Investment Property Market Snapshot
Latest industry statistics and analysis.
Asking rents up
Capital city asking rents for both houses and units rose 0.2 per cent in November to $553 p/w and $438 p/w respectively, SQM Research data reveals. Across the capitals: Canberra ($638 p/w for houses / $449 p/w for units); Sydney ($711 / $512); Darwin ($491 / $391); Brisbane ($453 / $371); Adelaide ($387 / $299); Hobart ($420 / $374); Melbourne ($526 / $405); Perth ($429 / $320).
According to SQM Research, the national residential vacancy rate fell to 2 per cent in October – the lowest level since March 2014. Nationally there were 67,350 vacant properties, down from 70,172 in September. Rates fell in Perth (from 3.6 per cent to 3.3 per cent), Melbourne (1.7 / 1.6), Brisbane (2.9 / 2.7) and Hobart (0.4 / 0.3), while rates held steady in Adelaide (1.1 per cent), Canberra (0.6) and Sydney (2.8). Darwin was the only capital to record an increase, from 3.6 per cent to 3.8 per cent.
Capital city home values steady
Combined, the daily home value index fell 0.2 per cent in November, according to CoreLogic’s Property Market Indicator. Perth and Brisbane held steady, while Melbourne (-0.4 per cent), Sydney (-3 per cent) and Adelaide (-0.1 per cent) recorded falls. Values were down 4.9 per cent for the year, with Sydney (-6.9 per cent), Melbourne (-5.4 per cent) and Perth (-3.6 per cent) the main drivers.
Data from CoreLogic’s Property Market Indicator revealed listings were up across most capital cities in November; however, Sydney (down 9.9 per cent), Melbourne and Brisbane recorded declines. Hobart listings rose 19.4 per cent, while Darwin was up 16.4 per cent. Average time on market also rose, with Canberra (27 days), Hobart (29 days) and Melbourne (34 days) the best performers, while Darwin (74 days) and Perth (72 days) recorded the highest number of days on the market. Vendor discounting was between 4.5 per cent and 7.5 per cent for houses across most capitals, and between 5.5 per cent and 10.6 per cent for units.
Rental increases at 25-year low
Figures released by the ABS revealed rents over the year to September 2018 increased by just 0.6 per cent on average – the slowest rise since 1993. There was marked variation between the capital cities over the 12 months, with Hobart recording a rent rise of 4.5 per cent, Canberra 3 per cent, Sydney 1.9 per cent, Melbourne 1.8 per cent and Adelaide 0.8 per cent. Substantial declines were recorded in Perth with -6.1 per cent and Darwin at -4.6 per cent. Brisbane rents were down -0.1 per cent over the year.
House prices fall
According to Domain’s House Price Report for the September quarter, nationally, house prices fell 2.6 per cent over the quarter and 2.9 per cent over the year to $781,787. Unit prices were also down 1.6 per cent over the quarter and 1.4 per cent over the year to $549,163. Except for Perth and Darwin, the report found all capitals were now underperforming relative to last year.
Land demand up
The median residential lot price for capital cities rose by 3.8 per cent to $336,124 over the June quarter, according to the HIA-CoreLogic Residential Land Report. Although the price of resi lots rose, the number of sales over the June quarter was down 22 per cent compared to the previous year.
Home values continue to decline
CoreLogics’s Hedonic Home Value Index revealed property prices declined 0.5 per cent nationwide in October (0.6 per cent in combined capital city home values and 0.2 per cent in combined regional home values). The sharpest decline was recorded in Perth (-0.8 per cent), followed by Sydney and Melbourne (both -0.7 per cent). Hobart (+0.9 per cent) and Adelaide (+0.2 per cent) were the only capitals to record a rise in values. National home values fell 3.5 per cent over the year to October, the weakest result since February 2012.
Investor lending drops
ABS housing finance figures for September showed investor lending fell 2.8 per cent from the previous month (seasonally adjusted), putting them at the lowest level since July 2013 – and down 18 per cent over the past 12 months. A total of $9.751 billion in investor loans were approved, accounting for 39.4 per cent of all new loans. Investment lending for the construction of new property fell 2.5 per cent, investment property for individuals fell 0.6 per cent and investment lending for other entities (e.g. SMSFs) dropped 2.2 per cent.
Apartment market continues to “flatline”
Urbis’s Apartment Essentials report determined the Australian apartment market is continuing to “flatline”, a scenario it does not see reversing any time soon. The report noted sales activity is slightly above the quarterly average at 1,330; approved apartment volumes have declined to their lowest level in three years at 4,000; apartment stock rose up to 10.4 per cent; the weighted quarterly average hovered between the high-$600k mark and the mid-$700k mark while 9 per cent of projects were priced at or above $1M; and three-bedroom apartments made up 15 per cent of sales. Urbis also found demand remained consistent but focussed more towards the affordable end of the market.
Melbourne tops for investors
According to the Urban Land Institute and PwC’s Emerging Trends in Real Estate Asia Pacific report for 2019, Melbourne is the best prospect in the region for both investment and development. The Victorian capital beat out markets like Singapore, Tokyo, Osaka and Sydney as it offers a constrained office supply pipeline, a good yield spread over the cost of debt and sovereign bonds, a deep, liquid, core market and good prospects for rental growth. Industrial was named the top option for investors (particularly logistics facilities), followed by office and retail.