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Prices down as housing correction hits 12 months

Prices down as housing correction hits 12 months

Housing prices are falling across Australia as the market corrects what has been a dramatic increase in home prices. While the falls aren’t expected to be a remarkable downturn as some are predicting, CoreLogic has this week announced that the falls have hit their one year anniversary, with home values down 2.7 per cent since peaking in September last year.

According to CoreLogic’s latest Hedonic Home Value Index, dwelling values fell by half a per cent over the last month, with lower values across five of Australia’s eight capital cities in September. The rest of the country hasn’t fared much better, with five of the seven “rest of state” regions in CoreLogic’s index also reporting falls in value over September.

The highest drop was recorded in Melbourne, where values fell 0.9 per cent, while Sydney and Perth recorded drops of 0.6 per cent, with Darwin and Adelaide falling 0.4 and 0.2 per cent respectively.

Annually, those falls add up, and for some parts of the country may seem more severe than others. In Sydney, the year has seen a fall in value of 6.1 per cent, while Darwin and Melbourne dropped 3.7 and 3.4 per cent respectively.

“While the housing market downturn is well entrenched across Darwin and Perth where dwelling values remain 22.1% and 13.2% lower relative to their 2014 peak, Sydney and Melbourne are now the primary drag on the national housing market performance.” – CoreLogic head of research, Tim Lawless.

The news isn’t all dire, as some Australian capital cities have reported improvements in the dwelling value. Hobart increased by as much as 9.3 per cent, Canberra by 2.0 per cent, while Brisbane and Adelaide were more modest, growing annually by 0.8 and 0.7 per cent.

LocationMonthly change in dwelling valuesQuarterly change in dwelling valuesAnnual change in dwelling valuesTotal returnMedian value
Sydney-0.6%-1.5%-6.1%-3.2%$847,948
Melbourne-0.9%-2.4%-3.4%-0.5%$697,457
Brisbane0.2%0.1%0.8%4.9%$495,474
Adelaide-0.2%0.0%0.7%4.9%$438,570
Perth-0.6%-2.0%-2.8%1.0%$452,138
Hobart0.4%0.3%9.3%14.7%$443,711
Darwin-0.4%0.1%-3.7%1.8%$436,936
Canberra0.3%1.0%2.0%6.6%$598,326
Combined capitals-0.6%-1.5%-3.7%-0.6%$642,531
Combined regional-0.2%-0.9%1.2%6.2%$368,441
National-0.5%-1.4%-2.7%0.7%$550,610

Source: CoreLogic

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This article was reviewed by Head of Content Leigh Stark before it was published as part of RateCity's Fact Check process.

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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.

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.

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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.

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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:

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