SnapshotInvestment Property Market Snapshot

Latest industry statistics and analysis.

Asking rents down
In March, capital city asking rents declined 0.2 per cent to $559 p/w for houses and $441 p/w for units, according to SQM Research. Adelaide and Hobart recorded increases in weekly asking rents for both houses and units. Sydney, Brisbane, Canberra and Darwin recorded marginal decreases in both house and units rents. Across the capitals: Canberra $644 p/w houses / $455 p/w units; Sydney $706 / $507; Darwin $490 / $378; Brisbane $456 / $370; Adelaide $394 / $302; Hobart $437 / $364; Melbourne $543 / $420; and Perth $440 / $333.

Vacancies steady
SQM Research showed the national vacancy rate remained steady at 2.2 per cent in February. The total number of vacancies Australia-wide was 72,333. Adelaide was the only capital to record an increase in vacancies, up 0.1 per cent to 1.2 per cent. Falls of 0.1 per cent were recorded in Brisbane (down to 2.6 per cent), Canberra (0.8 per cent), Darwin (3.7 per cent) and Hobart (0.4 per cent). Melbourne’s vacancy rate declined 0.2 per cent to 1.7 per cent, while Sydney (3.2 per cent) and Perth (3.0 per cent) remained steady.

New home lending falls
The ABS’s Lending to Households and Businesses for January 2019 revealed housing finance commitments for households declined 2.4 per cent (seasonally adjusted) – driven by  falls in new lending both for investment dwellings (-4.1 per cent) and for owner-occupier dwellings (-1.3 per cent). The fall in lending commitments to households follows a 3.6 per cent fall in December 2018. The value (seasonally adjusted) of new lending commitments for investment dwellings was down 28.6 per cent from January 2018 and down 17.1 per cent for owner-occupier dwellings.

Investors holding back
According to Digital Finance Analytics’ household surveys, just 10 per cent of solo and 15 per cent of portfolio investors intend to transact. The analysis found investors are less convinced by future capital appreciation and most now rely on tax efficiency. Concerns around regulatory changes and finance availability were the main barriers for investors.

Banks tweak investor mortgage rates
As of 25 March, ANZ introduced changes to its interest-only loans for investment purposes – increasing the LVR from 80 per cent to 90 per cent and extending the maximum loan term from five years to 10 years. As of 15 March, Macquarie decreased the rate on its investment fixed rate loans by 0.05 per cent for 1-, 2- and 3-year loans. At ME Bank, investment variable rate loans with P&I repayments, for an LVR of 80-90 per cent, decreased by 0.27 per cent. On 7 March, NAB reduced the fixed-interest rates on its Tailored Home Loans for investors for both P&I and IO loans.

Investment loans over 2018
APRA’s Quarterly Authorised Deposit-taking Property Exposures for December 2018 revealed the value of all ADI residential loans to households was $1.65 trillion as at 31 December 2018, an increase of $75.8 billion (4.8 per cent) on 31 December 2017. Owner-occupier loans accounted for $1,108.1 billion (67 per cent), an increase of $70 billion (6.7 per cent) from the year prior and investor loans were $546.2 billion (33 per cent), an increase of $5.8 billion (1.1 per cent). ADIs with greater than $1 billion of resi term loans held 99 per cent of all loans at the end of 2018, with 5.9 million loans totalling $1.64 billion. Of these, the average loan size was $276,000 and $407.3 billion (24.9 per cent) were IO loans. In contrast, ADIs with greater than $1 billion of residential term loans approved $359.3 billion of new loans in the year ending 31 December 2018, a decrease of $25.1 billion (6.5 per cent) on the year ending 31 December 2017. Of these new loan approvals, owner-occupier loan approvals were $250.1 billion (69.6 per cent), a decrease of $7.4 billion (2.9 per cent) from the year prior, while investment loan approvals were $109.2 billion (30.4 per cent), a decrease of $17.7 billion (14 per cent). Of the new loans approved, $49.5 billion (13.8 per cent) had an LVR greater than 80 per cent and less than or equal to 90 per cent, a decrease of $4.5 billion (8.4 per cent) and $23.8 billion (6.6 per cent) had an LVR greater than 90 per cent, a decrease of $3.8 billion (13.7 per cent). IO loans accounted for $57.7 billion (16.1 per cent), a decrease of $36.6 billion (38.8 per cent) from the year ending 31 December 2017.

House prices fall at fastest rate in 15 years
According to figures released by the ABS, capital city housing prices are falling faster than at any time in the past 15 years (including during the GFC when prices fell 4.6 per cent in the March 09 quarter). Prices dropped 5.1 per cent on average across the eight capitals over the year to the December 2018 quarter. Across the capitals: Sydney (-3.7 per cent in the December quarter / -7.8 per cent for 2018); Melbourne (-2.4 / -6.4), Brisbane (-1.1 / -0.3), Perth (-1 / -2.5), Darwin (-0.6 / -3.5), Canberra (-0.2 / +1.8), Adelaide (+0.1 / +1.5) and Hobart (+0.7 / +9.6).

Land prices rise as demand drops
According to the March 2019 HIA-CoreLogic Residential Land Report, the price of land for new residential building rose as demand fell – with land lot prices across Australia rising 0.8 per cent to reach $279,949 while the number of residential land lots sold fell by 16.2 per cent in the September 2018 quarter.

Resi property prices fall
Residential property prices fell 2.4 per cent in the December 2018 quarter, according to ABS figures. The total value of Australia’s 10.3 million residential dwellings fell by $133.1 billion to $6.7 trillion – with the mean price of dwellings now $651,100.

Home prices soften
REIA’s Real Estate Market Facts report for the December 2018 quarter revealed prices declined 2.3 per cent for houses and 2.4 per cent for other dwellings, Australia-wide. The national median declined to $733,438 for the quarter, which was due to falls experienced in all capital cities except Hobart, Adelaide (where prices were up) and Perth (where prices remained stable). Melbourne saw the largest decline in house prices for the quarter, down 3.7 per cent to $796,000. Other dwellings also saw the weighted average median price decline to $570,905 for the quarter, with Perth recording the largest decline – down 5.1 per cent down to $375,000. Adelaide had the lowest median house price for the quarter at $475,000 and Darwin had the lowest median other dwelling price at $350,000.

Rents rise
The quarterly rental market saw increases in the median rent for three-bedroom houses for all capital cities, with the exception of Sydney, Melbourne and Hobart where they held steady, according to the same REIA report. The median rent for two-bedroom other dwellings increased in Canberra and Hobart, remained steady in Brisbane, Adelaide and Perth and decreased in Sydney, Melbourne and Darwin. Hobart had the largest increase, while Sydney had the largest decrease – with the weighted average vacancy rate for the eight capital cities remaining steady at 2.6 per cent during the December quarter, a decrease of 0.1 percentage points for the year. The markets of all capital cities except Darwin had vacancy rates at or below the 3.0 per cent benchmark, indicating a strong demand for rental accommodation. Darwin had the highest vacancy rate of 8.2 per cent, which is 1.9 percentage points higher than the same time as last year, an indication of low demand, REIA noted.