Honey…I housed the kids

With the boom in the Sydney property market sending housing affordability skyrocketing over the last 12 months, granny flats also known as secondary dwellings have become increasingly popular investments. The great Australian dream of homeownership for Gen-Yers is becoming a major feat which has seen some parents generously invest in a granny flat.

Catching wind of the increasing demand for secondary dwellings with the interest rates at a historically-low 2.0%, we can thank the NSW state government for simplifying the approval process. Offering investors a bypass of council approval through ‘complying developments’, the Department of Planning and Environment can now offer approval with a proposed 10-day turnaround. How exciting! no more council applications….

There are a few condition though which can be found here, so make sure to get all the facts before drawing out boundaries on Mum & Dad's back lawn.

We have increasingly seen the impacts of the Affordable Rental Housing- State Environmental Planning Policy (SEPP) in the local Macarthur property market, with traditionally larger size blocks being snapped up. Director Graeme Paddock confirms that “more than 50% of local properties sold within the past few months have boasted granny flat potential”.

Encouraged by the record-low interest rates and attractive rent potential, buyers are getting more bang for their buck than ever before- investment yield that cannot be surpassed. Graeme’s advice to buyers in increasing the value of their investment is to preferably “invest in either a corner block or a block with vehicle side access, this will offer you the opportunity to construct a carport and the convenience of a separate frontage, improving the property’s market value in the long run."

WOW...was it cold?!

Last Friday night a team of volunteers from Prudential Real Estate braved the cold to raise awareness about hidden homelessness in Macarthur.

Attending the Macarthur Homelessness Steering Committee’s annual Sleep Out event at Campbelltown Athletics Centre, we kept warm by playing soccer, tennis and even running around the track in our onesies!

Director, Michael O’Sullivan even sported a pink hippo onesie to pay up on his bet with Paul Meehan of Meehans Solicitors to achieve another $500 donation towards the cause.

With temperatures dropping from a balmy 10 degrees to 0.9 degrees overnight, our sleep out in cardboard boxes was definitely chilly, but the fantastic live entertainment, a delicious sausage sizzle held by the Lions Rotary Club and fun and games including a raffle and bingo gave us more than enough distraction from the cold.

As the night wrapped up our team had managed to keep our spirits up with a few hot chocolates, hot wedges, cheese and biscuits and a tonne of lollies...giving Director, Nick Gauci a sugar high and an inability to sleep that night (not anything to do with a certain neighbour’s snoring)...

Prudential Real Estate is very proud to have participated in the ‘Night Out in the Cold for a Cause’ event as gold sponsors, raising over $1500 for the Macarthur Homelessness Steering Committee. We would like to thank the team of volunteers who attended, our supporters and importantly the Social Committee for organising our sponsorship and participation in this event.

All in all we had a blast raising awareness for the homeless in Macarthur, but returning to our warm houses the following day, we know sleeping out in the elements is a harsh reality for many people in the community. We appreciate the struggles faced each day by the homeless and we are happy to return next year to support this worthy, local cause. We look forward to seeing you all there!

Will the banks cause the end of the boom?

The slow-down in the Sydney property market is inevitable like all good things - the boom must come to an end at some stage. There has been much speculation about when and if the property market bubble will burst which has been dismissed, but with greater talk about APRA’s recent pressure on the banks to increase their measures in reducing capital investment percentages under the 10% target… we are paying attention.

So we thought it was the right time to explain the imminent shift in the property market in layman's terms for our readers.

Let’s break it down, What is APRA proposing the banks introduce to avoid penalties?

• Increase the minimum deposit rate on loans
• Increase linear expenses to reduce the amount people can borrow
• Increase interest rates for new and existing customers

Why?

APRA is trying to regulate the high influx of investment in the market which is leaving the banks with limited cash holdings and placing the banks in risky territory. As the cash rate interest rate is at an all time record low of 2.0%, loans are looking more and more attractive to those looking to enter the property market and to investors looking to improve their portfolios.

The demand for finance stimulated by the low interest rate can be explained through the example of our all-time favourite childhood treat, the Cadbury’s Freddo Frog. Back in my day as a millennial, the humble ‘Freddo’ was double in quantity and a margin of the price, making it one of the most popular school fundraiser chocolates. Nowadays we are faced with paying an extra .50c to a $1 more for a thinner ‘Freddo’....neutralising demand. This is the reality we face for loan finance as well as APRA continued pressure on the banks to limit their amounts loaned and for a higher interest rate.

What will this mean for investors and homeowners?

Essentially the pressure on the banks will see investors faced with higher loan interest rates and more stringent borrowing limits- less for more! This shift in economic measures will shake up investor interest in the Sydney property market by making that much harder to grow your portfolio.

Homeowners will also be left with a bad taste in their mouths, with these stringency measures meaning high interest rates could be passed onto existing loan holders. The news doesn't look so good for first home buyers either... increased minimum deposits will mean high barriers to entry into the property game and ultimately more time renting or living at home.