Rateseeker Round-Up: March Property News

Rateseeker Round-Up: March Property News

The first quarter of the year has been a busy one, as borders open up and the Federal Election looms.

Q1 2022 has seen property investor activity surge across the country. Meanwhile, the price gap between houses and units has also reached record levels. In light of this never-ending property surge, more Aussies than ever are choosing brokers over banks for their next home loan.

If you missed the latest news, here are four stories you should know from March.

Property investor activity grows 67.8% year-on-year

Investors are incredibly active right now. Data from the Australian Bureau of Statistics (ABS) found that property investors took out $33.7 billion of home loans in January. This is the second consecutive month in which investors set a borrowing record, and represents an increase of 67.8% more compared to January 2021.

This increase has occurred throughout the country over the year to January, with investment activity increasing by:

• Queensland: up 94%
• South Australia: up 81%
• Victoria: up 67%
• New South Wales: up 64%
• Western Australia: up 56%
• ACT: up 42%
• Northern Territory: up 33%
• Tasmania: up 32%

At the same time, Australia’s vacancy rate is at an incredibly low 1.1%, according to the latest data from Domain. That means most property investors are finding it easy to secure quality tenants and raise rents, because demand for rental accommodation is so high right now.

Price gap between houses and units reaches record high

House or unit? This single question could cost you as much as $182,000, according to new data from CoreLogic.

At the end of February, Australia’s median house price was 29.8% higher than its median unit price – a record gap.

To put it in dollar terms, median prices are $791,400 for houses and $609,800 for units, which means the gap is almost $182,000.

This gap has significantly widened in the past two years. In February 2020, the gap was just 8.3%, or $43,000. In February 2021, this figure had doubled to 16.2%, or $87,000.

It’s possible the house-unit price gap will widen even further as many Australians are working from home and may want a dedicated home office. On the other hand, it’s also possible the gap will narrow, because with houses looking relatively dear and units relatively cheap, demand might shift from the former to the latter.

Your student loan may affect your home loan application

When it comes to classifying debt as either ‘good’ or ‘bad’, borrowing to fund your education or buy a property is generally regarded as “good” debt, because both tend to deliver a return on investment. However, taking on HECS-HELP debt can make it harder to qualify for a home loan and reduce your borrowing capacity.

That’s because if hundreds of dollars per month are being diverted from your salary to repay your student debt, you have less money to service your mortgage.

This isn’t to say that you should repay your HECS-HELP debt as soon as possible, as it depends on your unique financial circumstances. On the one hand, eliminating your student debt could make it easier to get a home loan. On the other hand, student debt is interest-free, so it might be better to repay other interest-incurring loans first.

If you need help deciding on the best option, claim your complimentary consultation today. Our expert brokers will help you identify the best approach for your situation.

More Aussies choosing brokers over banks

Australians are increasingly turning to brokers to help with securing a home loan, rather than going straight to the banks. Mortgage brokers were responsible for 66.5% of all new home loans in the December quarter, according to the latest data from research group Comparator.

On top of being a record for a December quarter, this figure is also a significant increase on the market share brokers recorded in December 2020 (59.4%) and December 2019 (55.3%).

Mike Felton, the CEO of the Mortgage & Finance Association of Australia, said the strong increase in mortgage broker market share shows that consumers really value the service, competition and choice that brokers provide.

When you visit a bank for home loan advice, the bank will only tell you about its own products. When you visit a broker, the broker will compare interest rates, loan features and borrowing criteria from a range of lenders. For example, here at Rateseeker, we compare loans from more than 30+ lenders to seek the sharpest rate for your unique circumstances.

The broker will also negotiate with lenders on your behalf and help you through the mortgage application process. Best of all, it’s free for buyers to use this service, as brokers get paid a commission from the lender, not the buyer.

Want to compare interest rates on your next loan? Get in touch with our team of expert brokers today.