Market update

RBA Governor Bullock stated that the Board raised rates by 25 basis points in November due to slow progress in curbing inflation. Despite weaker growth, strong economic activity caused higher than expected inflation notably in various service sectors.

While conditions in the labour market had eased but remained tight, housing prices and mortgages surged nationwide, leading to increased inflation risk. In response the Board deemed it necessary to raise rates, acknowledging the heightened risk of prolonged elevated inflation. This adjustment aims to ensure a more confident path towards bringing inflation back within desired parameters within a reasonable timeframe.

On the property front, residential building approvals increased by 7.5% in October from -4.6% from the previous month. Detached houses and units both increased by 2.2% and 19.5% respectively.

Private sector credit increased by 0.3% in October, from +0.5% the previous month. Housing credit to owner-occupiers and investors both increased by 0.4% and 0.3% respectively.

In the domestic housing market, CoreLogic data that covers the eight capital cities showed an increase of 0.6% in dwelling prices in November, from a +0.9% the previous month. Sydney dwelling prices increased by 0.3% as Melbourne dwelling prices decreased by 0.10%. Housing finance approvals, excluding refinancing, increased by 5.4% in October, from upwardly revised +1.5% the previous month. Lending to owner-occupiers and investors both increased by 5.6% and 5% respectively.

Monthly headline inflation decreased to 0.3% in October, with the annual rate decreasing to 4.9% from 5.6% the previous month. This was stronger than market expectation of 5.2%. Core inflation decreased to 5.3% from 5.4% the previous month.

Retail sales also decreased by 0.2% in October from +0.9% the previous month, while trade balance increased by $0.9bn to $7.1bn in October, from a downwardly revised $6.2bn the previous month.

As anticipated, the RBA held the Cash Rate Target and Exchange Settlement accounts unchanged. Though inflation is above the RBA’s target range, it has begun to moderate due to the goods sector. Overall, indicators of future price expectations align with the inflation target. The primary focus remains on steering inflation back to the RBA’s target range of 2%-3%.

Things to know before you invest in a granny flat

Granny flats have been in the news over the past few months as one way to help ease Australia’s current rental crisis. An analysis released last year¹ using property data from CoreLogic identified more than 655,000 residential properties suitable for a granny flat across Australia’s three biggest cities – 242,081 in Sydney, 229,051 in Melbourne, and 184,660 in Brisbane.

Adding flexibility to your property for now and the future is a key drawcard. Incorporating a granny flat can be a useful way to set up multi-generational housing options for our older selves or for younger family members struggling with housing affordability.

Is your property suitable?

State governments have eased requirements on secondary dwellings in recent years to help tackle the housing shortage, but you still need to check with your local council to see if your property is suitable. Also remember that adding a secondary dwelling does not allow you to sell it on a separate title in the future.

Consider:

• Does your council allow dual occupancy in your area?

• Is there enough open space for a secondary dwelling? There are guidelines about separate entrances, setbacks from fences, and total building to land areas that must be followed. These vary in different states, but your local council can assist.

• Will there be enough privacy to appeal to family member or a renter not related to you? (Separate entrances, decking and planting arrangements will assist here).

• How can you maintain usable backyard space?

How much does it cost?

A granny flat can be a structural addition to a property (for example, built above a garage), a separate building constructed off a plan, or a prefabricated unit, so costs vary considerably. Keep in mind that the better the quality of the secondary dwelling, the more attractive it will be for a potential family member or renter. It will also add more value for property resale in the future.

• In 2023, Archicentre’s price guide² for new constructions (shell and roof only) was from $2,400 to $4,600/m2 and for renovations inside an existing building it was $1,300 to $3,400/m2.

• Modular granny flats are advertised for as little as $70,000 and converted shipping containers may cost even less.

• Granny flat specialists suggest costs from $120,000 to $140,000 for a completed one-bedroom dwelling, to between $145,000 and $155,000 for a two-bedroom plan, but these will vary³.

• Site access, water, sewerage and electrical connections may also affect those figures.

• Also consider landscaping costs, as it’s an investment that could make the property much more appealing in years to come.

Tax and other implications

The Australian Taxation Office has capital gains tax exemptions⁴ where there is a granny flat arrangement – a written agreement that gives an eligible person the right to occupy a property for life – so long as it’s not commercial in nature. However, get advice from a tax professional if this interests you. 

If you are renting out a granny flat, you will have to declare any income you receive. However, you will also be able to claim depreciation and any maintenance on the granny flat, the same as with any rental property.

In situations where you are living with family members, it’s a good idea to get an arrangement in writing. You’ll want to set out things such as contributing to costs, such as rates, the insurance arrangements, what happens if the property is sold, etc. Getting this sorted early on can set you up for years of happy co-habiting in the future.

If your property is suitable for a granny flat, speak with one of our Lending Specialists about the best way to fund it. You could consider a Your Way Investor Home Loan or a construction loan, depending on the project, and boost the flexibility and value of your property.

New year, new budget? Here’s how to do it

At some time we’ve all made that New Year’s resolution that this is the year when we’ll finally get on top of our finances. One key step to strengthening your relationship with money is setting yourself a realistic budget. If you’re suffering a financial hangover after the holidays and new year sales, it’s even more important.

Budgeting can help you:

• control your spending and get on top of debt

• plan for unexpected expenses and emergencies

• ease financial stress with a clear plan and more spending certainty.

Tips from our new series of Better Money Management podcasts and guides show how. Financial wellbeing coach, Betsy Westcott, has a great episode on how to set up a budget, and includes these simple steps on how to start taking control of your finances. (You should also check out her tips and podcasts for starting a savings habit and getting credit health).

1. Work out where your money is going

Your first move is getting a clear picture of how much is coming in and how much is going out. You can use our budget planner to help you capture everything, including little expenses you may have forgotten about. A simple way to do this is to look at three months of your bank records. Another option is to keep a money diary for a month, where you record absolutely everything you spend. 

2. Categorise needs vs wants

Once you have a better view of your finances, then it’s time to set yourself a budget. Categorise your expenses into needs (housing costs, bills, car, credit card and loan repayments, food, etc) and wants (entertainment, hobbies).

3. Set yourself some numbers 

Now, you should set yourself some guardrails and try to stick to them. Looking at your budget planner, how much of your income do you need to keep aside to cover your regular bills? How much can you put into savings? Also allocate a realistic amount for entertainment and food, otherwise there’s no way you’ll stick to your budget. Remember, our mobile banking app has a ‘How I spend’ feature you can use to track your spending across different categories. 

4. Do you need to do some budget repair?

If your income is more than your outgoings each month, you have a surplus. But if you’re spending more money than you get and using a credit card to plug the gaps – which may be an issue post-holidays – you’ll need to look at what you can do to get your budget back in balance.

Be methodical. Go through all your bills and cancel any subscriptions or services you don’t need. Check out your utility bills, too. Are you getting the best deal you can?

Also look at what changes you can make in your everyday spending. That could be cutting back on a few takeaway coffees and lunches out each month, drinking less alcohol, or finding free activities to do with friends.

5. Use your surplus to pay down debt and build savings

Your next step will be to use any surplus in your budget to pay down debt as quickly as you can, and to put money away as savings. Just think how exciting it could be to save for a holiday or a new electric vehicle.

To really get on top of debt, you may want to reduce your credit card limits or switch to using a debit card. And if you have a few credit cards you’re paying off, you could consolidate that debt into one lower interest personal loan to make repayments more manageable. (Find out more about using credit wisely here).

Remember, taking control of your finances can reduce at least one stress in your life. And the sooner you start, the sooner you’ll see results.

Download our Better Money Management Budgeting Guide and listen to our podcast with financial wellbeing coach Betsy Westcott for more great budgeting tips

Self-service: Moving money made easy with PayID

Let’s talk about an easy way to handle your payments – PayID! Send payments to almost anyone using the Teachers Mutual Bank mobile app and PayID.

The simplest and fastest way to pay and get paid

You can make payments and receive payments in around a minute. Forget those long, confusing numbers. Your PayID can be as simple as your mobile number or email address – making transferring money easier, faster and with less room for mistakes. There are no extra fees and you can be confident that your payment is secure.

Imagine paying for coffee or splitting a restaurant bill hassle-free? With PayID, you can do this anytime and anywhere and can be used to pay for a variety if services and businesses or directly to other people.

Fast and reliable

The best part? It’s super quick and safe! No matter where the other person banks, PayID makes transactions lightning fast and secure.

Secure and smart payments

Rest assured, only you can approve payments from your account making PayID super safe. Plus, it keeps an eye out for any fishy business with real-time fraud checks to help protect you from unauthorised transactions.

How PayID works & getting started

PayID works directly through our mobile app.

Getting started is easy. Simply log into our mobile app or internet banking to create your account and you’re all set!

Paying someone

Need to pay someone? Here’s what you do:

• Ask for their PayID.                                                

• Log in to your account on our mobile banking app.

• Start a payment and choose PayID, putting in the details you received from the person or business.

• You will see a chosen display name so you can verify you’re sending money to the right person.

• If it is correct, confirm and send the payment. It should arrive almost instantly to the account you’re paying.

Getting paid

Need to get paid? A person or business can pay you directly using their mobile or internet banking. Here’s what you need to do:

Protecting your mobile wallet

You can help keep your mobile wallet safe by:

• Give them your PayID, which will show the name you have chosen to display so they can verify they’re sending to the right person.                                                        

• Once the payment is made, it should arrive in your account almost immediately.

• Check your account to verify that it has come through. 

Find out more about PayID here.

Wills Service⁵

Appointments are held on selected dates in school holidays.

To make an appointment or find out more, submit an inquiry via our website.