Rateseeker Round-Up: May Residential Property News
There has been plenty of news coming out of the residential property market in May.
With the announcement of the 2021/22 Federal Budget and rents growing, home buyers are set to benefit from a flurry of incentives aimed to promote property ownership. Australia’s property market is also continuing to trend upwards, with the total value of residential real estate breaking the $8 trillion mark.
Read the three highlights that round out the big residential property updates this month.
Federal Budget promotes home ownership with support measures
With house prices continuing to rise across the country, the Federal Government has unveiled a string of support measures to help more Australians own their first or next home.
There were three key initiatives that home buyers should be aware of:
- Family Home Guarantee. This initiative is aimed at single parents with dependents. The Government will guarantee 10,000 loans over the next four years, which allows eligible single parents to purchase a property with a deposit of just 2% — without needing to pay Lender’s Mortgage Insurance (LMI). The Family Home Guarantee is open to both first home buyers and previous owner-occupiers.
- Expansion of the First Home Loan Deposit Scheme (New Homes). The FHLDS (New Homes) allows eligible first home buyers to build or buy a new home with just a 5% deposit. After a highly successful first year, the Morrison Government has announced there will be an additional 10,000 places made available in 2021-22.
- Changes to First Home Super Saver Scheme. Buyers can now draw upon a greater amount of their super to help fund the purchase of their first home. As part of the budget, the amount of voluntary contributions that can be released under the First Home Super Saver Scheme has been increased from $30,000 to $50,000.
Market favours buying as rent prices soar
Conditions are heavily favouring buyers in all capital cities, with rent prices skyrocketing in 2021. According to SQM research, average weekly rents jumped by 15.7% for houses throughout Australia and 7% for units over the year to 20 May. Houses also outperformed units in every capital city.
This surge in rental prices, combined with record-low interest rates, means that conditions are currently favouring buyers over renters. REA Insights found that it’s cheaper to buy than rent 59.1% of three-bedroom houses and 83.8% of two-bedroom units throughout Australia (based on the assumption buyers have a 20% deposit and property prices will grow by 3% per year over the next decade).
Australia’s property market passes the $8 trillion mark
The total value of Australian residential real estate has now passed the $8 trillion mark, according to CoreLogic. The property market reached $8.1 trillion at the end of April, which puts it at four times the size of Australia’s GDP and $1 trillion more than the combined value of Australia’s stock market, superannuation savings and commercial real estate stock.
This valuation landmark is an important reminder that whether you want to refinance a home loan or buy a new home, it’s vital to know the value of the property.
If your loan-to-value ratio (LVR) is less than 80%, your mortgage broker will have a better chance of getting you a lower interest rate. Plus, you won’t have to pay Lender’s Mortgage Insurance (LMI).
Looking to purchase a property?
The team at Rateseeker can help you seek the sharpest home loan rate and provide tailored advice for your personal and financial situation.
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