Investment Property Market Snapshot
Latest industry statistics and analysis.
Asking rents rise
Data from SQM Research revealed capital city asking rents for houses rose 0.7 per cent in September to $552 per week. Unit asking rents held steady at $440 per week. Over the year, asking rents for houses and units rose just 0.5 per cent. September results: Canberra $636 p/w houses / $439 p/w units; Sydney $708 / $515; Darwin $515 / $406; Brisbane $450 / $371; Adelaide $385 / $298; Hobart $411 / $373; Melbourne $526 / $409; and Perth $423 / $321.
The national residential vacancy rate dipped to 2.1 per cent in August (from 2.2 per cent in July), according to data from SQM Research. The number of vacancies Australia-wide sat at 70,447 properties. Across the capitals: Adelaide down from 1.3 per cent to 1.2 per cent; Perth down from 4.0 per cent to 3.7 per cent; Melbourne steady at 1.6 per cent; Brisbane down from 2.9 per cent to 2.8 per cent; Canberra down from 0.8 per cent to 0.7 per cent; Sydney steady at 2.8 per cent; Darwin up to 3.5 per cent from 3.4 per cent; and Hobart down from 0.7 per cent to 0.5 per cent.
According to CoreLogic, dwelling prices declined in September. Falls of 0.2 per cent were recorded for Sydney, Melbourne and Adelaide, while Perth prices saw a 0.1 per cent decline. Brisbane saw prices rise by 0.1 per cent.
Listings fall and time on market rises
In September, listings declined across most capitals, with the exception of Hobart (up 10.2 per cent), Canberra (up 11 per cent) and Darwin (up 11.9 per cent), according to figures released by CoreLogic. Houses remained more popular than units, with the average time on market slightly rising across the capital cities. Canberra (27 days on the market), Hobart (32 days) and Melbourne (33 days) performed the best for houses. For units, Hobart (28 days), Melbourne (31 days) and Sydney (41 days) were the top performers. Vendor discounting across most capital cities was between 4.9 per cent and 7.3 per cent for houses, and between 5.4 per cent and 9.3 per cent for units.
Property prices decline over June quarter
Data from the Real Estate Market Facts report from REIA showed house prices dropped 0.8 per cent and other dwelling type prices dropped 0.3 per cent across the capital cities in the June quarter. The weighted average median price for capital city houses declined to $765,098 over the quarter, with declines in Sydney, Melbourne, Perth, Darwin and Canberra. Other dwelling prices fell to $590,935, with declines in Sydney, Perth, Adelaide and Canberra. REIA also reported that the rental market was tightening, with the weighted average vacancy rate for the capital cities declining to 2.5 per cent, with Canberra the tightest market with a vacancy rate of 0.8 per cent.
Investor loans down over quarter, up over year
According to APRA’s quarterly property exposure lending stats for ADIs, there was $1.62 trillion worth of residential term loans to households as at 30 June 2018 – representing a 5.6 per cent increase ($86.6 billion) on 30 June 2017. Of these, 33.6 per cent ($544 billion) were investor loans, which was 1.9 per cent higher ($9.9 billion) than 30 June 2017. However, over the quarter, investor home loans dropped 12.4 per cent (to $117.5 billion), representing 31.1 per cent of new home loan approvals. It also noted that interest-only loans were down 54.9 per cent over the quarter, representing 16.2 per cent (or $61.2 billion) of new home loan approvals.
Value of loans declines
ABS data revealed over the past 12 months to July 2018, the value of lending for investment loans was down 15.7 per cent – which was almost 31 per cent lower since peaking in April 2015. As of July 2018, 41 per cent of all mortgage demand was from investors – which was down from almost 55 per cent in May 2015. New South Wales (49 per cent of all lending) and Victoria (41 per cent) make up the highest share of investor lending based on value.
Commercial real estate investors reap rewards
According to a report in The Weekend West, Australia’s best real estate investments this year were commercial properties such as shops, office buildings, warehouses and apartment towers. The value of real estate investment trusts (listed property trusts) surged 12 per cent in the last six months, with most paying income yields of 5-7 per cent – more than twice as high as bank deposits and better than capital city residential property yields of 3-5 per cent.
Annual house prices fall for first time since 2012
According to the latest ABS Residential Property Price Index, capital city house prices fell 0.7 per cent nationally in the three months to June. They also fell 0.6 per cent during the year to June 2018, the first annual fall recorded in six years. The average price of a home is now $686,200. Over the quarter, prices fell in Sydney (-1.2 per cent), Melbourne (-0.8), Darwin (-0.9) and Perth (-0.1), while rises were recorded in Adelaide (+0.3), Canberra (+0.6), Brisbane (+0.7) and Hobart (+3.0).
Resale profits decline
Despite 89.8 per cent of Australian homes sold through 2Q18 enjoying resale profit gains (totalling $15.7 billion), national resale gains were down from 90.1 per cent in the previous quarter and 91.1 per cent over 2Q17, according to CoreLogic’s quarterly Pain and Gain Report. Over the June 2018 quarter, 10.2 per cent of residential properties resold at a price lower than the previous sale price (total realised gross resale losses of $469.4 million).
Investor sentiment up
PIPA’s Property Investor Sentiment Survey has revealed 77 per cent of investors said now is a good time to invest in property (up from 71 per cent last year), and 98 per cent had a plan regarding their property investments with 28 per cent having a detailed long-term plan. It was also found 90 per cent were unconcerned about price declines in Sydney and Melbourne and said it would not slow down their investment plans. Brisbane was cited by 44 per cent as the capital with the best investment prospects, while 26 per cent stumped for Melbourne and just 8 per cent gave Sydney the nod. Houses were still the most popular investment with 67 per cent of respondents, while just 6.5 per cent favoured units. Metro area properties were preferred by 72 per cent of investors and regional markets grew to 20 per cent, while coastal locations dipped in popularity to 8 per cent.
… but concerns rise too
Access to finance was a rising concern amongst investors, with 48 per cent indicating that investor lending policy changes had made it harder to secure loans to add to their portfolios, up from 43 per cent last year. The PIPA survey also found investors were concerned about the possibility of changes to negative gearing, with 45 per cent saying they would rethink investing in the future if the changes occurred, and 71 per cent believed changing negative gearing and capital gains tax would not improve housing affordability. Investors were also concerned about property investment advice, with 95 per cent saying providers should have formal training and 90 per cent called for licensing or regulation of the sector. That investors need more education on the risks and benefits of investing was also noted by 87 per cent.