A guide to keep landlords and agents updated about what is happening in the investment property market…
1. The rental market
In December, capital city asking rents increased 0.4% for houses to $540 p/w but declined 0.2% for units to $408 p/w, according to SQM Research. Melbourne was the only capital to record decreases in weekly rents for both houses and units, while Brisbane, Perth, Adelaide, Hobart and Darwin recorded increases for both. In Sydney and Canberra house rents rose, while unit rents declined. Across the capitals: Canberra ($656 p/w houses / $474 p/w units), Sydney ($638 / $447), Darwin ($585 / $395), Brisbane ($470 / $379), Adelaide ($422 / $315), Hobart ($461 / $401), Melbourne ($513 / $383) and Perth ($485 / $366).
National vacancy rates remained stable at 2.1% in November, according to SQM Research. A total of 72,879 residential properties were vacant Australia-wide over the month. Rates held stable in Melbourne (4.4%), Perth (0.9%), Adelaide (0.8%), Canberra (0.9%), Darwin (0.7%) and Hobart (0.6%), while decreases were recorded in Sydney (-0.1% to 3.5%) and Brisbane (-0.2% to 1.8%).
According to CoreLogic’s Hedonic Home Value Index, the average gross rental yield for capital city houses in November was 3.3% and 3.8% for units, while the combined regional house yield was 4.8% and 5.3% for units – bringing the national gross yield to 3.6% for houses and 4.0% for units. Gross rental yields across the capitals: Sydney (2.7% houses / 3.3% units), Melbourne (2.9% / 3.7%), Brisbane (4.1% / 5.1%), Adelaide (4.1% / 5.3%), Perth (4.3% / 5.3%), Hobart (4.5% / 4.7%), Darwin (5.5% / 7.0%) and Canberra (4.2% / 5.5%).
In the year to November, the top performing rental market of the capital cities was Perth, where dwelling rents increased by 8.2%, according to data from CoreLogic. Across the combined capitals, house rents increased 2.7% while unit prices decreased 4.4%. For the combined regionals, house rents were up 4.5% and unit prices were also up 3.5%, bringing the national house rents to +3.2% and units to -3.1%. Across the capitals: Sydney (house rents +1.0% / unit rents -5.4%), Melbourne (0.6% / -7.0%), Brisbane (+2.2% / -1.3%), Adelaide (+3.3% / +1.3%), Perth (+8.6% / +5.4%), Hobart ( -1.5% / -3.2%), Darwin (+6.3% / +6.3%) and Canberra (+4.9% / +1.2%).
REIA’s The Housing Affordability Report found rental affordability declined in the September quarter and over the past year, with the proportion of income required to meet rent payments increasing 0.4% to 23.7%. REIA attributes the decline in affordability to the increase in rents in a number of capital cities.
Figures from Digital Finance Analytics revealed rental stress was 35.2% (or 1.78 million households) in November. NSW had the highest number of renters in stress (48.4%), followed by Victoria (38.4%), the ACT (32.7%), Queensland (32.0%), WA (27.7%), SA (18.7%), Tasmania (15.5%) and the NT (10.1%).
2. Housing trends
According to CoreLogic’s Hedonic Home Value Index, national housing values rose 0.8% in November to a median value of $565,474. All capital cities recorded increases: Canberra (+1.9%), Darwin (+1.9%), Hobart (+1.4%), Brisbane (+0.6%), Adelaide (+1.3%), Perth (+1.1%), Sydney (+0.4%) and Melbourne (+0.7%).
National residential property listings decreased 4.0% in November to 296,267, according to SQM Research data. All capital cities, except Melbourne, recorded decreases in property listings over the month. The research also found capital city average asking prices decreased 0.1% for houses (to $988,500) but increased 0.3% for units (to $565,800).
According to the ABS’s Residential Property Price Indexes: Eight Capital Cities, the weighted average price rose 0.8% in the September quarter. The indexes rose in Sydney (+1.0%), Brisbane (+1.5%), Perth (+1.4%), Adelaide (+1.6%), Canberra (+0.9%), Hobart (+1.2%), and Darwin (+0.8%), and fell in Melbourne (-0.3%), over the quarter. The total value of residential dwellings in Australia rose $87.8bn to $7,283.3bn this quarter, with the mean price of residential dwellings rising $5,400 to $689,500 while the number of residential dwellings rose by 44,000 to 10,562,800.
According to REIA’s Real Estate Market Facts report, the weighted average capital city median price for both houses and other dwellings increased over the September quarter. Median prices for houses rose 3.6% to $773,760 while other dwelling prices rose 2.9% to $596,751.
The number of building approvals nationwide rose 3.8% in October to 16,584 (seasonally adjusted), according to the ABS. Approvals for private sector dwellings excluding houses rose 6.2%, while approvals for private sector houses rose 3.1%. The value of residential building approved rose 9.4%.
4. Investment market
According to statistics from the ABS, the value of new loan commitments for investor housing rose 0.3% (seasonally adjusted) to $5.29bn in October.
In November, 25.6% of all investors were stressed (i.e. income from rent is not sufficient to recover the costs of owning and letting their properties), according to figures from Digital Finance Analytics. NSW (35.0%) had the highest number of stressed investors, followed by the ACT (34.6%), Victoria (25.2%), WA (23.1%), Queensland (22.8%), the NT (16.8%), SA (16.1%) and Tasmania (13.1%).
5. Finance matters
According to data from the ABS, the year to October 2020 saw a 14.5% increase in the volume of finance secured for the purchase of property. Investor lending rose $476M, while owner-occupier lending was up $15.8bn and FHB lending up $13.5bn.
6. Latest research
According to CoreLogic’s Best of the Best report for 2020, the highest rental yield for houses was found in Collinsville, Queensland at 14.6% and for units it was South Hedland in WA at 14.1%. Port Elliot in SA saw the greatest change in house rents over the year at 23.7% and Mittagong in NSW had the greatest change in unit rents at 20.6%.
Research by Domain identified the locations within capital cities with the highest and lowest vacancy rates in November. The highest vacancies were found in Victoria’s Melbourne City (14.4%), Stonnington – West (8.7%), Stonnington – East (7.1%), Whitehorse – West (6.8%), Boroondara (6.6%), Port Phillip and Yarra (both 5.0%), Queensland’s Brisbane Inner (6.3%), SA’s Adelaide City (6.0%) and NSW’s Sydney Inner City (5.2%). The lowest vacancy rates are found in Tasmania’s Hobart – South and West (0.1%), Hobart – North West (0.2%) and Meander Valley – West Tamar (0.3%), SA’s Gawler – Two Wells, Tea Tree Gully, Playford and Marion (all 0.2%), Victoria’s Mornington Peninsula (0.3%), Queensland’s Nerang (0.3%) and WA’s Wanneroo (0.3%).
According to the December 2020 Rental Affordability Index, single people on JobSeeker were paying 42-69% of their income on rent in every capital city, even before the supplement reduced in September.
A study of first homebuyers across 25 countries by money.co.uk found the average age of a FHB in Australia is 36 years. Belgium and Iceland had the youngest FHBs (27 years), while Switzerland had the eldest (48 years).
Christopher’s Housing Boom and Bust Report 2021 indicates capital city dwelling prices will rise in 2021 as a result of 2020’s government stimulus, interest rate cuts and upcoming changes to responsible lending laws. Price rises of between 5% and 9% are the base case forecast. Perth (+8% to +12%) is tipped to perform best, followed by Sydney (+7% to +11%), Adelaide (+6% to +10%), Darwin (+6% to +9%), Canberra (+5% to +9%), Brisbane (+4% to +8%), Hobart (+3% to +7%) and Melbourne (+2% to +6%).
The Finder RBA Cash Rate Survey has found 89% of property professionals favour scrapping stamp duty and replacing it with an annual land tax.
7. Technology insight
Launched in response to research that found half of Australian landlords and tenants wished there was an option to communicate directly to find a good match, the Dwell app allows both parties to get to know one another before signing a lease.
Home Live has developed a “Zoom”-like purpose-built live streaming platform for the industry. A survey by the company revealed 76% of respondents would request a live-streamed property inspection if it was an option and 81% would watch a live-stream if available.
8. COVID-19 impacts
The WA State Government announced the expansion of the COVID-19 Residential Relief Grants Scheme to help tenants pay their rent debt when the eviction and rent increase moratorium ends on 28 March 2021.
REI has added new OR code capability to the Forms Live platform to help agents comply with state government regulations around contact tracing.
Listings of short-stay rentals on Airbnb and other similar platforms have declined 55% in the major metropolitan markets during the pandemic, according to analysis by short-term rental analytics platform AirDNA and real estate firm Colliers International.
9. On the radar
Researchers from UNSW and UTS have developed a consumer-friendly guide to assist property buyers, owners and strata managers to navigate the process of identifying and rectifying building defects.
The Queensland Office of Fair Trading announced new training requirements for people entering the real estate industry.
10. Government incentives and actions
The Australian Government has announced the extension of the HomeBuilder program. The original grants of $25,000 to eligible people building a new home or renovating an existing one will expire at the end of 2020. However, grants of $15,000 will be available until 31 March 2021.
On 1 January 2021, changes to the NT’s Residential Tenancies Act come into effect. Changes include allowing tenants to have pets unless landlords have reasonable grounds to refuse the tenants’ request; making it an offence to fail to comply with the requirement to place tenants’ unclaimed bond monies into the tenancy trust account; and removing the option for condition reports to be entirely based on images.
The NSW Government has commenced consultation on the State’s strata laws. Submissions close 7 March 2021.
*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 954 374 if you have any questions.
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