Weekly Market Update (14 June 2024)

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Weekly Market Update (14 June 2024)
  1. Housing Affordability (Source: REIA)

    The Real Estate Institute of Australia (REIA) announced that housing affordability has improved for the first time since 2021, with the proportion of income required for average loan repayments decreasing. However, rental affordability has declined, and the number of first home buyers has also fallen. While some states saw improvements in affordability, others experienced declines. The average loan size for first home buyers has increased, and the total number of owner-occupied dwelling loans has decreased. Overall, the housing market is experiencing a mixed trend in affordability and buyer activity.

 

  1. Rental Market (Source: Tim Lawless, CoreLogic)

    The growth in Australian rental markets has slowed, with the national rental index rising by 0.7% in May, the lowest increase since December last year. Rental growth has reduced compared to the first quarter, especially in the unit sector. Despite rents being up 8.5% over the past year, the trend is towards a gradual slowdown in rental growth, likely due to easing net migration and rental affordability pressures. Additionally, gross rental yields have risen to 3.56% across the combined capitals, providing welcome relief to investors amidst high variable interest rates.

 

  1. Housing Crisis in Queensland (Source: Hal Pawson, UNSW Sydney)

    Post-COVID housing stress in Queensland has led to a 65% increase in property prices. The rising costs have led to financial strain, particularly for lower-income households, and contributed to homelessness. However, there has been a recent shift towards constructive housing policy, with the Queensland government increasing social housing investments and setting a target to add 53,500 social housing units by 2046. The government’s evidence-based approach to long-term planning in social housing investment is considered unprecedented in Australia. While positive steps have been taken, there are concerns about the adequacy of the government’s target and the scale of federal housing investment. Overall, the direction of housing policy in Queensland is viewed as more positive, with hopes of inspiring similar progressive actions by other Australian governments.

 

  1. Increasing Number of Buyers (Source: Joseph Ballota)

    The property market has seen an increase in the number of buyers despite a peak in the cash rate. The latest data shows a 31% annual growth in the number of first home buyers, owner-occupiers, and investors entering the market. The value of new home and investment property loans has also increased, with investors showing the greatest strength. The market has shown resilience and recovery in lending, with the number of new loans increasing by 31% from the previous year. Refinancing activity has also increased, with more borrowers securing better deals in April.

 

  1. Affordable and Liveable Property (Source: PRD)

    The PRD Affordable and Liveable Property Guides show that despite recent price rises, first home buyers can still find affordable suburbs with good investment potential in Sydney, Melbourne, and Brisbane. Brisbane has the highest percentage of affordable suburbs, but the availability of affordable areas has decreased. Sydney is the least friendly for affordable housing, but some suburbs are still experiencing negative growth, presenting opportunities for first home buyers. The most affordable suburbs in each city, with good investment fundamentals, are listed for both houses and units. These suburbs offer entry points into the property market for first home buyers.

 

  1. Gold Coast’s Housing Market (Source: API)

    The Gold Coast has transitioned from its historical boom and bust real estate cycles to a sustained period of capital growth. The city’s transformation, including infrastructure upgrades and the influx of wealth during the pandemic, has attracted not only families and retirees but also Australia’s wealthiest individuals. This migration of wealth has driven record real estate price growth, positioning the Gold Coast as a city of great value and safety. The region’s expansion is likely to continue, leading to further increases in property values and rental demand. Certain suburbs, such as Southport, present attractive investment opportunities due to high demand for rental accommodation. Overall, the Gold Coast is expected to experience significant capital growth and rental value increases over the next decade.

 

  1. Rental Crisis (Source: API)

    The rental crisis in Australia continues, with vacancy rates improving slightly but rents still rising. Homeowners are also struggling, with one in eight missing mortgage repayments in the past six months. The rental market remains extremely challenging, but there has been a slight increase in available rentals, providing a glimmer of hope. However, the undersupply of rental properties and strong demand mean that renters will continue to face difficulty. Additionally, the generational housing crisis is taking its toll, with many homeowners experiencing financial strain due to rising interest rates. Variable rate loans are popular, as borrowers believe interest rates are at their peak. Melbourne offers the most affordable rental options, with all top ten suburbs for affordable house rentals located there. The balance between real income and rent costs has shifted dramatically, placing significant financial pressure on renters. The introduction of the Treasury Laws Amendment Bill 2024 has been welcomed for recognizing build-to-rent housing’s role, but concerns remain about its ability to support the target of 150,000 new build-to-rent homes by 2034.

 

  1. Vacancy Rates (Source: SQM Research)

    The report from SQM Research shows a 0.5% decline in capital city advertised rents, driven by falls in Sydney and unchanged readings in Melbourne. Vacancy rates have risen to 1.2%, with increases in Sydney and Melbourne. Rental vacancies in inner city areas have increased, indicating easing demand for student rental accommodation. The Managing Director of SQM Research forecasts a rise in vacancy rates in winter, but expects tight vacancy rates to persist for 2024 due to a fall in dwelling completions relative to growing demand.

 

  1. CoreLogic Auction Results (Week ending 9 June 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 523 / 65%

    – Melbourne: 488 / 55.6%

    – Brisbane: 126 / 62.9%

    – Perth: 15 / 66.7%

    – Canberra: 67 / 56.7%

    – Adelaide: 97 / 80.4%

    – Tasmania: 1 / 0%

    – Combined Capitals: 1,317 / 62%

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