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.

Price boom largely in line with fundamentals says investment bank

July, 2017 by

Australia has had strong housing price growth in recent years, which has raised questions among some commentators about whether we’re in the middle of a housing bubble.

However, in the view of HSBC Bank, the weight of evidence suggests that the increase in housing values is largely justified by fundamentals such as low interest rates, strong population growth, and foreign demand. “At the same time, despite a significant ramp up in housing construction in recent years, our estimates still suggest aggregate housing undersupply,” said Paul Bloxham, Chief Economist Australia, New Zealand and Global Commodities, HSBC Bank Australia Limited. “On the supply side, it is important to recall that during the mining boom very little housing was built and population growth was strong.

Paul also noted that the process of returning to balance in the housing market is happening at a slower pace than previously thought, due to faster population growth.

“At a national level, a key reason for rising housing prices has been housing undersupply. This also suggests that a significant fall in Australian housing prices, as occurred in the US and Spain during the Global Financial Crisis, is unlikely, given that, in contrast to those countries, in Australia there is little evidence of a national housing oversupply.”

Reserve Bank leaves rates on hold

July, 2017 by

The Reserve Bank of Australia (RBA) left the cash rate on hold for an eleventh straight month. The RBA dropped the cash rate to a record low of 1.50% in August.

RateCity.com.au CEO Paul Marshall said the decision reflected the need to wait and see how the APRA led intervention plays out in the housing market. “The Reserve Bank needs more time to monitor the impact of rate increases for investors paying interest-only,” he said. “Over the last month we’ve seen the interest rate gap between the average owner-occupier paying principal and interest and investor paying interest-only widen by an estimated 0.67 percentage points, according to our latest data.”

There is now a clear incentive for investors paying interest-only to swap to principal and interest loans. “However, for those investors who want to keep paying interest-only, there are still some good deals being offered by smaller lenders, but not for long,” said Paul.

North Korea ramps up sharemarket volatility – good news for property

July, 2017 by

North Korea and Kim Jong-Un are back in the headlines after threatening global peace and sharemarkets following the testing of an Intercontinental Ballistic Missile (IBM) in early July. 

North Korea’s progress towards being able to reach the US with nuclear weapons is continuing and the actions have been widely condemned.

While solutions to the impasse are being left to the diplomats and Donald Trump, it’s fair to expect that North Korea could be a source of further volatility in share markets noted Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital. In fact, volatility, as measured by the average daily movement in the All Ordinaries Index, was 0.7% in June. This was higher than the previous month when volatility was 0.4%, according to ASX.

“The uncertainty created by North Korea will surely see a continuing flight to safe investment havens such gold, cash and Australian real estate for the remainder of 2017,” said Angus Raine, Executive Chairman, Raine & Horne. “To illustrate, Australian capital city dwelling values rose by 1.8% in the month of June according to CoreLogic, which demonstrates once again where Australians feel safer about putting their money.”

Northern Territory

July, 2017 by

Raine & Horne has recorded a staggering 75% more sales in Darwin in June, than the same time in 2016.

“A large number of sellers are investors, which could suggest end-of- financial year tax planning might have accounted for some of the early June sales, however many of the properties that sold were on the market for some time,” said Glenn Grantham, General Manager, Raine & Horne Darwin. “To get these properties moving, we introduced the vendors to the reality of the Darwin market place, which for many agents can be a difficult conversation to have with owners. However, the proof of our direct approach is in the pudding, as our early June sales results demonstrate.”

Three of the properties sold by Raine & Horne Darwin in the first week of June were located in the Palmerston area. “Palmerston is a competitive market with plenty of properties for sale. It’s a price driven market, with entry-level properties available from the low $300,000s,” said Glenn. For example, a 2-bedroom villa at 8/14 Duwun Road, Roseberry went to the market for offers above $315,000. At this price, it went immediately under contract.

“These pricing levels didn’t exist at the start of 2017 but at this price point, this villa found a buyer very fast,” he said. “The sweet selling spot for entry level homes in Palmerston is between $300,000 and $450,000 and $400,000 – $600,000 in the popular northern suburbs of Darwin.”

Sea change and tree change is gathering pace

July, 2017 by

The latest internal migration data shows that an increasing number of interstate and intrastate population movements are to either sea change or tree change regions or the outskirts of the capital cities, said Cameron Kusher, Head of Research at CoreLogic.

“Each year the Australian Bureau of Statistics (ABS) publishes data on internal migration across the regions of Australia. Internal migration data counts the number of residents moving within the state as well as across state borders,” he said.

Queensland’s holiday mecca, the Gold Coast recorded the most net internal arrivals at 6,428 persons over the year, followed by the Sunshine Coast with 6,200.

“Of the top 25 regions for net internal migration over the past year, 13 were located outside of the capital cities; generally in areas either adjacent or close to capital cities,” said Cameron. “These regions [are] a mix of sea change and tree change type locations.

The [ABS] data supports the strong price rises being recorded across many of Australia’s coastal and hinterland regions, especially those within easy commuting distance of the major capital cities.

Winter chills keeping vendors at home – again!

July, 2017 by

Property listings and appraisals were down 10% nationally in April, which is typically reflective of seasonal changes, said Angus Raine, Executive Chairman, Raine & Horne.

“We are finding that vendors are deferring listings because of transaction costs such as stamp duty,” said Angus. “The issue of finding the next home is another speedbump, while speculation that real estate prices may increase further, is causing some vendors to defer a sale.”

Trying to pick the best time to sell a property can be a complex business, advised Angus. “Yet winter is often a better time to sell in many markets around Australia because you could be competing with 15-20% fewer homes for sale in some markets – and even more in some cases.”

“But there is plenty of buyer interest out there, thanks to low interest rates and improving incentives for first home buyers in some states and territories, which will help underpin real estate activity.”

Housing affordability improved in all states and territories

July, 2017 by

In excellent news for home buyers, housing affordability improved nationally in the March 2017 quarter, according to the Adelaide Bank/REIA Housing Affordability Report.

The proportion of income required to meet loan repayments decreasing to 30.4%, a decrease of 1.3 percentage points over the quarter and a decrease of 1.3 percentage points compared to the corresponding quarter of 2016.

Over the quarter, housing affordability improved in all states and territories.

Compared to the March quarter 2016, housing affordability improved in all states and territories.

A number of factors contributed to improved affordability. During the March quarter, the Reserve Bank of Australia (RBA) maintained the official cash rate at 1.5%, while the quarterly average variable standard interest rate remained at 5.3%. That said, the quarterly average three-year fixed rate increased to 4.3%, an increase of 0.2 percentage points.

Additionally, the average loan size in Australia was $372,620, a decrease of 4.3% over the quarter. However, this was an increase of 2.3% compared to a year ago. During the March quarter, the average loan size decreased in all states and territories.

On the rental front, the proportion of median family income required to meet rent payments increased by 0.1 percentage points to 24.6%. However, the results varied across the states and territories with rental affordability improving marginally in New South Wales, South Australia, Western Australia and the Northern Territory.

Adelaide and Brisbane markets edge Australian real estate values forward

July, 2017 by

The CoreLogic May Home Value Index results confirmed that despite commentary to the contrary, there is still life in the Australian real estate market, with average capital city values edging up by 0.4% over the three months ending May 2017.

The best performers were Brisbane which produced quarterly growth of 1.2% and Adelaide where real estate values increased by 2.0% in the three months to 31 May.

The results in May are likely exaggerated by weak seasonality, said Shane Oliver, Chief Economist, AMP Capital. “Home values have fallen in 4 of the last 5 Mays with an average May decline of -0.9%,” he said. “There is probably also a degree of statistical noise going on after the unbelievably strong 5% and 4.2% gains seen in the March quarter in Sydney and Melbourne.”