Last month, we continued to see considerable property market activity, despite the arrival of the cold weather. Auction clearance rates continue to fall, indicating that conditions are currently favouring buyers. Interest rates remain low and there are plenty of opportunities out there for savvy property buyers and investors. If you’re looking to buy or refinance your existing home loan, call us now.

Interest Rate News

At its July meeting, the Reserve Bank of Australia (RBA) decided to leave the cash rate on hold at 1.5%, where it has remained since August 2016. Most economists now believe the RBA will leave the cash rate on hold until next year, and some are even predicting it will be 2020 before we see a change.

Meanwhile, lenders have been making changes to interest rates outside of the RBA’s decision. Several lenders raised interest rates marginally last month, citing funding costs as the driver.

If you haven’t had a home loan health check in a while, it’s important not to be complacent. Check in with us and we’ll compare the market to determine whether your mortgage still stacks up.

Property Market News

Dwelling values fell by -0.29% across the combined five capitals in the month to June 30. In Melbourne, prices fell -0.41%, while Sydney saw prices decline by -0.33%. Perth experienced a decline of -0.53% and Canberra -0.30%. Darwin experienced the largest monthly fall, with home values decreasing -1.12%. Hobart, Brisbane, and Adelaide all experienced very marginal increases.

Auction volumes have declined in recent weeks, although they are still quite strong for this time of year. In the week ending June 30, Victoria had 873 scheduled auctions and cleared 61% of stock. In New South Wales, there were 726 scheduled auctions, and 56% of properties sold under the hammer. Queensland had the third highest volume – 226 scheduled auctions, but only 32% of properties sold.

In South Australia, the clearance rate was 58% for 75 scheduled auctions. The ACT held 43 auctions, and achieved a clearance rate of 66%, while things were quieter in Western Australia – 38 scheduled auctions and a 22% clearance rate. The Northern Territory had only one auction and the property sold, while neither of the two properties to go to auction in Tasmania were sold.

Winter is a great time to purchase property, as there could be fewer buyers to compete with. What’s more, because the winter months are generally slower in the housing market, vendors may be more willing to negotiate on price. Remember, we offer finance solutions tailored to your specific financial situation and goals, so please speak to us at Element Finance about your finance needs, and if you’re in the market to buy a property, talk to us about pre-approval on your loan today.

To rent or buy? For some, renting makes good financial sense. For others, it’s just money down the drain. For you it may be a question of short-term convenience versus long-term financial growth, which can make it a difficult decision to make. In this article, we break down the pros and cons of renting and buying, putting it into simple terms. We also let you in on a little secret – how to get the best of both worlds! Remember, your mortgage broker is a great source of support and information – if you need help to decide which option is right for you, then please get in touch with us at Element Finance.

Pros of renting

  • You can live wherever you want

    Career and lifestyle are important considerations, whether you’re single or a family. Renting a place in a suburb or location that is close to your work, friends and ideal lifestyle amenities (like schools or shopping) can often be much more affordable than buying there.

  • Flexibility
    If your work or lifestyle require you to be ready to up stumps and move at short notice, then renting gives you greater flexibility and mobility. Or if your situation changes and you find you need less expensive digs, you can quickly find a rental that fits your new budget.
  • Lower costs and less hassle
    Renting is usually cheaper than buying and you won’t have to worry about ongoing expenses like rates, body corporate fees, maintenance, repairs and building insurance.

Cons of renting

  • The ‘dead money’ argument
    Have you ever heard the phrase ‘rent money is dead money’? Many argue it’s much better to pay off your own home loan than someone else’s. It’s certainly true that capital gains on a property can potentially grow your wealth, and you can look forward to living ‘mortgage free’ within 25 – 30 years.
  • Restrictions
    Common complaints from renters include living with the landlord’s décor, not being able to put hooks in walls, restrictions on pets, or even the number of people who live with you.
  • Uncertainty
    Rental properties don’t offer long-term certainty. Moving can be expensive and you’re vulnerable whenever the lease ends or the landlord decides to renovate or move back in.
  • Inspections
    Most rental properties require you to submit to inspections by the landlord or agent every six months. These can be stressful and inconvenient.
What the statistics say
* Based on the 2016 census
Percentage of Australians renting30.9%
Percentage of Australians who own their home outright31%
Percentage of Australians paying off their home34.5%

Pros of buying

  • Freedom to do what you like with the property
    Buying your own property means you have the freedom to do whatever you want with it. You can decorate any way you like, and add value by renovating.
  • Capital gains and wealth-building opportunities
    You’ll own an asset eventually, and while you’re paying it off the property could potentially increase in value. What’s more, you may be able to use the equity in your home to build wealth through property or other investments.
  • Certainty 
    You’ll have the security and certainty of knowing where you’ll be living for years to come. You’ll also obtain a degree of financial certainty – because you’ll own a substantial asset.

Cons of buying

  • Affordability constraints and costs
    High housing prices and low wages growth have made buying difficult for some people. However, there are incentives available like the First Home Owner Grant to help you get started. Ask us if you’d like to know more.
  • Added responsibility
    Becoming a home owner means you’ll have new financial responsibilities (such as paying your mortgage repayments and bills in a timely manner).
  • You may not be able to afford to buy where you want to live
    As a home buyer, you may have to compromise on location or property type to find a property that suits your budget at first. However, once you get a foot on the property ladder, the potential capital gains could help to make your next property purchase more ideal.

Have you considered rentvesting?

Just because you want to live close to the action doesn’t mean you have to forfeit your dream of owning property. Rentvesting is a strategy that allows you to live where you want and buy an affordable investment property elsewhere! You could potentially get a foot on the property ladder now, enjoy the benefits of capital growth and having a tenant to help you to pay the mortgage, but still live wherever you like.

Talk to us about what’s right for you

Whether to rent or buy comes down to your personal situation and goals. If you’ re considering buying, then talk to us and we’ll help you decide what’s right for you. Keep in mind that even if you don’t have a 20% deposit saved, there may be other ways to get you over the finish line to buy a home or kick off your rentvesting strategy. We’re happy to explain everything you need to know, so please get in touch with us at Element Finance today!

Co-housing is a way of living that offers many benefits, especially for seniors. If the concept is unfamiliar, you may be conjuring up images of a 1970s hippy commune, but rest assured you won’t have to wear tie dye t-shirts or become a vegan to be accepted! In this article, we explain what co-housing is, where it originated, and provide an example of a co-housing community in action in Tasmania. Remember, if you’re considering downsizing or making living arrangements for your retirement, we’re here to help you find the right finance for your needs.

What is co-housing?

Co-housing is defined as “an intentional community” of private homes built around shared facilities. These common spaces may include a common house with a shared kitchen and dining area where residents can cook and eat together.

There may be community gardens, playgrounds and recreational spaces. Some co-housing developments may even include communal swimming pools and movie rooms for residents to enjoy.

Each household in the community is independent and fully equipped with its own amenities, including private kitchens and baths. However, the idea behind co-housing is for neighbours to be part of a collaborative community.

Co-housing differs from regular retirement villages in that the community is owned and managed by the residents who live there.

The key benefits of a co-housing community are that residents may have the opportunity to collaborate over how it is set up, what amenities it includes and how much it costs.

Where did the idea originate?

The idea of co-housing started in Denmark in the 1960s. From Scandinavia, the concept spread to other parts of Europe, on to North America, and over to New Zealand and Australia.

Co-housing initiatives are now popping up in many parts of Australia, reinvigorating the concept of community. Seniors’ co-housing has been suggested as an alternative to aged care or retirement villages for those wishing to age in place.

What are the benefits?

Enthusiasts believe co-housing offers the following advantages:

  • More meaningful relationships with neighbours.
  • A feeling of belonging, in that you’re part of a community.
  • Reduces loneliness and isolation by connecting you with others.
  • A collaborative culture of sharing and caring.
  • Maintenance tasks are divided among the community.
  • Decisions affecting the community are based on the consensus.
  • You still have privacy, as well as the support of your neighbours as needed.
  • Reduces household bills, as expenses for shared space are divided between residents.
  • Depending on your community, it may be less expensive than other housing options.
  • Reduces your environmental impact thanks to a “greener” approach to living.

An example of a co-housing community in action

Cascade Cohousing in South Hobart is a great example of a thriving co-housing community. Established in 1991, there are currently 22 adults, ranging in age from young families to retirees, and six children living in 15 privately-owned properties (on strata title).

There’s a central common house with a shared kitchen, dining area, lounge, laundry, workshop and TV room. Three nights a week, the residents get together for a meal, and once a month they hold body corporate meetings and working bees for maintenance. There are fun activities on offer like film nights, games evenings and gardening.

You can find examples of other established and emerging co-housing communities on the Cohousing Australia website.

If you’re entering the next phase of life, co-housing may be the way to go. As your mortgage broker, we can help you secure the finance you need to start your exciting new chapter in an existing co-housing community, or even work with you and your chosen ‘community group’ to set one up. Please talk to us at Element Finance about your retirement lifestyle plans and goals today!

Last year, the Federal Government introduced down-sizing incentives aimed at the baby-boomer set. Add this to rising capital city property prices that give just about everyone an incentive to cash-in on their big home, and it’s not surprising that more and more people are looking for smaller, less expensive places to live.

However, when faced with the challenge of fitting years of accumulated stuff into a space that’s a quarter the size, it’s easy to come undone. In this article, we’ve put together some cool ideas for maximising every inch of your new small space home, to help you make it more liveable and drive up its value.

Get creative with storage

Before we even start talking about cool storage ideas, you’ll want to get tough on yourself and get rid of the stuff you don’t need. Consider a garage sale or selling it on eBay.

Once you’ve paired it back to the things you can’t live without, you can start thinking about incorporating clever storage solutions into the design of your home. Stairs are a hidden bonanza of wasted space that you can reclaim in a variety of different ways (check out these imaginative ideas on Buzzfeed).

Another great tip is to use space vertically, not horizontally – that means thinking of creative ways to make use of your wall and ceiling space instead of the floor. For example, try creating personality with floating wall shelves.

Use your furniture as extra storage Multifunctional furniture is also a great idea – look for a coffee table with a shelf under it for books, or one that converts into a desk. There are plenty of beds and sofas available with hidden storage underneath, and you can position attractive storage baskets to hide your clutter. Want to get even more creative? Consider a vertical wall bed that transforms into a revolving bookcase. Or this wall bed that converts into a home office or study.

Grow up!

If you love your garden, think vertical! There are plenty of fun ideas on Pinterest for small spaces and balconies, from pallet herb gardens to exotic-looking cactus displays. Click here for inspiration.

Conceal the laundry

Why not tuck your washer and dryer away inside a kitchen cupboard and reclaim the laundry for a different use? You might even like to include a fold-out drying rack and ironing board into the design for ultimate efficiency. Another option is to combine your bathroom and laundry into one, so that you can optimise the use of the plumbing.

Recess where possible

You could remodel the toilet and go for a wall-hung throne. By concealing the tank in the wall, you’ll save space and achieve a more modern look. When it comes to the bathroom, recessing cabinets and installing a pedestal basin will free up room. Another tip is to use neutral colours and larger mirrors to create the illusion of space.

Call us about financing your reno!

Renovating can do wonders to improve the liveability of a smaller home and boost its value – we hope these ideas help with your plans. If you’d like to know how you can finance your renovation dreams, please get in touch. You may be able to refinance and use the equity in your home, or you may benefit from a home loan with features such as a line of credit. There are all sorts of other finance options available, so talk to us at Element Finance and we’ll help you set the wheels in motion for your renovation project.

Are you thinking about buying a home and wondering how you’ll cover the mortgage repayments and still have a life? Remember Cousin Jimmy mentioning he was looking for a new pad? Sure, he’s a little ‘unusual’ with his back-scratcher collection and all, but if living with his bizarre hand gadgets means you’ll score some help with the rent, then why not?

Taking on a boarder could be a viable way to help you pay your mortgage, but it won’t all be beer and skittles! If you’re going to take in a boarder, there are some very important implications to consider first, as we explain in this article.

The pros of having a boarder

    • Additional income
    • You can offset your household costs
    • Potential tax deductions for property expenses
    • The social factor.

The cons of having a boarder

  • Loss of privacy
  • Extra responsibilities as a live-in landlord
  • The income may push you into a higher tax bracket
  • You may be subject to Capital Gains Tax (CGT) when you sell
  • Many lenders don’t take rent from roommates into account when assessing whether you can afford a home loan.

Legalities to consider

The money received from your boarder will generally be considered accessible income by the Australian Taxation Office (ATO), and you must declare it on your tax return. You may be able to claim deductions for expenses associated with renting out part of your home, such as interest on your mortgage. However, if you rent to a relative at a discounted or less than market rate, it can affect what you can claim. In some instances, payments from a family member for board or lodging may be considered a domestic arrangement and not rental income, so you may not be able to claim tax deductions.

You won’t have to pay Goods and Services Tax (GST) on the rent you charge, nor will you be able to claim GST credits. However, when it comes time to sell, you may not be entitled to the full main residence exemption from Capital Gains Tax (CGT) – generally you don’t pay this when you sell the home you live in. You can find more details via the ATO website, however, it’s wise to speak to your accountant about the financial implications before proceeding.

Precautions

It’s also important to familiarise yourself with your rights and responsibilities, and those of your boarder. Contact your local tenancy authority for advice. You’ll also need to follow the rules about lodging the bond with the residential tenancy authority in your state or territory.

Having a solid contract or tenancy agreement in place will help protect you, should things go wrong. The agreement should stipulate exactly what’s included (e.g. furniture and parking), when and how rent is due, details about notice required and room inspections, and bill arrangements. Also, consider your insurance needs. We partner with some of Australia’s leading insurance providers, so please ask us for help.

When interviewing candidates, be sure to ask plenty of questions and request references from previous landlords (even if it’s someone you know). Being clear from the start will help you avoid issues down the track. Talk openly about your expectations about things such as:

  • privacy
  • paying rent
  • noise
  • cleanliness
  • overnight guests
  • Lastly, before they move in, fill out a condition report and take photographic evidence.

Becoming a live-in landlord can help you pay off your mortgage and cover living expenses, whilst also allowing you to claim tax deductions in some instances. However, there are important implications to consider, which is why it’s so important to consult your accountant or financial planner first. If you’d like to know more about your finance options for purchasing your home, please speak to us at Element Finance. We can help you find a home loan that suits your specific financial needs and goals – and perhaps make it affordable without Cousin Jimmy’s contributions!


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