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Evaluating the property market in Australia: Is now the time to buy or sell?

Evaluating the property market in Australia: Is now the time to buy or sell?

Jun 1, 2023 | Property Market

The decision to buy or sell property is always a tricky one, as it’s a significant financial step that involves careful consideration of various factors – including market conditions.

Whilst it’s important to know that real estate markets can be unpredictable, understanding the key indicators can help you to make an informed decision. So, let’s look at the factors influencing the Australian property market.

  • Low Listing Numbers = Increased Competition for Buyers

With decade-low listing numbers, there’s not a lot of competition in the market for vendors – but competition is fierce for buyers as they battle it out to secure a property. This is one of the reasons that selling conditions have strengthened, as evidenced by above average clearance rates, faster selling time and less negotiation.

The total number of homes listed for sale across Australia is currently 28% below usual (as reported by CoreLogic). When these volumes are low, selling conditions strengthen, meaning that potential vendors thinking about selling may jump in now rather than waiting until the traditional spring period where activity surges and there’s a spike in competition.

  • Rising Prices

Home values for Sydney, Melbourne, Brisbane and Perth all recorded an increase in housing values from the lows recorded in February. A mid-month update based on CoreLogic Australia’s daily Home Value Index showed the upswing gathering momentum, especially in cities such as Brisbane where the index is up 1.0% over the past four weeks whilst the Sydney property market still remains the strongest.. Considering housing affordability measures remain stretched such a strong rate of growth is surprising, with many experts predicting that this price rise will not be sustainable in the long term.

  • Low Supply vs High Demand

As mentioned above, decade-low listing numbers and high demand has lead to fierce competition between buyers – as seen in auction clearance rates that have been holding at 70% or higher in recent weeks.

In a time where the market traditionally tends to cool off, the stats suggest that, if anything, the market is gathering momentum instead of slowing down. Strong clearance rates as well as faster selling times and reduced discounting rates indicate that it’s definitely a vendor’s market.

Recent data from the National Housing Finance and Investment Corporation shows a 115,000 dwelling undersupply for 2028.

  • Interest Rates Continue to Rise

The biggest challenge for potential and current property owners? Interest rates. With interest rates continuing to rise, demonstrating an ability to service a loan remains one of the biggest challenges for prospective buyers to face.

Interest rates are high, but assessment levels are three percentage points higher again – making it even harder for buyers to enter the market or secure their dream property.

  • Economic Uncertainty

In addition to rising interest rates, we’re also in the midst of a cost of living crisis where consumer confidence is low.

Should RBA cut interest rates, there’s a good change we would see a pick-up in both buyer and seller activity. It’s also highly likely that lower interest rates would be the catalyst for a further uptick in housing values, however, we’re not expecting a rate cut anytime soon and there’s speculation that rates may continue to rise this year.

Economists are split on their forecasts with predictions for further rate hikes, stability and some cuts later this year – all contributing to uncertainty and low consumer confidence levels.

  • A Helping Hand

Government policies and regulations play a crucial role in shaping the property market. Policies related to taxation, lending practices, and housing affordability can have both direct and indirect effects on the market.

At the moment, first home buyers in particular have a wide variety of grants, concessions and schemes available to them (outlined in our First Home Buyer Update here) that could make purchasing a property easier and more affordable.

  • Migration Predicted to Recover

With net overseas migration set to fully recover to pre-pandemic levels there will be more pressure on the housing market than we’ve seen in recent years.

With the return of international students and the surge in migration, it is estimated that an extra half a million people will be looking for somewhere to live in Australia in the next two years.

  • Low vacancy rates bringing investors into the market

We are experiencing a rental crisis across the country, with historically low vacancy rates encouraging more investors into the market. Unfortunately for investors, rising interest rates and property prices have made this challenging – as well as rising building costs making it harder for investors and developers to buy and renovate or rebuild.

Is now the right time to buy or sell?

In short? Maybe. Unfortunately it’s not a one size fits all answer.

Ultimately, making an informed choice that aligns with your own circumstances and long term goals is key when navigating the property market.

Luckily, we’re here to help. We’ll sit down to work out what your goals are, what your property budget may be and how we can help you secure a property. Contact us today to get started!

Purchasing Property Through a Self Managed Super Fund

Purchasing Property Through a Self Managed Super Fund

Apr 13, 2023 | Investment Property, Self Managed Super Fund (SMSF)

Are you considering purchasing property through a Self-Managed Super Fund?

Purchasing property through a self-managed super fund (SMSF) can be a smart investment strategy for Australians looking to secure their retirement future – but it’s important to know what you’re doing.  

With the Australian property market experiencing consistent growth over the years, buying property through an SMSF can provide a range of financial benefits.

Source: https://www.realcrowd.com/post/reasons-to-invest

What are the benefits of purchasing property through a self-managed super fund?

One of the main advantages of purchasing property through an SMSF is the potential tax benefits. Income from rental properties held by an SMSF is generally taxed at a rate of only 15%, compared to the marginal tax rate that applies to individuals. This means that the rental income earned from an SMSF-owned property is taxed at a much lower rate, leaving more funds available for reinvestment or retirement income.


Other benefits of investing in property through a self managed super fund include:

  • Leveraging your investment by borrowing through limited recourse borrowing arrangements (LRBA)
    When investing in property through an SMSF, investors can leveraging their investment by borrowing money through limited recourse borrowing arrangements (LRBAs). This allows investors to purchase property with a smaller initial investment and to benefit from any capital growth over time.
  • Increased control over investments
    SMSF trustees can also benefit from increased control over their investments. Unlike traditional superannuation funds, SMSF trustees have direct control over the investment strategy and can make investment decisions in line with their specific goals and risk appetite. This level of control and flexibility can be particularly attractive to investors who want to take a more active role in managing their retirement savings.

What are the downsides of purchasing property through a self-managed super fund?

It’s important to note that investing in property through a self-managed super fund Is not without risks, including:

  • Fluctuating property values
  • The time and money involved in managing a property
  • The stress of dealing with leasing your property/choosing the right tenants/potential damage to property

With this in mind, it’s crucial that investors undertake thorough research and seek professional advice before making any investment decisions.

Is purchasing property through a SMSF right for me?

Overall, purchasing property through a self-managed super fund can be a sound investment strategy for those looking to diversify their portfolio, enjoy tax benefits and take greater control over their retirement savings. With the Australian property market showing consistent growth, SMSF trustees may find that investing in property is a smart move for their financial future.

If you’re interested in exploring your options and finding out more, get in touch! Sanford Finance has helped many clients secure property through their Self-Managed Super Funds as well as helped numerous clients with their general investment portfolios. We’ll work through the different options with you and find out which is best suited to your financial goals.

Get in touch with our team at www.sanfordfinance.com.au/contact or call us on 9095 6888

Construction costs continue to soar at record rates

Construction costs continue to soar at record rates

Nov 1, 2022 | Construction Loan


Building your own home certainly sounds like a dream. From the floor plan to the flooring, every detail can be customised to your tastes – but this dream has become a nightmare for many Aussies building or looking to build in the current market.

CoreLogic’s Cordell Construction Cost Index (CCI) for Q3 2022 showed that national residential construction costs have increased at a record rate in the year to September 2022, recording the highest annual growth rate (excluding the period impacted by the introduction of GST).

Cost have increased by 11% over the 12 months to September 2022. The quarterly figure was also higher at 4.7%, compared to 2.4% in the previous quarter. This was above the 3.8% surge recorded over the three months to September 2021 when COVID lockdowns were having a more significant impact on domestic supply chains.

Unfortunately for Australians looking to build, the cost is only expected to rise further, with CoreLogic’s Construction Cost Estimation Manager, John Bennett, commenting that the team are continuing to see price increases, particularly across timber and metal materials.

With building materials increasing in price, many suppliers have little choice but to pass on price increases. John also commented that this quarter has also shown a larger increase in materials that were previously stable, such as wall linings including plasterboard and fibre cement. Even your front door will now cost you more with sharp price rises.

Whilst sea freight prices have begun to stabilise, the increasing cost of raw materials, labour and fuel continues to place upward pressure on residential construction costs.

So what is the outlook? Mr Lawless said that ongoing labour shortages and supply issues meant that these conditions would likely remaining challenging with little reprieve expected in the short to medium-term. “There’s no quick solution for providing additional materials and fuel costs remain elevated. All of these factors have an impact and are likely to push building costs higher for some time yet.”

Thinking about building or reconsidering your options?

We’re here to help. Whether you have your heart set on building or renovating or are unsure of what to do next, our team is here to help. We’ll sit down together to look at your options and come up with a plan that’s right for you. Contact us today to find out more.

How your daily spending is impacting your borrowing power

How your daily spending is impacting your borrowing power

Oct 4, 2022 | Borrowing Power

Your morning coffee, a quick lunch with your colleagues, ingredients for dinner, your Netflix subscription… ordinary day-to-day expenses, but did you know that these can considerably reduce the amount you are eligible to borrow, even if you are a high income earner?

If you’re planning to buy a home, now might be the time to Spring clean your expenses and set yourself a weekly budget and here’s why:

Why do lenders care about living expenses?

Mortgage brokers and lenders are required to meet ‘responsible lending’ guidelines under the National Consumer Credit Protection Act (NCCP). These guidelines are designed to ensure that a borrower can afford to make the repayments on their loan without suffering ‘substantial hardship’.

This means, by law, all mortgage brokers and lenders must ensure that you have plenty of money left over from your income to repay your loan after you have covered your regular financial commitments.

What are living expenses?

A living expense is defined as anything that you spend your money on. Your morning coffee, Netflix subscription, monthly dinner out with friends and gym membership all count – even if you don’t see them as essential or could easily live without them.

When applying for a loan, we have to perform a thorough living expense and income assessment which determines your true financial position – and all of these expenses are included.

According to a 2018 survey by UBank, 86% of Australians don’t know how much money they spend every month on their living expenses – and those small expenses can quickly add up.

Without tracking your purchases, it’s easy to spend more than you earn without even realising – especially if you use a credit card.

But what if I plan to change my spending habits?

You might think “once I buy a property I’ll….”, but to most lenders, all that matters is how you’re spending money now.

Tips for controlling your living expenses

In order to control your living expenses, you first need to know where your money is going.

ASIC have a free MoneySmart Budget Planner that is a great place to start and it can be downloaded here. Another great tool from ASIC is the MoneySmart TrackMySpend app which helps you to record your weekly household budget, nominate spending limits, separate ‘needs’ from ‘wants’ and kickstart your savings goals.

How do we perform a living expenses assessment?

As mentioned, as part of the borrowing process, we need to conduct a thorough living expenses assessment. To do this, we’ll provide you with a Needs Analysis Questionnaire to help you work out your living expenses.

These expenses are divided into simple categories, including:

  • Childcare
    Including formal day care, nannies and occasional babysitters or childminding services.
  • Personal Care
    Clothing, footwear, cosmetics, personal hygiene products, hairdressing, manicures, massages etc.
  • Education
    All educational costs/fees for the borrower and any dependents, including books, uniforms, equipment and excursions.
  • Groceries
    This includes meat, fruit, vegetables and anything you might buy from a supermarket, including cleaning products.
  • Insurance
    This includes health, home, car, life, pet and all other insurances you may have.
  • Medical
    Doctors visits, dental care, pharmaceutical prescriptions, optical etc.
  • Utilities and Home Expenses
    Gas, water, electricity, rates, taxes, levies and any other costs for running your own home.
  • Entertainment
    Movie tickets, take away food, club memberships, gifts, holidays, hobbies and all recreational expenses.
  • Connections
    Includes expenses such as mobile phone plans, internet, home phones, magazine subscriptions, streaming services etc.
  • Transport
    Including personal vehicle expenses like petrol, tolls, insurance and car registration as well as public transport, car parking, car servicing and maintenance.
  • Rent
    This is for rent on a property that you live, board (if you are living with your parents or renting a room) or similar housing costs.
    Note: If you are buying a home you intend to occupy, rental expenses are not included as part of your living expenses assessment.
  • Investment Property Expenses
    Including any costs you are responsible for paying, such as council rates, insurance, property management fees, taxes and levies, body corporate and strata fees, maintenance etc.
  • Other
    All other expenses that do not fit into the above categories.

When should I cut back on expenses?

If you’re planning on purchasing a property, the best time to start is now. Regardless of whether you’re purchasing a home for yourself or an investment, it’s important to know how much you’re spending and where.

Remember that a lender will only give you a loan for an amount you can afford to repay, so cutting back on your everyday spending could give you increased borrowing power and will maximise the chances of your loan getting approved the first time.

Where do I start?

We are happy to run through your living expenses and help you find ways to budget and increase your borrowing power. Just contact our team via the website here, or give us a call on (02) 9095 6888.

Apartments vs Houses: What should you invest in?

Apartments vs Houses: What should you invest in?

Mar 3, 2022 | Investment Property, Purchase

You’ve decided you’re ready to invest – but the decision process doesn’t stop there.

Houses, units, apartments, townhouses, new builds, existing builds – where should you put your money?

Purchasing any property is a highly considered process. In previous years, houses were considered the best purchase, with apartments and units only really an option for those on a lower budget.

Today, however, this is a thing of the past as the Australian property market continues to thrive, attracting overseas investors, infrastructure evolution and changing living situations.

So what should you invest in?

Deciding whether an apartment or house is the right purchase for you all depends on your budget, strategic goals and the current market.

With any major financial purchase, it’s important to look beyond your personal preference to the overall environment. You need to set your feelings aside and look at the property purchase as a rational financial transaction to ensure you’re spending your money wisely.

By focusing on economic indicators such as auction clearance rates, interest rates and median purchase prices, you can develop a solid strategic plan.

But you shouldn’t do it alone. Seeking professional assistance from real estate agents, mortgage brokers and financial planners is critical as it allows you to properly evaluate this information and apply it to your goals.

What is the best type of property to invest in?

When considering investment opportunities, it’s important to look at the facts. There are three important indicators that need to be considered before purchasing an apartment or house:

  • Economic Factors – understanding key economic drivers such as cash and interest rates, clearance and vacancy rates, demographics and employment figures will help illustrate how the market is currently performing, as well as give you an idea of what may happen in the future.
  • Supply and Demand – how many apartments are on the market currently compared to the number of houses? Which are leasing faster? Are house prices increasing faster than apartments or vice versa? By understanding these factors, as well as any developments in the area, you are able to determine whether there is an oversupply or undersupply in a particular location.
  • Affordability – understanding the affordability of a property will ensure you are not over or under-capitalising on your purchase. Rental yield is also an important factor to consider for the affordability of prospective tenants.

What are the advantages of investing in an apartment?

  • Generally a cheaper purchase price
  • Often located in highly sought-after inner city or beachside locations
  • Strata maintenance assists in the upkeep and maintenance of your property
  • Higher levels of rent relative to the purchase price provides investors with a better yield
  • When investing in apartments, you’re often able to hold more property over the long term due to lower purchase and maintenance costs

What are the advantages of purchasing a house as an investment property?

  • More privacy for tenants – often attracting higher rental prices
  • More scope for renovations when looking to add value quickly, without the need for signoff from strata or body corporate
  • Ownership of appreciating land
  • Can be more resilient to market changes

What are the disadvantages of purchasing an apartment as an investment property?

  • Restrictions on pet ownership can turn away tenants
  • Upgrades and renovations can be restricted
  • Less privacy for tenants
  • Fewer facilities including pools, backyards and outdoor areas

What are the disadvantages of investing in a home?

  • Higher purchase prices
  • Maintenance of grounds including gardens and pools
  • No strata or body corporate to assist with building maintenance or compliance

What type of property is the best to invest in?

Ultimately, there is no clear winner when deciding between houses or apartments. Instead, the key is to assess each opportunity on a case-by-case basis, determining which is the right purchase for you.

Need help deciding? That’s where we come in. To find out more about whether an apartment or home is the right investment for you, contact our team on (02) 9095 6888 or [email protected]