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Opinion

Australian housing prices tipped to bounce back in 2021, except inner-city units: economists

Australian housing prices

Home prices are set to rise in all Australian capital cities in 2021, economists predict, buoyed by low interest rates, an improving economy and government stimulus.

But they warn inner-city apartment prices in Melbourne and Sydney will continue to fall, due to a drop in immigration and international students and increasing numbers of city dwellers relocating to regional areas.

AMP Capital chief economist Shane Oliver predicts home prices will surge by 5 per cent nationally in 2021, but says inner-city unit prices in Melbourne could fall by as much as 5 per cent.

Home values in every capital city rose in December, for the second month in a row since the pandemic took its toll – with national home values up 1 per cent, according to CoreLogic’s Home Value Index.

It follows the September quarter Domain House Price Report that found house prices rose in every capital city except Melbourne, which was flat.

Dr Oliver expects the upward trend to continue into next year, with some capital cities, including Perth and Brisbane, to experience up to 10 per cent growth.

“The whole market is being driven by low interest rates, buyer incentives. Obviously, the reopening of the economy and the improvement in the jobs market which are tending to dominate the negatives, such as the hit to immigration, a weak rental market and higher than normal unemployment,” he said.

But, he believes Melbourne and Sydney are “a lot more vulnerable to the hit to immigration, particularly in the inner city” than other capital cities, and will see large discrepancies across the city and regional areas when it comes to property price trends in 2021.

Australian housing prices

Melbourne and Sydney are more vulnerable to slowing population growth.

“Overall, I’d expect Sydney and Melbourne to have gains of about 2 per cent, on average across the whole city. But within that, units in inner-city areas will probably go down 0-5 per cent, whereas outer suburbs houses will probably go up 5 to 7 per cent,” he said.

He said regional towns within a two-hour radius of Sydney and Melbourne could also expect steep house price growth of up to 10 per cent due to the “escape from the city phenomenon”, which he believes will continue “beyond the duration of the pandemic.”

“I think employees’ and businesses’ attitudes to working from home have changed fundamentally as a result of this pandemic, which will change people’s attitudes towards commuting and lifestyle and ultimately where they choose to live,” he said.

He compared this “monumental shift” to what happened  in the post-war era “when the automobile became widespread and the quality of roads improved and Australians grew the suburbs”.

“As a result, I’d expect regional areas within a two-hour zone of Melbourne and Sydney could be up towards 10 per cent next year,” he said.

Australian housing prices

Regional areas are in hot demand from tree changers. Photo: John Woudstra

Westpac chief economist Bill Evans said the bank was expecting Australian house prices to rise by 4 per cent next year and by a further 10 per cent in 2022, but also expected next year’s growth to be dragged down by inner-city apartments, largely in Melbourne and Sydney.

“For overall dwelling prices, we’re predicting 4 per cent  growth for next year, but that overall number is affected by the 10 per cent fall we’re expecting in inner city high rises,” he said.

Mr Evans said the national average would also be held back by softer growth in markets most impacted by the pandemic.

Westpac updated its forecasts in late November to predict dwelling prices in Melbourne would grow by 2 per cent in 2021 and 8 per cent in 2022, while Sydney prices were expected to grow by 3 per cent and 9 per cent, respectively.

This compares to other capital cities,  where Westpac has forecast housing price growth of up to 8 per cent for Brisbane and Perth in 2021. It expects growth in those cities to surge a further 10 per cent and 8 per cent, respectively, in 2022. It also expects Adelaide and Hobart to have house price gains of 5 per cent next year.

A string of economists have upgraded their housing price forecasts in recent months, with ANZ ditching its “too pessimistic” prediction of a 10 per cent drop to tip strong growth next year. ANZ expects Sydney prices to rise 8.8 per cent in 2021, Melbourne 7.8 per cent, Brisbane 9.5 per cent and Perth 12 per cent.

Commonwealth Bank of Australia’s head of Australian economics Gareth Aird said he expected property prices to surge across the country next year, with Perth likely to experience some of the fastest growth.

“Perth looks like one of the capital cities that will outperform next year. The vacancy rate has come right down there and the actual West Australian economy has come through the covid period in better shape than anywhere else. Out of all the bigger markets that could be the best performing one,” he said.

He expected Australia’s ongoing international border closure to affect Melbourne’s house prices the most heading into 2021.

“Melbourne will be the weakest market across the capital cities. That’s mostly because it’s the most reliant city on net overseas migration,” he said.

“So, with the borders closed, you’re not getting the growth in population and the vacancy rates are already rising. In a relative sense, prices rises in Melbourne won’t be as strong as the rest of the country,” he said.

Australian housing prices

Perth house prices could rise as the local economy picks up. Photo: iStock

Dr Oliver also believes Perth will see some of the biggest house price surges of 2021, in line with the “up to 10 per cent” growth he expects to see in some regional areas of Victoria and NSW, within a “two-hour zone” of the city.

“Brisbane I think will also see some strong growth, because they’ve been less impacted by the pandemic and so they’ve got lower debt levels to start with. They’re also playing catch up after a few years of underperforming,” he said.

He expects Canberra dwelling prices to rise by “6 to 7 per cent” and Darwin and Perth prices to increase by “up to 10 per cent.”

“Perth and Darwin are both going to be pretty strong because they’ve had a six-year bear market that only ended several months ago,” he said.

“Perth, in particular, is going to benefit from our iron ore price, which is going through the roof and piping money into the WA economy at a time when its rental vacancy rate has dropped from way above average to way below average, which is often a sign of a shortage of property,” he said.

Economists, including CBA’s Gareth Aird, say their current forecasts for next year take into account the potential for further localised outbreaks of COVID-19, which are likely to see Australia keep its border closed for some time, as well as the possibility of state borders being shut from time to time.

“We’ve had to revise forecasts for the economy quite a bit because of covid restrictions,” Mr Aird said. “And, while there’s nothing about this latest outbreak just yet that’s big enough to shift the dial, it is just a reminder that covid is still there and there is still the risk that you’re going  to get these local outbreaks that result in restrictions on activity.”

 

Article Source: www.domain.com.au

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Brisbane

Travel bans fuel Brisbane’s $30 million auction splurge

Brisbane

Expats and upgraders are splashing major cash on prestige properties across Brisbane with more than $30 million in real estate transacted from 38 auctions on Saturday.

The auction clearance rate was 81 per cent, compared with just 22 per cent this time last year.

Off the back of continued travel bans, property punters say buyers are continuing to pour millions into homes instead of holidays, and stranded Aussies are fuelling the prestige market from afar for fear if they don’t buy soon, they’ll miss out when borders open.

It’s a trend McGrath Estate Agents Cleveland agent Pamela Neilson said had spurred more than a handful of top sales in her area in the past few months, and one that helped her clock the city’s highest recorded auction on Saturday, after an upgrader forked out $4.35 million for a Raby Bay mansion.

 Brisbane

11 Grenoble Place, Raby Bay QLD 4163

“I’m seeing more transactions now between $2 million and $3 million (than I have in a long time). We’re finding this market is just continuing to move and I can’t see it quietening down,” Ms Neilson said.

“The biggest thing is expats at the moment and I have clients from London to Chicago, all wanting to come home but they want to get into the market now.

“I sold two [sight unseen] to expats just last month.”

 Brisbane

Marina views from 11 Grenoble Place, Raby Bay.

Although it was a local buyer who scored the winning bid on the sprawling Ray Bay home at 11 Grenoble Place, Ms Neilson said the incredible result was indicative of the sheer appetite for luxury homes in the Queensland capital, and also in Raby Bay, where high-end sales had surged in the past six months.

“We had 52 groups through the property and five offers prior to the auction. I think the massive land size of 2479 square metres [fuelled the interest] but also the big pontoon, the glorious views and the tennis court,” Ms Neilson said.

“It all needs updating, but it’s just so private, and after a renovation this property could be worth between $7 million and $8 million.

“The Raby bay area is also a lot stronger [than it has been in years]. The area is getting more attention now – people are finally waking up to it and the people trying to move in have probably missed out.”

Ms Neilson said it was only back in August the suburb price record was smashed with the $8.5 million sale of 1990s Aussie pop star Daniel Jones, of Savage Garden.

In the inner city, an old cottage on a tiny parcel of land clocked an incredible $1.55 million under the hammer on Saturday, after six registered bidders battled it out for a minuscule piece of dirt in “Brisbane’s best suburb”.

 Brisbane

210 Arthur Street, Teneriffe QLD 4005

The green and yellow four-bedroom abode, at 210 Arthurs Street, Teneriffe, occupies just a 256-square-metre block but with houses frequently clocking more than $2 million in the chic neighbourhood, selling agent Brett Greensill, of McGrath New Farm, said the home was a little piece of gold.

“It´s a small slice of land but, of course, Teneriffe is the most expensive suburb in Brisbane so to get a little slice of the best suburb [is still fantastic],” Mr Greensill said.

“We had six registered bidders, and there was an excellent crowd. The lady who turned out to be the underbidder started off with a cheeky bid of $600,000 but then the next bid was about $1.1 million.

“The reserve was $1.5 million, so we sold it for just over, and five of the six bidders were local.

“I actually sold this house in 2013 for $815,000 when it was first renovated. Here we are not even 10 years later and it has almost doubled. And, in the past six months (alone) this house gained probably 10 per cent (in value).”

Mr Greensill said the sale was another top result in a booming market where houses in particular were streaking ahead of apartments amid insatiable buyer appetite.

“Brisbane has always had headwinds of varying degrees but since Christmas we’ve had tailwinds (in the housing market).

“We have also had lots of conversations with expats recently.”

Other high-end sales across the city included one of Highgate Hill’s original homesteads at 77 Hampstead Road, which sold for $2.6 million through Luke Croft, of Ray White South Brisbane.

Brisbane

UNDER CONTRACT 77 Hampstead Road Highgate Hill QLD 4101

Built about 1890, the seven-bedroom, five-bathroom home mixed modern chic with heritage touches after an incredible architecturally renovation.

Under the $1 million mark selling agent Bevin Powell, of Ray White Annerley, set an office record for registered bidders after 30 hungry home-hunters battled it out for a four-bedroom brick home at 3 Appleyard Crescent, Coopers Plains, which sold for $816,000.

“This was an amazing auction, the property market is still hot right now but having said that, I’m not sure we’ll have another auction like this one for a while. The winning bidder purchased the property for their parents,” Mr Powell said.

 

Ray White Queensland chief auctioneer Mitch Peereboom said across their Brisbane agencies top results were fetched alongside soaring clearance rates with the high-end sector swelling.

“The marketplace is particularly strong in the $800,000 to $1.5 million range. We know buyers are selling and then have been looking to upgrade and that bracket is performing excellently,” Mr Peereboom said.

 

Article Source: www.domain.com.au

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Opinion

Property Industry Expects Interest Rate Rise

Property industry confidence levels are near record highs but there are rumblings that interest rates could to increase soon.

The ANZ/Property Council industry survey for the March quarter found confidence levels has improved drastically since the pandemic started, led by the residential sector.

The survey canvassed the views of more than 830 respondents—including, owners, developers, agents, managers, consultants and government—across all major industry sectors and regions.

The results revealed respondents also believe there will be an interest rate increase during the next 12 months.

This comes as the Reserve Bank of Australia closely watches the housing market as “cyclically low-interest rates and rising asset prices create a risk of excessive borrowing”.

According to the RBA financial stability review, this could lead to financial instability particularly if lending standards are weakened, which could expose lenders to large losses.

Interest rate changes

Property Industry

^Source: RBA 

For the meantime, the Reserve Bank decided to hold the official cash rate at 0.1 per cent for the fifth time in a row.

Despite expecting an interest rate rise, survey respondents were confident about work expectations, national growth and house prices in the next year.

Property Council of Australia chief executive Ken Morrison said the expectations for house prices were at the highest level in the survey’s 10-year history.

“When the property industry is confident it is exceptional news for the entire national economy because it employs so many people—more than 1.4-million Australians,” Morrison said.

“While the economy still faces significant challenges, the property industry is clearly buoyed by the speed of our turnaround and the strong demand they are seeing, particularly in the residential and industrial sectors.”

ANZ senior economist Felicity Emmett said that for now the combination of record low mortgage interest rates and targeted stimulus was clearly supporting the housing sector.

“Property sentiment has improved again, reflecting stellar economic performance, a large pipeline of work for the coming year and a strong outlook for property prices,” Emmett said

The survey also revealed an easing of concerns about the office sector as more CBD workers return to their work places.

 

Article Source: theurbandeveloper.com

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Brisbane

Property confidence stages remarkable comeback

property

The latest results from the ANZ/Property Council Survey reveal surging confidence levels in Queensland’s property sector, despite the slower than anticipated return of workers to major business precincts.

Property industry sentiment in Queensland bounced from 124 points in the December 2020 quarter, to 144 index points in the March 2021 quarter. The result shows that industry confidence has nearly tripled since the height of the COVID pandemic, when a low of 58 index points was recorded during the March 2020 quarter. A score of 100 is considered neutral.

Property Council Queensland Executive Director, Chris Mountford, said the results were nothing short of phenomenal, however, it was critical that the positivity was not taken for granted.

“The results highlight a remarkable recovery for Queensland’s property sector, which proved resilient throughout the challenges of last year and is now spearheading the State’s economic recovery,” said Mr Mountford.

“The industry has recorded strong results on most metrics of success, from crane counts to property clearance rates, to our own quarterly confidence surveys.

“However, we do need to maintain some degree of caution as these positive results were recorded prior to Brisbane’s most recent lockdown, and while the benefits of Government stimulus programs continue to be felt.

“It is well documented that these lockdowns cost our economy millions and impact on the confidence of employees to return to their places of work.

“Office occupancy within Brisbane CBD has stagnated at circa 63 per cent, showing the road to recovery for our city centres has clearly not been as smooth as in other property sectors.

“With the end of JobKeeper and the ever-present spectre of another lockdown, there is clearly a need to support our CBDs and the many businesses that rely on the daily visitation of workers, students and tourists to make ends meet.

“Over the coming months, the Property Council will be working with its members, Brisbane City Council and the Queensland Government, to implement a plan to support our city centre and ensure it continues to drive Queensland’s economy,” concluded Mr Mountford.

 

Article Source: www.miragenews.com

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