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Offshore Interest Accelerates Build-to-Rent

Offshore

Australia’s booming build-to-rent development industry grew almost 70 per cent in the past 12 months off the back of substantial offshore investment.

CBRE’s build-to-rent development pipeline report estimates the market is worth about $10 billion with 40 projects and almost 15,000 apartments in the pipeline.

Offshore institutional investment currently accounts for 57 per cent of the funding of build-to-rent developments. But with recent changes to tax concessions in New South Wales and Victoria it is expected more Australian banks and investors will funnel money into the asset class.

“We expect the momentum to be maintained with more projects announced as developers work through a pipeline of several thousand units currently under due diligence and taking advantage of recent tax reforms enacted in NSW and Victoria,” CBRE associate director Puian Mollaian said.

“Offshore institutional capital has been critical to support the launch of the first generation of projects in Australia. Almost two-thirds of projects announced have secured equity capital from global investors, mainly those based in North America and Europe.”

Offshore

▲ Build to rent investor profile. Image: CBRE

Mollaian said Covid-19 had stimulated further interest in build-to-rent from developers and investors in addition to planning incentives and tax reforms in New South Wales, Victoria and Queensland.

“Locally, preliminary data from the first wave of projects’ performance during Covid-19 indicate a level of resilience as evidenced by broadly stable rents and occupancy levels,” Mollaian said.

Melbourne continues to lead the way in the build-to-rent sector, with more than 50 per cent of projects in the capital city, including Assemble’s East Village development (artist’s render pictured above) on a 4.3ha former industrial site at Bentleigh East.

Sydney accounts for about 25 per cent of the national market.

Mollaian said Victoria and Queensland offered the most opportunity for Build to Rent due to the availability of “suitable development sites and lower barriers to entry in comparison to Sydney” where prices remained high.

Offshore

▲ Build to rent market share by state. Image: CBRE

CBRE Debt and Structure Finance managing director Andrew McCasker said it was encouraging to see traditional lenders and non-bank lenders allocate funds to the growth sector.

“We expect funding appetite to increase as the asset class, and knowledge of the industry, evolves and matures in Australia,” McCasker said.

The Property Council of Australia welcomed the change to New South Wales’ planning laws to help stimulate the build-to-rent sector further.

“Build-to-rent delivers much needed housing supply, is good for renters, keeps jobs in construction and is also great for our economy,” PCA executive director for NSW Jane Fitzgerald said.

Fitzgerald said the changes would provide a shot in the arm for build-to-rent in NSW by providing a planning and tax framework designed specifically with the new sector in mind.

“The planning changes not only acknowledge that build-to-rent is a different housing ‘product’ to build-to-sell but also provide clear guidance to investors, developers and consent authorities.

“The tax changes will improve certainty for investors and remove disincentives that would have held the sector back.”

 

Article Source: theurbandeveloper.com

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Opinion

Little movement on HTW residential property clock in April

residential property

Herron Todd White have released their April property clock, and there has been little movement in the residential sector.

Broome and Canberra were the only locations to change their position on the clock in terms of residential housing values, with both regions moving to ‘rising market’.

There were also few changes to the property clock for the residential unit market last month, with the biggest shift being Canberra moving to a declining market.

oowoomba units shifted to ‘start of recovery’ and Emerald is now classified as a ‘rising market’.

The residential property clock

Top of the clock:

Houses – Albury, Bathurst, Burnie/Devonport, Dubbo, Launceston, and Tamworth’s housing values all remain at the peak of the market.

Units – The best-performing unit markets include five of the same locations that featured at the top for houses: Albury, Bathurst, Burnie/Devonport, Launceston, and Tamworth.

Starting to decline

Houses – Wodonga

Units – Wodonga

Declining market

Canberra’s unit market was the only area classified as in decline.

Approaching bottom of the market

No areas

Bottom of the market

Houses – Albany, Geraldton, and Kalgoorlie remain at the bottom of the market.

Units – Albany, Geraldton, and Kalgoorlie all make another appearance for units, along with Sydney and the Whitsunday region.

Start of recovery 

Houses – Alice Springs, Bundaberg, and Darwin’s housing markets were all classified as being at the start of their recovery.

Units – Alice Springs, Brisbane, Bundaberg, Cairns, Canberra, Darwin, Emerald, Ipswich, Melbourne, Perth, South West WA, Toowoomba, and Townsville’s unit markets are also starting to recover.

Rising market

Houses – Once again, it’s a crowded field on the rising market end of the clock, with Adelaide, Adelaide Hills, Ballina/Byron Bay, Barossa Valley, Brisbane, Broome, Cairns, Canberra, Central Coast, Coffs Harbour, Emerald, Gladstone, Gold Coast, Hervey Bay, Hobart, Illawarra, Ipswich, Karratha, Lismore, Mackay, Melbourne, Mildura, Mount Gambier, Newcastle, Perth, Port Hedland, Rockhampton, Shepparton, South West WA, Southern Highlands, Sunshine Coast, Sydney, Toowoomba, Townsville, and Whitsunday housing markets all on the rise.

Units – Adelaide, Adelaide Hills, Ballina/Byron Bay, Barossa Valley, Broome, Coffs Harbour, Dubbo, Gladstone, Gold Coast, Hervey Bay, Hobart, Illawarra, Karratha, Lismore, Mackay, Mildura, Mt Gambier, Newcastle, Port Hedland, Rockhampton, Shepparton, Southern Highlands, and the Sunshine Coast’s unit markets were all classified as rising.

Approaching peak of the market

Geelong was the only location classed as approaching the peak of the market for both houses and units.

 

Article Source: eliteagent.com

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Opinion

Is now a good time to buy property? Nearly 40 per cent of people think so, despite record house prices

house prices

House prices are at historical highs, records tumble every weekend at real estates auctions around the country and price growth rates continue to rise.

Despite those facts, nearly 40 per cent of Australians believe that now is a good time to buy.

According to new research from the financial comparison website Canstar, 38 per cent of those surveyed believed that it was a good idea to buy property now.

Canstar group executive financial services Steve Mickenbecker said that of those who thought it was a good time to buy, many were expecting prices to continue to rise. They also cited low interest rates as another reason.

“Either way there will be no shortage of buyers as sellers come out,” he said.

“Today the market is overwhelmed with buyers, auctions are intensely competitive, open houses crowded, and unconditional contracts are becoming the norm. Low housing supply on the market has intensified the fear of missing out. We are in a low interest rate frenzy.”

Of the 39 per cent who said they didn’t think now was a good time to buy, 45 per cent said the market was currently in a bubble, inflated or under-supplied.

Mr Mickenbecker said the almost-equal number of respondents who said it was a good time and a bad time to buy indicated the rapid growth was slowing down.

“The Reserve Bank and APRA are likely to welcome a leading indicator of a return to balance, tempering growth and discouraging bank excess, but at the same time strong enough to support sustainable economic growth that won’t implode,” he said.

“The Reserve Bank doesn’t want to hurt the broader economy with higher interest rates and currency and is hoping for healthy property prices to support spending, but at a slower pace, so first-home buyers can afford to stay in the race.”

The latest quarterly Domain House Price Report, released last week, found price growth had hit a 32-year high in March.

Sydney’s median house price for the last quarter was $1.3 million, and Melbourne’s reached a record high of $975,000. Hobart’s was just above $600,000, and prices in Canberra grew 20 per cent in a year to a median of $930,000.

Brisbane and Adelaide’s median house prices were at their highest ever, and Perth’s was at its highest since December 2015. Darwin’s median house price was at its highest since December 2017.

CoreLogic figures released this week showed the rapid growth had started to slow, but prices continued to grow in every capital city and regional market in April.

“First-home buyers have been anything but deterred from the market and have leapt in with gusto, encouraged by government incentives,” Mr Mickenbecker said. “They are increasingly competing with investors able to make unconditional offers and blow them away at auctions, and would clearly welcome a more stable market.

“The market continues unabated for now, but a slow and steady future is hopefully ahead of us.”

 

Article Source: www.domain.com.au

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Opinion

CoreLogic: Home values continue to rise but the pace of growth loses steam in April

Home values

Australian housing values lifted by 1.8% in April according to CoreLogic’s national home value index, with the monthly pace of capital gains easing from a 32-year high in March (2.8%).  Although growth conditions have slowed, housing values are still rising at a rapid pace, up 6.8% over the past three months to be 10.2% higher than the COVID low in September last year.

CoreLogic’s research director, Tim Lawless, says the pace of capital gains could slow further over the coming months as inventory levels rise and affordability constraints dampen housing demand.

“The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth.  With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households, are finding it harder to save for a deposit and transactional costs.”

Home values

Home values

 

There is already some evidence of fewer first time buyers in the market, with the Australian Bureau of Statistics reporting a -4.0% fall in the value of first home buyer home loans through February, the first drop since May last year.

Despite the slowdown, positive housing market conditions remain geographically broad-based with every capital city and ‘rest-of-state’ region continuing to record a lift in dwelling values over the month.   Darwin (2.7%) and Sydney (2.4%) recorded the largest month-on-month rise in dwelling values, while Perth values recorded the lowest rate of growth amongst the capital cities at 0.8%.

The four smallest capital cities recorded double digit annual growth (Adelaide 10.3%, Hobart 13.8%, Darwin 15.3% and Canberra 14.2%), reflecting a smaller COVID-related disruption and an earlier start to the growth phase last year.  Melbourne is recording the lowest level of annual growth (2.2%) due to a larger downturn, attributable to the extended lockdown period last year.

The broad trend of houses outperforming the unit sector continued through April as higher density styles of housing experienced less demand amidst elevated supply across some inner city precincts.  At the combined capital city level house values (8.6%) have risen at double the pace of unit values (4.3%) over the first four months of the year.

“A preference shift away from higher density housing during a global pandemic is understandable, however a rise in flexible working arrangements also seems to be supporting greater demand for houses around the outer-fringes of capital cities.  Relatively weak investor activity, compounded by a supply overhang in some high-rise precincts, is also dampening price growth in unit markets,” Mr Lawless said.

Home values

 

 

Article Source: www.corelogic.com.au

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