Rateseeker January 2023 Property News Round-up

Rateseeker January 2023 Property News Round-up

As we move into a brand new year and we reset and refuel from the holiday break for the year ahead, there has been some interesting developments in the property market.

With refinancing levels at all-time highs, Aussies have taken to switch out their current home loans for a better deal with a staggering $19.5 billion in refinanced loans as of November 2022.

Renters are also in a tough spot with rental prices rising and vacancy levels dropping from 2.1% to 1.2%. Although investors benefited from a nice rise in rental income during 2022.

Aussies who are looking to build their own homes can also expect construction costs to ease this year as rising interest rates and inflation has consumers, suppliers and builders in a more cautious mode.

Additionally after many months of consecutive increases, the Reserve Bank of Australia (RBA) has stated they expect for inflation to ease this year with further drops in 2024.

Missed the latest property news? Don’t miss out, here are the biggest stories below.

Aussies hit a record high of $19.5 billion in refinanced home loans

The rate at which Aussie households are refinancing their home loans for a sharper rate has never been so high. Owner-occupiers and investors across the board are looking to find alternative loans with lower interest rates as the Reserve Bank has served a series of consecutive cash rate hikes.

According to the most recent data available from the Australian Bureau of Statistics and the Reserve Bank, borrowers have refinanced a record of $19.5 billion of loans in November of 2022, which sits at 20.4% higher than the previous year and 88.2% higher than the two prior years.

The Reserve Bank has revealed that Aussie households may see a further rate rise coming in the future. In December of 2022, the RBA had stated their aim was to rectify inflation to the 2-3% target range over time, however as it currently stands at 7.3% the central bank will be doing whatever is necessary to achieve the desired outcome to bring stabilisation to the Australian economy. This could ultimately mean further cash rate increases until the RBA is satisfied.

With the new year in full swing, it’s the perfect time to give your mortgage a health-check. With a huge amount of home owners switching to a sharper rate, it could be the perfect time for you to explore how much you can save in the long-term. Get in touch with us at Rateseeker, and we can walk you through the process and find out whether it’s beneficial for you to refinance your loan now.

Rental prices skyrocketing 22.2% between September 2020 and September 2022

Over the last year, the national vacancy rate dropped sharply from 2.1% to 1.2%, delivering a heavy blow to rental tenants looking for prospective rental homes.

To comprehend the drop, think of it as the number of untenanted rental properties falling from 21 available properties per 1000 to just 12. This change has forced tenants to compete harder, in turn, pushing up rents.

CoreLogic revealed that the median rent for an Australian investment properties skyrocketed 10.2% during the year.
CoreLogic’s head of Research Ms Owen states that rents are continuing to creep up in most capital cities and regional areas, with vacancy rates still remaining extremely low.

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Residential construction growth expected to slump in 2023

Home building costs continue to creep up, however it appears we may have better news on the horizon.
According to CoreLogic’s Cordell Construction Cost Index (CCCI). Residential construction costs increased 11.9% during the last year, after climbing 7.3% in 2021.
The result over the past 12 months showed the largest annual increase on record, negating the period impacted by the introduction of the GST.

In good news, the rate of growth appears to be slowing down, with construction prices increasing 4.7% in the September quarter, yet only 1.9% in the December quarter.

Experts have estimated that in 2023, costs would be unlikely to rise at the same intensity and pace as in the recent times, primarily due to the rising interest rates and inflation, which has made consumers, builders and suppliers more much more cautious.
Analysing the price increases, CoreLogic’s construction cost estimator Mr Bennett said:

• Volatile timber prices are affecting the cost of structural timber and general timber products
• Prices continue to increase for metal products, such as gutters, lintels and fixings, which are used for roofing and structural purposes
• Petrol price increases are affecting cartage and delivery costs, including for concrete and rainwater tanks
• Gravel, aggregates and fill prices have increased, possibly affected by the rise in petrol prices
• Costs have also increased for appliances and fittings

Are you looking for a building loan in order to create your own dream home? Get in touch with our team of expert brokers and we can help determine your borrowing power and guide you through the process so you can get into you new home fast.

The Reserve Bank predicts interest rates will fall in 2023

While inflation continues to be staggeringly high, experts believe we may have reached the peak.
The latest data from the Australian Bureau of Statistics’ latest reveals that inflation rose from 6.9% in October to 7.3% in November of last year.

In early December, the RBA forecasted that inflation would reach it’s peak at around 8% in December 2022.
With this in consideration, it may be that inflation is cooling down – despite the December 2022 inflation announcement may show an increase on the previous period.
With inflation is expected to decline this year, the RBA states it may be due to the ongoing resolution of global supply-side problems, recent declines in some commodity prices and slower growth in demand, suggesting a further fall in 2024, to “a little above 3%”.
The RBA’s stance towards high inflation is that it damages our economy and makes life more difficult for everyday Aussies, which is why they have been determined “to re-establish low inflation and return inflation to the 2-3% range over time”.

Are rising interest rates wrecking havoc on your home loan repayments?Refinancing may be a suitable option if it has been some time since you’ve reviewed your loan. We’re experts at finding the right home loan for every individual’s circumstances. Get in touch and speak to one of our experienced mortgage specialists for personalised help, guidance and the sharpest rates for your home loan.