Investment Property Market Snapshot
Latest industry statistics and analysis.
Mixed bag for rents
Capital city asking rents for houses fell in May by 1.6 per cent to $554 p/w, while rents for units rose 0.5 per cent to $445 p/w, according to SQM Research. Across the capitals: Canberra ($618 p/w for houses / $441 p/w for units); Sydney ($726 / $525); Darwin ($540 / $402); Brisbane ($446 / $367); Adelaide ($382 / $299); Hobart ($397 / $360); Melbourne ($533 / $409); and Perth ($421 / $324).
Vacancy rates steady
Data from SQM Research indicated that national vacancy rates held steady in April, at 2.1 per cent, or 67,854 properties. Vacancy rates declined in Adelaide and Melbourne (down 0.1 per cent to 1.3 per cent), Brisbane (-0.2 / 3.0) and Darwin (-0.3 / 3.3). Perth (4.1 per cent) and Sydney (2.3 per cent) held steady, while Canberra (up 0.2 per cent to 0.8 per cent) and Hobart (+0.1 / 0.7) saw rates rise.
Investor mortgages decline
ABS housing finance data (seasonally adjusted) showed investor housing commitments fell 9 per cent, or $1.07 billion, between February and March 2018. The $10.9 billion in mortgages was made up of $1 billion for construction of new dwellings (down 18.9 per cent over the month) and $9.9 billion for established dwellings (down 7.9 per cent). It was the largest decline since September 2015. Owner-occupier commitments also fell 1.9 per cent to $21 billion. The total value of dwelling finance commitments, excluding alterations and additions, fell 4.4 per cent to $31.9 billion.
The monthly market report from rent.com.au revealed rents flattened across the country in April. No change was recorded for unit prices with the median price remaining at $440 p/w, while house prices were up 1.18 per cent to $430 p/w with the average price per room at $180.
Dwelling value growth falls
According to CoreLogic’s Economic Property Review for April 2018, nationally dwelling value growth fell by 0.5 per cent over the first quarter of the year. Over the 12 months to March 2018, dwelling values increased 1.2 per cent – the slowest annual rate of growth since December 2012.
Home values hold steady
CoreLogic’s Property Market Indicator for May showed home values in Sydney, Melbourne and Brisbane all held steady. Adelaide rose 0.2 per cent and Perth declined 0.1 per cent.
The May Rental Affordability Index found Hobart was the least affordable capital city in Australia to rent in, requiring 29 per cent of household income to pay the rent. Sydney came in second least affordable at 27 per cent, followed by Adelaide (26 per cent), Brisbane (25 per cent), Melbourne (24 per cent) and the ACT (23 per cent), with and Perth the most affordable at 21 per cent. The RAI is released biannually by National Shelter, Community Sector Banking and SGS Economics & Planning, and measures rental affordability relative to household income.
Perth remains most affordable capital
Data from ratings agency Moody’s has found that Perth is the most affordable capital city when it comes to buying houses and apartments. In the year to March 2018, the proportion of income needed for mortgage repayments dropped to 19.2 per cent (down from 20.2 per cent in March 2017). Calculation was based on a two-income household taking out an 80 per cent LVR loan to buy a property at the median price. Perth’s median house price sat at $464,238 in April, compared to the national average of $554,605, according to CoreLogic RP Data.
Listings and asking prices decline
Data from SQM Research revealed both property listings and asking prices fell across Australia in April. Residential listings fell by 3.8 per cent from March, while asking prices fell 0.8 per cent for houses and 0.2 per cent for units.
Government collects $52.2Bn from property taxes
CoreLogic’s analysis of data from the ABS showed that state and local governments collected $52.2 billion from property taxes in FY17 – the highest level since 1999-2000. The figure was up 5.9 per cent on FY16. The taxes comprise 52.8 per cent of all tax revenue for state and local governments.
WA increases foreign buyers’ surcharge
The WA Government has announced its intention to raise the foreign buyers’ surcharge to seven per cent (up from four per cent). The new rate is set to come into effect from 1 January 2019 and applies to the dutiable value of residential property purchased by foreigners, including corporations and trusts (excludes commercial transactions and significant residential developments). The fee is in addition to the normal transfer duty payable. The Queensland Government is also raising its rate to seven per cent from 1 July 2018.
Removing negative gearing would impact market
Research by the Centre for International Economics, commissioned by the HIA, has found rental prices would rise and housing affordability would worsen if tax on investing in residential homes increased. The HIA noted that if the Government made changes to negative gearing and CGT, investors would leave the market which would drive the price of rentals up, exacerbate the current undersupply of housing and further reduce efficiency in the housing market.