Property Investment and Buyers Agents Blog

March 2017 Property Market News

image-of-flowers-march-2017-property-market-news

March 2017

March saw continued price rises in Sydney and Melbourne. Media coverage focussed on how to slow property markets. Discussions continued on how property can be made more affordable for First Home Buyers.

National

National news looking at topical points relating to Australia as a nation.

Property Market

‘The value of Australia’s 9.8 million residential dwellings grew by $274.2 billion to $6.4 trillion’
ABS

Property Cycles

For houses Sydney, Hobart and Adelaide are in ‘rising markets’. Brisbane, Darwin and Perth are ‘approaching the bottom / start of recovery’ with Melbourne ‘approaching the peak of the market’ and Canberra in a ‘declining market’
Herron Todd White

For units Sydney and Hobart are in ‘rising markets’. Brisbane, Darwin and Perth are in ‘declining markets’. Adelaide and Canberra are the ‘the bottom of the market’. Melbourne is at the ‘peak of the market’.

‘Mr Christopher (SQM) and Mr Kushner (Corelogic) believes a risk weighting system for every postcode should be implemented to curb oversupply occuring in certain areas’
Australian Financial Review

Prices

Year on year growth Sydney 18.41%, Melbourne 13.11%, Canberra 10.35%, Hobart 5.83%, Adelaide 3.50%, Brisbane 2.24%, Perth -4.46%, Darwin -5.32%
Corelogic

Change in dwelling values 2008-2017 Sydney 106.2%, Melbourne 88.8%, Canberra 37.7%, Adelaide 17.3%, Brisbane 16.1%, Darwin 14.9%, Hobart 11.6%, Perth 6%
Corelogic

Vacancy Rates

Vacancy rates Hobart 0.7%, Canberra 0.9%, Melbourne 1.7%, Sydney 1.9%, National 2.4%, Adelaide 2%, Brisbane 3.3%, Darwin 3.8%, Perth 4.8%
SQM Research

Clearance Rates

‘Weighted average clearance rates across the capital cities for the month have been above 70%’
Corelogic

Economy

‘The US Reserve raised the cash rate’
Australian Financial Review

‘We forecast demand for Aussie housing will continue to grow. It will be supported by Chinese wealth creation, attractive valuations’
AFR

‘There is plenty of value in Aussie property for Chinese investors. The median price for a 2 bedroom in Shanghai is $900,000 which is 25 per cent more than the median apartment price in Sydney’
Credit Suisse

‘Unemployment rate remained steady at 5.8%’
ABS

‘Borrowers must have a 10 per cent deposit instead of five per cent’
news.com.au

First Home Buyers

‘The government is thinking about letting First Home Buyers use their superannuation towards their first property’
Australian Financial Review

‘Purchasing off the plan has been a strategy adopted by many first home buyers in the Sydney market, typically with a two to three year settlement time frame’
Herron Todd White

Demographics

‘Australia is experiencing its fastest growth in net overseas migration in four years with 193,200 new residents during 2016’
ABS

‘Victoria is leading population growth with 127,500 new residents over 2016 followed by NSW 109,600, Queensland 67,700, Western Australia 25,200 and South Australia 9,400’
ABS

Local

Capital City related news relating to the property market.

Building Approvals

Sydney Building Approvals Financial Year to Date Parramatta 3,086, The Hills Shire 2,964, Sydney 2,900, Blacktown 2,618, Liverpool 1,963, Canterbury 1,693, Camden 1,531, Sutherland Shire 1,490, Penrith 1,333, Ryde 1,333, Lane Cove 900, Central Coast 875, Northern Beaches 793, Newcastle 616, Inner West 415, Ku-ring-gai 409, Woollahra 202, Mosman 25
ABS

Melbourne Building Approvals Financial Year to Date Melbourne 5,340 Casey 2,670, Wyndham 2,623, Hume 2,071, Whittlesea 1,499, Greater Geelong 1,489, Moonee Valley 1,295, Melton 1,283, Moreland 1,295, Whitehorse 1,198, Glen Eira 1,127, Frankston 451
ABS

Brisbane Building Approvals Financial Year to Date Brisbane 6,733, Gold Coast 4,051, Sunshine Coast 2,548, Moreton Bay 2,406, Ipswich 2,110, Logan 1,514, Toowoomba 692, Redland 660, Townsville 458
ABS

Property Market

‘Sydney experienced particular strength in all segments of established houses, particularly in the middle brackets of $1,350,000-$1,690,000′ and was particularly strong in the middle to upper segments of attached dwellings $840,000-$1,000,000’
ABS

‘Melbourne established houses experienced particular strength in the mid to lower $550,000-$650,000 and mid to upper $650,000-$1,000,000 segments of the mark. Attached dwellings was mixed across segments with rises in the mid to upper segments $550,000-$730,000’
ABS

How Would A $100,000 Investment Property In Australia Rate Against The World Between 1980-2017

Back in the 1980s property prices used to be way below were they are now. Many nations prices ranged between $50,000-$120,000. What happens if you invested in a $100,000 property back then? How would Australia have compared to other nations?

We will look at 13 countries over this period of time. Australia, Belgium, Britian, China, Canada, France, Hong Kong, The Netherlands, Singapore, Spain, Sweden, Switzerland and The USA.

The house price index shows how prices have performed from a given date. We have chosen 1980 to 2017. The data has been sourced from the economist.com. Prices from these 13 countries have increased by more than 8 times over this 37 year timeframe.

We have compiled a basic column graph image below comparing house price growth, house prices versus incomes and house prices versus rents.

From the graph we can see New Zealand had the highest price growth over 19.5 times the median property price since 1980. Australia followed at 13.3 times the national price, then Spain, Hong Kong, Britain and China. New Zealand also tops the list with prices 15.9 times average national incomes followed by Australia at 15 times national incomes followed by Hong Kong. New Zealand also the tops the list with prices at 21.4 times average rents followed by Canada at 20.4 times average rents then, Hong Kong, Sweden and Australia.

What is the relevance of this data besides some dinner party facts? It’s not extremely clear from this data why some countries have increased at much higher rates than others. We could hypothesise a huge number of variables impacting each specific country.

Variables could range from population changes and the countries demographic makeup including densities, urban migration and net overseas migration. Economic changes, industry makeup and general country wide tax rates. Financial deregulation, interest rates and globalisation of money flow. Consumer and business confidence.

A $100,000 investment in Australia in 1980 would have rated second in property price growth against the above 13 countries. In todays terms the investment would be worth more than $1.3m.

How First Home Buyers Using Superannuation Will Affect Investors

There has been alot written, discussed and pondered over by many of Australia’s greatest economists, thinkers and policy makers. The underlying topic all the experts are trying to solve is how can property become more affordable for first home buyers?

One of the newest ideas is allowing first home buyers access to their superannuation to help towards funding the property purchase. If this policy becomes reality then it will continue to be happy days for investors and current property owners.

Namely demand will increase as first home buyers re-enter the housing market. Many may even push into a higher purchase price bracket.

The newfound competition from this policy will continue to put upward pressure on prices. One aspect of the goal will be achieved. That is helping first home buyers enter the market. The flow on from the policy will be increased competition and upward price pressure.

Many believe simply increasing supply will reduce demand. You would think this to be true based on the most fundamental lesson you learn in Macroeconomics, which is Supply & Demand. In Sydney, this supply has come in the form of new apartment developments and to a lesser extent townhouse developments in the inner to middle ring. House and land options are about 40km from Sydney CBD. Have these options helped first home buyers? Yes, it has helped many. But there are many who aren’t willing to live further out. Has this supply put downward pressure on prices, resulting in more affordable housing? No. Well not yet. Should a first home buyer purchase a property just to get into the market even if it is an investment? It would make sense.

This policy helps first home buyers access more money. Does giving first home buyers more money make property more affordable? No. It doesn’t make it more affordable. But it does make it more accessible.

If you put yourself in the shoes of a first home buyer, then you would want anything that helps to buy your first home. Whether you live in it or not. Even if that means potentially driving up prices. At least you will have the chance to buy.