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CHOICESISSUE 1, 2018
in this issue
• What housing bubble?
• Five tips to successfully sell your home
• Going guarantor
• Life insurance - why it matters
• Why is the super gap so big?
Mortgage Choice Calculators Use our suite of popular mortgage & home loan calculators to work out your borrowing capacity, home loan repayments, stamp duty, savings targets and more.
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The information provided in Choices is for general education purposes only and does not constitute specialist advice.
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The team
Garry Parsons Lloyd Stanton
0416 105 060 0419 022 [email protected]
[email protected]/garry.parsons
O�ce 1, 3 Allman Street, Campbelltown, NSW 2560
For many years, I’ve heard di�erent market commentators and economists speak about an Australian housing bubble. They believe that the property market will burst and property prices will fall dramatically within a short period of time.
I, for one, do not believe we're in the midst of a property price bubble. However, for this to be the case:
1) Mortgage rates would have to skyrocket;2) Unemployment would have to soar;3) Building developers would have to significantly increase
their level of supply;4) Population growth would have to stall.
The fact is none of the above events are likely to occur. As such, I think we can expect to see continued growth in property values across most markets over the foreseeable future.
While the growth may not be at the levels we have seen in previous years, the property market will remain robust.
I share more of my thoughts on the property market in this edition of CHOICES. In addition, we look at the pros and cons of going guarantor on a loan and, tips for selling your home and other interesting articles.
As usual, if you would like more information or you would like to provide feedback on any of the articles you read in this edition of CHOICES, please let us know. We value your feedback.
3
So, is this ‘crash’ likely to happen over the short to medium term?
In my humble opinion, the short and simple answer is ‘no’.
Sure, we’re likely to see property price growth stagnate across some markets – specifically Sydney – but stagnate property price growth is not the same as a ‘crash’.
Significant changes have been made to investment lending policy in recent months. Moreover, interest rates have been sitting at historical lows for well over 12 months and will continue to sit at historically low levels for some time yet. Both of these things have combined to take some of the heat out of the market.
For a crash to occur in the housing market, there would need to be a number of economic factors at play.
First, supply would need to significantly exceed demand. Secondly, the cost of borrowing money would need to rise rapidly in a very short period of time, and unemployment would also need to reach dramatically high levels.
Moreover, there would need to be a large number of people looking to liquidate their properties at the same time.
If all those factors were to occur, a crash could be a possibility, but based on how our economy is travelling at the moment, it’s fair to say that we’re not in for a crash.
According to the Australian Bureau of Statistics (ABS), Australia’s population grew 1.6%1 over the year to March 2017 – which is significantly higher than other developed nations.
In total numbers, our population grew by 389,100 last year, and all of those people need somewhere to live. If we want to cater to our growing population, we need to build more properties, and that’s exactly what we’re doing.
At the same time, interest rates are low and we expect them to stay lower for longer. Meanwhile, the unemployment rate is trending downwards, hovering around the low 5%2 barrier.
When you consider all of the above economic data, there’s nothing to suggest that a property price crash is in our near future.
1 Australian Bureau of Statistics, Australian Demographics Statistics March 2017. 2 Australian Bureau of Statistics, Labour Force Australia October 2017.
What housing bubble?John Flavell, CEO Mortgage Choice
If you’ve opened a newspaper or watched the nightly news recently, you’ll have no doubt heard the term ‘property bubble’ being bandied around.
Some economists and market commentators believe Australia is in the midst of a housing bubble. More specifically, these economists believe certain markets – Sydney and Melbourne – are destined for a crash in property prices.
So what would a crash look like and are we heading for one?
Put simply, if property prices were to ‘crash’ and the bubble was to ‘burst’, we would probably have to see prices fall by a significant margin in a very short period of time. For example, a 20% drop in property values over a 12-month period may be considered a ‘crash’.
Interested in how the cash rate will affect you?
Every month we host a Facebook Live event to announce the RBA’s decision on the cash rate and we explain what
this will mean for you and how you can make the most of the rate. Join us here -
facebook.com/pg/MortgageChoice/events
4
So, is this ‘crash’ likely to happen over the short to medium term?
In my humble opinion, the short and simple answer is ‘no’.
Sure, we’re likely to see property price growth stagnate across some markets – specifically Sydney – but stagnate property price growth is not the same as a ‘crash’.
Significant changes have been made to investment lending policy in recent months. Moreover, interest rates have been sitting at historical lows for well over 12 months and will continue to sit at historically low levels for some time yet. Both of these things have combined to take some of the heat out of the market.
For a crash to occur in the housing market, there would need to be a number of economic factors at play.
First, supply would need to significantly exceed demand. Secondly, the cost of borrowing money would need to rise rapidly in a very short period of time, and unemployment would also need to reach dramatically high levels.
Moreover, there would need to be a large number of people looking to liquidate their properties at the same time.
If all those factors were to occur, a crash could be a possibility, but based on how our economy is travelling at the moment, it’s fair to say that we’re not in for a crash.
According to the Australian Bureau of Statistics (ABS), Australia’s population grew 1.6%1 over the year to March 2017 – which is significantly higher than other developed nations.
In total numbers, our population grew by 389,100 last year, and all of those people need somewhere to live. If we want to cater to our growing population, we need to build more properties, and that’s exactly what we’re doing.
At the same time, interest rates are low and we expect them to stay lower for longer. Meanwhile, the unemployment rate is trending downwards, hovering around the low 5%2 barrier.
When you consider all of the above economic data, there’s nothing to suggest that a property price crash is in our near future.
1 Australian Bureau of Statistics, Australian Demographics Statistics March 2017. 2 Australian Bureau of Statistics, Labour Force Australia October 2017.
What housing bubble?John Flavell, CEO Mortgage Choice
If you’ve opened a newspaper or watched the nightly news recently, you’ll have no doubt heard the term ‘property bubble’ being bandied around.
Some economists and market commentators believe Australia is in the midst of a housing bubble. More specifically, these economists believe certain markets – Sydney and Melbourne – are destined for a crash in property prices.
So what would a crash look like and are we heading for one?
Put simply, if property prices were to ‘crash’ and the bubble was to ‘burst’, we would probably have to see prices fall by a significant margin in a very short period of time. For example, a 20% drop in property values over a 12-month period may be considered a ‘crash’.
Interested in how the cash rate will affect you?
Every month we host a Facebook Live event to announce the RBA’s decision on the cash rate and we explain what
this will mean for you and how you can make the most of the rate. Join us here -
facebook.com/pg/MortgageChoice/events
5
SOLD
Five tips to successfully sell your homeFollow our five tips to successfully sell your place for maximum value and minimum fuss.
1
Forget notions about the ‘right’ time to sell
There has long been speculation that Spring is the best time to sell your home because there are more buyers in the market.
These days however, property super cycles no longer exist. Gone are the days when there was a better time to buy or sell your home. Today, with buyers and sellers constantly in the market, the best time to buy or sell a home is actually when you’re ready.
2
Sell first. Buy later.
When you’re in a mindset to upgrade to a new home, it can be very tempting to start looking at properties listed for sale – and make an offer on a place before you sell your old home. But giving in to this temptation can leave you financially skewered.
Despite any claims by the selling agent, no one really knows how long it’ll take to sell your home, and if it isn’t snapped up quickly you could be left in the challenging position of juggling two mortgages at once.
Selling before buying may mean a few weeks couch-surfing with friends or in-laws, or even taking out a short term rental until you settle on a new home. But at least you won’t face a cash squeeze that could drag on indefinitely if the market is slow.
3
Be selective about your selling agent
Don’t base your choice of agent on the highest quoted selling price. Look for agents with runs on the board – those who have “Sold” stickers slapped across their For Sale signs.
Ask friends, work colleagues and family members for recommendations, and be sure you are comfortable with the commission you’ll pay. In many cases it’s open to negotiation.
4
Set a realistic selling price
When it comes to the listed price or auction reserve, follow the advice of your selling agent. But do some research of your own too. Check out comparable houses or units being offered for a similar price – especially those that have sold. Be honest with yourself about how your place compares, and be flexible on your asking price if a genuine buyer makes a ballpark offer.
5
Don’t just list your home, market it!
Give your place the ‘wow’ factor. Declutter as much as possible, even if it means storing some of your belongings for a while. Complete any repairs you’ve been putting off and consider giving the home a fresh lick of paint. Most buyers don’t want to move into a home that requires a tonne of work, and having your property in tip-top shape can enhance its market appeal.
Your agent may suggest home styling especially if your furniture is looking a little well-loved. This can cost several thousand dollars but it could be money well spent if fresh furniture and accessories give your home’s market value an uptick.
The selling agent will arrange professional photographs to be taken. Be sure to have your home looking immaculate on photo day.
The combination of research, planning, a bit of elbow grease and a dash of flexibility can add up to let you enjoy a successful sale, and make buying your new home a lot less stressful.
6
SOLD
Five tips to successfully sell your homeFollow our five tips to successfully sell your place for maximum value and minimum fuss.
1
Forget notions about the ‘right’ time to sell
There has long been speculation that Spring is the best time to sell your home because there are more buyers in the market.
These days however, property super cycles no longer exist. Gone are the days when there was a better time to buy or sell your home. Today, with buyers and sellers constantly in the market, the best time to buy or sell a home is actually when you’re ready.
2
Sell first. Buy later.
When you’re in a mindset to upgrade to a new home, it can be very tempting to start looking at properties listed for sale – and make an offer on a place before you sell your old home. But giving in to this temptation can leave you financially skewered.
Despite any claims by the selling agent, no one really knows how long it’ll take to sell your home, and if it isn’t snapped up quickly you could be left in the challenging position of juggling two mortgages at once.
Selling before buying may mean a few weeks couch-surfing with friends or in-laws, or even taking out a short term rental until you settle on a new home. But at least you won’t face a cash squeeze that could drag on indefinitely if the market is slow.
3
Be selective about your selling agent
Don’t base your choice of agent on the highest quoted selling price. Look for agents with runs on the board – those who have “Sold” stickers slapped across their For Sale signs.
Ask friends, work colleagues and family members for recommendations, and be sure you are comfortable with the commission you’ll pay. In many cases it’s open to negotiation.
4
Set a realistic selling price
When it comes to the listed price or auction reserve, follow the advice of your selling agent. But do some research of your own too. Check out comparable houses or units being offered for a similar price – especially those that have sold. Be honest with yourself about how your place compares, and be flexible on your asking price if a genuine buyer makes a ballpark offer.
5
Don’t just list your home, market it!
Give your place the ‘wow’ factor. Declutter as much as possible, even if it means storing some of your belongings for a while. Complete any repairs you’ve been putting off and consider giving the home a fresh lick of paint. Most buyers don’t want to move into a home that requires a tonne of work, and having your property in tip-top shape can enhance its market appeal.
Your agent may suggest home styling especially if your furniture is looking a little well-loved. This can cost several thousand dollars but it could be money well spent if fresh furniture and accessories give your home’s market value an uptick.
The selling agent will arrange professional photographs to be taken. Be sure to have your home looking immaculate on photo day.
The combination of research, planning, a bit of elbow grease and a dash of flexibility can add up to let you enjoy a successful sale, and make buying your new home a lot less stressful.
7
Q: What safeguards should I have in place to protect or recoup my investment?
A: If you decide to guarantee a home loan, it’s essential you speak with a qualified mortgage broker and a solicitor to protect both parties. A contract can be drawn that clearly explains how the loan will be structured and what happens in the event that the borrower defaults on their loan.
Q: Does going guarantor mean my child will not need to prove savings?
A: While going guarantor means your child can borrow 100% of the purchase price, some lenders may still require evidence of genuine savings. Essentially, this is money your child has saved themselves for more than three months.
Q: How does going guarantor compare to other financial benefits such as gifting children money?
A: The biggest difference between going guarantor on a loan and gifting a child money is that no money changes hands in a guarantor loan. The guarantor does not have to save a lump sum, or put money away for an inheritance. Rather, they can help their child today by using the equity in their property.
Q: With house prices being so high, will guarantor loans become the new norm?
A: At Mortgage Choice, we've definitely seen an increase in the proportion of parents going guarantor on their children's loans.
Anything that can be done - by parents or the state and federal government - to help first home buyers should be applauded and welcomed.
Q: What do I do if I feel pressured into helping out my adult child in buying a home?
A: If you're asked to be a guarantor on a home loan, there’s no reason why you should feel pressured to do so.
While you may want to help them achieve their property ownership goals, it’s important to note that there are risks associated with going guarantor and, as such, no-one should jump into the situation before giving considered thought.
If you’re thinking of going guarantor on a home loan, it’s critical you speak to both a legal and mortgage professional.
Going guarantor? Here’s what you need to know We answer some of the more commonly asked guarantor questions to help you decide whether going guarantor on your family member's loan is the right move for you.
Q: How does a guarantor loan work?
A: A guarantor allows the equity in their property to be used as additional security for a person’s loan.
Q: What are the pros and cons of guarantor loans?
A: First home buyers don’t have to save the huge deposit needed to buy their first property because their guarantor is using the equity in their home as additional security for the first home buyer’s loan.
Of course, going guarantor is not without risk. If the first home buyer defaults on their home loan, the guarantor becomes responsible for paying their debt.
Our handy Guarantors Guide explains what a guarantor is,
who they are and the pros and cons. Download a copy here:
mortgagechoice.com.au/guarantors
8
Q: What safeguards should I have in place to protect or recoup my investment?
A: If you decide to guarantee a home loan, it’s essential you speak with a qualified mortgage broker and a solicitor to protect both parties. A contract can be drawn that clearly explains how the loan will be structured and what happens in the event that the borrower defaults on their loan.
Q: Does going guarantor mean my child will not need to prove savings?
A: While going guarantor means your child can borrow 100% of the purchase price, some lenders may still require evidence of genuine savings. Essentially, this is money your child has saved themselves for more than three months.
Q: How does going guarantor compare to other financial benefits such as gifting children money?
A: The biggest difference between going guarantor on a loan and gifting a child money is that no money changes hands in a guarantor loan. The guarantor does not have to save a lump sum, or put money away for an inheritance. Rather, they can help their child today by using the equity in their property.
Q: With house prices being so high, will guarantor loans become the new norm?
A: At Mortgage Choice, we've definitely seen an increase in the proportion of parents going guarantor on their children's loans.
Anything that can be done - by parents or the state and federal government - to help first home buyers should be applauded and welcomed.
Q: What do I do if I feel pressured into helping out my adult child in buying a home?
A: If you're asked to be a guarantor on a home loan, there’s no reason why you should feel pressured to do so.
While you may want to help them achieve their property ownership goals, it’s important to note that there are risks associated with going guarantor and, as such, no-one should jump into the situation before giving considered thought.
If you’re thinking of going guarantor on a home loan, it’s critical you speak to both a legal and mortgage professional.
Going guarantor? Here’s what you need to know We answer some of the more commonly asked guarantor questions to help you decide whether going guarantor on your family member's loan is the right move for you.
Q: How does a guarantor loan work?
A: A guarantor allows the equity in their property to be used as additional security for a person’s loan.
Q: What are the pros and cons of guarantor loans?
A: First home buyers don’t have to save the huge deposit needed to buy their first property because their guarantor is using the equity in their home as additional security for the first home buyer’s loan.
Of course, going guarantor is not without risk. If the first home buyer defaults on their home loan, the guarantor becomes responsible for paying their debt.
Our handy Guarantors Guide explains what a guarantor is,
who they are and the pros and cons. Download a copy here:
mortgagechoice.com.au/guarantors
9
Life insurance – the real story of why it mattersLife cover has something of an image problem right now. But before dismissing it altogether, take a moment to weigh up the facts to understand why it remains a cornerstone of financial security.
In 2016, news headlines were dominated by allegations that the Commonwealth Bank's life insurance arm – CommInsure, with its massive customer base of four million Australians, had denied heart attack claims based on outdated policy definitions.
Understandably, some people questioned the value of having life insurance.
But, before you toss in the towel on life cover, we’ll take a close look at why it remains so important.
In the wake of allegations about CommInsure, money regulator ASIC undertook a review of the way the life insurance industry handles claims.
ASIC found that across the full suite of life insurance products including income protection, TPD and trauma cover, “90% of claims are paid in the first instance”1. When it came solely to life insurance only 4% of claims were declined2.
Following ASIC’s review, the Financial Services Council introduced a Code of Practice that holds life insurers to high standards of claims handling3.
Life cover offers support in times of stress
Like many workers, you may have life insurance in place through your super. But if you’re relying solely on this to take care of your family in the event that you’re no longer around, you could be setting your loved ones up for financial hardship.
Cover of 10x annual income is the benchmark
A report by Rice Warner found the average 40-something couple needs life cover equal to ten times their annual income just to pay off household debt and maintain the family’s current living standard4.
Clearly, many families are facing a major shortfall in life insurance, and it’s something that could completely change your loved ones’ lives if you’re no longer around – and not always for the better.
Top up cover through super
Of course, the option is always there to increase the level of life cover you have through your super fund. The downside of this approach is that the premiums will come out of your nest egg, leaving you with less money for retirement.
But there’s a potentially more serious downside to consider.
Your super fund can have discretion about who your life insurance monies go to, and even if you complete a binding death nomination, you can face limitations in who you can nominate as a beneficiary.
The bottom line
Life cover remains an important product to protect your family’s wealth and financial wellbeing. But do check how much protection you have in place through your super. It’s not worth assuming it will be enough.
A sensible strategy is to set a date to talk with your Mortgage Choice broker or adviser about your level of life protection.
1 http://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-347mr-asic-issues-industry-review-of-life-insurance-claims/2 http://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-498-life-insurance-claims-an-industry-review/#infographic-snapshot3 https://www.fsc.org.au/_entity/annotation/ 517c70fd-9f15-e711-80d4-00155dea4d004 Proper adequacy in life insurance means looking beyond rising premiums’ – Rice Warner media release, December 2013
It’s easy to assume ‘it’ll never happen to me’ but none of
us are immune from illness or injury. Find out more here:
mortgagechoice.com.au/personalinsurance
10
Life insurance – the real story of why it mattersLife cover has something of an image problem right now. But before dismissing it altogether, take a moment to weigh up the facts to understand why it remains a cornerstone of financial security.
In 2016, news headlines were dominated by allegations that the Commonwealth Bank's life insurance arm – CommInsure, with its massive customer base of four million Australians, had denied heart attack claims based on outdated policy definitions.
Understandably, some people questioned the value of having life insurance.
But, before you toss in the towel on life cover, we’ll take a close look at why it remains so important.
In the wake of allegations about CommInsure, money regulator ASIC undertook a review of the way the life insurance industry handles claims.
ASIC found that across the full suite of life insurance products including income protection, TPD and trauma cover, “90% of claims are paid in the first instance”1. When it came solely to life insurance only 4% of claims were declined2.
Following ASIC’s review, the Financial Services Council introduced a Code of Practice that holds life insurers to high standards of claims handling3.
Life cover offers support in times of stress
Like many workers, you may have life insurance in place through your super. But if you’re relying solely on this to take care of your family in the event that you’re no longer around, you could be setting your loved ones up for financial hardship.
Cover of 10x annual income is the benchmark
A report by Rice Warner found the average 40-something couple needs life cover equal to ten times their annual income just to pay off household debt and maintain the family’s current living standard4.
Clearly, many families are facing a major shortfall in life insurance, and it’s something that could completely change your loved ones’ lives if you’re no longer around – and not always for the better.
Top up cover through super
Of course, the option is always there to increase the level of life cover you have through your super fund. The downside of this approach is that the premiums will come out of your nest egg, leaving you with less money for retirement.
But there’s a potentially more serious downside to consider.
Your super fund can have discretion about who your life insurance monies go to, and even if you complete a binding death nomination, you can face limitations in who you can nominate as a beneficiary.
The bottom line
Life cover remains an important product to protect your family’s wealth and financial wellbeing. But do check how much protection you have in place through your super. It’s not worth assuming it will be enough.
A sensible strategy is to set a date to talk with your Mortgage Choice broker or adviser about your level of life protection.
1 http://www.asic.gov.au/about-asic/media-centre/find-a-media-release/2016-releases/16-347mr-asic-issues-industry-review-of-life-insurance-claims/2 http://www.asic.gov.au/regulatory-resources/find-a-document/reports/rep-498-life-insurance-claims-an-industry-review/#infographic-snapshot3 https://www.fsc.org.au/_entity/annotation/ 517c70fd-9f15-e711-80d4-00155dea4d004 Proper adequacy in life insurance means looking beyond rising premiums’ – Rice Warner media release, December 2013
It’s easy to assume ‘it’ll never happen to me’ but none of
us are immune from illness or injury. Find out more here:
mortgagechoice.com.au/personalinsurance
11
Get your other half to come on board
Also since 1 July 2017, the upper income limit for the spouse super tax offset has increased. If you earn less than $40,000 annually (up from the previous threshold of $13,800), your spouse or partner could receive a tax saving of up to $540 for making a contribution to your super fund.
If you have any queries about how super works, or you’d like more information on ways to grow your super savings, call your local Mortgage Choice financial adviser to arrange a meeting.
1 ASFA media release: What’s the difference between super man and super woman? 17 July 2017 https://www.superannuation.asn.au/media/media-releases/2017/media-release-17-july-20172 ASFA Superannuation Statistics June 20173 ASFA media release: What’s the difference between super man and super woman? 17 July 2017 https://www.superannuation.asn.au/media/media-releases/2017/media-release-17-july-20174 https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/super-accounts-data/super-accounts-data-overview/
Why is the super gap so big? It’s no secret that women, rather than men, often take time out of the workforce to raise a family. Women are also more likely to work in part-time or lower paid employment, and women, on average, earn lower wages compared to their male counterpart1.
The impact of all this, is that women tend to have far less in super than men.
Across all ages, women have an average of $54,916 in super compared to $98,535 for men. Among women aged 60 to 64 – those nearest retirement age, the average super balance is $138,154 – around half the $292,510 average nest egg of men aged 60-642. One in three women retire with no super at all3.
Fortunately, there are strategies women can take to grow their super savings. Let’s see what’s involved.
Gather your super in one account
Tax Office figures show two out of five Australians have more than one super fund4. Tracking down any lost or forgotten super balances and consolidating different super accounts into a single fund can save on fees and help you stay in touch with your super.
Look at ways to grow your super
If you’re working, consider using salary sacrifice as a tax-friendly way to grow your nest egg using before-tax money. Even small regular contributions of $10 or $20 each week can make a significant difference to the value of your final nest egg.
Tax advantage of new tax breaks
Since 1 July 2017, you can claim a tax deduction for personal super contributions – up to a total of $25,000 annually. It’s a tax break that was previously only available if less than 10% of your total income came from salary or wages. These days however, if you have a part-time job where the boss pays, say $15,000 annually into your super, and you’re also running a business on the side, you may be able to claim a tax deduction for up to $10,000 worth of contributions made yourself.
Use our free retirement income calculator to see what you
could expect in your retirement and whether your current
investment strategy is right for you -
mortgagechoice.com.au/financial-planning/life-after-work/retirement-income-calculator.aspx
12
Get your other half to come on board
Also since 1 July 2017, the upper income limit for the spouse super tax offset has increased. If you earn less than $40,000 annually (up from the previous threshold of $13,800), your spouse or partner could receive a tax saving of up to $540 for making a contribution to your super fund.
If you have any queries about how super works, or you’d like more information on ways to grow your super savings, call your local Mortgage Choice financial adviser to arrange a meeting.
1 ASFA media release: What’s the difference between super man and super woman? 17 July 2017 https://www.superannuation.asn.au/media/media-releases/2017/media-release-17-july-20172 ASFA Superannuation Statistics June 20173 ASFA media release: What’s the difference between super man and super woman? 17 July 2017 https://www.superannuation.asn.au/media/media-releases/2017/media-release-17-july-20174 https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/super-accounts-data/super-accounts-data-overview/
Why is the super gap so big? It’s no secret that women, rather than men, often take time out of the workforce to raise a family. Women are also more likely to work in part-time or lower paid employment, and women, on average, earn lower wages compared to their male counterpart1.
The impact of all this, is that women tend to have far less in super than men.
Across all ages, women have an average of $54,916 in super compared to $98,535 for men. Among women aged 60 to 64 – those nearest retirement age, the average super balance is $138,154 – around half the $292,510 average nest egg of men aged 60-642. One in three women retire with no super at all3.
Fortunately, there are strategies women can take to grow their super savings. Let’s see what’s involved.
Gather your super in one account
Tax Office figures show two out of five Australians have more than one super fund4. Tracking down any lost or forgotten super balances and consolidating different super accounts into a single fund can save on fees and help you stay in touch with your super.
Look at ways to grow your super
If you’re working, consider using salary sacrifice as a tax-friendly way to grow your nest egg using before-tax money. Even small regular contributions of $10 or $20 each week can make a significant difference to the value of your final nest egg.
Tax advantage of new tax breaks
Since 1 July 2017, you can claim a tax deduction for personal super contributions – up to a total of $25,000 annually. It’s a tax break that was previously only available if less than 10% of your total income came from salary or wages. These days however, if you have a part-time job where the boss pays, say $15,000 annually into your super, and you’re also running a business on the side, you may be able to claim a tax deduction for up to $10,000 worth of contributions made yourself.
Use our free retirement income calculator to see what you
could expect in your retirement and whether your current
investment strategy is right for you -
mortgagechoice.com.au/financial-planning/life-after-work/retirement-income-calculator.aspx
13
Housing market update Financial markets have pushed expectations for a cash rate hike out to early 2019, which would imply that mortgage rates aren’t likely to rise materially over the foreseeable future.
Low interest rates should help to keep some heat in the property market. Across the country, we should see most markets record growth in property values. That said, this growth is likely to be subdued in comparison to what we’ve seen in recent years, especially in markets like Sydney and Melbourne.
Detached and semi-detached properties are likely to outperform units over the next 12 months. There's a distinct lack of detached and semi-detached stock in the market and, as such, demand for this type of property is outstripping supply.
On the other hand, the future prosperity of the high-rise unit sector is less certain. New unit projects that are positively differentiated and/or more geared towards owner occupier target markets rather than pure investment grade stock are likely to show a better performance.
The CoreLogic Settlement Risk Report continues to show that Brisbane’s inner city is facing the largest potential uplift in unit stock over the next two years, with some precincts facing the possibility of a 40-50% increase in total unit stock within 24 months.
Overall, performance across Australia’s housing market will remain as diverse as ever.
Source: Tim Lawless, Head of Research, CoreLogic RP Data
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Statistics Houses Units
Median sale price $975,000 $720,000
Change in median sale price (12 mths) 8.3% 4.3%
Change in median sale price (3 yrs) 33.6% 22.0%
Change in median sale price (5 yrs) 68.7% 46.9%
Median asking weekly rent $530 $530Source: CoreLogic RP Data Market Trends (Standard, National), December 2017 (all data is to 30 September 2017). All figures are current and based on data available at the time the report is published. Figures are indicative only and subject to revision.
S Y D N E Y H O U S I N G M AR KE T KE Y S TATI S T I C S
14
Housing market update Financial markets have pushed expectations for a cash rate hike out to early 2019, which would imply that mortgage rates aren’t likely to rise materially over the foreseeable future.
Low interest rates should help to keep some heat in the property market. Across the country, we should see most markets record growth in property values. That said, this growth is likely to be subdued in comparison to what we’ve seen in recent years, especially in markets like Sydney and Melbourne.
Detached and semi-detached properties are likely to outperform units over the next 12 months. There's a distinct lack of detached and semi-detached stock in the market and, as such, demand for this type of property is outstripping supply.
On the other hand, the future prosperity of the high-rise unit sector is less certain. New unit projects that are positively differentiated and/or more geared towards owner occupier target markets rather than pure investment grade stock are likely to show a better performance.
The CoreLogic Settlement Risk Report continues to show that Brisbane’s inner city is facing the largest potential uplift in unit stock over the next two years, with some precincts facing the possibility of a 40-50% increase in total unit stock within 24 months.
Overall, performance across Australia’s housing market will remain as diverse as ever.
Source: Tim Lawless, Head of Research, CoreLogic RP Data
Statistics Houses Units
Median sale price $721,978 $435,730
Change in median sale price (12 mths) 6.7% 3.8%
Change in median sale price (3 yrs) 22.9% 18.4%
Change in median sale price (5 yrs) 35.0% 22.2%
Median asking weekly rent $561 $439 Source: CoreLogic RP Data Market Trends (Standard, National), December 2017 (all data is to 30 September 2017). All figures are current and based on data available at the time the report is published. Figures are indicative only and subject to revision.
GO LD COA S T H O U S I N G M AR KE T KE Y S TATI S T I C S
