Welcome to our
July Newsletter
Australia’s property market is entering a new phase, and many buyers may be looking to better understand the opportunities and challenges that come with changing market conditions.
With buyers increasingly taking their time to purchase and becoming more selective, properties are no longer being snapped up at lightning speed in many markets. Buyers are negotiating harder and walking away if the asking price is not in line with current market expectations.
Recent tax reforms in the Federal Budget have also caused many investors to reassess their purchasing plans and strategies. Sellers are having to adjust their price expectations and adapt to the changing conditions, too.
If you’re looking to buy a home or investment property, talk to us about your finance options. We’ll explain your borrowing power and organise pre-approval.
Interest rate news
With economists and banks not aligned on where the market is heading, the Reserve Bank of Australia (RBA) has decided to leave the cash rate on hold at 4.35% at its June meeting. This follows three consecutive rate hikes so far this year.
While headline inflation has eased, underlying inflation remains elevated.
Annual inflation dropped to 4% in the 12 months to May, largely driven by a decline in fuel prices, which were nearly 12% lower in May.
In contrast, underlying inflation remained more persistent, with the RBA’s preferred trimmed mean measure increasing to 3.6%, up from 3.4% in April.
Treasurer Jim Chalmers welcomed the lower headline inflation rate, but said his government was not “complacent” about the risks.
“We know that there are still inflationary pressures in our economy. But these numbers today are much better than the market expected, much better than forecast, and that’s obviously a very good thing,” the treasurer said.
The RBA said the three rate hikes appeared to be having “broadly the expected effect”, as international economic pressures ease.
“It would take some time to assess the ultimate impact on the economy of the tightening in monetary policy since February but, at this stage, it appeared to be having broadly the expected effect,” the last RBA Board meeting minutes said.
“Housing demand had eased, which also reflected the broader economic environment and recently proposed tax changes.”
The next cash rate decision will be on August 11. Economists and major lenders are divided on the likely path for the upcoming interest rates, as global and domestic factors continue to shape an increasingly unpredictable economic environment.
Home Value Movements
The latest housing market figures show the downturn is deepening. National dwelling values dropped 0.4% in June according to Cotality, marking the largest month-on-month fall since December 2022.
Sydney’s prices fell 1.2%, Melbourne’s dropped 1%, and Canberra’s were down 0.6%. Adelaide’s prices remained flat, while Brisbane saw modest gains. Hobart and Perth’s values increased 0.6% and 0.7% respectively.
The June quarter marked a significant shift in Australia’s housing dynamic. Capital city home values fell by 1.3% over the quarter, with Sydney leading the pace of decline at -3.2%. Melbourne values were down 2.6%, and ACT values dropped 1.3%.
“Weaker conditions through the second quarter of the year are attributable to an array of downside factors,” said Cotality research director Tim Lawless.
“Even before interest rates rose by seventy-five basis points, we were seeing affordability hurdles weighing on buyer demand.
“Higher cost-of-living pressures, deeply pessimistic sentiment and a further dampening of demand via property taxation changes announced in the Federal Budget are all contributing to weaker housing conditions.”
The cooling market is further evident in falling auction clearance rates, home sales estimates and listing volumes.
“Such low clearance rates indicate a mismatch between buyer and seller pricing expectations. Buyers now have more stock to choose from and less urgency in their decision-making,” Mr Lawless said.
“Higher listings aren’t due to a pick-up in the flow of new listings; it’s a symptom of less demand in the market, which has led to an accumulation of advertised stock.”
Meanwhile, regional markets continue to outperform their capital city counterparts, increasing 1.1% over the quarter, and 0.3% in June.
Home Value Index
Ready to Buy?
Home loan pre-approval typically remains valid for around 90 days, so if you’re considering a property purchase in the coming months, it could be worth discussing your options sooner rather than later. Your broker can help you understand your borrowing capacity, explain the pre-approval process and discuss the factors that may be relevant to your circumstances, reach out today.
Additional sources
Cotality Data Daily Home Value Index: Monthly Values
https://www.cotality.com/au/our-data/auction-results
https://www.realestate.com.au/auction-results/
What’s driving the drop in auction clearance rates?
After years of fierce competition, fast-rising prices and crowded auction weekends, the market is beginning to show signs of a shift. More properties are being listed for sale, homes are taking longer to sell, and buyers are becoming increasingly selective about what they’re willing to pay.
One of the clearest signs of this changing market can be seen in auction clearance rates. Nationwide, fewer properties are selling under the hammer, with clearance rates recently dipping below 50%. In Sydney and Melbourne, auction success rates have dropped to their lowest levels in years.
While this may sound like bad news for sellers, it could create opportunities for buyers. A softer market can mean less competition, more room to negotiate and a greater chance of finding the right property without feeling pressured to act quickly.
So, what’s driving the decline in auction clearance rates, and what could it mean if you’re looking to buy?
Federal Budget tax changes
In the recent Federal Budget, the Government announced it would reform negative gearing and capital gains tax (CGT). These measures are now law.
Under the changes, which will apply from 1 July 2027, negative gearing for residential property investments will generally be limited to new builds. The 50% CGT discount for individuals, trusts and partnerships will also be replaced with cost base indexation and a 30% minimum tax rate on capital gains.
Existing investments held at 7:30pm AEST on 12 May 2026 will generally be exempt from the negative gearing changes, and CGT reforms applying only to gains that accrue after 1 July 2027.
These changes have cooled investor demand, with many putting their purchasing plans on ice. This in turn has impacted auction activity.
Cautious buyers and differing expectations
Changing market conditions have seen buyer demand soften, with many purchasers taking a more measured approach and spending longer evaluating their options. At the same time, some sellers are still adjusting their expectations to the current market environment, creating a wider gap between buyers’ and sellers’ expectations.
This gap in expectations is also influencing auction results. With buyers approaching the market more cautiously and auction clearance rates falling, some properties are not reaching their reserve price and are being passed in on auction day before moving to private negotiations.
Interest rate hikes
Since the beginning of this year, we’ve seen the cash rate increase three times. Lenders have, in turn, increased their interest rates, which reduces the amount buyers can borrow.
Rising interest rates affect auction activity by tightening buyer budgets and impacting consumer confidence. With fewer eager buyers competing for properties, vendors might struggle to reach their reserve price, resulting in a property being passed in.
How do the falling auction clearance rates affect buyers?
A cooling property market can create more opportunities for buyers. When fewer properties sell under the hammer, it often means less competition, fewer emotional bidding wars, and more room to negotiate on price and terms.
Instead of feeling pressured to make decisions in a competitive auction environment, buyers could have more time to complete their research, secure finance approval and negotiate directly with vendors. In some cases, sellers might also be more willing to consider offers before or after auction if they’re keen to achieve a sale.
For buyers who have been sitting on the sidelines, changing market conditions may provide an opportunity to reassess their options and purchasing plans. While every local market is different, changing conditions can open doors that would not have been available when competition was at its peak.
That’s why now could be a good time to speak with your broker. Whether you’re actively looking or simply keeping an eye on the market, having a clear understanding of your borrowing power and available finance options can help you be ready to act when an opportunity arises. With market conditions shifting, a home loan review can also help you assess whether your current loan remains appropriate for your needs and circumstances.
Why it’s important to have your finance in order
Before bidding at auction, it’s important to get a clear understanding of the current market values for similar properties in your desired area and understand your finance position. Auctions are typically unconditional. You can’t add a ‘subject to finance’ clause and there is no cooling off period.
If the reserve price is met and you’re the successful bidder, you’ll generally be required to sign the contract and pay a deposit on the day, typically 10% of the purchase price. From this point, the purchase becomes legally binding, with ownership transferring at settlement.
To better understand your borrowing capacity and available finance options, get in touch with us today. We can discuss your circumstances, explain the lending options available and help you navigate the application process.
Planning an investment property renovation? Here are your finance options
Renovating an investment property can help attract quality tenants, improve rental returns and potentially add value to your property. But before choosing paint colours or collecting quotes, it’s worth understanding how you’ll fund the project.
Many investors focus on the renovation itself and overlook the impact their funding choice can have on cash flow, borrowing capacity and long-term costs. The good news is that there are several ways to finance a renovation, from accessing equity to topping up an existing home loan.
Here’s what you should know before getting started.
Personal loan
Say you want to perform a few cosmetic enhancements. Nothing too major – just a paint job, maybe some new window dressings and/or flooring.
For a small project, a personal loan might be worth considering. Unsecured personal loans don’t use your property as security, and loan amounts and repayment terms are generally set at the time the loan is established.
However, interest rates are often higher than those available on home loans, and loan terms are generally shorter. This could mean that repaying the loan within one to seven years could cause higher monthly bills.
Refinancing
If your property’s value has increased or you’ve paid down your mortgage somewhat, you may be able to refinance and use the equity to fund your renovation. Equity is the difference between the current market value of your property and what you owe on your mortgage.
The perk with this option is that the interest rates are lower than for personal loans. If you’re undertaking a major renovation, it could be worth exploring refinancing, but keep in mind you’ll be adding more debt to your mortgage.
Top-up loan
Another option is to top-up your loan in order to fund your reno. A top-up loan is an extension of your existing mortgage that allows you to borrow extra money (without opening a whole new loan). Lenders usually add the new funds to your loan balance.
Like the refinancing option, this allows you to access lower interest rates than a personal loan or credit card. You will likely not have to pay setup fees that come with getting a new loan, and the approval process is generally different from that of a complete refinance.
It’s important to remember that lenders will usually only let you borrow up to 80% of your property’s value. If you exceed that, you might be up for lenders’ mortgage insurance. Also, because you’re spreading the renovation cost over the life of the loan, you might end up paying more in interest in the long run.
Construction loan
For larger projects like structural changes to your property, you might consider a construction loan. With this type of finance, the lender releases money to you in stages as your builder reaches milestones.
Depending on the loan structure, you may only pay interest on the funds that have been drawn and many lenders offer interest-only payments. This could help you manage cashflow during the renovation. But interest rates can be slightly higher, and there might be extra paperwork (like building plans and contracts, for example).
Line of credit
A line of credit allows you to access equity in your property and draw funds as needed, up to an approved limit. Because you can access money when required rather than all at once, some investors use it to help fund renovation projects.
One feature of a line of credit is the flexibility to draw funds as needed, though it is subject to the lender’s terms and conditions. Interest is generally charged only on the amount you’ve drawn, not the full credit limit. However, because the facility is secured against your property, it’s important to borrow responsibly and ensure you can comfortably manage repayments. If you can’t meet your loan obligations, your property could be at risk.
Use existing funds
If you have savings or you’ve been putting extra money into an offset account or redraw facility, you might decide to use those funds for your renovation.
Just remember it’s always a good idea to keep a little money aside for cost overruns.
Ready to chat about your finance?
Renovating can be exciting, but it’s important to understand your finance options before committing to a project.
Reach out if you’d like to discuss your circumstances and explore the finance options that might be available to you.
Why more than 8 in 10 borrowers are choosing mortgage brokers
Few decisions have a bigger impact on your financial future than buying a property. Whether it’s your first home, your next home or an investment property, getting the finance right can make a significant difference for years to come.
So why are more Australians choosing to work with a mortgage broker when making such an important financial decision?
Broker market share has grown from 55% to 81% in just eight years, reflecting a growing preference for personalised guidance and support throughout the home loan journey.
For many borrowers, having someone to help compare options, explain the fine print and advocate on their behalf provides confidence during what can otherwise be a complex process.
Let’s take a look at some of the reasons mortgage brokers continue to grow in popularity
Optimise borrowing capacity
Every borrower is different, which means there is no one-size-fits-all approach to finance. What works for one person may not be the right fit for another.
A mortgage broker can help you understand your borrowing capacity and explain how different lenders might assess your circumstances. Having someone guide you through those options can help you better understand how different lending solutions could align with your current needs and longer-term goals.
Navigate complex lending
Today’s lending environment is more complex than ever. Borrowers are navigating changing interest rates, evolving lender policies and a property market that continues to shift.
That’s where a mortgage broker can make a real difference. Rather than trying to compare countless loan options on your own, you have someone in your corner to explain your choices, help you find a suitable loan and guide you through the process with confidence.
While we take care of the research, lender comparisons and paperwork behind the scenes, you can focus on the exciting parts of your property journey.
Access to many lenders
When you’re making such a significant financial commitment, it’s natural to want confidence that you’ve explored your options.
Rather than being limited to a single lender’s products, a mortgage broker can compare loans from a range of lenders and help explain the differences between them. This can make it easier to understand the choices available and identify options that may be suitable for your circumstances and future plans.
Legal protection
Trust is an important part of any professional relationship, particularly when it involves one of life’s biggest financial decisions.
That’s why mortgage brokers are subject to the Best Interests Duty, which requires them to act in their clients’ best interests when providing credit assistance.
For borrowers, it’s an additional layer of reassurance that the recommendations they receive are designed to support their individual circumstances and objectives.
Ready to get started?
Buying a property is a major financial milestone, and many borrowers value having a trusted professional to help guide them through the process.
Whether you’re buying your first home, upgrading or investing, having someone in your corner can provide confidence and clarity when navigating your finance options.
If you’re looking to buy, get in touch. I’d be happy to talk through your options, explain your borrowing power and help you find a loan that suits your needs and goals.