Refinancing activity is at ultra-high levels right now, as owner-occupiers and investors alike try to find home loans with lower interest rates as the Reserve Bank continues to raise the cash rate.
According to the Reserve Bank of Australia, borrowers refinanced a record $19.5 billion of loans in November 2022 – the most recent data available.
By way of comparison, that was 20.4% higher than the year before and 88.2% higher than two years before.
The Reserve Bank has hinted that at least one more rate rise is coming. In December, it said it wanted to “return inflation to the 2-3% target range over time” (it’s currently 7.3%) and would “do what is necessary to achieve that outcome” – i.e. further cash rate increases.
So if you haven’t reviewed your home loan in the last 12 months, now is a good time to think about refinancing.
Reach out if you would like to discuss the options.
Rents rise from 4.3% in Canberra to 13.4% in Brisbane
Many property investors enjoyed a significant rise in their rental income during 2022.
CoreLogic has reported that the median rent for an Australia investment property increased 10.2% during the year. The city-by-city breakdown was:
• Brisbane 13.4%
• Adelaide 12.9%
• Sydney 11.4%
• Perth 11.2%
• Melbourne 9.6%
• Hobart 5.3%
• Darwin 5.1%
• Canberra 4.3%
During 2022, the national vacancy rate fell from 2.1% to 1.2%. To put it another way, the number of untenanted rental properties fell from 21 per 1000 to a very low 12. That forced tenants to compete harder, pushing up rents.
“Rents are still rising in most capital cities and regional areas, with vacancy rates low,” according to CoreLogic head of research Eliza Owen.
Between September 2020 (when this period of rental increases began) and December 2022, Australian rental rates increased 22.2% – the largest increase in a 27-month period in recorded history.
Growth in residential construction costs expected to slow in 2023
Home building costs continue to rise, but it appears the worst is behind us.
Residential construction costs rose 11.9% during 2022, after climbing 7.3% in 2021, according to CoreLogic’s Cordell Construction Cost Index (CCCI).
The 2022 result was the largest annual increase on record, apart from the period impacted by the introduction of the GST.
However, the pace of growth appears to be slowing: prices increased 4.7% in the September quarter, but only 1.9% in the December quarter.
CoreLogic construction cost estimation manager John Bennett said, in 2023, costs would be unlikely to rise at the same rapid pace as in the recent past, because rising interest rates and inflation have made consumers, builders and suppliers more cautious.
Analysing the price increases, Mr Bennett said:
– Volatile timber prices are affecting the cost of structural timber and general timber products
– Prices continue to increase for metal products, such as gutters, lintels and fixings, which are used for roofing and structural purposes
– Petrol price increases are affecting cartage and delivery costs, including for concrete and rainwater tanks
– Gravel, aggregates and fill prices have increased, possibly affected by the rise in petrol prices
– Costs have also increased for appliances and fittings.
If you are buying, re-financing or have any questions, contact me on the below information.
TAG Finance and Loans
Sal Cinque | CEO
03 9886 0800 | loans@tagfinancial.com.au
Disclaimer: The information contained on this page is general in nature. Professional advice should be sought before acting on any aspect on this page. TAG Finance and Loans Pty Ltd ABN 25 609 906 863 Credit Representative Number 483873 National Mortgage Brokers Pty Ltd ABN 88 093 874 376 Australian Credit License 391209.