It’s not an opportune time for home buyers in Australia. Data released by Australian Bureau of Statistics shows approval for residential buildings dropped 6% in the month of April from the previous year. To make it worse, the fall is preceded by two other falls in the past two years. The non-residential building sector is seeing approval for new buildings but the value of the buildings has slumped to a whopping 27%.
The combined value of approvals for residential and non-residential buildings has come down to $5.88 billion. A year earlier, it was $8.19. Does the $2.31 billion slump indicate sluggish growth of the real estate sector? To answer the question, the Australian housing sector must be studied carefully.
The housing industry in Australia is so overvalued according to experts that they feared a housing bubble burst. As per sources, the $4 trillion industry might be overvalued by at least 10%. Investors and homebuyers need to wait patiently for the price to climb down and also understand the reason behind the unexpected surge in valuation.
In August 2013, RBA (Reserve Bank of Australia) reduced cash rate to a record low 2.5% which caused AUD to rate low against USD. As a result mortgage rates reached to 4.8%. Buying a home has subsequently become difficult for Australians.
In this backdrop, Australian home buyers have to be pragmatic. They need to figure out their needs and what they could expect from the market. They should also be on the constant lookout of quality home buying deals.Below are some tips for them;
Compare home loan
At this moment, top fixed rate of mortgage is approximately 4.80% and the top variable rate 4.64%. While comparing home loan offers of banks and financial institutions, keep this figures in mind. If an offer is outrageously high or low from the top fixed or variable rate, you have reason to be suspicious about it. Consider factors such as monthly fee, upfront fee, availability of repayment pause, free redraw, establishment fee, etc.
Many don’t understand the difference between variable rate and comparison rate. Lenders are legally compelled in Australia to display comparison rate when they advertise their loan rate. Comparison rate reflects the true cost of a loan. It doesn’t only include the interest rate but also the fees and charges associated with the loan. The amount of loan, the rate of interest and the loan period all constitute comparison rate. Understanding the comparison rate could save your hard earned money.
Other than following the above tips, home buyers should look for other available options to finance their purchase. Above all, they should wait for the market to be more buyer friendly.