2019, the Year of Recovery

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As active players in the Perth property market, we have seen multiple signs of recovery in the latter half of 2018. We aren’t the only ones who have noticed with other credible sources including Premier Mark McGowan and Real Estate Institute of WA President Damian Collins both speaking out about the direction the Perth property market is headed.

Let’s start with some good news for Investors. Over 2018, Perth’s best quality was its rental market, said REIWA president Damian Collins. Perth’s successful rental market is expected to keep its momentum going through 2019 due to steady population growth and a slowdown in new building construction, according to REIWA data.

Mr Collins said that during 2018, the steady median rent of $350 per week, increased leasing activity, and decline in listings and vacancy rates all contributed to Perth’s rental success.

“With population growth in WA expected to remain stable and new dwelling commencements slowing, available rental stock should continue to decline. This should see competition amongst tenants increase, putting further downward pressure on the vacancy rate, which recently dropped below four per cent for the first time in four years,” Mr Collins said.

Mr Collins also noted that Perth’s median rent price has remained at $350 per week for 19 consecutive months, which is the longest period of consistent rents in Perth since REIWA began collecting rental data in 2001.

“If listings continue to decline and leasing volumes remain healthy, we should see the overall median rent price increase in 2019 for the first time since September 2014,” Mr Collins said.

Moving onto the sales market, Mr Collins said “While we expect sales activity in 2019 to largely reflect what we’ve seen this year, there is a possibility that rising consumer confidence levels, coupled with improved housing affordability, could translate into increased sales volumes in 2019. If weekly sales remain at current levels or better, Perth’s median house price could improve during the next 12 months.”

According to The Sunday Times, the State’s domestic economy expanded 1.1% in 2017-18, a considerable turnaround given the 7.1% drop during 2016-17 after four consecutive years of decline.

More good news? WA could be set to reclaim it’s AAA credit rating due to the $4.7 billion GST reform package. Premier Mark McGowan tipped a turnaround in the property market stating “It is actually a good time to buy a house, I would encourage people. Prices are low yet economic activity is picking up and so that will inevitably be followed by demand for housing.”

All signs point towards an improved Perth property market in 2019. The year is drawing to an end and Christmas is on the horizon however we are yet to see any signs of the market slowing down with an increase in available properties for sale and a significant decline in our rental vacancy rate which now sits at just 2.4%.

*All figures are accurate at the time of publication. Sources include The Sunday Times, The West Australian, REIWA and Smart Property Investment

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New credit reporting changes and what they mean for you!

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Once again, we sat down with Finance Specialist Terry Gardiner in order to provide you with the latest information on the implementation of Positive Credit Reporting.

Applying for a credit card, a loan or buying goods and services on credit? No matter who you are, your credit report can either make or break your application.

Let’s break it down from the beginning!

What is a credit report?

Whenever you apply for a loan or credit, providers will check your credit report. It’s created by a credit reporting body and documents your credit history e.g. how many times have you applied for credit and which loans were opened, your history of making repayments, defaults and how much debt you have available. Credit reporting bodies or credit providers may condense your credit report into a credit score. Your credit score compares you to other borrowers and assess your creditworthiness to help credit providers to decide who to lend to and how much to charge for interest.

What’s changed this year?

New credit reporting changes which commenced 1st July, 2018 provide a clearer picture of your credit history. These changes may make it easier for some people – or harder – to get credit or a loan.

As of 1st July 2018, recording positive credit information on credit histories is mandatory for all credit providers. This is intended to allow lenders to better assess this risk using a clearer picture on any potential borrower’s credit history. It could be beneficial for people who have the means to take on a loan, however, it could also reveal a few blemishes in the past such as one or two missed payments.

Negative credit reporting in Australia operated until March 2014, which was based around only making a note of negative credit events. Lender’s based assessments of a potential borrowing applicant solely on whether the applicant had any negative reports on the credit history, such as missed repayments.

Australia switching to comprehensive credit reporting (CCR) has brought a credit reporting system in line with other OECD countries, many of which have some form of positive credit reporting. It’s common practice in the USA and UK for consumers to use a positive credit rating as leveraging looking for a loan of any sort and CCR will potentially allow for Australians to do the same.

The system was originally recommended in 2014 and the Government subsequently imposed deadlines for CCR. The major four banks were required to provide 50% of the credit data to credit bureaus by July 2018 and 100% by July 2019.

Potential Benefits of Comprehensive Credit Reporting (CCR)

  • Recent positive behaviour is registered which may balance out some previously negative slip ups.
  • People with a very ‘thin’ credit file or a very short history of credit will now potentially have more information in their file concerning their creditworthiness which may make it easier for baked with then put it to them.
  • The credit scores of individuals may not be significantly impacted by just one single negative event. Instead it will generally take the credit report listing repeated missed payments or a general pattern of credit stress to impact on an individual’s credit rating.
  • An individual’s credit score or credit rating is potentially more accurate and comprehensive compared to a credit score that was constructed using negative reporting.

Potential benefits of CCR for lenders

  • Having access to more comprehensive pictures of consumers and their credit related behaviour could support more responsible lending.
  • Lenders can differentiate their products and offers using the new, comprehensive depiction of consumer credit worthiness and consumer behaviour in general.
  • CCR allows lenders to identify credit stress or over-committal at a much earlier stage, potentially leading to fewer bankruptcies and financial stress.

What are some ‘positive’ things a customer could do to boost their creditworthiness?

  1. Pay your bills on time – always, and no exceptions. Direct debit is a great option to ensure timely payments with no room for forgetting. Remember both ‘good’ and ‘bad’ repeated behaviour is shared with the credit bureaus under CCR.
  2. Regularly check your details with the three credit bureaus (Veda, D & B and Experian). Consumers are entitled to a free copy of the credit file once a year and it is vital to check the accuracy of information. The report will list all credit enquiries current/past addresses any default/bankruptcies and in some cases, positive reporting data to.

Why do we think traditional lenders have been slower to implement CCR?

If you are a traditional lender, one of your major competitive advantages is your customer data, making this accessible to other lenders is not easy sell. No bank wants to make it easier for new innovative lenders to win market share. There’s also the argument that the banks own this data rather than the consumer.

How can consumers protect their credit report?

Your credit file is an incredibly important and valuable asset – identity theft (where a person uses your personal details to fraudulently apply for credit in your name) is a growing trend across Australia. Be aware of how much information you provide to social media websites (e.g. date of birth, addresses etc.) as well as taking care of physical ID’s like your driver’s licence as those details can aid fraudsters in assuming your identity.

Terrence Gardiner is a Credit Representative (No. 399006) of Money Quest Australia Pty Ltd, Australian Credit Licence 487823.

SELLING YOUR HOME AT CHRISTMAS

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Let’s be honest, Christmas can be a lot more stressful than merry for the average adult and that’s before you even contemplate trying to sell your home during the festive season!

Stress less, we have a few jolly good (pun intended) tips to make preparing your home for sale and surviving the festivities a little easier.

  1. Advertising photos

If possible, have your property photographed prior to putting up the tree and all the directions. Not only can decorations detract from the features of your home in photos, if your property is still on the market come next year, it will be painfully obvious to prospective purchasers how long your property has been on the market for.

  1. Timing

‘Tis the season to avoid time wasters! Traditionally, most sellers opt to launch their property campaign after Christmas and New Year celebrations are out of the way as popular opinion is that if buyers can’t be in their new home before Christmas, they would rather wait until the new year. Sure, the average buyer would love to be in prior to Christmas but if they haven’t found what they’re looking for, it doesn’t mean they are going to stop looking! Any buyer who is out and about during the holiday season searching for a home is likely to be a serious buyer. It’s also worth noting that your competition is significantly reduced during this period which can make your property stand out from the crowd. The lack of available properties can also be in your favour when it comes to negotiating sale price and contract terms.

  1. Online advertising

Don’t be afraid to upgrade your online advert on platforms such as realestate.com.au, reiwa.com.au and domain.com.au – if you are trying to sell during the holidays, take advantage of the fact you will have less competition and upgrade your advert to the top of the suburb search field.

  1. Presentation

Don’t go overboard with the Christmas decorations if you’re planning on having property inspections, the home itself should be the main feature – it’s great to get into the Christmas spirit, just try and keep things simple and tasteful. Similarly, we recommend that you avoid placing those wrapped gifts under the tree until you’ve completed your last inspection prior to Christmas day!

  1. Inspections

If you won’t be allowing property inspections to take place during the festive season, you may want to consider waiting until the landmark celebrations are out of the way before launching your campaign. If you are open to inspections, let your agent know your availability to avoid last minute stress with unplanned inspections and frantic cleaning. Keep in mind Christmas in Perth is HOT – make sure your cooling system is in good order before any inspections take place.