Like many coastal hot spots the Gold Coast market was hit hard by the GFC, resulting in a huge drop in property values and many forced sales.
New figures released by RP Data today, reveal the housing market is making a comeback.
House values have risen by 4.8 per cent in the past year although unit values have dropped marginally by 0.7 per cent.
Property transaction levels are up by more than 30 per cent in the year to the end of February, which RP Data analyst Cameron Kusher says should eventually flow through to help improve values.
“House values are up 4.8 per cent but there is not much of a sign of the unit market coming back as yet, but I guess the rate of decline in that market has definitely slowed over the last 12 months,’’ he says.
“If values continue to rise in the housing market we may slowly start to see a bit of a recovery in that unit market.’’
Rental returns in the house market increased by 2.2 per cent in the past year, although unit
rental rates are unchanged.
Mr Kusher says with the continued low buy in price for units on the Gold Coast it could be considered a good time for investors to buy.
“I guess it is a good opportunity for investors.
“I still think obviously probably somewhere like Sydney or Melbourne is still more attractive at the moment because values are growing much quicker.’’
“Sure the rental returns are not there but the short term gain in a market like that is more attractive than somewhere like the Gold Coast.
“We are starting to see early signs of growth but I don’t think anyone is expecting that the growth is going to be particularly strong.’’
Mr Kusher says investors with long-term views would see good opportunities in the Gold Coast market now.
He predicts values will not ramp up significantly on the Gold Coast, it will be a slow and moderate recovery.
“We are still not seeing a huge amount of interstate migration into Queensland or into south east Queensland which really drove the market in the past but I think for the most part people are probably realising that values are not going to get any lower.’’
Original article published at www.news.com.au by Michelle Hele, Real Estate Online Editor Newscorp 30/5/2014
Australian property reaches 32-year annual growth peak in September
It’s no secret that Australian real estate has been going gangbusters this year, but CoreLogic’s latest findings really help just how big this boom has been.
Property prices grew another +1.5 per cent in September, pushing the median Australian home price up +20.3 per cent over 12 months. That’s the highest rate of annual growth since June 1989.
This truly is a once in a generation event and a major opportunity for sellers. But, with gains slowly reducing and a rush of stock expected to come to the market, are things about to change?
National property values: September 2021
Monthly change: +1.6%
Monthly change: +1.1%
While the overall sentiment is that the market has been cooling off since the +2.8 per cent monthly peak in March, a +1.5 per cent jump in September is still well above the decade average (+0.4 per cent).
Australia’s median property price is now $674,848, almost exactly $100,000 more than it was at the beginning of January 2021.
Houses in Sydney, Brisbane, Adelaide, Hobart and Canberra all gained at least another +2.0 per cent in September, with Melbourne up +1.1 per cent.
Regional markets had another strong month and on the whole outperformed the capitals. Among the biggest movers were NSW (+2.0 per cent), QLD and Tasmania (+1.7 per cent) and units in WA (+2.4 per cent).
Even though we’re still looking at big monthly numbers in many cities and regions, the bigger picture does show that growth is easing off.
As the CoreLogic report states, “although growth conditions remain positive, it is becoming increasingly clear the housing market moved past its peak rate of growth.”
New spring listings hit the market but total stock is still well down
With lockdowns pushing the start of the spring selling season back, there’s been plenty of anticipation around fresh listings coming to the market—and they’re finally arriving.
Sydney in particular has seen a huge surge of new properties coming online, +23.1 per cent up from August according to SQM Research.
Melbourne listings are up a healthy +9.9 per cent, with plenty more expected to come once restrictions ease further, while Brisbane, Perth and Adelaide have also seen a bump up in their numbers.
Canberra, which entered lockdown later than Sydney and Melbourne, seems further from returning to ‘normal’ again, and the drop in listings reflects that. But Sydney’s path through could foreshadow what’s to come in the other locked-down markets.
Even with new listings coming online, CoreLogic says the total amount of stock on the market is still “extremely low” (-25.5 per cent below the five-year average) and with demand remaining so high, desperate buyers are snapping up whatever they can.
“Nationally, homes are selling in 35 days, up from 29 days in April, and vendor discounting levels remain around record lows at – 2.8 per cent,” Mr Lawless says.
It’s also worth noting that, even with total listings so low, the total number of monthly sales are well beyond the five-year average, suggesting that most of anything that’s making it to the market is being bought up.
With days on market and vendor discounting so low, auction clearance rates back up to their highest levels since March and available stock on the market way below average, all the indicators point to very strong selling conditions as spring moves on.
Affordability issues continue to cool the market
Even though we’re still seeing well-above-average monthly growth, the overall trend since March 2021 has been towards easing gains.
CoreLogic’s research director Tim Lawless believes this has in part been driven by first home buyers being squeezed out of the market thanks to soaring prices and fewer government incentives.
“With housing values rising substantially faster than household incomes, raising a deposit has become more challenging for most cohorts of the market, especially first home buyers,” he says.
He points to ABS lending data, which shows that the number of first home buyer loans fell -20.5 per cent between January and July, suggesting that those buyers may have changed their tactics to ‘rentvest’—seeking an investment property in cheaper markets while renting where they live.
It’s widely forecast by the big banks and pundits alike that growth will continue to slow into 2022 as more buyers are priced out of the market, so it’s unlikely that sellers will be able to gain too much more out of this cycle.
Houses are still outperforming units despite high prices, but that could change
It may seem contradictory to the above, but house prices continue to increase at a more rapid rate than units even though detached housing is becoming less and less accessible to buyers.
In most capital cities, houses have outpaced units this year by double or more.
Thanks to the prevalence of remote working now, the ‘race for space’ mentality is still driving people to seek lifestyle improvements during the pandemic, and that means houses have been in hot demand.
There’s a chance that could change in some of the country’s most expensive markets, though, and houses may cool off while units make up some ground.
As BuyersBuyers co-founder Pete Wargent told OpenAgent, affordability constraints have meant a number of buyers—particularly in markets like Sydney—have had to adjust their new home search.
“My guess is that, the way the median house price has gone in Sydney, there will be a shift towards units,” he said. “Prices are so high now that affordability will start to bite for the detached house market.”
What’s next for the Australian property market?
There’s been a lot of talk about if and when APRA may tighten home loan lending conditions, and that’s now been announced.
From November it will become more difficult for borrowers to be approved for a mortgage, a move that is widely tipped to slow down the already cooling market as buyers may end up with less purchasing power.
CoreLogic also predicts that, once lockdowns have ended and people return to more normal spending habits, the conditions that have helped many save considerable amounts of money during the pandemic may shift and demand for housing could ease.
They also suggest the influx of stock expected as the spring selling season continues to unfold will start to give buyers more choice and dilute some of the frenzied demand we’ve seen, which could take more heat out of the market.
So, in the medium term, there are a number of factors that look set to reduce growth. But for now, with stock low and demand high, interest rates remaining at record lows and pent-up pressure ready to release from lockdowns, it’s very much a seller’s market right now.
Article Source: www.openagent.com.au
Housing stock gains $1 trillion in value even as businesses shed staff
Australia’s residential housing stock has gained $1 trillion in value in just five months, even as the number of people in work falls back to pre-coronavirus levels with lockdowns in NSW and Victoria dragging down the national jobs market.
Record-low interest rates, reduced spending opportunities for cashed-up Australians and government grants to first home buyers have contributed to the fastest increase in property values on record.
CoreLogic data shows just how quickly the property market has appreciated over recent years.
It estimates the total value of residential property reached $9 trillion in September. It had climbed to $8 trillion in April.
Despite the biggest economic downturn since the 1930s due to the pandemic, the value of Australian property has climbed by more than $2 trillion in about 14 months.
“This puts housing values around 28.2 per cent higher than the estimated value of superannuation, the ASX and commercial real estate combined,” CoreLogic head of research Eliza Owen said.
Data released on Friday by the federal government shows its first home loan deposit scheme is bringing more people into the market.
In its first 18 months of operation, the scheme has helped almost 6000 essential workers – of which 35 per cent were nurses – into their first home. Almost 60 per cent of those using the scheme were aged under 30, bringing forward their purchase by an average of 4 years.
The Australian Prudential Regulation Authority this week announced a tightening of bank lending standards due to growing concerns about the state of the financial system related to the surge in house prices.
Banks must test whether new customers could manage their repayments at an interest rate 3 percentage points higher than the actual rate on the loan. Until now, banks have added 2.5 percentage points – known as a “serviceability buffer” – onto the rate of the loan when assessing a customer.
APRA said it believed its actions would reduce new customers’ borrowing capacity by about 5 per cent.
Treasurer Josh Frydenberg said APRA’s move was well-targeted, arguing it was likely to affect investors more than other borrowers.
“What has been pleasing in this cycle compared to previous cycles is that more first homeowners, more owner-occupiers are coming into the market. And this move will affect investors more than it will affect first home buyers,” he told the Seven Network.
As NSW, Victoria and the ACT approach key dates for their re-opening out of COVID-19 lockdowns, payroll figures from the Australian Bureau of Statistics released on Thursday showed the total number of people on business payrolls has fallen below its pre-virus levels, with women and young workers again suffering the most from the pandemic restrictions.
The number of people on business payrolls fell by 0.7 per cent in the fortnight to September 11, after a 1.5 per cent drop in the fortnight before that.
Victoria (down 1.8 per cent) and the ACT (down 2.3 per cent) took the biggest hits while NSW slipped another 0.3 per cent.
Since going into lockdown, there has been a 9.2 per cent drop in the number of people on NSW business payrolls. There’s been a 10.2 per cent drop in NSW women on the state’s payrolls while people aged between 15 and 19 have suffered a 28 per cent fall.
It’s s similar story in Victoria with its lockdown, which started several weeks after NSW. Total jobs on payrolls are down by 7.2 per cent, with women (minus 8 per cent) doing worse than men (minus 6 per cent).
The worst-hit area has been the ACT where jobs have tumbled by 12.2 per cent.
Westpac senior economist Justin Smirk said small and medium-sized businesses were taking a bigger hit to jobs than previous lockdowns.
“There clearly is a lot of pressure on small businesses in NSW and Victoria but overall the recovery has a strong base to build on given the strength of larger firms,” he said.
Article Source: www.brisbanetimes.com.au
Stamp duty crimps property listings, pushing up prices
The increasing impost of stamp duty is restricting the number of properties that come onto the market, contributing to record-high prices as buyers compete for tight supply.
As prices rise, more properties are pushed into higher-bracket stamp duty bands, exacerbating the trend.
If stamp duty was replaced by an annual land tax, one of the barriers for those looking to downsize later in life would be removed, boosting supply, says SQM Research in a report: Stamp duty: the relationship to Australian housing affordability and supply.
The report shows how the rising cost of stamp duty has fostered reduced property listings for more than a decade.
Louis Christopher, managing director of SQM Research, says there has been an ongoing decline in the number of listings, despite steady increases in the total numbers of dwellings being built across Australia.
In 2008, up to 4.5 per cent of all residential properties were available for sale; today the percentage is less than 2.5 per cent, says the report, which was commissioned by the Real Estate Institute of Australia (REIA).
‘The long-term decline in listings fundamentally represents a shortage of real estate, which is a contributing factor to the surge in prices.’
Louis Christopher, managing director of SQM Research
“The long-term decline in listings fundamentally represents a shortage of real estate, which is a contributing factor to the surge in prices,” Christopher says.
Adrian Kelly, president of REIA, says stamp duty remains a prohibitive tax, adding tens of thousands of dollars to the purchase price of a home.
“Stamp duties as a percentage of average national earnings have jumped over the past decade to 34.3 per cent, from 25.1 percent in 2012 – up almost one-third”, Kelly says.
Stamp duty of $40,207 is paid on a $1 million property purchase in New South Wales, and $55,000 on a purchase with a “dutiable value” of $1 million in Victoria.
CoreLogic data for September showed Sydney house prices up 25.8 per cent since the year began with the median value now at $1.3 million. In September alone they increased by $18,000.
Melbourne prices have climbed 16.2 per cent since January 1 with the median value now at $962,250 after adding another $7750 last month.
A $2 million property in NSW attracts stamp duty of $94,567 and $110,000 in Victoria. States and territories have various stamp duty concessions for first home buyers.
In some cities, the news is not so bad. In Perth and Canberra, where stamp duty as a proportion of average wages has reduced or not risen much, there has not been as marked a deterioration in the availability of properties listed for sale.
Stamp duty creates economic distortions, according to former treasury secretary Ken Henry in a review of the tax system a decade ago. His report recommended replacing the impost with an annual land tax.
The NSW government has floated the idea of introducing a land tax. The proposal would see property purchasers given a choice of either paying a lump sum stamp duty, or paying a smaller, ongoing annual property tax.
Stamp duty on property purchases is being phased out in the Australian Capital Territory.
A report from the National Housing Finance and Investment Corp., released in July, favoured replacing stamp duty with land tax.
It said retirees and low-income earners could be paid a rebate on any land tax liability.
The report said a move to annual land tax would “likely lift dwelling prices in the short-term, as the removal of transfer duty is capitalised into prices.”
“However, if lenders fully capitalise the cost of the replacement land tax into loan serviceability criteria, the price impact from removing duty [over the short-term] may be negligible.”
Article Source: www.brisbanetimes.com.au
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