Property predictions for 2014

Property predictions for 2014

It’s been quite a year for the Australian property market – with buyers out in record numbers, investors getting in on the action, prices continuing to gain momentum and record auction clearance rates contributing to a market recovery following a sluggish 2011.

With all those elements in play, perhaps it’s not surprising that property experts are predicting more activity and price growth next year, to be driven once again by the Sydney property market.

Stage set for further growth
Property investment expert Michael Yardney, CEO of Metropole Property Strategists, believes the market is currently in a cyclical upturn that will continue into 2014 and 2015, as low interest rates and rising consumer confidence encourage more people to enter the property market.

“There are always some surprises – an x-factor that comes out of the blue that you can’t predict, and this can be due to international or local factors –­ but in saying that, I believe 2014 will be a good year for property,” Yardney said.

In addition to low interest rates and an improving economy, Yardney cited population growth as a factor that will contribute to a strong property market.

“Australia’s population is growing at 1.8 percent per annum and it doesn’t look like it’s going to slow down. That suggests that our population will increase by 10 percent in the next five years and the vast majority of those people are going to be coming to the major cities, which will underpin property values.”

Real Estate Institute of Australia president Peter Bushby agreed that the property market is set for further growth in 2014. “Interest rates are expected to stay relatively low, continuing to assist the housing market. Now that we’ve moved on from the distraction of the federal election, public and business sentiment are generally more positive,” he said.

“We can expect continued steady improvement in market activity in most markets and generally a more positive year ahead, provided there are no left field global issues that emerge. We would like to see initiatives re-instated or new programs to assist first home buyers get into their own properties.”

Sydney to drive growth
Property research company SQM Research’s 2014 market outlook, released this month, is predicting a bumper year for Sydney with price growth expectations between 15 percent and 20 percent. According to Australian Property Monitors, Sydney is already the most expensive city in Australia with 66 percent of suburbs boasting a media price in excess of $1 million.

Nationally, SQM is forecasting house price rises between 7 percent and 11 percent in capital cities, an increase from the expected 2013 average of 6 percent to 9 percent. Following Sydney, Melbourne and Brisbane will post the next biggest price growths, according to SQM, of between 4 percent and 8 percent each.

Metropole’s Yardney is predicting national price growth in the vicinity of 7 percent, also tipping Sydney to post double-digit growth. “Sydney will be an outstanding performer,” he said. “Brisbane is starting to pick up so it will do better next year than this year. All the capital cities will do reasonable well, with the exception of Hobart and Darwin.”

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Learn more about home loans

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

How can I get a home loan with no deposit?

Following the Global Financial Crisis, no-deposit loans, as they once used to be known, have largely been removed from the market. Now, if you wish to enter the market with no deposit, you will require a property of your own to secure a loan against or the assistance of a guarantor.

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.

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What is stamp duty?

Stamp duty is the tax that must be paid when purchasing a property in Australia.

It is calculated by the state government based on the selling price of the property. These charges may differ for first homebuyers. You can calculate the stamp duty for your property using our stamp duty calculator.

What is an investment loan?

An investment loan is a home loan that is taken out to purchase a property purely for investment purposes. This means that the purchaser will not be living in the property but will instead rent it out or simply retain it for purposes of capital growth.

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

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.

What does pre-approval' mean?

Pre-approval for a home loan is an agreement between you and your lender that, subject to certain conditions, you will be able to borrow a set amount when you find the property you want to buy. This approach is useful if you are in the early stages of surveying the property market and need to know how much money you can spend to help guide your search.

It is also useful when you are heading into an auction and want to be able to bid with confidence. Once you have found the property you want to buy you will need to receive formal approval from your bank.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.

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.

What is a loan-to-value ratio (LVR)?

A loan-to-value ratio (otherwise known as a Loan to Valuation Ratio or LVR), is a calculation lenders make to work out the value of your loan versus the value of your property, expressed as a percentage.   Lenders use this calculation to help assess your suitability for a home loan, and whether you need to pay lender’s mortgage insurance (LMI). As a general rule, most banks will require you to pay LMI if your loan-to-value ratio is 80 per cent or more.   LVR is worked out by dividing the loan amount by the value of the property. If you are looking for a quick ball-park estimate of LVR, the size of your deposit is a good indicator as it is directly proportionate to your LVR. For instance, a loan with an LVR of 80 per cent requires a deposit of 20 per cent, while a 90 per cent LVR requires 10 per cent down payment. 


While this all sounds simple enough, it is worth doing a more accurate calculation of LVR before you commit to buying a place as there are some traps to be aware of. Firstly, the ‘loan amount’ is the price you paid for the property plus additional costs such as stamp duty and legal fees, minus your deposit amount. Secondly, the ‘property value’ is determined by your lender’s valuation of the property, not the price you paid for it, and sometimes these can differ so where possible, try and get your bank to evaluate the property before you put in an offer.