Investment Property Market Snapshot
Latest industry statistics and analysis.
Rents on the rise over the quarter
Across the country, rental rates rose by 1.1 per cent over the March quarter, according to CoreLogic’s Quarterly Rental Review. Median rent for March was $427 p/w – $426 p/w for houses and $430 p/w for units. Rental growth over the first quarter was higher in the regions (+1.2 per cent) than in the capital cities (+1.0 per cent). All capitals except Darwin (-0.3 per cent to $474 p/w) recorded rises over the quarter: Hobart (+5.0 / $410), Canberra (+2.3 / $528), Sydney (+0.5 / $582), Melbourne (+1.2 / $442), Brisbane (+1.2 / $436), Perth (+1.7 / $377) and Adelaide (+1.0 / $374).
Asking rents rise
SQM Research found asking rents for April rose nationally by 0.5 per cent to $563 p/w for houses and 0.2 per cent to $443 p/w for units: Canberra ($617 p/w houses / $439 p/w units), Sydney ($737 / $523), Darwin ($559 / $403), Adelaide ($383 / $287), Hobart ($408 / $356), Melbourne ($537 / $406) and Perth ($423 / $326).
Vacancy rates dip
The national vacancy rate slipped to 2.1 per cent in March from 2.2 per cent in February, according to SQM Research. Rates fell in Brisbane (to 3.2 per cent from 3.4 per cent in February) and Canberra (0.6 / 0.8). Vacancies held steady in Adelaide (1.4), Perth (4.1), Melbourne (1.4) and Sydney (2.3). Slight rises were recorded in Hobart (0.6 / 0.5) and Darwin (3.6 / 3.3).
Rental yields on the up
CoreLogic’s Quarterly Rental Review also found rental yields had increased nationally by 0.1 per cent over the 12 months to March to 3.68 per cent: Darwin (5.83 per cent), Hobart (5.01), Canberra (4.55), Brisbane (4.40), Adelaide (4.28), Perth (3.92), Sydney (3.20) and Melbourne (2.93).
Dwelling values steady
Over the three months to March 2018, national dwelling values were down 0.5 per cent, according to CoreLogic’s April Housing & Economic Chart Pack. The combined capital cities recorded a fall in values of 0.9 per cent, while the combined regional markets recorded an increase of 1.1 per cent.
Housing investor credit moderates
According to the private sector credit figures released by the RBA, credit to investors grew by 0.6 per cent in February, up 6.7 per cent from the year earlier.
Investor loans rise
Figures released by the ABS revealed that (seasonally adjusted) investment housing commitments rose 0.5 per cent in February (to $12.030 billion) compared to January, while owner-occupier loans rose 1.3 per cent (to $21.494 billion).
APRA drops investor lending restrictions
On 27 April, APRA announced that it was set to remove its cap on investor loan growth. A 10 per cent cap on investor lending was introduced in December 2014 and in response banks introduced higher rates for investor loans. From 1 July 2018, lenders that have been operating below the 10 per cent investor lending growth benchmark will no longer be required to do so, provided APRA is satisfied with their policies and practices. The 30 per cent limit on interest-only lending will continue to apply.
Perth cheapest capital to rent
Despite the first rental price rise since 2013, Perth remains the cheapest capital city to rent a home. According to a Domain report, the median rent is $355 p/w for houses and $300 p/w for units. Median weekly house rental costs grew by 1.4 per cent in the March quarter but were still 4.1 per cent cheaper than they were a year ago. Sydney continued to be the most expensive place to rent a house at $500 p/w, while Canberra had the highest rent for units at $450 p/w.
House prices tipped to drop
The NAB Residential Property Survey for Q1/2018 has indicated that house prices Australia-wide will decrease 0.8 per cent this year, down by 4.8 per cent. The capital city the bank expects to see continued price rises compared to last year is Perth, rising 3.6 per cent to 1 per cent. Hobart, despite falling 6.4 per cent, is predicted to be the best performing capital with prices expected to rise by 6.5 per cent. Brisbane is tipped to experience the smallest decline at 1.4 per cent to see prices rise by 1.7 per cent. Adelaide follows (-3.3 per cent to see prices remain steady), then Sydney (-5.5 per cent to see prices slide by 3.4 per cent) and Melbourne (-9 per cent to see prices rise by just 0.1 per cent).
Investor interest in apartments waning
Analysis of ABS data by the HIA has revealed that investor demand for new apartments has fallen due to the impact of regulatory interventions on local investors and additional taxes on foreign investors. ABS data for building activity in Q4/2017 recorded a 0.7 per cent rise in commencements for detached houses, but a fall of 11.2 per cent for other dwelling types. Multi-unit dwellings declined 5 per cent for the quarter and 8.3 per cent for the year.
Mortgage arrears stable
Nationally, the mortgage delinquency rate decreased 0.07 per cent to 1.45 per cent in November 2017, according to Moody’s Investors Service. The proportion of residential mortgages that were more than 30 days in arrears declined in all states except NSW. WA recorded the highest rate at 2.5 per cent (down from a record high of 2.76 per cent in 2016). The ratings agency also noted that household debt as a proportion of disposable income was 188 per cent in September 2017, compared with 161 per cent in September 2012.
Investor sentiment rises
According to the latest NAB Residential Property Index, overall market sentiment rose for the March quarter. The market sentiment index sat at +23, nine points higher than the long-term average of +14. WA recorded the strongest positive change in sentiment, rising 20 points to +7, followed by Queensland up 13 points to +31. NSW, Victoria, SA and the NT all saw sentiment decline.