First National Press Releases

Media Release - 14 April 2023

With interest rates on hold, should you buy now?
 

The Reserve Bank of Australia sent an important signal when it kept rates on hold at its April meeting. It’s the signal most home hunters have been looking for, delivering hope that the climate of rising interest rates, if not over, may soon be coming to an end.
 
The RBA decision delivers greater confidence that if you buy a home today, you’ll be able to continue to manage the mortgage repayments tomorrow. However, while the RBA kept rates on hold for April, other factors that drive or at least underpin house prices are far from ‘on hold’, other than the supply of homes for sale it seems.
 
Rates on hold but migration booming
 
Overseas migration is surging as students and expats return to Australia. Based on the current trajectory, more than 300,000 people will arrive in the country this year; that’s 25% more than originally anticipated. We may see a more than usual proportion of these people choosing to buy, rather than try and find a place to rent.
 
Our population is rising, as are company profits and small business profits. That’s another possible reason why housing values actually rose in Sydney, Melbourne and Perth in February, then again in Sydney, Melbourne, Brisbane and Perth in March. That’s according to CoreLogic.
 
The number of homes for sale has been below average since September last year. At the end of March, homes for sale in our capital cities were almost 20% below the previous five-year average. It’s fair to say that buyer activity has fallen, but not as much as the number of homes for sale have fallen, so we still have demand outstripping supply.
 
Another contributing factor is that builders just can’t build enough homes to keep up with demand, and some are failing under decade-high construction costs, labour and materials shortages, and the costs of delays caused by bad weather.
 
The National Housing Finance and Investment Corporation has just released its ‘State of the Nation Housing Report for 2022-23’. Within it warns of worse to come as the level of new supply in cities falters. The NHFIC says that between 2023 and 2027, there will be a shortfall of 100,300 dwellings in Australia.
 
What do property market commentators think about the outlook?
 
SQM Research managing director, Louis Christopher, says the pause in interest rate rises would indicate to buyers and sellers that the worst could be over for the housing market. He believes we’re seeing the end of the interest rate tightening cycle and that we’ll see buyers and investors returning to the market soon, and renters trying to escape the tight rental market. He also thinks the impact of interest rate rises on the housing market has likely been overestimated by many forecasters.
 
CoreLogic research director, Tim Lawless, reminds us that the RBA has hinted at further rate rises, but acknowledges sentiment will be boosted by its decision to hold. This, he says, should see more buyers and sellers returning to the market.
 
HSBC’s chief economist, Paul Bloxham, is more bearish, predicting further falls in house prices this year. His reasoning is that rate rises haven’t yet flowed through to all variable rate mortgage holders, and he cites the large number of fixed rate mortgages that will reset in the coming months.
 
The National Australia Bank considers that the recent fall in bond markets yields may also contribute to downward pressure on interest rates. That’s the reason it is now talking of US rate cuts before the end of the calendar year.
 
RBA Governor, Phillip Lowe, says the jump in immigration will only be matched with a ‘modest’ housing supply in the coming years.
 
Robert Gottliebsen considers our economy will slow in the coming months, but feels that the downturn will be different from those we have experienced in recent decades. He says normally Australians fear losing their job during a downturn, but in 2023 we have near full employment. The problem is that real wages have fallen between 4% over the past year and 7% from their peak, which means people with large mortgages are cutting expenditure.
 
To buy or not to buy
 
The majority of cash rate hikes are now likely behind us. So, it would appear, are falling house prices.
 
We’ve a shortage of homes for sale as well as those being built, and even fewer available for rent. Against this backdrop, we are experiencing surging migration and a considerable cohort of older first home buyers – the over 40s - taking advantage of grants to escape renting and buy a home.
 
All that is required now is for confidence to be normalise before we see a substantial increase in demand across all price ranges.
 
The best advice, as always, is to speak to a financial advisor to get a strong understanding of your borrowing capacity as well as your ability to weather any remaining increases to the cash rate. Then, talk to us for advice about what you can buy without breaking your budget.

Media Release - 6 April 2023

How To Choose The Right Investment Property

From passive income to appreciation, stable cash flow, tax advantages and leverage, investing in property is widely regarded as a dependable means to build wealth, which is why it’s become a bit of a national obsession. But finding the right property to tick the boxes and having a solid understanding of the intricacies of property investment is where many fall short. To help you navigate these, we’ve created this guide to choosing the right investment property.

 

Step 1 – Get a handle on your finances

The first step in any investment is getting a clear picture of your budget. When it comes to property, this means understanding how much you require for a deposit (or any equity held in an existing property) and being realistic about your capacity to borrow factoring is some interest rate rises. This allows you to hone in on suitable properties from the outset rather than being swept up in attractive but possibly unaffordable investment.

Step 2 – Understand your goals

Are you looking to make a quick buck by flipping a property, chasing rental yield or playing the long-term capital gain game? It’s essential to understand your goals so you can choose a property that aligns with them. Here’s a snapshot of the most common property investment strategies and what they deliver:

• Capital growth – capital growth generally happens when demand exceeds supply. This usually occurs in established areas with great amenities and often comes with a hefty property investment price tag. Buying in a desirable area typically means the rent you’ll get from your investment property won’t cover your ownership costs, making this a longer-term investment strategy.
• Rental yield – a property with good yield will leave you with cash in hand once all the related expenses have been paid. Properties with strong rental yields are often found in places like university towns where high demand for rentals exists, but purchase prices remain relatively steady.
• Flipping – also known as wholesale real estate investing or residential redevelopment, flipping a property can easily be a full-time job! It involves either purchasing a home to renovate or change cosmetically (and reselling within a short time for profit) or choosing a home in a rapidly appreciating market and reselling with minimal investment. While large sums of money can be made this way, you’ll need to be aware of your tax obligations.

Step 3 – Assess the risks

Investments of any kind come with a degree of risk, so getting well-versed in the specific risks associated with property investment and considering whether you sit on the conservative or thrill-seeker end of the spectrum is essential. The general rule of thumb is that the higher the expected return, the higher the risk; without any risk, there’s often very little reward. The main risks to consider are:

• Interest rate changes – interest rates fluctuate, so plan for several scenarios. Interest rate rises need not be a deterrent, as long as you get your finances right from the get-go.
• Market fluctuations – as with interest rates, the property market can change overnight. Think about what this means for your investment strategy.
• Overcapitalisation – if you plan to renovate, ensure you have a firm plan and stick to a budget. If you spend too much, you could risk reducing your profit or even losing money.
• Lack of liquidity – it’s hard to convert property into cash, which makes it an illiquid
  investment. The risk is that if you’re forced to sell the property (for whatever reason), you might have to do so at a price you wouldn’t usually accept.
• Tenancy troubles – from longer than expected vacancy periods to property damage, being a landlord isn’t always a bed of roses. Make sure you can cope with whatever comes your way and definitely consider employing a First National Real Estate property manager.

 

Step 4 – Narrow it down

You’ve got your finances sorted and a solid understanding of your goals, so now it’s time for the fun part – house hunting. Here are 4 crucial factors to add to your checklist:

1. Location, location, location – it’s a real estate cliché that’s wheeled out repeatedly, and for good reason. Location is one of the key ingredients in projected capital growth, as is choosing a location that’s pegged for future growth. Good indicators of this are steady population growth and increasing investment in local infrastructure. Additionally, factors like proximity to essential amenities like public transport, schools, medical practices, shops and restaurants will not only impact the value of your property but make it more appealing to tenants – securing vital rental returns.
2. Know your type – consider your potential tenants or future home buyers and what they want in a home. Looking to attract young families? A bath might be a deal breaker, and a decent outdoor space. Does the area have an older population? Loads of stairs and high-maintenance gardens might be a turn-off.
3. Look to demand and yield – for each property that pops up in your search, ensure you understand what it would look like from a yield perspective. Find out vacancy rates in the area and factor any downtime between tenants into the equation.
4. Condition counts – is the property rental ready, or will you need to put money into getting it up to the required standard? Make sure you factor in the costs of repairs and the lost rental income. Also, it’s essential to account for ongoing maintenance costs based on the condition and age of the property. Will fittings and fixtures need replacing in the near future? Will the roof need replacing in a few years? Remember, there are also tax considerations based on the depreciation of your asset.

 

Enlist an expert
Getting it right with property investment takes a lot of homework, knowledge and experience, which is why having an expert in your corner is invaluable. Once you’ve understood the basics in this guide, a professional will provide support and guidance throughout your journey and work with you to find a property that ticks all the boxes. From accountants to property developers to lawyers, mortgage brokers and real estate agents, a wealth of resources is available to tap into. First National Real Estate has over 300 offices throughout Australia, New Zealand, and Vanuatu – that’s a lot of team members and a lot of knowledge! Contact us today to see how we can assist you on your property investment journey.

DISCLAIMER
The following advice is of a general nature only and intended as a broad guide. The advice should not be regarded as legal, financial or real estate advice. You should make your own inquiries and obtain independent professional advice tailored to your specific circumstances before making any legal, financial or real estate decisions.

Media Release - 29 March 2023

Deadline for Homebuilder applicants extended

 

Exciting news has been announced for Australians building new homes and expecting to secure a $25,000 HomeBuilder grant.
 
Originally, people who had applied for the grant were working towards the looming deadline of April 30, 2023 to get their paperwork in. If they missed the deadline, they would miss out on the grant.
 
Fortunately, with many experiencing delays due to shortages of materials and supply chain issues, they have been granted a reprieve by federal Housing Minister Julie Collins. The Minister has announced the government will extend the deadline for people to submit their paperwork until June 30, 2025.
 

• HomeBuilder was introduced by the Morrison Government during the COVID pandemic

• To receive a $25,000 grant, people had to spend $150,000 to $750,000 renovating a home or building a new home

• Contracts had to be signed between June 4 and December 31, 2020

• The scheme was then extended, with a $15,000 grant offered for contracts signed between January 1 and March 31, 2021

• Applications to apply for the grants closed on April 14, 2021

• At first, work was required to begin within 3 months of contracts being executed but this was then extended to 18 months

• Construction of homes had to be completed by April 30, 2023 to qualify for the $25,000 grant

 
 
Grants are paid when:
 

• The first payment has been made to the builder for a new build

• At least $150,000 has been paid for renovations

• A practical completion certificate from the developer is submitted for an off-the-plan home

• The deadline to submit the relevant documentation to prove this was April 30.

 
Unfortunately, for first home buyers wondering if they can still apply for a HomeBuilder grant, applications closed in April 2021. This extension applies only to people who applied and received formal approval for off-the-plan purchases or renovations.
 
A further complication is that the extension is subject to states and territories agreeing to the Minister’s plan, although it is anticipated that agreement will be reached.

Media Release - 16 March 2023

How to Win the Rental Application Race

Australia is facing a severe shortage of rental properties, resulting in a rental crisis that has delivered some of the lowest rental vacancy rates on record and the fastest rises in weekly rents.
 
This crippling shortage is hampering labour mobility, making finding your next rental very stressful, and contributing to cost-of-living pressures the like of which have not been seen in a generation.
 
First National Real Estate’s property managers are witnessing highly competitive situations where applicants feel compelled to offer to pay more rent than a rental provider (landlord) is asking, while others seek longer leases or even offer to pay a year in advance.
 
While our policy is that we do not encourage prospective tenants to pay more than the asking price for a property, all agents and property managers are duty-bound to communicate any such offer to a landlord, even in states or territories where legislation prevents agents from inviting or soliciting a higher rent.
 
Tenants are legally allowed to offer higher rents for a property if they do so voluntarily and freely, however the prohibition on agent’s conduct to not solicit or invite a higher offer of rent may also affect how real estate agents respond to questions from prospective tenants.
 
What’s the state of play?
 
In September 2022, the national rental vacancy rate hit a record low of 0.9%, the lowest since April 2006, when it was only 0.8% for one month. This low vacancy rate has persisted throughout most of 2022, marking an unprecedented situation over the last two decades.
 
The rental housing shortage has created significant pressure on the market, driving up rent prices. Consequently, national combined rents for houses and apartments reached an all-time high of $542 per week as of November 2022.
 
Why do we have a rental crisis?
 
There is a complex set of reasons why Australia finds itself in such a difficult situation. From First National Real Estate’s perspective, the reasons are best summarised as follows:

1. We’re not building enough houses to keep up with population and household growth
2. There has been a 17.1% rise in single person households between 2016 and 2021, partially caused by relationship breakdowns and the dissolving of shared houses during COVID
3. The number of houses we are building is slowing, not increasing, thanks to supply chain issues, town planning restrictions and worker shortages
4. Internal migration - Between 2016 and 2021, regional Australia gained 184,000 people as people moved out of capital cities, placing further pressure on availability
5. Surges in Australian home values led to many investors selling their rental properties, which were largely bought by first homebuyers, or homeowners exiting our cities
6. International migration – With borders re-opening, over 1 million international students and workers have entered the country since late 2022
7. Short-term rentals such as AirBnB have reduced the pool of available long-term rentals, however this is mainly restricted to high-demand city areas with significant tourism appeal

 
How can you win the rental application race?
 
With the market so tight and so many different people competing for rental properties, you need to be well prepared and ready to lodge your application quickly.
 
However, the challenges each applicant faces can be very different. For example, first time renters with no renting history are competing with well-established tenants with good track records. Tenants with pets suffer discrimination at the hands of some landlords, especially if they haven’t taken the time to get references arranged. And, long-term homeowners who are downsizing may not have rented a property in 40 years and, similarly, have no tenancy history to strengthen their application.
 
So how can you craft the strongest possible application to put yourself to the head of the queue, whether you’re a first-timer, a family with pets, or you’re downsizing?
 
Here are our top tips for each situation:
 
First time applicants:
 

1. Before you start looking for a rental, make sure you have all the necessary documents such as proof of income, credit report, and references, then register with several agents in the area you are interested in. This will speed up the application process. Also, make sure your Facebook or other social media profiles do not create an unfavourable impression for a landlord (yes, they check).
2. Be organised - Create a file or folder to keep all your rental documents in one place or consider using a do-it-once application system like realestate.com.au’s Ignite. This will help you keep track of everything, move quickly, and ensure you don't leave out any important details.
3. Act fast: If you find a rental property you like, act quickly. Good rental properties go fast, so it's important to be prepared and ready to submit your application as soon as possible.
4. Be honest: Be honest about your financial situation and employment status. Landlords appreciate honesty and are more likely to choose first time tenants who are transparent and truthful.
5. Highlight your strengths: Emphasise your positive qualities such as your ability to pay rent on time, and your stable employment (or income source). You have no rental history so you need to bolster your application with recommendations or any references that attest to your reliability and good reputation.
6. Include a personal touch: If you're serious about a rental property, consider including a personal letter introducing yourself and explaining why you would be the perfect tenant. This can help you stand out from other applicants.
7. Provide references: Provide strong references from teachers, employers, community leaders or other credible sources. This can help landlords feel confident in your ability to be a responsible tenant.
8. Respond quickly: Be responsive to the property manager’s requests for information or additional documentation. A quick response can help show your level of interest and commitment.
9. Be prepared to pay upfront: Be prepared to pay a deposit, first month's rent, and any other fees required by the landlord. Having these funds readily available can show your financial responsibility and make your application more appealing.

 
Families with pets:
 

1. Be upfront about your pet and children: When applying for a rental property, it's important to be honest about the fact that you have both a pet and children – their ages and interests etc. This will help you find a landlord who is open to renting to families with pets.
2. Emphasise your responsibility: Highlight your responsibility as a pet owner by providing evidence of up-to-date vaccinations, training certificates, and good behaviour references. This will show that you are a responsible pet owner and can be trusted with a rental property.
3. Offer to pay a pet deposit: Consider offering to pay a pet deposit to the landlord to assure them that any damages or additional wear caused by your pet will be covered. This can show that you are willing to take responsibility for your pet's actions.
4. Highlight your family's positive qualities: Emphasise your family's positive qualities such as your clean rental history, stable employment, and financial responsibility. This will show that you are reliable and trustworthy tenants.
5. Be prepared to sign a pet agreement: Be prepared to sign a pet agreement that outlines your responsibilities as a pet owner. This can help put the landlord's mind at ease and show that you are serious about renting the property.
6. Provide references: Provide strong references from previous landlords, employers, or other credible sources that can attest to your responsibility as a pet owner and a parent.
7. Show proof of income: Show proof of income such as pay notifications or bank statements to demonstrate your ability to pay rent and provide for your family and pet.
8. Include a personal touch: Consider including a personal letter introducing your family and your pet (with a photo) explaining why you would be the perfect tenants for the property. This can help you stand out from other applicants and show your enthusiasm for the property.
9. Respond quickly: Be responsive to the landlord's requests for information or additional documentation. A quick response can help show your level of interest and commitment.
10. Offer to sign a longer lease: Consider offering to sign a longer lease to provide the landlord with more security and reassurance. This can show your willingness to commit to the property and can make your application more appealing.

 
Downsizers
 

1. Provide a letter of recommendation: Ask for a professional reference from a current or previous employer, former neighbour or community leader, attesting to your good character, responsibility, and reliability.
2. Show proof of financial stability: Provide bank statements, pension or social security income information, and other documentation that shows you have the financial means to pay rent and other expenses.
3. Offer to pay a higher security deposit: Even if you have no rental history, offering to pay a higher security deposit can show landlords that you are committed to being a responsible tenant.
4. Be upfront about your situation: Explain your situation to the landlord and be upfront about why you are downsizing and looking to rent. This can help build trust and establish a positive relationship.
5. Offer to sign a longer lease: A longer lease can provide landlords with the stability and assurance they need to rent to someone without rental history.
6. Demonstrate good credit: Provide proof of a good credit score and history of paying bills on time. This can show landlords that you are a responsible and reliable tenant.
7. Be flexible with move-in dates: Being flexible with move-in dates can demonstrate your eagerness to find a suitable rental property and increase your chances of being accepted.
8. Offer to provide additional references: If you have volunteered or participated in community activities, offer to provide references from those organisations to further demonstrate your reliability and character.
9. Highlight your life experience: Emphasise your life experience and skills, such as home maintenance or gardening, that can make you a valuable tenant and asset to the property.