Your monthly guide to latest industry statistics and news impacting landlords and property professionals.
Asking rents down
In June, capital city asking rents were down 0.2 per cent for both houses and units – $553 p/w houses and $441 p/w units, according to SQM Research. In comparison to 12 months previous, asking rents for houses increased 0.4 per cent but declined 0.7 per cent for units. Adelaide, Darwin and Hobart were the only states to experience increases in weekly rents for both houses and units. Across the capitals: Canberra $618 p/w houses / $462 p/w units; Sydney $689 / $502; Darwin $512 / $370; Brisbane $459 / $372; Adelaide $395 / $308; Hobart $435 / $388; Melbourne $540 / $424; and Perth $448 / $336.
SQM Research showed the national vacancy rate declined 0.1 per cent to 2.2 per cent in May. The total number of vacancies Australia-wide was 75,093. Most states recorded minor declines ranging from 0.1 per cent to 0.3 per cent: Canberra 1.2 per cent; Sydney 3.3 per cent; Darwin 3.3 per cent; Brisbane 2.4 per cent; Adelaide 1.1 per cent; Hobart 0.5 per cent; Melbourne 1.8 per cent; and Perth 3.1 per cent.
Rental yields up
CoreLogic’s national Hedonic Rental Index held firm in May and was up 0.4 per cent over the past twelve months. The Darwin (-5.2 per cent) and Sydney (-2.9 per cent) rental markets recorded the greatest declines in rental growth over the 12 months, while Hobart rents (+4.9 per cent) rose the fastest amongst the capitals. Despite sluggish rental markets, gross rental yields continued to recover – with the national gross rental yield at 4.13 per cent, the highest gross yield since May 2015, but still 14 basis points below the decade average of 4.27 per cent.
But growth slowing
Data from CoreLogic has also showed rents are trending lower, with national rents just 0.4 per cent higher over the year to 30 April 2019 – the slowest annual rate of growth on record. Darwin recorded the largest drop in rents (-5.6 per cent) over the year, followed by Sydney (-3.1 per cent, as an emerging oversupply of apartments helps push rents down). Rents in Melbourne (+1.8 per cent), Brisbane (+1.5 per cent) and Adelaide (+1.4 per cent) rose marginally, while rental growth in Hobart surged 5.7 per cent where a shortage of rental accommodation is pushing rents higher.
Home values steady
CoreLogic’s May 2019 Home Value Index results showed national dwelling values were down 0.4 per cent, the smallest month-on-month decline in 12 months, with the pace of decline slowing. Adelaide was the only capital where values rose (+0.2 per cent). All other capitals recorded falls: Sydney -0.5 per cent, Melbourne -0.3 per cent, Brisbane -0.5 per cent, Perth
-1.0 per cent, Hobart -0.4 per cent, Darwin -1.6 per cent, Canberra -0.2 per cent.
Property listings rise
National residential property listings rose 4.0 per cent in May to 345,516, according to SQM Research data. All states experienced an increase in property sales listings over the month: Sydney +4.7 per cent, Melbourne +4.9 per cent, Brisbane +5.1 per cent, Perth +3.9 per cent, Adelaide +6.4 per cent, Canberra +5.6 per cent, Darwin +4 per cent, Hobart +7.1 per cent.
Asking prices down
Capital city house asking prices decreased marginally in May. House prices were down 0.6 per cent to an average of $903,700, and unit prices were down 0.2 per cent to $558,700. SQM Research data showed Adelaide was the only capital to record increases over the month.
Interest rate cut
On 4 June 2019, the RBA cut the official interest rate by 0.25 per cent, to 1.25 per cent. In a statement the RBA noted: “The Board took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target.” The big four banks all announced rate cuts to their variable rate home loans the same day, but the discount varied: ANZ dropped 18 basis points; CBA 25 basis points; NAB 25 basis points; Westpac 20 basis points (their investor IO loans decreased 35 basis points from 18 June).
Auction volumes double following election
Data from CoreLogic revealed the number of auctions taking place across the capitals more than doubled the week after the election (from 930 for the week ending 19 May to 2,041 in the week ending 26 May). The clearance rate was 62.6 per cent (preliminary) across the combined capitals.
Investor demand contributes to resi property price falls
The total value of Australia’s 10.3 million residential properties fell 3.0 per cent (or $172.7 billion) to $6.6 trillion in the March quarter, according to figures released by the ABS. The mean price of dwellings was $636,900. The ABS Chief Economist noted: “A continuation of tight credit supply and reduced demand from investors and owner occupiers has contributed to weakness in property prices in all capital cities this quarter.” Sydney (-3.9 per cent) and Melbourne (-3.8 per cent) recorded the greatest falls, followed by Darwin (-1.8 per cent), Brisbane (-1.5 per cent), Perth (-1.1 per cent), Canberra (-0.9 per cent), Hobart (-0.4 per cent) and Adelaide (-0.2 per cent).
Home values fall
According to CoreLogic’s Property Market Indicator data, the daily home value index fell by 0.2 per cent in May. Values held steady in Brisbane, but fell by 0.3 per cent in Sydney, 0.2 per cent in Melbourne, and 0.1 per cent in Adelaide and Perth. Except for Darwin, listings dropped across all capital cities, with the sharpest falls recorded in Sydney (-28.7 per cent) and Melbourne (-26.4 per cent). Vendor discounting was between 5.5 per cent and 7.9 per cent for houses across most capital cities, and between 7.0 per cent and 8.0 per cent for units.
The HIA Affordability Index rose by 2.2 per cent in the March quarter, representing the sharpest increase since September 2013. Five of the eight capitals saw improved affordability over the year to March 2019 – Sydney recorded the greatest improvement (up 12.4 per cent), followed by Melbourne (+9.6 per cent), Perth (+7.7 per cent), Darwin (+5.9 per cent) and Brisbane (+2.5 per cent). Affordability deteriorated in Hobart (-5.1 per cent), Canberra (-5.1 per cent) and Adelaide (-1.1 per cent).
Dwelling approvals decline
Figures from the ABS revealed the number of dwellings approved fell by 0.6 per cent in April (trend terms), driven by a decline of 1.9 per cent for private sector deattached houses, although private dwellings excluding houses rose 1.2 per cent.
Fewer new homes being built
HIA’s Quarterly Economic and Industry Outlook revealed the number of new homes being built fell 15.2 per cent in the March quarter and noted that a further 11 per cent decline in activity is expected through the calendar year.
New home sales up
According to the HIA’s New Home Sales report for March, new home sales stabilised in the quarter. NSW (4.8 per cent), SA (8.6 per cent) and WA (2.3 per cent) all experienced an increase in new home sales compared to the previous month, while Queensland experienced a decrease of 4.7 per cent and Victoria was down by 2.9 per cent.
Investor lending declines
ABS figures showed the value of investment dwelling lending dipped 2.2 per cent in April to $4,431 million. Weaker investment lending was most evident in NSW (-4.7 per cent) with only Tasmania, the NT and the ACT recording rises in investment dwelling lending. Over the year, investment lending was down 26 per cent.
Analysis of APRA data by CoreLogic found lending to investors declined 18.7 per cent in the March quarter (and 19.6 per cent compared to the same time last year). The total value of IO loans was $10.785 billion, making up only 14.9 per cent of all resi mortgages. Loans with an LVR over 80 per cent made up 21.8 per cent of all loans but the total value of $15.772 billion was the lowest on record.
Mortgage stress at record high
Figures from Digital Finance Analytics revealed 1,071,829 households – or 31.9 per cent of owner-occupier borrowing households – were estimated to be in mortgage stress and of these, 33,427 were in severe stress and 70,502 were at risk of 30-day default in the next 12 months.
Mortgage defaults up
The S&P Spin Index for April showed mortgage defaults had risen in all states and territories except the ACT (-0.11 per cent). Australia’s default rate was 1.3 per cent, with the highest increases recorded in WA (+0.07 per cent to 3.10 per cent) and Queensland (+0.06 per cent to 1.94 per cent). Victoria and NSW both recorded increases of 0.04 per cent (to 1.43 per cent and 1.28 per cent, respectively), the NT was up 0.02 per cent to 3.33 per cent and SA up 0.01 per cent to 1.61 per cent, while Tasmania held steady at 1.15 per cent.
Oz capitals most expensive for construction
According to design and consultancy firm Arcadis’ International Constructions Costs Report 2019, four of Australia’s capital cities are ranked amongst the top 100 most expensive for construction. Sydney ranked 34th, Brisbane 56th, Melbourne 61st and Perth 62nd. New York City topped the list.
Investor demand affects apartment pipeline
According to JLL’s March 2019 quarter Apartment Market Report, the number of apartments under construction in the capital cities has fallen by 10 per cent over the past year, while the number of apartments being marketed has fallen 48 per cent. JLL noted that the “retreat of domestic and foreign investors from the market has had the biggest impact on slowing demand”.
Byron most expensive city to buy property
Results of Propertyology’s top 40 median house prices for December 2018 showed Byron is now the most expensive city in Australia to buy property with a median house price of $987,500, edging out Sydney at $950,000. The top 20 most expensive cities was rounded out by Kiama ($910k), Surf Coast ($835k), Wingecarribee ($814.5k), Melbourne ($772.5k), Wollongong ($755k), Noosa ($735k), Ballina ($680k), Canberra ($657.25k), Central Coast ($655k), Shellharbour and Tweed ($650k), Gold Coast ($632.5k), Newcastle ($628.5k), Macedon Ranges ($610k), Sunshine Coast ($600k), Port Stephens ($575k), Shoalhaven ($565k) and Yass Valley ($550k).
APRA to remove 7% serviceability requirement
APRA has proposed letting lenders set their own minimum interest rate floor for use in serviceability assessments, suggesting ADIs incorporate an interest rate buffer of 2.5 per cent.
4 capitals make luxury resi price growth list
Brisbane (14th, 3.2 per cent annual growth), Sydney (18th, 2.4 per cent), Melbourne (22nd, 1.8 per cent) and Perth (23rd, 1.8 per cent) have all made the Knight Frank Prime Global Cities Index, which ranks cities for luxury residential price growth. All four capitals recorded growth higher than the average prime growth of 1.3 per cent across 45 cities globally.
Investors positive on market
According to the latest edition of ME’s Quarterly Property Sentiment Report, 44 per cent of investors feel positive about the market. Property investors are also optimistic about property prices – 32 per cent are expecting the value of their property to rise over the next 12 months, as opposed to 30 per cent expecting declines and 30 per cent not expecting any movement. The survey found the top concern for investors was housing affordability (83 per cent), followed by switching from IO loans 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). It was also revealed that 59 per cent of investors were happy that property prices were declining, which could make property purchases a more appealing option.
Vic landlords to tap into solar
The next phase of the Victorian State Government’s $1.3 billion Solar Homes program rolls out on 1 July with rebates for solar panels, batteries and hot water systems. As part of the program, the State Government is offering no-interest loans for solar panels (PV) and new rebates for batteries and solar panels (PV) for rental properties. A rebate of up to $2,225 is available for rental properties, subject to a Solar Homes Landlord-Tenant Agreement being signed.
Big ESL increase in NSW
The NSW State Government announced a 14 per cent increase in the ESL for FY20 in its 2019/20 Budget. The ESL will raise $895 million. A further increase of 22 per cent is earmarked for FY21, increasing the level to $1,094 million. The Budget also indicated the state would receive over $1 billion in stamp duty revenue on insurance policies in FY20.
Tech watch: new apps and platforms
The ICA has developed a mobile phone and tablet app that summarises the severe weather-related and natural disaster risks that could potentially affect homes and businesses. MyHazards takes the property address and provides a visual map and easy-to-understand summary of potential natural disasters and severe weather hazards, including storms, cyclones, floods, storm tide and bushfire risk, for more than 11 million properties.
Rental management platform Cubbi has launched instant rental payments. Powered by the New Payments Platform (NPP), Cubbi’s Instant Payments uses the latest technology to ensure tenant’s rent payments are paid on-time and land in the owner’s bank account within one minute.
realestate.com.au has released Reach, the final product in the Agent Edge series of personal branding products. Reach is an end-to-end digital marketing solution that allows agents and agencies to build an online presence and remain top of mind with local property owners when they are visiting sites on the web away from realestate.com.au.
*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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