Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
More analysis of recent price changes for property – this time in the West, and again strong correlation with high levels of mortgage stress. Thanks for Cookie Boy for doing the research.
We focused on more affordable houses, and spruikers note, prices are down.
Go to the Walk The World Universe at https://walktheworld.com.au/
My latest Friday afternoon chat with journalist Tarric Brooker, in which we explore home price dynamics, politics, and much more besides.
https://avidcom.substack.com/p/charts-that-matter-22nd-july-2022 for copies of the slides.
https://avidcom.substack.com/p/rising-rates-and-australias-over
Go to the Walk The World Universe at https://walktheworld.com.au/
Another set of asking price cut case studies, from QLD, courtesy of CB, inter-cut with relevant data from the DFA models. Still think prices are booming in QLD?
Go to the Walk The World Universe at https://walktheworld.com.au/
The proportion of Australians who own their home outright has halved over two decades for most age groups while the proportion of people with mortgages in retirement years has tripled.
Data from the Australian Bureau of Statistics shows that outright home ownership has more than halved for 25 to 54-year-olds between 2001 and 2021. At the same time, the number of mortgage holders and renters across all age groups has ballooned.
The number of Australians who own their homes outright has plummeted over the last 20 years.
The proportion of Australians who completely own their property has fallen by 11 percentage points according to the latest census data.
According to the recent Census data, which counted 25,422,788 Australians the proportion of Australians who own a home outright dropped from 41.6 per cent in 1996 to 31 per cent in 2021.
The same data also noted that, over the last 25 years, the number of Australians who owned a home with a mortgage also doubled, rising by 96.8 per cent.
Go to the Walk The World Universe at https://walktheworld.com.au/
Following the Reserve Bank’s double rate hike, big banks have lifted all their variable mortgage rates by 0.5 percentage points.
As a result, the average variable borrower will have seen their rate rise by 1.25 percentage points since the start of May.
That means someone with a $500,000 mortgage, with 25 years remaining, will see their repayments increase by an estimated $333 in total across the three hikes, RateCity.com.au said.
While variable rate borrowers with loans with CBA, NAB, and ANZ will be charged a higher interest rate starting today, it will take weeks for their monthly repayments to rise. In fact, the increase in monthly repayments many of these customers are currently seeing resulted from the May hike.
This is because banks typically give 20 to 32 days’ notice before lifting their monthly repayments, despite charging their customers the higher rate from the effective date.
Even then, the increase to their monthly repayment might not take effect for another few weeks, depending on when they are due.
UBS has predicted interest rates will peak at around 3.5 per cent in March next year, but said this will still hit the housing market hard.
“We still think market pricing of about 3.5 per cent – if delivered – would likely crash housing, and see the economy nearing a recession,” George Tharenou, chief economist at UBS, told The Australian.
If interest rates were to rise to 3.5 per cent it would likely see the average variable mortgage rate hit a whopping 6 per cent and could plunge the economy into recession, according to the investment bank.
“Interest payments across the economy next year for the household sector will close to double from now,” Mr Tharenou said.
“We have never seen such a sharp increase in repayments. That really crushes household cashflow next year when you have cost-of-living issues.”
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
The REINZ released their latest reports to June 2022, and were are pains to talk about the annual price movements, not the monthly changes, which was down 1.9% overall.
And according to their HPI you can see why. There is the remnants of a run up, which masks the falls following the RBNZ rate hikes which started late last year. Falls are in play almost universally, including the Upper North Island, Lower North Island and the South Island. But there are some variations.
The largest one-month falls were in Wellington City, down 5.7%, Dunedin City down 3.6%, Nelson down 2.9% and Queenstown down 2.4%. In the North, Turanga City fell 4.3%, Hastings 3.9%, Palmerston North 3.3% and Auckland City 2.8%. On the other hand, Rotorua was up 2.3%, Upper Hutt up 1.6% and Christchurch City up 0.6%, the same as Auckland’s North Shore City.
They did concede listings were up, days on market were increasing, and the proportion of sales via auctions were falling.
They refer to their median price calculations, where the median change was up 1.2% across the country, or 1.5% seasonally adjusted. But the spin machine was in full misdirection mode in their report.
Go to the Walk The World Universe at https://walktheworld.com.au/
Our latest property-related chat with Edwin Almeida, our property insider as we look at the latest from China in terms of new migrants, listing numbers, real estate agent behaviour, and the shape of the market. And we have Edwin’s latest hot tip.
https://www.ribbonproperty.com.au/
Go to the Walk The World Universe at https://walktheworld.com.au/
In recent years we have seen a swathe of “initiatives” from state and federal governments with the aim to encouraging and helping more first-time buyers into the housing market. The previous Government claimed they had helped “hundreds of thousands” into the property market.
The latest ABS statistics shows that the number of First Time Buyers is falling again – and the part peaks map directly onto Government “stimulus” measures.
The latest is the Albanese Government release of 40,000 new places under the Federal Government’s Home Guarantee Scheme, which will enable eligible first home buyers to purchase a property with a deposit of as little as 2% or 5%.
This as a time when the Reserve Bank of Australia is aggressively increasing rates and house prices are expected to plunge by between 10% and 20%, depending on the forecast. What could possibly go wrong?
In fact, the evidence suggest that these schemes are ineffective. Indeed, the long-term trends in terms of home ownership shows that across Australia, a smaller proportion of people own their own home, and those that do have bigger mortgages for longer. The latest Census data, which is still in the process of being released continues to confirm this trend.
Home ownership rates in Australia have declined over several decades, and the likelihood of attaining home ownership by age 30 has fallen substantially. Go back two decades and the average age of a first time buyer was 27 year, today its 34 years and rising based on my surveys. In addition, especially in Sydney, Melbourne and Perth, first home buyers (FHBs) are now buying fewer houses and more units, and evidence shows that more are receiving parental assistance.
Also while mortgage repayment affordability stress has been cushioned by falling interest rates until 2022, mortgage deposit requirements have risen with prices and become an increasingly serious constraint—far more so in Sydney and Melbourne than elsewhere.
I have long argued that this First Home Owner grants are bribes which distort the market, lift prices and are more designed to assist the construction sector. In other words, First Time Buyer Grants are a con.
Go to the Walk The World Universe at https://walktheworld.com.au/
My latest chat on a Friday afternoon with Journalist Tarric Brooker, covering the latest economic and financial news, courtesy of his famous slides. https://avidcom.substack.com/p/charts-that-matter-8th-july-2022
You can follow him on Twitter @AvidCommentator
Go to the Walk The World Universe at https://walktheworld.com.au/
We look at some more property repricing, as vendor exceptions are being adjusted now, and using our analytics tool highlight some of the common themes which come to the surface.
Do not believe the spruikers, many properties are being repriced lower!
Go to the Walk The World Universe at https://walktheworld.com.au/