This Week in Real Estate – 17th November 2022
Regional Qld Defies Downturn
Trend Regional Queensland dwelling values are proving to be more resilient than those in the Brisbane market. Property values in Regional Queensland are down just 1.8% since their peak, compared with 2.7% in Brisbane, according to the latest PropTrack Market Insights Report. It says three regional Queensland locations achieved solid results in October – Toowoomba up 12.9%, Townsville up 6.4% and Mackay-Isaac-Whitsunday up 7.2%. PropTrack’s Eleanor Creagh says those markets could still have some growth in them. “Regional home prices have increased 6.5% in the past year, compared to a 2.1% decline in the capitals,” she says. “Home price falls in Regional Australia are not as widespread as metro areas,” she says. “Out of the 42 regional areas classified by the Australian Bureau of Statistics as SA4s, 28 have seen prices fall from their peak, while 41 of the 46 metro regions have seen home prices slip from peak levels.” Sunshine Coast values are down 5.1% from their peak and the Gold Coast is down 2.2%.
2032 Opportunities For Gold Coast
The Gold Coast has a once-in-a-lifetime opportunity to build the infrastructure it needs to help it grow into a million-person city within the next decade, according to demographer Simon Kuestenmacher. Kuestenmacher, the co-founder of The Demographics Group, has urged all levels of government to do what they can to deliver light and heavy rail and other major community infrastructure projects. He told the Future Gold Coast forum it was a “golden opportunity” to set the Gold Coast up for the future. “The Olympics have to be used to bring infrastructure spending forward because there is a brief window when this will be possible and it opened last year when the Olympic Games was won but it must be grasped,” he says. “The important thing is creating regional infrastructure at (a great) scale right now and this is about the big picture, so it isn’t important which routes they take. They just need to be built,” he says.
Quote of the Week
“This is a permanent change and someone wanting to refinance every three to four years is something brokers need to get used to and something they need to tap into.” Trail Homes founder Nick Young, commenting on the rise of re-financing activity.”
Refinancing Volumes Hit $33 Billion
The number of home-owners looking for better deals and refinancing their mortgage has risen rapidly, according to new figures from the Australian Bureau of Statistics. The figures show that refinancing volumes increased from $16.3b in May 2020 to $33.2b in January 2022. According to Trail Homes founder Nick Young, mortgage brokers are reporting that while new loan numbers are down, they are helping plenty of existing clients who are looking to refinance. He believes now that homeowners have become comfortable with refinancing, it is a trend which will remain. “This is a permanent change and someone wanting to refinance every three to four years is something brokers need to get used to and something they need to tap into,” he says. He predicts a further 10% increase of people refinancing through mortgage brokers is to come in the next year. Young says lenders continue to try to lure new borrowers with incentives such as cash back offers.
High Demand Pushes Up Student Rents
Low vacancy rates and high demand from students for the 2023 academic year has resulted in an increase in student accommodation rents. Student accommodation provider Scape says rents are already 10% above pre-pandemic levels and many of their properties are already committed for next year. Property Council of Australia executive director of the Student Accommodation Council, Torie Brown, says many operators are reporting similar demand. A Property Council report into student accommodation shows foreign student numbers will lift from 521,000 this year to 699,000 by 2027. It predicts the national total of purpose-built student accommodation will grow to 93,300 beds by 2025. Students from China have the largest marketshare of students using the accommodation (27%), followed by Australian students (26%), Indonesia (5%), India (4%) and Malaysia (4%). Tight rental markets have increased the number of Australian students seeking purpose-built student accommodation. The report says for the sector to grow further it needs a reduction in barriers to investment.
Low Vacancies Will Halt Price Decline
Low vacancy rates and a looming increase in demand from international migrants are set to offset any softening of house prices, according to REA Group which owns realestate.com.au. It says prices have softened in some locations in 2022, but the rental shortage crisis means there is unlikely to be a big drop in price levels. REA chief executive Owen Wilson says house prices nationally are down about 5% but remain well above pre-pandemic levels. Softening prices in some markets have resulted in a small drop in the number of people searching for properties on realestate.com.au. “Customers are telling us that every time rates go up vendors tend to pause on their thinking about bringing their properties to market and buyers definitely pause as they reconfirm their buying capacity after each rate rise,” he says. Wilson says a few things will keep house prices stable, including the predicted influx of more than 200,000 migrants which will come to Australian within the next year, all needing somewhere the live.