Thursday, April 8, 2010

Latest Property News from Ted Hanson

Friday 09 April 2010
Quote of the Week

Life's challenges are not supposed to paralyze you, they're supposed to help you discover who you are.

~Bernice Johnson Reagon~

OCR up to 4.25
As was widely expected, the Reserve Bank Board decided this week to raise the cash rate by 25 basis points to 4.25 per cent.

In a statement announcing the decision, Reserve Bank Governor Glenn Stevens observed that global financial markets are functioning much better than they were a year ago and the extraordinary support from governments and central banks is gradually being wound back.

"Credit for housing has been expanding at a solid pace", Governor Stevens said, adding that interest rates have been lower than average for most borrowers.

"At this point the market for established dwellings is still characterised by considerable buoyancy, with prices continuing to increase in the early part of 2010."

"The Board judges that with growth likely to be around trend and inflation close to target over the coming year, it is appropriate for interest rates to be closer to average", he concluded.

Fewer dwelling units approved

Building Approvals figures show that the number of dwelling units approved fell 3.3 per cent in February 2010 following a fall last month, the Australian Bureau of Statistics (ABS) said this week.

The number of dwellings approved fell in New South Wales by 14.6 per cent, in Victoria by 1.9 per cent and South Australia by a whopping 23.3 per cent.

There was a fall in the number of approvals for private sector houses (down 0.9 per cent) this month, following increases in January 2010 and December 2009.

New South Wales (down by 10.4 per cent), Victoria (down 0.5 per cent), Queensland (-0.7 per cent) and South Australia (-5.9 per cent) recorded fewer private sector houses this month, according to the ABS.

The value of total building approved fell 4.5 per cent in February. The value of total residential building approvals rose 1.2 per cent while non-residential building approvals fell 13.0 per cent.

Hop in for a home loan approval

Hot on the heels of Easter holidays, April is traditionally a prime time for potential property buyers to hop along to a number of inspections in the hunt for a suitable purchase. If this is your plan, are you prepared for the new home loan market?

Mortgage broker Mortgage Choice warned this week that borrowers should be aware that sweeping changes to lending criteria over the past two years may cause many novice and experienced property buyers alike to get egg on their face with an unexpected loan rejection.

Senior corporate affairs manager Kristy Sheppard said that property investment can lead to financial rewards if clever decisions are made upfront.

"Along with researching thoroughly to find a profitable property, good investment decisions come from a clear strategy, meticulous preparation, careful comparison of finance options and securing a home loan tailored to your needs."

"Spending a good amount of time shopping around often leads to a bargain. The key is patience, understanding of short and long-term requirements and knowing what is needed for loan approval.

"In becoming more risk-adverse, lenders have tightened their policies around who they will lend to and how much. To help determine what loan options are available to suit your individual circumstances, it's a valuable exercise to visit a reputable and educated mortgage broker with knowledge of the approval criteria for a wide range of loans and lenders.

"A broker helps borrowers compare lenders' interest rates, loan features, fees and service, and advises on the criteria needed to qualify for loan approval. Lenders have different benchmarks. Lender A may require a five percent deposit from genuine savings with six months evidence, while Lender B requires a 10 percent deposit.

"Regardless, having a larger deposit or more equity to contribute means you borrow less and are therefore more likely to be approved. A number of lenders have now capped their loan to value ratios at 90 per cent of the purchase price for homebuyers and 80 per cent for investors.

"Also be aware that reducing your other debt commitments will probably increase the amount you can borrow. For example, someone with credit card limits totalling $50k can borrow less than someone with a $5k limit, regardless of how much debt the credit card/s actually hold.

"Further, small blemishes in someone's credit history can reduce the likelihood of loan approval. A default on a car loan, credit card or even a mobile phone bill can leave a borrower loan-less. Similarly, each time you apply for credit and are rejected, it is recorded on your credit file, so it's important to investigate your history in this respect before you apply for a loan.

"An experienced and knowledgeable mortgage broker will also help determine if you have a strong likelihood of being pre-approved for a home loan before you apply. Why is this important? Being declined for a loan pre-approval - which many people take out before property hunting - may also count towards your credit record, depending on the lender.

Mortgage Choice offers these further tips to help you gain loan approval:

  • See if a family member can `gift' you funds to put towards the property purchase, to help build your deposit and perhaps allow you to avoid lenders mortgage insurance. Lenders will require a statutory declaration confirming the money need not be repaid.
  • Be sure to have a solid employment record and don't expect overtime to be included if it is non-essential work (it may, but it is best not to expect so).
  • To reduce the costs involved with purchasing property, consider sharing the commitment by buying with others you trust, eg. friends and family.
  • Include on your loan application details of all your important assets eg. savings accounts, shares held, gifted funds.
  • Again, be aware that there is a wide range of lenders out there. One lender may be much more likely to approve you for a loan than another. Do your research!
Housing report card sees challenges ahead

The recovery in new home building is well underway but is still forecast to fall short of what is required to house Australia's growing population, according to the Housing Industry Association's latest National Outlook.

The HIA's Chief Economist, Dr Harley Dale said that there is no doubt that a first stage new home building recovery is underway, but the challenge will be in ensuring a strong, sustainable recovery beyond this year.

HIA is forecasting growth of 20 per cent in new housing starts in financial year 2009/10 to a level of nearly 157,000.

"That result is testament to the success of stimulatory monetary and fiscal policies in 2009", Dale said.

"Through 2009/10, the lion's share of this growth will occur in detached housing which is forecast to grow by 24 per cent, to 114,000 dwellings."

The `Other dwellings' sector, which covers all non- detached housing, is expected to grow off a very low base by only 10 per cent, to 43,000 dwellings.

At the same time as the new home building market has been recovering so too has the renovations market.

"Total investment in renovations recovered in the second half of 2009 after falling by 4 per cent in 2008/09," said Harley Dale.

"Stronger than expected labour market conditions and existing home price gains are driving a resurgence in renovation activity which is forecast to see the total worth of this sector increase by 7 per cent in 2009/10 to $33.4 billion."

Renovations activity is forecast to increase by 8 per cent over 2010/11 - 2011/12, reaching over $35.9 billion.

There's gold in the desert

Saddam Hussein may have lived like a king at the expense of his people, but now people in his hometown are seeking outside investors to turn their former loss into a profit.

World news sources are reporting this week that local officials see potential in Saddam's 76 abandoned villas as a `cash cow' in terms of tourism. The village of al-Awja, outside Baghdad, is home to artificial lakes, date orchards, over a hundred buildings and a slew of villas that could potentially increase tourism in a rehabilitation project that extends the available budget.

Showering cats and dogs

Dogs love a good bath, cats will tolerate it if necessary, but their owners rarely want to join in, especially with that vigorous shake at the end.

Even those owners who have the space to use a hose may want to avoid that during winter, so what could be better than the Pet Shower Curtain, which catches every spill and shake so you can invite your furry friend to jump in the tub.

The clear curtain allows you to see your pet while two full-arm `gloves' allow you to hold, wash and comfort them without getting any drops on you or the rest of the room.

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