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Growth in property prices remains strong

Growth in property prices remains strong

Real estate will continue to bolster over the next five years as one group predicts growth in median prices.

As 2019 saw the housing market return from its lows, Propertyology expects growth will continue over the next five years.

Although a lot of the growth last year was centred in Sydney and Melbourne, Propertyology head of research Simon Pressley expects the growth will be more widespread.

The firm suggests that in 2020, property buyers should make decisions based on what the medium-term fundamentals say, instead of focusing on today’s market results.

“The 2019 mid-year momentum change in Australian property markets was triggered by the stimulus of three interest rate cuts. It’s a sugar fix of sorts. But it doesn’t change underlying fundamentals,” Mr Pressley said.

“While a quick burst of sugar on occasions doesn’t hurt anyone, we all know that sugar is not a sustainable energy source.

“Those contemplating participating in 2020 property markets would be wise to focus on the fundamentals of a balanced diet.

“Within a year or so, these current stimulatory policies will be gone, and Australia’s best-performed property markets will be the ones that always had the strongest fundamentals.”

While the current stimulus measures were in response to softer national economic data, when it is compared to the post-global financial crisis stimulus, it was valid, Mr Pressley said.

“The strong, and largely across-the-board, rebound in Australian real estate prices from the 2009–10 stimulus is likely to be repeated in 2020,” he said.

“However, the smart decision-makers of today will be looking beyond 2020 and trying to figure out which Australian property markets have the best potential post-stimulus.”

When the global financial crisis sugar wore off, all capital city property markets declined in 2011, and five of them also declined in 2012, he said.

“The markets which subsequently went on to become the best performers were ones which hadn’t seen much price growth during the pre-GFC years, their housing supply had been tightening throughout all of those lean years, and price growth then occurred through improved local economic conditions,” Mr Pressley said.

“Back then, the markets which had those key fundamentals included the likes of Sydney, Melbourne, Hobart, Orange, Byron, Geelong and Newcastle. This time around, it will be completely different property markets.”

There was nothing orderly about the current property markets, Mr Pressley said.

“Given the significant policy disruptions, I consider it to be a completely futile exercise to attempt to forecast actual rates of property price growth for 2020, and anyone who buys property based on the potential of a one-year result is in the wrong game anyway.”

The outlook for Australian real estate is as good as it has been for many years, he said.

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Brisbane

‘Absolutely inundated’: Lack of stock drives Queensland interest

‘Absolutely inundated’ Lack of stock drives Queensland interest

As open-home restrictions begin to lift, a Brisbane agency has reported huge interest from first home buyers clamouring to get onto the property ladder despite COVID-19.

Coronis Agency has reported that it had more than 80 potential buyers attend the first scheduled open home of an Archerfield property.

The three-bedroom, two-bathroom property only hit the market last Thursday and received more than 56 phone and email enquiries within 48 hours.

Director Anthony Hunt said the agency was “absolutely inundated with buyer enquiries within 30 minutes of the property going live, with many buyers asking to schedule a private inspection on the Thursday night or Friday as they were eager to beat the rush on Saturday”.

“In the end, I opened the property up on Friday afternoon and had nine groups of buyers turn up purely from responding to their calls and emails,” he explained.

He added that at the Saturday open home, which was the first advertised inspection, “it took more than an hour to get everyone through the property due to the social distancing restrictions, but on the whole, everyone was really understanding and willing to wait their turn”.

Mr Hunt said the general feedback he received from most parties is that “they want to buy something right now, despite everything going on with COVID-19”.

“Many of them are first home buyers with pre-approval who are looking to get their foot on the property ladder and aren’t fazed about going out in public to attend open homes,” he said.

The director believes that what they’re more concerned about is the lack of properties to choose from and how quickly properties are selling at the moment.

By Saturday afternoon, Mr Hunt said he had received four offers and it was under contract by Saturday night for a price that exceeded the seller’s expectations, “so they’re very happy”.

While 140 Granard Road was “beautifully presented”, the agent expressed the opinion that the main reason it was so popular with buyers was because it offered “great value for money in a suburb only 15km from Brisbane CBD”.

He iterated that buyers are willing to look outside of their desired suburb to purchase the right property.

His message to those who are considering holding off on selling? Don’t wait.

“In the past week, the Coronis sales team has received more than 1,000 buyer enquiries, and from that, 550-plus groups attended an open home on the weekend, so there is no doubt about it — buyers have a strong appetite to purchase now, they just need more options to choose from,” he concluded.

 

 

 

This article is republished from www.smartpropertyinvestment.com.au under a Creative Commons license. Read the original article.

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Opinion

Coronavirus combines with end to interest-only home loans in big hit coming for investors, experts warn

Coronavirus combines with end to interest-only home loans in big hit coming for investors, experts warn

House prices are tipped to fall by 11 per cent over the next three years as the COVID-related economic downturn bites, and for one group of Australian homeowners, it could not come at a worse time.

There are an estimated 730,000 investors, many of whom are self-funded retirees or people planning for retirement, who have taken out interest-only bank loans in the belief property was a safe bet.

Coronavirus has already delivered challenges, including rent arrears and the prospect of losing their tenants altogether.

But now these private landlords are facing big hikes in their monthly bank repayments as they switch from interest-only to paying off the principal of their loans as well.

Coronavirus combines with end to interest-only home loans in big hit coming for investors, experts warn (2)

Max Green is one of many who has been trying to negotiate with the banks for an extension to the interest-only period of his loans.

The 69-year-old and his partner have bought two properties — one in Brisbane, the other in Perth — in the past 10 years to help fund their retirement.

But the value of the Brisbane property has flatlined and the Perth property, a unit in the city’s outer suburbs, has plummeted from $425,000 in 2016 to $300,000 today, according to a recent valuation.

“The intent was … to provide us with some equity growth in the properties, which would then assist us in the future once I had retired,” Mr Green said.

“We had been advised that we would be able to extend the interest-only period.”

Coronavirus combines with end to interest-only home loans in big hit coming for investors, experts warn (3)

Instead, the couple face paying an additional $1,900 a month from July as they begin to pay off both the principal and interest on their loans.

Mr Green said he still enjoyed his work as a project manager at WA’s Water Corporation, but conceded his retirement ambitions had not gone to plan.

He said he would now be forced to either keep working beyond 70, dip into the couple’s superannuation to pay the banks, or sell at a loss.

Investors brace for massive losses

Others with similar investment plans have already decided to cut their losses and are now facing negative equity as a result — where their home is worth less than the amount they owe.

Wayne Grimes, 50, said he couldn’t help but laugh when he considered the price he would likely now get for his luxury investment unit.

“I’m laughing because it is just ridiculous,” he said.

 

 

 

This article is republished from www.abc.net.au under a Creative Commons license. Read the original article.

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Brisbane

How COVID-19 has impacted tourism hotspots

How COVID-19 has impacted tourism hotspots

New research has revealed the impact COVID-19 restrictions have had on Queensland’s tourism property markets.

The Palaszczuk government’s mandatory COVID-19 restrictions went live from 20 March 2020, with knock-on effects to the state’s property market.

However, despite the perceived effects, the REIQ said the sunshine coast capital – Brisbane – has reported a relatively stable vacancy rate of 2.44 per cent for the last quarter.

But how has this translated to tourism hotspots?

Gold Coast

According to the REIQ, this quarter’s rental vacancy data provides a peek at the initial impacts of the coronavirus pandemic across popular tourism hotspots in particular.

“The Gold Coast saw an end-of-summer sharp spike result in a 1.2 per cent rise to 3 per cent (with only a 0.4 per cent increase in the Scenic Rim region).

“Up the coastline and it’s not so different around the Bay Islands district where the archipelago average soared by 2.7 per cent to a vacancy rate of 4.3 per cent (making up part of the state’s 10 per cent weakest regions).

North of Brisbane

When it comes to areas slightly north of Brisbane, the REIQ noted that most areas have remained stable with little movement either way.

“For example, Caboolture saw a drop in vacancies (-0.6 per cent to 0.8 per cent) while Redcliffe saw a marginal rise of 0.1 per cent to level out still within tight vacancy range at 2 per cent,” REIQ said.

“Further north and the Sunshine Coast hasn’t offered up any side effects from COVID-19 as of yet, with a 0.2 per cent drop in vacancy rates across the region to 1.4 per cent.

“Even inland across the majestic hinterland region the average vacancy rate reflected a 0.8 per cent decrease to 1.5 per cent.”

Coastline

There’s some “unmistakeable movement upward” when it comes to areas back along the coastline, according to the REIQ.

“Early tremors of COVID-19 [are] attributable to those results recorded in Noosa (+1.3 per cent to 3.6 per cent) and Fraser Coast (+1.4 per cent to 3.1 per cent) which includes Hervey Bay (+2.4 per cent to 4.3 per cent),” it said.

“Drive a few hours north and more stable yet tight vacancy rates become the norm once more from Bundaberg (+0.9 per cent to 2.4 per cent) through to Rockhampton (-0.3 per cent to 1.3 per cent).

“However, the outlier here is Gladstone. With mining and infrastructure projects on the go, demand for trades has boomed – with vacancy results reflecting rental demand by a staggering 2.5 per cent to a record low of 1.6 per cent for the region.”

The REIQ noted Mackay represents the only area across Queensland that’s remained unchanged over the quarter (2.5 per cent).

Far North Queensland

Townsville remained relatively unscathed with vacancy rates fairly stable (+0.8 per cent to 2.9 per cent), according to the REIQ.

Meanwhile, Mount Isa saw a 1.1 per cent drop to 2.5 per cent, proving the state’s largest township maintained a healthy rental market in the first quarter of 2020.

“Unfortunately, the same couldn’t be said for Cairns,” REIQ said.

“As the gateway to the Great Barrier Reef, Port Douglas and the Daintree Rainforest, the tourism-driven region closed out the quarter with a 1.8 per cent increase to 3.5 per cent rental vacancies – teetering on the edge of weak market conditions after experiencing record-low vacancies over the last 12 months.”

Commenting further on the results, REIQ CEO Antonia Mercorella said:

“Any further surges in vacant properties across Queensland’s tourism regions are likely to be addressed by future tourism-focused initiatives to boost domestic holidaymakers.”

“It’s an optimistic start to the year. The next quarter will reveal more about the true impact of COVID-19 on the Queensland rental market.”

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