This Week in Real Estate – 15th December 2022
Qld Moves To Increase Supply
The Queensland Government has released a series of recommendations as part of its Housing Summit Outcomes Report. The report was borne out of a government and industry roundtable searching for solutions to the current housing shortage crisis. The report says the government’s objective is that every Queenslander have access to a safe, secure and affordable home. It has committed to unlocking land and housing supply, declaring 34 priority development areas and delivering 140,000 new residential lots. About 118,000 households will be assisted with private
rental market support, social and affordable housing supply will be boosted through an initial $1billion investment to drive social and affordable housing. And $166 million will be poured into emergency accommodation through 240 specialist homelessness services. The Property Council of Queensland says it is pleased with the key recommendations but it believes there are many areas for further work and urges it to be implemented quickly. The housing roundtable will reconvene in March 2023
Quote of the Week
“History tells us that, in the last 30 years, the duration and steepness of an upswing are longer and greater than a downturn, supporting the idea that it’s not timing the market, it’s the time spent IN the market that counts.”
Domain chief of research and economics Dr Nicola Powell
Prices Up 27% Despite Downturn
Australian property prices remain well above 2020 levels despite some recent softening in the market. According to Domain’s End of Year Wrap, house prices across the combined capitals have fallen 4.9% from their peak in March 2022 but are still 27% higher than mid-2020.
The combined regions have performed even better, remaining 30% higher during the same period. Domain chief of research and economics Nicola Powell says it is inevitable there would be some adjustment to prices in 2022 but it hasn’t resulted in massive price drops.
On a capital city basis, Hobart and Adelaide prices are still 47% higher, Canberra is 41% higher and Brisbane 36%. Darwin is 30% higher, Perth 22%, Sydney 29% and Melbourne 17%.
“History tells us that, in the last 30 years, the duration and steepness of an upswing are longer and greater than a downturn, supporting the idea that it’s not timing the market, it’s the time spent in the market that counts,” Powell says
Dwelling Rents Rise 24% In 2022
Residential rents in capital city Australia are 24% higher than a year ago, according to the latest Rents Index from SQM Research. Five of the eight capital cities have recorded annual growth of 20% or more in their rents, headed by Sydney which is up 28%.
Close behind is Melbourne on 24%, Brisbane on 23% and both Perth and Adelaide where residential rents have increased 20%.Canberra, Hobart and Darwin have recorded more moderate increases in rents, according to the SQM index.
The figures provide further evidence of the impact of record low vacancy rates across Australia.Various research sources place the national vacancy rate below 1%, the lowest ever recorded and indicative of a rental shortage crisis which has been building for several years.
We are now seeing rental growth in the major cities at levels similar to the price growth that occurred in 2021. With prices no longer rising at those levels in the major cities, rents have taken over as the headline statistics of the housing market.
Prices To Grow In New Year
Property prices are predicted to grow again in 2023, with signs the current decline in the biggest cities is already slowing. CoreLogic head of research Eliza Owen believes the market overall may have already moved past the peak of price drops in the big cities.
“As we move into 2023, there continues to be a mix of headwinds and tailwinds for housing market performance,” Owen says. “With expectations that the bulk of the rate-tightening cycle occurred in 2022, housing value declines could find a floor in the New Year.”
CoreLogic economist Kaytlin Ezzy says it’s unlikely markets will fall below the levels recorded at the beginning of Covid, while some locations have continued to deliver good growth in 2022.
“Adelaide suburbs dominated the list for strongest annual appreciation in value across both property types, with house values across Davoren Park rising by 34.7% and unit values in Seacliff Park 41.4% above the levels recorded this time last year,” Ezzy says.