As a background to the current Sydney bubble a report from Planning NSW based on the  1990 – 2010 period shows that there had been three clear cycles of population growth and dwelling completions.  Where in the third cycle the massive  population growth from net immigration was not met by any real increase in construction of new dwellings.

The report shows that in 2009 Sydney’s population  was 4.5 million people or  63% of the state’s population of 7.1 million at that time.  It suggests that by 2036 the Sydney’s population is  forecast to increase to 6 million.  Of course this also shows that 37% of the state’s population don’t live in Sydney, something Macquarie St often appears to forget.

It does appear that construction over the period lagged seriously behind growth, largely due to  the unattractive return on investment for developers with construction and development costs  dramatically rising over  15 years. While investor rental yields struggled to achieve 4% something that is now even more of an issue with current growing vacancy rates.  Which is something of a contradiction however the current development boom particularly in high rise apartments may outstrip demand and push rental returns even lower.

Many people believe that low economic growth regulates interest rates however the Planning NSW report clearly shows that historically his has not been the case as the graph below shows  the significant variance in the CPI as against the RBA cash rate.

 

Capture

The Sydney property market has been very volatile over the past 12 months with sellers making a killing and buyers forced to queue to find an opportunity.  Much of the current heat is being generated by investors looking to cash in on the historically low interest rates and in particular very attractive low fixed interest rates.

This investor activity has forced first home buyers into the back court with grants and stamp duty concessions only available for those who can afford to enter the highly inflated new property market.

Low interest rates create opportunities for buyers but it very wise to shop around as there is a substantial range in what is being offered and you should not simply take the first deal that you see.  Variable rates currently range from 5.90% to 4.60% and while the best rates may be for big borrowers we have rates of 4.74% available for loans as small as $150,000.  We also have fixed rates as low as 4.69% and we also have some fixed interest rate products that don’t have all of the restrictions that can make fixed interest a bad choice for so many people.

That’s why it is important to use a mortgage broker to help you review all of your options rather than just the options that your current bank is prepared to offer.  As your mortgage broker we will compare the home loans available from over 20 lenders including the big banks, second tier lenders such as AMP, ING or Suncorp  and the smaller lenders such as Heritage, ME or Teacher’s Mutual.  We can arrange your loan and because the lenders pay us a generous commission we don’t need to charge you for service.

Everyone’s needs are different, a young investor needs to maximise equity and return while Mums & Dad looking to resize need to keep costs under control.  Meanwhile first home buyers who are struggling to save the deposit and stamp duty required may be able to make good use of a guarantor loan that doesn’t inconvenience Mum & Dad too much.  We have 14 years experience handling these types of inquiries every day of the week and our broker staff are paid flat hourly rates and no commission to ensure that their advice to you is not influenced by bonuses or incentives.

Of course we are fully licensed and accredited so you get good free professional advice and your loan will be the same interest rates and fees that you would get from a branch and in many cases a better deal.  Why not contact us with the Free Mortgage Advice button above or call us now on 1300 852 900

 

During the second yearly LJ Hooker Mosman Investment Seminar, Dr Andrew Wilson of the Australian Property Monitors (ADM) said, while the growth in lower and middle markets is tapering off, properties in the northern beaches, city east and the lower north shore are experiencing rapid price growth.

“The middle and lower ends of the market are starting to taper off, but the lower north shore is really firing up, with eight per cent growth in the March quarter,” Mr. Wilson commented. This growth is more favorable than those in western suburbs that reported to have 3.9% increase in the same period.

Compared with their price cycle in 2009 and 2010, the prestige markets aren’t as developed. According to Dr. Wilson, “There is no stopping in the prestige market at the moment. There is still a lot of positive energy buzzing around with reports of the highest price growth since 2003”

As opposed to an underpinning driver, this positive atmosphere is playing as the driving force to gather more buyers and sellers in prestige market. As regards to growth, the upper market seems to be as good as the middle markets. Hence, more activities are expected in the colder months than in the past.

Bernard Ryan, the director of LJ Hooker Mosman, stated that the prestige area is attracting investors in an increasing number. “Investors and upgraders have been honing in on the lower north shore since interest rates started trending down in November 2011, but activity really gathered pace in the last year,” commented Mr Ryan.