Central business districts have taken another blow, with residential vacancy on the rise and rent falling by 3.1 per cent for houses and down 5.5 per cent for units during September.
Melbourne is at a new all-time high of 10.8 per cent, the Brisbane CBD vacancy rate also increased to 12.5 per cent, however Sydney is slowly dropping, from 12.9 per cent in August to 12.8 per cent in September, according to SQM Research.
This is the polar opposite of the extremely tight markets seen in Australia’s other capitals and regions, which sit below one per cent.
On a national scale, residential rental property vacancy is at a mere 2 per cent, with 70,389 vacant properties, down from 2.1 per cent in September 2019.
Rent has also moved up by 4.8 per cent for houses and 1.7 per cent for units on average during the past year.
Residential vacancy rates
|City||Sept 2020 vacancy rate||Sept 2019 vacancy rate||Rent Sept 2020 – houses, units||12 month change – houses, units|
|Sydney||3.5%||3.2%||$611.7, $452.1||-8.9%, -8.9%|
|Melbourne||3.8%||2.0%||$515.3, $390.2||-2.2%, -5.1%|
|Brisbane||2.0%||2.3%||$467.4, $377.1||1.1%, -0.6%|
|Perth||0.9%||2.7%||$473.1, $362.3||6.8%, 7.6%|
|Adelaide||0.8%||0.9%||$416.9, $315.3||5.1%, 1.9%|
|Canberra||0.9%||1.0%||$623.9, $479.8||1.4%, 3.8%|
|Darwin||2.9%||0.7%||$526.6, $369.0||1.5%, -3.3%|
|Hobart||0.6%||0.6%||$454.5, $382.6||4.4%, -5.2%|
|Capital||2.1%||1.8%||$463.0, $369.0||4.8%, 1.7%|
|Average||2.0%||2.1%||$527.0, $411.0||-3.1%, -5.5%|
^ Source: SQM Research
SQM Research managing director Louis said the population is still looking to stay away from the large cities.
“We think this trend may soon reverse, but to what extent remains a mystery,” Christopher said.
“Elevated rental vacancy rates in Sydney and Melbourne continue to push city rents downwards—this is particularly the case in the CBD and inner-ring suburbs close to the CBDs.
“However, outside Sydney and Melbourne vacancy rates are falling again.
“And then when we consider regional locations, vacancy rates have fallen below 1 per cent which really represents the point of little to no rental vacancy.”
SQM research for September also shows residential listings are down a further 1.2 per cent on the month and down 7.4 per cent on the year.
Despite initial predictions of huge falls in house prices early on in the pandemic, the residential market has been buffered by government stimulus packages, with the market starting to ease and even turn around in some cities.
However, the Reserve Bank expects rental growth to remain subdued through 2021 as restrictions on international migration affect vacancy rates.
This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article
Logan City Builds on ‘Family Magnet’ Study Findings
Logan could grow by an additional 56,000 dwellings in the next 15 years, with more than $18 billion in government-funded infrastructure projects planned for the city.
The City of Logan has launched its Housing Study, the first step in a three-stage strategy for the south-east Queensland district, located between Brisbane and the Gold Coast.
A number of factors are driving residential development potential, including declared priority development areas at Yarrabilla—a 2,200-hectare site—and a 7,188-hectare Greater Flagstone site, part of which Peet Limited was given approval to develop last year.
Meanwhile, in the surrounding area, Golden Gate Property has kicked off a $130 million residential project; CFMG Capital has acquired a large development site and a $460 million Logan Hospital revamp is also on the cards.
The entire Logan City Council was sacked last year over fraud and corruption allegations.
The new housing study provides the new council with options for higher-density development around transport corridors.
Since 2010, annual residential dwelling approvals have increased by 77 per cent, nearing 4000.
The City of Logan is now home to more than 334,358 residents with a growth rate of 1.9 per cent; by 2041 as many as 586,000 people are expected to live in the city.
Potential for residential development in Logan by 2036
^ Source: City of Logan Housing Study 2020
The study found that affordable choices for housing and high availability have attracted families to the area from other parts of Queensland and as far afield as New Zealand.
Other findings include the fact that nearly a quarter of residents—23 per cent—are 14 years or younger, with a further 12 per cent of the population in the 15 to 24 age bracket, 63 per cent of whom are still living at home.
The median weekly rent for a three-bedroom house is $350 and the majority of families live in stand-alone homes with double garages.
City of Logan mayor Darren Power said the results of the study allow council to set a strategic vision that meets the expectations of the community as they look towards their 2025 planning scheme.
“Families are flocking to our booming new residential developments, our established suburbs are being re-energised and we have also seen growth in the traditional Logan rural-residential lifestyle,” Power said.
“The contents of this study will now help shape our housing strategy to establish best-practice policy options for future housing and residential development across the city.”
Stage 2 of the housing strategy will involve detailed investigations on planning issues including managing development in established areas, examining lot sizes and dwelling areas as well as identifying locations for new residential growth.
This article is republished from theurbandeveloper.com under a Creative Commons license. Read the original article.
The retreat of property investors: which State has been most impacted?
Property investor activity in the Australian housing market has been falling since early 2015, after macro-prudential policies were implemented in Australian mortgage lending. Apart from a brief ‘bounce’ in 2016, investor participation has been consistently trending lower. The latest ABS housing finance data shows the portion of housing finance for the purchase of property lent to investors fell to a fresh record low of 23.5% in August. This is significantly lower than the decade average of 36.1%.
The decline of the property investor has been brought about by multiple factors. These include:
- temporary policies implemented between 2014 and 2019, which limited lending products favoured by investors;
- mortgage rate premiums for investor loans;
- less appetite for high LVR and interest only lending from the banking sector;
- less certainty around prospects for capital gains;
- high levels of housing construction which have softened rental returns; and,
- the recent global pandemic, which has created a particular negative demand shock to the rental market, thereby further inhibiting returns.
But can we expect investor activity to keep declining? When comparing investor activity at the state level with CoreLogic rental data, there are clear differences between markets that may appeal to investors, versus those where the retreat could last longer.
NSW. For the past decade, investor participation in mortgage activity averaged 41.9% across NSW and moved through a record high in late 2014 when investors comprised 55.6% of mortgage demand. By August 2020, investors as a proportion of housing finance had fallen 28.2 percentage points from that peak, to 27.4%.
Across NSW, returns to investors vary greatly by submarket in both the growth of the value of property assets and rental return. Broadly however, dwelling values across NSW sit 3.5% below the record high reached in July 2017. Gross rental yields across the state were 3.23% in September, which is just 2 basis points off the record low from October 2017.
Rental market performance has been highly varied through the COVID-19 period. As one of Australia’s two major international cities, the closure of international borders has created significant shock to the rental market, where new migrants to Australia typically rent. Outer suburban and regional markets have seen upward pressure on rents, but the wind-back of stimulus to households affected by COVID, and cheaper rents closer to the city, may erode this growth over the coming months. Ultimately, the biggest boost to investor returns, and an uptick in investor activity, will be dependent on international travel resuming to Australia.
VIC. Victoria, namely Melbourne, had the highest exposure to overseas migration as a source of new housing demand prior to COVID-19, which has significantly impacted rental values, particularly those in inner city markets. Across Greater Melbourne, unit rents have declined 5.5%, but in submarkets such as Melbourne City, unit rents have seen much more acute declines of -16.2% since March. Gross rental yields across the state were 3.4% in September, down from 3.7% one year ago.
With dwelling values also down 5.5% across Melbourne, and half a per cent across regional Victoria since the pandemic, investor interest is likely to remain subdued until international travel resumes. Investors who can afford low or no rental income may take advantage of lower property values towards the market trough.
QLD. Investor participation in the QLD dwelling market shifted significantly lower over 2017, and again with the onset of the COVID-19 pandemic. Inner Brisbane in particular has seen high levels of unit development, which has placed downward pressure on rents over time. Since the onset of Stage 2 pandemic restrictions in March, Inner Brisbane unit rents have declined a further -4.8%.
Despite a long period of high supply and subdued investor participation, gross rental yields across the state are far higher than NSW and VIC, largely due to relatively low dwelling values. A typical dwelling value at September was around $505,000 across Brisbane, and $388,000 across regional QLD. Gross rental yields across the state were 4.8% in September, down from 5.0% a year ago.
SA. South Australian rental markets have been tightening for the past few years, with positive growth in the Adelaide rental market since 2017. At September, Adelaide had the second highest annual rent value growth of the city markets at 2.6% over the year, putting rental income growth well above inflation.
Despite the stronger fundamentals, investor participation as a share of mortgage activity has continued to decline. The portion of investor finance was 20.4% at August, down from the decade average of 31.7%. However, the rate of decline in investment activity has not been as steep as in other parts of the country. Between record low mortgage rates, low dwelling prices, volatility and a tightening rental market, South Australia may see an increase in investor participation over the coming quarters.
WA. Western Australia has actually seen a turn in investor participation, and is bucking the general trend of subdued investor activity. Since bottoming out in April at 14.5%, the share of mortgage finance for the purchase of property to investors has climbed to 17.0%. This comes after a long period of correction in the Perth property market, which saw momentum gradually gathering in prices and rents from early 2020. Rental values across Perth grew significantly higher than the national average, at 4.8% in the year to September, which will likely see investor participation continue to rise. Typical gross rent yields across WA were 4.7% at September, up from 4.6% one year ago.
TAS. For years, Tasmania has been a source of strong capital and rental growth. Between annualised growth and rental return, total annualised return was 12.3% across the state for the past five years. However, COVID-19 has created a severe disruption to the rental market. Unit rent values in particular have declined -5.6%, which is the steepest fall of the capital city markets. The loosening of rental markets since COVID-19, which has likely had something to do with Airbnb properties converted to the long term market, has provided some much-needed relief for renters. With a steep retreat in investor participation since March, first home buyers may also face less competition. However, the return of international and inter-state travel would likely see rental markets tighten once more, as short-term accommodation owners revert their properties in preparation for increased tourism.
ACT. The portion of investment across the ACT does not appear to be as disrupted by COVID-19 as other states and territories, but has still trended down over time. Investor share of mortgage activity has fallen to 24.6%, from a decade average of 32.6%. Gross rental yields have compressed across the region, from 4.7% in September 2019 to 4.5% at September 2020. This is likely the result of dwelling value increases since the onset of COVID, and may weaken investor interest in the coming months.
NT. Across Darwin, rental yields are the highest of any capital city market at 5.9%. However, this is has largely been a function of a long property price correction, where both rent values and property values have declined over time. The start of 2020 has signaled a recovery in values, with Darwin dwellings up 2.7% from March through to September. Although investor participation was the lowest of the states and territories at 12.6%, the sheer cyclical correction of Darwin values sees the typical dwelling value at just under $400,000, and may see a gradual recovery in investor interest.
The patterns in respective rental markets suggest that from an affordability and yield perspective, smaller capital city markets may see increasing popularity from investors in the coming months. For the traditional investor markets such as inner city Sydney and Melbourne, COVID-19 has triggered a further retreat of investors that is likely to last until overseas migration and travel resumes.
This article is republished from corelogic.com under a Creative Commons license. Read the original article.
‘Flicked a switch’: Buyers bid big at South East Queensland auctions
A four-bedroom home in Mermaid Waters garnered so much interest that buyers from Denmark, Saudi Arabia and the United States inspected the property on FaceTime.
But it was a Queensland buyer who snapped up the waterfront home at 20 Tequila Court for $1.71 million.
20 Tequila Court, Mermaid Waters QLD 4218
It was the first time the home, on the Gold Coast close to Broadbeach, had been offered for sale since being built 36 years ago.
Ray White Mermaid Beach co-principal Conner Malan said the buyer, a woman from Toowoomba, was one of 14 registered bidders on the day.
“She used an advocate, who was very flamboyant,” Mr Malan said. “He was bidding in eights trying to convince the other bidders he was bidding for a Chinese buyer.”
The winning bidder would now be calling the property her forever home, and was planning on some renovations, he said.
The property was one of almost 50 auctions held at the weekend across South East Queensland.
Brisbane’s preliminary auction clearance rate sat at 52 per cent, after 46 auctions were scheduled and 25 results reported. Five properties were withdrawn from auction on Saturday.
In Brisbane’s western suburbs, 23 buyers registered to bid on a very popular property.
The property, at 7 Salisbury Street, Indooroopilly, had a four-bedroom removable home on a double block of land, which many buyers were interested in.
7 Salisbury Street, Indooroopilly QLD 4068
The home was snapped up by a developer/investor for $1,191,000 after an action-packed auction.
Doug Disher Real Estate director Doug Disher said bidding opened at $1 million, setting the scene for other buyers.
“There were some people there because they wanted to be close to schools,” Mr Disher said.
So many people turned up for the auction that some had to be asked to move onto the street or a safe distance away to allow for COVID-19 social distancing.
The vendor, who lives overseas, watched the action unfold through a live stream, Mr Disher said.
“They were selling because the home was surplus to their needs,” he said. “[They] were delighted with the result.”
In Bulimba, in Brisbane’s north-east, a four-bedroom Queenslander on a low-maintenance block at 7 Birkalla Street sold under the hammer for $1,452,500.
7 Birkalla Street, Bulimba QLD 4171
Ray White Bulimba’s Jonathan Peck said the vendors, who had owned the property for 10 years, undertook a full renovation four years ago.
“They’re delighted to be able to move onto their next chapter,” Mr Peck said.
Eight buyers registered to bid on the property that had been inspected by more than 60 people in the past four weeks, Mr Peck said.
“The Brisbane property market continues to be red hot and Bulimba has now been on an upward trajectory for some time – it’s great to see so many buyers out and about,” he said.
Another fully renovated Queenslander at 19 Gordon Street, Hendra, sold under the hammer on Saturday, for $1,058,000.
19 Gordon Street, Hendra QLD 4011
Ray White Metro North’s Jon Finney said in the end it came down to two bidders, both young professionals, wanting to buy the home, which included large, decked outdoor entertaining areas.
“The winning bidder had missed out on three previous properties so they were determined to buy it with a capital D,” Mr Finney said.
The vendors, meanwhile, offloaded the home to make a full-time move to the Sunshine Coast, he said. Such sales showed how strong Brisbane’s auction market had become in the latter part of 2020.
“The confidence is here as strongly as it was lacking last year,” Mr Finney said. “There’s been a massive turnaround – it’s like a massive light switch has been flicked on.”
This article is republished from domain.com under a Creative Commons license. Read the original article.
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