The rich will get even richer this year as the nation approaches another massive property boom, a property expert has tipped.
Michael Yardney - who runs buyers' advocacy service Metropole Property Investment Strategists - says that despite the record low in affordability, there was no doubt the great divide would keep growing, with the more affluent suburbs set to be the strongest performers in 2007.
"I think, looking at the stage of the cycle we are in in SA, this is a year where the rich are going to get richer," Mr Yardney said.
He said Australia was on the cusp of one last momentous real estate boom caused by strong immigration, a lack of land and an increasing proportion of single-person households. As the price climb continued, home ownership levels would also continue to fall, he said.
The Australian Housing and Urban Research Institute has predicted that by 2011, the number of renters across the country will have risen 12 per cent, to 40 per cent of the population.
"Now that is just an amazing figure," Mr Yardney said. The property commentator predicts Adelaide's median house price will be $13.5 million in less than 40 years.
Recent State Government figures peg Adelaide's median house price at $300,000, up from $110,000 in 1996.
He said while such a rise seemed unimaginable, he pointed to countries like the United Kingdom, where house prices were beyond the reach of average people.
Source: The Advertiser
Saturday, April 21, 2007
Monday, April 16, 2007
Calls to scrap mortgage comparison rates as they are not understood and open to lender abuse
A lack of awareness of comparison rates and how they work has prompted calls for them to be scrapped. A finance industry group has described them as costly, complex and open to abuse.
And a recent study found that since 2003, when mandatory comparison rates were introduced, only about a third of people have found out what they are and only about one in 10 could define them accurately.
Most people said they found the wide range of choice in the consumer credit market confusing, a situation that was not helped much by comparison rates.
The Mortgage & Finance Association of Australia, which represents mortgage brokers, says state governments are maintaining a costly system that has not served consumers well. Its attack on comparison rates comes in response to the Queensland Government's introduction of a bill to extend the life of the mandatory comparison rate regime, scheduled to lapse in July this year, to 2009.
Comparison rates are loan interest rates calculated after adding fees and charges to the lender's advertised rate. The idea is to express the full cost of the loan in the rate and also provide a basis for comparing one loan with another.
The mandatory comparison rate rules are part of the Uniform Consumer Credit Code, which governs consumer lending. This is uniform state legislation first passed in Queensland and then taken up by the other states.
The code was introduced in 1994, with the mandatory comparison rate following in 2003. The comparison rate scheme has a sunset clause, put in place to allow the states to review the effectiveness of the comparison rates before making them a permanent part of the code.
Calvert Duffy, head of legal and compliance with the brokers' association, says: "Having the ability to compare like with like is a brilliant idea. But the execution is difficult and consumers struggle with the concept."
There has been a proliferation of "off-book" fees and charges since 2003. Items such as third party valuations and legal fees do not go into the comparison rate, nor do the increasingly common and expensive deferred establishment fees.
Lenders say these fees cannot form part of the comparison rate because they do not apply to all borrowers equally and may not apply at all. Duffy says to leave them out means understating the real cost of the loan but putting them in creates inaccuracies. Either way, the comparison rate is unhelpful.
The system, though widely held to be flawed, still has its fans. Mara Bun, a senior executive of the banking industry research group Cannex, says the idea of comparison rates is a good one and the problems in the current arrangement can be fixed. "Deferred establishment fees and other exit charges are the big problem," Bun says. "The states need to look at how the [credit code] can capture those costs."
Duffy says such a project is not worth doing, even if it means better comparison rates, because consumers are not using them.
In a study published last year, researchers from the Institute for Social Research at Swinburne University of Technology found a low level of awareness in the focus groups they ran. Only 37 per cent recognised the term "comparison rate" and only 12.5 per cent could define it correctly. Among those who knew about comparison rates, the majority found them helpful but the message did not appear to be getting out widely.
Respondents said the most important factor in choosing a credit product was the interest rate, followed by fees and charges - a finding that makes the lack of awareness of comparison rates surprising.
The Swinburne report says: "The majority of people interviewed did not feel educated about the credit market. Confusing, complex and mind-boggling were words frequently used to describe credit searches."
The researchers said that similar studies in New Zealand, Britain and US also found low levels of awareness of comparison rates.
Source. The Age
And a recent study found that since 2003, when mandatory comparison rates were introduced, only about a third of people have found out what they are and only about one in 10 could define them accurately.
Most people said they found the wide range of choice in the consumer credit market confusing, a situation that was not helped much by comparison rates.
The Mortgage & Finance Association of Australia, which represents mortgage brokers, says state governments are maintaining a costly system that has not served consumers well. Its attack on comparison rates comes in response to the Queensland Government's introduction of a bill to extend the life of the mandatory comparison rate regime, scheduled to lapse in July this year, to 2009.
Comparison rates are loan interest rates calculated after adding fees and charges to the lender's advertised rate. The idea is to express the full cost of the loan in the rate and also provide a basis for comparing one loan with another.
The mandatory comparison rate rules are part of the Uniform Consumer Credit Code, which governs consumer lending. This is uniform state legislation first passed in Queensland and then taken up by the other states.
The code was introduced in 1994, with the mandatory comparison rate following in 2003. The comparison rate scheme has a sunset clause, put in place to allow the states to review the effectiveness of the comparison rates before making them a permanent part of the code.
Calvert Duffy, head of legal and compliance with the brokers' association, says: "Having the ability to compare like with like is a brilliant idea. But the execution is difficult and consumers struggle with the concept."
There has been a proliferation of "off-book" fees and charges since 2003. Items such as third party valuations and legal fees do not go into the comparison rate, nor do the increasingly common and expensive deferred establishment fees.
Lenders say these fees cannot form part of the comparison rate because they do not apply to all borrowers equally and may not apply at all. Duffy says to leave them out means understating the real cost of the loan but putting them in creates inaccuracies. Either way, the comparison rate is unhelpful.
The system, though widely held to be flawed, still has its fans. Mara Bun, a senior executive of the banking industry research group Cannex, says the idea of comparison rates is a good one and the problems in the current arrangement can be fixed. "Deferred establishment fees and other exit charges are the big problem," Bun says. "The states need to look at how the [credit code] can capture those costs."
Duffy says such a project is not worth doing, even if it means better comparison rates, because consumers are not using them.
In a study published last year, researchers from the Institute for Social Research at Swinburne University of Technology found a low level of awareness in the focus groups they ran. Only 37 per cent recognised the term "comparison rate" and only 12.5 per cent could define it correctly. Among those who knew about comparison rates, the majority found them helpful but the message did not appear to be getting out widely.
Respondents said the most important factor in choosing a credit product was the interest rate, followed by fees and charges - a finding that makes the lack of awareness of comparison rates surprising.
The Swinburne report says: "The majority of people interviewed did not feel educated about the credit market. Confusing, complex and mind-boggling were words frequently used to describe credit searches."
The researchers said that similar studies in New Zealand, Britain and US also found low levels of awareness of comparison rates.
Source. The Age
Subscribe to:
Posts (Atom)