SnapshotInvestment Property Market Snapshot

Latest industry statistics and analysis.

Asking rents fall
Data from SQM Research revealed capital city asking rents for August fell by 0.2 per cent to $548 p/w for houses and 0.9 per cent to $440 p/w for units. Capitals: Canberra ($625 p/w for houses / $437 p/w for units), Sydney ($706 / $515), Darwin ($518 / $405), Brisbane ($452 / $370), Adelaide ($383 / $299), Hobart ($400 / $360), Melbourne ($522 / $411), and Perth ($423 / $323).

Vacancies dip
The national vacancy rate dipped to 2.2 per cent in July from 2.3 per cent in June, with 72,458 properties nation-wide vacant, according to figures released by SQM Research. Falls were recorded in Adelaide (from 1.5 per cent in June to 1.3 per cent in July), Perth (4.1 / 4.0), Brisbane (3.0 / 2.9), Canberra (0.9 / 0.8) and Darwin (3.5 / 3.4).  Vacancy rates remained unchanged in Melbourne (1.6 per cent), Sydney (2.8) and Hobart (0.7).

Investor loan values rise
APRA’s monthly banking stats to June 2018 have revealed the total balance of loans rose in the month by $9.2 billion to $1.64 trillion. Investor loans rose 0.38 per cent to $558 billion, accounting for 34 per cent of all loans. Owner-occupier lending rose 0.68 per cent, or $7.1 billion, to $1.08 trillion.

Investor lending declines
According to ABS figures, loan approvals fell by 1.6 per cent to $31.2 billion in June (seasonally adjusted). Loans to investors fell 2.7 per cent to $10.382 billion. The proportion of loans for investment purposes, excluding refinance, was 41.4 per cent, down from 53 per cent in 2015. In month-on-month trend estimates, investment construction lending rose 1.3 per cent (or $14 million), borrowing for investment purposes by individuals fell 1.8 per cent (down $154 million) and investment by other entities fell 5.1 per cent to $45.7 million.

Investors unable to refinance
Surveys by Digital Finance Analytics have revealed the number of loan rejections rose significantly in July. Rejections were prevalent amongst those seeking to refinance an existing loan, including interest-only loans, with 30,986 rejections recorded, up from 18,926 in June. The number of investor loans rejected in July was 16,076, up from 11,383 in June, while portfolio investor rejections were up from 5,195 in June to 5,764 in July.

Dwelling prices fall
CoreLogic’s home value results for July confirmed that national dwelling values have trended lower over the last three months – dropping 0.6 per cent over the month to be down 0.9 per cent over the rolling quarter and 1.6 per cent lower over the past 12 months. Nationally, the median value was $554,263 ($650,165 for the combined capitals and $367,067 for combined regional). Over the quarter, values dipped in all capitals except Brisbane, Adelaide and Hobart.

Office vacancies decline
The latest Property Council of Australia’s Office Market Report found vacancy rates across Australia fell from 9.6 per cent to 9.1 per cent over the six months to July 2018. Melbourne CBD recorded the lowest vacancy in a decade at 3.6 per cent. The Sydney CBD market tightened further with a vacancy rate of 4.6 per cent (down from 4.8 per cent six months ago). In Brisbane vacancy across the CBD dropped from 16.1 per cent to 14.6 per cent. Perth’s rate dropped from 19.8 per cent to 19.4 per cent. Adelaide’s CBD office vacancy rate dropped for the third consecutive period to 14.7 per cent, while Canberra was the only capital city to record a vacancy increase over the six months, increasing to 13.2 per cent from 12.5 per cent.

New loans forecast to decline 8 per cent
Research from Morgan Stanley has indicated the average new mortgage will be 8 per cent lower – from $379,000 to $349,000 – as banks target high-risk loans amid a crackdown by APRA and the scrutiny of the Royal Commission. Morgan Stanley estimates the median loan-to-income (LTI) ratio is 3.5 times, with about 40 per cent of mortgage holders having a LTI ratio over four times and 18 per cent having an LTI over six times.

Price growth expected to be capped’s Property Outlook – July 2018 is expecting price growth to be capped within the next six months. The report cites fewer foreign investors (with applications to the FIRB declining “dramatically” and new taxes being introduced), fewer local investors (noting investor lending has fallen 15 per cent during the last year and sentiment is on the wane), the Royal Commission (resulting in banks restricting lending, particularly interest-only) and rising mortgage rates in the US (with Australian banks impacted by international wholesale lending markets) as contributing factors. Also noting that if there was a change in Federal Government, Labor’s proposed changes to negative gearing could also have an impact (with RiskWise and Wargent Consulting predicting it could result in a 10 per cent fall).