. It was also 35.4% higher than in July 2023, showing the enormous growth in investor activity during that time.  Here are five reasons why so many Australians consider property investing a great way to build wealth:
 One of the great things about constructing your own home is that it can be tailored to your specifications. If you’re interested in building rather than buying your dream home, here’s the process you need to follow:
It’s worth noting that the rate of annual growth in house-building costs increased from 3.9% in September 2023 to 4.3% in June 2024, according to the Australian Bureau of Statistics. Given that costs will likely continue to rise, the sooner you build, the cheaper it could be in the long term. If this is something you’re thinking about doing, you should explore your options soon.  The latest home loans data from the Australian Bureau of Statistics has revealed three key trends.
 Contact me if you’re thinking about buying a property. I can get you a home loan pre-approval and, if you’re interested, introduce you to a good buyer’s agent.
 When you apply for a mortgage, the lender uses a series of criteria to assess how likely you’d be to repay the loan. As part of this process, the lender also considers whether you’d be able to continue making your repayments if interest rates were to rise.
Generally, lenders will apply a buffer of at least 3.00 percentage points – so if you applied for a loan with an interest rate of 6.50%, this would mean calculating whether you’d be able to make repayments at 9.50%. This ‘mortgage serviceability buffer’, as it’s known, is mandated by APRA, Australia’s banking regulator. Partly, it’s designed to prevent lenders from issuing risky loans; because if a large number of borrowers defaulted on their loans, that would undermine the banking system. And, partly, it’s designed to protect borrowers from taking on loans they might not be able to afford. The serviceability buffer can make it harder for borrowers to qualify for loans, but is ultimately designed to be in their best interests.  Property investors have enjoyed a golden run over the past five years, during which the national median rent increased 39.7%. However, in July, rents increased just 0.1%, which was the slowest growth since 2020, according to CoreLogic. At the same time, annual rental growth has been trending down over the past few months. Between February and July, rental growth fell from 9.7% to 8.0% in the combined capitals, although it rose from 5.4% to 7.1% in the combined regions. The big cities appear to be close to their rental affordability limit, while the regions, which have had less rental growth, might have more capacity to absorb higher rents.  Despite the slowdown of the national rental market, CoreLogic economist Kaitlyn Ezzy said rents were likely to keep increasing.
“Low supply will likely continue to put upward pressure on rents, albeit at a slower pace,” she said. “With dwelling approvals and commencements at historic lows, providing sufficient new housing will not be a quick fix and remains a genuine challenge for policymakers, the property industry and, of course, tenants.” In other words, while rents are likely to keep rising, tenants are likely to get some relief and investors shouldn’t budget for the double-digit-percentage increases of previous years.  Home loan volumes have significantly increased over the past year, especially among investors. Investors committed to $10.67 billion of mortgages in May, according to the latest data from the Australian Bureau of Statistics. That was 29.5% higher than the year before. At the same time, owner-occupier borrowing activity rose 12.2%, to $18.13 billion. Investors were responsible for 37.1% of the home loans that were issued in May. Despite the surge, that's only slightly higher than the long-term average (in records dating back to 2002) of 35.9%.  By way of comparison, investors' share of home loan activity bottomed out at 22.4% in 2021 and peaked at 45.9% in 2015, while owner-occupiers’ share reached a low of 54.1% in 2015 and a high of 77.6% in 2021.
If you’re thinking about applying for a home loan, here are three important tips to make yourself more creditworthy in the eyes of lenders:
 Record property prices are proving to be good news for vendors, with 94.3% of all vendors in the March quarter selling their home for more than they'd originally paid, according to CoreLogic. That was the fourth consecutive quarterly increase and the highest share since 2010.
However, the share of vendors who made a gross profit varied significantly from capital city to city, reflecting different market performance. Another significant finding was that house owners were more likely to record a profit than unit owners, by a share of 97.1% to 89.0%. Also, there was a clear link between the amount of time someone had owned a home and the size of their profit. Vendors made a median profit of $82,000 with a hold period of up to two years, $275,000 for up to 10 years, $435,000 for up to 20 years and $780,000 for up to 30 years.  The federal government has allocated another 50,000 places across Australia to its Home Guarantee Scheme (HGS) for the 2024-25 financial year.
That includes 35,000 places for the First Home Guarantee and 10,000 for the Regional First Home Buyer Guarantee. Under the first program, the government supports eligible first home buyers to purchase a property with a 5% deposit, without having to pay lender's mortgage insurance (LMI). The second program is identical, but applies to regional applicants purchasing regional properties. The HGS also includes 5,000 places for the Family Home Guarantee, through which the government helps eligible single parents and single legal guardians to purchase a property with a 2% deposit, without paying LMI. For all three schemes, applicants must be owner-occupiers. Income caps apply ($125,000 for single applicants, $200,000 for joint applicants), as do property price caps (which vary from state to state). The HGS has strict conditions and is not available through all lenders. If you’re unsure whether you’re eligible or how the scheme works, reach out and I’ll be happy to help.  With property prices at record levels, the size of the average mortgage has also hit new highs, making it more important than ever that you shop around for the right loan. Australia’s median property price reached a record $794,000 in June, up 8.0% year on year, according to CoreLogic. Meanwhile, the size of the average owner-occupied loan reached a record $626,055 at the end of May (the most recent month for which we have data), up 7.1% year on year, according to the Australian Bureau of Statistics. Just as interest rates can vary significantly from lender to lender, so can your borrowing power, depending on your financial profile, the type of property you’re planning to buy and the location of the property. Sometimes, one institution might be willing to lend you tens of thousands – or even hundreds of thousands – of dollars more than another institution.  Trying to source all this information yourself would be very time-consuming. But brokers have an intimate understanding of the credit policies of many different lenders. That’s why, if you get a home loan through a broker, they can recommend a lender that is suitable for someone with your profile and scenario.
 If you're one of the many Australians who've purchased a property through a self-managed superannuation fund (SMSF), the Australian Taxation Office (ATO) has provided valuable guidance about how to file your annual tax return.
The ATO said that if you want your SMSF annual return to be processed without delay, you should make sure:
 The Australian property market is growing briskly right now and has grown significantly since the pandemic. But the city-by-city performance has been more varied. Over the year to May, the national median price rose 8.3%, according to CoreLogic. But at a city level, growth ranged from a staggering 22.0% increase in Perth to a 0.1% decrease in Hobart. Meanwhile, growth since March 2020 has ranged from a high of 62.6% in Perth to a low of 11.2% in Melbourne.  CoreLogic's head of research, Eliza Owen, attributed the contrasting results to diverse market conditions.
“The highest-performing markets have generally come off a low base, with housing conditions and demographic trends relatively weak over the years preceding the pandemic,” she said. “Differences in capital growth trends are marked by the varied supply-demand balances of each city, and in turn migration, affordability factors and dwelling completions influence that supply and demand dynamic.” Ms Owen said annual growth had started to slow across the combined capital cities. “This could mean a slowdown in growth across Brisbane, Perth and Adelaide is on the horizon, and could see the range of growth eventually narrow across the capital cities,” she added.  While it’s often said you need a 20% deposit to qualify for a home loan, a significant number of borrowers are securing mortgages with smaller deposits, according to the latest data from APRA, the banking regulator. In the March 2024 quarter, 31.0% of new home loans (by value) had deposits of less than 20%, while 6.2% of new loans had deposits of less than 10%. Generally, you will need to pay lender’s mortgage insurance (LMI) if you purchase a property with a deposit of less than 15-20%. However, some lenders give LMI exemptions to certain professionals, such as doctors, dentists, physiotherapists, lawyers and accountants.  While more than three in 10 borrowers are taking out loans with deposits under 20%, these figures are relatively low by historical standards. Back in December 2020, for example, 41.7% of new loans had deposits of less than 20%, while 11.3% had deposits of less than 10%.
This illustrates how banks have tightened their lending standards, to ensure borrowers don’t take on an excessive amount of debt. Yet it’s still possible to buy a property with a small deposit, provided your financial circumstances allow it and you structure your loan application correctly.  The federal government has unveiled a series of reforms to the banking sector, which aim to help consumers access lower home loan rates and higher savings accounts rates.
As part of the reforms, Treasury will investigate how behavioural economics could be used in the banking sector to encourage consumers to switch to cheaper home loans and banking products. Also, lenders will be required to make it easier for customers to refinance their mortgage, by ensuring they have direct and easy access to the forms needed to switch. Treasurer Jim Chalmers said these changes would “help bank customers get a better deal, including through more choice, lower prices and better services”. For consumers, that could mean:
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