This Week in Real Estate -30 March 2024

The Week In Real Estate March 30, 2024

 

90% Of Property Markets Rise

Values rose in almost 90% of house and unit markets throughout Australia in the past 12 months.

Analysis by CoreLogic shows national dwelling values are up 8.9%, which based on the median dwelling value ($765,762) is equivalent to $63,000.

It says 88.4% (4087) of the 4625 house and unit markets it analysed experienced increases.

This is a substantial increase from just two years ago (February 2023) when only  39.1% increased.

CoreLogic Economist, Kaytlin Ezzy, says the imbalance between supply and demand means there have been broad-based capital gains in the past year.

“Despite three rate hikes, worsening affordability, and the rising cost of living, the increasingly entrenched undersupply in housing stock, and above average demand thanks to strong net migration, has helped push values higher,” she says.

In Brisbane, every single house and unit market recorded an increase in value. In Perth, 100% of unit markets and 99.7% of house markets were up, Adelaide, 99.7% of unit markets and 98.6% of house markets, Sydney 98.6% houses, 97.1% units and Melbourne, 90.3% of houses and 81.9% units.

 

Price Per Square Metre Rising

Properties are getting smaller as the price per square metre rises according to Domain’s latest Price Square Metre Report.

The report shows that house and unit prices per square metre in capital cities have been trending upward over the past year.

Domain Chief of Research and Economics, Dr Nicola Powell says as the price per square metre increases, average land lot sizes are dropping in an effort to keep them affordable.

“(the) report reveals a trend of shrinking land sizes attributed to densification and rising land premiums. While this may seem counterintuitive, it actually creates more opportunities for home ownership (as) higher density translates to increased affordability.”

Powell says without the shift towards greater density and smaller land sizes over the past two decades, house prices would be vastly higher than they are today – higher by 44% in Perth, 16% in Adelaide, and 14% in Melbourne.

The report shows the price per square metre has increased by 14% in Perth in the past 12 months, 9.6% in Adelaide, 7.5% in Brisbane, 5.1% in Sydney and 0.8% in Melbourne. It has dropped by 2% in Canberra, -2.3% in Darwin and -2.7% in Hobart.

 

Rate Cuts Predicted

Homeowners are tipped to be almost $700 a month better off by the end of 2026 if predicted interest rate cuts come through.

BIS Oxford Economics predicts that the cash rate will drop by 1.75 percentage points within the next 18 months.

It says this will leave more money on the wallets of homeowners and also improve the borrowing capacity of those looking to get into the market. It predicts the first interest rate cut will come in December this year.

Under that scenario based on the $624,000 average Australian home loan, monthly repayments will drop from $4003 to $3310 or about $8300 per year.

“Interest rate cuts from late 2024 should boost credit availability, accelerating broad price growth once again,” senior economist, Maree Kilroy says.

She says higher borrowing costs in 2023 did not deter buyers.

“Underlying demand has been robust in many sectors, backed by the strongest population growth increment on record. Migration is running red hot but should soon normalise.”

 

Listings On the Rise

Property listings are finally starting to increase and are now 16.6% higher than at this time last year.

PropTrack data shows across the combined capital cities new listings are up by 22.2% in the year to February. The national increase is largely being driven by Sydney, Melbourne and Canberra markets.

Listings are down year on year in Darwin and remain at the same level in Adelaide and Perth.

PropTrack senior economist Angus Moore believes sellers are confident in listing their homes because of the favourable conditions in the housing market.

“Sellers and buyers are more confident about the outlook for interest rates, with expectations of no more rate hikes and even cuts later in the year underpinning the confidence in the market,” he says.

He says with unemployment low and income growth starting to increase there is a growing demand from buyers, particularly as the rental market remains difficult.

The total number of properties listed for sale in Sydney, Melbourne, Canberra, and Hobart is now well above the prior-decade average, although Brisbane, Perth, and Adelaide are about 40% below.

  

Super For Homes Not So Super

The Superannuation industry is rebuffing calls for first-home buyers to be able to access their retirement savings early to buy property.

A report from the Association of Superannuation Funds of Australia says allowing early access will really only help those who could have afforded to buy without having to access their super.

And it warns it could drive up house prices by increasing demand.

ASFA chief executive Mary Delahunty says this would mean people on lower or moderate incomes will still feel locked out of the market.

But Hotspotting founder Terry Ryder dismissed the comments as self-serving and not based on any research analysis. “The comments from big super are the voice of vested interest, always the biggest noise in real estate,” he said.

“Whenever anyone puts forward a proposal to help first-home buyers, there are claims it will push up property prices. “But no one has ever produced any research to support that claim. I see this as a major furphy.”

 

 QUOTE OF THE WEEK

PropTrack senior economist Angus Moore

“Sellers and buyers are more confident about the outlook for interest rates, with expectations of no more rate hikes and even cuts later in the year underpinning the confidence in the market.”

 

 

 

This Week in Real Estate -23 March 2024

Cash Buyers Big On Coast

Broadbeach on the Gold Coast recorded the highest value of cash property purchases in Australia, according to research by electronic conveyancing firm PEXA.

It shows Broadbeach topped the eastern states with $1.33 billion spent on cash purchases.

The latest Cash Purchases Report says purchases without a loan now account for 28.5% of the total value of all sales in Australia with more than 140,000 properties sold to cash-only buyers.

PEXA chief economist Julie Toth says Queensland proved to be very popular with cash buyers with 52,177 properties purchased that way in 2023.

Surfers Paradise was also in the top ten as well as Hope Island, Biggera Waters and Southport.

In terms of the number of sales 42.6% of all settlements in Broadbeach were to cash buyers.

PEXA says those buying with cash tended to be older and retired.

“They tend to have lower household incomes, but they also have fewer dependants and are more likely to be ‘asset-rich’, with accumulated property, savings and superannuation to fund their next purchase,” Toth says.

 

Bridges For Northern Gold Coast

Three green bridges are proposed for the northern Gold Coast to get students walking and their parents off the busy M1 during peak times.

Gold Coast City planning committee chair Mark Hammel says the bridges would allow up to 6000 school students to walk or cycle safely to schools in the precinct.

“With close to 6000 school kids living in the various suburbs around the division, it is clear from the design of these green bridges that they would offer a genuine alternative to getting to and from school,” Hammel says.

The bridges could connect different sections of Ormeau to the rail network at the Yatala train station. The project would require State Government funding.

“These green bridges would form important links between housing estates in our community to local schools, parks and playgrounds and public transport, while also taking traffic off the road and encouraging a healthy lifestyle,” Hammel says.

He says the State Government could incorporate the bridges into a future Exit 45 upgrade.

 

Vacancy Rates Hits New Low

The national vacancy rate has hit a new record low with predictions that the scarcity of rental properties will drive rents up further.

Data from PropTrack shows that in February the national rental vacancy rate fell to 1.07% and was below 1% in Brisbane, Adelaide and Perth.

Its analysis says the number of rental properties available for rent is now 57% lower than it was at the start of the pandemic.

The high demand means rental properties on average are listed for only 18 days before securing a new tenant.

PropTrack senior economist Angus Moore says the only thing that will ease the rental market is more stock.

“That is a slow process,” he says. “The government has a housing target of 1.2 million new homes in five years, but unfortunately we are not building enough to meet that.”

“Until then, we don’t see relief for renters in the near term, and with the market this tight, it will only result in further price hikes.”

 

New Home Sales Rise

Sales of new homes nationally increased by 5.3% in February according to new data from the Housing Industry Association (HIA).

The HIA New Home Sales report is a monthly survey of the largest volume home builders, it shows the increase as in most of the large states.

HIA Chief Economist, Tim Reardon says given the weakness of January data, it is not too surprising to see an uptick in February.

While sales did increase, they still remain at low levels according to Reardon.

“The higher borrowing costs are compounding the elevated cost of land and construction, drying up the pipeline of new home building work despite the significant pent-up demand for housing,” he says.

New home sales increased by 8.4% in Queensland, 6.3% in Victoria and 5% in Western Australia.

Sales dropped by 5.5% in South Australia during the month.

The new figures mean that quarterly sales are up in Western Australia (+39.9%), Queensland (+20.4%) and New South Wales (+16.0%).

 

Build-To-Rent Rising

The build to rent sector is on the rise according to the JLL Apartment Market Overview Q4, 2023.

It shows that the unit pipeline is increasing with nearly 60% of build to rent projects in Victoria, 24% in Queensland and 11% in NSW.

JLL says it is a way for developers to better deal with rising construction costs.

“The BTR project pipeline continues to grow, buoyed by the advantage of no pre-sales period,” the report says.

“But the BTR pipeline is still small and not large enough to offset the decline in Build to Sell supply.”

JLL head of living, capital markets, Jack Bergin, says investors are showing a strong desire to be part of the sector.

But he says further regulatory support is needed to support project viability and unlock the full potential of build-to-rent sector and deliver new housing.

The report says while BTR in Australia remains in its infancy it has gained momentum and drivers such as a tight rental market and low build to sell supply levels, support the need for more of it.

 

QUOTE OF THE WEEK:

Westpac managing director of mortgages Damien MacRae

“While some buyers have paused their housing plans, the intention to buy remains strong and prospective buyers are becoming more ruthless with their goals.”

 

 

 

 

This Week in Real Estate -15 March 2024

Housing Solution Up In The Air

The Gold Coast is the perfect place for airspace development, according to a leading proponent of the concept.

Association of Rooftop and Airspace Development president Warren Livesey, says airspace above strata unit blocks in Australia is an untapped $100 billion-plus market.

He says it could include housing extensions, buying a neighbour’s airspace for a view, or strata apartment owners banding together to sell rooftop airspace to a developer.

Livesey says there have been 180,000 airspace homes approved in London since 2020, 110,000 in Paris and 100,000 in Barcelona.

Livesey promoted the concept to the Federal Parliament last week. After initial discussions with the Gold Coast Chamber of Commerce, he hopes to pitch the idea to the Gold Coast City Council.

“Ultimately by utilising airspace, we are creating additional development sites in and around existing infrastructure. You’re not creating density where there was none, you’re just maximising it.”

Livesey says as well as increasing housing supply, airspace development can help boost the financial resources of building body corporate services to help maintain facilities.

 

Gold Coast Games Pitch

Leveraging existing Gold Coast venues for the 2032 Olympics could deliver up to $5 billion in savings, according to a submission by the Gold Coast City Council.

Its proposal to the 60-day review of the Olympic and Paralympic Games Brisbane 2032 Venue Master Plan says it would be a “financially prudent, responsible, and sustainable way” to hold the event

In the submission, Gold Coast City CEO Tim Baker says the Gold Coast has world-class facilities already available which could be used.

It nominates key venues including the Gold Coast Aquatic Centre, Heritage Bank Stadium and the Gold Coast Hockey Centre as suitable venues.

The Gold Coast Aquatic and Hockey Centres were both upgraded for the Commonwealth Games and can host more than 10,000 spectators.

“These are existing permanent facilities, so the savings are enormous,” the submission says.

It says $2.5 billion could be saved by using the Gold Coast Aquatic Centre at Southport for the Games and a further $2 million by using the Gold Coast Hockey Centre.

 

 Stamp Duty Reform

Abolishing stamp duty would immediately help more people buy property, according to new research.

Analysis by e61 Institute and PropTrack shows that increasing the rate of stamp duty by just one percentage point reduces the number of homes sold by more than 7%.

It says if a state such as NSW abolished stamp duty entirely, an extra 100,000 people would be able to buy every year.

The report says stamp duty doesn’t just affect the property market. It blames stamp duty for making it difficult or too expensive for people to change jobs if it involves moving to a new location.

“Job mobility has slowed over the past couple of decades, which has weighed on productivity and coincides with a surge in the cost of stamp duty,” it says.

“Meanwhile, older households – many of whom have numerous spare bedrooms – are discouraged from downsizing.

“Discouraging people from moving has all sorts of damaging flow-on effects, and these problems are becoming increasingly acute because the impost of stamp duty has grown considerably relative to previous generations,” it says.

 

Buyers Remain Optimistic

Home buyers believe now is a good time to buy, because of predictions that property prices will continue to rise this year.

The Residential Audience Pulse Survey released this week, shows 40% of buyers think property prices will increase in the next six months.

Despite this 35% of respondents believe now is the time to buy, up 9% on the previous quarter.

The report says this suggests that while apprehensions exist, many buyers remain optimistic about market conditions. The survey says almost a quarter of consumers aged 18 and above are actively looking to buy.

The biggest motivator for buying was a lifestyle change (32%), followed by making financial gains (18%), downsizing (13%), retirement (12%), and upsizing (12%).

About a third of respondents say they believe demand for property will be even stronger in the coming months.

First-home buyers look set to not be as active with a drop of 3% compared to the previous quarter who are looking to secure a property in the next five years.

4600 people were surveyed for the report, which examined buyers’ perspectives on the market.

 

More Women in Construction

The number of women working in the construction industry is on the rise according to analysis by the HIA.

HIA Senior Executive Director, of Compliance and Workplace Relations, Melissa Adler says while figures are still lower than they would like to be, it is rising steadily.

“Currently, women make up approximately 15% of the construction industry, but these figures do not tell the whole story, with the focus too often only on onsite trades,” she says.

“The construction industry is filled with a wide range of opportunities for women and we are already seeing a larger percentage of women taking on roles in construction and thriving.”

Adler says the industry is now training more female workers than ever before.

“There are nearly 6,000 female apprentices and trainees undertaking training in the construction industry which is more than double the number in training from 2019,” she says.

“For its part HIA has a strong network of women who work within the construction industry, offering opportunities for professional connections through HIA’s Building Women program nationally, and offering training and apprentice programs with wrap-around mentoring to support young women entering the industry.”

 

QUOTE OF THE WEEK:

HIA Senior Executive Director, Compliance and Workplace Relations, Melissa Adler

“The construction industry is filled with a wide range of opportunities for women, and we are already seeing a larger percentage of women taking on roles in construction and thriving.”

 

 

 

This Week in Real Estate -8 March 2024

Terry’s View: Invest Wisely, Ignore Noise

I feel for Australian consumers trying to make headway in real estate. The nation abounds with media misinformation on property and often the content consumers are seeing is overwhelmingly, and unnecessarily, discouraging.

A recent article that was widely published claimed it was almost impossible to find a home for less than $750,000 in any of our capital cities. Given that the median dwelling price in Australia (according to PropTrack) is $760,000, which means half of all sales are less than that figure, it was a patently false proposition. Adelaide, Perth, Hobart and Darwin all have median prices well below $750,000 and both Brisbane and Melbourne are both around $790,000, which suggests lots of options under $750,000.

Another newspaper article recently inferred that you need to an annual income of $220,000 to afford a home in Australia. If that was accurate, a significant proportion of recent sales would not have been possible.

Media like this is all too common and it makes you wonder what motivates the people who write material that is so obviously false. Clearly the motivation is not to be helpful to consumers. Rather, media delights in startling people and truth/accuracy/balance is optional.

People trying to make sense of real estate markets across Australia are advised to tune out the white noise in real estate and access genuine research analysis.

 

More Long-term Apartment Living

The number of Australians living long-term in apartments is on the rise as the gap between house and unit prices widens and buyers chase affordability.

Domain Chief of Research and Economics Dr Nicola Powell says there has always been a gap in price between the two different types of product but never to the extent it is now.

“When you look at the price gaps now, what that suggests is two things: one, that houses are overvalued, or two, that units are undervalued. I think when you look at those price gaps, it really showcases the distortion in the sub-markets of the housing market that we’ve seen since the pandemic,” she says.

She says with houses becoming more unaffordable it was changing what some people regard as the ideal long-term home.

“As Australians, we need to talk about our first homes in a different light. We need to re-evaluate how our first home looks. That dream picture of a detached house on a block of land has changed over time as our population has swollen and our cities have grown,” she says.

University of New South Wales research associate Dr Sophie-May Kerr, says more people are choosing apartment living over houses.

And it is not just the costs that are pushing more into the apartment market according to Kerr.

She says for some buyers apartments offer the opportunity to live closer to work or transport and city-based amenities.

“With the increase of issues that we are seeing with housing affordability and the shift towards higher density housing in our cities – we see that trend increasing and more likely to continue,” she says.

 

Luxury Property Boom

Rising property prices have not been enough to deter those looking to secure something at the high end of the market with new analysis showing luxury property prices have almost doubled in the past ten years.

According to PropTrack dwelling prices across the board rose by 72.5% between 2013 to 2023, while the luxury end of the market increased by 89.5% during the same period.

Luxury house prices rose by 99% over the past ten years, while units were up by 61%.

PropTrack senior economist Paul Ryan says demand during the pandemic drove up luxury property prices, particularly in waterfront locations such as the Sunshine Coast and on the Mornington Peninsula.

“Throughout the pandemic, people had money in their pockets and couldn’t travel, which was pushing people toward this form of luxury,” he says.

“Strong economic performance has benefited high-income earners and that has, in turn, benefited luxury property.”

He predicts after such a strong period of price growth the pace of growth may slow down in 2024 to around 1% to 4%.

“We’re not expecting the outperformance of the luxury market that we have seen over the past 10 years,” he says.

According to CoreLogic figures housing values posed a broad-based rise in February, up by 0.6%, the strongest monthly gain since October 2023.

 

Construction Costs Back To Normal

After three solid years of price rises residential construction costs are returning to more normalised levels of growth.

The Cordell Construction Cost Index (CCCI), which tracks the cost to build a typical new dwelling, shows a national growth rate of just 0.8% over the final three months of 2023.

CoreLogic Economist Kaytlin Ezzy says the annual growth rate for 2023 was 2.9%. This was the smallest 12-month annual increase since 2007.

“This suggests that growth in construction costs have normalised after recording a recent peak of 11.9% over the 12 months to December 2022,” Ezzy says.

CoreLogic Construction Cost Estimation Manager John Bennett says there have been increases in the price of hardware and chemical items.

Price rises varied across the states, with an increased growth rate seen in New South Wales, Victoria and Western Australia and a drop in the rate of growth in South Australia and Queensland.

Ezzy says the market is unlikely to experience a drop in construction costs, but she predicts a recent lull in approvals could result in a shortfall in new projects, which would help keep growth in building costs low, due to greater capacity in the construction sector.

She says the normalisation in construction price growth will help provide some certainty for builders, insurance companies and homeowners alike.

 

Biggest Foreign Investors

Offshore buyers purchased $1.5 billion worth of Australian properties in the third quarter of 2023, according to newly released figures.

There were 1374 international purchases during the three months with Chinese-based buyers still the largest investors in Australia’s real estate, according to Federal Treasury figures.

It says more than 53% of the money spent on property during the quarter came from mainland China and Hong Kong combined.

Buyers from Hong Kong spent  $100 million on real estate. Juwai Founder and Managing Director Daniel Ho predicts buying from China will pick up pace again soon.

He says the Chinese buyers were more focused on Victora and New South Wales.

“Victoria also attracts high-end buyers who like the premium single-family home suburbs like Toorak and the new penthouses that sell for tens of millions of dollars in buildings like Melbourne Square on Kavanagh Street in Southbank,” he says.

According to Ray White chief economist Nerida Conisbee, the number of buyers from India is also on the increase and is on track to be at record levels this financial year.

She says in one quarter approvals were already halfway to halfway to what was recorded in all of 2022.

 

 

 

Australian Property Update – March 2024

Tax Cuts Encourage Investment

Stage 3 tax cuts coupled with a drop in interest rates could be enough to entice investors back to the property market. Industry experts said the two financial measures combined would lead to better borrowing capacity.
Rate City analysis says borrowing capacity might improve by between 4% and 5% as a result of the Stage 3 tax cuts. LJ Hooker’s head of research Mathew Tiller, says there has already seen an increase in investor activity over the last six or so months with much lower vacancies and higher yields.

“With more money tipped into everyone’s pockets, that could increase buyer demand from both investors and owner-occupiers. It would also help borrowing capacity for investors and the serviceability of their mortgages,” he says.
Under the Stage 3 tax cuts, people on $100,000 a year receive a tax cut of $2179 a year, those on $190,000 and above will receive a cut of $4529, and those on $70,000 will receive a tax cut of $1429.

Cheaper to Buy Than Rent

Rents have risen so substantially in some locations that it is cheaper to make weekly mortgage repayments than rent. Analysis by PropTrack found 340 house markets and 261 unit markets which offer cheaper weekly mortgage repayments than typical rents.
Australia’s median rent is $550 over the past year according to PropTrack senior economist, Paul Ryan. Assuming a 20% deposit and a 6.24% interest rate, a property would need to be priced at less than $447,000 for repayments to be less than $550 per week.

In Sydney unit markets in Lakemba, Wiley Park and Punchbowl met the criteria, while in Melbourne unit markets including Carlton, Flemington, and West Footscray were suitable.

In Brisbane house markets in North Booval and East Ipswich were cheaper to buy than rent.

In Adelaide house markets in, Davoren Park and Smithfield Plains were cheaper to buy then and in Perth, it was Camillo and Armadale.

Tasmania’s Bridgewater and Risdon Vale house market were cheaper to buy than rent and in Darwin there were plenty of options including Darwin City and Nightcliff.

 

Prices Tipped to Keep Rising

Australian property prices are tipped to rise by 5% a year for the next two years according to a survey of property analysts.

The poll by Reuters, conducted in February, of 14 property analysts, shows the majority think price increases will continue to rise despite substantial increases in the past three years.

ANZ senior economist Adelaide Timbrell says housing prices will still grow because people will have more borrowing capacity through the year due to tax cuts and rate cuts.

“And there’s still strong population growth and a backlog of building homes that needs to be filled.” According to CoreLogic Australian Housing values nationwide increased by 0.6% in February, with Western Australia, Queensland and South Australia the most solid performers. Almost every capital city (Hobart was the exception) recorded a lift in values over the month according to CoreLogic Research director Tim Lawless.
“Housing values have been more than resilient in the face of high-interest rates and cost of living pressures,” he says.

 

QUOTE OF THE WEEK

CoreLogic Research director Tim Lawless
“Housing values have been more than resilient in the face of high interest rates and cost of living pressures.”

This Week in Real Estate -29 February 2024

Where Gold Coast Values Doubled

House prices in Surfers Paradise have doubled in just five years. Domain data shows that since 2018, Surfers Paradise achieved the biggest increase in median house price in Australia with its median up by 107.9% to reach $2.65 million.

The continuing high demand for Gold Coast properties is evidenced by strong auction results. Last week Surfers Paradise had the Gold Coast’s hottest auction market with 11 properties selling for a total of $17.7 million under the hammer.

Just a few weeks ago the strong demand for Gold Coast property was on display at the annual Ray White auction event which achieved a clearance rate of around 80% compared to 60% for the same event the previous year.

Ray White Surfers Paradise chief executive, Andrew Bell, says there is strong demand across all price brackets on the Gold Coast. However, three-quarters of the homes they sold at The Event were for more than $1 million.

According to the latest Herron Todd White Month-in-Review prices on the Gold Coast are still at the start of the recovery.

 

New Gold Coast Development 

Development sales remain strong on the Gold Coast with Bastion Property Group securing yet another site for a new residential project.

The group, which launched Nera on Chevron Island,  a few weeks ago has bought two sites at Vista Street and Surfers Paradise Boulevard which it will amalgamate for a new project.

It intends to have ten projects in the market within the next ten years. The new site is near the Gold Coast Light Rail station. Bastion’s $140 million Nera project has already chalked up $18 million in sales, primarily to Gold Coast residents.

It is approved but the developer is awaiting the response to some minor revisions before it starts construction. It hopes to start work in mid-2024 with completion in 2026. It has not revealed plans yet for what it will build on the new site.

 

House and Unit Gap Widens

The price gap between houses and units has widened even further with analysis by CoreLogic showing the difference is 45% higher than it was at the start of the pandemic.

Research director Tim Lawless says rising land values and a scarcity of houses listed for sale, means prices are being driven up by demand in the house market.

As a result, he predicts demand for units will continue to rise in the coming years.

“The house premium rose sharply through the pandemic upswing as more people sought out space and were more willing and able to live further afield in our cities,” he says.

“While we saw the premium contract through the early part of the rate hiking cycle as house values fell more than unit values, across the combined capitals the gap between house and unit values has since rebounded to a new record high as house values once again rise at a faster pace than units.”

The biggest gap was in Sydney (68.4%), Canberra (65%), Adelaide (58.1%), Brisbane (56.3%), Darwin (55.4%), Melbourne (55%), Perth, (49.1%) and Hobart (29.3%).

 

Building Incentives Needed

The Property Council of Australia (PCA) is calling for the Federal government to double the $3.5 billion incentives it has already offered for states and territories to exceed their housing targets.

In its budget submission, PCA says the extent of the housing crisis requires scaled-up incentives and it wants a doubling of the performance-based New Home Bonus and the $500 million Housing Support Program.

Property Council of Australia Chief Executive, Mike Zorbas, Australia can’t afford for any of the states to miss the housing targets.

“We need to supply more quality homes around job, educational and social opportunities and as close to public transport as we can get,” he says.

“With younger people utilising bespoke student housing to meet their unique needs, and older Australians moving into communities that are proven to keep them healthier and happier for longer and save taxpayers $1 billion a year by delaying their entry into aged care, then we open up the middle market for more Australian families,” he says.

 

Price Growth Stars

Forget what you’ve heard about price growth softening, new analysis by PropTrack shows many locations are still recording high levels of price increases.

It has found 87 suburbs throughout Australia where price growth outperformed neighbouring suburbs in the past 12 months.

In most cities, there were locations where prices increased by more than 20% with the largest increases in Perth, Adelaide and southeast Queensland.

PropTrack senior economist Eleanor Creagh says the majority of suburbs with the most significant growth were relatively affordable suburbs, which showed how much demand had increased for affordable properties.

In Greater Brisbane, Woodridge (up 24.5%), Runcorn (up 23.4%) and Caboolture South (22.3%) were the best performers.

In Perth, Greenfields (29.5%), Kelmscott (28.6%) and Warnbro (27.7%) were top performers while in Adelaide, Elizabeth North (26.7%), Hackham West (21.8%) and Lobethal (19.6%) came out on top.

Greater Melbourne’s growth was among the lowest but is best performers were Notting Hills (8.5%), Waterways (7.9%) Doncaster East (6.9%).

 

QUOTE OF THE WEEK

 

Property Council of Australia Chief Executive, Mike Zorbas

“We need to supply more quality homes around job, educational and social opportunities and as close to public transport as we can get.”

 

 

 

This Week in Real Estate -22 February 2024

 

Gold Coast Apartments Sales Surge

The Gold Coast apartment market continues to boom with CoreLogic figures showing median unit prices rose 10.8% in the past year.

That increase brings the median price to $727,000.

Driving the price increases is an increase in off-the-plan sales, with an Urbis report showing 470 apartments sold in the final quarter of 2023.

Urbis Director, Paul Riga, says the areas of Surfers Paradise, Broadbeach and Main Beach were the most popular with buyers, particularly as a number of projects are underway there.

A little further north a new project has been announced for Robina, an eight-storey mixed-use project, Ombré.

Immerse Projects will deliver 95, one-, two- and three-bedroom apartments as well as integrated retail and commercial spaces.

Immerse Projects Managing Director, John Kearney, says it will have skyline and hinterland views. The building was designed by BDA Architecture.

Amenities will include a residents’ lounge, function room, games room, pool and landscaped outdoor spaces. Construction is expected to begin in May.

 

Land Prices Rising

The national median price of a residential block of land in Australia reached a record high in the September quarter of 2023 according to the Housing Industry Association.

The HIA-CoreLogic Residential Land Report analysed sales activity in 51 housing markets across Australia and found the median price had hit $340,000.

HIA Senior Economist, Tom Devitt, says a shortage of lots resulted in prices surging during the pandemic.

Devitt says delivering the infrastructure needed to get more residential land remains a “chokepoint” as developer contribution charges were another issue constraining home building.

“More taxes on supplying new homes means there will be less of it, which is not consistent with the Australian Government’s stated objectives,” he says.

As a result of shortages the volume of lots being sold has dropped to a 20-year low.

“Alleviating the housing shortages in Australia will require a supply-driven approach, and National Cabinet’s ambition to build 1.2 million well-located homes in five years is a step in the right direction,” he says.

 

Best Picks For FHBs

There are still plenty of locations where first-home buyers can afford to buy under the Federal Government’s Home Guarantee Scheme.

PropTrack economist Anne Flaherty says maybe they can’t afford to buy in their ideal suburb, or as many bedrooms as they initially wanted but in some locations a mortgage is cheaper than renting.

Under the Home Guarantee Scheme, first-home buyers can buy with a deposit as low as 5%. Property prices in the scheme are capped between $600,000 and $900,000 in capital cities and some regional centres. Otherwise, other others are capped between $400,000 and $750,000.

In Victoria, buyers can use the scheme for properties within Thomastown and Mickleham as well as Altona.

In Queensland, the top picks are Morayfield, Darra, Springfield Lakes and Beaudesert. In New South Wales the best options are in Hamilton or Mayfield in Newcastle or Armidale.

Western Australia options are Mandurah, Armadale and Rockingham while in South Australia the best options are Morphett Vale, Salisbury or Parafield Gardens.

 

Grandparents Forking Out For Homes

The bank of mum and dad have long been there to lend a hand to their adult children trying to break into the housing market and now research shows a growing number of grandparents are being called upon as well.

McCrindle Research says grandparents are helping buy or allowing their grandchildren to live with them rent-free to help them save a deposit.

It says 12% of Generation Z buyers received financial support from their grandparents to buy their home while 11% live with them for free or for a reduced rent.

Principal social researcher, Mark McCrindle, says grandparents are increasingly playing a greater role in the lives of their children and grandchildren, particularly for their education and home purchasing.

Almost one in five Generation Z had received help from their grandparents to pay for their education.

“As we look to the future and an increasing amount of wealth will be transferred to younger generations, grandparents will see to continue to have a building impact on the financial climate of Australia,” McCrindle says.

 

QUOTE OF THE WEEK

SQM Research managing director, Louis Christopher

“Vacancies were already low to start with due to the ongoing rental shortage, so this renewed increase in demand can only push rents higher at a rapid pace, certainly over the first half of the year.”

 

 

 

This Week in Real Estate -17 February 2024

Where Rents Will Spike

In good news for landlords but bad news for tenants, new research shows the Queensland suburbs where rents are tipped to rise in 2024.

SuburbTrends says unit rents in particular could increase by 30% or more in some suburbs by the end of the year.

It says the average rent for a unit in Brisbane will hit $729 by the end of the year up from $546 a week.

On the Gold Coast, house rents in Mermaid Beach and Broadbeach are predicted to jump by $239 or 24% to $1239 per week by December while rents for Mermaid Waters units are forecast to rise by $326 to $1066 per week.

SuburbTrends founder Kent Lardner says affordability is now driving demand in the unit rental market.

“People are being squeezed out of houses, so they’re going into units and that’s driving rents higher,” he says.

Lardner says Queensland has traditionally been an affordable place but that was no longer the case in some locations.

 

Stamp Duty Skyrockets

Stamp duty charges have skyrocketed costing property buyers up to six times more than in the eighties.

A new report by PropTrack and research institute, e61, says in some states stamp duty on a median-priced home could be as much as $45,000.

In real terms relative to income, the research says stamp duty is six times higher in the Melbourne and Hobart markets than it was in the early to mid-eighties and 5.4 times higher in Sydney.

Stamp duty is 5.5 times higher in Brisbane and 4.5 times higher in both Perth and Adelaide.

PropTrack senior economist, Angus Moore, says the figures show that reform is critically needed to allow the property market to operate more efficiently.

“Stamp duty is a large upfront cost for home buyers that has to be saved on top of a deposit,” he says.

e61 research manager Nick Garvin says policymakers must consider the indirect impact stamp duty has on other parts of the economy and people’s lives.

 

Housing Crisis Fix

Easing planning regulations will have more of an impact on improving housing supply than abolishing negative gearing, a new report reveals.

The report by Centre for Independent Studies chief economist, Peter Tulip, says it is restrictive planning rules that have added more than 40% to the cost of a house in cities such as Sydney and Melbourne.

The Housing Affordability and Supply Restriction report says property taxes only increase the cost of a house by about 4%.

“There are arguments from the tax policy perspective that negative gearing and the capital gains discount should be considered, but it’s not relevant to the question of housing affordability,” he says.

Tulip’s analysis shows if housing stock is increased by just 1% rents and prices should drop by 2.5%.

“The effect of those tax discounts on housing prices is tiny,” he says.

Tulip says zoning restrictions need to be relaxed and the states should consider overriding councils when necessary.

 

Stage 3 Impact On Market

Stage 3 tax cuts could increase a buyer’s borrowing capacity by more than $57,000.

Modelling by Rate City shows buyers will need to borrow at capacity to feel the full effect of the tax cuts.

RateCity research director Sally Tindall says their modelling shows a single person earning $100,000 could increase their borrowing capacity by $21,100 while a couple earning $100,000 and $150,000 could borrow up to $57,100 more.

 

 

 

This Week in Real Estate -10 February 2024

Interstate Buyers Flocking To Gold Coast

Interstate buyers are flocking to the Gold Coast after being priced out of beachside locations in Sydney and Melbourne.

Analysis by Ray White chief economist Nerida Conisbee shows that interstate buyers accounted for one in four Gold Coast auction sales last year.

“They’ve come from places like Sydney’s Northern Beaches. They want that beach lifestyle but can’t afford it in Sydney. On the Gold Coast, they can get something fairly decent, so there’s been more of that movement,” she says.

Conisbee has also seen a return of investors to the Gold Coast market driven by above-average yields.

She says 28% of auction sales on the Gold Coast went to investors.

Ray White Surfers Paradise principal, Andrew Bell says interstate buyers see good value on the Gold Coast and are prepared to pay more than locals.

He says the region’s economy has also improved in recent years as it was no longer just reliant on tourism, which made it a more appealing location for investment.

 

Gold Coast Market Cracks $1M

The Gold Coast property market has cracked the $1million barrier with its median house price now $1.03 million.

According to Domain the Gold Coast hit the million-dollar mark in the December quarter after experiencing growth of 4.6%. Domain chief of research and economics, Dr Nicola Powell, says price growth during the pandemic was strong on the Gold Coast and that has continued.

She says interstate and overseas buyers are driving demand. “Australians are also driven by lifestyle, and we’re willing to pay a premium for location,” she says.

Gold Coast apartments also increased substantially, up 10.2% in the past 12 months to $705,000. While it is the first time the whole of the Gold Coast LGA has had a medina in excess of $1million, some of its suburbs surpassed that level years ago. Surfers Paradise’s median house price rose by  20.5% in 2023 to reach $2.65 million.

Mermaid each has a median house price of $2.525 million, despite dropping 22% in the past 12 months.

 

 Auctions Start With A Bang

The 2024 auction selling season is now officially underway with a solid start during the first big weekend of sales.

CoreLogic reports clearance rates last week were the second-best start to a selling season since it started collecting data in 2008 with the national preliminary clearance rate from 1671 auctions hitting 74%.

CoreLogic head of research Tim Lawless says news of low inflation and the possibility of early rate cuts appears to have boosted sentiment. Adelaide continued its successful run of auctions with the highest clearance rate of 77.6% last week based on 159 auctions. Sydney was 76.3% based on 562 auctions, its best result since July 2023.

Melbourne’s clearance rate was 71.9% based on 603 auctions and Brisbane’s 68.5% based on 203 auctions. Lawless says the next few weeks will confirm whether the strong result is some “early year exuberance” or a trend that can persist.

The best sub-region performer was Sydney’s Northern Beaches with a clearance rate of 82.4%.

 

 Banks Offering Better Fixed Rates

In a sure sign that they think interest rate cuts are looming, the big banks have started to cut fixed interest rates.

Macquarie, AMP Bank, Bendigo, Adelaide Bank and the Bank of Queensland have all cut their fixed rates in the past three months, according to Mozo.

Research and compliance manager Peter Marshall says fixed rates are finally starting to become more competitive. It comes as the RBA met for the first time in 2024 and decided to keep interest rates on hold.

“Banks are starting to become more confident that the next change in the cash rate will be a cut, and probably more than one cut,” he says.

“When setting fixed rates, banks try to look ahead and implement anticipated future changes into their fixed rates. As they become more confident of cuts later this year, fixed rates will start to fall even further.”

He says the lowest variable rates are about 6% and now fixed rates are beginning to drop below that, particularly for those willing to lock in for two or three years. 

 

We’re Borrowing More

Rising property prices mean we are borrowing more than ever to finance our dreams of homeownership according to the latest ABS Figures.

Queensland’s new record home loan size is now, $572,439, South Australia, $519,478, and Western Australia, $509,275.

The amount being borrowed dropped in Victoria by almost $25,000 to $613,018 and it was slightly down in New South Wales to $785,405 (it peaked at $803,235 in January 2022).

According to the ABS, there have been 732,385 mortgages refinanced since interest rates began rising.

Australians are borrowing more to keep up with rising prices according to PropTrack senior economist Angus Moore. He says prices will continue to rise in 2024, although potentially at a slower pace than in 2023.

“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year,” Moore says.

The median value of all dwellings in capital cities in Australia is more than $800,000 while nationally the median value of homes and units is $760,000, according to PropTrack.

 

 QUOTE OF THE WEEK

PropTrack senior economist Angus Moore

“A more stable interest rate environment, coupled with ongoing population growth and a low level of new building activity, will support home price growth this year.”

 

 

Australian Property Update – February 2024

Underperformers With Potential

 

Buyers who want to get in ahead of future price growth should target “under-performing” suburbs where growth hasn’t kept pace with capital city growth according to PropTrack. PropTrack analysed key enquiries on listings which show intent to buy, including emailing an enquiry, calling the agent or downloading documents. It says the data is a leading indicator of growing demand and therefore future price growth.

According to PropTrack there are still plenty of opportunities throughout Australia to snare properties in underperforming capital city suburbs, where demand is starting to grow. Senior economist, Paul Ryan says the underachieving suburbs that are most in demand are varied, and trends differ depending on the region or the city.

Kenthurst in Sydney’s northwest tops the list of suburbs with below-average price growth. It had the highest number of key enquiries per listing in Australia, while its median house price dropped by 7.3% in the past year. At the same time, values in Greater Sydney rose by 8.3%.

Brisbane’s top underperforming suburb with high enquiries was Sheldon, with just 6% growth in the past 12 months, compared to Brisbane’s growth of 10.5%. In Adelaide, Beaumont was popular with would-be buyers with its median house price up by 8.6% compared to Adelaide’s growth of 11% in 2023.

PropTrack says Melbourne suburb Coolaroo was in demand, it had price growth of just 0.3% while during the same period, Melbourne city-wide growth was 0.75%. In Perth, Carine had median house price growth of 8.2% compared to greater Perth growth of 15.5% and in Tasmania, Richmond was in demand with its growth down 10.1% compared to Hobart which was down by 3.5% during the same period.

 

Bank Of Mum And Dad The Norm

Almost three-quarters of buyers are using the “bank of Mum and Dad” to help them buy property. Economist, Carlos Cacho, of Jarden Australia, says surveying mortgage brokers reveals about 15% of all borrowers were using some form of family assistance to buy a home, receiving on average $92,000 to help them out.

Assuming the majority of them are first-time buyers, Cacho says this implies 75% of first-home buyers are receiving some sort of assistance from family to buy.This is a significant increase on 2017 when University of Newcastle research showed about 60% of first-time borrowers had help from family and in 2010 when it was just 12%.

“The true scale of it is potentially even larger when you look at the big capital cities. It certainly feels like it’s the key driver of the housing market,” he says. Australian Housing and Urban Research Institute (AHURI) analysis shows those with family financial support are twice as likely to buy than those without.

The increase in family assistance comes as home prices rose on average by 6.4% across the capital cities in 2023 and by 3.2% across the regions.

 

Where Affordable Properties Are

There are still plenty of places where buyers can secure something where mortgage repayments won’t break the bank. CoreLogic figures show there are 524 house markets and 584 unit markets where, based on the median household income and average mortgage repayments, buyers spend less than 30% of their household income on mortgages.

There are no house markets in Sydney where repayments would be less than 30% of household earnings. But in a continuing example of the affordability of Australia’s apartment market, there are 73 Sydney unit markets that meet the criteria. Perth has 60 house suburbs, Brisbane, 38, Melbourne, 17 and Adelaide, 12. CoreLogic research director Tim Lawless says buyers need to look at the lower end of the market to secure something that will not consume more than 30% of the household budget.

This often means buying a unit instead of a house, unless you are prepared to move well outside the CBD of some capital cities. Sydney units in Wiley Park, Lakemba and Carramar are in the affordable category while in Melbourne, house markets in Melton and Melton South require less than 30% of the average income to service a mortgage. Brisbane, buyers need to look to areas such as Toogoolawah, Laidley and Riverview. Adelaide’s northern suburbs such as Elizabeth North are affordable as is Medina in Perth’s southwest.

 

Market Fully Recovered

Property prices which dropped in 2022 have fully recovered with new figures showing the national median house value has hit a record high. Domain’s latest quarterly House Price Report shows the national median house value is now $1,094,539.
It says Sydney, Brisbane, Adelaide, and Perth have achieved new house price highs, after a short downturn in Brisbane and Sydney in 2022. The report shows that median house prices rose across most capital cities in the December quarter except Canberra (down by 3.5%) and Darwin (down by 1.2%).

Domain Chief of Research and Economics Dr Nicola Powell says a continuing lack of listings is driving price growth. Powell says it has been a strong start to the recovery and while she predicts further price growth, it will vary between capital cities.
The report shows that unit values have already picked up pace and increased by 2.3% in the December quarter.

Powell predicts Sydney will hit a median house price of $1.6 million this year and that the steep gains Brisbane experienced in the past year will continue. “(In Brisbane) Units have come off a very long period of underperformance because they’ve had such a heightened level of supply,” she says.

“It’s been really the hero days for units in Brisbane over the last couple of years.”

 

QUOTE OF THE WEEK

PropTrack senior economist Angus Moore

“We’re still seeing very strong growth in places like Perth, Sydney and Melbourne. So, we’re far from out of the woods for renters.”

This Week in Real Estate -2 February 2024

Spit Master Plan

The popular fishermen’s market is to be retained at the Spit, under new plans revealed by the state government.

Gold Coast residents had been concerned that any redevelopment of the area would remove the fishermen’s market, but in unveiling its plans for the site, the State Government said the area would continue to be home to the local fishing fleet.

It has called for tenders for expressions of interest to redevelop the site at Carter’s Basin on the Gold Coast to include a new commercial marina and associated landside facilities.

It will cater to commercial fishing fleets and marine tourism operators in a mixed-use development. The local fishing fleet will gain renewed and reconfigured facilities.

The site includes 7000 sq m of leasable land and a 20,000 sqm seabed lease.

The neighbouring Peter’s Fish Market has been secured through a Deed of Development which includes plans for a new two-storey premises overlooking the Broadwater.

 

Temporary Tourist Attraction For Gold Coast

Surfers Paradise is set to gain a temporary tourist attraction on a parcel of land owned by the Sultan of Brunei.

Plans have been lodged with the Gold Coast City Council to use the land on Surfers Paradise Boulevard for an attraction called the Imaginator.

The attraction is described as having various indoor walk-through installations which provide a “multi-sensory immersive experience”.

It is expected to operate on the site for two years starting in March. The Sultan has owned the land since 1997, although nothing has been developed on it.

The plans lodged with council, show the attraction will have a moving parachute theatre in which patrons can lay on a sloping cushioned bed to watch a large projection screen.

Gold Coast mayor Tom Tate has expressed concerns over undeveloped sites on the Gold Coast being left to lay idle, sometimes for years.

The site to be used for the Imaginator has been vacant and used as a car park for decades.

Tate hopes the temporary use of the site will encourage others to consider temporary tourist offers on their under-utilised land.

 

Investor Intentions

Investors look set to become active again in 2024 according to the latest Australian Property Investor Property Sentiment Report.

It says despite high inflation and rising interest rates, property market sentiment “held its ground” over the last quarter of 2023.

The report, which surveys property investors throughout Australia, shows four out of five respondents expect price increases over the coming 12 months, with very few expecting price falls.

Investors felt that increased taxes on land, properties and landlords were a large impediment to helping alleviate Australia’s housing crisis by encouraging investment in new property stock.

“Survey respondents reflecting on the last quarter of 2023 have given every indication they are going to be very active in the property market in 2024,” the report says.

“For almost two years, the proportion of respondents intending to buy in the next 12 months has been zigzagging up and down, but the latest results reveal that this key indicator of market sentiment is now at a two-year high.”

 

Surprise Top Performer

Despite what many may think the majority of Australia’s top-performing property markets are not beachfront or inner-city suburbs but are in fact normal suburban markets.

Domain’s latest House Price Report shows Churchlands in Perth outperformed every other location in 2023 with its median house price rising by almost 50% to $1.535 million.

In New South Wales the best performer was about 500km from Sydney. West Wyalong recorded the strongest growth of 39% to a still very affordable $400,000.

In Queensland, it was Parkhurst in Rockhampton with growth of 38% to $622,500.

PropTrack which uses a different methodology agrees Western Australia had the top performer but says it was Armadale and Brookdale with their medians up 34% to $404,000 and $441,000 respectively.

It says Riverview at Ipswich in Queensland was the top performer with growth of 24% to $464,000 while Sydney’s best performer was Denistone East (up 17% to $2,332,000).

Rosedale in Latrobe in Victoria was up 11% to $493,000 while Elizabeth North in Adelaide was up 30% to $366,000.

 

Coastal Properties Hold Values

More than a third of Australia’s regional coastal markets have property prices at record highs.

Analysis of 368 coastal markets, at least 50km from the nearest capital city, shows the top performers in 2023  were: Bouvard (WA), Mulambin in Central Queensland and Port Vincent (SA).

CoreLogic research director Tim Lawless says the markets which recorded significant value growth tended to be the more affordable ones, with all top 20 suburbs having median values well below $1million.

“The past 12 months have seen markets that offer a combination of value and lifestyle attributes, such as commuting distance to a major city, great beaches, and quality housing at a more affordable price point, outperform more well-known areas,” Lawless says.

“Suburbs in areas such as Western Australia and more northern regions of Queensland where it’s still possible to make a sea change for less than $1 million were the strongest performers last year. Although home values in these regions are mostly at record highs, they remain relatively affordable for sea changers selling out of more expensive metro markets.”

 

QUOTE OF THE WEEK

Regional Australia Institute CEO Liz Ritchie

“The surge in people, combined with strong regional job growth and the role regional Australia will play in the nation’s transition to net zero, are putting pressure on regional housing like never seen before.”

 

 

 

This Week in Real Estate – 26 January 2024

The Week In Real Estate

Gold Coast Records Break

New property price records were set in 11 Gold Coast property markets in the past year.

The biggest sale of the year was the $24.8 million sale of a home known as Alston at Southport. The riverfront home beat the previous Southport record of $23.75m, which it had set when it previously sold in March 2021.

Analysis of sales data shows it wasn’t just the beachfront homes in huge demand with a house in Tallebudgera Valley, breaking the Queensland auction record when it went under the hammer for $11.2m. The previous suburb record was $5.9m.

In Mermaid Waters a home, known as the White House, beat the suburb record by more than $2million when it sold for $7.3m in November. And a home within the Elysee complex at Coolangatta changed hands for $4.035m, well above the previous record of $2.85m.

Gold Coast agent Andrew Bell predicts the Gold Coast will continue to be a standout market in 2024. He says demand remains strong driven by high levels of immigration.

 

Beach Buyers Out in Force

Buyers are snapping up off-the-plan apartments on the Gold Coast beachfront.

Apartments in Burly Residences, which was launched in September, have sold for a total of $140 million.

Already 38 of its 101 apartments have been sold in the David Devine project which is being built on a 2024sq m site with 40 metres of beach frontage at North Burleigh.

Also achieving strong off-the-plan sales is the tower, Escape at Broadbeach which is being developed by Luxcon Group. Work is expected to start in January on the  $250 million tower which will have 31 full-floor residences and two double-level penthouses.

Nine apartments have sold for a total of about $75 million. The strong sales demand resulted in the release of stage two earlier than originally anticipated with further apartments to be released once construction starts.

The 35-level building which will be constructed on Garfield Tce, has 15m of beach frontage and resident facilities including a beachfront pool, surfboard storage, oceanfront business centre and fitness centre.

  

Unit Rents Surpass Houses

The pace of growth of unit rents is starting to surpass that of houses in many capital cities.

The latest Domain Rent Report shows the combined capital cities median unit and house rent prices both came in at $600 a week, up 20%  for units and 9.1% for houses in the past 12 months.

There were five cities that had annual rent increases which were higher for units than houses.

Sydney with a median asking unit rent of $680 per week is up 17.2%  while its median house rent rose 12.3% to $730 per week.

Melbourne’s unit rents rose 15.6% to $520 a week, while house rents rose 14.6% to $650.

Brisbane unit rents rose 16.7% to $560 per week and house rents rose 9.1% to $600

Adelaide unit rents rose by 12.5% to $450 per week and houses rose 12% to $560.

Perth unit rents rose by 18.2% to $520 per week and houses rose 17% to $620

Domain chief of research and economics, Dr Nicola Powell, says while the unit market was affordable during the pandemic as people left cities behind that had completely changed in the past year.

 

First Homebuyers Are Back

Rising rents and tight vacancy rates have resulted in an increase in First Homebuyers, according to Australian Bureau of Statistics figures.

Its latest lending figures show that the number of first-time homebuyers taking out loans increased by 20.3%  in the year to November 2023.

ABS head of finance statistics, Mish Tan, says first homebuyer loan commits rose 3.5% during the month of November.

The amount they borrowed to get into the market also rose by 26% in the past 12 months to an average mortgage of $505,000.

It was the more affordable states, that recorded the largest number of first homebuyer commitments, with Queensland leading the pack in November (10.9% increase in the month), followed by Western Australia (4.7%) and South Australia (3.5%).

The ACT did record a 14.2% increase in first homebuyer loans in November 2023, although the ABS says those figures need to take into account that the market is smaller and more volatile than other States or Territories.

 

Where It’s Hard To Buy

While there are shortages of listings in many parts of Australia, there are suburbs where no matter where it is in the property cycle it can be hard to buy because owners just won’t leave.

According to CoreLogic figures in Sydney,  Bonnyrigg Heights is the most tightly held suburb with homeowners keeping their properties for a median of 20.2 years before selling.

Longueville owners stayed put for a median of 17.7 years before selling and in Cabarita in Sydney, they held on for 17.3 years.

In Melbourne, homeowners in Vermont South, in the eastern suburbs, had the longest median hold time of 20.6 years, followed by Caulfield, 20.5 years and Keilor Downs, 19.6 years.

Brisbane homeowners on average were selling their homes after 8.7 years but owners in areas within the western suburbs often kept their properties for twice as long. Middle Park owners stayed put for a median of 19 years while close by in Mount Ommaney it was 18.9 years.

 

QUOTE OF THE WEEK

PropTrack Senior Economist, Eleanor Creagh

“Conditions in the rental market are unlikely to deteriorate at the same pace as they did in 2022 and 2023, meaning rental prices could stabilise and increase at a slower rate than the past year.”

 

This Week in Real Estate – 20 January 2024

Luxury Gold Coast Sales Soar

The Gold Coast luxury property market is continuing to chalk up big sales.

The 25-storey development, MIRA, which is being built on a site at Garfield Tce, Surfers Paradise, by Frank Developments, is achieving an average sale price of $8.25 million.

There are 12 apartments in the project, which are described as vertical beach houses. Four apartments remain for sale priced from $8.5 million.

Other developments are also securing big sales, including the $1.5 billion Jewel project also in Surfers Paradise, where 80% of purchasers have been cash buyers.

It sold 100 apartments for a total of around $200 million the first tower in the project in the past 12 months.

DD Living’s $457 million Royale Gold Coast at Surfers Paradise and $400 million Burly Residences at North Burleigh are also selling well.

Royale is 80% sold with remaining apartments from $4.5 million.

Burly Residences has secured contracts on 25 apartments for prices ranging from $2.2 million to $6.4 million.

Investors Are Back

Investors are making a return to the property market with new figures from the Australian Bureau of Statistics showing the value of new investor loans has increased by 18% in the year to November.

The figures show in November there was a 1.9% increase in investment loans, while at the same time, the number of new owner-occupier loans grew by 1%.

ABS head of finance and statistics Dr Mish Tan says the increase in lending was driven by the three most populated states, NSW, Victoria and Queensland.

She says NSW had the biggest increase in loans to owner-occupiers and investors.

The data shows investors accounted for $9.72 billion of lending in November.

The figures also show that first home buyers loans grew by 3.5% in November and 20.% over the year, with the largest number of first home buyer loans written in Victoria (3516), followed by New South Wales (2730), Queensland (2173), Western Australia (1512), South Australia (720), ACT (317) Tasmania (152) and the Northern Territory (85).

 

Apartment Approvals Jump

In a sign the apartment market will continue to fire in 2024, the latest Australian Bureau of Statistics figures show apartment approvals are up.

The November 2023 figures, released this week, show the total number of dwellings approved rose by 1.6% to 14,529 for the month. This followed a 7.2% increase in October.

While house approvals fell by 1.7%, apartment approvals rose by 6.7%.

The increase in apartment approvals comes on the back of a 17.4% increase in October.

Master Builders Australia chief economist, Shane Garrett, says more higher density buildings will help alleviate some of the pressure in the rental market.

HIA chief economist, Tim Reardon, says the apartment approval figures are a positive sign, but more development is needed to meet demand.

During the month of November the total number of dwellings approved rose in ACT (22.5%), Northern Territory (2.6%), Western Australia (2.1%), and Victoria (1.4%).

They declined in New South Wales (-3.9%) Tasmania (-3.9%), Queensland (-1.7%), and South Australia (-0.2%).

 

Renovation Boom For 2024

Stabilising building costs mean many homeowners will renovate in 2024 according to the Housing Industry Association (HIA).

It says materials costs have not changed in the past quarter, but shipping costs have lowered, meaning overall it is not as expensive to buy materials to build or renovate.

HIA chief economist Tim Reardon says with interest rates potentially being cut this year and the economy improving he thinks there may be an increase in renovation work.

“The ongoing growth in house prices is slowing, but prices have increased dramatically in the last four years,” Reardon says.

“As a result, people will still continue renovating as the cost won’t be significant compared to the rising value of their homes.”

Reardon says with the average price of a new approved house in the September quarter, up by 11.5%, he believes people will be keener to renovate than move.

“Since the pandemic, people spend more time at home, so in the course of the decade, renovations will continue to be high,” he says.

 

QUOTE OF THE WEEK

HIA chief economist Tim Reardon:

“Since the pandemic, people spend more time at home, so in the course of the decade, renovations will continue to be high.”

 

 

Australian Property Update – January 2024

Gold Coast Market To Rise in 2024

 

Property Prices on the Gold Coast are tipped to rise by a further 4% in 2024, even though the pace of price growth will slow.

The median house value now sits at more than $1.1 million and the median unit value is more than $720,000.

Knight Frank director of residential project sales, Alison Hedger tips house price growth of 4% in 2024 and a further 6% in 2025.

She says weekly rents remain on an upward trajectory, vacancies are low, and property prices continue to surge with more people moving to the Gold Coast.

“There is a significant number of cash buyers in the market coming from interstate who are seeking to downsize and make their low maintenance, high amenity living a reality,” she says.

According to Juwai IQI managing director Daniel Ho, Asian buyers also remain very interested in the Gold Coast market.

He says Chinese buyer enquiries were up by 138% in the third quarter of 2023 compared with the same period in 2022.
 

 

Homeowners $300,000 Richer

The majority of vendors did extremely well in 2023, with new data showing residential property sellers achieved nearly $300,000 in gross profits in the September quarter.

The latest CoreLogic Pain and Gain Report shows the portion of profitable home sales increased in the September quarter, with 93.5% of all sales now achieving a higher price than the property was bought for.

This is the highest rate of “profit-making sales” since the July 2022 quarter.

The September quarter results have CoreLogic head of research Eliza Owen already predicting the December results will also be significant as home values rose by 1.4% in October and November.

Adelaide had the highest proportion of profit-making sales with 98.5% of properties achieving a higher price than owners originally paid, followed by Hobart (97.6%), ACT (97.4%) and Brisbane (97.3%).

In Melbourne, 91.3% of sales were for a profit, 91.1% in Sydney,  90% in Perth and 69.7% in Darwin.

The report shows those who sold within three years of buying were more likely to take a loss.

 

When Rates Will Drop

The Commonwealth Bank is tipping a drop in interest rates of nearly 1 percentage point by the second half of 2024.

CBA chief economist Stephen Halmarick, believes cuts will start in September 2024, dropping rates to 3.6%.

He also predicts a further 75 basis point drop in 2025 when inflation sits within the Reserve Bank of Australia’s target of 2% to 3%. This he says will bring the cash rate back to 2.85%.

“Markets have shifted to our view that the global monetary policy tightening cycle is at an end and that 2024 will see interest rate cuts from some of the major central banks, especially the US Federal Reserve and the RBA,” Halmarick says.

Halmarick says the pace of global inflation began to slow in mid-2023 and he expects that to happen even further this year.

In November 2023 the RBA’s Statement on Monetary Policy predicted that the level of inflation would fall to 4% by June 2024.

 

Rents Keep Rising

Rents are expected to keep rising in 2024, as new analysis reveals tenants are paying up to 11.5% more than they were at this time last year.

Data from PropTrack shows record low vacancy rates are continuing to drive rents up.

It says rents in the combined capital cities are up even higher, 13.2%, with tenants paying an average of $600 a week.

PropTrack senior economist Angus Moore says there are some signs rental increases are starting to slow in some areas.

 

“But we’re still seeing very strong growth in places like Perth, Sydney and Melbourne. So, we’re far from out of the woods for renters,” he says.

Median asking rents for houses were highest in Sydney at $750 per week and lowest in Melbourne and Hobart at $550 per week.

The ACT had a median asking rent of $680 per week for houses, Darwin, $660, Brisbane and Perth $620, and Adelaide was $560 per week.

“Rents have been growing very quickly, and we would expect that to continue in at least the near term,” Moore says.

 

QUOTE OF THE WEEK

PropTrack senior economist Angus Moore

“We’re still seeing very strong growth in places like Perth, Sydney and Melbourne. So, we’re far from out of the woods for renters.”

This Week in Real Estate – 22 December 2023

2023’s Top Performers

Western Australia dominated the list of the top-performing suburbs in Australia for 2023, taking out nine of the ten spots, according to data from PropTrack.

PropTrack economist Anne Flaherty says affordability was a big influence in 2023 with Armadale in Perth recording the highest median house price growth of 34% to bring its median to $404,000.

South Australia’s top performer was Elizabeth North, with growth of 30% to $366,000. It came in eighth position in the top ten.

Riverview ($464,000) in Ipswich had the strongest growth of 24% in Brisbane, while Denistone East and Clontarf shared top honours in Sydney with 17% growth to $2,332,000 and $5,523,000 respectively.

In Melbourne, Harkaway and Officer both had growth of 10% to bring their medians to $1,294,000 and $820,000 respectively.

Median house price growth was very low in Tasmania with Kingston Beach the best performer with its median up  2% to $882,000.

Berrimah in Darwin, record a 13% increase to $455,000 while in the ACT, Aranda was up 8% to $1,233,000.

 

Where Buyers Spent The Most

Buyers continued to pour big dollars into the housing market in 2023, with new figures showing which suburbs “earned” the most in the past 12 months.

In NSW the highest total value of house sales was in Mosman with 236 sold for a total of $1.461 billion while Macquarie Park led the unit market with $552 million in sales across 590 transactions.

In Victoria, Brighton had $893 million worth of house sales across 220 transactions and Inner Melbourne had 1386 unit sales worth $792 million.

Hope Island on the Gold Coast had the highest total value of house sales in Queensland with 295 changing hands for $624 million, and Brisbane City had $485 million worth of unit sales across 753 transactions.

Mount Braker in South Australia had 426 house sales worth a total of $289 million and Adelaide City had 591 unit sales worth $294 million.

In WA, Baldivis had 1154 house sales worth $609 million and Inner Perth had 606 unit sales worth a total of $284 million

Sandy Bay in Hobart had the highest value house (118 sales) and units (81) total value sales  of $178 million and $70 million respectively.

 

 

Australia’s Rank On The World Stage

Australia has come in 18th position in the world for the pace of its property price growth.

The latest Knight Frank report, which analysed the property price growth in 56 countries says Australia recorded a 4.9% increase in house prices over the year to the third quarter of 2023.

Australia was one of 35 markets that experienced annual price growth, while just 21 of the 56 countries recorded drops in values.

Knight Frank head of residential research, Michelle Ciesielski, says the upturn in the latest quarter indicates strengthening price growth in several markets, including Australia, Ireland, Sweden, the UK and the US,  despite rising interest rates.

“The resilience of house prices can be attributed to limited available stock, strong employment and robust wage growth,” she says.

Turkey has the most significant increase of 89.2% followed by Croatia (13.7%) and then Greece (11.9%).

Knight Frank’s global head of research, Liam Bailey, says the big issue for housing markets in 2024 will be low market liquidity.

“With sales volumes down by up to a quarter compared to their recent peaks- only a shift to lower interest rates will lift sales activity,” he says.

 

Builders Hard To Find

Infrastructure projects are driving up home building costs with Industry experts blaming a shortage of labour for the rising costs.

MCG Quantity Surveyors managing director, Mike Mortlock, says about a third of construction companies are reporting labour shortages.

Infrastructure spending is making the problem worse, according to the Reserve Bank of Australia which has warned government-funded road and rail projects are competing for trades and materials.

“Some (residential building) firms report the need to compete with infrastructure projects for materials and labour inputs,” it says.

“Firms have noted that demand is exceeding available capacity across the non-residential construction sector; this is keeping materials and contractor costs elevated.”

The Federal Government has $120 billion worth of infrastructure projects in the pipeline.

Infrastructure Australia warns there is a shortage of 229,000 workers looming across the infrastructure sector, which will add to ongoing cost pressures on everything from steel to quarry rocks, new homes, roads and power generation. Construction costs have risen 27% in the past two years.

 

 

This Week in Real Estate – 15 December 2023

 

Gold Coast Homes In Demand

The latest Sight Unseen report by virtual inspection platform, Little Hinges, reveals Gold Coast properties are attracting the highest number of virtual inspections by interstate buyers.

Southeast Queensland in general was very popular with the analysis showing 35% of those doing virtual inspections on the site were looking at Gold Coast properties, closely followed by the Sunshine Coast (34%) and Brisbane (28.9%).

When it comes to international buyers the Gold Coast (8.5%) was second only to the Sunshine Coast (9.2%).

Analysis by PropTrack shows properties are selling faster in the Gold Coast’s western suburbs than its beach suburbs.

PropTrack Senior Economist Paul Ryan says there is growing demand for more affordable properties in this corridor on the Gold Coast.

“In an environment where interest rates have risen extremely quickly and housing affordability is sitting at its lowest level in three decades it isn’t a surprise to see buyers getting priced out of the inner-city areas and looking further afield to those affordable suburbs,” he says.

 

New Shops For The Gold Coast

Gold Coast City Council is set to approve a new shopping centre development, although at a reduced size to what was initially proposed.

The Gilston Lifestyle Village development was originally planned to be 25,000 sqm, but has now been reduced to 2500 sqm more in keeping with the rural nature of the location.

Councillor Glenn Tozer says there is significant support in the area for a small-scale neighbourhood centre.

“Generally my experience in the community has been that probably 80% in the community have said we’d like a cafe, a corner store and maybe some medical facilities, things like that. Which is what it has been approved for,” he says.

“In the 2003 City Plan, the neighbourhood centre was effectively designated just north of this site, which has now got a playground on it. So we’re effectively honouring almost 20 years of saying that there should be a neighbourhood centre by delivering a neighbourhood centre.”

 

Where Prices Will Rise The Most

Home prices are tipped to set new records in 2024, with the smaller capital cities of Brisbane, Perth and Adelaide expected to lead the pack.

PropTrack’s December Property Market Outlook report says nationally prices will grow between 1% and 4% over the next 12 months.

PropTrack director of economic research Cameron Kusher expects the trends that fuelled prices in 2023 will continue in 2024.

He says stock levels will remain low, buyer demand will remain high and there will be a shortage of new construction all at a time of strong population growth.

Kusher also stays the planned stage three tax cuts, due to come into effect from the middle of next year, could also leave more money in buyers’ pockets and lead to further demand.

“In Brisbane, Adelaide, and Perth, total listings were more than 30% below their November decade average,” Kusher says.

Kusher says Perth (+5% to +8%), Adelaide (+4% to +7%), and Brisbane (+3% to +6%) will be the best performers.

At the same time Sydney prices are expected to rise 2% and 5% in 2024, and Melbourne between 1% and 4%.

 

 

Where Properties Sell The Fastest

High demand means properties in some locations are selling in as little as seven days, according to a new report by Domain.

In Western Australia the fastest selling location is Leda, with an average of just eight days on market before a sale.

In New South Wales, Normanhurst and Dean Park properties sell on average within 13 days on market.

In Vitoria, Watsonia North homes sell on average within 21 days on market.

In Queensland, Brendale homes sell within 18 days on average. The suburb has a very small housing market, so properties are snapped up quickly once listed for sale.

In the ACT, homes in Fraser sell on average within 31 days while South Australia’s fastest-selling suburb is Hillier where properties change hands on average within 39 days.

Tasmania’s fastest-selling suburb is Rosney with properties changing hands on average in 22 days, while in the Northern Territory Nakara is the fastest seller with properties on market for an average of 74 days.

 

Where Rents Will Rise The Most

Perth is set to be hit with Australia’s highest rental increases in 2024, while Hobart will have the smallest, according to new analysis by Finder.

It says rents will increase by 9.5% in Perth by the end of next year.

Finder head of consumer research Graham Cooke says Hobart rents are expected to increase by only 3%.

Melbourne rents are tipped to rise by 6.8% while both Sydney and Brisbane will rise by 6.5% and Darwin by 5.5%.

The analysis says Adelaide rents will rise by 5%.

Cooke says the Finder Consumer Sentiment Tracker shows 42% of renters are already struggling to pay their rent.

“Much of the conversation around rate rises focuses on homeowners, but it’s actually renters who are proportionally feeling the impact more, as they deal with flow-on rent increases,” he says.

“Further rent increases won’t be welcome news for those struggling.”

Analysts predict rents will continue to rise despite a Federal Government announcement that it will scale back immigration to more “sustainable levels”.

 

QUOTE OF THE WEEK:

PropTrack Senior Economist, Paul Ryan

“In an environment where interest rates have risen extremely quickly, and housing affordability is sitting at its lowest level in three decades it isn’t a surprise to see buyers getting priced out of the inner-city areas and looking more further afield to those affordable suburbs.”

 

 

Australian Property Update – December 2023

Terry’s View: 2024 Will Defy Property Doomsayers

Just as 2023 defied the forecasts of economists and news media, delivering solid price growth in most jurisdictions, 2024 will do better that the pessimistic predictions that emerged recently.

Those who predicted significant price decline for 2023 and 2024 have something in common: they all believe the biggest factor is interest rates. In the simplistic mindset of bank economists, movements in interest rates dictate what will happen with dwelling prices.

History has shown this is false and 2023 provided further confirmation. There were multiple increases in the cash rate but prices continued to increase in most major markets, proving there were more powerful forces driving prices.

Those elements can be distilled to one word: shortage. The Australian housing market has shortages of everything that matters: we have been building too few new dwellings, there are too few homes listed for sale and there’s an undersupply of rentals. The shortage factor has been exacerbated by high population growth, turbocharged by record levels of overseas migrants.

And, as we consider prospects for 2024, there are no remedies in sight. The building industry has myriad problems and can’t produce homes fast enough. All levels of government, but state governments in particular, stymie development with restrictive taxes and red tape which slows everything down. Policy changes are invariably detrimental to investors which deters the cohort that supplies 90% of the homes people rent – and that worsens the rental shortage.

The other big factor that will impact 2024 is the steady rise in buyer activity throughout 2023. The year began with weak markets in Sydney, Melbourne and Brisbane, as well as regional NSW, Victoria and Queensland. But as the year evolved, sales activity picked up steadily until, by the September Quarter, these markets were pumping strongly.

This is the momentum that will create a strong start to 2024 in those key cities and regional areas.

 

Where Affordable Rental Markets Are

Rents may have skyrocketed throughout much of Australia but new analysis of CoreLogic data shows there are still some affordable places to rent.
Median asking rents across Australia’s combined capital cities rose 10% to $616 per week in the past 12 months, but CoreLogic says there are still some rentals for as low as $352 per week within 20km of CBDs.
CoreLogic head of research Eliza Owen says there are 29 house markets where asking rents are still below $500 per week on average and in the unit market there are six suburbs where asking rents are less than $400 per week.
“The analysis also highlights the up-and-coming areas from an investment perspective as the strength in their rental market and relative affordability can have the spillover effects of changing the demographics, which fuels gentrification and buyer demand into these areas,” Owen says.
In Melbourne Albanvale (30km from CBD), Laverton (24km) and Broadmeadows (24km) all had rents of $441 a week on average.
In Brisbane, Woodridge (25km from CBD) had the lowest median weekly rents for both houses and units at $501 and $352 a week respectively.
In Sydney, Granville and Auburn (both 22km from CBD) were $648 and $678 respectively.
In Adelaide, Salisbury and Salisbury Downs (about 20km from CBD) were the cheapest at $473 and $478 per week while in Perth, Girrawheen and Gosnells (both about 20km from the CBD) were the cheapest at $491 and $501 per week respectively.

 

Hotels Could Solve Housing Crisis

Old hotels could be converted into apartments to help ease Australia’s housing crisis, according to commercial agency JLL.
The group says one-fifth of Australia’s hotel stock is more than 20 years old, and it would be easier to convert them into residential use than converting vacant office space as some have suggested.
JLL senior analyst Kyle Wheatley says repurposing existing buildings, could help pick of the massive shortfall in the housing market.
He says hotel buildings usually already have central cores for lifts and other services and floorplans with kitchens and plumbing that lend themselves more to residential refurbishment than office buildings.
“From a very high level it would be much easier, especially for a more serviced apartment product or budget-style smaller hotel product,” he says. “It would definitely be a lot more feasible than an office building, just given the similarities in product type.”
Wheatley says hotels built before 2000 would be getting tired and need renovations anyway.
Some developers have already taken the plunge, with a with a Sydney developer converting a former hotel at Rushcutters Bay into an apartment building and the units are now being offered for sale. The Sir Stamford Circular Quay has also been earmarked for conversion, to apartments.

 

Residential Activity Picking Up

While the Spring selling market in 2022 was fairly subdued, there was a significant uptick in Spring 2023, according to the property valuation group, Herron Todd White.
In his November Month in Review, national director of residential, Ben Esau, says there has been a surge in transactions and listings, which reflected a more traditional selling season.
Esau says overall stock levels are still below long-term averages but the spring injection of new properties for sale was creating more of a balance between supply and demand.
He says cost-of-living pressures and reduced spending in November has resulted in poor consumer sentiment about the market.
The review says the prestige market is traditionally a lead indicator of what direction the rest of the market is heading in.
“Historically, when the prestige market has been shaken, slowed or has dropped, it has often been a sign of things to come for the wider market,” Esau says.
In this cycle he says even the $10 million plus markets are still experiencing strong demand.
“A potential credit crunch that could close the gate on available capital could instigate a shift in the prestige market but as of today, that doesn’t look likely,” he says.

This Week in Real Estate – 1 December 2023

Apartment Pipeline Slows

The pace of apartment construction has slowed by 8% in the past 12 months, according to a new report from JLL.

The JLL Q3 Apartment Market Overview blames continuing difficulties in sourcing staff and recent builder collapses for the lag as well as a move by builders to seek the security of working on big infrastructure projects instead.

JLL senior research director Leigh Warner says as a result things will remain tough in the rental market for some time with less stock coming to market.

“The pipeline’s been shrinking for quite some time. All we’ve seen in the last quarter is a few projects being reactivated and some recent DAs for more density,” he says.

The report says the number of apartments being marketed has dropped 30% in the past year.

Projects that are proceeding are more likely to be build-to-rent projects than build-to-sell, according to Warner with that part of the development market growing by 80% in the past 12 months.

 

House Values Hit New Peak

The November interest rate rises appear to have done little to dampen price growth, with CoreLogic figures showing home values have hit a record high.

After reaching a peak in April 2022, national home values fell by 7.5% by January 2023. But the latest data shows national home values are now up 8.1% from that trough, which means the market has recouped all the losses of the recent downturn.

CoreLogic research director, Tim Lawless, says while it is great news for those who already own property, it is not good news for those looking to buy.

“Affordability pressures are becoming more pressing amid rising values, high-interest rates and worsening serviceability challenges,” he says.

The downside could also mean that as properties become more unaffordable buyer demand could wane, according to Lawless.

“Higher interest rates, higher housing prices, higher rents and high cost-of-living pressures are likely to weigh on buyer sentiment leading into 2024,” he says.

 

Buying Beats Renting in 1/3 AUS

It’s cheaper to buy than rent more than a third of homes throughout Australia according to a new report from PropTrack.

It found 36% of homes are cheaper to buy than rent, with Queensland, Tasmania and Western Australia offering the highest proportion of homes that cost less to buy.

In Western Australia more than three-quarters of homes were cheaper to buy than rent.

The ratios were even higher in unit markets with 55% of unit markets cheaper to buy than rent.

PropTrack economist Paul Ryan says even though home prices have increased substantially since the start of the pandemic, rents have also skyrocketed.

“This shows that there are still opportunities for buyers across the housing market,” he says.

“A record pace of rent growth, with advertised rents up 14.6 per cent over the past year, has offset higher buying costs in many regions.”

Ryan says buying conditions remain strongest in Queensland, South Australia and Western Australia which is likely to result in price increases in those areas.

 

 

QUOTE OF THE WEEK:

ANZ senior economist Adelaide Timbrell

“Such conditions help to explain why homeownership has fallen more substantially across lower-income households over time and may result in weaker first home buyer activity going forward.”

 

This Week in Real Estate – 17th November 2023

Gold Coast Population To Surge

The Gold Coast’s northern suburbs are tipped to surge in the next twenty years with predictions the region’s population could rise by up to 75%.

Social researcher Mark McCrindle says the Gold Coast will become home to more than 1 million people by 2046 on the back of surging domestic and international migration and the vast bulk of those people will live in the northern suburbs.

“The total Gold Coast population is just approaching 650,000 and if we forecast forward to 2046, a decade and a bit past the Olympics of 2032, we are looking at the Gold Coast having a population of 1 million people,” he says.

“But what’s most remarkable is the growth of the northern part of the Gold Coast which has a current population of just under 300,000 but in 2046, it will have a population of 500,000 in its own right.”

The region includes the three ABS statistical areas of Ormeau/Oxenford, Gold Coast North, and Southport.

 

Buyers Swarm To The Gold Coast

New apartment sales more than doubled on the Gold Coast, in the September quarter.

Research from Urbis shows there were 470 unit sales in the quarter, a 135% increase on the June quarter.

The biggest selling project was Lagoon at Main Beach, which recorded 124 sales across its two towers.

Cienna, at Varsity Lakes had 85 sales and 26 Vista at Surfers Paradise had 80 sales.

The report says there are nearly 1800 apartments available for sale on the Gold Coast, the majority of which are in Surfers Paradise, Main Beach and Broadbeach.

Urbis director Paul Riga says the demand for apartments remains strong.

“This is great for the property market, underpins property prices, but creates further problems with supply – meaning if new projects don’t get underway, the supply will continue to diminish.”

He says some developers have decided to convert their projects from build to rent to build to sell projects to take advantage of current demand.

 

Rate Rise Won’t Dent Prices

The November interest rate rise increase is unlikely to dampen the pace of property price growth, according to industry analysts.

PEXA chief economist Julie Toth says prices may drop temporarily but they will also rebound just as quickly.

“We may see a welcome pause in price increases, but I doubt we’ll see another fall. On the flip side, we’ll probably see a burst of activity in refinancing,” Toth says.

CoreLogic research director, Tim Lawless, thinks price drops are unlikely, although he says confidence may take a slight hit.

“While the decision could prompt an increase in listings of owners forced to sell and weaker demand from would-be buyers now able to borrow less than they could before, the rise was not enough to trigger price falls,” he says.

“The still-burgeoning undersupply should keep a floor under housing to some extent. At least for the medium term this probably means more that price growth will continue to slow but remain positive rather than move into negative territory.”

 

Vacancy Rates Tumble Again

The national vacancy rate continues to tumble, hitting a record low for the second consecutive month.

It fell to 0.8% in October according to Domain’s latest Vacancy Rate report. The report says between 40,000 to 70,000 rentals are needed to achieve a balanced vacancy rate of between 2% and 3%.

Domain chief of research and economics, Dr Nicola Powell, says dwindling rental stock has visibly suffered because of a lack of investor activity, ongoing development undersupply and higher construction costs.

Powell says vacancy rates were low in capital cities and regional centres. Adelaide and Pert have the lowest vacancy rate of just 0.3%, while Canberra’s is the highest at just 1.6%.

“(In Perth and Adelaide) Rental supply is at an all-time low, emphasising the need for a significant boost in supply to see a change in these tight conditions.” Powell says.

She says investors need to be encouraged into the market to ease the shortage of rental properties.

 

Clearance Rates Drop

The national auction clearance rate dropped last week, hitting its second-lowest level since Easter.

CoreLogic figures show only 63.8% of homes sold under the hammer.

For much of the year, the clearance rate has sat above 70%.

Some of the drop can be explained by a reduction in properties being offered for auction in Melbourne, which is Australia’s biggest auction market, as a result of the Melbourne Cup festivities and public holiday.

There were 2,023 homes taken to auction across the combined capital cities last week, down from 3,381 the previous week which was the busiest auction week in more than 18 months.

CoreLogic predicts the number of properties being offered for auction this week will increase by almost 40% with about 2690 homes set to go under the hammer, making it the second busiest auction week of the year.

There are 1,218 homes scheduled for auction in Melbourne, up 160.3% on last week’s very low 468 properties.

 

QUOTE OF THE WEEK

Domain chief of research and economics, Dr Nicola Powell

“Rental supply is at an all-time low, emphasising the need for a significant boost in supply to see a change in these tight conditions.”

 

 

 

 

 

 

This Week in Real Estate – 10th November 2023

Gold Coast Most Liveable

The Gold Coast has made it onto the list of Queensland’s Top Five most liveable local government areas. The Glitter Strip came in second only to Noosa in the analysis by Place Score.

The most liveable local government areas were identified as inner-city, high-amenity, mixed-density environments with established landscapes.

Place Score chief executive Kylie Legge says the results show how important well-planned development is.

Legge says mixed-density inner-city environments with established landscapes are considered the most liveable.

“New suburbs can’t compete with more than 100 years’ worth of investment and amenities in the older suburbs,” she says.

The analysis elicits responses from more than 50,000 residents throughout Australia to rank their living situation via 50 different attributes.

The most highly regarded attributes were elements of the natural environment, public open space, neighbour amenities and local businesses that provide for daily needs.

Scores reduced most significantly across capital cities and improved in regional centres, however, 82% of respondents are generally satisfied with where they live.

 

Unit Rents To Soar

Apartment rents are tipped to soar in Australia, with new analysis showing the five Australian markets poised for huge increases.

CBRE’s Apartment Rent and Vacancy Outlook, suggests the most significant rental growth, will be in Sydney’s Eastern Suburbs, Parramatta, Melbourne North, Perth City and virtually all precincts in Brisbane.

It says median rents for two-bedroom apartments in these precincts will surge by $120 per week between 2023 and 2028.

“At the start of 2013 just four precincts in Australia had an average rent of over $600 per week for two-bedroom apartments, being the Sydney and Perth CBDs, Sydney’s Eastern Suburbs and Sydney’s Lower North Shore,” CBRE’s Pacific Head of Research Sameer Chopra says.

“By June this had grown to 20 precincts and by 2028 we expect 38 precincts – or over 70% of Australia’s two-bedroom apartments – to have a rent exceeding $600 per week.”

The report says 75,000 new apartments are needed each year to keep up with population growth.

 

Building Approvals Down

The number of new house approvals is at its lowest level in a decade according to Australian Bureau of Statistics figures.

HIA Senior Economist, Tom Devitt, says the number of new houses approved in September fell by 4% per cent.

“Building approvals continue to be weighed down by the fastest increase in interest rates in a generation,” he says.

He believes further declines are to be expected as the full impact of another rate rise is felt by households.

“This slowdown in the volume of approvals will make it increasingly difficult to reach the Australian government’s target of building 1.2 million new homes in five years,” he says.

Master Builders Australia says a blowout in construction delays means the time it takes to build a new home is now nearly 12 months.

Chief executive, Denita Wawn, says the state with the most significant delays is Western Australia, where it takes on average 16.5 months to build.

 

Housing Crisis Yet To Peak

Australia’s housing crisis is nowhere near its peak, according to RMIT which predicts it will continue well into 2025.

Senior lecturer in the School of Property, Construction and Project Management, Dr Peng Yew Wong, says the lack of supply will not be resolved in the short term which means the housing crisis will continue to affect all Australians.

Wong says the market is doing something it has not done since the 2008 Global Financial Crisis, and that is prices will continue to grow, despite high costs of living and high mortgage repayments.

With predictions Australian house prices will hit a new record high in the final quarter of 2023, it will become more expensive for home buyers.

“This will present a difficult conundrum for homebuyers, and especially prospective first homebuyers,” he says.

Wong predicts Australia will be short 106,300 new homes over the next five years and as a result, house prices will continue to go from strength to strength.

 

Quote Of The Week:

HIA Senior Economist, Tom Devitt

“Building approvals continue to be weighed down by the fastest increase in interest rates in a generation.”

 

 

 

 

 

 

 

 

 

Gold Coast Bulletin Article

We were recently featured in the ‘Gold Coast Bulletin’ – thanks for shining a spotlight on this important project that will benefit the Gold Coast community immensely.
Click here  to read the full article

Australian Property Update – November 2023

SEQ Values On The Rise

SEQ Values On The Rise

Queensland now has 185 suburbs with a median house price above $1million after 95%of suburbs recorded growth in the past three months. The PropTrack Home Price Index says nine new suburbs entered the $1 million club, all within the southeast. PropTrack economist Eleanor Creagh says many of the top-performing markets were in more affordable suburbs and regions.

“Generally speaking, we would expect to see price growth continue, especially in Brisbane and southeast Queensland,” she says.
“Brisbane and the Gold Coast have already reclaimed any losses incurred in 2022 and continue to record growth every month to hit new peaks,” she says.
The report says on the Gold Coast, unit values are on the rise with the top four suburbs for growth, Southport, Molendinar, Ashmore and Parkwood.
House values in Jacobs Well, Palm Beach, Coolangatta and Currumbin Waters also rose by between 4.98% and 5.99%.
On the Sunshine Coast, the top performers were Yaroomba and Caloundra for houses, and Sippy Downs for units.

 

Infrastructure Boom Drives Prices

The national pipeline of infrastructure work has grown by $15 billion in the past 12months, according to the Federal Government’s Infrastructure Market Capacity report. Buyers’ agent, Miriam Sandkuhler of Property Mavens says property investors should factor in big infrastructure projects, as they generally drive property prices. Victoria is spending $85 billion on infrastructure over the next four years and Sandkuhler predicts Melbourne Metro Tunnell will have the biggest effect on prices, particularly around new stations such as Arden. New South Wales is spending $110 billion with a new rail line from the Western Sydney Airport into the Sydney to have a big impact. “The rail link to Badgerys Creek will be a boon for some suburbs along the new rail line running south from St Marys to Luddenham,”she says. South Australia is spending $19 billion including additions to the Women’s and Children’s Hospital. Sandkuhler says suburbs next to it, such as Sturtand Bellevue Heights, will feel the benefits of price growth. Queensland is spending$38 billion, including the Cross River Rail. “It should prove a boon for prices in suburbs currently underserviced by public transport. These include Woolloongabba and Dutton Park in Brisbane’s inner south and around Herston north of the river,”Sandkuhler says. Western Australia’s spend is $34 billion with Metronet, delivering new rail lines and stations. “The new lines of particular note to investors are the Morley to Ellenbrook line and the Thornlie to Cockburn link,” Sandkuhler says.

 

Construction Contracts Change

The success of the Federal Government’s $10-billion housing fund depends on also developing sustainable and resilient infrastructure to support population growth. Engineering firm, CJC Management, managing director, Colin Calder, says while infrastructure spending has increased, at the same time Australia’s population has soared by more than 500,000people. He says it is the only way that communities can not only exist but thrive and that to support the additional housing, further money needs to be committed to utilities, telecommunications, digital infrastructure, port developments, and social infrastructure. Calder predicts changes ahead in way that the engineering and construction industry work on big projects and says they are moving away from fixed-price contracts to more flexible agreements that focus on cost and time assessments. Many Australian construction companies collapsed during Covid when the costs of materials so are dand workers were hard to find, but they were locked into fixed-price contracts which had not predicted the massive increases .Calder says a KPMG report shows it was a worldwide issue with only half of projects completed on time. “It’s vital for the entire industry to look beyond traditional construction. The inclusion of digital innovation, environmental sustainability, and workforce diversity is essential for the journey ahead.”

 

Units Money Can’t Buy

The number of renters in high-rise apartments has been increasing for the past decade with more than 10% of the population now in units. Macquarie analysts says the high-rise apartment pipeline in key inner-city growth areas is not keeping up with demand, with about 30,000 expected to be under construction across Sydney, Melbourne and Brisbane in 2024.While new projects are now underway, the bad news for buyers is many of them won’t be for sale. Macquarie says a number of major property developers are expanding into the Build to Rent sector, where the properties are built specifically to be long-term rentals. According to the Knight Frank Breaking the Shackles – the rise of BTR report, there are about 8350dedicated BTR apartments under construction nationally as of September 2023. Forecasts predict about 55,000 BTR units will be delivered by 2030. Macquarie says while returns to developers on this type of product are usually lower, the rentals provide an attractive long-term income stream. Mirvac has made huge inroads into the BTR area with projects finished in Sydney and Melbourne and others underway in Melbourne and Brisbane. It has revealed it wants to deliver more than 5000 by2030.

This Week in Real Estate – 3rd November 2023

 GC Spit Masterplan Released

A masterplan has been released to help “unlock the full potential” of the Top of the Spit at Main Beach on the Gold Coast. The Gold Coast Waterways Authority has undertaken stakeholder engagement for thepast six months to help create a vision for the area.

It has now crafted a detailed precinct plan which it says will sit alongside the State Government’s Spit Master Plan which was released in 2019. It aims to maximise the public benefit in the areas of Marine Stadium, Doug Jennings Park, Moondarewa Spit and the Gold Coast Seaway Promenade.

The guiding principles of the master plan are that it provides “beautiful and relaxed spaces for visitors” as well as focus on sustainability.

“The precinct plan will ensure the long-term viability of the parkland, allowing it to thrive asa dynamic hub of social interaction and recreation while acknowledging the importance of preserving the area’s natural beauty and ecological balance,” it says.

 

 Quote Of The Week

“With vacancy rates at historic lows, investors are unlikely to be struggling for a tenant – a farcry from just two years ago when many investors were offering tenants reduced rents to helpthem get through lockdown.”

RateCity research director Sally Tindall

November 04, 2034

 

Where Rentals Are In Demand

In a sign the housing crisis is nowhere near easing, new data shows the number of enquiries per online rental listing has skyrocketed in some locations.

Analysis of online rental listings by PropTrack shows in September the number of enquiries per listing was greatest inPerth (50.3), Adelaide (40) and Melbourne (31.4).

Brisbane listing received an average of 29.1 enquiries, Canberra, 9.1, regional Tasmania, 9 and regional NT, 8.9.Butsome suburbs achieved much higher than the capital city average with the top location, Bently in Perth receiving an average of 160 inquiries on rentals listed online. In Adelaide, Para Hills West was also extremely popular, attracting about136 prospective tenants for each listing.

PropTrack, Director of Economic Research, Cameron Kusher says the rental market remains extremely challenged and renters face significant competition for the limited stock available.

“While the national trend is showing strong demand and little supply, it is largely being driven by the major capital cities,” he says.

 

Affordable Homes Are Still Out There

There are still locations in every state in Australia where it is possible to buy property for less than $500,000.

Analysis by Ray White shows Broken Hill in NSW has the highest (55.5%) of properties that have sold for less than$500,000 in the past 12 months. Darwin was next with 45.6%of sales under $500,000.

Ray White Group chief economist Nerida Conisbee says, that while the number of affordable properties has been steadily reducing in the past 20 years, there are still options.

In Perth, 41.3% of all sales were under $500,000, Adelaide24.9%, Brisbane, 24.1%, and Hobart 20.1%.

The pricier capital cities still had some options with 14.7% of sales in Canberra for less than $500,000, 13.2% in Melbourne and 9.4% in Sydney. Conisbee says many of these sales were apartments.

“‍Places where we have seen extremely high levels of apartment development have the most availability of low-priced apartments,” she says. Conisbee says affordability is better in regional Australia.

 

 

 

 

 

 

 

 

This Week in Real Estate – 27th October 2023

Gold Coast Rent Rises

Some of the Gold Coast’s most affordable suburbs have been hit hardest by rent rises. PropTrack’s quarterly rent data report shows a typical weekly rent for a Gold Coast unit is now $630 – 14.5% higher than it was 12 months ago and house rents are $780 per week, which is 11.4% higher.

Renters in affordable suburbs, such as Pacific Pines are doing it even tougher with their average rents up by 30% to $650 a week. PropTrack economist, Paul Ryan, says migration to southeast Queensland, has resulted in higher demand for rental properties on the Gold Coast.

“There’s fierce competition for affordable rentals across the Gold Coast, and that is not unique to the region but is a trend across Queensland and the country,” Ryan says. “Affordability is pushing more renters to units and that has meant a lot of the cheaper parts of the Gold Coast have seen really strong growth over the past year and particularly over the past quarter.

 

 Quote Of The Week

“As interest rates are higher, people’s borrowing power has dropped, shrinking some buyers’budgets, meaning regions that remain comparatively affordable are in demand.”

PropTrack senior economist Eleanor Creagh

 

Confidence Returns

Confidence has returned to the Australian housing market according to the latest NAB Residential Property survey. It says expectations for a housing market recovery over the next few years have strengthened, with confidence levels among surveyed property professionals rising to their highest levels in two years.

However a number of those surveyed in the construction industry say they still feel hamstrung from starting new residential developments by the high cost of building. NAB economists say they have revised their expectations of property price growth upwards, after accounting for stronger than expected outcomes over the past three months. They are predicting capital city dwelling values will be up by around 8%by the end of the year.

“We continue to see prices rising a further 5% in 2024 with ongoing strength in housing demand relative to supply outweighing the impact of the ongoing pass-through of higher rates.” They also expect the RBA to lift rates to 4.35% at the November meeting.

 

Building Costs Ease

The rising cost of building a new home has finally started to ease. Australians building a home faced 20% increases in the year to September 2022, as Covid-induced trade and materials shortages drove up costs.

The latest Cordell Construction Cost Index (CCCI) shows construction costs are now rising at their slowest rate in four years and says this may be an early sign that pressures are stabilising within the building sector. The report tracks the cost to build a typical dwelling and says costs only increased by0.5% in the September quarter – the smallest increase since June 2019.

“This is the fourth consecutive slowdown in the quarterly pace of growth for residential construction costs,” the report says.

Construction Cost Estimation Manager, John Bennett, says cost pressures in construction are shifting from an issue of materials to labour. “While material costs appear to have stabilised in general, labour costs have had a number of new pressures applied,” he says.

 

Listings Down Prices Up

The number of new listings hitting the market has slowed, despite increased buyer demand and rising prices. Analysis by Domain says as a result many locations are experiencing strong price growth. It says for the month of September, the number of new listings across combined capital cities was down 12.3%, and it is down 0.7% on the same time last year.

Ray White chief economist Nerida Conisbee says while there was a slight increase in listings from June to August, new listings have slowed since then.

“It’s a bit problematic because there’s a lot more buyers out there but at the same time, we generally expect more sellers this time around but we’re not seeing that continuing to occur as we move into late spring,” she says.

Conisbee believes the low listings will continue through to the end of the year.She says realistically, if someone wants to sell before Christmas, they’re going to need to do that within the next two weeks.