This Week in Real Estate – 9th July 2022
Rents Surge In GC Prestige Market
Extremely low vacancy rates mean those wanting to secure a rental property in the Gold Coast’s high-end market are forking out thousands of dollars a week for the privilege. The Gold Coast’s most expensive long-term rental is now $7,500 a week, with a $30,000 bond.
The house on Main Beach Pde, Main Beach, is the sixth most expensive rental property in Australia on the market. With a weekly rent which could service the mortgage on several suburban homes, the house was recently bought for $9.8 million. The four-storey, four-bedroom house has direct beachfront access.
Brent Martens of Harcourts Coastal who has listed the rental says there is no shortage of tenants prepared to pay such prices.
“The market has changed dramatically over the past two years,” Martens says. “Three or four years ago you would get one inquiry every two weeks on a property renting for $3,000 to $4,000-plus, now we get 10 to 15 immediately,” he says.
Census Reveals Mortgage Ease
The number of households still paying off a mortgage has increased with just 31% of Australians owning their home outright according to the latest Census data.
The figures show in 1996, 41.6% of Australians owned their home outright. The data also shows 31% of Australians are renting.
While many households still had mortgages, more than three quarters of owners were not overextended as their monthly repayments are less than a third of their income.
University of Sydney professor of urban and regional planning, Nicole Gurran, says that is probably a result of the low interest rate environment during the pandemic, when fixed and variable rates were available for below 2%.
While Australia is in the grip of a rental crisis and rents are rising the Census figures show only 32.2% of households are spending more than a third of their income on rent compared with 36% in 2016. Gurran says this may be because more higher income earners entering the private rental market.
Govt Extends Home Guarantee Scheme
An additional 40,000 places are being offered in the Home Guarantee Scheme which aims to help first-home buyers and single parents get into the housing market.
Of those, 35,000 places will support first-home buyers to buy with a deposit as low as 5% while 5,000 places will help single parents with a deposit as low as 2%.
The Federal Government has also announced it will provide more support in regional areas and more social and affordable housing.
HIA chief executive industry policy Kristin Brookfield says the announcement is great news for Australians who hope to one day buy a home.
“The guarantees offer help to those Australians looking to buy their first home, recognising that saving for a deposit is the largest obstacle to achieving home ownership,” Brookfield says.
“With the current cost pressures on households, a first-home buyer is facing years to save a deposit and in that time they risk being priced out of the market.”
RBA Lifts Cash Rate to 1.35%
The new financial year got off with a bang with the RBA announcing another rise in the official interest rate. The RBA board increased the cash rate from 0.85% to 1.35%, on the back of a similar increase in June.
PropTrack senior economist Eleanor Creagh says many households are sitting on large savings buffers which will help to ease the impact of the recent rate increases.
“For many homeowners, substantial home equity has been accumulated after the significant rise in home prices over the last two years, and some have taken advantage of falling interest rates to pay down debt quicker,” she says.
Mortgage Choice national sales director David Zammit says most lenders have already substantially increased rates on variable and fixed rate home loans.
He says it’s important that borrowers make sure they have the best rates on offer. Mortgage Choice data shows an increase in refinancing activity since the first cash rate rise in May.