SME credit demand improves, lenders begin next phase of COVID-19 support

Things are starting to look better for small business owners across the country with just 5% of deferred business loans yet to resume repayments. Meanwhile, there are signs that business credit demand is improving, especially when it comes to asset finance.

The first bit of data comes from the Australian Banking Association (ABA), which shows just 11,263 business loans across the country are yet to resume repayments.

That’s a huge drop from the height of the pandemic back in June when more than 200,000 small business loans were deferred.

With automatic loan deferrals now coming to an end, the next phase of support for borrowers who are unable to make reduced repayments or restructure their loans will involve assistance from specialised hardship teams.

As part of this support, banks have developed an industry-wide, consistent approach to hardship and a new online assistant hub to guide customers in financial hardship and improve transparency.

“Customers can expect a thoughtful and compassionate approach, with clear and transparent explanations, regardless of who they bank with,” says ABA CEO Anna Bligh.

Credit demand improving

The other positive news for business confidence around the nation is that credit demand is showing signs of recovery, especially when it comes to asset finance.

Equifax’s Quarterly Business Credit Demand Index for the December 2020 quarter shows that while business loan applications were down 10.1% from the year before, the rate of decline has softened.

Applications in Victoria were up 7% in December 2020 compared to the September quarter, closely followed by Queensland and Western Australia (+5%).

Better yet, asset finance applications were actually 0.2% higher than the same period a year earlier.

“While overall business credit demand remains down, it is encouraging to see that there are signs of a turnaround,” says Equifax’s General Manager Commercial and Property Services Scott Mason.

“The lifting of extended restrictions in Victoria has allowed for a rebound in business credit applications driven by asset finance.”

How’s 2021 looking for your business?

If you’re starting to feel confident about your business’s outlook in 2021, and you want to explore your finance options to make the most of any upcoming opportunities, then please get in touch.

It’s worth mentioning that the federal government's temporary full expensing’ scheme – which allows businesses to immediately deduct the business portion of the cost of eligible new depreciating assets – is in place until 30 June 2022.

If you’d like to find out more about how it could assist with your business’s cash flow when purchasing assets, feel free to give us a call today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Tick tock – is time running out for first home buyers?

The first home buyer market had a bumper year in 2020 due to modest declines in property prices, reduced investor activity, and a range of government incentives. But with those advantages tailing off, how will first home buyers compete in 2021?

Another week, another big bank tipping national property prices are set to boom.

This week it was Westpac’s turn, with their senior economist tipping property prices to increase 10% in 2021 and another 10% in 2022.

This follows AMP predicting a 5-10% property price increase in 2021, and Commonwealth Bank expecting house prices will increase by 9% in 2021 and 7% in 2022.

Meanwhile, auction clearance rates are high – in the 80% plus range, according to CoreLogic.

So is time running out for first home buyers?

Not at all, but it sure won’t get any easier as property prices increase throughout the year.

Furthermore, the federal government’s HomeBuilder scheme is set to finish at the end of March.

The scheme provides buyers with $15,000 grants to build or substantially renovate homes that are generally in the first home buyer price range.

With the above in mind, the REA Insights Property Outlook Report 2021 states that ‘first home buyers are set to moderate in 2021’.

“In 2021, it is unlikely first home buyers will continue to be as active as they were. Prices are moving quickly; investors are coming back and any incentives available to first home buyers are likely to be eased,” the recently released report says.

The REA adds that first home buyers tend to be more active in slower markets when they can take their time.

But with savvy property investors returning to the market, this can add pressure to first home buyers.

“Investors and first home buyers frequently target the same sorts of properties at similar price points,” explains the report.

So what can first home buyers do to compete in 2021?

Rest assured there are a number of strategies first home buyers can employ to crack the property market in 2021.

With competition for properties heating up, it’s important to have your ducks-in-a-row when it comes to finance before you start looking.

This can help you find properties within your price range, identify any additional costs you may not have factored in yet, and make an offer while your preferred property is still available.

It’s also worth noting that the federal government is set to release another 10,000 spots in its First Home Loan Deposit Scheme on July 1, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI).

Another consideration is shifting the focus of your property search – whether that be the location or property type.

For example, house prices are predicted to grow a lot quicker than apartment prices this year.

So if you’re not quite ready to buy just yet, and it appears that properties are rising quickly out of your price range, consider that the apartment market should move more slowly.

Get the ball rolling today

If you’d like to discuss more options when it comes to obtaining finance to pay for your much-anticipated first home, get in touch with us today.

As mentioned above, the more prepared you are when it comes to financing your first home, the less stressful the whole buying process will be.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

“On the cusp of a boom”: CBA’s assessment of the housing market

Australia’s housing market is on the “cusp of a boom”, with house prices set to leap 16% over the next two years, according to the Commonwealth Bank (CBA).

The head of economics at Australia’s biggest bank, Gareth Aird, predicts national house prices will surge 9% in 2021 and a further 7% in 2022.

Apartment prices meanwhile are predicted to rise 5% in 2021 and 4% in 2022.

“The negative impact that COVID-19 had on Australian property prices turned out to be much more muted than almost any forecaster expected,” Mr Aird has written in a note to clients.

The CBA prediction is similar to that contained in an internal RBA FOI document, which projects house prices could rise by up to 30% if interest rates remain low over the next three years (which the RBA has indicated will happen).

So what can we expect across the country?

In Sydney and Melbourne, dwelling (house and apartment) prices are predicted to grow by at least 12% in the next two years, says Mr Aird.

That would see Sydney’s median dwelling price increase by a whopping $160,000 to $1.2 million, and Melbourne’s median dwelling price increase by $110,000 to $920,000.

Meanwhile, Perth values are tipped to rise 17.7% ($99,000), Brisbane 16.6% ($102,000), and Canberra 15.5% ($132,000).

Rounding out the capital cities, Adelaide is predicted to increase 14.5% ($86,000), Hobart 15% ($87,000) and Darwin 18% ($99,000).

So when and why are property prices set to increase?

Well, it appears as though the “boom” may have already just begun, Mr Aird explains in a CBA podcast.

“Over the first two weeks of February, national prices are up 0.8%. So we’re looking at over 1.5% in February alone,” says Mr Aird.

“Prices are now rising in all capital cities. And they’re rising quite quickly.”

Mr Aird says a strong indicator for property prices is lending figures, and over the last four to five months lending has picked up quite significantly.

“It’s quite intuitive when you think about it. The money that people borrow ends up going into the housing market, and that then pushes up housing prices. There’s usually about a six month lead time,” he explains.

“Initially, that (lending) was with owner-occupiers, but more recently it has spilled over to investors. And that is now feeding into house prices.”

Another strong indicator is auction clearance rates, adds Mr Aird.

“They are very, very firm at the moment. Nationally we’re seeing it sit in the 80s (percent), which historically has been consistent with double-digit dwelling price growth,” he says.

Other key momentum builders are the RBA advising that the record-low official cash rate won’t increase until 2024, says Mr Aird, and strong recovery in the labour market.

“The fact that the Reserve Bank has given explicit public guidance that rates are going to stay very, very low for a number of years, that’s given borrowers a lot of confidence to go out there and take on debt,” he says.

“All of those inputs that go into our model are screaming that house price rises could be faster than at any point we’ve seen before, and our model goes back 10 years.”

Explore your options

If you’re one of the many prospective homebuyers who are feeling confident about the housing market right now and want to explore your financing options, get in touch today.

We’re more than happy to help you determine whether you can finance that home you have your eye on before the next housing boom takes off.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Digital transformation: how does your business compare?

How well placed is your retail business when it comes to its digital transformation? Today we’ll look at some of the ways your competitors might be complementing their bricks and mortar stores with online empires.

For some retailers, COVID-19 was the death knell for their business. For others, it gave a much-needed nudge to supplement in-store sales with thriving online hubs.

So how well did you transform your business compared to your competitors in 2020?

Well, Retail Express conducted a benchmarking study of 22,000 Australian and New Zealand retailers across multiple sectors throughout 2020.

It looked at something called “omni-channel” retail, which is defined as “an approach to sales that focuses on providing seamless customer experience whether the client is shopping online, from a mobile device, a laptop or in a brick-and-mortar store”.

The study’s key findings

Founder and CEO of Retail Express, Aaron Blackman, says “the quality of a retailer’s eCommerce store, Click & Collect services and home delivery speed have now become key factors in who consumers decide to shop with.”

And the study demonstrates significant opportunities for Australian retail businesses to improve, with less than a third of surveyed retailers offering key omni-channel practices:

Click and collect: 26% of retailers offer this service

Display stock in store on website: 14%

Display live inventory available for online orders: 3%

Ship from store: 21%

Cross-channel gift vouchers: 26%

Inter-store stock transfers: 21%

Pre-orders: 13%

Investing in tech moving forward

As a business owner, it’s important not to think of 2020 as a once-off. Instead, consider that disruption is the new normal.

As such, Mr Blackman says retailers should be constantly thinking of ways to improve their omni-channel offerings.

“Just offering online shopping with Click & Collect will no longer be a competitive advantage, same day Click & Collect, and the speed of home delivery will be the benchmark,” he suggests.

In 2021 and beyond, digital transformation will be a significant priority as retailers look for ways to adapt to future disruptions, adds Mr Blackman.

“Now is the time for retailers to plan and design a robust and flexible operating model including a review of current systems and technology looking for all possible efficiency gains,” he says.

Get in touch

If you think now is the time to invest in your digital offerings, then get in touch today to discuss your funding options.

Obtaining the right finance is an important step when it comes to implementing the right technology, processes and personnel to fund your business’s future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Back up for grabs: 1800 first home buyer scheme spots reissued

Great news just in for first home buyers: the Australian government will reissue 1800 First Home Loan Deposit Scheme (FHLDS) spots from the 2019-20 financial year.  

The 1800 spots are back up for grabs because people who previously reserved a spot in the Australian government scheme were unable to complete the purchase of their first home.

Their loss can be your gain!

The FHLDS allows eligible first home buyers to break into the property market sooner, as you only need a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).

This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.

More locations now possible

Ok, so the FHLDS has these things called ‘property price thresholds’.

Basically, they mean you can only qualify for the scheme if you purchase a property under a certain price tag in certain locations.

The good news is that the thresholds were recently increased to allow first home buyers a greater range of options.

And helpfully, property research group CoreLogic has just identified suburbs that – due to COVID-19 and the slight impact it had on inner-city apartment prices – are now a prime option for first home buyers in Sydney, Melbourne, Brisbane and Perth.

They’ve identified 23 suburbs where median unit values have slipped below the FHLDS property price thresholds in the past 12 months.

Here’s the full list, but some highlights include:

Sydney: Strathfield, Arncliffe, Ashfield, Gladesville, Wentworth Point.

Melbourne: Brunswick, South Melbourne, St Kilda East, Thornbury, Docklands.

Brisbane: South Brisbane.

Perth: Munster.

Time’s ticking!

It’s important to note that FHLDS spots are usually reserved pretty quickly.

So if you’re thinking about purchasing your first home soon and want to make the most of the scheme, give us a call today – we’ll help you get the ball rolling on applying with one of the scheme’s participating lenders.

And even if you are unable to jag one of the 1800 reissued spots, you’ll be in a prime position to apply when a further 10,000 spots are released on July 1.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Record-breaking: 5 big property trends in 2021

After a bumpy 2020, 2021 is already rewriting the record books. From property prices, to interest rates, to refinancing – no matter which way you look records are being broken. Today we’ll look at why property market sentiment is riding so high.

How quickly things can turn around.

It wasn’t too long ago (9-10 months, to be more precise) that many highly-regarded economists were predicting property prices could plummet 30% due to COVID-19.

Instead, now we’re seeing official RBA documents predict that house prices could increase 30% over the next three years, so long as the official cash rate remains near record low levels (at or below 0.5%).

Suffice to say, market sentiment is soaring. So let’s take a look at some of the records currently being broken.

1. Record high housing values

Australian housing values have just reached a new record high as prices continue to rise across the country, according to CoreLogic.

In fact, housing values have surpassed pre-COVID levels by 1.0%, and the index is 0.7% higher than the previous September 2017 peak.

Every capital city and rest-of-state region recorded a rise in housing values in January, ranging from a 2.3% surge in Darwin to a relatively mild 0.4% rise in Sydney and Melbourne.

And unsurprisingly, regional housing values are rising at more than twice the pace of capital city markets due to COVID-19.

“Better housing affordability, an opportunity for a lifestyle upgrade and lower density housing options are factors that might be contributing to this trend, along with the new found popularity of remote working arrangements,” says CoreLogic’s research director, Tim Lawless.

2. Record low interest rates

In case you missed it, the RBA cut the official cash rate three times in 2020, with the last reduction in November taking the rate to just 0.1%.

At the same time, competition amongst lenders is fierce, with many offering record-low home loan rates in a bid to win over as many customers as possible.

3. Record high refinancing numbers

With record-low interest rates, it makes sense that we’re also seeing a record number of mortgage holders refinance their home loans to save themselves thousands of dollars.

According to ABS data, last year, the total number of home loan customers who switched providers increased by 27% – from 143,664 in 2019 to 182,016 in 2020.

And experts are predicting the number of externally refinanced loans will grow by 9% this year, according to a recent Finder survey, meaning nearly 200,000 Aussies will switch to another lender in 2021.

4. Record house building approvals

Private house approvals rose for the sixth consecutive month in December and reached a record high, according to Australian Bureau of Statistics (ABS) data.

In fact, private house building approvals surged 55.6% over the year.

“Federal and state housing stimulus measures (such as HomeBuilder), along with record low-interest rates have contributed to strong demand for detached dwellings,” says Daniel Rossi, Director of Construction Statistics at the ABS.

5. Record-high market positivity

With all of the above in mind, it’s no wonder that buyer confidence is surging.

In fact, positive sentiment among those in the property market has reached a record high, and negative sentiment is at an all-time low, according to ME Bank’s latest Quarterly Property Sentiment Report.

The buoyed sentiment is being supported by expectations for residential property price increases, higher levels of market activity and a combination of record-low interest rates and government stimulus incentives, says ME Bank.

That’s pretty much everything we’ve just touched upon today.

So, if you’re feeling pretty confident yourself and are looking to buy, or you think you’re overdue for refinancing, get in touch today.

We’re here to help you with all your funding and refinancing needs.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How will your business bounce back from 2020?

If you’re worried about how to recover from the horror show that was 2020, you’re not alone. Two-thirds of Australian small to medium businesses feel the same way, research shows.

As SMEs look towards “COVID-normal” in 2021, many are wondering how they will rebound from the stresses and strains of the past year.

In fact, as many as 65% of businesses are worried about having a clear recovery pathway, according to findings from business banking analysis firm East & Partners.

And despite the government support on offer during the pandemic, almost half of surveyed businesses (47%) said they had difficulty accessing government-guaranteed loans during COVID-19.

COVID-19 exacerbates existing concerns

These COVID-specific concerns come as businesses experience a marked increase in perennial concerns, the ScotPac-commissioned research also shows.

In the past 18 months, the biggest shift has been businesses finding funders harder to deal with than normal, with 56% of businesses saying this was an issue compared to 47% in 2019.

And there has been a marked increase in businesses frustrated that their funder isn’t meeting their needs (22%, up from 16%).

The top three concerns have been loan conditions (84%), having to provide property security (80%) and lack of flexibility (74%).

More businesses seek specialist advice

Amid the horror show of 2020, SME reliance on trusted advisors grew.

53% of SMEs relied more on their key advisor – such as their broker or accountant – during the pandemic.

And the vast majority (82%) said this had a positive impact on their business.

Path to recovery

Moving forward, the report states that “successfully navigating out the other side of the COVID crisis requires SME owners not to delay making the hard decisions about their business.”

“These hard decisions include assessing business viability, pinpointing the best way to fund the business, working out how to deal with the end of JobKeeper (if not for themselves, for the impact this will have on their supply chains) and planning for what happens when ATO debts are enforced and other deferred debts fall due.”

If you think you might have trouble navigating some of these hard decisions, then please get in touch today – we’re here to help you explore your business’s finance and funding options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How did your suburb fare during the COVID-19 crisis?

When coronavirus broke out across Australia, doomsday reports tipped the property market could fall as far as 30% across the country. Fortunately, that wasn’t the case. Here’s how to find out how your suburb actually fared.

A realestate.com.au analysis shows that property prices actually grew in most Australian suburbs throughout 2020.

Yep, that’s right.

Despite prolonged lockdowns in some parts of the country (especially Melbourne), most suburbs experienced year-on-year growth in 2020.

Go and have a look for yourself using this realestate.com.au interactive tool to see how your suburb did.

So which suburbs did best?

It should come as no surprise that lifestyle suburbs and coastal areas (such as Pearl Beach in NSW, pictured) ranked consistently high, given that many people had a taste of working from home and might not ever have to return to their inner-city offices.

But houses in plenty of trendy inner-city suburbs did well too, such as St Lucia in Brisbane (up 35%) and Brunswick East in Melbourne (up 20%).

Below are the suburbs that experienced the largest percentage increase in house prices in each state and territory:

NSW: Pearl Beach (46%), North Avoca (44%), Glenorie (38%), Woollahra (35%), Clovelly (34%).

VIC: Portsea (34%), Tyabb (28%), South Melbourne (23%), Collingwood (22%), Brunswick East (20%).

QLD: St Lucia (35%), Virginia (24%), Yeronga (20%), Woodford (19%), Kilcoy (19%).

WA: Kelmscott (39%), Coodanup (30%), Medina (22%), Madora Bay (20%), Mosman Park (20%).

SA: Hove (36%), Port Noarlunga South (27%), Glenelg East (22%), Blackwood (22%), Craigburn Farm (22%).

TAS: Dodges Ferry (26%), New Norfolk (25%), Berriedale (18%), Bridgewater (17%), Rokeby (17%).

ACT: Ainslie (34%), Lyneham (23%), O’Connor (21%), Palmerston (20%), Garran (20%).

NT: Berriham (12%), Zuccoli (8%), Durack (8%), Muirhead (6%), Leanyer (2%).

So why didn’t property prices take a dive?

Director of economic research at realestate.com.au Cameron Kusher says there are several reasons why property prices didn’t fall dramatically, but the key reason is the unprecedented amount of stimulus that was pumped into the economy.

“HomeBuilder has stimulated new housing, JobKeeper has kept many Australians employed and the relaxation of bankruptcy laws along with lenders offering mortgage holidays ensured we didn’t see a rise in forced sales,” Mr Kusher says.

Another key reason is record-low borrowing costs.

Indeed, the RBA cut the official cash rate three times to 0.1% in 2020, and as such interest rates are now at record low levels.

“Historic low borrowing costs at a time when people are spending less has seen more demand flow into the housing market, driving up sales and supporting price levels,” adds Mr Kusher.

How to make property more affordable

As mentioned above, interest rates are at record low levels and there are still a number of government stimulus packages available to help make your next property purchase more affordable.

If you’d like us to run you through some of the support and interest rate offers in more detail, give us a call today – we’d love to help you explore your options.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

House prices projected to jump 30% in three years: RBA

It’s the document that was never meant to see the light of day. But a Freedom of Information request reveals the Reserve Bank of Australia projects a 30% increase in house prices if interest rates remain low for the next few years.

The internal, not-meant-for-public-viewing analysis by the RBA looks at the impact of low interest rates on asset prices, including property.

The November 2020 document projects that housing prices could increase by 30% after about three years, so long as the official cash rate remains near record low levels (at or below 0.5%).

And that part of the equation looks promising, as the RBA board said they “weren’t expecting to increase the cash rate for at least three years” when they cut it to 0.1% in November.

What does this mean for property owners?

A lot more than just a potential 30% increase in the value of their property.

The RBA says both households and businesses can expect their borrowing capacity to increase, too.

That’s because low interest rates will lift asset prices (including property), which in turn will boost wealth, household spending and the value of collateral.

And as the value of collateral increases, so too will the borrowing capacity of households and businesses, the RBA document states.

What about prospective property owners?

With house prices projected by the RBA to rise 30% over the coming three years, it begs the question: is now a good time to jump into the property market?

Well, like most things in life, it will depend on your earnings, savings, borrowing capacity, goals, and where you’re at in life right now.

But it’s worth noting that there are a wide variety of generous federal and state government initiatives currently on offer, including the First Home Loan Deposit Scheme, HomeBuilder and stamp duty exemptions/concessions.

The quickest way to find out whether you can finance that home you have your eye on is to get in touch with us today – we’d love to explore your financing options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

What are Australia’s most popular vehicles? The 2020 results are in

Long gone are the days of Holden vs Ford. These days it’s all about the SUV vs the great Australian ute. So which vehicle type topped the list in 2020?

Let’s wind back the clock a bit.

It’s the year 2000: we’ve dodged Y2K (phew!), you can still photograph your kids sitting next to the pilot, and you’re either a fan of Peter Brock (Holden) or Dick Johnson (Ford) – never both.

Back then the Holden Commodore and Ford Falcon were our two top-selling vehicles, both of which have been discontinued in recent years.

How times change, huh?

So what’s the most popular kind of vehicle in 2020?

These days it’s all about the SUV, which is getting more and more popular.

In fact, SUVs claimed 49.6% of the market during 2020, an increase from 45.5% market share in 2019, according to the Federal Chamber of Automotive Industries (FCAI).

Light commercial vehicles (LCVs) – mainly utes and vans – were also popular in 2020, with 22.4% market share.

Sales for this vehicle type were no doubt boosted by the federal government’s instant asset write off scheme – now expanded to ‘temporary full expensing’ – which allows businesses to immediately deduct the business portion of the cost of eligible new depreciating assets.

What are the most popular brands and models in 2020?

The highest-selling brand for the year was Toyota, with an impressive 204,801 vehicles sold for a whopping 22.3% market share in Australia, says the FCAI.

In second place was Mazda (85,640 sales for 9.3% market share), followed by Hyundai (64,807 sales for 7.1% market share).

In fourth place was Ford (59,601 sales for 6.5% market share), narrowly beating out Mitsubishi (58,335 sales for 6.4% market share).

It’s interesting to note that out of the top ten vehicles for the year, seven of them were either SUVs or LCVs.

So without further ado, the top-selling vehicles for the year 2020 were:

1. Toyota HiLux (45,176 sales)
2. Ford Ranger (40,973)
3. Toyota RAV4 (38,537)
4. Toyota Corolla (25,882)
5. Toyota Landcruiser (25,142)
6. Mazda CX-5 (21,979)
7. Hyundai i30 (20,734)
8. Mitsubishi Triton (18,136)
9. Toyota Prado (18,034)
10. Kia Cerato (17,559).

Got your eye on a vehicle? Get in touch

If you’re thinking of purchasing a new vehicle and want to explore your finance options for it, then please get in touch.

As mentioned above, if you’re a business owner and need to use the vehicle for your business, you might be able to take advantage of the federal government’s ‘temporary full expensing’ scheme, which is designed to help boost your business’s cash flow.

To find out more, please get in touch with us today – we’d love to help you hit the road in a new set of wheels.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Apply for small business funding in as little as ten minutes

If you need funds to keep the momentum going in your business, we may be able to help with a flexible funding solution. With fast application and decision and a dedicated business lending specialist to help you, the application process is simple and easy.

How it works

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Standard credit approval criteria, fees, terms and conditions apply. Australian credit licence 454782.

The small business loan products (Small Business Loan and Business Line of Credit) are offered by Prospa Advance Pty Ltd ACN 154 775 667. Prospa is the lender. We are the introducer only and may receive a commission or referral fee from Prospa in connection with any referral. Eligibility and approval is subject to standard credit assessment and not all amounts, term lengths or rates will be available to all applicants. Fees, terms and conditions apply.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Still haven’t found what you’re looking for? Listings to pick up soon

While you were kicking your feet up over the festive season, did you flick open your phone and scroll through real estate listings in your dream location? If so, you might’ve noticed there were fewer properties listed for sale than usual. Here’s why.

If you couldn’t find exactly what you were looking for, don’t stress – it’s actually much harder to find ‘the one’ at this time of year.

That’s because property listings traditionally drop in December, with 2020 no exception.

In fact, according to SQM Research, national residential property listings decreased by 7.9% in December 2020, falling from 296,267 in November 2020 to 272,999.

If you compare that figure to 12 months prior, it was a 5.8% drop (that’s 2020 for you!).

What was really interesting, however, was that new listings (those less than 30 days old) dropped a whopping 17.0% in December, with 13,680 fewer new properties listed for sale than in November.

So why did the overall number of listings drop?

Well for starters, you can’t blame people for not wanting to spend their summer holidays selling their property, particularly after enduring the 2020 COVID-19 lockdown/s.

“The month of December traditionally records falls in properties listed for sale as it is the start of the festive and summer holiday period,” explains Louis Christopher, Managing Director of SQM Research.

Another factor at play could also be that two-thirds of Australians believe it’s a good time to buy property, and thus, demand is outstripping supply.

Indeed, you may have even caught one or two news reports of regional and coastal house prices soaring as city slickers decide to finally make their big escape.

This home buyer activity has been further aided by a number of federal and state government initiatives, including the First Home Loan Deposit Scheme, HomeBuilder and stamp duty exemptions/concessions.

So when can I hope to find ‘the one’?

The good news is that listings are expected to increase again shortly, according to SQM Research.

“Going forward I believe listings activity is going to remain strong in early 2021,” Mr Christopher says.

Furthermore, recent NHFIC research indicates new residential construction supply is expected to exceed demand by 127,000 dwellings in 2021 across Australia, and 68,000 dwellings in 2022 (this is due to the dramatic impact of COVID-19 on net overseas migration).

Got your eye on something?

So, how’d you go with your most recent property search? Anything catch your eye?

If so, don’t let it be “the one that got away”.

Get in touch with us today and we’d be happy to go through your financing options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Take control of your 2021: 3 quick and easy finance resolutions

Whenever we think of New Year’s resolutions, the first thing that comes to mind is a health kick. But here are three (easy) New Year’s resolutions that’ll help improve your financial wellbeing in 2021.

Below we’ll run you through three straightforward, and most importantly, achievable New Year’s resolutions to set yourself this year.

1. Get a home loan health check

Quick question (no judgement): do you know the interest rate on your home loan?

Don’t stress if you don’t, studies show that about half of mortgage holders can’t recall their home loan interest rate.

But it does beg the question: if you don’t know your rate, how do you know whether or not you’re getting a good deal on your loan? You could very well be paying too much.

This is why making a home loan health check your New Year’s resolution is so important, particularly with interest rates at record low levels after a series of RBA cash rate cuts.

Indeed, a recent RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

So if it’s been a while since you’ve refinanced – so long that you can’t recall your rate – then it’s probably time to get in touch for a home loan health check to see if you can get a better deal.

Rest assured we’ll make it quick and painless. Simply get the ball rolling by giving us a call today.

2. Set yourself a financial or lifestyle goal

If you’re not back at work yet, use this precious time to carefully consider what financial goals you want to achieve in 2021.

With renewed post-COVID optimism on the horizon, now might be time to launch that business idea you’ve been thinking about.

Perhaps it’s time to upgrade from an apartment to your first house. Or with international travel on hold for a while, maybe now’s a good opportunity to explore Australia with a new set of wheels.

Whatever your flavour, consider taking stock of what you want to achieve in 2021 so that you can work out a plan to achieve it.

And if you’re unsure about how you’ll finance that goal, we’re here to discuss your funding options. We can help you work out whether you might be able to make them a reality in 2021, or if it’s more realistic to work towards 2022 instead.

3. Cut back on your microtransactions

Once you’ve identified a big financial goal to hit in 2021, you’ll want to start saving towards it.

But micro-transactions – purchases that are low in cost and trivial in nature – can be a real obstacle.

For example, did you know that buying a $4 takeaway coffee each day costs you a whopping $1460 per year, whereas making it yourself using a french press or aeropress costs just $260.

That’s a saving of $1200.

Other micro-transactions that most families can cut back on include alcohol, take-away food such as Uber Eats, and multiple entertainment subscriptions such as Spotify, Netflix and Foxtel.

With a little bit of budget tinkering, you can save yourself hundreds – even thousands – of dollars each month.

So what’s your first step?

That’s easy – get in touch today for resolution #1: a home loan health check.

There’s a reason tens of thousands of families are currently refinancing their home loans: competition among lenders is fierce.

And by getting the ball rolling on resolution #1, you’ll also be contributing towards resolutions #2 and #3 by saving money that you can put towards your 2021 financial goal.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Happy New Year! Here’s to a prosperous 2021!

Well, that was a year for the history books. Time to start looking forward, we reckon! And the good news is 2021 offers plenty of promise. So what’s your New Year’s resolution?

While we saw the national housing market dip throughout the middle of 2020, it’s already started to recover, and many experts predict it’ll rebound even stronger in 2021 as the COVID-19 vaccination is rolled out across the country.

With that optimistic outlook in mind, now’s a great time to sit down and ask yourself: what am I aiming for in 2021?

A new home? A caravan to explore Australia in? Or now that you’ve had a taste of working from home, possibly a new business idea?

Because, let’s face it, while we’re all for health-inspired New Year’s resolutions (well, kinda), it doesn’t hurt to have a financial resolution too.

And usually the two work hand-in-hand quite well.

For example, the less you spend on booze, take-away coffees or Uber Eats, the more you can put towards savings to your 2021 financial goal.

So over this New Year’s long weekend have a little think about what you might want to achieve in 2021.

Whatever it is, rest assured that we’ll be here for you to help you achieve it.

And if you just want to enjoy 2021 after enduring the horror show that was 2020, we’re all for that too!

Happy New Year and all the best for the year ahead!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Warning to SMEs: payment times have completely blown out

Small businesses are receiving payments from clients a month late on average – that’s 18 days longer than last year. Make sure your business’s cash flow isn’t adversely impacted this holiday season.

The blow-out in payment times is having a “devastating impact” on small businesses across the country, warns the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).

In October, small businesses were paid 31 days late on average, compared to 13 days late in October 2019, reveals CreditorWatch data published in a recent report.

ASBFEO Kate Carnell says the delay in payments is hitting businesses already under strain due to COVID-19.

“It’s more important than ever to remember that although Small Business Counts is a statistical report, behind every number is a person,” she says.

“Small businesses are the engine room of the Australian economy, but they are also hard-working people who have had to overcome huge obstacles in 2020.”

What businesses are worst impacted?

The transport, postal and warehousing sector has been hit hardest by the blowout in payment times, with those businesses receiving payments an average of 90 days late, compared to 9 days late in October 2019.

Other sectors with average payment delays of over 30 days include:

– financial and insurance services

– professional, scientific and technical services

– construction

– rental, hiring and real estate services

– healthcare and social assistance businesses, and

– many other service-based businesses.

It’s doubtful these figures will improve over the next couple of months, with the summer holidays a notorious period for late payments.

So if you haven’t started invoicing clients yet, you should consider doing so now – especially those who have a history of being tardy.

Silver linings in 2020

It’s worth noting that the ASBFEO report isn’t all bad news.

It also highlights the resilience and agility of Australian small businesses.

It shows 40% of small businesses have pivoted their operations to adapt to the rapidly changing conditions faced in 2020 – whether that be due to the summer bushfires or COVID-19.

“It’s been inspiring to hear the stories of small businesses that made a decade’s worth of change in a matter of days and managed to keep their business afloat,” says Ms Carnell.

Funding options are available

If your business is struggling with cash flow issues due to late payments from clients, or a recent change in direction, then please get in touch sooner rather than later.

We can run you through some financing solutions that may be available to help your business make the transition from 2020 (good riddance!) to 2021 (here we come!).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Season’s Greetings! Bring on 2021!

To all our wonderful clients: this has been a year like no other, so we can only hope that you’re treated to a relaxing time with family and friends this festive season.

We want to say a huge thank you for your support over these past twelve months. It’s fair to say it’s been an incredibly challenging year for households and businesses alike.

That said, it’s been an absolute pleasure and an honour working with you towards your lifestyle and business goals.

May you feast alongside those you love this Christmas, and enjoy some time off over the New Year period.

We look forward to working with you towards a prosperous 2021! (and leaving 2020 behind us all!).

Merry Christmas and Happy New Year!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Love thy neighbour: how to protect your home these summer holidays

How comfortable do you feel leaving your home unattended when you go on holidays? Turns out that those who know their neighbours best have more peace of mind.

Remember The Wet Bandits from Home Alone?

It was their modus operandi to case out families going on holidays before robbing their homes over Christmas.

When you consider that insurer QBE sees up to 15% more theft claims over the summer holiday period than any other time of year, it was a pretty clever little plotline.

But, it turns out that you don’t have to leave your eight-year-old kid home alone to fend off the hapless crooks.

It’s much simpler (and safer) to get to know your neighbour – which is something Australians have been doing a lot better this year thanks to the COVID-19 lockdowns.

Neighbourhood watch

More than 80% of Australians spent more time at home during 2020 than ever before, and QBE’s research reveals this may have helped us all become better neighbours.

In fact, one in three Australians claim they know their neighbours better now than in previous years, and 61% say they’d like an even better relationship with their neighbour, especially if it could improve their home security.

It’s not surprising then, that three in four Australians say they feel more comfortable going on holidays if they know their neighbours are keeping an eye on things.

Indeed, 71% of neighbours interviewed claim they’d record a vehicle number plate, 60% would call the police, 47% would give their neighbours a call, and (a very bold) 28% would even approach the suspicious party.

How to prepare ahead of your summer trip

With state borders starting to reopen and interstate travel resuming, it’s important to take relevant safety precautions to protect your household belongings this holiday season.

“If you’re not in the habit of letting your neighbours know when you go away, now would be a great time to start,” says QBE’s chief customer officer, personal lines, Eleanor Debelle.

“Aside from increasing the security of your home, it may also strengthen the relationship you’ve built during 2020.”

Here are QBE’s top five tips to secure your home these holidays

1. Ask a neighbour to check on your property, collect the mail, mow your lawn, or put away bins.

2. Walk around your property and check doors, windows and locks.

3. Make sure valuables are out of sight or given to a trusted person to look after. The most common items stolen include jewellery, bags, laptops, phones, rings, keys and tools.

4. Set a burglar alarm.

5. Set timer switches for lighting.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Be careful of loading up on ‘buy now, pay later’ purchases this Xmas

‘Tis the season to be jolly, but it’s important not to get carried away when using ‘buy now, pay later’ providers to fund that festive spirit. That’s because one-in-five users struggle to make their repayments, new research has found.

“Christmas is a time for giving” – it’s a line that’s been drummed into us since we popped our first piece of chocolate out of an advent calendar.

But it’s important not to go overboard and spend more than you can afford to pay back if you use ‘buy now, pay later‘ services such as Afterpay and Zip Pay.

That’s because a new report from ASIC shows one-in-five users were late paying their other bills, including home loan repayments, as a result of using the services.

Below we’ll discuss why it’s important to budget properly if you plan on using a ‘buy now, pay later’ service this festive season.

But first, what are ‘buy now, pay later’ services?

‘Buy now, pay later’ arrangements allow you to buy goods and services immediately, and repay the amount over a series of instalments.

If you make a purchase using market leader Afterpay, for example, you’ll pay your first instalment at the time of purchase, and then the remaining three instalments over the next three fortnights.

If you pay on time, there’s no fee for you (that’s charged to the merchant). However, if you’re late to make a repayment, you’ll cop a small fee (usually $10).

On the face of it, it’s a pretty good arrangement. And don’t get us wrong – these are perfectly legitimate companies.

But where you can run into financial trouble is using several ‘buy now, pay later’ services without a plan to pay the money back over the coming fortnights, especially over the holiday season when your focus doesn’t tend to be on the household budget.

One-in-five consumers miss paying other bills on time

As mentioned earlier, 20% of ‘buy now, pay later’ users miss or are late to pay other bills in order to make their ‘buy now, pay later’ payments on time.

The bills most commonly affected are household bills (44%), credit card payments (32%), and, worryingly, home loan repayments (22%).

What’s really surprising though, is that 15% of 1,655 users surveyed by ASIC say they took out an additional loan in order to make their ‘buy now, pay later’ payments on time.

“[Some consumers] are experiencing financial hardship, such as cutting back on or going without essentials (e.g. meals) or taking out additional loans, in order to make their ‘buy now, pay later’ payments on time,” the ASIC report says.

Some final considerations

Look, we’re certainly not trying to play Grinch this Christmas.

But with many families doing it tough right now, it’s important not to take on any debt that you can’t afford to comfortably pay back – no matter how straight forward and low risk it might seem.

It’s also worth noting that while the Afterpay approval process doesn’t (generally) involve credit report checks, Afterpay (and its competitors such as Zip Pay) is still a credit liability that needs to be disclosed when applying for a home loan.

So if you have any doubts about whether a ‘buy now, pay later’ purchase might affect your ability to secure a home loan – or pay off your existing one – then feel free to get in touch.

We’re happy to chat in more detail to help you make this Christmas more jolly, and less folly.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How well do you know your finance jargon? Take our quiz!

The finance industry has a bunch of acronyms and abbreviations that can make the home buying process a little confusing. But they’re not as difficult to understand as you might think. Take our short quiz to see how many you can answer!

Below we’ve listed eight commonly used acronyms and abbreviations in the mortgage and finance industry.

So grab a pen and some paper and test out that noggin of yours!

Quiz time

We’ll give you one point for each acronym you can identify, and an extra point if you know what it means.

1. LVR

2. LMI

3. FHB

4. FHLDS

5. Low Doc

6. DTI

7. ADI

8. FHOG

Once you’ve written down your responses, scroll down for the answers below.

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1. LVR: Loan to Value Ratio

LVR is the percentage of the property’s value, as assessed by the lender, that your loan equates to.

For example, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is worth 80% of the property value, making your LVR 80%.

2. LMI: Lenders Mortgage Insurance

LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.

It’s usually paid by borrowers with an LVR higher than 80% – that is, borrowers with a deposit of less than 20%.

3. FHB: First Home Buyer

This one is pretty self-explanatory. Basically, a FHB is someone who has never purchased property before but is in the process of doing so.

Being a FHB allows you to take advantage of a number of federal and state government schemes and incentives, which we’ll cover below.

4. FHLDS: First Home Loan Deposit Scheme

The FHLDS is a federal government scheme that allows eligible FHBs with a 5% deposit (aka 95% LVR) to purchase a property without paying for LMI.

This can save FHBs thousands of dollars (sometimes even tens of thousands!) and help them enter the property market sooner.

5. Low Doc: Low Documentation home loan

Low doc home loans are often used by self-employed borrowers who find it difficult to provide conventional proof of income. That’s because many self-employed people try to minimise their taxable income to pay less tax, but this creates problems when they try to borrow.

Fortunately, low doc loans don’t require the same level of “documentation” as normal loans and are specifically designed for self-employed people who are capable of servicing a loan.

6. DTI: Debt-to-Income ratio

Your DTI is used by lenders to determine if you can afford to take on any more debt. Basically, it compares your total debt to your gross income.

The formula is: Total Debt / Gross Income = Debt to Income ratio

So if you have a $500,000 home loan (and no other debt), and $160,000 in gross household income, your DTI is 3.125.

7. ADI: Authorised Deposit-taking Institution

ADIs are financial institutions that are licensed by the Australian Prudential Regulatory Authority (APRA) to carry on banking business, including accepting deposits from the public.

They are generally banks, building societies and credit unions.

8. FHOG: First Home Owners Grant

FHOG are generally state government-run grants available to eligible first home buyers to help them get a leg up into the property market.

Typically, they’re in the vicinity of $10,000 to $20,000, and in many states they’re available alongside stamp duty exemptions and federal government initiatives, such as the $25,000 Homebuilder Grant.

How’d you score?

If you scored 1-4: Hey, no worries! We all started out with this score. And to be honest, we enjoy nothing more than helping people embark on their property buying journey.

If you scored 5-8: Have we met before? I’m sure we have. You seem pretty well-versed in the world of property and finance. We should have a chat again soon to discuss your next steps on the property ladder.

If you scored 9-12: You likely either work in the finance industry, are a savvy property investor, or we’ve taught you well! Long story short: you know your stuff!

If you scored 13-16: Ok, so you either work for us, are married to one of us, or you’re one of our competitors sussing us out! If you scored in this range, take a bow!

Last but not least!

If you ever want to clarify anything with us – whether that be acronyms, abbreviations or any other finance topic – then please don’t hesitate to ‘DM’ us (see, we’re down with all kinds of lingo around here!).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Freedom to move: stamp duty reforms gain momentum

Stamp duty: two of the most dreaded words in the world of property and finance. Fortunately, NSW and Victoria have unveiled some big changes to the inefficient tax this week, and there’s hope it’ll inspire other states to review their own stamp duty arrangements.

If you’re unfamiliar with stamp duty, it’s basically a state/territory government tax you pay on certain transactions, such as a car or piece of real estate.

How much it costs depends on what state you’re buying in, the value of the property you’re buying, and whether you’re eligible for a first home buyer concession.

The problem is that it’s often regarded as an inefficient tax because it requires a large upfront sum (usually tens of thousands of dollars) from home buyers and therefore disincentivises people from buying and selling property.

It particularly tends to restrict young families who want to upgrade from their first home, and downsizers who want to move into a smaller place.

So why does it still exist?

State governments have been slow to overhaul the current system because it’s their biggest source of revenue.

In fact, stamp duty raises about $21 billion a year, including $7.5 billion for NSW and $6 billion for Victoria.

However, with the economy in need of a rebound due to COVID-19, the state governments of NSW and Victoria have made some big stamp duty announcements in their 2020/21 budgets.

NSW has flagged a complete overhaul of the system with a shift towards a property tax, while Victoria has announced short term discounts.

“Reform of the inefficient stamp duty system could create and support thousands of jobs to boost the economy and kick-start our recovery for a prosperous, post-pandemic NSW,” explained NSW Treasurer Dominic Perrottet during the announcement.

And make no mistake: this isn’t just good news for NSW and Victoria.

As the two most populated states in Australia, a move in these property markets may put pressure on other state governments to follow suit sooner rather than later.

Below we’ll outline the announcements in NSW and Victoria, as well as the current state of play around the nation.

New South Wales

The NSW state government will open for public consultation a property tax model that it says will make homeownership more achievable.

NSW Treasury says stamp duty adds $34,000 to the upfront cost of buying the average home, and takes an average 2.5 years to save (compared to one year in 1990).

The consultation will begin with a proposed model that would include giving property purchasers the choice between paying stamp duty upfront or opting to pay an annual property tax.

Victoria

The Victorian government announced it will be waiving 50% of stamp duty on newly-built and off-the-plan homes valued below $1 million.

Existing homes will also be eligible for a 25% stamp duty discount.

The discounts will apply to contracts signed on or after 25 November 2020 and before 1 July 2021.

Elsewhere around the country

The ACT has already started phasing out stamp duty and replacing it with a land tax as part of its 20-year tax reform program.

And in Queensland, the Property Council of Australia says it’s time to review property taxes following NSW’s bold move.

Queensland Treasurer Cameron Dick, however, has ruled out announcing a similar scheme ahead of this year’s state budget on December 1.

In the meantime, most states are offering concessions and exemptions for first home buyers, and some may even follow Victoria’s broader discount waiver over the short term.

Here’s where you can go to find out more about first homeowner concessions and exemptions for NSW, Victoria, Queensland, Western Australia, and Tasmania.

Get in touch

If you’re interested in further exploring some of the stamp duty exemptions, concessions, waivers or discounts, please don’t hesitate to reach out.

Obviously, the less stamp duty you pay, the more of your money you can put towards a home loan deposit.

So for a hand figuring it all out, please get in touch – we’re happy to help you crunch the numbers.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.