National housing conditions steady

October, 2017 by

Hobart with growth of 13.6% emerged as the country’s best performing capital city based on growth in dwelling values over the past twelve months, according to the latest CoreLogic Home Value Index.

Sydney came second with 13.0% growth just ahead of Melbourne with an annualised average increase of 12.7%.

For investors and self-managed superfunds seeking decent income returns, CoreLogic says that regional investments are producing stronger yields. The combined gross rental yield for houses in regional Australia is 4.9% compared with 3.1% for city houses. The difference isn’t quite as stark for apartments. However, regional units are still well ahead with gross rental yields of 5.2% compared to 4.0% for city apartments.

For what it’s worth, Darwin is generating the strongest rental yields of all Australian capital cities. In the Northern Territory capital, houses are producing gross yields of 5.5% and apartments are retuning 5.8%.

Compared to a year ago, national residential property listings are down by 4.3%, according to SQM Research. Listings were down in Hobart by 20.2% and in Melbourne by 15.3%. The tight supply in Victorian and Tasmanian capitals will help to maintain the mounting pressure on house and unit prices.

Cash rate on hold signals good news for property

October, 2017 by

At its meeting in early September, the RBA decided to leave the cash rate unchanged at 1.50%.

The RBA has cited several reasons for leaving interest rates on hold including improving global economic conditions. “Labour markets have tightened further and above-trend growth is expected in a number of advanced economies, although uncertainties remain,” said Philip Lowe, Governor of the RBA. Growth in the Chinese economy, for example, is being supported by increased spending on infrastructure and property construction. “Commodity prices have risen recently, although Australia’s terms of trade are still expected to decline over coming years,” said Philip.

In the United States, the Federal Reserve expects to increase interest rates further, which will most likely ease the pressure on the RBA to move rates up anytime soon, noted Angus Raine, Executive Chairman, Raine & Horne.

In Australia, the recent economic data has been consistent with the RBA’s expectation that growth in the Australian economy will gradually pick up over the coming year, as the decline in mining investment runs its course. The outlook for non-mining investment has improved recently and reported business conditions are at a high level. Residential construction activity remains at a high level, but little further growth is expected. Retail sales have picked up recently, although slow growth in real wages and high levels of household debt will restrict spending.

Employment growth has been stronger over recent months and has increased in all states, which is excellent news for real estate, notes Angus. “The low level of interest rates is continuing to support the Australian economy and will underpin real estate markets longer-term.”

Land price increases unrelenting

October, 2017 by

The HIA-CoreLogic Residential Land Report, Australia’s leading report on the residential land market, shows that a typical vacant lot of land for housing increased in price by 2.1% in the March quarter of 2017.

The report shows a small increase in the supply of residential land on the market during the quarter and the price of land is now 9.3% higher than a year ago. “Land price increases in Australia are unrelenting,” said HIA Senior Economist, Shane Garrett.

“The solution to the housing affordability challenge lies in ensuring that the additional residential land needed across our cities and regional towns is delivered in the right place, at the right time and at the lowest price. This should be a key imperative for governments at all levels,” said Shane.

Don’t use rising property prices as excuse to curb foreign investment: John Howard

October, 2017 by

Former prime minister John Howard has warned against using climbing property prices as a reason to limit foreign investment.

Speaking at property industry symposium in Sydney in late August, Mr Howard told Commercial Real Estate that property price rises should be expected for any big city, but admitted that housing affordability was one area that Australia had gone backwards in.

“It’s a fundamental law of economics that if you’re going to have a growing population in a large urban concentration, you’re going to put a squeeze on housing prices. (But) we must not allow any of that to spill over into hostility to [foreign] investment,” he said. “In the long run, we would be crazy as a nation and it would be an act of self-destruction to ever become unfriendly towards foreign investment.”

APRA strikes fail to dampen investor zest for property

September, 2017 by

APRA’s intervention into Australia’s property market isn’t biting as much as the government watchdog might like, according to the ABS housing finance data.

The ABS data shows investor lending increased by 1.6% in June, according to the seasonally adjusted figures, and despite many lenders enacting several out-of-cycle rate hikes in recent months.

RateCity.com.au’s Sally Tindall said, “The APRA intervention initially took the steam out of the property market, but the latest figures confirm buyers are choosing to wear the rate hikes.

“APRA has been focused on deterring investor growth over two years now with limited success.”

The percentage of fixed rate loans has increased from 11.2% last September to 17.5% in June. This represents the highest percentage of fixers since November 2013, according to RateCity. “This is a clear reaction to the out of cycle rate hikes from the banks as borrowers move to protect themselves from future increases,” said Sally.

“With the spring real estate market just around the corner and auction rates continuing to make modest improvements, it will be interesting to see whether it will be game on again for the spring property market.”

RBA leaves cash rate at a record low of 1.50%

September, 2017 by

After its decision to leave the official cash rate at 1.5%, Angus Raine, Executive Chairman of Raine & Horne said it appears the RBA doesn’t consider the Australian economy to be strong enough to justify tightening the cash rate.

“That said, with the Australian dollar nudging $US0.80, there are plenty of international investors who appear to like the cut of Australia’s economic jib,” said Mr Raine. “And why not with inflation at 1.9%, which is below the RBA’s target range of 2-3%. Add our steady unemployment at 5.6% and Australia’s comparative political stability, and we look very good when judged against many other global economies.”

The RBA will monitor the higher Australian dollar, but its trajectory won’t be enough to force a cut any time soon, noted Dawn Inanli, General Manager, Raine & Horne Financial Services. “The clampdown by lenders on interest-only loans continues to be a more significant threat to owners with mortgages,” she said.

While this crackdown will have a negligible impact on the wider real estate market, older owner-occupiers with interest-only mortgages, might be squeezed financially if the lenders start forcing them to make principal and interest repayments, noted Dawn.

“If your lender is imposing new restrictions on your mortgage, and you’d like some advice about your options, contact Raine & Horne’s financial services arm, Our Broker on 1800 913 677.”

House price values up in July

September, 2017 by

The latest CoreLogic Home Value Index results recorded a 1.5% rise in capital city real estate values for July.

 Most individual capital cities recorded increases, with a 3.1% gain in Melbourne a significant driver of the strong monthly result.

CoreLogic Head of Research Tim Lawless said, “The recent bounce in capital gains may be partially due to a recovery from the seasonal slump in values recorded in April and May. However, other factors, such as stamp duty concessions for first home buyers in New South Wales and Victoria, may also be having a positive impact on market demand.”

He said, “It’s still too early to measure the effect of first home buyer incentives, which went live on July 1st. However historically, the first-time buyer segment has been very responsive to stimulus measures.”

Melbourne appears to be benefitting from consistently high population growth which is creating strong demand for housing, as well as consistently high jobs growth and more affordable housing options relative to Sydney, noted Tim.

First home buyers return to the market

September, 2017 by

The latest housing finance figures released in the second week of August by the Australian Bureau of Statistics (ABS) showed that first home buyers are returning to the market.

“First home buyers represented 15% of the total owner-occupied housing finance commitments in June, which is up from 14% in May,” said Angus Raine, Executive Chairman, Raine & Horne.

In fact, the number of first home buyer commitments increased by 1.6% for the month, following a 28.9% increase the previous month, and is the highest since October 2014, according to analysis by the Real Estate Institute of Australia.

“There is no doubt that generous tax breaks and subsidies for first home buyers around the country are starting to bite,” said Angus. “Your local Raine & Horne agent will also be able to give you plenty of advice about the subsidies and tax breaks available in your state or territory.”

Queensland real estate review

July, 2017 by

The March 2017 quarter has delivered the Brisbane LGA’s first $2 million suburb, as Teneriffe reached a median house price of $2.075 million, according to the REIQ’s March Quarter Queensland Market Monitor.

Additionally a record number of $1 million-plus suburbs as 15 suburbs (including Teneriffe) hit the median milestone, up from 10 suburbs in the December quarter.

House prices annually have grown 4% in the Brisbane LGA, taking the annual median to $650,000. REIQ CEO Antonia Mercorella said the Brisbane house market had once again proven itself to be a solid performer. “This market consistently performs well for property owners, while maintaining its affordable status,” she said.

Outside the capital, the Gold Coast and Sunshine Coast were the two strongest performing markets in Queensland again in the March quarter, outperforming Brisbane (as they did last quarter). “The Gold Coast has benefited from the investment delivered for the 2018 Commonwealth Games and this has significantly improved the infrastructure in the region, transforming it into an international hub,” Ms Mercorella said.

The Sunshine Coast continues to grow and, along with the Gold Coast, these centres formed the top two most popular migration destinations for people moving within Australia in 2016. More than 12,000 people moved to these two coastal destinations (excluding overseas immigration) last year, according to ABS data.

Noosa was the top annual median house performer with an annual growth of 9.2% compared with March 2016. This has positioned Noosa as the second-most expensive house market with an annual median sale price of $615,000.

The housing market in Fraser Coast, Bundaberg and Cairns held steady for the 12 months to March 2017.

Melbourne drives increases in national median house price: REIA

July, 2017 by

The median house price across Australian capital cities has continued to increase with the weighted average median prices rising by 2.9% for houses and 2.5% for other dwellings, according to the latest research from the Real Estate Institute of Australia. 

REIA Real Estate Market Facts for the March quarter 2017 show the weighted average median price for houses for the eight capital cities increased to $763,892.

REIA President Malcolm Gunning said the median price was driven by increases in Melbourne and Sydney and, to a lesser extent, in Darwin.

“The weighted average median price for other dwellings increased to $587,290, again driven by median price growth in Melbourne and Sydney and, to lesser extent, in Perth, Canberra and Hobart,” said Malcolm. “Over the quarter, Melbourne had the largest increase in both the median price for houses, 7.6% and for other dwellings, 3.8%.

Over the March 2017 quarter, median rents for three-bedroom houses increased in most capital cities – Sydney, Melbourne, Brisbane, Adelaide, Hobart and Canberra. Hobart had the largest increase at 5.7%. “Median rents for two-bedroom other dwellings increased in most capital cities with the largest increase at 7.5 per cent in Hobart.

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