Our Leg Up

07/02/2024

We're Listening!

Hello, everyone! At Our Leg Up, we're more than just home equity solutions; we're about empowering you with information that matters. 🏡💼

What topics are you curious about? Financial advice, home improvements, or perhaps the latest in sustainable living? Let us know what you'd like to read in our newsroom 📚🌍:

https://www.ourlegup.com/newsroom

Drop your suggestions in the comments.

Visit our newsroom for the latest curated articles, press releases, and updates on our company. Stay informed and up-to-date with ease.

24/05/2023

Are we running out of housing?

Australia had the highest rental increase in histroy across capital cities (11.7%, year-to-April).

Not only are renters struggling to find homes to rent, they’re also facing high rent increases.

CoreLogic’s national dwelling rental index shows the following increases:

* 0.9% month of April
* 2.8% quarter ending April
* 10.1% year to April

Rentals may be easing across the regional markets due to internal migrations rates normalising, but regional rents still rose 6.0% for the year to April.

These increases are attributed to a mismatch between supply and demand and this can also be seen in the vacancy rates. For April, the vacancy rate was 1.0% in the capital cities and 1.1% nationally. A balanced market should have a vacancy rate of about 3%.

So how can more aspiring homeowners enter the market and stop paying rent? Our solution is for Australians to give each other a leg up.

Visit https://www.ourlegup.com/

16/05/2023

In the future you may see the energy rating of a home along with its other features, if the Property Council and Green Building Council get their way.

“It’s high time all Australian home buyers and renters had access to a consistent national rating, so they know the energy bill costs and comfort levels to expect during colder months,” said Property Council chief executive Mike Zorbas.

The two organisations are encouraging political leaders to look for emission-reduction opportunities across all sectors of the economy, not just in the energy sector. They recommend:

* Phasing out fossil fuels in existing buildings and appliances including gas water heaters and cooktops
* Implementing a strategy to ensure climate resilient buildings
* Improving the skills and capacity of the workforce to transition more homes away from gas

Currently, the National Construction Code is tasked with ensuring homes are liveable and environmentally friendly. It has published a transition calendar that gives states a number of years to implement energy efficiency and liveable housing designs.

But some argue this is insufficient because architects and tradespeople must drive these design changes and their clients may have different priorities.

Another organisation campaigning for change is the Australian Passive House Association. It focuses on design models that are energy efficient but still comfortable and is campaigning for clear measured targets, high-quality construction and quality controls.

Whichever option federal or local governments choose, Australians may need to transition their homes to clean energy at some stage. And a way homeowners can pay for these transitions is by investing the equity in their homes through Our Leg Up. Visit https://www.ourlegup.com/ to find out more

10/05/2023

Home values in certain areas across Australia have increased.

National home values rose by 0.5% in April, following a 0.6% uplift in March (CoreLogic).

Does this mean the property market is in recovery? We think it's a premature sell.

CoreLogic’s research director Tim Lawless believes Australia’s housing downturn may be over because:

- Low vacancy rates may reduce rental affordability and force more people to buy
- Vendors waiting to sell mean fewer properties for sale but relatively more bidding
- Media sentiment led many to believe interest rates had stabilised

So has the market turned or is this just a dead-cat bounce?

- Rates continue to rises, impacting servicability and dampening prospective buyers' borrowing power (fewer buyers = less competition = lower prices)
- If more sellers enter the market thinking the downturn is over, this could lead to an oversupply (more sellers = less competition = lower prices)

We're not at the bottom, but we could be close. Visit https://zurl.co/4shH

05/05/2023

Kid: Are we there yet?
Mum: Just a little further, dear

Days ago, the RBA hiked the cash rate up to 3.85% (+25bps) in an ongoing battle against high inflation.

ABS data indicates 7% inflation (Year-to-March) but the RBA intends to bring this back between 2-3%, acknowleding it may only drop to 4.5% in 2023 and to 3% mid-2025.

Philip Lowe has warned of further increases, mentioning two key areas of concern:

1. A low unemployment rate can drive up wages if organisations must compete for workers (3.5%, Mar-23).

2. Inflation for services is still high in Australia and globally.

So it seems that ANZ’s prediction of the cash rate rising to 4.10% by Aug-23 is the most likely scenario.

As lenders continue to pass these rate rises onto borrowers, homeowners may need to find new ways to cut costs or earn more to pay for their mortgages.

That’s where we come in.

Our Leg Up can help homeowners make income from the equity in their homes to pay for the increase in mortgage rates, and then some. Visit https://zurl.co/0fZx to find out more

28/04/2023

Secure your retirement with a passive income stream that beats inflation - Our Leg Up has got you covered!

Inflation can test the best laid plans. Australia has been fortunate to avoid some of the more extreme inflation seen in other parts around the world. Many parts of Europe including Germany and the UK have inflation that has breached double digits. Here in Australia it appears to be moderating but remains at 7%.

If you worked and saved for many years planning to live your best retirement, the impact of inflation does not need to be explained. Unlike the aged pension, or even the Commonwealth Super Scheme for some former Commonwealth government employees, your self funded retirement savings won’t get a free boost twice a year through CPI adjustments.

If you are fortunate enough to own your own home at least your ‘owners rent’ is protected from inflation. The underlying price usually does a good job at keeping its value through times of high inflation as well.

What if you could use your home to also give you an income stream? An income stream that will be protected from erosion by the scourge of inflation.

Our Leg Up has tried to solve this dilemma by providing a passive income as well as helping the next generation of Australians. By using the equity in your home, you can generate a return without taking on an interest bearing loan and earn 2% to 4% return.

Visit Our Leg Up at https://zurl.co/L99v to make your retirement comfortable.

26/04/2023

Headline CPI came in at 7.0% which is a reduction of 0.8% from the December quarter reading of 7.8%. Does that mean the inflation challenge is over?

Right across the world inflation got a huge shock after pandemic-era stimulus boosted demand simultaneously and global supply chains could not keep up. That catalyst is well and truly over in most countries, many stopped their direct money stimulus 12-18 months ago.

The global collective release of inflation was exacerbated by the collective failure of central banks to act soon enough. Unfortunately, the excuses put out in the media of global supply chains and the war in Ukraine were very real stories for 2021 and 2022 but no longer hold water. Oil as measured by West Texas Crude Intermediate (WTI) was $92 USD on Feb 22, 2022 prior to the Ukraine invasion, as of yesterday had fallen to $76 USD.

The inflation problem has instead migrated into the much more difficult to solve services sector. Chief among them has been housing. Housing is a unique component of the CPI as it captures both a goods price (construction) and a service price (rents). The goods component is moderating fast however the service component, along with many other services, is still rising. In fact, the quarterly figure for growth in rent now exceeds the quarterly figure for housing construction cost.

According to the ABS, rents have risen 4.9% in the year to March, compared with 4.0% in the year to December (previous quarterly reading). The relatively modest pace in the growth of rent may come as a surprise to recent rental property hunters that might be more familiar with double digit hikes in Sydney and Melbourne.

The ABS points out that its figures are a combination of faster new rental leases and those longer term leases that roll over at a slower growth.

With building companies going bust and being unable to complete many houses, it is very unlikely that there will be an upswing in housing completions any time soon. Pressure will persist in the rental market and today’s data shows that it has yet to peak even though headline inflation has.

The steady uplift in rents seems to suggest inflation may be with us for a little while longer and may keep the RBA with an upward bias for interest rates for much of 2023. This will further limit borrowing capacity of younger people and in turn make it harder for developers to sell houses and apartments off the plan.

Saving a deposit for your own home will continue to get more difficult. Visit OurLegUp.com to see how to get out of the rental trap.

Note: 2023 figures are for the year to March 2023, all other years are for the full year to December. Annualised figures for the March quarter show an even stronger growth in rent of 6.2%.

References:
ABS (2023), Consumer Price Index Australia, https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release

24/04/2023

There has been a lot of discussion around the fact younger people are needing more help from their parents. Is it even possible for a person on a normal income to afford a home?

According to the ABS the average income for somebody employed full-time across both males and females and without any overtime or second job is $1807.70 per week, as of November 2022. For a single person, mortgage calculators, assuming you can gather a 20% deposit, will only allow you to borrow $470,000. Allowing you to purchase a property worth $587,500 once including your deposit of $117,500. That is only going to get you a modest property in most metropolitan areas across Australia. Enough for a single person can afford at least a 1 bedroom apartment in inner areas or a 2 bedroom apartment in middle and outer ring suburbs.

A couple fares much better than a single. With a combined income equal to 2 of the average weekly incomes, the borrowing capacity increases to $940,000. So we are talking about a combined purchase price of $1,175,000. That is above the median price for all cities in Australia except Sydney.

Under both scenarios, the assumption is a 20% deposit is available. Unfortunately this is where those people with families that can lend the deposit or act as guarantor for the loan can enter the market while others can’t. This is commonly referred to as ‘the bank of mum and dad’.

For people fortunate enough to have access to such a bank, it does afford the opportunity to get into the market much sooner. A property that may not be their ‘forever home’ but will get them a solid footing on the property ladder.

For people without such an advantage, a single that earns the average income, dedicates 50% of the after tax income to rent and saving for a house will be able to save for the 20% deposit in 8 years, assuming they can earn a 4% return on their savings throughout. This doesn’t include the stamp duty, lawyers fees or any other expenses. A couple does have a real advantage here. The same scenario with 50% of the combined after tax income being saved or spent on rent will allow the couple to save in just 4 years and 11 months.

The problem of course is that by the time they have saved that 20% deposit, the combined deposit and loan may no longer be enough to buy that same property. Thereby requiring even more time to save.

The media has focused on young people’s ability to enter the housing market. The biggest challenge remains the saving for a deposit. The second largest problem is the cost inflation of construction pushing up entry level apartments and houses the longer they take to save for the deposit.

Our Leg Up remains committed to helping level the playing field. Giving the opportunity for young people to access their first home sooner with as little as a 5% deposit.

Visit OurLegUp.com to find out how.

References:
ABS (2023), Average Weekly Earnings https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/average-weekly-earnings-australia/latest-release

21/04/2023

Unlock the potential of your home with Our Leg Up and secure both financial security and the benefits of homeownership

Owners in metropolitan cities across Australia have seen a significant boost in their assets over the past decade. Despite recent declines, Sydney house values remain above $1.2mil, Melbourne close to $900,000, with Brisbane, Adelaide and Canberra all posting strong growth as well.

For many older Australians that took a chance some years ago and remained in the housing market, they now sit on large price gains. Often suburbs which were middle or outer suburbs 20 and 30 years ago are now much sought after. This has led to an ever growing number of Australians having houses exceeding the $1 million price and even $2 million in many suburbs across Sydney, Melbourne, Canberra and now also Brisbane, Adelaide, Perth and Hobart.

The problem is a house is a giant asset in which you also live in and delight in the local amenities. You don’t really want to lose that, nor the benefits of the financial security and tax concessions it provides.

Our Leg Up has tried to solve this dilemma by providing a passive income as well as helping the next generation of Australians. By using the equity in your home, you can generate a return without taking on an interest bearing loan and earn 2% to 4% return.

Visit https://zurl.co/EzVU to find out more about this opportunity.

19/04/2023

Wanna boost your property investment returns?

Over the long run, the housing market has been a strong performer. It offers investors some clarity and comfort because they know what they own. It can also offer regular income (when rented) or offer a consumption of shelter (if live-in). Houses are also able to benefit from tax advantages if lived in, or a reduction in gains taxed if lived in for part of the ownership.

The returns in the very long run tend to follow nominal GDP. What is that? Well, the number of people/households and the amount of income they earn. So houses will benefit from population growth as well as income growth.

Australia’s strong historic and projected population growth, underpin the long run returns greater than just the increases due to people’s wages. Typically, nominal GDP has averaged between 6% and 7% annually over the past 40 years. In the latest year to December 2022, nominal GDP was up 12% as Australia benefited from higher prices of the commodities we sell.

What if you could boost the return by another 2%?
A median $1mil property returning 5% per year would grow by over $625,000 over 10 years. If that was increased by just 2%, that same property would increase by over $965,000, approximately an extra $340,000 extra.

Our Leg Up aims to assist make this difference real by generating returns of 3% - 4%. Our Leg Up offers a way to ‘bank’ your property and earn a modest return in addition to the total return you will receive from any price change, rent or consumption that you continue to receive. Visit https://www.ourlegup.com/investor

17/04/2023

Do house prices grow faster than wages? The short answer is yes. Over the long term, history shows house prices tend to follow nominal GDP (as shown in the chart) which grows faster than income.

What is nominal GDP? Well it is the total production/income of all households. This includes the growth in the number of people/households as well as the growth in the amount of income they earn in the prices of that year (current prices). This shows house prices have traditionally benefited from population growth as well as wage/income growth from all sources.

Australia’s strong historic and projected population growth underpin the long run price growth greater than just the increases due to people’s wages. Nominal GDP has averaged 6.7% annually over the past 40 years since 1982. Both GDP and house prices are higher when inflation is higher. This growth rate excludes the very high inflation period of the 1970s.

The two series can at times deviate from one another. There is seemingly a gravitational pull that keeps them in line over time. If we examine the most recent 3 year cycle as a test of the relationship.

House prices shot up above the nominal GDP index. Once again, the two series adjusted. House prices fell in the year to Dec 2022, while in the latest year to December 2022, nominal GDP was up 12% as Australia benefited from higher prices of the commodities we sell and a return of migrants.

House prices can and do move up or down significant amounts in the short run but appear to maintain a strong relationship with nominal GDP over the long term to grow persistently faster than wages.

References:
Abelson & Chung, HOUSING PRICES IN AUSTRALIA:1970 TO 2003
ABS (2022), Residential Property Price Indexes: Eight Capital Cities
ABS (2023), National Accounts, GDP Current Prices

13/04/2023

Retirees, don't Feel Trapped by Your own Home!

Retirees tend to remain where they are most comfortable. Put simply, the longer you can hold onto your home, the greater certainty you will have over your retirement.

It is no surprise that we are holding onto our homes longer than ever before. The average ‘hold period’ for all households rose nationally in the latest quarter to 9.9 years.

For a retiree, their own home offers an unparalleled opportunity. It is a ‘triple threat’:

- Consumption
- Inflation hedge
- Real price growth

The only problem, it is all on paper. You can’t spend the wealth you have, let alone profit from the asset accumulation. It then becomes a difficult choice, do I stay where I am comfortable or ‘cash in’ so I can enjoy my retirement? Does it feel like you are trapped by your own home?

Our Leg Up has found a way to enable retirees to maintain their comfort and gain some income from their property assets.

Our Leg Up is allowing you to ‘bank’ your property asset and generate a return by using the value of your home as security. There is no interest to repay leaving you free to stay in your home, rent out your home or sell your home without having to repay a loan.

visit https://zurl.co/mD3j to find out more about this innovative product.