Your monthly guide to latest industry statistics and news impacting landlords and property professionals.
Asking rents steady
In November, capital city asking rents increased 1.0 per cent for houses to $549 p/w, while unit rents held steady at $435 p/w, according to SQM Research. Sydney, Adelaide, Canberra and Hobart all recorded increases in weekly rents for both houses and units, while Perth and Darwin recorded declines in both house and unit rents over the month. Across the capitals: Canberra ($642 p/w houses / $471 p/w units); Sydney ($681 / $497); Darwin ($502 / $377); Brisbane ($463 / $376); Adelaide ($397 / $312); Hobart ($436 / $419); Melbourne ($529 / $408); and Perth ($438 / $333).
SQM Research showed the national vacancy rate held steady at 2.1 per cent in October. The total number of vacancies Australia-wide was 69,951. Darwin was the only capital to record an increase in vacancies (up 0.2 per cent to 3.1 per cent), while Perth recorded the biggest improvement (down 0.3 per cent to 2.4 per cent). Vacancy rates decreased 0.1 per cent in Sydney (3.1 per cent), Adelaide (0.8 per cent) and Hobart (0.5 per cent). Melbourne’s vacancy rate held steady at 2.0 per cent, Brisbane’s at 2.3 per cent and Canberra’s at 1.0 per cent.
According to CoreLogic’s Hedonic Home Value Index, capital city yields were lower in October, 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 (3.2 per cent), followed by Melbourne (3.4 per cent), Perth (4.3 per cent), Adelaide (4.4 per cent), Brisbane (4.6 per cent) and Canberra (4.7 per cent). Only Hobart (5.2 per cent) and Darwin (5.8 per cent) had yields in excess of 5 per cent.
Rental growth up
The Corelogic report also noted that while rental rates were flat over October, the annual rate of rental growth trended higher. National growth sat at 0.8 per cent, with combined capitals at 0.2 per cent and combined regionals at 2.5 per cent. Canberra (-0.6 per cent), Darwin (-2.6 per cent) and Sydney (-1.8 per cent) saw annual rental growth contract, while Melbourne (+1.2 per cent), Brisbane (+1.8 per cent), Adelaide (+2.0 per cent) and Perth (+2.4 per cent) saw increases. Hobart recorded 6.1 per cent annual rental growth.
Investor lending down
ABS’ Lending to Households and Businesses data for September 2019 showed new lending commitments for investment dwellings fell 4.0 per cent (seasonally adjusted) to $4,695 million. Refinancing of investment dwellings was also down 0.9 per cent.
New home sales up
HIA’s New Home Sales report showed new home sales were up 5.7 per cent in September. New home sales increased in all states except NSW (-12.1 per cent) over the month: SA (+18.0 per cent), WA (+13.6 per cent), Victoria (+11.0 per cent) and Queensland (+1.7 per cent).
Building approvals up
The number of building approvals nation-wide rose to 14,004 in September, up 7.6 per cent from the previous month (seasonally adjusted), according to the ABS. Approvals for private sector homes excluding houses rose 16.6 per cent, while approvals for private sector houses also rose 2.8 per cent.
Property listings rise
National residential property listings increased 2.0 per cent in October to 318,874, according to SQM Research data. All states experienced an increase in property sales listings over the month except for Darwin (-2.4 per cent): Sydney (+4.2 per cent), Melbourne (+3.7 per cent), Brisbane (+1.9 per cent), Perth (+2.7 per cent), Adelaide (+3.4 per cent), Canberra (+4.1 per cent) and Hobart (+0.8 per cent).
Asking prices mixed
SQM Research data showed capital city asking prices for houses decreased 0.7 per cent in October to an average of $935,400. In contrast, unit asking prices were up 0.3 per cent to $570,100. Melbourne, Canberra and Darwin recorded decreases in both house and unit asking prices, while Brisbane Adelaide and Hobart recorded increases.
Dwelling values rise
CoreLogic’s October Home Value Index results showed national dwelling values rose 1.2 per cent, with the median value at $529,860. Values in the combined capitals were up 1.4 per cent to a median value of $610,645, while combined regionals were up 0.4 per cent to $378,495. Rises in housing values were recorded in all capitals except Perth which recorded a fall of -0.4 per cent: Sydney (+1.7 per cent), Melbourne (+2.3 per cent), Brisbane (+0.8 per cent), Adelaide (+0.4 per cent), Darwin (+0.3 per cent), Hobart (+0.9 per cent) and Canberra (+0.6 per cent).
HIA’s Affordability Index improved 2.2 per cent in the September quarter due to the reduction in interest rates and ongoing wage growth. All eight capital cities saw improved affordability over the year to September, with Perth leading the way (+15.3 per cent), followed by Darwin (+13.5 per cent), Sydney (+11.9 per cent), Melbourne (+11.6 per cent), Brisbane (+7.0 per cent), Adelaide (+4.9 per cent), Hobart (+3.3 per cent) and Canberra (+1.4 per cent).
Property values tipped to rise
HSBC has doubled its forecasted rise in national housing values, now expecting a 5-9 per cent increase in 2020 (previously predicted a gain of 0-4 per cent). The rise has been driven by falling interest rates, looser prudential settings and limited established market supply. Gains are expected in all capital cities except Perth, where prices are tipped to fall a further 5 per cent. Sydney (8-12 per cent) and Melbourne (10-14 per cent) are expected to lead the gains, with the other capitals expected to see modest housing price increases.
Record dwelling price rises forecast for 2020
According to SQM Research’s annual Housing Boom and Bust Report 2020, most capital cities will benefit from the interest rate cuts and loosening of credit restrictions to record dwelling price rises over 2020, forecasting dwelling prices to rise between 7 per cent and 11 per cent. Sydney (+10-14 per cent) and Melbourne (+11-15 per cent) are expected to lead the charge, with all other capitals except Darwin (-5 to -2 per cent) expected to see price growth: Perth (+3-6 per cent), Brisbane (+3-6 per cent), Adelaide (+1-4 per cent), Hobart (+5-8 per cent) and Canberra (+3-7 per cent).
Commercial real estate to grow
According to Knight Frank research, the Australian commercial real estate market will see further growth in capital values and strong returns as the impact of lower interest rates flows through and creates the conditions for yield compression in 2020 and 2021.
Investor confidence wanes
Digital Finance Analytics’ household financial confidence index for October showed investor confidence had fallen. Pressure from low net rental yields, the need to switch to P&I from IO loans and worries about construction defects were cited as reasons for the decline.
Mortgage stress up
Figures from Digital Finance Analytics revealed 1,083,848 households – or 32.2 per cent of owner-occupier borrowing households – were estimated to be in mortgage stress in October and 71,860 were at risk of 30-day default in the next 12 months. Tasmania (39 per cent) and the NT (36.9 per cent) had the highest number of households in stress, followed by WA (34.3 per cent), Victoria (33.1 per cent) and NSW (28.3 per cent).
Renting unaffordable for Newstart recipients and pensioners
According to the latest Rental Affordability Index (RAI), Hobart is the least affordable city in Australia to rent, followed by Adelaide – which overtook Sydney as the second least affordable capital city. The RAI noted Newstart recipients cannot afford to rent in any Australian capital city, with rent costing at least 77 per cent of a Newstart income. With 43 per cent of low-income households experiencing rental stress, the report also found pensioners were at risk, with a single pensioner having to spend more than half of their income on rent in a metropolitan area (rising to 88 per cent in Sydney).
Queensland proposes new rental laws
The Queensland State Government announced stage one of a slew of rental reforms in November. While provisions for survivors of domestic violence were welcomed, industry groups have raised concerns about other reforms including the abolition of a landlord’s right not to renew a tenancy agreement at the end of its agreed term, the loss of a landlord’s right to refuse pets, the introduction of a tenant right to make modifications to a rental property without the landlord’s consent, and the introduction of minimum housing standards requiring the rental property and its inclusions to meet prescribed standards and to be in a certain state of repair.
… and new strata laws
Under proposed changes to the Body Corporate and Community Management Act, bodies corporate would be able to put pet-free and smoke-free by-laws in place, issue fines for by-law breaches, and be able to tow illegally parked vehicles. The proposed changes also concern day-to-day body corporate meeting and administrative procedures.
PIPA and PICA warn about spruikers
PIPA and PICA have joined forces to warn novice investors are being blindsided by spruikers masquerading as qualified property investment professionals. The industry bodies said with the property markets rebounding, “fly-by-night spruikers were coming out the woodwork”, with many making money by accepting huge commissions to promote substandard property investment stock.
Investors shun diversity
Researchers at the universities of Tasmania and Sydney have found two-thirds of residential property investors buy properties in the same area in which they live, foregoing portfolio diversification. Home Advantage: The preference for local residential real estate investment paper noted the reasons for investing close to home included time, effort and travel costs being typically lower when investing in the local area (particularly important for those who self-manage) and the belief they have a “home advantage” in knowing their location better than non-locals.
New rules for mortgage brokers
The amended Financial Sector Reform (Hayne Royal Commission Response—Protecting Consumers (2019 Measures)) Bill 2019 was tabled in Parliament on 28 November, outlining the role mortgage brokers need to take when helping a borrower from 1 July 2020. Key features of the new law relate to brokers being required to act in the best interests of consumers, and conflicts of interest.
Aussies chose fur babies over family and friends
Suncorp’s Home Index Report has found Australians place more importance on a home’s pet-friendliness than its proximity to family (46 per cent) and friends (39 per cent).
Liability exposures revealed
QBE’s SMEs and Insurance report has revealed 62 per cent of SMEs are not likely to have the right insurance in place, despite 87 per cent agreeing a liability claim could put them out of business. Claims data from the insurer found the most costly liability claims for the rental, hiring and real estate industry were $499,809 for an electrocution (largest bodily injury claim) while $35,536 was the average bodily injury claim; and $43,184 for a fire (largest property damage claim), while $5,700 was the average property damage claim. Talk to one of our colleagues at EBM about ensuring you have the right liability insurance for your real estate business.
Legal corner: REA banned
A South Australian real estate agent lost her licence for six months, fined $7,500 and ordered to undergo anger management training after she was abusive towards tenants, real estate agents, public servants and police. The commissioner for consumer affairs took action against the agent after receiving numerous complaints about her conduct and her failure to heed prior warnings.
Latest apps and platforms
Westpac-backed uno Home Loans has partnered with social property app Sohoapp.com to enable homebuyers using the app to check the competitiveness of their home loan, and how much they could save by refinancing.
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