The newest suburbs in Australia to crack the million-dollar mark

The newest suburbs in Australia to crack the million-dollar mark

COVID-19 and the economic downturn has done little to dampen the rise of million-dollar suburbs in Australia, new data reveals, though prices have come down more generally in the past three months.

Forty-six suburbs across the country entered the million-dollar club in the 12 months to June 2020, according to REA Group data.

Melbourne led the charge, with 24 suburbs tipping past the million-dollar median house price point, followed by Sydney with 14 and Brisbane with seven.

But median house prices in 10 suburbs fell below the million-dollar mark. Sydney and Melbourne saw four and three suburbs drop off the list respectively. This was followed by two suburbs in Adelaide and one in Brisbane.

It’s worth noting that suburbs with fewer than 30 sales in this period were excluded.

Sydney and Melbourne lead Australia’s premium property market

REA Group chief economist Nerida Conisbee said the top end of the property market has been “one of the most stable property markets during the COVID-19 pandemic”, as high-income sectors have yet to see widespread job losses.

“Over the last 12 months, more suburbs have entered the million-dollar club than suburbs that have fallen out, but there are still some opportunities to get into a premium suburb for six figures,” she said, adding that this is still possible in Brisbane and Adelaide.

Melbourne saw the greatest jump in suburbs with median prices in the seven figures, tallying 119 suburbs in the list, but Ms Conisbee said it was too early to tell how the second lockdown could impact the property market.

She added that Sydney homebuyers could find it harder to purchase a property close to the city with a six-figure budget.

“Highlighting the extreme pricing of Sydney, 15 suburbs joined the million-dollar club, now bringing the total to 209 million-dollar suburbs, and making it difficult to find an inner or middle ring suburb for under a million dollars,” Ms Conisbee said.

Why the property market is remaining stable

While national real estate prices have been edging lower in the past three months, the annual figures are still positive. Property values increased by 7.1 per cent nationally in the 12 months to July 2020, the latest CoreLogic data showed, but they fell 1.6 per cent in the three months to July.

CoreLogic’s head of research Tim Lawless said low housing stock and buyer incentives has helped protect the real estate market during COVID-19.

“Advertised supply levels have remained tight, with the total number of properties for sale falling a further 4.3 per cent in the four weeks to July 27, sitting 15.2 per cent below where they were this time last year,” he said.

“Additionally, increased demand driven by housing specific incentives from both federal and state governments, especially for first home buyers, have become more substantial.”

Ms Conisbee said housing prices have remained “stable”, despite the economic recession. She attributed this to four factors:

  • High levels of stimulus.
  • A stable banking system.
  • Mortgage repayment deferrals.
  • Relative confidence among buyers, particularly before the shutdowns.

Should you refinance your mortgage?

If real estate values have grown in your areas, it’s possible that you may have more equity in your property. With record-low interest rates, it may be a good opportunity to refinance your mortgage and pay a potentially lower interest rate.

External refinancing jumped about 50 per cent in the 12 months to June 2020, indicating many are taking advantage of the low interest rate environment.

If you’re an owner-occupier with substantial equity in your property, chances are lenders may see you as a reliable, low-risk borrower, and they may be more willing to do business with you. If you’d prefer not to move to another bank, your existing lender may also consider your request for a rate reduction.

But refinancing may not be for everyone. For instance, if you have plans to sell your property in the short to medium term, it may not be worth switching to a low fixed rate home loan.

New suburbs in the million-dollar club

Melbourne Sydney Brisbane
Blackburn North - $1.08m Arncliffe - $1.105m Samford Valley - $1.1m
Blackburn South - $1.101m Asquith - $1,019,500 Bardon - $1.01m
Box Hill South - $1,266,666 Belmore - $1,030,500 West End - $1.05m
Brunswick East - $1.001m Berowra Heights - $1.03m Fig Tree Pocket - $1.17m
Burwood East - $1,084,500 Bexley - $1,251,500 Ashgrove - $1.03m
Chadstone - $1.01m Glenwood - $1.04m Clayfield - $1,092,500
Cheltenham - $1,035,500 Jannali - $1.11m Grange - $1,123,500
Coburg - $1,027,500 Menai - $1.04m  
Collingwood - $1.075m Mount Colah - $1,062,500  
Edithvale - $1m Northmead - $1.01m  
Flemington - $1,019,500 Picnic Point - $1.05m  
Kensington - $1,115,500 The Ponds - $1.037m  
Kingsville - $1,017,500 Wamberal - $1.025m  
Maribyrnong - $1,012,500 Winston Hills - $1.022m  
Mentone - $1,040,500 Yarrawarrah - $1,023,500  
Mitcham - $1.02m    
Moorabbin - $1.14m    
Mt Martha - $1,022,500    
Nunawading - $1,035,500    
Preston - $1,010,500    
Rosanna - $1.115m    
Seddon - $1,009,500    
Vermont - $1.02m    
Wantirna South - $1,029,500    

Source: REA Group. Data is for the 12-month median price for houses, based on at least 30 sales in a suburb.

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Learn more about home loans

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

How to use the ME Bank reverse mortgage calculator?

You can access the equity in your home to help you fund your needs during your senior years. A ME Bank reverse mortgage allows you to tap into the equity you’ve built up in your home while you continue living in your house. You can also use the funds to pay for your move to a retirement home and repay the loan when you sell the property.

Generally, if you’re 60 years old, you can borrow up to 15 per cent of the property value. If you are older than 75 years, the amount you can access increases to up to 30 per cent. You can use a reverse mortgage calculator to know how much you can borrow.

To take out a ME Bank reverse mortgage, you’ll need to provide information like your age, type of property – house or an apartment, postcode, and the estimated market value of the property. The loan to value ratio (LVR) is calculated based on your age and the property’s value.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

This type of loan is a flexible mortgage that allows you to draw on funds when you need them, similar to a credit card.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

What is a low-deposit home loan?

A low-deposit home loan is a mortgage where you need to borrow more than 80 per cent of the purchase price – in other words, your deposit is less than 20 per cent of the purchase price.

For example, if you want to buy a $500,000 property, you’ll need a low-deposit home loan if your deposit is less than $100,000 and therefore you need to borrow more than $400,000.

As a general rule, you’ll need to pay LMI (lender’s mortgage insurance) if you take out a low-deposit home loan. You can use this LMI calculator to estimate your LMI payment.

What is equity and home equity?

The percentage of a property effectively ‘owned’ by the borrower, equity is calculated by subtracting the amount currently owing on a mortgage from the property’s current value. As you pay back your mortgage’s principal, your home equity increases. Equity can be affected by changes in market value or improvements to your property.

Are you REALLY giving away a million bucks?

We are giving away, for one lucky entrant, the chance to win $1 million. Here’s how it will work:

On 21 May 2020, one winner will be drawn from all the entries. This winner will then get a one in 200 shot at winning one million dollars. Even if they’re unlucky and don’t win the one million, they’ll still leave $5000 richer. 

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.