Weekly Market Update (17 May 2024)

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Weekly Market Update (17 May 2024)
  1. Australian Economic And Financial Markets Update (Source: RBA)

    Australia’s economy is facing challenges, but the unemployment rate remains low at 3.7%, providing a sense of financial security for Australians. Despite rising interest rates and inflation, Aussies are still spending boldly, leading to a decline in disposable income and a drop in the savings ratio. The property market is experiencing a shortfall in housing, with high construction costs making new developments financially unviable, contributing to the ongoing undersupply of dwellings.

 

  1. Rental Market (Source: CoreLogic)

    Australia’s median weekly rent has reached a record high of $627, with rental costs varying from $770 in Sydney to $547 in Hobart. Rent growth has accelerated nationally, driven by renters moving to more affordable peripheral housing markets as central metropolitan locations become less affordable. Despite record high national rents, some areas in Australia are still below peak rental values, with regional areas like the Pilbara experiencing significant declines.

 

  1. National Housing Market Update (Source: CoreLogic)

    The Australian housing market continued its 15th consecutive month of growth in April, with national home values increasing by 0.1%. Regional markets have shown stronger growth than capital cities over the past five months. Home sales peaked in November, while rents increased by 0.8% in April. Sydney and Adelaide have seen modest value increases, while Melbourne experienced a slight decrease. Brisbane, Perth, and Adelaide are currently at record high dwelling values. The housing market’s strength is attributed to lower supply compared to demand, with interest rates likely to remain high and support housing values in the near future.

 

  1. National Vacancy Rates (Source: SQM Research)

    In April 2024, national rental vacancy rates in Australia slightly increased to 1.1%, with a total of 33,177 residential properties vacant. Sydney had a rental vacancy rate of 1.2%, while Melbourne’s rate remained steady at 1.1%. Canberra had the highest vacancy rate at 1.7%, while Perth and Adelaide had the lowest at 0.6%. Vacancy rates in the inner city rental markets rose in some areas, indicating a softening in those markets. The calculations were based on online rental listings advertised for three weeks or more compared to the total number of established rental properties.

    Capital city asking rents rose by 0.5% over the past 30 days, with the national median weekly asking rent for a dwelling at $625. Sydney had the highest weekly rent for a house at $1,059, while Hobart offered the most affordable units at $459 per week. Despite the slight easing in rental vacancy rates, the rental crisis is still ongoing, and vacancy rates are expected to rise somewhat in winter due to seasonal trends. SQM Research anticipates tight vacancy rates to persist in 2024 due to a decrease in dwelling completions relative to growing demand.

 

  1. 2024-25 Federal Budget (Source: SPI)

    The 2024-25 budget addresses cost-of-living relief and housing pressures, aiming to combat inflation without adding to broader pressures. Key measures include a 10% increase in Commonwealth Rent Assistance, a focus on building 1.2 million homes over five years, and funding for construction workforce expansion. Additionally, the budget supports gender equality in priority sectors, includes real estate in anti-money laundering efforts, and provides power bill relief for households and small businesses.

 

  1. The government’s $11.3bn ‘Homes for Australia’ plan (Source: SPI)

    Prime Minister Anthony Albanese has unveiled the “Home for Australia” plan, a multibillion-dollar package to address the housing crisis. The plan includes funding for social housing, infrastructure for residential development, crisis accommodation for domestic violence victims, and support for student accommodation. The government aims to work with the higher education sector to increase student housing supply. The budget also allocates funding to boost the construction workforce. Reactions from the housing industry are positive, with support for the government’s commitments to housing supply across various sectors. However, industry leaders are also urging the government to address other barriers hindering housing supply.

 

  1. Brisbane’s Property Price Growth (Source: Melinda Jennison)

    The property price growth in Brisbane is slowing, with units and outer suburbs still driving strong monthly capital growth. Affordability pressures are impacting growth, and there are fewer property options for buyers. Sales volumes have risen, but properties are selling quickly once listed. The lowest 25% of property values are experiencing the most robust growth. House prices are still rising, but the unit market is outperforming in terms of growth. Rents are setting record highs due to a chronic lack of rental properties. The demand for properties remains strong, with limited choices for buyers and low vacancy rates leading to rent hikes. Long-term supply from new construction faces obstacles, and population shifts are influencing demand. Buyers are facing tough competition and limited property availability in Brisbane’s current market conditions.

 

  1. Property Investment (Source: Andrew Bell)

    Property investment in Perth and the Gold Coast is projected to offer the best returns due to growing populations and low supply. Real estate is considered the most secure long-term investment option compared to alternatives like stocks and savings accounts. The rental crisis is driving significant increases in house rentals, making property ownership a lucrative investment for the long term.

 

  1. CoreLogic Auction Results (Week ending 12 May 2024)
    (Total Auction / Clearance Rate)

    – Sydney: 773 / 68.7%

    – Melbourne: 1,104 / 60.4%

    – Brisbane: 153 / 70.4%

    – Perth: 12 / 66.7%

    – Canberra: 74 / 59.5%

    – Adelaide: 119 / 82.2%

    – Tasmania: 2 / 50%

    – Combined Capitals: 2,237 / 65.1%

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