Predictions for a long hot summer and a tricky property market are two good reasons to keep your cool.

A few years ago when house prices were spiralling, property was the main topic of conversation at barbecues and dinner parties. Now that things have calmed down, I can’t remember the last time I heard someone mention property prices at the dinner table.

Those giddy days may be behind us for a while, with house prices expected to remain relatively steady in the major markets for the next year or so, but that can spell opportunity for homeowners and investors who are willing to bide their time.

To start with, existing investors can look forward to slightly improved yields over the next 12 months. Estimated gross yields for two-bedroom ‘other dwellings’ are still quite low around Australia, ranging from about 3.7% in Perth to 4.8% in Brisbane (as at June 2006), but tight vacancy rates should see an increase in rental returns. In particular, Sydney has been lagging a little behind on rental growth despite vacancy rates being lower than the long-term average, so I would expect to see increases there.

Capital growth on residential investment property is not likely to return to the dizzying heights of 2003 in the medium term, but that could be good news for investors looking to enter the market. It means there’s time to do your homework before buying. Research past sales and rental returns in your market. Look also for signs of new supply that could

compete with your property for tenants. Investors in Perth, where house prices have continued to skyrocket over the last 12 months thanks largely to the resources boom, should take particular care not to pay too much in a market that is starting to show signs of moderation.

Rule number one as you begin to assess properties, is to ask yourself what type of tenant would want to live there and is that consistent with the demographics of the suburb. There’s no point buying a property suited to uni students if it’s nowhere near a university. Next, look for a point of difference in the property, perhaps a two-car garage or a view. Generic properties are harder to lease and sell later on.

For owner-occupiers looking to sell their home, again time is on your side. Unless you need to sell quickly, be patient and do your research. Discuss with your agent whether auction or sale is the best method. Consider repainting, fi x anything that’s broken or damaged, and spruce up the garden if you have one.

HOME LOANS STILL IN DEMANDWhile housing affordability is down, making it more diffi cult for new entrants in the housing market, demand for new home loans by owner-occupiers is at record levels nationally. In addition to this, the level of equity withdrawal has spiked again in 2006 as existing homeowners dip into their mortgages.

These are unexpected developments, given the rising interest rates. In the past, demand for mortgages has declined as people tighten their belts, but rates have been increasing in small

increments for so long that it seems owner-occupiers have become less alarmed about rising debt servicing costs. Possibly also underpinning demand is the 30 year low in unemployment and a generally healthy economy.

Demand for home loans is predicted to lessen over the next few months as the effects of the latest interest rate rise hit home, but the favourable economic outlook is likely to prevent a crash. Looks like cool heads will prevail all round.

Amanda Quiggin is Westpac’s Associate Director, Property Markets. ■

THE OUTLOOK

BY AMANDA QUIGGIN

Cool heads needed

Think you’d have to be dreaming

to buy a holiday house? Think again, page 2.

WIN a holiday fromyour mortgage

Holiday dreaming

Trend in home loan checksAustralians are increasingly looking to reassess their home and property loans as life circumstances change. Westpac offers a free service for all loan customers to re-evaluate their current loan – ensuring it’s best suited to their current needs. If changes are needed, a variety of options include reducing payments for a time, accessing equity or even paying off the loan sooner. For a free loan assessment visit your local Westpac branch or call 1800 807 693.

RBA lifts ratesOn 7 November, the Reserve Bank of Australia raised interest rates by 25 basis points to 6.25 per cent. RBA Governor, Glenn Stevens said the decision was taken against a background of continued expansion in the global economy and further evidence that infl ationary pressures had increased. Westpac customers with any concerns about loan repayments may have the option to look at restructuring their loan or taking a holiday from repayments. Visit your local branch for further details.

Holiday cash, pleaseThere are plenty of ways for Australians to fund their holiday spending. Selected home or property owners can now redraw, top-up or access equity from their current loan at a similar rate. It’s a convenient and cost effective way to ensure everyone enjoys their summer break. Call 131 900 for further details (select option 2).

I N T H I S E D I T I O N : R E N O VAT I O N T I P S ■ M A R K E T N E W S ■ H O L I D AY H O M E S ■ A N D M O R E

For details and to enter the draw, visitwww.westpac.com.au/mypropertynewsletterand tell us what you think aboutWestpac housekeeping.

Inspiration for your propertyS U M M E R 0 6 / 0 7

Westpac housekeeping™

Things you should know: The information in the above article is current as at 10 November 2006. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts. This information has been prepared without taking account of your objectives, fi nancial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, fi nancial situation or needs. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac Banking Corporation ABN 33 007 457 141. Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority.

We respect your privacy: If you do not wish to receive any further marketing communication from any member of the Westpac Group about products or services, please call us on 132 032, write to us at GPO Box 3433, Sydney 2001 or call in at any of our branches.© 2006 Westpac Banking Corporation ABN 33 007 457 141.

Westpac housekeeping is a new regular newsletter keeping you at the forefront of what’s happening in the property market. You’ll fi nd news, features and tips on everything from economics and managing your loan to home renovation. So relax, have a read and best wishes for a happy and safe holiday season.

Ethical lendingInternational Banks have joined forces to create the Equator Principles – a set of guidelines restricting the funding of development projects that may potentially harm communities or the environment.

Westpac is proud to be a founding member and the only Australian bank to have joined.

Every generation should live better than the lastWestpac has launched a new website as part of its campaign to improve the lives of the next generation. To know what’s happening in your community, find out how you can help the environment with a ‘greener’ home loan and more, visit www.everygeneration.com.au

HPN001 V2 (11/06) WHL0320

04Bargain huntCheck out salvage yards and auction houses. Almost anything you need for renovating can be found here, from materials and equipment to white goods – all at a fraction of the retail price. Be sure to take your measurements at home fi rst and bring a tape measure along.

IMAGINE IT. The weekend’s about to roll round and rather than spend it battling city traffi c, you make plans to get out of town to your holiday home instead. Sounds like bliss?

Making the dream a reality might not be as pie-in-the-sky as you think. From turning it into a money spinner when you’re not using it, to going partners with a group of friends, there are lots of ways to make owning a holiday house happen.

“There is defi nitely some evidence that people are buying holiday homes as part of a group, rather than as individuals,” says Tony Brasier, president of the Real Estate Institute of Australia. “Provided you’re very sure who you’re buying the property with, it can certainly make it more affordable. More frequently, people are buying something that has the potential to generate income when they’re not using it.”

The key to doing that is buying in the right area. Get that right by doing your homework and talking to local real estate agents, who may help you lease the property to holiday tenants.

“For a holiday home to be a successful purchase, I also think it’s crucial that it’s within easy reach of where you live. You’re unlikely to embark on a six hour drive on a Friday night just to spend a weekend away,” says Brasier.

Betty Zeritis, a Sydney resident with her own little slice of Huskisson on the NSW south coast, couldn’t agree more. The two hour drive south of Sydney means her family makes the most of the holiday home she bought eight years ago. “I’d say we stay there at least 13 times a year because it’s so easy to get to,” says Betty.

“We had equity in our own home, so were able to take out a loan based on that and haven’t regretted it. If I was offered a million dollars for my holiday place tomorrow, I wouldn’t sell. It’s far too special.”

According to Colin Goddard, a Westpac Home Finance Manager, taking advantage of the equity in your own home can be a smart move. “Depending on how much equity you have, you may be able to borrow up to 100% of the property’s value,” says Goddard.

“Of course, it’s still vital that you can service the loan, have a realistic budget and take into account that you’ll have to pay things like rates and ongoing maintenance costs – but being able to use equity in your home does make it more viable for many people.”

So what should you watch out for? Is buying a holiday home different to buying an everyday house? “In a lot of ways, it’s not,” says Brasier. “You should still research your market so you

know that a prospective property is a good buy and a sound long-term investment. But, that said, in other ways it is different.For example, you’ll need to take into account land tax and capital gains tax – costs that don’t typically apply to a primary residence.”

Other than that? Get ready for a lot of lazy weekends and plenty of visitors.

To fi nd out more about home fi nance, speak to a Westpac home fi nance manager at your nearest Westpac branch or call 131 900 (select option 1). ■

The Castle’s Darryl Kerrigan had it right. There’s something special about escaping to your own personal holiday destination. KAREN FITTALL REPORTS.

How’s the serenity…

THE FEATURE

Not quite ready for a holiday house?Try a house swap. List your own home and search for potential swappers on websites such as aussiehouseswap.com.au and placetoplace.com.au. Enjoy a great holiday without the cost of accommodation.

Renovations on the riseStable house prices, a strong labour market and high moving costs are keeping Australia’s home renovators active.

Number of households to undergo some type of renovation in April-June 2006: 10,000

Average renovation value: $84,000 ea

Total industry fi gure: $850 million in just 3 months

Source: Housing Industry Association (HIA).

THE WORD ON

Gettingrenovation right

03Finance rightYour property loan is an opportunity to ensure you never pay high rates for extra credit. You could:*

a Access equity – up to 80% of the value of your property. Suitable for borrowings of $25,000 or more.

b Redraw – access additional payments you’ve made to your mortgage.

c Top-up – increase the credit limit of your existing property loan (subject to normal lending criteria).

02Know your budgetBe upfront with your builder and designer about your ideas and what you can spend. If your dreams are too big, they can always help you achieve a similar outcome at a price you can afford.

01Value your renoAssess your project’s potential beforehand. New kitchens and bathrooms can add value fast, whereas a swimming pool is fun but adds little to the price of property. Remember, it’s best to wait 5-7 years to reap the full benefi ts of a renovation.

05Colour me richOne of the quickest, easiest and cheapest ways to add value to your property is to paint it. Save money on a tradesman by doing it yourself and keep colours neutral to appeal to future buyers.

06Bedroom benefi tDining rooms, sunrooms or studies can easily be converted into an extra bedroom, raising the rent and value of your property. Or make a double carport single and create space for a new rumpus room.

07Think outdoorsA recent report from Archicentre, suggests outdoor areas have become increasingly important to homeowners and renters. Casual living links to outdoors, landscaped gardens, decking and loads of natural light are increasingly in demand. ■

Whether it’s time to lose that 70s kitchen, add another room or make your house just plain fabulous, here are a few pointers on getting the most out of your dream renovation.

*These options are available on selected home and investment property loans only. For further details call 131 900 (select option 2).

04Bargain huntCheck out salvage yards and auction houses. Almost anything you need for renovating can be found here, from materials and equipment to white goods – all at a fraction of the retail price. Be sure to take your measurements at home fi rst and bring a tape measure along.

IMAGINE IT. The weekend’s about to roll round and rather than spend it battling city traffi c, you make plans to get out of town to your holiday home instead. Sounds like bliss?

Making the dream a reality might not be as pie-in-the-sky as you think. From turning it into a money spinner when you’re not using it, to going partners with a group of friends, there are lots of ways to make owning a holiday house happen.

“There is defi nitely some evidence that people are buying holiday homes as part of a group, rather than as individuals,” says Tony Brasier, president of the Real Estate Institute of Australia. “Provided you’re very sure who you’re buying the property with, it can certainly make it more affordable. More frequently, people are buying something that has the potential to generate income when they’re not using it.”

The key to doing that is buying in the right area. Get that right by doing your homework and talking to local real estate agents, who may help you lease the property to holiday tenants.

“For a holiday home to be a successful purchase, I also think it’s crucial that it’s within easy reach of where you live. You’re unlikely to embark on a six hour drive on a Friday night just to spend a weekend away,” says Brasier.

Betty Zeritis, a Sydney resident with her own little slice of Huskisson on the NSW south coast, couldn’t agree more. The two hour drive south of Sydney means her family makes the most of the holiday home she bought eight years ago. “I’d say we stay there at least 13 times a year because it’s so easy to get to,” says Betty.

“We had equity in our own home, so were able to take out a loan based on that and haven’t regretted it. If I was offered a million dollars for my holiday place tomorrow, I wouldn’t sell. It’s far too special.”

According to Colin Goddard, a Westpac Home Finance Manager, taking advantage of the equity in your own home can be a smart move. “Depending on how much equity you have, you may be able to borrow up to 100% of the property’s value,” says Goddard.

“Of course, it’s still vital that you can service the loan, have a realistic budget and take into account that you’ll have to pay things like rates and ongoing maintenance costs – but being able to use equity in your home does make it more viable for many people.”

So what should you watch out for? Is buying a holiday home different to buying an everyday house? “In a lot of ways, it’s not,” says Brasier. “You should still research your market so you

know that a prospective property is a good buy and a sound long-term investment. But, that said, in other ways it is different.For example, you’ll need to take into account land tax and capital gains tax – costs that don’t typically apply to a primary residence.”

Other than that? Get ready for a lot of lazy weekends and plenty of visitors.

To fi nd out more about home fi nance, speak to a Westpac home fi nance manager at your nearest Westpac branch or call 131 900 (select option 1). ■

The Castle’s Darryl Kerrigan had it right. There’s something special about escaping to your own personal holiday destination. KAREN FITTALL REPORTS.

How’s the serenity…

THE FEATURE

Not quite ready for a holiday house?Try a house swap. List your own home and search for potential swappers on websites such as aussiehouseswap.com.au and placetoplace.com.au. Enjoy a great holiday without the cost of accommodation.

Renovations on the riseStable house prices, a strong labour market and high moving costs are keeping Australia’s home renovators active.

Number of households to undergo some type of renovation in April-June 2006: 10,000

Average renovation value: $84,000 ea

Total industry fi gure: $850 million in just 3 months

Source: Housing Industry Association (HIA).

THE WORD ON

Gettingrenovation right

03Finance rightYour property loan is an opportunity to ensure you never pay high rates for extra credit. You could:*

a Access equity – up to 80% of the value of your property. Suitable for borrowings of $25,000 or more.

b Redraw – access additional payments you’ve made to your mortgage.

c Top-up – increase the credit limit of your existing property loan (subject to normal lending criteria).

02Know your budgetBe upfront with your builder and designer about your ideas and what you can spend. If your dreams are too big, they can always help you achieve a similar outcome at a price you can afford.

01Value your renoAssess your project’s potential beforehand. New kitchens and bathrooms can add value fast, whereas a swimming pool is fun but adds little to the price of property. Remember, it’s best to wait 5-7 years to reap the full benefi ts of a renovation.

05Colour me richOne of the quickest, easiest and cheapest ways to add value to your property is to paint it. Save money on a tradesman by doing it yourself and keep colours neutral to appeal to future buyers.

06Bedroom benefi tDining rooms, sunrooms or studies can easily be converted into an extra bedroom, raising the rent and value of your property. Or make a double carport single and create space for a new rumpus room.

07Think outdoorsA recent report from Archicentre, suggests outdoor areas have become increasingly important to homeowners and renters. Casual living links to outdoors, landscaped gardens, decking and loads of natural light are increasingly in demand. ■

Whether it’s time to lose that 70s kitchen, add another room or make your house just plain fabulous, here are a few pointers on getting the most out of your dream renovation.

*These options are available on selected home and investment property loans only. For further details call 131 900 (select option 2).

Predictions for a long hot summer and a tricky property market are two good reasons to keep your cool.

A few years ago when house prices were spiralling, property was the main topic of conversation at barbecues and dinner parties. Now that things have calmed down, I can’t remember the last time I heard someone mention property prices at the dinner table.

Those giddy days may be behind us for a while, with house prices expected to remain relatively steady in the major markets for the next year or so, but that can spell opportunity for homeowners and investors who are willing to bide their time.

To start with, existing investors can look forward to slightly improved yields over the next 12 months. Estimated gross yields for two-bedroom ‘other dwellings’ are still quite low around Australia, ranging from about 3.7% in Perth to 4.8% in Brisbane (as at June 2006), but tight vacancy rates should see an increase in rental returns. In particular, Sydney has been lagging a little behind on rental growth despite vacancy rates being lower than the long-term average, so I would expect to see increases there.

Capital growth on residential investment property is not likely to return to the dizzying heights of 2003 in the medium term, but that could be good news for investors looking to enter the market. It means there’s time to do your homework before buying. Research past sales and rental returns in your market. Look also for signs of new supply that could

compete with your property for tenants. Investors in Perth, where house prices have continued to skyrocket over the last 12 months thanks largely to the resources boom, should take particular care not to pay too much in a market that is starting to show signs of moderation.

Rule number one as you begin to assess properties, is to ask yourself what type of tenant would want to live there and is that consistent with the demographics of the suburb. There’s no point buying a property suited to uni students if it’s nowhere near a university. Next, look for a point of difference in the property, perhaps a two-car garage or a view. Generic properties are harder to lease and sell later on.

For owner-occupiers looking to sell their home, again time is on your side. Unless you need to sell quickly, be patient and do your research. Discuss with your agent whether auction or sale is the best method. Consider repainting, fi x anything that’s broken or damaged, and spruce up the garden if you have one.

HOME LOANS STILL IN DEMANDWhile housing affordability is down, making it more diffi cult for new entrants in the housing market, demand for new home loans by owner-occupiers is at record levels nationally. In addition to this, the level of equity withdrawal has spiked again in 2006 as existing homeowners dip into their mortgages.

These are unexpected developments, given the rising interest rates. In the past, demand for mortgages has declined as people tighten their belts, but rates have been increasing in small

increments for so long that it seems owner-occupiers have become less alarmed about rising debt servicing costs. Possibly also underpinning demand is the 30 year low in unemployment and a generally healthy economy.

Demand for home loans is predicted to lessen over the next few months as the effects of the latest interest rate rise hit home, but the favourable economic outlook is likely to prevent a crash. Looks like cool heads will prevail all round.

Amanda Quiggin is Westpac’s Associate Director, Property Markets. ■

THE OUTLOOK

BY AMANDA QUIGGIN

Cool heads needed

Think you’d have to be dreaming

to buy a holiday house? Think again, page 2.

WIN a holiday fromyour mortgage

Holiday dreaming

Trend in home loan checksAustralians are increasingly looking to reassess their home and property loans as life circumstances change. Westpac offers a free service for all loan customers to re-evaluate their current loan – ensuring it’s best suited to their current needs. If changes are needed, a variety of options include reducing payments for a time, accessing equity or even paying off the loan sooner. For a free loan assessment visit your local Westpac branch or call 1800 807 693.

RBA lifts ratesOn 7 November, the Reserve Bank of Australia raised interest rates by 25 basis points to 6.25 per cent. RBA Governor, Glenn Stevens said the decision was taken against a background of continued expansion in the global economy and further evidence that infl ationary pressures had increased. Westpac customers with any concerns about loan repayments may have the option to look at restructuring their loan or taking a holiday from repayments. Visit your local branch for further details.

Holiday cash, pleaseThere are plenty of ways for Australians to fund their holiday spending. Selected home or property owners can now redraw, top-up or access equity from their current loan at a similar rate. It’s a convenient and cost effective way to ensure everyone enjoys their summer break. Call 131 900 for further details (select option 2).

I N T H I S E D I T I O N : R E N O VAT I O N T I P S ■ M A R K E T N E W S ■ H O L I D AY H O M E S ■ A N D M O R E

For details and to enter the draw, visitwww.westpac.com.au/mypropertynewsletterand tell us what you think aboutWestpac housekeeping.

Inspiration for your propertyS U M M E R 0 6 / 0 7

Westpac housekeeping™

Things you should know: The information in the above article is current as at 10 November 2006. Past performance is not a reliable indicator of future performance. The forecasts given in this document are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts. This information has been prepared without taking account of your objectives, fi nancial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, fi nancial situation or needs. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac Banking Corporation ABN 33 007 457 141. Westpac accepts no responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpac is under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is regulated for the conduct of investment business in the United Kingdom by the Financial Services Authority.

We respect your privacy: If you do not wish to receive any further marketing communication from any member of the Westpac Group about products or services, please call us on 132 032, write to us at GPO Box 3433, Sydney 2001 or call in at any of our branches.© 2006 Westpac Banking Corporation ABN 33 007 457 141.

Westpac housekeeping is a new regular newsletter keeping you at the forefront of what’s happening in the property market. You’ll fi nd news, features and tips on everything from economics and managing your loan to home renovation. So relax, have a read and best wishes for a happy and safe holiday season.

Ethical lendingInternational Banks have joined forces to create the Equator Principles – a set of guidelines restricting the funding of development projects that may potentially harm communities or the environment.

Westpac is proud to be a founding member and the only Australian bank to have joined.

Every generation should live better than the lastWestpac has launched a new website as part of its campaign to improve the lives of the next generation. To know what’s happening in your community, find out how you can help the environment with a ‘greener’ home loan and more, visit www.everygeneration.com.au

HPN001 V2 (11/06) WHL0320