Your monthly guide to latest industry statistics and news impacting landlords and property professionals.
Asking rents mixed
In July, capital city asking rents were down 0.4 per cent for houses to $551 p/w, while unit rents remained steady at $441 p/w, according to SQM Research. In comparison, over the 12 months, asking rents for houses increased 0.4 per cent but declined 0.7 per cent for units. Brisbane, Adelaide and Hobart were the only states to experience increases in weekly rents for both houses and units. Across the capitals: Canberra $624 p/w houses / $461 p/w units; Sydney $685 / $501; Darwin $527 / $369; Brisbane $464 / $374; Adelaide $399 / $309; Hobart $450 / $407; Melbourne $534 / $423; and Perth $435 / $339.
SQM Research showed the national vacancy rate increased 0.1 per cent to 2.3 per cent in June. The total number of vacancies Australia-wide was 78,690. Sydney (3.5 per cent) and Melbourne (2.0 per cent) both recorded increases of 0.2 per cent. While Canberra (1.3 per cent); Brisbane (2.5 per cent); Adelaide (1.2 per cent) and Perth (3.1 per cent) recorded rises of 0.1 per cent over the month. Hobart’s vacancy rate held steady at 0.5 per cent, while Darwin was the only capital to record a decline of 0.2 per cent to 3.1 per cent.
Rental growth rises
CoreLogic’s Quarterly Rental Review revealed national weekly rents increased by 0.3 per cent over Q2. Across the capitals, rents were 0.1 per cent higher over the quarter and -0.1 per cent lower year on year. Rises were recorded in all capitals except Sydney (median rent $580 p/w, down 0.3 per cent on the quarter), Canberra ($549, -0.9 per cent) and Darwin ($456, -0.3 per cent). Hobart recorded the biggest improvement ($457, +1.1 per cent), followed by Perth ($389, +0.7 per cent), Melbourne ($458, +0.5 per cent), Adelaide ($388, +0.4 per cent) and Brisbane ($435, +0.3 per cent). Regional markets fared better, recording an increase of 0.7 per cent over the quarter to be 1.9 per cent higher over the past 12 months.
The CoreLogic review also found the national rent was $438 p/w – $466 p/w across the combined capitals and $380 p/w across the combined regional markets. National yield sat at 4.1 per cent, up from 3.8 per cent 12 months ago – combined capitals yield was 3.9 per cent compared to 3.6 per cent 12 months prior, while combined regionals was 5.1 per cent, up from 4.9 per cent. All capitals recorded improved yields from 12 months prior: Sydney (current 3.5 per cent / 3.2 per cent 12 months ago), Melbourne (3.7 / 3.2), Brisbane (4.6 / 4.4), Adelaide (4.5 / 4.4), Perth (4.3 / 4.0), Hobart (5.2 / 5.1), Darwin (6.0 / 5.9) and Canberra (4.8 / 4.7).
Rental growth sluggish
According to CoreLogic’s Hedonic Home Value Index, rents remained unchanged over July after tracking 0.3 per cent higher over the June quarter and 0.4 per cent higher over the financial year. Although rental growth is sluggish, most capitals saw rental rates rise faster (or fall slower) relative to dwelling values. With rents outperforming values, gross rental yields pushed higher to 3.9 per cent at the end of June. Similarly, yields rose to 5.1 per cent in June. Every capital city recorded a rise in rental yields over the year, although gross yields in Sydney and Melbourne remain well below 4.0 per cent.
Home values down
CoreLogic’s June Home Value Index results showed national dwelling values were down 0.2 per cent (-0.1 per cent combined capitals and -0.4 per cent combined regionals), the smallest month-on-month decline since March 2018. Rises in housing values were recorded in Sydney (+0.1 per cent), Melbourne (+0.2 per cent) and Hobart (+0.2 per cent), while falls were recorded in Brisbane (-0.6 per cent), Adelaide (-0.5 per cent), Perth (-0.7 per cent), Canberra (-0.9 per cent) and Darwin (-0.9 per cent).
Property listings decline
National residential property listings declined 5.8 per cent in June to 325,404, according to SQM Research data. All states experienced a decline in property sales listings over the month: Sydney (-10.7 per cent), Melbourne (-10.8 per cent), Brisbane (-4.4 per cent), Perth (-5.1 per cent), Adelaide (-5.2 per cent), Canberra (-9.0 per cent), Darwin (-1.3 per cent) and Hobart (-9.4 per cent).
Asking prices up
Capital city house asking prices increased marginally in June. House prices were up 0.4 per cent to an average of $908,900, and unit prices were up 0.8 per cent to $563,600. SQM Research data showed Darwin was the only capital to record decreases over the month in both houses and units.
Dwelling approvals decline
Figures from the ABS revealed the number of dwellings approved fell by 0.5 per cent in May (trend terms), driven by a decline of 1.3 per cent for private sector attached houses, although private dwellings excluding houses rose 0.6 per cent. The trend estimate for the value of total building approved fell 0.2 per cent. The value of resi building fell 0.6 per cent, while the value of non-resi building rose 0.3 per cent.
New home sales up
According to the HIA’s New Home Sales report for May, new home sales bounced back to their highest monthly level in more than a year. New home sales jumped in NSW (+54.2 per cent), WA (+34.0 per cent), Queensland (+26.0 per cent), Victoria (+25.3 per cent) and SA (+0.9 per cent). HIA stated: “The resurgence in home sales was evident across all five states covered by the New Homes Sales survey, suggesting broad-based improvement in housing market sentiment around the country.”
Lot sales decline
Data from the HIA-CoreLogic Residential Land Report found residential lot sales across Australia fell to a record low of 7,236 in the March quarter, almost 50 per cent below the average of the past decade (13,682).during the first three months of 2019. While the volume of sales decreased, the weighted median price increased 0.9 per cent compared to the December 2018 quarter.
Capital city trends revealed
According to CoreLogic’s June Mapping the Market report, which identifies key trends in the nation’s capital cities, 10.6 per cent of Sydney suburbs had median house prices that exceed $2 million, while 31.4 per cent had a median unit value below $500,000. In Melbourne, 41.7 per cent of suburbs had a median house value of less than $500,000 and 57.2 per cent had a median unit value of more than $500,000. In Queensland’s capital, 40.3 per cent of Brisbane suburbs had a median house value under $500,000, while 12.5 per cent had a median unit value in excess of $500,000. As at the end of June, 93.7 per cent of Adelaide suburbs had a median house value of less than $1 million and 26 per cent had a median unit value of less than $250,000. In Hobart, 50.4 per cent of suburbs had a median house value of more than $500,000 and 46.2 per cent had a median unit value of less than $250,000. In Australia’s capital, 11.4 per cent of suburbs had a median house value of more than $1 million, while 70.5 per cent of Canberra suburbs had a median unit value under $500,000. In Perth, 10.3 per cent of suburbs had a median house value of more than $1 million and 25.9 per cent had a median unit value of less than $250,000. The NT’s capital had 65.9 per cent of suburbs with a median house value of less than $500,000 and 6.6 per cent of Darwin suburbs had a median value of more than $500,000.
Investor lending declines
ABS figures showed the value of investment dwelling lending dipped 1.7 per cent in May to $4,349 million. Compared to the year prior, investment lending was down 27.8 per cent.
Investors selling at a loss
Investors have experienced the biggest fall in profits since March 2013, according to CoreLogic’s Pain and Gain report. Investors suffered $486.8 million in realised gross losses from resale over the March quarter. Every capital city saw an increase in the share of loss-making resales over the quarter. Together, Perth and Sydney contributed nearly 45 per cent of the total losses. Hobart was the only capital where the share of resale loss was lower relative to the March 2018 quarter. Melbourne’s share loss was the highest since August 2014, Brisbane’s since November 2013, Adelaide’s since June 2016 and Perth’s was a record loss.
Mortgage stress at record high
Figures from Digital Finance Analytics revealed 1,063,574 households – or 32 per cent of owner-occupier borrowing households – were estimated to be in mortgage stress and 70,907 were at risk of 30-day default in the next 12 months.
Market confidence improves
According to the latest ANZ/Property Council survey, confidence in the property market improved 13 points, reversing a year-long decline. Confidence rallied in all states and territories except the ACT.
According to the HIA, housing affordability is the best it has been since 1999. All eight capitals saw an improvement in the affordability index over the quarter to June 2019. Darwin (+4.8 per cent) saw the biggest improvement, followed by Melbourne (+3.0 per cent), Perth and Brisbane (both +2.6 per cent), Sydney and Canberra (both +2.4 per cent), Hobart (+2.2 per cent) and Adelaide (+1.0 per cent). “For a home buyer with an average income purchasing a median priced dwelling (assuming a 10 per cent deposit), mortgage repayments will consume the smallest proportion of their earnings since 1999,” the HIA noted.
Price growth predicted
Domain is predicting capital city price falls will end this year and the cities should begin to show modest price growth in 2020. Domain predicts: Sydney owners should expect prices to bottom out in spring 2019; Melbourne prices should stabilise by the end of the year before growing slowly in 2020; Brisbane prices should see a modest turnaround; Perth prices should bottom out later this year; Adelaide should experience modest price growth; Hobart price growth will slow significantly in 2019 and 2020; and Canberra should see modest price growth over the next 18 months.
Investor sentiment improves
According to ME’s Quarterly Property Sentiment Report, 44 per cent of investors feel positive about the property market. Investors were also upbeat about property prices, with 32 per cent expecting prices to rise over the next 12 months, 30 per cent expecting declines and 30 per cent not expecting any movement. It was also found 44 per cent of investors plan to buy property in the next 12 months, 23 per cent plan to sell and 39 per cent don’t plan on doing either.
Investor fears revealed
The ME survey also identified affordability as the greatest concern for investors (83 per cent), followed by switching from IO to P&I loans (74 per cent), the value of their property declining (64 per cent), declining property prices resulting in owing more on a property (53 per cent) and tighter credit policies making refinancing more difficult (53 per cent). Meanwhile, 59 per cent of investors were happy property prices were declining, which could make purchases a more appealing option.
More plan to become landlords
Findings from CBA’s Home Own survey revealed 15 per cent of respondents plan to buy an investment property within the next two years – with 28 per cent of under-30s planning to become landlords.
The latest research from the ABS has revealed 32 per cent of Australians rented their homes in 2017-18, up from 30 per cent in 2015-16. Average weekly housing costs remained stable for renters at $366, and renters spent 20 per cent of their gross weekly income on housing. Over two decades, the number of people renting from private landlords had increased from 20 per cent (1997-98) to 27 per cent (2017-18), while the number renting from state/territory housing authorities declined from 6 per cent to just 3 per cent. The research also found that 20 per cent of households in 2017-18 owned one or more resi properties other than their usual residence – with 71 per cent owning a single investment property and 5 per cent owning four or more.
Interest rate cut
On 2 July 2019, the RBA cut the official interest rate by 0.25 per cent, to an historic low of 1.0 per cent. The Big Four banks announced cuts to their variable mortgage rates: ANZ dropped 25 basis points (from 12/7); CBA 19 basis points (from 23/7); NAB 19 basis points (from 12/7); and Westpac 20 basis points.
Banks adjust mortgage terms
APRA’s removal of the 7 per cent serviceability requirement has seen the Big Four banks lower their interest rate floor for serviceability assessments on home loan offerings. CBA reduced its rate from 7.25 per cent to 5.75 per cent, ANZ dropped from 7.25 per cent to 5.5 per cent (and increased its sensitivity buffer from 2.25 per cent to 2.5 per cent), Westpac’s rate moved to 5.75 per cent, down from 7.25 per cent (it also increased its buffer from 2.25 per cent to 2.5 per cent) and NAB lowered its interest rate floor to 5.5 per cent and increased its interest rate buffer to 2.5 per cent,. Non-majors have also lowered their rates.
Property prices boost CEO confidence
The Executive Connection’s quarterly confidence index, which surveys CEOs and business owners of companies with up to 200 employees and annual revenue of between $2 million and $100 million, showed confidence in the economy was up. The boost was attributed to stability in the property market despite only 20 per cent of CEO’s expecting house prices to rise over the year, with the report authors noting the mindset of the typical owner-operator is “if the property market’s doing well, the economy’s doing well”.
Changes to NSW tenancy legislation
The second round of amendments to the Residential Tenancies Amendment Act 2018 will include making it easier for tenants to make certain alterations, requiring landlords/agents to inform prospective tenants of any drug crimes at the property, clarifying how and when a landlord must carry out a repair to a smoke alarm and when tenants may replace a battery in a smoke alarm. Following consultation (5 July to 2 August 2019), it is expected the Regulation will be finalised and published in September and take effect on 2 December 2019. Minimum standards for rented properties are expected to commence six months later, to give landlords enough time to prepare.
Legal corner: Perth PMs fined and banned
A PM who stole $34,803.99 from a trust account was fined $3,000 and sentenced to 18 months’ imprisonment (suspended 24 months). In addition, the PM’s certificate of registration as a RE sales rep was cancelled and she was permanently disqualified from being registered in the future.
Another PM agency has been reprimanded, fined $8,000 and ordered to pay costs of $2,000 for having breached the Real Estate and Business Agents Act and the Code of Conduct for Agents and Sales Representatives by failing to exercise due skill, care and diligence after $17,882 was mistakenly withdrawn from the agency’s trust account without proper purpose or being authorised by a person lawfully entitled to the money.
*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 661 662 if you have any questions.
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