Auction clearance rates in Melbourne at record highs in 2015

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Auction clearance rates in Melbourne reach record highs in April 2015

Melbourne’s Auction clearance rate jumped a massive 8% to 86% for the week of 18-25 April 2015 according to Australian Property Monitors (APM) data. This rate is the highest seen across all of Australia’s capital cities in 2015, above Sydney’s previous peak of 85%.

What caused the record high auction clearance rate in Melbourne?

The Auction clearance rate has previously been high (78% in the previous week) and increasing. However, because Saturday the 25 April 2015 was ANZAC day very few properties were listed for Auction as fewer bidders were also expected on this day. It is clear that there is high demand for property in Melbourne though we will need to wait until the end of next week to see the auction clearance rate under normal conditions.

High auction clearance rates are a good indication of price growth in the market as more vendors’ (sellers) price expectations (and the reserve prices) are met resulting in a greater proportion of sales. Though not a major factor, rising rents in Melbourne may also be contributing to increased interest in the Melbourne market as higher rental yields make paying an investment property loan easier and make renting less attractive.

 

Are you looking to invest in property? Find out about investment property loans here:

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Or you can contact one of our mortgage brokers to assist you with your finance.

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Chinese property investors predicted to invest billions more in Australian real estate 2015

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Chinese buyers are forecast to invest $ billions in Australian property 2015

A report by global investment bank Credit Suisse predicts that Chinese nationals will continue to invest in Australian real estate. It is estimated that Chinese investment in Australia property will be approx AUD$44 billion over the next seven (7) years.
When forecasting expected Chinese residential property investment, the analysis combined information from the Foreign Investment Review Board, Department of Immigration and Bureau of Statistics . The bank’s conservative estimate is that Chinese will invest $5 billion per annum into the future.
The Credit Suisse analysis estimated that newly arrived Australian immigrants and foreign Chinese investors have already spent about $24 billion on Australian property over the past seven years. Foreigners (including Foreign Chinese) are required to purchase new properties, taking this into account the report estimates that about 12% of all new properties in Australia are purchased by foreign Chinese buyers.

Where are Chinese property investors buying property?

The  report suggests that the majority of Chinese property buying is occurring in Australia’s two largest cities, Sydney and Melbourne. Within Sydney and Melbourne certain suburbs are Chinese buyer hotspots such as in and around Glen Waverley in Melbourne. It is estimated that 18 per cent of all new properties in Sydney and 14 per cent in Melbourne are being purchased by foreign Chinese nationals. The amount of new property bought by foreign Chinese in other Australian cities was estimated at a much lower level (7%).

Is Chinese investors buying in Australia good for other Australian property investors and homeowners

The continued demand from Chinese property investors for Australian property is good news for homeowners, property investors and property developers as demand for Australian property, particularly new property is set to remain strong and result in sustained capital gains. However, on the contrary, this may be bad news for those yet to enter the Australian property market as prices are likely to rise quicker than many can save for a deposit.

Are you a first home buyer and want to enter the property market with a low deposit or no deposit? If you have family that would like to help you and who already own property that has increased in value since they bought it, you may also be able to get a guarantor home loan without having a deposit. Low deposit home loans are available where you can borrow up to 95% of the property value without a guarantor.

Guarantor home loans

 

Are you a property investor or about to buy your first investment property? With the already high demand for Australian property (as a result of population grow) increasing due to foreign demand you may want to invest in Australia property. Find out more about borrowing to invest in property.

Investment property loans

 

Are you Chinese, looking for a home loan and want to speak to a Chinese mortgage broker?

If you are Chinese and need assistance from a Chinese mortgage broker, we have Chinese mortgage brokers that can help you. Our Chinese mortgage brokers can assess and compare home loan options for you so that that you don’t pay too much. If you are a Chinese property investor, our Chinese mortgage brokers can help you to find home loans that suit property investment and structure your investment home loans correctly to save you money and increase your flexibility. Ask us about home loans for Chinese property investors and consult with a Chinese mortgage broker.

 

Chinese mortgage brokers

 

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Renting gets more expensive in Melbourne in 2015

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Rent prices are on the increase in Melbourne, Victoria in 2015

With rent prices increasing in Melbourne, the rental market has never been tougher for tenants. Melbourne’s rent prices have reached an all-time high in 2015.

According to the Domain Group’s recently released rental report, the median asking rent for houses in Melbourne, Victoria increased to $390 per week, an increase of 2.5 per cent over the March quarter. The report also found that unit rents increased to $365 per week, an increase of 1.4 per cent over the March quarter. These increases are thought to be as a result of strong population growth in Melbourne that has not only been pushing up rent prices but also pushing up real estate prices. The rental increases come despite Melbourne having a unit vacancy rate of 2.8 per cent and a house vacancy rate of 1.9 per cent.

Melbourne is not the only Australian city to be experiencing increasing rent prices in 2015. Sydney is also seeing rents get more expensive, on the back of property capital gains.  The median rent in the Sydney in the 2015 March quarter for houses was $520 a week and for units $500 a week.

These increases in rental prices may result in further interest by renter and investors alike in purchasing property in Melbourne, which is already showing good property capital growth.

There is concern for first home buyers due to the increased rents reducing disposable income and making it more difficult to to save a deposit for the purchase of their first home. This comes on top of what is already a difficult market to enter due to higher and rising property prices. It is also expected that the rental price increase will lead to higher demand for low deposit home loans and family assisted first home buying (such as guarantor home loans). However, rental price increases are good news for property investors in Melbourne as increases to rents also help to cover the interest payments on investment properties.

Are you interest in a guarantor home loan? Find out more information about guarantor home loans here:

Guarantor home loans

 

Maybe you want to buy an investment property. Find out about investment property loans here:

Investment property loans

 

Or you can contact one of our mortgage brokers in Melbourne, Sydney or wherever you are to assist you with your finance.

 

Mortgage brokers in Adelaide

 

Mortgage brokers in Brisbane

 

Mortgage brokers in Canberra

 

Mortgage brokers in Melbourne

 

Mortgage brokers in Perth

 

Mortgage brokers in Sydney

 

 

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Negative gearing: No changes to negative gearing says Tony Abbott

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Changes to negative gearing rules were ruled out by Tony Abbott, Prime Minister of Australia on Thursday 16 April 2015.

In response to questions about a report by Australian Council of Social Service that called for the ‘tax break’ to be restricted, Mr Abbott stated that there would be no changes to negative gearing.

Mortgage Broker Oak Laurel by Nigel Abery (PhD), Principal Mortgage Broker at Oak Laurel.

 

Mr Abbott indicated that his Government did not want to increases taxes but rather to control Government spending and removing the allowable negative gearing allowance would amount to an increase to taxes.

Contrary to what some believe negative gearing is not primarily a tax break for the rich. Data from the Australian Tax Office (ATO) shows that the bulk of the tax deductions and largest band of beneficiaries earn incomes between $30,001 and $80,000. However, higher income earners are able to claim the biggest tax deductions against their total income as they earn more and have a higher rate of tax. 

1.3 million landlords in Australia claimed almost $14 billion in tax losses that were offset against tax on their other income. Therefore, any changes to the negative gearing allowances would clearly impact on a large number of people who are would not be considered as “rich”.

Changes to the negative gearing rules have previously been ruled out due to concerns over it discouraging investment in housing and resulting in reduced supply; and increasing rent prices resulting in increased demand for public housing, as landlords raise rents to cover losses otherwise offset by negative gearing allowances.

Hopefully this announcement by Mr Abbott will prevent further speculation about negative gearing changes and provide for a more certain investment environment for property investors.

Are you looking to invest in Australian property?

You may be able to take advantage of the negative gearing allowances when you invest in Australian property. Lean more about investment property loans or contact our one of our mortgage brokers to compare your investment property loan options. Note: contact your accountant or financial adviser regarding taxation matters that suit your specific needs.

 

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Guarantor home loans: Pros and cons of helping family buy their own home

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Guarantor home loans: What are the pros and cons of helping family buy their own home?

With house prices on the rise and saving a deposit becoming even more difficult for first home buyers, many are turning to their families for help getting into the property market.

So what are the options to help family get into the property market?

The main options to help family get into the property market are:

  • Guarantor home loans;
  • Gifted deposits from family;or
  • Soft loans (or informal loans) from family.

 

Mortgage Broker Oak Laurel by Nigel Abery (PhD), Principal Mortgage Broker at Oak Laurel.

 

Guarantor home loans: There are different types of guarantor home loans but the usual type is where family members offer property as security for the loan when there is insufficient deposit.

Gifted deposits: This is basically where the family member will give money as a gift to be used as the home loan deposit.

Soft loans: This is similar to a gifted deposit but where the money is returned to the family member when possible.

 

What are the pros and cons of the different options?

Pros of Guarantor home loans

When the parents or family member has equity in their home or another asset this can be used without raising the cash.

The guarantor only provides security for the loan so all of the payments are made on the loan by the borrower (if all goes to plan). This is good for the guarantor as they can use their cash for other things.

Cons of Guarantor home loans

If the borrower does not make their payments then the guarantor’s home or other asset that is used as the security is at risk.

 

Pros of a gifted deposit

With a gifted deposit the family member is not responsible for the loan and you are not putting your home at risk if everything goes wrong.

If the guarantor has equity in their home and doesn’t have cash on hand, they could take out a line of credit against their home and give it for the deposit. That way even though the family member will be responsible for the line of credit, that is all the family member will be responsible for.

Cons of a gifted deposit

The family member needs cash on hand or if a line of credit secured by an asset (property) is used, the family member will be expected to make the payments on the line of credit.

 

Pros of a soft loan

The same as the pros for a gifted deposit. The family member has no responsibility for the home and their home is not put at risk.

Provided everything goes to plan, the family member should get their money back – eventually.

Cons of a soft loan

Lenders generally do not like this situation and where they know it is occurring it could mean they reject the loan application.

Because it is a soft loan the family member will generally be a lower priority (with the lender coming first) for making repayments.

 

What should the family member (guarantor) know before committing their finances?

It is very important for the family member to understand what their responsibilities and their risks are if things don’t go to plan. What will happen if the borrower fails to make the repayments.

The family member may also want to obtain independent financial advice before they commit.

 

Are you interested to assist your family to buy a property? See more about:

Guarantor home loan

 

Contact us to talk to a mortgage broker.

 

 

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Will there be a RBA cash rate cut in April 2015?

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Markets predict a cash rate cut of 0.25%, reducing the cash rate to 2% today.

The Reserve Bank of Australia (RBA) is due  to meet today (7 April 2015) to discuss the cash rate. Will there be a RBA cash rate cut? Many market commentators and the money market are predicting so. If the RBA cut rates today it will be the second time that they have cut rates this year (2015).  The rate cut predictions are being made due to the weak Australian economy, rising unemployment and low inflation (with the exception of segments of the Australian property market).

Mortgage Broker Oak Laurel by Nigel Abery (PhD), Principal Mortgage Broker at Oak Laurel.

It is thought that a cut to the cash rate would help stimulate the Australian economy, lowering the Australian dollar against other currencies and boosting export industries.

Some are concerned that another RBA rate cut (which should flow on to cuts in home loan interest rates) will further stimulate the Australian property market. However, it has been acknowledged by some experts that the ‘Australian property price bubble‘ is only confined to the Sydney property market segment. Whilst some investors are using lower interest rates to increase their investment in the property market, others are using record low interest rates to pay down their mortgages.

Has your bank passed on the previous 0.25% rate cut in full? Are you taking the advantage of the record low interest rate? Contact Oak Laurel for a free home loan check-up.

 

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Happy Easter 2015

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Wishing you a very happy Easter 2015 from Oak Laurel mortgage brokers!

Oak Laurel mortgage brokers would like to wish you all a safe and happy Easter! We love Easter. It’s a time for eating all the chocolate you can find without feeling guilty! Have a delicious time this Easter.

Mortgage Broker Oak Laurel by Nigel Abery (PhD), Principal Mortgage Broker at Oak Laurel.

 

May you spend the Easter holiday enjoying the company of family and or friends! For those who are working over this Easter break may you earn extra!

Celebrate this Easter with a heart filled with love and peace.

 

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