Skip to content

Finance Update January 2024

I hope you had a lovely Christmas. We’re now a few weeks into 2024 and there’s been plenty of big news:

  • Investor borrowing up 18%
  • Property prices rise 8.1%
  • Building approvals rise
  • How to be better at money

Every state has recorded a rise in property investor borrowing over the past year, with Western Australia leading the way.

Throughout Australia, investors took out $9.72 billion of home loans in November 2023, which was 18.0% higher than the year before, according to the most recent data from the Australian Bureau of Statistics.

Looking at the individual states, the year-on-year increases in investor borrowing ranged from 3.5% in Victoria to 42.1% in Western Australia.

This strong increase in property investor activity might be because investors are enjoying a double wealth gain right now: during 2023, investors enjoyed increases in both the national median property price (by 8.1%) and national median rent (by 8.3%), according to CoreLogic.

One of the key things to remember with investor loans is that your outcomes can vary significantly from lender to lender. Depending on your financial position and the property you want to buy, different lenders will offer you different loan products, loan sizes and interest rates. As your broker, I will compare the market for you and shortlist lenders that suit someone with your specific scenario.

Australia’s median property price reached a record $757,746 at the end of 2023, after another year of growth.

The median price rose 3.0% during the pandemic year of 2020, surged 24.5% in 2021, contracted 4.9% in 2022 and then climbed another 8.1% in 2023, according to CoreLogic.

The median price for the combined capitals ended 2023 at record levels, while the combined regions were just 1.5% off peak.

December was the 11th consecutive month of price gains (see graph) – however, as CoreLogic research director Tim Lawless noted, it was also the smallest of those monthly gains, at 0.4%.

“After monthly growth in home values peaked in May at 1.3%, a rate hike in June and another in November, along with persistent cost of living pressures, worsening affordability challenges, rising advertised stock levels and low consumer sentiment, have progressively taken some heat out of the market through the second half of the year,” he said.

As interest rates move up and down, so does the average person’s borrowing power. Borrowing power tended to decline in 2023 and is likely to change again in 2024 as rates evolve. The other point worth mentioning is that your borrowing power can vary significantly from lender to lender. The good news is that I can match you with a bank that wants to lend to someone with your situation.

More owners and developers are planning to construct new homes and renovate existing properties, according to the latest home building approvals data.

In January 2023, only 12,185 building approvals were issued. But after trending higher throughout the year, the number of approvals reached 14,529 in November, an increase of 19.2%.

Please contact me before you start a building or renovation project, so I can explain how the finance works.

Unlike with a regular home loan, where you receive the money in a lump sum, a construction loan involves a series of progress payments (typically five) as your project proceeds. The advantage of this approach is that instead of paying interest on the whole loan amount, you pay interest only on the portion received.

Another difference is that construction loans typically start as interest-only; you can then switch to paying principal and interest once the project is complete.

Becoming a better budgeter can help you save more, invest more and get ahead on your home loan.

To stay on top of your finances, there are two broad approaches you can take.

The first is to plan how much you’ll spend on each category (groceries, entertainment, etc) each month. If you stick to your budget, you’ll know in advance how much you’ll save.

The second approach is to throw out the budget and focus on saving instead:

  1. Decide how much money you want to save each month
  2. Set up an auto-transfer to move this amount of money from a transaction account to a savings account whenever your salary gets paid
  3. Spend whatever is left in the transaction account, however and whenever you like

The first approach suits people who want to pay close attention to their money, while the second is for people who want to ‘set and forget’ their savings.

Whichever approach you take, a good place to begin is to review your last 12 months of expenses, to see how much you’re spending and on what things. You can use that information to identify areas of wastage and set savings targets.

Share

I hope you enjoyed our latest update. We’re here to help, so if you need assistance with a new loan or refinancing, please get in touch with one of our friendly team by booking a free consult below.

Kind Regards,
David Fraser

Disclaimer: The information provided above is on the understanding that it is for illustrative and discussion purposes only. Any party seeking to rely on its content or otherwise should make their own enquiries and research to ensure its relevance to your specific personal and business requirements and circumstances.

Stay Up to Date

Sign up to receive finance updates straight to your inbox.

Who Would You Like to Chat With?

Ben Simmons
Ben Simmons
Sam Fraser
Sam Fraser
Mornington Mortgage Broker David Fraser
David Fraser

I'd Like To ...

Get a Home Loan
Refinance an Existing Loan
Consolidate Debts
Borrow for Investment
Get a Business Loan
Get a Car Loan
Buy Property In My SMSF