Home Info Centre Investment Property Market Snapshot – December 2019
Investment Property Market Snapshot – December 2019
Insurance insights

Investment Property Market Snapshot – December 2019

31 Dec 2019 11 mins read

Your monthly guide to latest industry statistics and news impacting landlords and property professionals.

Asking rents mixed 

In December, capital city asking rents increased 0.2 per cent for houses to $550 p/w, while unit rents declined 0.2 per cent to $434 p/w, according to SQM Research. Melbourne, Brisbane, Perth, Adelaide and Hobart all recorded increases in weekly rents for both houses and units. Across the capitals: Canberra ($648 p/w houses / $462 p/w units); Sydney ($684 / $494); Darwin ($483 / $380); Brisbane ($468 / $378); Adelaide ($402 / $313); Hobart ($453 / $422); Melbourne ($534 / $410); and Perth ($439 / $333).

Vacancies increase 

SQM Research showed the national vacancy rate increased marginally to 2.2 per cent in November (up from 2.1 per cent in October). The total number of vacancies Australia-wide was 75,947. Vacancy rates in Darwin (3.1 per cent) and Hobart (0.5 per cent) held steady, while all other capitals recorded increases: Sydney (up 0.3 per cent to 3.4 per cent), Melbourne (up 0.2 per cent to 2.2 per cent), Brisbane (up 0.2 per cent to 2.5 per cent), Perth (up  0.1 per cent to 2.5 per cent), Adelaide (up 0.2 per cent to 1.0 per cent), and Canberra (up 0.1 per cent to 1.1 per cent). 

Yields steady

According to CoreLogic’s Hedonic Home Value Index, capital city yields remained unchanged in November, with the national median yield at 3.9 per cent – combined capitals 3.6 per cent, combined regionals 5.1 per cent. Sydney continued to have the lowest yield of the capitals (3.1 per cent), followed by Melbourne (3.3 per cent), Perth (4.3 per cent), Adelaide (4.4 per cent), Brisbane (4.5 per cent) and Canberra (4.7 per cent). Only Hobart (5.0 per cent) and Darwin (5.9 per cent) had yields at or in excess of 5 per cent.

Investor lending up

ABS’ Lending to Households and Businesses data for October 2019 showed new lending commitments for investment dwellings rose 1.4 per cent (seasonally adjusted) to $5.1 billion. 

Property prices up

According to the ABS, residential property prices rose 2.4 per cent in the September quarter, the strongest quarterly growth since December 2016. Sydney (+3.6 per cent) and Melbourne (+3.6 per cent) led the price growth, with rises also recorded in Brisbane (+0.7 per cent) and Hobart (+1.3 per cent). Adelaide (-0.3 per cent), Canberra (-0.5 per cent), Perth (-1.2 per cent) and Darwin (-1.2 per cent) did not fair so well over the quarter, despite the total value of Australia’s 10.4 million residential dwelling rising $189.920.7 million to $6,869, 369.8 million in the quarter. The mean resi dwelling price sat at $660,800.

Housing prices up

The weighted average median price for houses for the eight capital cities increased to $743,776 in the September quarter, according to REIA’s Real Estate Market Facts. The increase was driven by the larger property markets of Sydney and Melbourne where house prices increased, while all other capital city house prices decreased. The weighted average median price for other dwellings increased to $577,135 over the quarter, with prices increasing in Sydney, Melbourne, Adelaide and Hobart. Prices remained stable in Brisbane and Canberra and decreased in Perth and Darwin.

Rents steady, vacancies decrease

REIA’s report also showed that over the quarter, the median rent for three-bedroom houses remained steady in most capital cities, with only Canberra and Darwin decreasing, while the median rent for two-bedroom other dwellings increased or remained steady in all capital cities except Sydney. The weighted average vacancy rate for the eight capital cities decreased to 2.5 per cent during the September quarter. The report also noted the proportion of lending to households for investment was down to 25.6 per cent for the quarter, which was considerably lower than the average of 34.4 per cent.

Building approvals down

The number of building approvals nation-wide fell to 13,049 in October, down 8.1 per cent from the previous month (seasonally adjusted), according to the ABS. Approvals for private sector homes excluding houses fell 11.3 per cent, while approvals for private sector houses also fell 7.0 per cent.

Property listings rise

National residential property listings increased 6.3 per cent in November to 338,971, according to SQM Research data. All capital cities, except Darwin (-1.9 per cent), experienced an increase in property sales listings over the month: Sydney (+7.1 per cent), Melbourne (+10.7 per cent), Brisbane (+6.8 per cent), Perth (+5.8 per cent), Adelaide (+10.8 per cent), Canberra (+10.4 per cent) and Hobart (+11.7 per cent).

Asking prices up

SQM Research data showed capital city asking prices for houses increased 1.6 per cent in November to an average of $954,800. Unit asking prices were also up, recording a 0.6 per cent rise to an average of $573,100. Sydney, Melbourne, Adelaide and Canberra all recorded increases in both houses and units, while Brisbane and Hobart both posted increases in house prices but falls in unit prices. Perth’s housing prices remained steady while unit prides declined. House and unit prices in Darwin both continued to decline. 

Dwelling values rise

CoreLogic’s November Home Value Index showed national housing values increased 1.7 per cent over the month, marking the fifth month of consistent growth. The median value of a home was $537,506 – $622,346 for combined capitals and $380,657 for combined regionals. All capitals expect Darwin (-1.2 per cent) saw positive growth over the month: Sydney (+2.7 per cent), Melbourne (+2.2 per cent), Brisbane (+0.8 per cent), Adelaide (+0.5 per cent), Perth (+0.4 per cent), Hobart (+2.3 per cent) and Canberra (+1.6 per cent). 

Investor confidence rises

Digital Finance Analytics’ household financial confidence index for November showed investor confidence rose slightly. Despite continued weakness in rental income, news about rising home prices was cited as the reason for the small uptick in confidence.

Investors plan to add to portfolio

According to a survey by PropertyUpdate, Your Investment Property and onthehouse.com.au, 68 per cent of respondents said now is a good time to invest in residential real estate and 42 per cent plan to buy an investment property in 2020. The survey also found 61 per cent of respondents see property values rising in 2020 and 35 per cent of investors see an opportunity to “manufacture” capital growth by purchasing property with renovation or development potential.

Rentvesting to rise

PIPA’s 2019 Investor Sentiment Survey revealed 63 per cent of investors are considering rentvesting in 2020. The survey also found 45 per cent of investors are looking to buy outside of the state where they live.

Waterfront properties command best prices

According to the Knight Frank Waterfront Index, prime waterfront properties are worth up to 63 per cent more (on average) than their inland counterparts. Waterfront properties in Sydney attract the greatest uplift in value at 94.9 per cent, followed by the Gold Coast (+66.5 per cent), Perth (+53.6 per cent), Brisbane (+45.1 per cent) and Melbourne (+27.3 per cent). Homes on a harbourfront command the largest uplift at 97 per cent, those in prime coastal areas 61 per cent, riverfront properties 57 per cent and those with canal waterfronts 50 per cent.

New RE reforms

The NSW State Government has announced a slew of reforms to the real estate and property industry. From 23 March 2020, entry standards for licence and certificate of registration holders will be increased and continuing professional development (CPD) requirements will be introduced.

..and rental reforms 

Changes to tenancy laws also come into effect on 23 March 2020. The reforms are designed to increase protection for tenants, clarify the rights and obligations of tenants and landlords, and reduce disputes over repairs and maintenance. Key changes include limiting rent increases to once every 12 months, landlord responsibility for smoke alarms, minimum standards for a property to be deemed ‘fit for habitation’, and making it easier for tenants to do minor renovations. 

Vacant land tax notifications

Landlords with vacant residential property in inner and middle Melbourne (unoccupied for more than six months during CY19) are required to notify the Victorian State Revenue Office about the property by 15 January 2020 using the online portal. 

New off-the-plan laws introduced in NSW

On 1 December 2019, new requirements for residential off-the-plan contracts came into effect in New South Wales. Under changes to the Conveyancing Act 1919 and Conveyancing (Sale of Land) Regulation 2017, the new requirements aim to “bring greater transparency and certainty” for purchasers. Key changes include the requirement for vendors to give buyers key information about the development, including copies of the proposed plan, proposed by-laws and a schedule of finishes before contracts are signed. Vendors must also notify purchasers of material changes to what was disclosed and buyers can end the contract or claim compensation in some cases if they are materially impacted by changes made from what was disclosed.

Short-term landlords in Treasury sights

The mid-year budget update detailed a new third-party reporting regime for short-term accommodation platforms. From 1 July 2022, sharing economy platforms will be required to report identification and income details of participating individuals to the ATO with the information on property owners to be used in data-matching activities.

Melbourne tipped for investment in 2020

According to the annual property investor sentiment survey conducted by Your Investment Property, PropertyUpdate and onthehouse.com.au, Melbourne is tipped as the capital with the best long-term capital growth prospects in 2020. With 39 per cent of respondents choosing the Victorian capital, it pipped last year’s winner Brisbane (scoring 37 per cent) and Sydney (with 33 per cent). Just 19 per cent cited regional Australia has having the best prospects.  

Aussies chose travel over property

A survey by ME Bank found when given a choice between home ownership and a trip away, one-third of Aussies would choose the holiday – and among those aged 18 to 24, the number rises to 50 per cent.   

Legal corner: Landlord fined 

A Western Australian landlord has been fined $4,000 and ordered to pay back his tenant’s $1,400 bond after he failed to lodge the bond and then refused to release the monies at the end of the tenancy. The landlord also failed to provide the tenant with a completed rental agreement and with a property condition report. The Commissioner for Consumer Protection warned others to ensure they lodge a tenant’s bond within 14 days: “Private landlords, as well as real estate agents and property managers, need to comply with the law and transfer bond payments to the bond administrator as soon as practicable and certainly within 14 days. There are serious consequences for those who don’t comply.”

Insurance industry update

Federal Treasury has released draft legislation that would make insurance claims handling a financial service and subject to regulatory oversight by ASIC. If the Bill to amend the Corporations Act 2001 is passed, the handling and settlement of insurance claims, or potential insurance claims, would no longer be excluded from the definition of ‘financial service’. The proposed laws would apply to insurance brokers who handle insurance claims on behalf of an insurer and to any person who provides financial advice to an insured and who settles an insurance claim on behalf of the insurer.

The NSW Independent Pricing and Regulatory Tribunal (IPART) is reviewing the consumer protections available for home owners through the NSW home building compensation scheme. The review will examine whether the current regulatory requirements to take out home building compensation cover provide an adequate level of protection to consumers and also consider the funding arrangements for any change to consumer protection relating to the home building compensation scheme. 

Latest apps and platforms

FutureRent enables tenants to pay a year’s rent upfront by lending them up to $60,000. Currently operating in Adelaide, Brisbane, Melbourne and Sydney, the company works with investors who have property managers. Landlords pay fixed fees for repayments and can access six weeks’ rent upfront to help with the cost of letting the property.

ListReady, an online payment platform for agencies, allows vendors to postpone paying listing costs until their property settles. ListReady covers the advertising and other listing-related costs like staging and styling, handyman services and repairs, on behalf of vendors and transfers the funds to the agency so they can start marketing immediately. 

_

*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 961 017 if you have any questions. 

You may also like

View all
Choosing the right insurance for holiday lets and Airbnb accommodation
Protection Choosing the right insurance for holiday lets and Airbnb accommodation

Summer’s almost here and it’s prime time for holiday rentals. Are you ready for the onslaught of guests?...

31 May 2019 3 mins read
Eight tips to minimise rental arrears
Prevention Eight tips to minimise rental arrears

DID YOU KNOW... Loss of rent makes up around two-thirds of landlord insurance claims at EBM RentCover?...

28 May 2019 3 mins read
How to identify the ideal tenant
Prevention How to identify the ideal tenant

There are two major things landlords and agents should look for when screening a tenant...

14 Aug 2019 5 mins read
Get a quote