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When purchasing property there are a few calculations that the lenders abbreviate and both the LVR and LMI are two of the most common ones. Often when I have spoken to people, they may have an idea on them but don’t actually realise the full meaning and how they are best used when it comes to property.
We have a distinct new phase in the property sector, one without parallels and without the fanfare! Since the smooth transition from the Federal Election we have seen two other key elements have impact on the property market. The lesser of these was the RBA interest rate cut, the other has far more long-term benefit but has hardly been mentioned. This is the APRA set levels for serviceability assessment and the banks own safe lending assessments. These appear to be a return to commonsense.
In this upcoming Federal Election, the Labor Party have put Negative Gearing as their major policy they will introduce should they gain Government. This policy had remained the same for almost 15 months, but are we now seeing signs that it may have only been appropriate to a small window of time in our property history and that time has now passed.
Property prices at present are very patchy, with some areas and price ranges lower, then others are still increasing in the Melbourne Metro region, now, today............ yes even in this current market. Why you may ask, well lets start with a firm understanding of how we truly examine and verify a real estate price in ANY marketplace.
The REIV, RPdata, PriceFinder and around eight other statistics groups never seem to form alignment on the actual activity in the marketplace. One key stat that is highlighted is the Rental Growth in Melbourne which has been staggering in the last quarter of 2018. The average rental for Houses moved from $420 pw and increased to $440 pw which is a 4.7% increase within a single quarter. This has to classified as staggering in anyone's language and appears to be overshadowed by other media focus.
The old saying of what is a property worth? “What someone is prepared to pay for it” may not exactly hold true in the current marketplace. What it’s worth may not be what a purchaser can borrower at present. Let’s examine this in more detail today.