Surge in sellers axing property prices, but discounts smaller than 2019

Surge in sellers axing property prices, but discounts smaller than 2019

More property sellers across Australia are marking down their listing prices amid a COVID-19 impacted market, new research from Domain showed.

But while price cutting has become more widespread, the degree of discount across all cities has generally reduced from the levels seen in 2019, bar Perth where it remained the same, according to Domain’s senior research analyst Nicola Powell.

“This suggests a broader market slowdown with more properties discounted by marginal amounts rather than hefty discounts on fewer homes,” she said.

Price cutting the most common in Sydney

Sydney vendors took the lead nationally with discounting in July, with prices revised down for about one in seven property listings in the harbour city. This is nearly triple the figure in the same month last year.

Asking prices were axed in 16 per cent or more of listings across: 

  • The northern beaches (17.3 per cent);
  • Canterbury-Bankstown (17 per cent);
  • The upper and lower north shore (16.9 per cent and 16.4 per cent);
  • The city and eastern suburbs (16.2 per cent); and
  • Wollongong (16 per cent).

The median price discount for live listings in Sydney was -4.3 per cent in July, slightly down from -4.7 per cent in the same time last year.

Yet areas in the city have seen the biggest jump in sale discounting nationally since the coronavirus hit Australia. The lower north shore had 16.4 per cent of its listings’ asking prices revised down in July, up by 7 percentage points since February. Vendors in the city and east marked down prices in 16.2 per cent of listings, up by 6.1 per cent since February.

Melbourne takes a blow from COVID-19 

Discounting was the second most prevalent in Melbourne, where asking prices on about one in nine properties were cut throughout July — almost four times more common than July 2019. 

At least 12 per cent of listings saw prices reduced in:

  • Melbourne’s inner south (13.5 per cent);
  • Melbourne’s outer east (12.6 per cent);
  • Inner Melbourne (12.5 per cent);
  • Mornington Peninsula (12.5 per cent); and
  • Melbourne’s inner east (12 per cent).

Asking prices were discounted by a median of -4 per cent across Melbourne, shrinking from 4.2 per cent in July 2019.

Dr Powell said Melbourne has felt the shock of the economic downturn more than other cities, as it:

  • has been more affected by pandemic-related job losses;
  • is more exposed to overseas migration; and
  • has more investment activity.

“A rapid rise of discounting rates in Melbourne is anticipated considering that to date, Melbourne has recorded the steepest falls in median prices compared to the other cities,” Dr Powell said.

Is this a good time to buy a property?

Australia is still riding out a global pandemic and a recession, but that doesn’t mean it’s a good or bad time to buy a home, depending on your financial situation

For some buyers, it might be an opportune time to purchase a property, considering that real estate prices are falling in general, and you might have a better chance of nabbing a discount from property sellers. Record-low interest rates in the home loan market may also help you get closer to buying a property, with some advertised rates in the 2 per cent and even 1 per cent bracket. 

But if you don’t have a stable income, or if your deposit isn’t over the 20 per cent mark yet, it may not be the best time for you to enter the property market. Buying a property is a major financial commitment, and it’s important that you do your research to ensure you can afford it before shopping for a home. All things considered, it could be a good idea to speak to a financial adviser or a mortgage broker for professional advice if you’re considering a property purchase in the near future. 

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How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

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.

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).

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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.

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

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.

How much deposit will I need to buy a house?

A deposit of 20 per cent or more is ideal as it’s typically the amount a lender sees as ‘safe’. Being a safe borrower is a good position to be in as you’ll have a range of lenders to pick from, with some likely to offer up a lower interest rate as a reward. Additionally, a deposit of over 20 per cent usually eliminates the need for lender’s mortgage insurance (LMI) which can add thousands to the cost of buying your home.

While you can get a loan with as little as 5 per cent deposit, it’s definitely not the most advisable way to enter the home loan market. Banks view people with low deposits as ‘high risk’ and often charge higher interest rates as a precaution. The smaller your deposit, the more you’ll also have to pay in LMI as it works on a sliding scale dependent on your deposit size.

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.

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How long does NAB home loan approval take?

The time required to get your home loan from NAB approved can vary based on a number of factors involved in the application process. 

Once you have applied for a home loan, a NAB specialist will contact you within 24 hours over the phone to take down relevant information, including your total income, debts (existing loans, credit cards, etc.), assets (car, shares, etc.), and your monthly expenses (food, utility bills, etc.). Your lender might also ask for information related to the property you want to purchase, including the type of dwelling and preferred postcode.

NAB will then verify all your information and check your credit score, and if the details stack up, you should be given a conditional approval certificate. This certificate stipulates how much money NAB is willing to lend you and is typically valid for 90 days. 

Once you have your conditional approval, you can start browsing for properties that you like and that fit within the budget that NAB has provided. After you find a suitable property, you’ll need to give a copy of the signed deed to NAB, following which you should get full approval and access to the funds. This process can take up to 4-6 weeks. 

Can I take a personal loan after a home loan?

Are you struggling to pay the deposit for your dream home? A personal loan can help you pay the deposit. The question that may arise in your mind is can I take a home loan after a personal loan, or can you take a personal loan at the same time as a home loan, as it is. The answer is that, yes, provided you can meet the general eligibility criteria for both a personal loan and a home loan, your application should be approved. Those eligibility criteria may include:

  • Higher-income to show repayment capability for both the loans
  • Clear credit history with no delays in bill payments or defaults on debts
  • Zero or minimal current outstanding debt
  • Some amount of savings
  • Proven rent history will be positively perceived by the lenders

A personal loan after or during a home loan may impact serviceability, however, as the numbers can seriously add up. Every loan you avail of increases your monthly installments and the amount you use to repay the personal loan will be considered to lower the money available for the repayment of your home loan.

As to whether you can get a personal loan after your home loan, the answer is a very likely "yes", though it does come with a caveat: as long as you can show sufficient income to repay both the loans on time, you should be able to get that personal loan approved. A personal loan can also help to improve your credit score showing financial discipline and responsibility, which may benefit you with more favorable terms for your home loan.