House prices across the country are showing a rising trend, with the national dwelling value index increasing by 0.9% in January.
According to CoreLogic, this takes the annual growth rate to 4.1% – the fastest growth pace over a twelve month period since December 2017. The increase reflects a massive 6.7% turnaround since the housing price slump that bottomed out in June 2019.
Capital city housing prices rising
Among Australia’s capitals, Sydney and Melbourne lead the pack when it comes to capital gains. Sydney dwelling values saw a 1.1% increase, just shy of Melbourne at 1.2%. Perth is seeing the slowest gain at 0.1% growth over the one month period, though home owners should remain positive as it indicates a slight reprieve from the last 5 year slump of values for the Western Capital.
Index results as at January 31, 2020 Source: CoreLogic
Regional centre housing prices
Regional properties across the country also recorded slight increases in values averaging +0.4% over January. Regional South Australia was the only area where dwelling prices decreased over January. CoreLogic research director Tim Lawless observed that the southern region will see increases sooner rather than later thanks to the national average value index showing increases across the board.
The highest increase was recorded in regional Tasmania at 1.3%, followed by regional Western Australia at 0.9% and then regional Victoria and regional Queensland at 0.8%.
Has the housing market made a full recovery?
While Australia’s total combined dwelling values remain at -2.2% lower than their peak in October 2017, some capital cities and regions have reached their highest values ever.
Within one month, four of Australia’s capitals have reached record high dwelling values. Brisbane, Adelaide, Hobart and Canberra each sit at their peak recorded values. Regional Victoria and Tasmania also reached their peak values during the month of January.
Tim Lawless from CoreLogic says “with housing prices rising at the quarterly pace of 3.7%, we are likely to see a nominal recovery in the national home value measure within the next two-to-three months”.
How are investors affected?
Data taken from the Australian Bureau of Statistics indicates a share of new housing finance by purchaser type. Compared to peaking in the 2012-2017 period, investors are taking a backseat and hanging on to their current properties. The rise in housing value is making it more difficult to maximise return over investment, however those looking to sell for capital gain may see an opportunity in the coming months.
Investors can look to save a few more dollars and maximise return by reviewing their home loan interest rate to combat rising property prices. By refinancing their investment loan to a lower rate, borrowers could look at savings in the tens of thousands through the life of the loan; a sure win for investors seeking to maximise return.
Online lender Reduce Home Loans offers investment variable rates from as low as 2.99% p.a. (3.01%*(14) p.a. comparison).
Josh Beitz, General Manager of Reduce Home Loans says, ‘it is no surprise to us that home owners and investors are enjoying historically low-interest rates, so it just makes sense to switch and save.’
‘On average, Reduce Home Loans clients are saving up to $3000 – $3500 a year and even in some cases $7000 and up to $11,000 a year.‘
How are owner occupiers affected?
As a result of easing investor pressure, owner occupier share has increased by 5.3%, and first home buyer share by a whopping 6.7%.
First Home Buyers appear to be the reigning frontrunners in purchase share thanks to the numerous state and federal government grants made available since the October 2017 housing value peak. Government schemes include First Home Super Saver Scheme, state government First Home Owner Grants and Stamp Duty Exemptions and the newly introduced First Home Loan Deposit Scheme.
Reduce Home Loans offers full-featured owner occupier rates from 2.69% p.a. (2.70%*(4) p.a. comparison).
“We want to give bells and whistles to our borrowers and these features mean that our clients have an all in one facility at the lowest rate we can make available.”, Beitz said.
To learn how you can take advantage of low rate home loans with great features, contact a Reduce Home Loans broker and discuss your options.