As an agent, you probably get annoyed when you hear the media talk about the national property market. Why? Because of Sydney.
The Sydney boom is now over. In the last three months of 2017, the median price fell by 2.1 per cent, according to the latest CoreLogic stats. This downturn has started to affect our national statistics, which also fell over the last quarter. It has also started to influence national property journalists who are focused on Sydney’s fall from grace.
Which is why 2018 will be the year of negative property stories.
But Australia doesn’t have one single housing market. There are 560 councils scattered across the country and, if you’re like most agents, you probably work in just one or two of these areas. Perhaps three at a stretch. That’s your property market, and in your local patch, conditions might be very different. Everything else should be largely irrelevant.
While it’s easy enough for you to ignore the media hype, it’s worth pointing out any anomalies to your clients. After all, it’s impossible to stop them from reading the headlines, so a few well-timed phone calls to update them on their local market might be worth making throughout the year.
Not all mortgages are created equal
Just as Australia doesn’t have one single housing market, it also doesn’t have one single mortgage market. That’s something to bear in mind when talking to buyers.
Different borrowers get different rates. RateCity.com.au’s home loan database shows the different average variable rates for four broad categories of borrower. These are:
• Owner-occupier paying principal and interest = 4.33 per cent
• Owner-occupier paying interest-only = 4.68 per cent
• Investor paying principal and interest = 4.78 per cent
• Investor paying interest-only = 5.07per cent
The four broad categories of borrower can then be broken down into numerous sub-categories based on LVR, loan size, employment status, postcode and other variables.
That’s why some owner-occupiers have home loans that start with a “3“ while others have loans that start with a “6”.
So, just as you should take commentary about the property market with a grain of salt, you should also keep an open mind whenever the media discusses interest rates. Even though average interest rates are likely to rise in 2018, rates for certain types of borrower might actually go backwards, particularly if they opt to refinance.
Sally manages the RateCity editorial team, producing consumer-focused insights into personal finance and cost of living issues.
She is passionate about helping everyday Australians get access to affordable finance options without falling victim to marketing ploys.
Sally is experienced in finance issues, having worked for the Institute of Chartered Accountants, the Prime Minister of Australia Julia Gillard, NSW Minister for Finance and Accenture Consulting in the United Kingdom.
At the federal government, Sally worked on three federal budgets targeted at easing the cost of living, providing greater access to affordable education and providing targeted financial assistance to in-need families. She also participated at multinational finance forums such as the G20 and APEC.
She is a regular contributor to news outlets including Fairfax, News Ltd, Money Magazine, Yahoo, Ninemsn, and a regular commentator on television and radio about personal finance matters.