Latest news with #DiaswatiMardiasmo
Courier-Mail
20-05-2025
- Business
- Courier-Mail
Latest interest rate cut will be big blow for one key Aussie group
It will seem like a big win for some — but the RBA's latest interest rate cut could make life substantially harder for a big subset of the Aussie population. Experts said those still searching for a place to call home would be steamrolled by the central bank's decision to slash interest rates by 0.25 per cent, announced at its May board meeting on Tuesday. The official cash rate has now dropped from 4.1 per cent to 3.85 per cent. The move, widely anticipated by economists and the money market, is the second rate cut for the cycle following an earlier reduction in February and a hold in April. It will deliver existing homeowners a lot of savings on their repayments but it is also expected to supercharge the property market and leave would-be buyers even further behind. The cut could pour fuel over an already heating housing market and drive up prices, with much of the increased competition expected to come from investors and upgraders, economists revealed. All this will coincide with a still frantic rental market that will make it harder for new home buyers to save fast enough to match price rises. MORE: What homes will be worth in each suburb by 2030 MORE: Trick Aussies are using to get $200m+ mansions Gareth Croy, director of financial services firm Your Future Strategy, said first-home buyers are going to be 'chasing the market'. 'Another cut, plus more cuts later this year, could boost the average buyers' borrowing capacity by about $75,000. And we could see that amount added to prices by Christmas,' he said. 'Rate cuts do create this fear of missing out that can push prices up.' PRD chief economist Dr Diaswati Mardiasmo said the recent cut and subsequent cuts would make it harder for aspiring first-time buyers to get into the market in the coming months. 'First-home buyers who are ready to purchase right now might get some benefit from cheaper rates but those with longer-term plans are going to find it a lot harder,' she said. 'Part of the problem is that someone who isn't in the market yet will see their ability to save diminish because there is still high rent and high living costs and three or more cuts this year will push up the price they will pay for their home.' MORE: Wild bank move before rate cut The brutal twist is that those trying to save for a deposit could be hit twice. New research has found that the majority of Aussies are still banking with the same institution they joined as teenagers — often on outdated savings accounts with lacklustre interest returns. Banks have also historically been very quick to slash interest rates on savings accounts. With rates now slashed even lower, their hard-earned deposits are soon to be earning a lot less. KEY BANKING MISTAKE EXPOSED The polling by comparison group revealed 51 per cent of Aussies were sticking with the bank they joined as children, often in accounts set up by their parents. The research found 55 per cent of women were still with the same bank they had as a child, compared to 47 per cent of men. The trend was prevalent across all generations, with almost one in three baby boomers (30 per cent) still with their very first bank. Finder personal finance expert Sarah Megginson said these Aussies were likely missing out on a better deal. 'You can be sure there's a better rate available than the one on the account your parents opened for you as a child,' she said. MORE: 'Fuel to the fire:' looming rate cuts big downfall 'You might think your existing bank is 'good enough', but if you're not earning interest, it's your bank balance that is missing out.' It comes as additional modelling from Aussie Home Loans found that rising prices would likely outweigh the benefit of lower interest for first-time buyers. Those who bought next year could be stung with an additional $77,000 in costs over the life of their loans, the Aussie analysis found. RISING ANXIETY AMONG FIRST-HOME BUYERS Some first-home buyers say they are fearful of what the future holds. James Martin and Liz Upcroft, both 28, plan to buy a home later this year or early next and said they were concerned price rises could be too fast. 'Rate cuts are fantastic for people who already bought but for someone looking to buy at the end of this year, it's a bit of a worry because prices could go up a lot. It's a catch-22,' Mr Martin said. He added that the prospect of getting priced out the market had encouraged them to consider the government's First Home Guarantee Scheme, which will allow them to buy with only a 5 per cent deposit. 'I feel like if we wanted to get a 20 per cent deposit, the interest rate cuts would affect our savings and it would be a lot more of a problem,' Mr Martin said. IMPACT OF PREVIOUS CUTS Mortgage Choice inner west broker Chantelle Rangel said similar cuts in interest rates had heated the housing market in the past and this trend was already looking to be repeated. 'I've never been this busy before,' she said. 'What's interesting is, we've had a significant increase in investor pre-approvals as well as people wanting to purchase in their self-managed super funds. 'There is always a frenzy of demand as soon as rates drop … We experienced many buyers who were sitting on the sidelines due to affordability re-enter the market after the last rate cut.' REA Group economist Anne Flaherty said a similar trend even occurred when rates were last cut in February. 'Following February's rate cut, buy searches on jumped, consumer sentiment saw a significant recovery, and home price growth picked up,' she said. 'A rate cut in May is likely to have a similarly positive impact on buyer demand and confidence.' Peter Kelaher, director of buyer's agency PK Property, said in a note to clients that the experience of previous rate cuts suggested a wave of demand was coming. 'When interest rates come down, the natural human reaction in most cases will be to borrow as much money as you can,' he said. 'And what does that mean? It means one thing: people can throw around more money to be competitive at auction, and in general, the property market.' Owl Home Loans director Aidan Hartley said rate cuts had already driven a huge influx of buyers seeking approvals. 'I've been doing this a while and I've never been thrown as many contracts from new buyers,' he said. 'There's a big sense of urgency because a lot want to get in (to the market) before cuts because they're taking out variable rates,' he added. Compare the Market property expert Andrew Winter said a rate drop at the RBA's Tuesday meeting would likely push prices up again. He explained that cheaper credit would lead to bigger offers on properties, particularly in highly sought after areas. Mr Winter said aspiring buyers may be anxious to 'get a foot in the door' now before market conditions become too competitive. He said the capacity to borrow more money would not make buying a house easier for most people. 'The main hurdle for most first-time buyers is raising a deposit which can be extremely challenging when value growth outpaces wage growth in such an extreme way.'
News.com.au
20-05-2025
- Business
- News.com.au
Latest interest rate cut will be big blow for one key Aussie group
It will seem like a big win for some — but the RBA's latest interest rate cut could make life substantially harder for a big subset of the Aussie population. Experts said those still searching for a place to call home would be steamrolled by the central bank's decision to slash interest rates by 0.25 per cent, announced at its May board meeting on Tuesday. The official cash rate has now dropped from 4.1 per cent to 3.85 per cent. The move, widely anticipated by economists and the money market, is the second rate cut for the cycle following an earlier reduction in February and a hold in April. It will deliver existing homeowners a lot of savings on their repayments but it is also expected to supercharge the property market and leave would-be buyers even further behind. The cut could pour fuel over an already heating housing market and drive up prices, with much of the increased competition expected to come from investors and upgraders, economists revealed. All this will coincide with a still frantic rental market that will make it harder for new home buyers to save fast enough to match price rises. Gareth Croy, director of financial services firm Your Future Strategy, said first-home buyers are going to be 'chasing the market'. 'Another cut, plus more cuts later this year, could boost the average buyers' borrowing capacity by about $75,000. And we could see that amount added to prices by Christmas,' he said. 'Rate cuts do create this fear of missing out that can push prices up.' PRD chief economist Dr Diaswati Mardiasmo said the recent cut and subsequent cuts would make it harder for aspiring first-time buyers to get into the market in the coming months. 'First-home buyers who are ready to purchase right now might get some benefit from cheaper rates but those with longer-term plans are going to find it a lot harder,' she said. 'Part of the problem is that someone who isn't in the market yet will see their ability to save diminish because there is still high rent and high living costs and three or more cuts this year will push up the price they will pay for their home.' The brutal twist is that those trying to save for a deposit could be hit twice. New research has found that the majority of Aussies are still banking with the same institution they joined as teenagers — often on outdated savings accounts with lacklustre interest returns. Banks have also historically been very quick to slash interest rates on savings accounts. With rates now slashed even lower, their hard-earned deposits are soon to be earning a lot less. KEY BANKING MISTAKE EXPOSED The polling by comparison group revealed 51 per cent of Aussies were sticking with the bank they joined as children, often in accounts set up by their parents. The research found 55 per cent of women were still with the same bank they had as a child, compared to 47 per cent of men. The trend was prevalent across all generations, with almost one in three baby boomers (30 per cent) still with their very first bank. Finder personal finance expert Sarah Megginson said these Aussies were likely missing out on a better deal. 'You can be sure there's a better rate available than the one on the account your parents opened for you as a child,' she said. 'You might think your existing bank is 'good enough', but if you're not earning interest, it's your bank balance that is missing out.' It comes as additional modelling from Aussie Home Loans found that rising prices would likely outweigh the benefit of lower interest for first-time buyers. Those who bought next year could be stung with an additional $77,000 in costs over the life of their loans, the Aussie analysis found. Some first-home buyers say they are fearful of what the future holds. James Martin and Liz Upcroft, both 28, plan to buy a home later this year or early next and said they were concerned price rises could be too fast. 'Rate cuts are fantastic for people who already bought but for someone looking to buy at the end of this year, it's a bit of a worry because prices could go up a lot. It's a catch-22,' Mr Martin said. He added that the prospect of getting priced out the market had encouraged them to consider the government's First Home Guarantee Scheme, which will allow them to buy with only a 5 per cent deposit. 'I feel like if we wanted to get a 20 per cent deposit, the interest rate cuts would affect our savings and it would be a lot more of a problem,' Mr Martin said. IMPACT OF PREVIOUS CUTS Mortgage Choice inner west broker Chantelle Rangel said similar cuts in interest rates had heated the housing market in the past and this trend was already looking to be repeated. 'I've never been this busy before,' she said. 'What's interesting is, we've had a significant increase in investor pre-approvals as well as people wanting to purchase in their self-managed super funds. 'There is always a frenzy of demand as soon as rates drop ... We experienced many buyers who were sitting on the sidelines due to affordability re-enter the market after the last rate cut.' REA Group economist Anne Flaherty said a similar trend even occurred when rates were last cut in February. 'Following February's rate cut, buy searches on jumped, consumer sentiment saw a significant recovery, and home price growth picked up,' she said. 'A rate cut in May is likely to have a similarly positive impact on buyer demand and confidence.' Peter Kelaher, director of buyer's agency PK Property, said in a note to clients that the experience of previous rate cuts suggested a wave of demand was coming. 'When interest rates come down, the natural human reaction in most cases will be to borrow as much money as you can,' he said. 'And what does that mean? It means one thing: people can throw around more money to be competitive at auction, and in general, the property market.' Owl Home Loans director Aidan Hartley said rate cuts had already driven a huge influx of buyers seeking approvals. 'I've been doing this a while and I've never been thrown as many contracts from new buyers,' he said. 'There's a big sense of urgency because a lot want to get in (to the market) before cuts because they're taking out variable rates,' he added. Compare the Market property expert Andrew Winter said a rate drop at the RBA's Tuesday meeting would likely push prices up again. He explained that cheaper credit would lead to bigger offers on properties, particularly in highly sought after areas. Mr Winter said aspiring buyers may be anxious to 'get a foot in the door' now before market conditions become too competitive. He said the capacity to borrow more money would not make buying a house easier for most people. 'The main hurdle for most first-time buyers is raising a deposit which can be extremely challenging when value growth outpaces wage growth in such an extreme way.'
Courier-Mail
11-05-2025
- Business
- Courier-Mail
Revealed: Affordable places to buy a home in Qld
Queensland's top spots for affordable real estate have been revealed with new analysis pinpointing the regional areas where homebuyers and investors can get on the property ladder for less. The PRD 'Smart Moves: Regional Edition 2025' highlighted the top ten affordable regional markets on the Australian east coast, with three Queensland spots making the list. PRD chief economist, Diaswati Mardiasmo said the report looked at key criteria including affordability, rental yields and future projects to determine the Cairns, Whitsundays and Southern Downs regions were the best bets in Queensland. These hotspots were almost 30 per cent cheaper than Brisbane. MORE: Quirky solution to housing crisis Artist builds Aus first aircrete dome home MORE: See the Aussies who put their pets first when buying a house Un-beer-lievable: SEQ costlier than Melbourne for housing, food, grog Dubbo, Port Macquarie-Hastings and Shoalhaven in New South Wales, Bendigo, Greater Shepparton and Wodonga in Victoria, and Burnie in Tasmania also made the top 10 list. Dr Mardiasmo said with property affordability reaching a new low at the end of last year, the dream of owning a home in a capital city was slipping away for many Australians. 'The national Home Loan Affordability Index fell to just 20.0 points in the December quarter of 2024 – the weakest it's been in more than a decade,' she said. 'Mortgage repayments are now consuming over half of household income. 'Meanwhile, first homebuyers must commit to a higher level of mortgage debt, by an extra 5.4 per cent (nationally).' That figure was even higher in Queensland, up 11.7 per cent. Dr Mardiasmo said the February interest rate cut to 4.1 per cent offered a brief boost, but it wasn't enough to shift the metro markets. 'Instead, buyers are turning to regional locations with lower entry prices, better rental returns, and clear growth potential,' she said. MORE: Shock: Brisbane prices to smash Sydney Australia's biggest political property moguls revealed In addition to Cairns, Whitsundays and Southern Downs, the report flagged Gladstone, Townsville, Mackay, Toowoomba, Ipswich, Bundaberg and Fraser Coast as affordable Queensland regions, with median house prices up to 46 per cent cheaper than Brisbane. 'When looking at local government areas (LGAs) in each state, Queensland has a higher percentage with affordable real estate and ready to sell stock planned,' Dr Mardiasmo said. PRD data showed 87.3 per cent of LGAs in Queensland were 'affordable', meaning they were cheaper than Brisbane, while 54 per cent were affordable and had ready to sell stock. In comparison, just 36.7 per cent of NSW LGAs were affordable and had stock, while that figure was 46.2 per cent in Victoria and 44.3 per cent in Tasmania. The PRD 'Smart Moves' report found Cairns was standout for buyers chasing lifestyle and opportunity, with home prices on the up, good returns for investors and new projects on the horizon. 'New housing supply is on the way, with about $1.8b worth of developments planned for 2025,' the report said. 'Even so, supply isn't expected to meet demand fully, especially for freestanding homes.' The region has a median house price of $650,000, a median land price of $325,000 and a median unit price of $371,000. The vacancy rate is 0.5 per cent with rental yields of 4.8 per cent for houses and 5 per cent for units. MORE: Builder's marvel named Aus hottest house Bikini goddess' 'missing sister' for sale in $15m mystery twist Ray White Cairns selling principal, Ray Murphy said the region offered affordability and good returns for homeowners. 'I can see why we made the cut,' he said. 'Cairns has seen quite a large shift in prices, but compared to national prices, there is so much opportunity here. 'There's also a good lifestyle, especially at this time of the year.' Mr Murphy said Cairns was popular with both owner-occupiers and investors. 'At the moment one in every three transactions is to an investor, mostly from Melbourne, Sydney and Brisbane,' he said. 'Cairns is still quite transient, our vacancy rate is below 1 per cent and people are screaming for rentals. 'Gone are the days of buying a property for $500,000 and renting it for $500. 'Now a $600,000 home generally achieves a rent return of around about $750 to $800 per week.' Ray White Cairns sales director, David Murphy said the Cairns market offered solid capital gains and rental yields. 'It's quite common for properties to achieve 4.5 to 5 per cent net return in just cash flow and, on top of that, capital growth of 7 to 11 per cent,' he said. 'The returns in Cairns have been likened to mining town hotspots, but whereas the region once relied heavily on tourism, the local economy is now much more stable and self-sufficient.' The Southern Downs region west of Brisbane made the PRD list for its affordability, growing popularity and job prospects. 'An estimated $1.9b worth of new projects is planned to launch in 2025, including the Toowoomba to Warwick Pipeline (major infrastructure) and the Sugarloaf Road Subdivision (42 new residential lots),' the report said. Property prices in the Southern Downs had shown impressive growth over the past decade with land prices up 95.2 per cent and house prices up 87.9 per cent between 2014 and 2024. The region has a median house price of $502,500, a median unit price of $302,500 and median land price of $305,000. The vacancy rate is sitting at 0.4 per cent with rental yields of 4.5 per cent for houses and 5.3 per cent for units. The PRD analysis determined the Whitsundays had been one of the state's strongest growth stories in the past five years. 'Around 4000 new residents have moved into the region since 2018 — proof that it's more than the beaches pulling people in,' the report said. 'The Whitsundays is offering a rare mix right now (of) strong lifestyle appeal, decent affordability compared to Brisbane, low vacancy rates and steady returns. 'But the window of opportunity is narrowing.' The region has a median house price of $570,000, a median unit price of $410,000 and median land price of $240,000. The vacancy rate it sitting at 1.3 per cent with rental yields of 3.9 per cent for houses and 5.3 per cent for units. TOP 10 AFFORDABLE REGIONAL AREAS Cairns, QLD Whitsundays, QLD Southern Downs, QLD Dubbo, NSW Port Macquarie-Hastings, NSW Shoalhaven, NSW Bendigo, VIC Greater Shepparton, VIC Wodonga, VIC Burnie, TAS (Source: PRD)
News.com.au
10-05-2025
- Business
- News.com.au
Best NSW hotspots for lifestyle and investors
Those seeking an exodus from Sydney or a more affordable market for investing have been given a cheatsheet of the regional NSW areas offering the best and cheapest lifestyle alternatives to the Harbour City. The research from national property group PRD revealed the areas with the most comparable standard of living to Sydney, coupled with affordable prices that were due to grow strongly in the coming years. The markets offering the best balance of these attributes were identified as the Dubbo, Port Macquarie-Hastings and the Shoalhaven regions. PRD chief economist Diaswati Mardiasmo added that these regional areas were not only more affordable than Sydney but showed strong investment fundamentals and had new housing projects breaking ground in 2025. New infrastructure was being invested in these regions and they all had low unemployment rates, she added. 'We wanted to identify places with amenities and services so you can swap your Sydney life for a (cheaper) life and still have your cafes and shops available,' she said. 'It's also for investors because in Sydney, the rental yield is only around 2.5 depending on where you are, whereas in these areas you've got that affordability aspect and the rental yield is 3.5-5.5 per cent,' she said. 'The vacancy is also lower, so you're definitely getting a better deal.' The analysis comes as declining affordability continues to push city-dwellers to alternative markets. With Sydney dwelling prices hitting a new peak of $1.1m in April, there has also been a rise in rentvesting as residents remain reluctant to give up their city lifestyle and are instead purchasing in alternate markets while renting in their desired area. CEO of the Investors Agency Darren Venter said the lack of affordability in Sydney was the biggest reason many were turning to rentvesting. 'The reality is that if you can put your money into something that is not on your doorstep, a regional market is a really good opportunity,' he said. Affordable markets with room for price growth paired and population movement were two aspects to watch, he added. 'As long as they continue to have population increases, these markets are going to stimulate the investor pockets,' he said. 'If that allows a person to get into the property market to create equity to eventually use for a deposit, for many that's the best opportunity for them to get their actual dream home inside a metropolitan market.' Dubbo had the most affordable house prices at $532,000, while Port Macquarie-Hastings region's median was $845,000 and Shoalhaven at $820,000. 'It's for those who are looking for an alternative, thinking where can I actually be a property owner and have that lifestyle,' added Dr Mardiasmo.
Sydney Morning Herald
10-05-2025
- Business
- Sydney Morning Herald
‘Golden opportunity': Victoria's top affordable tree-change towns
Three regional Victorian areas have been named among Australia's top affordable housing markets, as rising property prices in capital cities push buyers towards greener pastures. Bendigo, Greater Shepparton and Wodonga are listed as the best affordable regional areas where 'growth, value and lifestyle intersect' according to a new report by PRD Real Estate, Smart Moves: Regional Edition 2025. In the report, which covers 10 regional markets, PRD Real Estate applied five criteria to identify the 'most promising' areas for either home buyers or investors. They are affordability, sales and growth, rental yields, future development and employment strength. In Victoria's case, all three locations have house prices well below Melbourne's median, which was $894,500 in the December quarter according to PRD. By comparison, median house prices in the same period were $580,000 in Wodonga, $570,000 in Bendigo and $490,000 in Greater Shepparton. PRD Real Estate chief economist Dr Diaswati Mardiasmo described regional Victoria as 'a world of opportunities'. She said rising prices in Melbourne and loan conditions were prompting first home buyers to look elsewhere. 'Most of these [regional towns] are 40 to 45 per cent cheaper than Melbourne… You have a lot more choice if you are a first home buyer and [buying] under the first home grant … most of the stock in regional areas in Victoria fits underneath the price cap,' Mardiasmo said. She said the areas listed also appealed to investors due to affordability and less competition.
