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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