It’s spring, and that means auction season is gearing up. If you are spending your Saturdays scouring the viewing lists and heading out to find the home of your dreams, understand this season is a bit different.
If you’ve got loan approval and are ready to go, you are a little more in demand than you were last year. Actually, quite a lot more in demand.
Why? The market has at last absorbed a lot of the desperate speculation of 2016. So, for a change, you might be treated with a bit more respect.
Here are five things to know about the market courtesy of the Bendigo Bank’s survey of the last quarter:
• Housing affordability has declined, and the proportion of median family income required to meet average loan repayments increasing by one per cent to 31.4 per cent.
• The number of first home buyers has increased by 14 per cent
• The average national loan size to first home buyers increased by 1.2% to $365,600 with the average loan size to first home buyers decreasing in South Australia, Tasmania and the Australian Capital Territory, and increasing in New South Wales, Victoria, Queensland and the Northern Territory.
• The proportion of family income required to meet median rents decreased by 0.6 percentage points to 24.3 per cent.
• In NSW, the proportion of family income required to meet loan repayments is 6.6% higher than the nation’s average. New South Wales remains the least affordable state or territory in which to buy a home.
Spend like there’s no tomorrow…except there is.
Remember Mr Micawber’s famous, and oft-quoted, recipe for happiness: “Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”
This week, we learned household spending is growing faster than income – and has been for five quarters,
That’s the longest unsupported boom in spending since before the global financial crisis.
We also learned that wage growth is showing no sign of increasing. Indeed, according to The Financial Review, it continues to go backwards.
Apparently, we are eating into our savings for our spending spree.
The household saving ratio fell to 4.6 per cent in June – according to The Sydney Morning Herald, down from 8.7 per cent when the Coalition took office in 2013.
According to Treasurer Scott Morrison, it was a sign of improving confidence .
‘‘ It’s how people see things out over the next 12 months, two years and so on and how they see things moving,’’ he said.
‘‘There’s undoubtedly lots of volatility in the global economy but the global economic position , as we’ve been saying now since the beginning of the year, has been improving and that’s a positive thing. “
But wages and salaries grew just 0.7 per cent in the three months to June and by only 2.1 per cent over the year, an increase driven by a jump in the number of hours worked rather than pay increases.
Charles Dicken’s great character’s recipe for happines is still true today.
Reward good behaviour? It makes sense to us.
If you pay your bills on time and don’t have debt, you would have a great credit rating, right? Er…no.
Now GetCreditScore.com.au, a company that specialises in credit ratings, is campaigning for something called “positive credit reporting” – rewarding you for paying on time and keeping a good record.
Just 15 per cent of Australians say they know about positive credit reporting (also known as comprehensive credit reporting). Young Australians are the least knowledgeable, with just 12 per cent of millennials knowing about the new system.
Positive credit reporting is designed to give lenders a more holistic view of a borrower’s risk profile.
Luke Keller, Head of GetCreditScore.com.au, said: “While it’s not surprising that Australians want more competition in lending, it’s alarming that many don’t know about positive credit reporting – which is a system that will open up more product choice and greater competition as it gains momentum.
“Before this was introduced in Australia in 2014, credit providers only reported negative information to the credit bureaus such as when a consumer had defaulted on a loan repayment.
“This reform means that when a consumer does the right thing – such as making loan repayments on time – this information will also be included. Giving lenders a holistic picture of your financial behaviour means they can make more informed decisions, leading to greater financial inclusion and a fairer system.
“Positive credit reporting could be considered the most important credit industry reform in almost 30 years but it has flown under the radar for many Australians and we’re still a long way behind the rest of the world.
“Positive credit reporting has been established for some time in the US and UK, and has led to product innovation such as interest rates based on your credit score and fast online approvals,” Mr Keller said.
No cheers for this idea
ASFA, the Australian Superannuation Funds of Australia, is backing something called Boost Your Super day.
Apparently, we all pledge to put more into super – a very good idea indeed.
But there is one suggestion we find hard to raise a glass to. Apparently, ASFA claims that if you drink one less glass of champagne a week, you could get an extra $18,996 into your super over you lifetime.
We’re all for saving. But this sounds like a pretty poor exchange.