- Australian economic and financial markets update (Source: RBA)
The International Monetary Fund predicts sluggish growth for 2023 and 2024. In Australia, the economy is still performing strongly, with low unemployment rates and rising wages. However, inflation remains high, and the Reserve Bank is trying to manage it without causing a recession.
- Cash rate (Source: CoreLogic)
The Reserve Bank of Australia (RBA) has kept the cash rate unchanged at 4.35% in its last meeting of the year. This decision was expected due to weaker data flows in November, including a decline in retail trade and a slight increase in the unemployment rate. The monthly CPI measure also declined but had less influence on the decision. Housing lending in October showed a surprising increase, but this may not be sustained as sales volumes are expected to decline in November. The housing market has shown some slowdown, particularly in Melbourne and Sydney, due to factors such as interest rate increases, affordability issues, and normalizing stock levels. However, households have been able to cope with higher mortgage costs, with non-performing loan rates and delinquency rates remaining relatively low. The RBA will meet again in February 2024 and will make further decisions based on economic data.
- Foreign investor (Source: Smart Property Investment)
The Australian government is implementing new measures to discourage foreign property investors from leaving homes vacant and to increase the housing stock for residents. The new framework includes higher fees for purchasing existing homes, increased penalties for empty homes, and stricter compliance measures. Meanwhile, application fees for foreign investment in build-to-rent projects will be reduced to encourage the construction of new homes. The changes aim to push foreign investors towards new housing developments and rental properties. The government plans to strengthen the compliance regime and ensure foreign home owners sell properties when required. Legislation for the new fees is expected to be introduced in early 2024. The application of commercial foreign investment fees to build-to-rent projects will start from December 14, 2023.
- National Vacancy Rate (Source: SQM Research)
The vacancy rates for residential properties in Australia increased to 1.1% in November, with the total number of vacant properties reaching 33,471. Sydney, Melbourne, and Darwin saw an increase in vacancy rates, while Hobart experienced a decline. Rental vacancy rates in CBD areas also rose. Asking rents in capital cities increased by 0.3% in the past 30 days and have risen by 14.7% over the past year. The national median weekly asking rent is $604.55, with Sydney houses being the most expensive and units in Adelaide being the most affordable. Rent prices have slightly decreased in Sydney and continued to drop in Darwin. The increase in vacancies is attributed to international student departures in CBD areas. Market conditions for renters remain competitive and tight, with no signs of improvement without more housing supply.
- Best of the Best Report (Source: CoreLogic)
The housing market in Australia faced challenges in 2023 due to climbing interest rates and stretched affordability. However, home values remained resilient overall. Affordability constraints led to increased demand for lower-priced housing in cities like Perth, Brisbane, and Adelaide. Perth dominated the top 10 spots for the strongest growth in house values, while units in Brisbane and Adelaide also performed well. The rental market saw strong growth in areas with high overseas migration, with Sydney’s Kensington and Lakemba experiencing the highest rent growth. Looking ahead to 2024, the residential housing market is expected to be more subdued due to various factors such as a rise in the unemployment rate and slowing GDP growth. Rental growth may also slow down, but rents are not expected to decline nationally. The completion of new homes associated with the “HomeBuilder” stimulus could ease rental demand. Overall, the market may see a reduction in the pace of growth, but conditions could strengthen towards the end of the year if there is a loosening in monetary policy.
- Australia ranks 18th for home price growth (Source: Juliet Helmke)
Despite global interest rates increasing, residential prices in Australia only dipped slightly at the beginning of this year. Australia ranked 18th out of 56 countries for price growth, with a 4.9% increase in house prices over the year to Q3 2023. The report shows that buyers are still willing to accept higher home payments, and Australia was one of 35 markets that experienced annual price growth. Turkey had the highest price growth, while Sweden experienced the greatest decline. The impact of prudential regulation slowed home price growth since the beginning of 2022. Limited available stock, strong employment, and robust wage growth contribute to the resilience of house prices. Housing supply is a constraint on activity globally, with sales volumes declining. Activity is expected to rebound when interest rates are substantially lowered.
- CoreLogic Auction Results (Week ending 10 Dec 2023)
(Total Auction / Clearance Rate)
– Sydney: 1,110 / 66.3%
– Melbourne: 1,432 / 66.1%
– Brisbane: 218 / 67.7%
– Perth: 22 / 63.6%
– Canberra: 137 / 60.8%
– Adelaide: 191 / 80.7%
– Tasmania: N/A / 0%
– Combined Capitals: 3,110 / 66.9%
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