Price Keeps Falling

3.7% and 2.4% falls are recorded for Sydney and Melbourne residential property markets respectively for the last quarter of 2018.  The two Australia largest cities have been experienced double-digit falling on median price since last peaks in 2017. The pace of price drops is worse than during GFC 2008.

Residential Property Loan Lending

After a year’s staying on the top of hottest news topics, royal commission into misconduct in the banking, superannuation and financial services industry came to an end on 4 February 2019. As a result, home loan lenders especially banks are now more cautious than ever to provide funds to property purchasers. For a successful home loan application, Lenders now ask loan applicants for

  • Long and stable PAYG incomes;
  • Practical living expenses;
  • Minimum existing personal debts;
  • Prefer primary residence buyers especially first-home buyers than property investors especially with large profiles;
  • Less LVR, which means purchasers need to have more own funds in their accounts;
  • Purchased property in good location, correct property type and passed the valuation assessment.

ANZ will offer interest-only loans to property investors with up to 90% of property value and for up to 10 years. This decision will be effective starting April 25.

Labour Party’s Housing Tax Changes

Election fears – Labour Party’s housing tax changes may impose interest effects residential housing markets, who proposes

  • Negative gearing only applies to new dwelling purchases;
  • Capital gain tax discount reduced to 25% from current 50%.

Housing Market Direction

The market may go anywhere

  • View 1: the price drop is just half-way and more correction coming in 2019 – 2020;
  • View 2: with ease on lending and forecast of further RBA cash rate cuts the market will touch the bottom and return to normal by the end of 2019;
  • View 3: will have clearer picture after federal election in May.
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