The typical home shed about $12,500 this year: ABS

The typical home shed about $12,500 this year: ABS

The typical home dropped more than $12,000 in price since the beginning of the year, according to the nation’s statistical agency, possibly ushering in a widely prophesied property fall.

Australia’s capital cities spearheaded a fall in property prices over the June quarter this year, according to the Australian Bureau of Statistics (ABS). 

Melbourne homes experienced the steepest drop at 2.3 per cent, followed closely by Sydney at 2.2 per cent. But they were far from alone. 

All capital cities -- other than Canberra -- recorded falls in property prices during the June quarter, Andrew Tomadini said, head of prices and statistics at the ABS.

Residential property prices quarterly percentage change june quarter 2020.JPG


"The number of residential property transactions fell substantially in the eight capital cities during the June quarter 2020, due to the effects of COVID-19 on the property market,” he said. 

The price of a typical home was $678,500 in the June quarter -- a drop of $12,500 compared to December 2019. 

Combined, Australia’s 10.5 million homes fell by $98.2 billion to $7,138.2 billion in the June quarter 2020. This was despite the number of homes going up by 43,800.

The prices of houses generally experienced a bigger fall than apartments. Melbourne and Sydney homes dropped a respective 2.8 and 2.6 per cent, compared to the respective drops of 1 and 1.4 per cent in apartments.

This quarterly fall wasn’t enough to offset the general growth experienced since the beginning of the year, the ABS said. Residential property prices were up 6.2 per cent with rises in all capital cities except Perth and Darwin.

Melbourne still had the largest gains over the last twelve months recording rises of 8.8 per cent, followed by Sydney at 8.1 per cent and Hobart at 6.1 per cent. 

Property prices in major capital cities have been widely forecast to drop by double digits in the coming year or two, as remote working no longer requires people to live closer to cities.

Lending commitments rebound in July: ABS

The home loan market showed early signs of recovery following a period of volatility with a surge in new commitments, offering some insight into people’s appetite for buying a property following the easing of coronavirus restrictions.

About $19 billion was spent on new home loan commitments in the month of July, the ABS said, a nearly 9 per cent increase that is also the largest in the data series.

First home buyers helped bolster the monthly rebound and likely took advantage of the government’s first home loan deposit scheme

But the combined values of home loan applications in July of $18.92 billion still represented a drop prior to the COVID-19 pandemic. At the beginning of the year in January, for instance, home loan commitments were valued at $20.73 billion.

The largest increases were in New South Wales, Victoria and Queensland, the ABS said, and is largely owed to the easing COVID-19 restrictions, including open houses and auctions.

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The exact repayment amount for a $250,000 mortgage will be determined by several factors including your deposit size, interest rate and the type of loan. It is best to use a mortgage calculator to determine your actual repayment size.

For example, the monthly repayments on a $250,000 loan with a 5 per cent interest rate over 30 years will be $1342. For a loan of $300,000 on the same rate and loan term, the monthly repayments will be $1610 and for a $500,000 loan, the monthly repayments will be $2684.

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Who offers 40 year mortgages?

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Currently, 40 year home loan lenders in Australia include AlphaBeta Money, BCU, G&C Mutual Bank, Pepper, and Sydney Mutual Bank.

Even though these lengthier loans 35 to 40 year loans do exist on the market, they are not overwhelmingly popular, as the extra interest you pay compared to a 30-year loan can be over $100,000 or more.

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If the mortgage is in your name only the house will be sold by the bank to cover the remaining debt and your nominated air will receive the remaining sum if there is a difference. If there is a turn in the market and the sale of your house won’t cover the remaining debt the case may go to court and the difference may have to be covered by the sale of other assets.  

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While bank staff recommend home loan products only from their own employer, brokers are independent, so they can recommend products from a range of institutions.

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