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The Guardian
18-05-2025
- Business
- The Guardian
RBA interest rate cuts expected to drive home-buyer activity but economists doubtful of ‘boom market'
As soon as they were told to vacate their Adelaide rental, Nikki and Matt started looking to buy a property amid fears an anticipated string of interest rate cuts would send prices soaring. At an auction in early May, the young couple secured their first home below the reserve price at a tepid auction against just two other buyers. 'I just thought it'd take us a lot longer, but I think we're just lucky that we found one when we did,' said Nikki, who asked for her surname not to be published. 'With the interest rate cuts maybe coming soon, it could have meant there was more competition for the houses that we were looking for, as well as the house prices going up.' Sign up for Guardian Australia's breaking news email The Reserve Bank of Australia is expected to slash its key interest rate on Tuesday, adding further fuel to property prices. Markets are pricing in a 95% chance the central bank will reduce rates by a further quarter-point, marking the second rate cut this year. Lower interest rates help buyers borrow greater amounts of money, which in turn can lift home prices – which are already at record highs nationally. Most economists expect a rate cut on Tuesday because inflation has fallen into the RBA's target range. Consumers are also increasingly pessimistic, according to consumer confidence readings, which should provide comfort to the RBA that a rate cut will not fuel a spending splurge. But expectations of a bumper half-percentage point cut are evaporating and many economists have also wound back the number of cuts they expect this year. A strong jobs market and rising wages in Australia, coupled with easing tariffs between the US and China, will keep the RBA from rushing to cut hard and fast, according to Gareth Aird, the head of Australian economics at Commonwealth Bank. Unemployment has stayed steady at 4.1% – a level it has hovered at for over a year – and jobs prospects have continued to rise, with the economy adding 125,000 jobs in March and April according to the latest government data. 'Our view is that the proverbial inflation dragon has been slayed but we are not convinced the RBA will share that view just yet given the unemployment rate is still [low],' Aird wrote. Markets now expect just three more cuts this year, including Tuesday, while ANZ analysts on Friday said the Tuesday cut was no longer a certainty and indicated they expect just two more cuts this year. Even one rate cut, though, has been enough to boost competition for housing and increase borrowers' confidence. Buyer activity jumped after February's cut in the official rate to 4.1% and began to pick up in May ahead of an expected second cut, according to Nicola Powell, the chief of research and economics for property marketplace Domain. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion 'Confidence is slowly coming back for buyers,' Powell said. Inquiries for properties on Domain have slowed but were still higher in the three months to April period compared to a year ago, Powell said. 'Once we see more rate cuts coming through, that's probably where we're going to see much greater change,' she said. Clearance rates rose to 65% in early May, the highest level since July 2024 according to Cotality data in a sign of growing competition for homes. Rising demand should help drive home loan applications and building approvals, which fell away at the start of the year, and see buyer interest pick up, according to Terry Rawnsley, an urban economist at KPMG. But he said that while the number of people going to open homes and auctions might pick up, still-restrictive interest rates and poor affordability will limit how far that competition will drive up prices. 'It's not going to be a boom market by any stretch of the imagination,' Rawnsley said. 'People are really stretched at their budgets, and there's not much upwards capacity for people to find more money to put into housing.' More than one in three homes around the country are worth $1m or more, Cotality data on Friday indicated – about 13 times the average adult Australian's annual income. Nikki and Matt said they had watched interest rates and house prices closely to try to beat an anticipated rush of new buyers. 'When you're growing up, you think of a million-dollar home as being like a mansion [but] now a million dollars doesn't really get you much anymore,' Nikki said. 'We just didn't want the house market and prices to go up drastically [and] in the future there's probably a lot more people, with interest rate cuts, that might be looking.'
News.com.au
15-05-2025
- General
- News.com.au
‘Give up': The one task Gen Z homeowners can't do
An Aussie woman and her partner have just bought their first home in Queensland – but what should be cause for celebration has turned into a major headache. Maddison Smillie, 23, told her social media followers that she decided to 'give up' on a tricky renovation chore, to which many Aussies echoed her sentiments. 'We have decided to give up painting our own home,' she announced in a TikTok video. 'We just bought our first home and to save money we thought it would be a good idea to paint the house ourselves.' 'I'm here to tell you that it is not a good idea,' she said. Amid the cost-of-living crisis it's become increasingly common for Aussies to undertake tasks usually done by professionals to save some cash. In 2023, Aussies ranked third globally for their love of home renovation with over 57 per cent of Australians considered to be 'DIY-ers.' A massive 44 per cent of respondents said their reason for doing the tasks themselves was to 'improve their home in a more affordable way.' 2022 saw Aussies put $12.3 billion into renovating their homes, up 33 per cent on 2020, reported the ABC. Ms Smillie revealed they bought a two-storey house and had endeavoured to paint the top level first. 'We started the top-storey so we're going to finish that ourselves and then hire a professional to do the rest,' she said. 'The idea of painting your own home sounds good, but when you're actually doing it, it's tough work.' She warned her followers that it's definitely a lesson learnt and that sometimes it's better to just hire a professional. 'I will in fact be putting this on my resume though,' she joked. The clip, which has over 30,000 views, saw Aussies flood to the comment section to share her pain. 'I couldn't think of anything worse,' said one viewer. 'I'm a painter myself and I feel you,' added another. 'Painting is the worst. Especially the ceilings,' echoed a third. Others pulled through with helpful suggestions for the couple. 'Dad's a painter by trade, don't hesitate to message and ask if you guys want to keep doing it yourself and need any advice,' offered one kind commenter. 'Nah, spend two days prepping and then buy a spray gun. takes you less than a day,' suggested one. 'We went to pay a professional until we were quoted $6k and then decided we'd suck it up,' said another. In a separate video, Ms Smillie revealed she was 'so happy' with how the professional paint job turned out.
Irish Times
13-05-2025
- Business
- Irish Times
Locked out of Help to Buy despite State clawing back the relief
We are looking to buy our first home together. The house we are looking at was a new build one year ago, and the people who bought it then availed of Help to Buy. Because they aren't staying in the house for the required five years, they need to return the grant they received. We have been approved for Help to Buy. Given the vendors are returning their grant, should we be able to avail of same? Ms PG Help to Buy has been a great assistance to aspiring young homebuyers at an individual level, even if the jury is out on the extent to which it has delivered on its stated aim of helping people to buy their first homes and incentivising developers to build for that market. READ MORE When you're scrambling around to make the numbers stack up on home purchase, you don't tend to worry too much about such big-picture policy issues. It's all about making the most of what you have, and Help to Buy has delivered on that basis. It has been amended a few times since it was first introduced. As of now, it allows first-time buyers to claim back income tax and (less relevant) deposit interest retention tax (Dirt) that they have paid on their savings over the four years prior to the year in which you are buying the home. You can claim back up to a maximum of €30,000 or 10 per cent of the price of the new property, whichever is the lesser. Even if it had been a long-abandoned home that you bought and restored, you would not be considered eligible for Help to Buy There are other conditions too: the property itself needs to be valued at €500,000 or less, you need to have taken out a mortgage for at least 70 per cent of the price and, obviously, you must be a first-time buyer. The relief can provide the 10 per cent deposit most first-time buyers will be required to put up themselves or, better still, reduce your mortgage borrowings and so the scale of your monthly repayments. However, there are some very strict rules in place under the scheme – relating both to what properties qualify and how you need to behave once you have availed of the relief. Looking at those in reverse, the key post-relief caveat is that anyone availing of Help-to-Buy must live in the property for at least five years. Fail to do that and, as the owners of this house you are interested in have discovered, you will have to repay some of the relief. There are very limited exceptions, mostly revolving around being forced to move for your work. The clawback reduces over time. So if you fail to live there for a full year, you need to repay all of it. That figure falls to 80 per cent in year two, 60 per cent in year three etc. But that is the sellers' problem; you're understandably more interested in your perspective. And that will relate to the type of property eligible for the scheme. The watchword here is 'new'. With very limited exceptions, the property must be newly built – either for you as a one-off or as part of a housing estate. Under the heading, What is a Qualifying Residence?, Revenue's Tax and Duty Manual among other things states clearly: 'The property must not previously, at any time, have been used, or suitable for use, as a dwelling.' The key post-relief caveat is that anyone availing of Help-to-Buy must live in the property for at least five years That is pretty black and white. Even if it had been a long-abandoned home that you bought and restored, you would not be considered eligible for Help to Buy. So what about those very limited exceptions? One covers properties that were originally non-residential, but which have since been converted for residential use. The other relates to derelict properties that you demolish and then rebuild on the same site - but even then, Revenue says only that they will consider such applications on a case-by-case basis. This property was previously used as a dwelling, however briefly. And so it will not be available to you under Help to Buy. The fact that they are repaying the bulk of their Help to Buy relief does not open the door for you to step into that Help to Buy status, as it were – even if you were to seek only a portion of the relief to account for their period of occupation. When you're scrambling around to make the numbers stack up on home purchase, you don't tend to worry too much about big-picture policy issues Where does that leave you? With two choices, really. Either you can weigh up whether this property is affordable for you without the relief granted under Help to Buy, or you can regretfully move on and see if you can find another home in the area that does meet the eligibility criteria. Can the Help to Buy rules change? Of course they can, and have done in the past – though that related mostly to how much you could claim in relief, not a fundamental reassessment of the qualifying criteria. There was (unsurprisingly) a campaign from the construction sector to include second-hand homes, such as this house, under the scheme. But it was pretty half-hearted, as though even the builders knew it was a reach too far. There is an arguable grey area for those very few homes where the original owner had the relief clawed back, as in your case, but I detect no sign of the Government relenting even on that. Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to with a contact phone number. This column is a reader service and is not intended to replace professional advice
