Investment Property Market Snapshot
Latest industry statistics and analysis.
SQM Research has revealed capital city asking rents for July fell 0.4 per cent to $549 p/w for houses, while unit prices remained steady at $444 p/w. Across the capitals: Canberra $630 p/w for houses / $439 for units; Sydney $709 / $521; Darwin $540 / $405; Brisbane $451 / $370; Adelaide $383 / $299; Hobart $398 / $347; Melbourne $522 / $411; and Perth $424 / $326.
Vacancy rates rise
Nationally, the residential vacancy rate rose to 2.3 per cent in June, up from 2.1 per cent in May, according to SQM Research. In June there were 75,757 vacant properties Australia-wide. Rates were up in Adelaide (1.5 per cent, from 1.3 per cent), Melbourne (1.6 from 1.4), Brisbane (3.0 from 2.9), Canberra (0.9 from 0.8) and Sydney (2.8 from 2.5). Rental vacancies remained steady in Perth (4.1 per cent), Darwin (3.5) and Hobart (0.7).
Rental yields continue to recover
FY18 saw dwelling values fall 1.6 per cent, but rental yields rose 1.4 per cent, according to CoreLogic. With rents rising and dwelling values falling, gross rental yields are trending higher. Melbourne (3.0 per cent) and Sydney (3.21 per cent) continue to have the lowest yields.
Rental demand up
The realestate.com.au Property Outlook for 2018 showed demand for all properties including rentals had risen by 5.2 per cent over the year. Demand for housing rose in Hobart (+38.6 per cent), Brisbane (+5.9), Adelaide (+2.7), Darwin (+4.7), Canberra (+16.2) and Perth (+6.4). Both Sydney (-22.5 per cent) and Melbourne (-6.1) recorded decreases in demand.
Asking rents remain flat over quarter
The Domain Rental Report has found asking rents in most capitals remained flat over the quarter and year-on-year. However, unprecedented demand in Hobart has led to house prices rising 17.3 per cent, and rents for apartments rising 12.5 per cent over the year (2.9 per cent over the quarter) to $360 p/w and rents for houses up 13.9 per cent year-on-year. Asking prices in Canberra also rose 10 per cent for houses year-on-year to $550 p/w and apartment asking rents were also up 7.1 per cent. The biggest drop in asking rents was recorded in Darwin – down 6.5 per cent for houses over the quarter and down 2.4 per cent for apartments. Perth was the cheapest capital in which to rent a house, with the average asking rent sitting at $350 p/w.
Investor loans decline
ABS housing finance figures for May 2018 have shown investor loans were down 1.9 per cent to $10.743 billion (trend terms). Owner-occupier housing commitments also fell 0.2 per cent to $21.089 billion. Commitments for construction of dwellings fell 1.5 per cent, commitments for the purchase of new dwellings fell 0.9 per cent and the number of commitments for the purchase of established dwellings fell 0.6 per cent.
National property prices decline
The March quarter saw national property prices fall 0.7 per cent, according to the latest ABS data. With the exception of Hobart (with a rate of 14.1 per cent), all capital cities recorded declines in annual growth rates since September 2017. The median price of Australian dwellings is now $687,700 and the total value of Australia’s 10 million residential dwellings decreased $22.5 billion to $6.9 trillion.
Average time on market rises
CoreLogic has noted that the average time properties are on the market rose in most capitals in July, with houses remaining more popular than units. For houses, Hobart performed best at 30 days, followed by Melbourne (34 days) and Canberra (36 days). The longest wait was in Darwin at 93 days, followed by Perth (83) and Brisbane (63). For units, Hobart (28 days) and Melbourne (34) performed best. Vendor discounting across most capitals was between 4 per cent and 8 per cent for houses, and between 4.9 per cent and 8.8 per cent for units.
Dwelling values continue to fall
Dwelling values were down 0.2 per cent over the month of June to be 0.8 per cent lower over the year, according to Corelogic’s June Hedonic Home Value Index. A 0.8 per cent drop in values across the combined capital cities was slightly offset by a 0.6 per cent rise in values across the combined regional markets. Melbourne recorded to largest decline amongst capitals over the June quarter by falling 1.4 per cent, followed by Sydney (-0.9 per cent), Darwin (-0.8) and Perth (-0.7). Hobart recorded the largest rise at 2.3 per cent, followed by Adelaide (+0.9), Brisbane (+0.3) and Canberra (+0.2). It was the ninth consecutive month that values fell, taking national dwelling values 1.3 per cent below their September 2017 peak. Despite the recent falls, national dwelling values are 32.4 per cent higher than five years ago.
The quarterly AFG Mortgage Index Figures revealed total mortgage lodgements for the last quarter were up on the previous quarter to end FY18 at 28,896. Lodgement volume for the quarter was also up, to $14.59 billion, with the average loan at $504,901. Investors accounted for 28 per cent of the lodgements and 19 per cent of all lodgements were for interest-only loans.
The latest NAB Residential Property Index (which measures current market sentiment among property professionals) fell sharply in the June quarter – down 17 points to +6 to sit at its lowest level since mid-2016 and below the long-term average of +14. Sentiment was weaker in all states, with confidence levels falling to a survey low. While housing prices are expected to fall in both NSW and Victoria, the housing markets in Queensland and WA are expected to lead the country for capital growth over the next 1-2 years. The outlook for rents remains positive in all states and is likely placing upward pressure on yields (with income returns expected to be strongest in Victoria due to the rapid population growth contributing to low vacancy rates), the report notes.
Settled transactions losing ground
CoreLogic’s latest Property Pulse has found the number of settled transactions in the last year to May 2018 was down by 7.7 per cent to 465,788 houses and units. Settled transactions over the last year to May 2018: Sydney -13.5 per cent, Melbourne -12.9, Brisbane -12.1, Adelaide +2.5, Perth +1.4, Hobart -7.4, Darwin -5.8 and Canberra -10 per cent.
Growing capital city divide
Property prices across Australia rose 0.9 per cent on average in June, according to realestate.com.au’s Property Outlook. While Sydney recorded a fall of 7.4 per cent year-on-year to June 2018, Melbourne (+0.5 per cent), Brisbane (+1.0), Adelaide (+3.0), Canberra (+7.7) and Hobart (+16.1) fared better. Prices in Darwin and Perth also fell, but demand rose.