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Third of Australian Homes Cheaper to Buy Than Rent

Australian Homes

There is even more incentive for people to quit the big smoke— Sydney and Melbourne—with homes across the rest of the country generally cheaper to buy than rent.

Only 4.9 per cent of homes in Sydney and 7.3 per cent of Melbourne homes were cheaper to buy than rent, according to Corelogic’s latest report.

This compared to between 43 and 96 per cent of other Australian addresses where it was cheaper to service a mortgage, including Brisbane.

The Weekly Property Pulse showed buying cost less than renting at 36.2 per cent of properties across the country, up from 33.9 per cent last year.

The report comes as demand for new homes increased by 15.3 per cent driven by owner-occupiers while rent went up in places experiencing strong domestic migration.

Proportion of homes cheaper to buy than rent

Capital Percentage cheaper to buy Regional homes Percentage cheaper to buy
Darwin 86.5% NT 96.4%
Perth 59.6% WA 79.4%
Brisbane 55.3% Qld 73.1%
Hobart 50.2% Tas 71.4%
Adelaide 47.4% SA 47.4%
ACT 43.6
Melbourne 7.3% Vic 43.6%
Sydney 4.9% NSW 48.2%
Combined 26.2% Combined 60.1%

^Source: Corelogic Property Pulse

Corelogic head of research Eliza Owen said the data revealed striking differences in housing costs across different parts of Australia, with a loss of migration affecting Sydney and Melbourne.

“The combination of lower rent growth and very strong dwelling value growth has meant that even fewer properties across Sydney are cheaper to pay down a mortgage than rent, at just 4.9 per cent,” Owen said.

“This is down from 7.1 per cent when the analysis was done with the same assumptions in February 2020.”

Owen said the results were also a reflection of much lower interest costs on mortgage debt since the onset of Covid-19.

“However, reduced interest costs have not led to cheaper mortgage serviceability relative to rents in every instance,” Owen said.

“This is especially the case in Sydney, where property values have increased markedly against low interest rates, pushing up loan principals and outpacing growth in rents.”

Despite homes becoming cheaper to buy than rent, prices were also going up, however, a boom-to-bust scenario was unlikely, according to Knight Frank research.

The housing value would continue to be underpinned by undersupply, low interest rates and buyers’ fear of missing out.

 

Article Source: www.theurbandeveloper.com

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Market Place

Australian property prices continue to break records despite lockdowns: Core Logic

property prices

Australian property prices are growing at their fastest pace in 17 years despite lockdowns, with several cities climbing to record highs, new data reveals.

National dwelling values are now up 16.1 per cent over the past year to July, after chalking up another 1.6 per cent in the past month, reaching a median of $656,694, the latest Core Logic Home Value Index released on Monday shows.

The majority of that annual growth was recorded over this year, growing 14.1 per cent in the first seven months.

It is the strongest annual growth seen since April 2004, but the monthly growth rate has been slowing since March this year when the national index rose 2.8 per cent, said Tim Lawless, Core Logic’s research director.

Every capital city, except for Darwin and Perth, recorded new high median prices.

Canberra recorded the fastest monthly growth in July of 2.6 per cent, with its median reaching $793,872.

Darwin recorded the fastest annual growth of 23.4 per cent with the median reaching $486,054.

Perth’s median dwelling value is still 13.8 per cent below its peak back in June 2014 and Darwin’s median value is still 15.3 per cent from its May 2014 peak.

Despite Sydney’s ongoing lockdown, dwelling values rose another 2 per cent in July, and 18.2 per cent over the year, reaching a median of $1,017,692.

The restrictions have spooked vendors who are holding off listing their properties until restrictions ease, putting even more pressure on buyers who are still keen to transact.

“They’ve clearly had an effect on activity but not on values,” said Mr Lawless. “The trend in new listing numbers was rising really quickly leading up to lockdown, but that has fallen sharply more recently, having a drag-down effect.”

Australian property

CoreLogic Home Value Index July 2021

Listing levels almost halved in July as a result, with the mismatch between buyer demand and advertised supply a key factor that placed upwards pressure on housing prices, he said.

“One of the biggest impacts of COVID is a further reduction in available supply, which is creating more urgency among buyers.

“Vendors have lost confidence, understandably, when you consider it’s harder to have a property inspected or have an open home.

“On the flip side, we’re not seeing buyer demand easing off; you can still virtually inspect a home or go to an auction online.”

Melbourne’s snap lockdown in July did little to slow property price growth, with the city’s median dwelling value increasing 1.3 per cent in July, and 10.4 per cent over the year, to $762,068.

But Mr Lawless said the rate of growth would inevitably ease as affordability continued to weigh down on price-sensitive buyers such as first-home owning hopefuls and lower-income families.

“Prices are rising more in a month than wages are rising in an entire year,” he said. “It’s a real positive thing for someone who owns a home they’re getting wealthy, but for someone who doesn’t, they’re stuck between a rock and a hard place.”

 

Article Source: www.domain.com.au

 

 

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Brisbane

Brisbane house prices hit another record high, rise 13 per cent

Brisbane’s compelling real estate story is on the cusp of its most exciting chapter yet after house prices climbed by double digits over the past year to record heights.

The latest Domain House Price Report, released on Thursday, revealed median prices jumped by 13 per cent over the 12 months until June – the largest rise in 13 years.

Over the past 12 months, the median house price has gone up by almost $78,000, which is around the average Queensland annual salary. Property experts claim this moment in Brisbane property history is just the beginning, with the city’s successful success Olympics bid tipped to fuel further growth.

According to the report, house prices rose by 5 per cent over the June quarter alone, pushing the median to $678,236. Unit prices remained almost flat in the city’s ongoing tale of two markets, with prices rising 2.1 per cent over the past year to $394,287.

Brisbane median house price reached a record $678,236 in the June quarter.

For anyone who has been trying to buy a house in Brisbane’s frenzied market over the past year, the figures will come as no surprise. In Brisbane’s inner-city ring, house prices have jumped a massive 30 per cent, while prices in Brisbane’s north are up 19.8 per cent. They’re up 18.9 per cent in the western suburbs and 17.5 per cent in the south.

The rises come amid record house price growth across the nation: Sydney’s median is now at $1.41 million, while Melbourne and Canberra’s medians have both cracked $1 million.

Capital city median house prices, June quarter

Jun-21 Mar-21 Jun-20 QoQ YoY
Sydney $1,410,133 $1,303,185 $1,137,246 8.2% 24.0%
Melbourne $1,022,927 $982,382 $880,620 4.1% 16.2%
Brisbane $678,236 $645,718 $600,258 5.0% 13.0%
Adelaide $629,728 $597,187 $541,591 5.4% 16.3%
Canberra $1,015,833 $919,900 $786,517 10.4% 29.2%
Perth $595,823 $589,687 $530,702 1.0% 12.3%
Hobart $646,301 $606,275 $503,392 6.6% 28.4%
Darwin $608,519 $559,022 $497,543 8.9% 22.3%
National $955,927 $903,471 $804,380 5.8% 18.8%

Data provided by domain

Domain chief of research and economics Nicola Powell said the Queensland capital was perfectly poised for a property coming of age with close to record-high interstate and expat migration largely feeding the latest growth.

“What’s interesting around hosting the Olympics is that the impact on housing values isn’t going to be during the Olympics of 2032; it’s going to be far more stretched than that because in the lead up it’s such a significant event for Australia and Brisbane so we’ll see significant investment,” Dr Powell said.

“It will grow the infrastructure and the associated job creation, and with that, it will bring economic prosperity … and what we could see is a bit of a turnaround in unit growth as well.

“I think this is something that sets Brisbane apart from our other capital cities because, until 2032, there’s a long period of time, which means there’s lots of time for purchases on big-ticket items in terms of infrastructure.”

Dr Powell added that the capital’s continued affordability compared to Sydney and Melbourne was throwing more fuel into the price cycle.

Ray White New Farm principal Haesley Cush said Brisbane’s gripping property tale was only just unfolding.

Brisbane house price rises by region

SA4 Jun-21 Mar-21 Jun-20 QoQ YoY
Brisbane – East $655,000 $615,000 $601,600 6.5% 8.9%
Brisbane – North $725,000 $685,000 $605,000 5.8% 19.8%
Brisbane – South $833,500 $785,000 $709,500 6.2% 17.5%
Brisbane – West $868,000 $820,000 $730,000 5.9% 18.9%
Brisbane Inner City $1,240,000 $1,200,000 $952,500 3.3% 30.2%

Data provided by domain

“The market is extraordinarily unique. In March 2020, Brisbane was finally waking up after 10 years of a relatively flat period, and that’s quite a long time for a capital city to not have real capital growth,” Mr Cush said.

“So, we were due for an upward swing, but to (further) drive that up was COVID and the [planned] infrastructure.

“COVID had this unpredicted benefit to property prices, and there’s no sign of [price growth] slowing. And then on top of that, you have the Olympics, and so that, by definition, adds more capital growth, and the final thing people look for is some comfort that prices won’t go down and we’re still 10 years away from the Olympics.

“So, you can see that we have this insurance policy of the Olympics counteracting any downward trend, and Brisbane is going to be on the map, and people are going to notice the city more than ever before.

“Then looking at the infrastructure coming, it’s an unbelievable story for Brisbane … in 10 years’ time, Brisbane is actually going to be improved quite dramatically.”

Brisbane

Brisbane is on the cusp of further change and expansion, given the successful 2032 Olympics bid which will only further accelerate house prices. Photo: SPACE Property South Brisbane

The sunny outlook comes hot on the heels of record price growth in the city, with Mr Cush citing the first quarter of the year as their greatest three months of sales in history.

“This quarter was probably continuing on par, but some of our markets have continued to roar … it’s probably the most exciting market I’ve worked in,” Mr Cush said.

Joint managing director and lead agent at Place Estate Agents Bulimba, Sarah Hackett, said while the greater city had undergone strong growth as a whole, that million-dollar price point had skyrocketed by 30 per cent in some cases.

“We’ve never seen this before in Brisbane. The numbers through the opens [are incredible]. We’ve got about 20 per cent more going through than in 2019, and we’ll always have someone from Hong Kong and the UK,” Ms Hackett said.

“Buyers aren’t mucking around … and on average, we have seven registered bidders per auction, and it’s all cash buyers.

“Over the last quarter Place Bulimba was up 62 per cent from 2019, and that was working out to be one of our best years.

“I can honestly say this is all I’ve ever done for 24 years; it’s the best market I’ve ever seen.”

Capital city median unit prices, June quarter

Jun-21 Mar-21 Jun-20 QoQ YoY
Sydney $786,175 $761,993 $731,789 3.2% 7.4%
Melbourne $572,793 $568,475 $544,290 0.8% 5.2%
Brisbane $394,287 $396,039 $386,136 -0.4% 2.1%
Adelaide $337,932 $337,932 $330,190 0.0% 2.3%
Canberra $504,217 $486,512 $481,599 3.6% 4.7%
Perth $370,571 $377,073 $325,778 -1.7% 13.7%
Hobart ** $429,287 $433,435 ** **
Darwin ** $298,624 $275,664 ** **
National $601,482 $588,957 $563,907 2.1% 6.7%

Data provided by domain

While Ms Hackett agreed that homes in the city’s blue-chip inner fringe were going nothing short of gangbusters, she said opportunities still abounded in the prestige sector where prices hadn’t surged with the same ferocity.

“It’s an incredibly good time to upgrade because the houses worth $1.2 million have gone up substantially.”

But with thousands of expats projected to fly home in the coming year and storm the market, it’s a window she felt could start to close.

“There’s still plenty of opportunity for growth, and there’s going to be a lot more migration.”

 

Article Source: www.domain.com.au

 

 

 

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Market Place

Mortgage Stability Attracting New Buyers

Taking on a new mortgage is becoming an increasingly attractive option for Australians as mortgage stability hits a near-record high.

Around 3 million people were expected to buy a new home in the next six months, while more than 256,000 refinanced, according to a number of reports.

Australia’s ability to keep up with these mortgage repayments was continuing to improve despite property prices skyrocketing.

One-in-six mortgagors said they were considered at risk of mortgage stress in the three months to May, compared to nearly one-in-five at the same time last year.

The data from Roy Morgan revealed low community transmission and increased full-time employment were contributing to improved conditions.

Meanwhile, property prices nationally have increased by more than 10 per cent in the first half of the year, according to the Reserve Bank of Australia, who decided to maintain the cash rate this week.

“Demand over the preceding year had been led by owner-occupiers, although investors had become more active in recent months,” the board said.

“As had been the case for some time, the flow of new listings for sale remained similar to pre-pandemic levels but total listings were much lower, implying that dwellings were being sold at a rapid pace.”

Low interest rates and new buyers could further boost the property prices with three million people looking to buy in the next six months, according to Finder.

The research revealed 7 per cent of Australians were looking to buy as an investment, while 7 per cent plan to live in the home they buy.

A further 10 per cent of people would buy a property in the next six months if they could afford to do so.

However, rents were also on the rise increasing between 8.9 and 21.6 per cent across Australia with the exception of Melbourne and Sydney where there was little change.

Mortgage stress hits near record low 

Mortgage

^Source: Roy Morgan 

Roy Morgan chief executive Michele Levine said support from the government and banks was helping people continue to service their mortgages.

“Many years of research into mortgage stress has shown that the biggest driver of increased mortgage stress is the reduction in income caused by the loss of a job which causes an immediate jump into a ‘risk’ category,” Levine said.

“Over two-in-three mortgages rely on more than one income and our analysis shows losing even the lower of these two incomes causes an immediate four-fold increase in the likelihood of those mortgage holders becoming ‘at risk’ or ‘extremely at risk’.”

Refinancing is also on the up with more than 256,000 refinance settlements occurring across the 2020-21 financial year, according to PEXA.

PEXA senior research manager Mike Gill said mortgage holders were taking advantage of the low interest rates.

“We witnessed a significant spike in refinances in June 2020 following the Reserve Bank of Australia’s rare double rate cut in March of that year,” Gill said.

“We have seen elevated levels of refinancing activity since then across all eastern states.

“The recent records set in June 2021 within NSW and Queensland coincide with public commentary of a potential interest rate rise sooner than previously forecast by the Reserve Bank.”

The report found refinance activity in NSW had the steepest rise, up 15 per cent year-on-year to over 101,000, while Queensland volumes also increased by 12 per cent year-on-year, with more than 48,000 refinances settled.

Victoria recorded the most refinances of any other state with more than 106,000, just surpassing its northern neighbour, however witnessed lower year-on-year growth, under 4 per cent.

 

Article Source: www.theurbandeveloper.com

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