Commbank Melbourne Property Ladder

HERALDSUN.COM.AU/REALESTATE SATURDAY, FEBRUARY 22, 2014 REALESTATE 21

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PROPERTY LADDERYOUR GUIDE TO BUYING AND INVESTING

SPECIAL REPORT

■ NEW WAYS TO BUY YOUR FIRST HOME

■ TOP TIPS FOR UPSIZING

Things to know before you Can: Applications are subject to credit approval. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

Talk to a lending expert or visit commbank.com.au/home

WE’VE HELPED MORE VICTORIANS BUY THEIR OWN HOME THAN ANY OTHER BANK.

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22 REALESTATE SATURDAY, FEBRUARY 22, 2014 HERALDSUN.COM.AU/REALESTATE

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PROPERTY LADDER

TODAY’S first-homebuyers are findingcreative ways to step onthe property ladder.

Contradicting views that lastyear’s end of first-home buyer grants for established homes makes it almost impossible to enter the market, Commonwealth Bank general manager of home loans Clive van Horen said “it is absolutely still possible” for first-time home buyers to invest.

Latest data from the Australian Bureau of Statistics (ABS) does confirm first-home loans as a proportion of all owner occupier finance commitments are at a record low level.

However, Cameron Kusher,national research director of Australia’s biggest real estate statistics provider RP Data, doesn’t believe that is because first-home buyers cannot afford to buy.

Looking at sales throughout2013, 27.1 per cent of capital city house sales and 39.4 per cent of capital city unit sales were below $400,000.

“So even in cities viewed asbeing unaffordable, opportunities still abound,” Mr Kusher said.

He said data confirmed mostfirst-home purchases were new dwellings in the past 12 months in line with most states’ first-home grants now only being offered for new homes.

“It is reasonable to expect these first home buyers are buying relatively more affordable new housing stock, be it a detached house in a greenfield development or a unit throughout the city within a new development,” he said.

New trends in first-home borrowing are also emerging, according to Mr van Horen, including “property shares” where multiple buyers — often friends — get individual home loans for their respective portions of a jointly owned property.

Loans backed by “guarantor’s support”, where a borrower’s parents offer their home as extra security, is another increasingly popular borrowing option.

Another strategy is borrowing to buy a first property the borrower will not live in.

Dubbed “rentvestors”, somefirst-home buyers are opting to buy rental homes while either continuing to live at home or rent elsewhere.

“There are signs in 2014 thatfirst-home buyer activity is growing; there are still ways to buy a first property, you just have to think creatively,” Mr van Horen said.

KPMG partner and demographer Bernard Salt agrees, refuting the idea first-home buyers are not really in the market.

Asked to comment on whatfirst-home buyers are buying this year, Real Estate Institute of Australia president Peter Bushby said affordability varied between states making it impossible to generalise.

“In Tasmania it is still possible to buy quite reasonable houses in the city for quite affordable prices,” he said.

“Of course in Sydney, withprices and competition from investor buyers making it harder, most are wanting inner apartments near attractions, rail links, and with little or even no yard or maintenance needs, if they don’t want a house in the outer suburbs.”

DREAMWITHINREACH

AFFORDABILITY is a major factor for buyers aged 25 to 35, particularly those looking to get into their first home.

The suburbs below are great spots to get a foot on the property ladder, with median sale prices ranging from $250,000 for a house in Melton to $483,000 for a Northcote unit.

But they’re not in our top 10 just for their affordability. They’ve also recorded solid price growth over the past year.

Units are the way to go if

you’re looking in the first six suburbs, while the remaining four offer top house buys.

1. GARDENVALE 2. CAULFIELD EAST 3. BOX HILL 4. NORTH MELBOURNE5. THORNBURY 6. NORTHCOTE 7. LILYDALE 8. POINT COOK 9. MELTON 10. TARNEIT

■ Source: Commonwealth Bank and RP Data

Data confirms market still not beyond reach of first-home buyers, Caroline James writes

There are still ways to buy a first

property, you just have to think

creativelyC L I V E V A N H O R E N

THE TOP 10 SUBURBS

This was “at odds” with thenumber of people aged between 25 and 35 in Australia today.

“Gen Y are the children of the baby boomers and there is a bucket of them,” Mr Salt said.

“They will have to move outof home eventually so there is much pent up demand and momentum for change.”

Now you can get a helping hand from CommBank, with a $1,000 cashback for a limited time. Apply by 31 March 2014; fund by 30 June 2014 (for construction loans f rst progress payment made by 29 September 2014). Minimum loan size $100,000. Maximum loan to valuation ratio 90%.*

Things to know before you Can: *After capitalisation of any lenders mortgage insurance or low deposit premium. The Home Loan or Line of Credit applied for must be the fi rst loan that any applicant has had to purchase or construct a residential property for owner-occupied or investment purposes, except where the prior loan was for the purchase of vacant land only. Home Seeker Loan applications made before 20 January 2014 are also eligible for the cashback offer. Payment of the $1,000 cashback will be paid only to a Commonwealth Bank Transaction Account within four weeks of the loan funding/fi rst progress payment. Applications are subject to credit approval. Full terms and conditions are included in the Loan Offer. Fees and charges are payable. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

Ask us how you can qualify today.

Talk to a lending expert or visit commbank.com.au/f rsthome

$1,000 CASHBACKON YOUR FIRST HOME LOAN?COMMBANK CAN.


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LIFE STAGE 25-35 YEARSBROUGHT TO YOU BY

LOVE THE LIFESTYLETHE right price and

right location provedan irrisitable combination for first-home buyer Letitia

Hatton.Ms Hatton, 32, saw her

Thornbury apartment for the first time the same day she bought it.

She made a successful $360,000 offer on the apartment, in Flinders St, after it was passed in at auction.

While a “spontaneous buy”,it followed much determined saving by the Victoria Tourism Industry Council policy manager, who moved in last weekend after settling on Valentine’s Day.

“I knew I had enough savedup to make an offer,” she said.

“A two-bedroom home nearthe city in my price range ... also with public transport at the doorstep, a growing cafe culture and fabulous nightspots nearby

... it was an opportunity too good to pass up.”

Ms Hatton, who previouslyrented in Northcote, plans to live in the apartment for a while and rent it out when she buys her next property.

She said that while most ofher friends still rented, one recently bought a property off the plan to avoid stamp duty.

Love Real Estate Thornbury’s Simone Curley said Ms Hatton was one of

many first-home-buying professionals who were looking for smaller dwellings close to the city.

“It all about the lifestyle forthese buyers,” she said.

Ms Curley said she had seenthe rise of the “rentvestor”in recent times.

“Most first-home buyers prefer to live in a rental property, usually with friends as close to the CBD as possible,” she said.

“They secure properties inThornbury for investment with the aim of moving in down the track.”

Ms Curley said 42 per cent ofher agency’s sales were to first-home buyers.

“One- or two-bedroom villaunits with a small outdoor area have been selling particularly well to young buyers in the last year,” she said.

CHRISTINE de SILVA

Letitia Hatton at her new apartment in Flinders St, Thornbury. Picture: STUART MILLIGAN

1START SAVINGIf you saved $100 a week,it might seem insignificant today butover time will become a

healthy deposit on your first piece of real estate.

2HAVE A BUDGETKnowing how muchyou can afford tospend on your firsthome will save much

time and frustration inspecting homes beyond your means.

3DON’T FORGETTHE EXTRASMake sure to tally allpurchase costsincluding stamp duty,

legal fees, pest and building inspections, insurance and moving costs. These can quickly add another 5 per cent to your home’s purchase cost.

4GET PRE-APPROVEDBEFORE HOMESHOPPINGLoan pre-approval

up to a certain amount stops you buying property you won’t be able to finance and it reduces the disappointment of getting attached to a home beyond your reach. It also boosts buyer confidence in negotiations and removes the need for a conditional contract, which vendors love.

5STUDY THE MARKETWork out where youwant to buy and whatyou can afford. Hit the

streets to research suitable properties in your preferred locations and study comparable sales to get a feel for prices.

6HOLD YOUR NERVEIt is easy to fall inlove with your firstproperty and end up

paying more than you budgeted (then find you cannot afford it). Don’t. Stick to your guns and the right home at the right price will come along.

TOP TIPS FOR BUYING YOUR FIRST HOME

Now you can get a helping hand from CommBank, with a $1,000 cashback for a limited time. Apply by 31 March 2014; fund by 30 June 2014 (for construction loans f rst progress payment made by 29 September 2014). Minimum loan size $100,000. Maximum loan to valuation ratio 90%.*

Things to know before you Can: *After capitalisation of any lenders mortgage insurance or low deposit premium. The Home Loan or Line of Credit applied for must be the fi rst loan that any applicant has had to purchase or construct a residential property for owner-occupied or investment purposes, except where the prior loan was for the purchase of vacant land only. Home Seeker Loan applications made before 20 January 2014 are also eligible for the cashback offer. Payment of the $1,000 cashback will be paid only to a Commonwealth Bank Transaction Account within four weeks of the loan funding/fi rst progress payment. Applications are subject to credit approval. Full terms and conditions are included in the Loan Offer. Fees and charges are payable. Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

Ask us how you can qualify today.

Talk to a lending expert or visit commbank.com.au/f rsthome

$1,000 CASHBACKON YOUR FIRST HOME LOAN?COMMBANK CAN.

www.commbank.com.au/firsthome


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PROPERTY LADDER

topping up existing home loans to renovate or extend, some are downsizing to buy in preferred locations.”

Mr Kusher said the most important thing to keep in mind if upgrading in today’s market was that mortgage rates were at record lows.

“At some point in the futurethey will increase,” he said. “Also keep in mind that the current and historic levels of capital growth in the housing market are not guaranteed to continue.”

If thinking of upgrading, thequestions to ask yourself are:HOW much equity do you have in your current home?

The question of whether ahomeowner should sell or buy first draws mixed responses from industry experts.

“Whether you can afford tobuy first or have to sell first will come down to your financial position,” Mr Bushby said. “But if you haven’t got capacity to buy before selling, your outlook is fairly difficult.”

Mr Yardney disagreed, saying most people were better to sell first.

“You can then purchase yourdream home with confidence and don’t feel rushed to make a purchasing decision, at worst you can rent in the short-term,” Mr Yardney said.

IT’S BACK TO BASICS

WITH some equity built up in their existing property, buyers in the 35 to 55 age bracket generally have a bit more cash to splash on their next home.

Houses with plenty of room for the kids are usually at the top of their list and the suburbs below offer great family house buys.

Most have median sale prices in the $600,000 and $700,000 range. Mont Albert North and Ormond are options for those with $900,000-plus to spend,

while Balwyn North is the top pick for those with budgets just above $1 million.

1. MARIBYRNONG 2. BALWYN NORTH 3. MONT ALBERT NORTH4. CHADSTONE5. ORMOND6. BOX HILL NORTH7. BLACKBURN NORTH 8. GLEN WAVERLEY9. BENTLEIGH EAST10. ELTHAM

■ Source: Commonwealth Bank and RP Data

Buying a second or third home — it never gets any easier, reports Caroline James.

THE TOP 10 SUBURBSHAS my financial situation improved since my previous purchase?HOW have broader market values changed?WILL I be buying and selling in the same market?

Ideal family home suburbshave good education facilities including primary and secondary schools and kindergartens, proximity to sports facilities and shopping, according to Real Estate Institute of Australia president Peter Bushby.

“My advice is always buy where it suits your family in the best location you can afford,” Mr Bushby said.

HOMEOWNERSusually reach a pointwhen they outgrowfirst homes andneed to upgrade.

You have done it all before,right? How hard can it be?

According to experts, buyinga second or even third home can often be as fraught as buying the first one.

“Buying your next home canbe a daunting task, it’s extremely exciting but full of complexities,” said property expert Michael Yardney, of Metropole Property Strategists.

“One of my best tips — no matter where you are buying — is do not be influenced by ‘the market’ more than by your own needs.

“Waiting for the ‘right time’or for prices to go down is gambling with your family’s future.”

Fortunately with careful planning, understanding what you can afford and knowing how to sell and buy, upgrading homes can be hugely rewarding.

RP Data national researchdirector Cameron Kusher said upgrading homeowners were “one of the most active cohorts” of buyers this year.

Commonwealth Bank headof home loans Clive van Horen agreed upgrading homeowners were a big portion of the total borrowing market this year.

“Second- and third-time home buyers are a very strong segment, just behind the investors, and approaching this move in different ways,” Mr van Horen said.

“Some are upsizing by sellingto buy bigger homes, some are


WE’VE HELPED MORE VICTORIANS BUY THEIR OWN HOME THAN ANY OTHER BANK.Talk to a lending expert or visit commbank.com.au/home



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LIFE STAGE 35-55 YEARSBROUGHT TO YOU BY

UPSIZE A REAL FAMILY OPTIONTHE Ciavola household

in Diamond Creekwas bursting at theseams last year.

Sab and wife Alexhad been thinking about upsizing the family home for a while, planning to sell their three-bedroom home before buying a new place.

“We’d been going throughthe papers and realestate.com.au and just wanted to see what our money would get us,” Mr Ciavola said.

Initially they were convinced everything was either too small or beyond their price range.

But with Molly, 14-months,and Harvey the dog needing more space they decided to put in an offer on a house in Main Rd, Eltham.

“We had wanted to sell thenbuy, but we ended up buying before selling and that gave us a bit of panic,” Mr Ciavola said.

“It was just a good opportunity for us, I feel we got the house at a bit of a steal and it doesn’t need much work.

“We liked the area and it’s very family oriented and there’s lots of walking and riding tracks.”

Tristan Meserle, from Morrison Kleeman in Eltham, sold the family the Eltham house and then helped them sell their Diamond Creek property.

He said the area was popularwith family buyers looking for space and a relaxing atmosphere.

“We are seeing a lot of people moving within the area, a lot are upsizing from Greensborough, Diamond Creek and Montmorency,” he said. “And we also see quite a lot of people coming out from Clifton Hill and Alphington.”

NATHAN MAWBY

1BACK TO THE BOOKSIt is common for upgraders tosuffer research complacencybecause they have done it allbefore. But poor research

often results in poor purchase decisions. Instead, study today’s markets in suburbs with suitable houses, comparing recent sale prices and trends data before signing on any dotted lines.

2WHAT’S YOUR BUDGETAsk local real estate agentsto appraise your homeand/or get a bank valuationto get a sense of its value

before shopping for your next purchase. This knowledge is invaluable in helping you work out how much you can afford to spend on your next property and how much your weekly mortgage repayments will change.

3TALK TO YOUR BANKAside from determiningyour borrowing power andgetting pre-approved foryour next loan, ask your

lender about bridging finance if planning to upgrade before selling your current home.

4BUY FIRST ORSELL FIRST?Which order to transactusually depends on thestate of the market.

When a market is growing — increasing demand and decreasing supply — it can be stressful to sell your current home before securing a suitable upgrade. To avoid sleepless nights, ask the vendor if they will accept a sale subject to the sale of your current home.

TOP TIPSFOR PAIN-FREE UPGRADING

Alex and Sab Ciavola with daughter Molly and dog Harvey at their new property in Eltham. Picture: RICHARD SERONG


WE’VE HELPED MORE VICTORIANS BUY THEIR OWN HOME THAN ANY OTHER BANK.Talk to a lending expert or visit commbank.com.au/home


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PROPERTY LADDER

GREY investors are outin force acrossAustralia today, keento bring life to “dead”

equity in their homes.Property investors

including droves of retirees and soon-to-be retirees have been “extremely active” in 2013, reports RP Data national research director Cameron Kusher.

As a proportion of all housing finance commitments, property investors were at their highest levels in December since late 2003.

“They have re-entered themarket in a big way, chasing the types of returns which simply aren’t available currently across other asset classes,” Mr Kusher said.

“More people these days arethinking they have dead equity in their homes,” explained Chris Gray, host of Your Property Empire on Sky News Business.

“Our parents’ generationthought the goal was paying off their homes by retirement, then came the Baby Boomers who think that achieving full ownership of a $1 million house by retirement is OK but they would rather refinance to leverage that equity to grow wealth.’’

At the top of the over-55 investor’s wish list is well-located and rentable homes, although their purchasing means and goals vary.

Some are investing with funds

from super, some from selling now-empty suburban nests to downsize and buy rental homes promising retirement income streams.

All experts agree older investors must buy with clear objectives in mind and seek reputable advice before buying.

Real Estate Institute of Australia president Peter Bushby encouraged retirees to steer clear of properties promising super high yields today but questionable long-term rental demand tomorrow.

Instead buy in suburbs closeto railway stations with established and ongoing demand and consistent population growth trends, he said.

“Ask yourself ‘am I buying for long-term capital

value gain and a reasonable rental income or chasing a premium rental yield but with more potential risk?’,” he suggested.

“There is no point buying ina mining town, for example, now in operational mode as there is no scope for future population and rental growth and if downsizing I’d look for homes close to hospitals, public transport and low maintenance.”

Research commissioned by Commonwealth Bank reveals about 70

per cent of investors believe property prices are impacted by the fear of missing out.

About half of those polledwould pay above market value if they “really want a property.”

Commonwealth Bank headof home loans Clive van Horen described this finding as “worrying” if the investor couldn’t afford it.

“We all love a good financial deal and when

investors believe they have found one, 30 per

cent say they aredriven to snap it

up becausethey don’t

want to

miss out (but) many investors aren’t sticking to their budget, with 48 per cent saying they paid more than they should have but they really liked the property,” Mr van Horen said.

Another mistake of retireeinvestors is only buying homes they would live in and ignoring what tenants expect.

“So much time has passedsince they (retirees) went looking for a home that they are out of tune with what a good investment property looks like today,” Mr Gray said.

“They go looking for investments only they would live in themselves, not what someone renting wants to live in, which is usually smaller, low-maintenance and near public transport and amenities.”

GREY POWER PLAY Downsizing is on the agenda for many empty nesters aged 55-plus. And so is property investing. Having sold the family house and bought a smaller home, many are looking to channel surplus funds into affordable investment properties that can provide rental income as they head into retirement.

Most of the suburbs below offer houses or units that have returned healthy rental yields of between 4.2 and 6 per cent in the past 12 months.

Beaumaris rounds out thelist for its lifestyle appeal and steady median price growth over the past five years.

1. CARLTON2. CORIO3. MELBOURNE4. WENDOUREE5. MILLGROVE6. FRANKSTON NORTH7. KEYSBOROUGH8. GROVEDALE9. RICHMOND10. BEAUMARIS

■ Source — Commonwealth Bank and RP Data

TOP 10 SUBURBS

Baby Boomers are changing the face of the investment market, Caroline James writes


Talk to a lending expert or visit commbank.com.au/buyaproperty

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LIFE STAGE 55+ YEARSBROUGHT TO YOU BY

SMALL STEP BACKAS well as organising

the big move intotheir new Beaumaristownhouse,downsizers Graham

and Angela Thomas will soon call on their financial adviser.

And if they choose to look at investing in property, the couple have an agent all lined up.

In December, Buxton Bentleigh agent Vish Prashad

helped them buy their new townhouse at 3 Keith St for $765,000.

And just two weeks ago, hesold their Black Rock house for $1.14 million, giving them a tidy sum in the bank.

For this family dentist withmore than three decades’ practice in Beaumaris, it was a no brainer choosing to downsize in the vicinity.

“We are downsizing to spend

more time on other things than doing chores and maintaining a large house” Dr Thomas, 70, said.

“The townhouse has a gooddesign and is comfortable.

“It has a separate driveway,no body corporate and three on the block. And there is space when the family visits.

“My wife’s family is local toBeaumaris and she still has family here.

“And we will be close to shops and transport and also Sandringham Hospital.”

The couple settled in Beaumaris when they married and have lived in several homes in the area since, raising a family that now extends to several great grandchildren.

They paid $17,500 in 1971 fortheir first home and $300,000 for the Black Rock property in the 1990s.

Dr Thomas said he still enjoyed his work and retirement was a few years away, although he might begin to cut back his hours.

Mr Prashad said that bayside suburbs like Beaumaris were popular with retirees and investors because of the lifestyle, facilities, good shopping and the water.

MING HAW LIM

Retirees Graham and Angela Thomas in front of their new home in Beaumaris. Picture: JAY TOWN

1Who do you think will beinterested in renting thisinvestment property?

2Do you know how muchrent you will earn in thecurrent market?

3Can you afford to serviceoutgoings — both todayand once retired —

including the gap between its rent and loan (if any), management fees, council and water rates, body corporate fees if applicable, insurance, ongoing maintenance and any renovations needed long-term?

4Is the home’s suburbforecast to experiencestrong population

growth?

5What is your budget? Bevery clear about whatyou can and cannot

afford both pre- and post-retirement.

6Are there any newinfrastructure developments afoot

that will create more jobs and/or greater suburban appeal?

7Where does the propertysit in the broader market— the lower/higher side?

8Does the propertyappeal to both rentersand homeowners?

Homes with the broadest appeal have far greater chance of recording capital growth than those only appealing to a tenant.

9Do you want to invest ina unit or a house? Alsoask yourself which

option will meet your overall objective. Each option offers a different return so you’ll need to consider whether rental yield or capital growth is more important to you in the long-term.

TOP TIPSWHAT TO ASK WHEN CHOOSING AN INVESTMENT PROPERTY


Talk to a lending expert or visit commbank.com.au/buyaproperty

WE’VE HELPED MORE VICTORIANS BUY A PROPERTY THAN ANY OTHER BANK.

Things to know before you Can: Applications are subject to credit approval.

Commonwealth Bank of Australia ABN 48 123 123 124. Australian credit licence 234945.

WE’VE HELPED MORE AUSTRALIANS BUY THEIR OWN HOME THAN ANY OTHER BANK.Talk to a lending expert or visit commbank.com.au/home


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