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Help with Rising House Prices 2021

Buying a house is supposed to be one of the most important times in your life. However, with rising house prices, many people are left disheartened. The already booming prices have continued to reach new heights. What this means is more grim news for Australians looking for a new house.

Statistics show that more than 60 per cent of Australians own their own home. However, home-ownership rates for people that are aged under 40 are quickly declining. While it may seem easier to simply build a new house, the hardship doesn’t stop there. House prices, in general, are rising, and that includes building prices.

Last year, all Australians were told that there would be a large market drop. Unfortunately, after saying that, the prices soared. Many people seem to think that the prices soaring can be attributed to not enough homes. That just isn’t the case.

house prices 2021

Why we are dealing with rising house prices

People are generally believing that rising house prices equals not enough homes. This has been a common thought process; however, this is completely wrong. It just can’t explain the take off in 2000, the next take off in 2013, and the most recent take off.

We definitely have enough homes. The 2016 census concluded that we had 12 per cent more dwellings than we do households. This statistic is up 10 per cent since 2001. This means that 12 per cent of our houses and apartments in Australia are empty. Usually, they are used as holiday homes, second homes, or they are waiting for tenants.

If there weren’t enough homes available, it would be more than property prices soaring, it would be rentals as well. Instead, rent has barely been moving. It has been growing even slower than wages for around half a decade.

rising house prices

The increase

House prices in Australia haven’t just skyrocketed. To say that is a complete and utter understatement. We have seen the rising house prices reach the steepest increase in almost 18 years. Places such as Sydney and Canberra have recorded the fastest quarterly increases in almost three decades. Melbourne has also seen a new record high with their house and unit prices rising significantly.

It is said that median house prices are expected to far surpass $1m in the next quarter alone. It seems as if affordability is being pushed very far out of reach for many people looking to own a home. News.com.au reports that the major driving force in this boom has been first home buyers, in much the same way as they were during the global financial crisis.

Landlords contributing to rising house prices

Funnily enough, people often buy houses and don’t even live in them. This is something called ‘rent-vesting’ that has become more and more popular since 2000. Since this time, people have been wanting to buy houses to rent them out and become landlords. These days, one in 10 people are landlords which equals out to around two million Australians.

To get the properties, aside from buying them, they have had to outbid people. Most of the time, they outbid people who would have actually lived in the house. While doing this, they have subsequently been pushing up the prices. Rather than investing in companies or the stock market, they are buying rental properties more than ever before.

buying a house 2021

A continued rise

Apparently, the rising house prices won’t be ending anytime soon. With mortgage rates reaching new, extreme lows as well as wealthier Australians coming out of the crisis with their wealth intact, it could mean trouble. It makes a lot of sense to do what others are doing. However, it will push up prices resulting in even more hardship. This could create some very uncertain times.

The bottom line is that it is not attributed to a shortage in housing. Instead, it will be pushing home prices even farther out of reach. News.com.au says “Whether or not investor activity will rise sufficiently to make up for this inevitable loss of demand in the longer term remains a matter of debate. But in the short term with the growth in housing finance commitments currently heading ever higher, it’s likely that we will continue to see strong housing price growth in the months ahead”.

How you can find help with rising house prices?

A saving grace with rising house prices is the Australian Lending Centre offering home loans for anyone. Whether you are looking to upsize, downsize or invest, need a loc doc loan or you have bad credit. We have a wide range of home loans to suit most situations.

Australian Lending Centre can help to finance the purchase of a house in many ways. With standard Home Loans, First Home Buyer Loans and Investment Property Loans. If you can’t afford to buy a house due to the rise in house prices, then you could renovate your existing home instead. Contact us today for all your home loan needs and more.

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Personal Loans First Home Buyer Home Loans

Reasons to Pay Arrears with a Personal Loan

Understand the main reasons why you should pay your arrears even if it means getting a personal loan to do it. We will also discuss a few tips on how to use your loans wisely to avoid getting into debt all over again.

There can be some confusion as to the differences between arrears and defaults. In simple terms, when fail to pay your mortgage, you call the unpaid balance, ‘arrears’. It’s ‘default’ when you missed payments on other types of credit—such as credit card or personal loans. Here are some of the most practical reasons why you should immediately settle your arrears—using a personal loan:

Save money on your growth asset

When you pay your arrears you are protecting your home equity. Instead of losing your home, why don’t you just pay your dues and enjoy the benefits of having a home which could increase in value overtime. Plus, you can also use a portion of you loan to make some improvements to increase your home’s fair market value. This is particularly advantageous for those who have obtained their first or second mortgage at a lower interest than the prevailing rates.

It protects your borrowing power

When you take out a loan, it has to be repaid at all cost. You will have to pay a fixed rate or variable interest rate on the loan. Since you put your home as a security to the loan, you have to give it up when you do not have enough money to pay your dues. When that happens, your borrowing power would diminish.

It is too difficult to obtain a mortgage when your home has been foreclosed because of unpaid monthly repayments.

Your home is one of the biggest financial resources. By building your home equity, you can also build up your wealth. You can take a home equity loan and use the proceeds to start a home small business. In addition, many businesses also start from home. You can take advantage of the fact that you don’t have to rent a business space nor commute. It offers flexibility and the perks of growing your business around your family.

You can build income overtime

By building your equity, you are producing wealth while literally living inside your investment.

When your neighbours of friends who are working from home think that their business outgrows their working space at home, you can offer a portion of your house as an incubator space or a co-working hub. Not only will you increase your home’s value, but you will also boost your income while helping other people establish their businesses.

Here are tips when using a personal loan to pay arrears:

Determine the exact amount of money you need

It’s not how much money you want, but how much do you need that really matters. Some borrowers waste money on unnecessary things because they fail to determine how much they really need in the first place. Take the time to pin down your intended loan amount, as accurately as you van before you fill out the application form. But, don’t forget to allow for contingencies, as emergencies may happen. While you should not borrow too much, it must also be enough to cover not only the arrears but other things that could put you in a much better financial position. Borrowing an exact amount may put you in financial trouble especially if you don’t have a backup plan on how to repay the loan when your income decreases or when emergencies arise.

Ask yourself how you will use the borrowed money

Though lenders offering personal loans will not ask you where the money is going, you must specifically know what it will be spent on to avoid wasting it. Simply saying, “to pay arrears” does not give you a specific guide on how to spend it wisely. List all accounts where you have arrears and if possible, include unpaid credit card balances and other debts that charge high interests. It is also important to put aside a certain amount for your emergency fund so you have enough money to cover contingencies when they arrive—and you won’t have to go back to your lender to borrow money again.

When will you pay the loan back?

You will need to decide how to pay the loan back and how will you pay it. Do you have a conservative cash flow projection? Do you have the capacity to pay back the loan, based on your current income or business standing? Will lenders approve your loan even if you don’t have adequate collateral to pledge? Make sure that you make the right decisions when getting another loan. It can save your assets for now by paying your Home Loan Arrears, but you can still lose them if you don’t establish your finances as soon as possible.

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First Home Buyer News

Land of the “Fair Go” Now a “No Go”

Income Inequality in Australia

Australia has always been a country that has been considered egalitarian by the rest of the world, a place where all citizens had a ‘Fair Go’ at the Australian Dream, – that is, until recently. Australia has suffered a shift in income equality that has created a sizeable gap between the rich and the poor.  “In Australia, the richest 1% are as rich as the poorest 60% of Australians,” with wages for top earners increasing at a more rapid rate than the wages of the everyday Aussie.

A big factor in this troubling trend is that Australians’ assets are skewed toward real assets as opposed to wage earnings in determining their net worth. With median home prices on the rise throughout Australia it is no wonder that we are witnessing a steadily decreasing middle class.

A large difference in net worth can be seen through generational gaps. Baby Boomers came into the market in a time when Australian home prices were lower. They bought properties and were easily able to pay them off with a single income setting them up for greater earning potential and financial security in their future. Generation Y on the other hand, hasn’t had such luck.  They are typically known as the generation who has been shut out of the property market with rising prices of real estate.

Australian home prices in 2016 are high when compared directly with the average Australian income. In January 2016 the Australian average weekly wages were measured at $1160.90 by the Australian Bureau of Statistics which is considerably out of proportion with the rising cost of real estate. Sydney currently has the highest mean house price in the nation with the average home price as high as $780,900 AUD, pricing many younger buyers out of the market completely resulting in a drop in first time home ownership.

Generation Y, on the other hand, earn significantly more than Generation X , but they have significantly less investments, relying heavily on their income as a source of wealth.  This has given them a significantly lower net worth; the effect of this is made more severe by the lack of wage growth in the past years. Wage growth was down by as much as 3% in 2015. With little hope of that big raise, the hard-working Generation Y Australian won’t have much opportunity to increase their wealth and will have a tough time competing with an older generation with growing investment returns.

Millennials are also being generationally affected by these factors. Many young Australians are opting to move back in with mom & dad after university to combat rising home prices and cost of living. For many it’s the only way to save enough for a down payment.

So what does this mean for Australians? The average Australian is going to have less disposable income than they had 8 years ago.  That means less money for consumer spending. Inequality and the growth of class differences could potentially have a big effect on the way the economy grows and negatively affect our communities.

 

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First Home Buyer News

Should you access superannuation for buying a house?

It is every young family’s dream to buy a house to make into a home but with rising property prices, it is becoming more difficult for first home buyers to enter the market. A young family might not have much in the way of savings and it can seem impossible to come up with the minimum amount needed for a deposit on a mortgage. The Australian government, under Treasurer Joe Hockey’s suggestion, is considering letting people access their superannuation account for the purpose of putting that money towards buying a house.

Superannuation for a new home

The retirement funds are generally not allowed to be accessed until a person is the age of 60 but the federal government is taking a lead from other countries such as Switzerland, Canada and Singapore and thinking of letting people dip into their retirement funds early to invest into a home. The idea has gotten a lot of backlash from the opposition government and it probably should. Although the money is for that person to spend however they want, it also serves as a safety net to make sure that people can afford their needs when they get older. Instead of having the capital being held by the government at a secure interest rate and knowing it will be there in the future, it might soon be possible to take a risk and use some of that money in the real estate market.

The proposal hopes to have several positive and negative effects. Getting young families into homes is a major goal of the current administration. But the goal also includes letting people become more self-reliant and less dependent on the superannuation scheme. The 5% taken out of Australians’ pay cheques is usually something that all Australians are looking forward to one day. However there is a possibility that many will not have as much as they might have had when it comes time to enjoy their golden years if this proposal gets approved.

The access to retirement funds might just fuel home prices higher and have a muted effect on making homes more affordable. Any large decision like buying a home is already big enough and maybe it is not the best decision to risk your superannuation funds on the volatile property market. There are many ways to get the loans needed for a mortgage and with the current low interest rates it could be wiser to leave your superannuation alone and buy a house the old fashioned way.

The old fashioned way being; acquiring a home loan or a debt consolidation loan from a trusted bank or a trusted lender, usually at a more competitive rate. Speak to a financial consultant about the right type of loan for you and your family to buy a new home.

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First Home Buyer

Top 5 Ways to Save for a Home Deposit

House prices logically increase every year. It is not surprising that it gets more difficult for first time homebuyers to finally buy and own their own dwellings. If you are considering buying your own house for the first time, you should not despair. If you would be more strategic, you could surely find creative ways to save for the major purchase.

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First Home Buyer

First Mortgages No Longer for the Young

More Australians are buying houses later in their lives.

As a new mortgage survey suggests, a new social trend is emerging in the mortgage market. The survey found, “37% people looking to purchase their first home in the next five years will be over the age of 40”, jumping 28% from last year.

This new trend signifies a shift in the way people are using and spending their money. With the current climate of inflation and rising living costs, people can no longer afford to fund mortgage repayments earlier in life. As Mortgage Choice Survey Spokesperson Kirsty Sheppard explains, people are focussing on other life goals such as career and travel, before entering the property market.

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First Home Buyer

First Home Buyers Being Priced Out

In recent times it has become even harder for Aussies to get their foot in the door of the property market. First home buyers are quickly being priced out of the market, as investors are snapping up properties right in the midst of a housing shortage.

It seems as though our buoyant economy and strong job prospects have spurred established home owners to invest in property or upgrade their homes.

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First Home Buyer

Home Loan Debt Increases Mortgage Stress

45% of first home buyers are currently in mortgage stress and racking up debt on their credit cards to make home loan repayments. With rates expected to rise again – this obscurity is only going to worsen.

As tens of thousands of young homebuyers use credit cards or other loans to meet their financial responsibilities, they are making paying off a home loan severely stressful because now they have multiple debts with increasing interest to pay off, and their income has remained the same.