Weekly Market Update (12 April 2024)

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Weekly Market Update (12 April 2024)
  1. Build-to-rent (Source: REIA)

    The Real Estate Institute of Australia (REIA) has released a report on Build-to-Rent (BTR) developments, indicating that they only represent 3.0% of the existing rental stock in Australia’s eastern cities and will fall short of the government’s 1.2 million homes target. The report highlights that the BTR pipeline will not meet the ambitious supply statement of 150,000 units and emphasizes the dominance of private investors in the rental market. It also emphasizes the need for collaboration between public and private stakeholders to address the housing supply challenges facing the nation.

 

  1. Housing Shift (Source: Newsdesk)

    The property landscape in Southeast Queensland is shifting towards apartment living due to increasing demand for affordable, low-maintenance housing. TOTAL Property Group advises developers to focus on building one and two-bedroom apartments to meet this demand. Population growth and a decline in home building approvals are exacerbating the housing shortage. The success of the Summerlin Banyo development demonstrates the market demand for quality, moderately sized apartments. TOTAL Property Group emphasizes the importance of market analysis to tailor developments to meet market expectations. The shift towards apartment living presents opportunities for developers and investors, and TOTAL Property Group is committed to guiding them through the changing trends in the property market.

 

  1. Brisbane’s Property Market (Source: Newsdesk)

    Brisbane’s property market is poised to overtake Perth as the leading hotspot for property investors in Australia due to strong growth indicators and supply-demand dynamics. Population growth, infrastructure projects, and a decline in home building approvals are key factors driving Brisbane’s property market growth and potential for surpassing Perth’s price growth by 2025. The forecast suggests a significant shift in Australia’s property investment sector, with Brisbane emerging as a strategic location for long-term investment, potentially attracting investors away from Perth.

 

  1. Lending (Source: Newsdesk)

    The latest lending analysis from the Australian Bureau of Statistics (ABS) indicates an increase in housing prices, with the total value of new housing loans to investors rising by 1.2% in February 2024. This rise is attributed to private investors responding to higher rents and anticipated interest rate cuts. However, the Real Estate Institute of Australia (REIA) President, Leanne Pilkington, has expressed concern that the results do not accurately represent the housing affordability crisis due to the shortage of housing supply and soaring rental and capital prices. Although there is growing momentum behind Build-to-Rent (BTR) developments, it is noted that these initiatives still represent a small percentage of the existing rental stock and may fall short of projections. On a positive note, the value of new owner-occupier and first home buyer loans has also increased, with first home buyers taking advantage of government subsidies in the face of diminishing rental properties and rising purchase costs.

 

  1. Home Lending (Source: Newsdesk)

    New home lending in Australia remains at its lowest level in over 20 years, with only a slight increase in February 2024. The number of loans for new home construction and purchase rose by 3.6% compared to the previous month, but was 3.6% lower than the previous year. This decline is attributed to the impact of increased construction costs and the rise in the cash rate. The slowdown in lending is most evident in New South Wales and Victoria, where lending has fallen significantly since interest rates were raised. The HIA Chief Economist predicts that the slowing in home building activity will continue, impacting economic growth. Some areas, such as Western Australia and South Australia, saw increases in new home lending, but others experienced declines, with the Northern Territory and Tasmania seeing the most significant drops.

 

  1. Rent Report March Quarter 2024 (Source: Domain)

    House rents have reached a record high across the combined capitals ($630 weekly), marking the steepest quarterly gain in 17 years and the second-highest on record. Meanwhile, unit rents across the combined capitals ($620 weekly) continue their record-breaking streak of 11 successive quarters of growth. However, a tipping point will still likely be reached in 2024 with the competitive rental change-over period being over and other positive shifts in market dynamics, such as a slowdown in population growth.

 

  1. Brisbane’s Housing Market (Source: Streamline Property Buyers)

    The median house prices in Brisbane have reached over $900,000 for the first time, with unit values showing significant growth compared to the national average. The property market in Brisbane continues to experience positive price growth, driven by strong buyer interest and increased competition. Despite a slight slowdown in the pace of price increase, the market remains highly competitive, with limited available properties. Brisbane’s population growth is contributing to the high demand for housing, leading to a shortage of supply. The median dwelling values in Brisbane have reached record highs, with unit values surpassing those in Canberra. House prices have also hit a historic high, while unit prices are outperforming the housing market. The rental market is facing tight conditions, with increasing rents and limited availability. The construction activity has decreased, leading to higher demand for existing properties. Overall, Brisbane is expected to maintain positive price growth, but variations in performance across different regions and property types are anticipated to continue.

 

  1. Construction Cost Index (Source: CoreLogic)

    The CoreLogic’s Cordell Construction Cost Index (CCCI) report for Q1 2024 shows a 0.8% rise in national construction costs, indicating stabilization. This is the smallest annual increase since 2007, with building material costs leveling out. Despite costs being 27.6% higher since the start of the pandemic, construction costs are expected to remain within normal margins due to low dwelling approvals. New South Wales and Victoria saw a slight pullback in growth, while Queensland and South Australia recorded an acceleration. The annual change in construction costs varied across states, with Western Australia and South Australia seeing the lowest increases in almost seven and fourteen years, respectively.

 

  1. CoreLogic Auction Results (Week ending 7 Apr 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 849 / 70.4%

    – Melbourne: 812 / 62.8%

    – Brisbane: 123 / 67.5%

    – Perth: 9 / 85.7%

    – Canberra: 69 / 60.3%

    – Adelaide: 122 / 73.3%

    – Tasmania: 1 / 0%

    – Combined Capitals: 1,985 / 67%

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