Investment Property Market Snapshot
Latest industry statistics and analysis.
Asking rents down
In April, capital city asking rents declined 0.7 per cent to $555 p/w for houses and declined 0.2 per cent to $441 p/w for units, according to SQM Research. Average rents declined in Sydney, Adelaide, Canberra and Darwin, and increased in Melbourne, Brisbane and Perth. Across the capitals: Canberra $630 p/w houses / $456 p/w units; Sydney $695 / $506; Darwin $488 / $375; Brisbane $457 / $371; Adelaide $391 / $300; Hobart $427 / $368; Melbourne $544 / $422; and Perth $446 / $336.
SQM Research showed the national vacancy rate declined marginally to 2.1 per cent in March. Across the capitals: Canberra 0.9 per cent; Sydney 3.1 per cent; Darwin 3.7 per cent; Brisbane 2.5 per cent; Adelaide 1.1 per cent; Hobart 0.4 per cent; Melbourne 1.6 per cent; and Perth 2.9 per cent.
According to CoreLogic’s Quarterly Rental Review, there was an increase in national rental yields in the March 2019 quarter. Gross national yields increased across the combined capitals to 4.10 per cent, compared to 3.95 per cent in the previous quarter.
Hobart: reported the strongest growth in weekly rents (up 3.6 per cent over the past quarter and 5.4 per cent over the past year to $453) and the second highest rental yield at 5.1 per cent.
Sydney: remained Australia’s most expensive capital city market, with a median weekly rent of $582 (up 0.5 per cent over the past quarter, but -3.1 per cent over the past 12 months). Sydney also had the lowest rental yields out of all capital cities, at 3.5 per cent, over the past quarter.
Canberra: recorded a median rental cost of $550 per week (up 1.5 per cent over the past quarter and 3.6 per cent over the past 12 months).
Melbourne: weekly rents were up 1 per cent over the quarter and 2.1 per cent over the past 12 months to $454 a week. Melbourne reported the greatest increase in rental yields out of all capital cities, with current rental yields at 3.6 per cent, compared to 3.1 per cent a year ago.
Brisbane: weekly rents were up 0.8 per cent over the quarter and 1.4 per cent over the past 12 months to sit at $436.
Perth: was the most affordable capital city to rent in, with a median weekly rent of $385. However, it is showing signs of growth, achieving 1.8 per cent growth over the quarter and 2.1 per cent over the year.
Adelaide: was the second most affordable capital city, with a median weekly rent of $386 (up 0.8 per cent over the quarter and 1.2 per cent over the year). Gross rental yields remained static over the year at 4.4 per cent.
Darwin: experienced the most significant decline in rent (-0.3 per cent over the quarter and -5.7 per cent over the year) to achieve a median weekly rent of $458. However, at 6 per cent, Darwin had the highest gross rental yield out of all the capital cities (up 0.1 per cent on the past 12 months).
Investment loans rise
February 2019 saw a 0.9 per cent increase in lending commitments to households for investment dwellings, according to figures released by the ABS. In seasonally adjusted terms, the value of new lending commitments for investment dwellings was down 29.1 per cent from February 2018. Overall, the value of lending to households rose 2.6 per cent in February. Finance approvals to build new houses were up 2.5 per cent and up 0.7 per cent for established homes, while approvals to buy newly-built dwellings fell 2.4 per cent.
Building approvals up
ABS figures showed approvals to build or renovate houses and apartments rose by 19.1 per cent in February (but were down 12.5 from a year prior). Permits to build private houses fell 3.6 per cent, while approvals to build apartments surged 64.6 per cent in February. Across the states and territories, approvals for detached houses were strongest in Victoria (+37.3 per cent), NSW (+25.2 per cent), SA (+6.8 per cent) and Queensland (+3.4 per cent). Approval declines were recorded in the ACT (-6.3 per cent), the NT (-6.5 per cent), WA (-10.9 per cent) and Tasmania (-13.6 per cent). Multi-unit approvals were strongest in Victoria (+134.1 per cent) and NSW (+69.5 per cent).
Housing values set to decline
According to the latest CoreLogic-Moody’s Analytics Australian Home Value Index, national housing values have recorded sharper declines than apartment values, with housing recording a 9 per cent drop from its 2017 peak, compared to a 6 per cent drop for apartments. Housing values are also forecast to drop 7.7 per cent through 2019, with declines expected in Melbourne (-11.4 per cent), Sydney (-9.3 per cent), Brisbane (-0.6 per cent), Perth (-7.6 per cent) and Darwin (-0.6 per cent). House prices are forecast to improve in Adelaide (+1.0 per cent), Canberra (+3.2 per cent) and Hobart (+4.0 per cent).
Rents on the rise
Data from rent.com.au showed rent prices were rising in some cities despite the downturn in the property market. The national median rent for an apartment in February rose 2.2 per cent to $460 p/w, while house prices declined 2.2 per cent to $440 p/w. Apartment prices were up in all capitals except Perth (-0.7 per cent), while house prices were steady in Sydney, Melbourne, Perth, Adelaide and Hobart, down -2.2 per cent in Brisbane and up 2 per cent in Darwin and 1.8 per cent in Canberra. The national median price per room rose 3.9 per cent to $197 p/w.
Highs and lows for rents
According to the Domain Rental Report for the March 2019 quarter, Canberra ($30 p/w more) beat out Sydney (where rental stock hit record highs) to have the highest rents across the capitals. Both Brisbane and Adelaide saw rents hit record highs, while Perth had the most affordable rents. Yields in Melbourne saw their strongest annual improvement for seven years. In Hobart, rent rises are set to ease a little despite vacancy rates tightening, while Darwin has the highest vacancy rate though rents are stabilising.
Auction clearance rates rise
According to CoreLogic’s Quarterly Auction Market Review, 49.9 per cent of all homes up for auction across the capitals sold during the March 2019 quarter. This represents an increase of 6.6 per cent on the December 2018 quarter results. Quarterly clearance rates increased across all capitals except Hobart (-5.2 per cent) and Canberra (-1.6 per cent).
New home sales continue to wane
The HIA’s New Home Sales report revealed new home sales rose by just 1 per cent nationwide in February. Rises were recorded in Victoria (+2.5 per cent), WA (+5.1 per cent) and SA (+7.5 per cent), while falls were recorded in Queensland (-5.5 per cent) and NSW (-1.7 per cent). The HIA noted that sales for the three months to February were 18.1 per cent lower than at the same time last year while approvals for new homes showed the market was 8.1 per cent lower than in the same three-month period a year earlier.
Home loan activity falls to lowest level in 6 years
According to Australian Finance Group’s Mortgage Index and Competition Index, lending volumes across Australia in the March 2019 quarter fell 10 per cent, compared to the previous quarter. The 23,049 loans lodged during the quarter represented the lowest number in six years, while the $11.6 billion volume was the lowest quarterly figure since 2014.
Housing affordability rises
Ratings agency Moody’s found housing affordability improved 2.2 per cent in the March 2019 quarter. It was also found that the proportion of household income needed to meet repayments on new mortgages dropped 2.2 percentage points in the last 12 months, to sit at 26.5 per cent.
Investor confidence dips as renters’ rise
Digital Finance Analytics’ March 2019 Household Financial Confidence Index revealed renters were the only market segment to show a rise in confidence (attributed to rents in some centres, particularly Sydney, on the decline). In contrast, property investors remained the most concerned, with falling home prices, the switch from IO lending, lower net rental yields and the risks from changes to negative gearing and CGT impacting confidence.