A dramatic fall in one particular section of the property market has dragged down house prices and led to losses not seen since the GFC.
The sharp drop-off in investors purchasing properties dragged the national housing market to its heaviest losses this side of the Global Financial Crisis, experts say.
The falls were exacerbated by policies that limited access for overseas investors, including the percentage of dwellings in new apartment buildings allowed to be bought off shore as well as a stamp duty hike.
The value of lending to investors was down 45.4 per cent in April from its peak in April 2015, according to the Australian Bureau of Statistics.
Four years ago, investors were borrowing $12.5 billion but that fell back to $6.8 billion.
“We are now looking at a very different property market to what it was like during the boom,” realestate.com.au chief economist Nerida Conisbee said.
She said investor lending is unlikely to get back to where it was any time soon.
“Buyers from Asia, a key market for new development, have dropped dramatically,” Ms Conisbee said.
“Over the past 12 months alone, property seekers from China have dropped by over 60 per cent to the lowest level we have ever recorded.
“And confidence in the new apartment sector is low following some high-profile structural issues.”
CoreLogic head of research Cameron Kusher said investors abandoning the sector could be attributed to property policy as well as an oversupply of dwellings.
Mr Kusher said investors being charged a premium on top of the higher rate for interest-only loans — typically used for investment properties — was a disincentive.
“There’s also been a large volume of new stock in the apartment segment hitting the market at a time when values have started to fall and it highlights that a lot of investors chase the capital growth not necessarily the rental return,” he told news.com.au.
“Once values started to fall, there was less inclination from an investor to purchase a property because the value wasn’t increasing.”
Mr Kusher said investors account for about one-third of the market, therefore a dramatic pull back in purchases was always going to drag prices lower.
“And now we’re also seeing the owner-occupier segment drop off as well,” he said.
“That’s a key contributor to why dwelling values are falling, when a third of the market starts to slow pretty rapidly, it does have an impact.”
Brisbane was the only capital city where the median house price increased in value in the three months to June, according to the latest figures from realestate.com.au.
The Queensland capital was up 0.1 per cent in the quarter to $490,000, weathering the national downturn despite risks its over supply of apartments threatened to derail financial stability, Ms Conisbee said.
“The upswing is also extending to regional areas, with Mackay seeing the strongest price growth of any region in Australia over the past 12 months, and many smaller mining towns are roaring ahead,” she said.
Sydney and Melbourne both lost 0.4 per cent in the quarter to $805,000 and $650,000 respectively.
“If this downturn has now ended, the price fall from peak to trough ended up being 11 per cent, far less than what most commentators predicted,” Ms Conisbee said of Sydney.
“Melbourne prices may have flat lined in June, but it is still too early to tell whether this means the worst is behind us.”
Adelaide, Hobart and Perth all fell 0.7 per cent in the three months to $440,000, $430,000 and $460,000.
Darwin experienced the heaviest fall, losing 1.6 per cent to $430,000, while Canberra was down 0.3 per cent $592,500.
Brisbane rents: Landlords in ‘rosier position’ as unit oversupply eases
Brisbane rents are creeping up and the proportion of vacant homes is inching down, as the city’s rental market recovers from years of oversupply, experts say.
Asking rents for units rose 1.3 per cent to a median $380 a week over the past year, the latest figures from the Domain Rental Report for the September quarter show.
House rents also edged up 1.3 per cent to a median $405 over the same time period, according to the report released on Thursday.
The combined vacancy rate fell 0.1 percentage points to 2.2 per cent during the September quarter.
It comes after a wave of new apartments were built in Brisbane’s inner city in recent years, with the extra supply keeping a lid on rents.
Domain research analyst Eliza Owen said the market was now in good health, despite appearing to be near-stagnant.
Median weekly asking rents for units
|REGION||SEP-19||JUN-19||SEP-18||QOQ % ∆||YOY % ∆|
|Brisbane – City wide||$380||$380||$375||0.0%||1.3%|
|Brisbane – East||$405||$405||$400||0.0%||1.3%|
|Brisbane – North||$370||$365||$363||1.4%||2.1%|
|Brisbane – South||$385||$380||$375||1.3%||2.7%|
|Brisbane – West||$400||$415||$390||-3.6%||2.6%|
|Brisbane Inner City||$420||$425||$410||-1.2%||2.4%|
|Moreton Bay – North||$315||$315||$310||0.0%||1.6%|
|Moreton Bay – South||$340||$335||$335||1.5%||1.5%|
For units, the stability was a positive story compared to oversupply-induced market weakness a few years back, Ms Owen said.
“There’s been a lot of fear about over-development but in the building space there’s been tightening of dwelling completions,” she said. “They’ve come down sharply and are returning to long-run average levels.”
Rents were now trending up and vacancy rates down, she said.
“The picture for south-east Queensland in terms of rental returns is pretty good, it’s also one of the most affordable rental markets for houses.”
Ms Owen said interstate migration, mostly from Sydney, was a major factor in keeping the rental market balanced.
“The tightening of the rental market is off the back of strong population growth and a very affordable lifestyle, and this is reflected in the rental vacancy rate which is down to 2.2 per cent from 2.6 in the previous year,” she said.
Investec Lists Fortitude Valley Office Tower
The newly-listed Investec Australia Property Fund will divest its 11-storey Fortitude Valley office building with an expected price north of $90 million as it moves to recycle capital.
Fresh off the heels of its fully underwritten institutional placement and purchase of three industrial properties in the Northern Territory, Western Australia and South Australia for $84 million last month, Investec has motioned to sell its Brisbane, 757 Ann Street, tower.
Investec purchasted the Nettleton Tribe-designed tower for 68.5 million after it was completed in 2014.
Comprising 9,422sq m of office space with a weighted average lease expiry of approximately five years, the A-grade building, anchored by technology company Asea Brown Boveri, is 100 per cent leased.
Cushman & Wakefield’s Mike Walsh and Peter Court are managing the international expression of interest campaign, to kick off mid-October, with expectations it will generate strong interest from domestic and off-shore institutions, funds and syndication groups.
“The entire commercial component of the asset is structured on a net lease basis, providing smooth, predictable cash flow for investors,” Court said.
Sales over the first half of the year surpassed the total volume of sales over 2018—reaching $1.2 billion, according to Colliers research, with Australian institutional investors dominating the lion share of transactions.
Commercial assets currently on the market include Perth-based investor RG Property’s 410 Queen Street in Brisbane’s ‘golden triangle’.
Recent Brisbane assets changing hands include the sale of the Jubilee Place Office development at nearby 470 St Pauls Terrace to a real estate fund managed by Credit Suisse, Malaysian-backed HCK’s 116 Adelaide street for $30 million, and QIC’s Q&A Centre at 141 Queen Street and 140 Elizabeth Street which sold to Taiwanese developer Shayher Group.
As for development plans in the Fortitude Valley precinct, Sydney fund manager Millinium Capital in August announced plans for a new university campus and 30-storey tower that would comprise student accomodation, co-living and co-working space at 240 Brunswick Street and 11 Overells Lane.
Australian property management startup raises $3.5 million, expands to Brisbane
Australian proptech startup :Different has announced it raised $3.5 million in its latest funding round to continue its national expansion.
The fund raising coincides with the company’s launch into Brisbane today.
:Different is a full-service property management startup where property owners pay a fixed fee of $100 per month instead of a percentage based on the rental price of the property.
The appeal of :Different is their tech base which automates the everyday tasks of a property manager.
:Different’s owner app provides 24/7 access to documents like lease agreements, statements, and maintenance requests, while the tenant app helps streamline requests and fast track communications.
Over the last 12 months, :Different’s customer base has grown five folds with more than $700 million worth of properties now under management across New South Wales and Victoria, while its team has quadrupled to 32.
The latest funding round supports :Different’s ambitions to expand into new markets, further enhance its tech platform and continue to build its team of expert property managers, said Mina Radhakrishnan, Co-Founder at :Different.
“We’ve already had huge success since launching in Sydney and Melbourne, and we’re thrilled to offer the same great offering to Queenslanders,” Radhakrishnan said.
“We have big growth ambitions for :Different. This latest funding round will help us continue to rebuild property management in Australia and beyond.”
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