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2023 property market update

BMT team — Sun, 02 Apr 2023 23:14:25 +0000

2022 was an interesting year for the property market. Interest rates and rental yields increased, while property prices fell. Nonetheless, Australian investors persevered and made it through this challenging year. We sat down with Bradley Beer, Chief Executive Officer of BMT, and asked him some questions surrounding the property market outlook of 2023 and the latest BMT news. Read on for Bradley Beer’s insights into the year so far and what may lie ahead. What did the Australian property market look like in 2022? The value of the residential real estate market fell from $9.6 trillion in December 2021 to $9.3 trillion in December2022. Australian national housing values fell 5.3 per cent over 2022, the largest calendar-year decline since the Global Financial Crisis in 2008 where values fell 6.4 per cent. The median price of a residential dwelling as of 31 December 2022 was $708,613 with combined capitals at $770,374 and combined regionals at $577,616. What can we expect from the housing market in 2023? I expect that property prices will continue to fall as long as interest rates are rising. It is likely that sales from owners unable to service their loans due to interest rate rises and inflation will increase, with 35 per cent of outstanding housing credit on fixed terms and around two-thirds of these expiring in 2023. And what about interest rates? At 7.8 per cent, the Consumer Price Index (CPI) is still well above the RBA’s target of 2-3 per cent. To return inflation to target, the RBA has lifted the cash rate every month from May, with it now sitting at 3.60%, the highest rate in eleven years. It is expected that inflation will return to 4.7 per cent over 2023 and 3.2 per cent over 2024. How are rental markets performing so far in 2023? Rental markets have remained firm so far throughout 2023, with the current national rental vacancy rate sitting at a record low of 1.0 per cent. As of January 2023, gross rental yields were 3.9 per cent, a growth of 0.7 per cent from January 2022. CoreLogic reported annual growth in Australian rent values of 10.2% in the 12 months to December, a record high. The most rapid annual rise is evident in unit rents across Sydney, Melbourne and Brisbane, where rents have increased around 14 to 17% annually. What is loan activity looking like? The percentage of investor loans increased by 5.3 per cent between September 2019 and September 2022. New variable home loan rates for owner occupiers increased from a low of 2.41 per cent in April 2022, to 4.58 per cent in October, notably impacting housing affordability. While the rate rises are making owner-occupier mortgage repayments less affordable, investors are less impacted thanks to the tax deductibility of interest on investment loans. How will changes to international borders and migration affect the market? To ease workforce and skill shortages, the permanent migration quota has been increased from 160,000 to 195,000 in 2023, with all additional spaces allocated to skilled work visas. This will likely further decrease vacancy rates and increase rental yields and house sales. The reopening of borders has caused interstate and foreign buying activity to resume strongly which will likely continue to grow throughout 2023. There has been increased foreign investment in commercial property, with remaining popularity in the office and industrial sectors. What’s the latest in BMT news? In BMT news, we reached a milestone of 800,000 schedules completed since opening our doors in 1997 – an accomplishment we attribute to our valued clients and referrer partners. In 2022 we also found clients an average of almost ten thousand dollars in depreciation deductions within the first full financial year. Last August saw BMT’s private equity partners exit, and the executive team acquired one hundred per cent of the company. This allows us to have full control to drive the future direction of the business. Our strategy focuses on customer service and thorough, accurate reporting, always with the aim to maximise claims and make life easy for our clients and corporate partners. Now that we are on the other side of the pandemic and have full control of the business, we will continue to find customers the highest compliant deductions while delivering the outstanding customer service that we are known for. We look forward to seeing what the year will bring. The information in this article is sourced from CoreLogic and the Reserve Bank of Australia. This article is general in nature and should not be taken as advice or a guaranteed outcome.

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Everything you need to know about interest rate cuts

BMT team — Thu, 03 Oct 2019 00:17:09 +0000

The Reserve Bank of Australia (RBA) made history in the first week of October, slashing the official interest rate and signalling further cuts in the coming months. What is the current interest rate? The RBA dropped the official interest rate to just 0.75 per cent on Tuesday, 1 October. The first time the official cash rate has dropped below 1 per cent in Australia and the third rate cut since June. Interest rates are significant in affecting the economy, which is why the RBA’s decision is so important. If interest rates are lower, it’s likely to encourage more people to take out a mortgage and purchase a property or take out a loan for home renovation. Why did the RBA drop the interest rate? In a statement issued after the call, the RBA said they made the decision to lower the rate in a bid to revive consumer spending, lift Australia’s otherwise stagnant wage growth, drive employment and provide greater confidence that inflation would be consistent with the medium-term target. RBA Governor, Phillip Lowe also noted trade conflict between the United States and China as a contributing factor. “While the outlook for the global economy remains reasonable, the risks are tilted to the downside. The US–China trade and technology disputes are affecting international trade flows and investment as businesses scale back spending plans because of the increased uncertainty,” Lowe said in the statement. “At the same time, in most advanced economies, unemployment rates are low and wage growth has picked up, although inflation remains low. “Interest rates are very low around the world and further monetary easing is widely expected, as central banks respond to the persistent downside risks to the global economy and subdued inflation.” Have the banks passed on the current interest rate? So far, the big four banks have baulked at passing the official interest rate cut in full to consumers. Both the Commonwealth Bank and National Australia Bank (NAB) defied the RBA by refusing to pass on the cut in full just hours after the decision. The Commonwealth unveiled its mortgage rate changes, withholding 12 basis points from borrowers. Treasurer Josh Frydenberg blasted the two banks for failing to pass on interest rate cuts in full, saying it was “very disappointing” and that “customers should vote with their feet.” Reduce Home Loans cut interest rates by 0.20 per cent with the lowest variable rate currently at 2.69 per cent. Homestar Finance and Athena Home Loans both dropped 0.25 per cent, with variable rates at 2.74 per cent and 2.84 per cent respectively. Will there be further rate cuts? The RBA has suggested that another rate drop is expected to take place if the economy remains subdued, however when this might occur remains unclear. “It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target,” Lowe said. “The [RBA] Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.”

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Property market update April 2019

BMT team — Tue, 02 Apr 2019 04:16:05 +0000

Property values According to CoreLogic’s March 2019 Home Property Value Index, six of eight Australian capital cities saw dwelling prices decline during the month, with Canberra values holding firm while Hobart values were 0.6 per cent higher. The national median dwelling price value, which has been trending lower for seventeen months and has fallen by a cumulative 7.4 per cent since peaking in October 2017, remains 15.9 per cent higher than five years ago. Darwin and Perth, where weak housing market conditions were driven by the post mining boom and weaker economic and demographic conditions, saw dwelling values fall by a cumulative 27.5 per cent and 18.1 per cent respectively since peaking in 2014. Housing is now very affordable in both these capital cities and first home buyers seem much more active compared to other cities across the nation. Dwelling values remained at record highs in Hobart and across regional Tasmania. In other cities values were only marginally lower including Canberra (-0.2 per cent), Adelaide (-0.5 per cent) and Brisbane (-1.6 per cent) and regional Victoria (-0.8 per cent). Although housing market conditions remain relatively healthy in these regions, conditions have noticeably softened over the past twelve months, with values either slipping or the pace of growth slowing. Residential listings International investment banking company, Morgan Stanley, reported March is typically the strongest seasonal month for Australian house prices and residential listings. The recent slowdown of falling house prices and listing availability is likely due to seasonality, rather than the prospect that house values may soon hit bottom. Vacancy and rental rates Rents across our nation’s capital cities slipped 0.1 per cent lower over the twelve months ending March 2019, the first negative reading since at least May 2005. CoreLogic reports the negative change in annual rental activity was heavily influenced by the Sydney market, where weekly rents were down 3.1 per cent over the year. Every other capital city apart from Darwin recorded a slight rise in weekly rents over the year. During March, CoreLogic also noted that gross rental yields have moved away from their record lows in both Sydney and Melbourne. However, these cities are still recording the lowest gross rental yields amongst the capital cities at 3.5 per cent and 3.6 per cent respectively. Other capital cities recorded average gross rental yields of 4.5 per cent, with Darwin and Hobart showing a higher yield profile. Nationally, regional markets are reflecting a higher gross rental yield relative to the capital cities. Finance and interest rates The upcoming federal election and potential changes to negative gearing and Capital Gains Tax (CGT) will continue to cause uncertainty for property investors in a market that has already been influenced by tighter lending policies and economic conditions locally and internationally. Some prospective buyers and sellers may be delaying their housing decisions until after the election. However, there is no guarantee investor certainty will improve post-election should there be a change of government and the opposition’s plans to wind back negative gearing and halve the CGT concession go ahead. The March 2019 CoreLogic report cites other factors are likely to help offset the housing market weakness, such as an expected cut to interest rates later this year. This could result in lower mortgage rates.

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Property market update March 2019

BMT team — Wed, 13 Mar 2019 05:22:45 +0000

Property values According to CoreLogic’s Home Property Value Index for February 2019, seven of the eight capitals cities saw house prices decline during the month. The national median house price value also slipped a further 0.9 per cent. Hobart was the only capital city not to see a price decrease. Their median house price increased by 0.9 per cent in February to $489,000. Perth and Darwin housing markets were the hardest hit during the month. Both saw declines of 1.4 per cent and 1.3 per cent respectively. Sydney and Melbourne median house price values continued to drop a further 1.1 per cent and 1.2 per cent during the month of February. Sydney’s median house price value now sits below $900,000, down $14,000 from the month of January, while Melbourne’s median house price value dropped $11,000 over the month. Compared with March 2018, Sydney’s median house price value has fallen more than $160,000, while Melbourne’s has dropped by $105,000. February saw both capital city markets approaching 11 per cent annual declines (Melbourne 10.6 per cent, Sydney 10.9 per cent). The strongest capital city housing markets continue to be Hobart, Adelaide, Canberra and Brisbane. The top performing areas continue to be centered around regional Tasmania and the larger cities/towns surrounding Melbourne. These areas have a mix of lifestyle appeal, relatively affordable price points, access to amenities and transport options linking home buyers and tenants with major work precincts. Residential listings The number of properties advertised for sale has been consistently rising due to fewer buyers and longer selling times. Despite the surge in inventory, new homes being added to the market was down 19 per cent relative to last year, highlighting that vendor confidence is low. Buyers are firmly in the driver’s seat and in a good position to take advantage of the favourable circumstances. Vacancy and rental rates Rental conditions generally improved in February on the back of a seasonal rise in rental demand. Every capital city except Darwin saw weekly rents edge higher over the month. Regional areas also saw rents increase. Data from CoreLogic continues to show a trend of sluggish rental conditions across most regions of Australia. Nationally, rental rates were 0.3 per cent higher in February, but were up only 0.4 per cent over the past twelve months. Canberra and Hobart stand out as the tightest rental markets, with renters paying an extra 4.7 per cent and 4.6 per cent respectively compared with a year ago. The weakest rental conditions over the past year are in Darwin and Sydney, where rents have slipped 6.1 per cent and 2.9 per cent lower. Despite the relatively soft rental conditions, gross yields have continued to trend higher, especially across the capital cities where gross yields moved through record lows in August 2017, improving from 3.4 per cent since that time to reach 3.8 per cent at the end of February this year. Auction clearance rates CoreLogic reports there were 2,204 capital city homes taken to auction over the week ending 4 March 2019, returning a preliminary weighted average clearance rate of 55 per cent. The week’s volumes were slightly lower than the week’s previous 2,293 auctions held, which was the busiest week so far this year. The higher volumes last week saw the clearance rate dip below 50 per cent and it’s likely, as volumes increase, we will see clearance rates trend below this mark. Comparing results to one year ago, volumes are significantly lower than the 3,026 homes taken to auction over the same week in 2018. Given the combined capital cities posted another month on month decline in home values in February, it’s expected vendors will remain reluctant to auction their property while selling conditions remain challenging and year on year volumes will continue to trend lower throughout the year. Finance and interest rates Credit aggregates from the Reserve Bank of Australia and housing finance data from the Australian Bureau of Statistics have continued to show a consistent reduction in credit flows and mortgage activity, with a more pronounced downturn in owner-occupier credit growth visible through the second half of 2018 and now into the first quarter of 2019. It’s now been more than two and a half years since the RBA cut the official cash rate to 1.5 per cent in August 2016. The record-low interest rate is now the longest period rates have been left unchanged since the cash rate was introduced in 1990. What’s more, falling house prices are supporting the case to keep rates on hold even longer.

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Property market update – March 2017

BMT team — Tue, 14 Mar 2017 04:11:55 +0000

Property values Just when you thought property prices couldn’t increase any further, data from the latest CoreLogic Home Value index for February 2017 indicates that capital city home prices rose a further 1.4 per cent. Over the past twelve months, prices across the capital cities are now 11.7 per cent higher. The Sydney property market remains particularly heated, seeing a further 2.6 per cent growth during the month and reaching an annual growth rate of 18.4 per cent. This means that if you purchased a property in Sydney before June 2012, it is now worth 75 per cent more than what it was purchased for. The median dwelling price for properties in Sydney is currently $795,000, followed closely by Melbourne with a median dwelling price of $610,000. Melbourne, Adelaide, Hobart and Canberra also experienced monthly increases in dwelling values during February. Meanwhile, only Brisbane, Perth and Darwin saw dwelling values fall. Darwin was the capital city which saw the largest decrease in average dwelling values, falling by 4.3 per cent. Residential listings It appears that a lack of supply coupled with strong demand continue to be the main factors pushing property prices higher. The latest data from SQM Research shows that there has been a fall in stock available on the market over the past year of 5.1 per cent nationally. Of the capital cities, Hobart has seen the largest percentage fall. The number of residential listings available in the Tasmanian capital fell 13.4 per cent over the past year. While Melbourne saw more properties hit the market than any other capital city around the country during January, with 5,423 properties listed during the month, SQM Research figures for the Victorian capital suggest the number of listings trended downwards over the past year. Listings have fallen 9.7 per cent in Melbourne from 36,406 during February 2016 to 32,892 in February 2017. While a fall in residential stock in Sydney is less pronounced, at just 0.7 per cent, it has been argued that the city needs more listings to lessen the pressure that is contributing to the recent price growth. Rental vacancies While there has been a fall in properties available for purchase, the most recent figures compiled by CoreLogic show houses advertised for rent rose 8.7 per cent to 362,708 properties. In 2016, units available for rent were up 9.3 per cent to 287,233 properties. However, the CoreLogic figures suggest that the areas which are seeing the biggest increase in rental vacancies are located in Western Australia, especially in Perth. This is due to a decrease in demand following the end of the mining boom. There are some areas of Sydney such as Fairfield, Hornsby, the Hills Shire and Kur-ring-gai which reflect that investors have been actively purchasing in these areas and these properties are now becoming available for rent. Despite the annual increase, the latest figures from SQM Research indicate that there has been a fall in the national vacancy rate from 2.8 per cent in December 2016 to just 2.4 per cent during January 2017. According to the SQM Research data, both Sydney and Melbourne saw falls in vacancies during January. Sydney went from 2.4 per cent in December to 2.0 per cent in January, whilst Melbourne went from 2.5 per cent in December to 2.0 per cent. Of the capital cities, Perth had the highest vacancy rate during January at 4.8 per cent. Auction clearance rates According to the latest data from CoreLogic on the capital city auction clearance rates, strong demand saw 80.8 per cent of properties sell across the capitals for the week ending the 12th of March. This was up on the 74.6 per cent clearance rate from the previous week and 64.9 per cent achieved during the same week one year earlier. Of the capital cities, Adelaide experienced the highest clearance rate at 87 per cent from just eighty two auctions reported. This was followed by Melbourne with an 84.3 per cent clearance rate from 355 total auctions and Sydney with an 83.1 per cent clearance rate from 766 total auctions. Canberra also performed strongly, registering a preliminary clearance rate of 83.3 per cent. One of the reasons driving high clearance rates is due to four of the eight states having a public holiday, which has meant a fall in auction volumes over the week. Rental rates The asking rents for both Perth and Darwin continue to fall reflecting the high vacancy rates being reported in these areas. The Northern Territory capital saw a fall in asking rents for units of 2.5 per cent during January and 0.1 per cent for houses. Meanwhile Perth has had the largest yearly decline of 7.6 per cent for houses to $435.50 per week and 10.8 per cent for units to $337.20 per week. However there was a slight improvement in weekly house rents, increasing 2 per cent in the week ending the 20th of February when compared with the previous week and up 0.5 per cent when compared to the previous month. Adelaide and Hobart remain the cheapest cities in which to rent. Houses in Adelaide currently rent at an average of $370.50 per week and units at $289.70 per week whilst houses in Hobart rent at $352.20 per week and units at $306.10 per week. Building approvals Given the lack of supply and demand for property being experienced in some areas of the Australian market, many are hoping to see a rise in the number of dwellings being approved. Despite this, the latest figures from the Australian Bureau of Statistics show that while the number of new buildings approved across the country increased slightly in January, it was lower than at the same time a year ago. The number of new dwellings approved in seasonally adjusted terms rose 1.8 per cent from 17,327 reported in December 2016 to 17,412 in January 2017. Over the past twelve months there has been a 12 per cent decline in the total number of dwellings approved in seasonally adjusted […]

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Property market update – February 2017

BMT team — Wed, 08 Feb 2017 23:05:06 +0000

Property values 2017 kicked off with continued growth in house prices according to CoreLogic’s Home Value Index. Combined capital city dwelling values increased by 0.7 per cent in January and as a result, values are 10.7 per cent higher than this time last year. Over the three months to January, it was Hobart which surprising led the capital cities in terms of the greatest increase in values. Tasmania’s capital saw dwelling values increase by 5.8 per cent, reaching a median dwelling price of $366,000. Sydney and Melbourne continue to be consistent performers in terms of dwelling price growth. Over the three months to January values rose by 2.7 and 2.4 per cent respectively in these cities. The current median dwelling price for Sydney is $850,000 while in Melbourne it sits at $640,000. Darwin was the only capital city where dwelling values experienced a fall, declining by 1.7 per cent during the month of January to a median dwelling price of $490,000. Residential property listings The latest data from SQM Research indicates that the number of residential property listings available fell during the month of January. According to the report, the biggest drop was experienced in Sydney and Melbourne, where listings declined 6.6 and 12.3 per cent during the month respectively. Nationally, there was a 3.0 per cent decrease in the number of residential properties listed. The only capital city which experienced an increase in listings over January was Darwin, with a 1.5 per cent increase. Auction clearance rates Despite the slowdown in residential property listings reported by SQM Research, the latest CoreLogic auction clearance rates indicate that the market will gather momentum after the seasonal holiday slowdown. Already there has been an increase in the number of auctions across the capital cities over the past week, with 867 auctions reported for the week ending the 5th of January compared with just 368 auctions during the previous week. From the 867 auctions tracked, CoreLogic reported a preliminary clearance rate of 70.8 per cent, down slight from the 71.6 per cent recorded for the last week of January. Rental rates Figures from the latest SQM Research Weekly Rental Index for the week ending the 4th of February show that over the month of January weekly rents for houses decreased by 1.4 per cent whilst weekly rents for units increased by 0.3 per cent. Of the capital cities, Canberra and Hobart led the way with the most significant increases in weekly rents for houses and units. Canberra experienced a 2.2 per cent increase in house rents and a 0.4 per cent increase in unit rents while Hobart saw a 2.3 per cent increase in house rents and a 0.7 per cent increase in unit rents over the month. Asking rents for Sydney houses increased by 0.2 per cent over January. However, the New South Wales capital city also saw a decline in asking rents for units of 0.2 per cent. No other capital cities experienced a decrease in weekly rents during the month. However, the asking rents for Darwin, Brisbane and Adelaide units experienced no changes when compared with the previous month. Rental vacancies The most noteworthy news regarding vacancy rates reported recently were figures reported by the Property Council of Australia. According to the Property Council’s Office Market Report, there was a slight lift in office vacancy rates from 10.5 to 10.4 per cent. The Australian Central Business District (CBD) office vacancy rate has remained steady over the six months to January 2017, falling from 11.0 per cent to 10.9 per cent. Demand for office space has been strong in all capital cities and particularly in Brisbane, where the Property Council reported that office space in the city CBD is now more than five times higher than historical levels. The Sunshine Coast and the Gold Coast office markets have also recorded sharp declines in vacancies, with the two cities now sitting at 6.9 and 12.2 per cent office vacancy respectively. Sydney and Melbourne CBD’s continue to demonstrate a strong office market performance, with vacancy rates of 6.2 and 6.4 per cent respectively. Building approvals The Australian Bureau of Statistics (ABS) released the latest buildings approvals data for December 2016 in February. According to the report there were 17,327 dwellings approved in December, a fall in approvals of 1.2 per cent when compared with the previous month in seasonally adjusted terms. The drop follows a 7.5 per cent jump in approvals reported in November and the numbers of dwellings approved is 11.4 per cent lower than the same time one year ago. Finance and interest rates At the first board meeting of the year by the Reserve Bank of Australia (RBA) it was decided to leave rates on hold at 1.5 per cent. The decision was widely anticipated after all seventy two Economists surveyed by Reuters indicated they expected the cash rate to stay put. Despite record low interest rates, property investors may continue to face difficulties with new loan applications and requests to refinance. Just yesterday Commonwealth Bank subsidiary, Bankwest, announced it has again tightened their lending policies for property investors.

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Property market update – December 2016

BMT team — Fri, 16 Dec 2016 00:02:59 +0000

Property values There were mixed results reported in the latest CoreLogic Home Value Index for the month of November 2016. The index revealed capital city house prices rose 0.2 per cent, led by strong increases in Darwin, Hobart and Sydney markets, however surprisingly Melbourne was the worst performer. In the Victorian capital city, house prices dropped by 1.5 per cent over the month to $623,500, despite being the second best performing city over the past year. Apartment prices in the city also fell by 3.2 per cent. According to Tim Lawless, CoreLogic’s Head of Research, the decrease in prices experienced in Melbourne could be due to an increase in the supply of apartments in the city. “It appears that higher unit supply is progressively weighing down the capital gains across Melbourne’s unit sector, with annual capital gains tracking at 3.9 per cent for Melbourne units compared with 12.2 per cent annual gain in Melbourne house values,” said Mr Lawless. Darwin was the capital city which experienced the strongest price growth, with a 3.7 per cent increase in home values, reaching a median of $480,000. Sydney continues to be the most expensive city to buy, with prices increasing a further 0.8 per cent over the month to $845,000. Hobart remains the cheapest of the capital cities. While the city experienced a 0.9 per cent price growth over the month, the median dwelling value sits at just $336,000. Rental vacancies The latest rental vacancy data from SQM Research found that nationally vacancies rose in November to 2.5 per cent, up from 2.3 per cent recorded during October. While Sydney had a vacancy rate of just 1.9 per cent, it still had the highest number of vacant properties with 11,962. Perth was the capital city with the highest vacancy rate, sitting at 4.9 per cent, and followed Sydney with the next highest number of empty properties with 10,273. Hobart, with only 158 properties vacant and a 0.6 per cent vacancy rate, remains the countries tightest rental market. Nationally there were 78,629 residential properties lying vacant recorded according to the SQM Research November report. Rental rates Despite the number of properties lying vacant in Sydney, the city continues to experience increases in weekly rents for houses. According to the SQM Research Weekly Rental Index for the week ending the 12th of December 2016, house rents in the New South Wales capital grew by 4.4 per cent when compared to the previous week, reaching $735 for houses. Weekly rents for units in Sydney experienced only a modest reduction of 0.1 per cent over the week. After seeing a dramatic rise of 9.7 per cent in weekly rents for houses during November, the latest December weekly rental index showed that Darwin rents continue to climb, increasing a further 0.7 per cent to approximately $551 per week. However, over a twelve month period rents for the Northern Territory capital are down for both houses and units by 0.7 and 2 per cent respectively. Hobart was the other major capital city to experience falling rents when compared to the previous week. The cost to rent a house dropped 5.1 per cent to approximately $352 and the cost to rent a unit dropped 4.3 per cent to approximately $304. The capital city which saw the most significant change on weekly rents for houses was Canberra, up 7.8 per cent to approximately $540. Building approvals Towards the end of November, the Australian Bureau of Statistics released the latest building approvals data for October2016. The report showed that building approvals have continued to slump. After seasonal adjustments, the report showed the total number of dwelling units approved decreased by 12.6 per cent over the month to 16,279. Over the space of one year, there has been a substantial drop of 24.9 per cent in the total number of dwelling units approved. Finance and interest rates When the Reserve Bank of Australia (RBA) delivered their decision at the 6th of December 2016 board meeting (the last meeting for the year) they decided again to keep the cash rate on hold at 1.5 per cent. Despite the record low cash rate, many banks are lifting interest rates. All four of the big four banks have increased interest rates for property investor loans and it has been widely predicted that interest rates for owner-occupiers may rise in 2017 too. The changes could be a result of increased uncertainty on global debt markets, particularly following the recent US election. A recent ANZ-Roy Morgan Consumer Confidence Report also gauged that confidence has fallen by 4.4 per cent, the lowest level recorded since May 2016. This comes on the back of Australia’s AAA credit rating being placed on a negative watch by Standard & Poor’s and fears that the economy could be heading towards a recession. Auction clearance rates While confidence is down and banks are lifting interest rates, it doesn’t seem to be having an impact on Australia’s auction clearance rates. Summer is traditionally a period when the market slows, but this year there have been more auctions held at this time than in the past. The most recent data released by CoreLogic for the week ending the 11th of December 2016 reported that there were 3,411 property auctions held during the week and a preliminary national clearance rate of 74.6 per cent was achieved. The results marked the twentieth consecutive week where clearance rates were above 70 per cent.

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Property market update – November 2016

BMT team — Mon, 07 Nov 2016 04:00:34 +0000

Property values Home values continue to rise during October, albeit at a slower pace than those experienced during September. The CoreLogic Home Value Index for October showed that capital city dwelling values rose just 0.5 per cent during the month, a drop from the previous growth results reported during August and September in which dwelling values rose 1.1 per cent and 1 per cent respectively. Sydney’s prices increased by 0.6 per cent during October, resulting in an average median dwelling price of $800,000. However it was Melbourne and Brisbane which led the capital cities with the most growth in dwelling prices, both seeing a 0.8 per cent increase and resulting in a median of $600,000 for Melbourne and $470,000 for Brisbane. Adelaide and Hobart were the only capital cities to see a fall in dwelling values. The South Australian capital city fell by 2.4 per cent while the Tasmanian capital fell by 2.1 per cent. Hobart remains the cheapest capital city, with a median dwelling value of $343,500 while Adelaide’s median dwelling price sits at $415,000. Rental vacancies Rental vacancies rose again during September according to the latest figures reported by SQM Research. Nationally the vacancy rate rose 2.4 per cent during September, up 2.3 per cent during August. Perth continues to be troubled by properties which remain untenanted, recording the highest vacancy rate at 5 per cent. Meanwhile, Hobart’s rental market remained the nations tightest, with a vacancy rate of just 0.6 per cent. Rental rates Reflecting its high vacancy rates, the SQM Research report revealed that the city of Perth also recorded falls of 9.5 per cent and 11.1 per cent in asking rents for houses and units respectively over the past twelve months. Yearly falls were also reported for Darwin, where asking rents for houses are down 4.8 per cent and for units down 3.5 per cent. Darwin is the second most expensive city to rent in Australia following Sydney. Weekly rents in the New South Wales capital for a house sit at $725 per week and $511 for units. Of the capital cities, Hobart remains the most affordable for rental accommodation, with houses costing just $359 per week to rent and units averaging $287 per week. CoreLogic also released a country-wide regional rental report towards the end of October which showed that outside the capital cities, rental property market conditions remain weak. The CoreLogic report explained that Tasmania has recorded the strongest rental growth across the country over the past year, with a 2 per cent increase in rent for houses and 4.5 per cent for units. Meanwhile, asking rents in regional Northern Territory and regional Western Australia were down 6 per cent and 5.6 per cent respectively over the year. A snapshot of the regions with the highest rental growth included West Moreton in Queensland which saw house rents increase 5 per cent over the last quarter to $318 per week and Wimmera in Victoria which saw house rents increase 3.3 per cent over the quarter to $318 per week and unit rents increase 2.5 per cent per week over the quarter to $205 per week. South West Queensland unit rents also increased 11.8 per cent over the last quarter to $308 per week. Building approvals The Australian Bureau of Statistics released the latest building approvals data for September 2016 last week. Total dwelling units approved continue to slow, with an 8.7 per cent drop when compared to last year in seasonally adjusted terms. While there has been a 2.3 per cent rise in the number of approvals for new houses to 9,605, apartment and townhouse approvals fell 16.3 per cent to 9,166. Although the value of residential building fell 0.1 per cent and has fallen for two months, the trend estimate of the value of total building approved rose 2.1 per cent in September and has risen for ten months. Finance and interest rates When the Reserve Bank of Australia (RBA) delivered their decision at the 1st of November 2016 board meeting, they decided to keep rates on hold at 1.5 per cent for the third straight month. It was also the fifth year in a row that there has not been an interest rate change on Melbourne Cup Day. While interest rates remain at all-time lows, mortgage rates from major banks and other lenders could still increase due to rules which are part of the Basel III accord. International banking regulators have told Australian banks to start relying more on Australian customer deposits to fund loans, rather than overseas money markets. This means banks are left with two options; to cover the added cost they can increase interest rates or reduce the discount customers might be expecting to receive on their variable rate next year. Auction clearance rates The preliminary auction clearance rate rose to 77.5 per cent according to results reported by CoreLogic on Sunday the 6th of November. There were 2,490 auctions scheduled for the week, up from the 2,253 reported for the previous week. However, the number of auctions is down on the same time last year, when 2,947 auctions were reported with a 61.4 per cent clearance rate. Sydney continues to record a clearance rate above 80 per cent. Of the 1,063 auctions schedule, 82.1 per cent sold. Perth, with only fifty one auctions schedule achieved only a 31.8 per cent clearance rate.

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Property market update – October 2016

BMT team — Fri, 07 Oct 2016 01:00:50 +0000

Property values For the month of September, a 1 per cent rise in home values was recorded according to the latest CoreLogic Hedonic Home Value Index. Sydney remains the capital city with the highest median dwelling price, currently sitting at $785,000, followed by Melbourne with a median dwelling price of $590,000. Of the two cities, Melbourne experienced the most growth in dwelling values, increasing by 2.3 per cent. Sydney dwelling values increased by just 0.8 per cent, however the city has seen a massive 10.2 per cent growth year on year. Of the capital cities, Canberra was the surprise package during September, outpacing both Sydney and Melbourne with an increase in dwelling values of 2.4 per cent during the month. The city has also experienced growth of 9 per cent over the past year. The median dwelling value for the city is currently sitting at $556,800. Perth and Darwin continue to experience falls in median dwelling values, dropping -2.5 per cent and -2.2 per cent respectively over the month of September. Rental vacancies The latest figures from SQM Research have revealed that vacancy rates during August 2016 have dropped to 2.3 per cent from the previously reported 2.5 per cent recorded during July 2016. All of the capital cities vacancy rates dropped during August, which helped to drive up rents particularly in Sydney and Melbourne where vacancy rates were below 2 per cent (sitting at 1.7 and 1.9 per cent respectively). The total number of vacancies across the country during August was 73,451. Hobart was the capital city with the tightest vacancy rates during the month of August, sitting at just 0.5 per cent. Rental rates According to SQM Research’s weekly rental index, the asking rent for a three bedroom house in Sydney has jumped 4.8 per cent over the past twelve months to $713 per week. Melbourne has also experienced a 3.4 per cent jump in rents over the past twelve months, with the average three bedroom house costing approximately $486 to rent per week. Both cities experienced an increase in weekly rents for units of 4 and 4.5 per cent respectively. Decreases in average rents for both houses and units were experienced by Perth and Darwin. There was been a -9.8 per cent decrease in weekly rents for houses and -11.4 per cent for units in Perth over the past twelve months, which is due in part to the downturn of the mining sector. Darwin has experienced a -1.5 per cent decrease in weekly rents for houses and a -5.5 per cent decrease in weekly rents for units over the past twelve months. Building approvals The Australian Bureau of Statistics released the latest building approvals data for August 2016 this week. While the data showed that overall residential building approvals slowed during August, down by just -1.8 per cent, the number of approvals (20,788 dwellings) is 10.1 per cent higher than during the same month last year. Of the 20,788 dwellings approved, 9,475 were houses and 11,313 were units. Units are continuing to prove to be popular as over the past year on more than seven occasions, there were more than seven months where dwelling approvals for residential units outpaced the number of dwellings approved for residential houses. Finance and interest rates More than fifty seven Economists polled by Reuters who expected the cash rate to remain on hold at 1.5 per cent were correct when the Reserve Bank of Australia (RBA) delivered their decision at the board meeting on Tuesday the 4th of October. While continued low interest rates will help first home owners and property investors to enter the market, housing finance data from the Australian Bureau of Statistics (ABS) released on the 9th of September suggests there has been a decrease of -1.8 per cent in the total value of mortgage lending. During July the total value of mortgage lending was $31.8 billion according to the report, down from 32.4 billion during June and $33.2 billion when it peaked during April 2015. Auction clearance rates There was less stock available on the market for the final weekend of September as most recognised that potential home buyers and property investor’s focus would be on watching the results of the AFL and Rugby League grand finals. However, of the 437 auctions reported in Sydney, there was a preliminary clearance rate of 83.8 per cent. In Melbourne, there were just 111 auctions held last weekend, the lowest recorded since the week ending January 24th 2016, and a preliminary clearance result of 92.8 per cent. This is the highest clearance rate Melbourne has recorded this year. Brisbane recorded a preliminary clearance rate of 47.9 per cent from just seventy one auctions recorded and of the five auctions held in Tasmania this week, there was just one successful sale.

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Property market update – September 2016

BMT team — Wed, 07 Sep 2016 01:56:29 +0000

As a property investor, staying informed on any changes or statistical indicators relating to the property market is vitally important. With this in mind, we’ll be providing a monthly property market update which summarises some of the most relevant real estate and finance industry news to assist you to succeed on your investment journey. Property values For the month of August, a 1.1 per cent rise in home values was recorded according to the latest CoreLogic Hedonic Home Value Index. Sydney remains the capital city with the highest median dwelling price, currently sitting at $780,000, followed by Melbourne with a median dwelling price of $576,000. In both of these cities, dwelling values have continued to increase month-on-month by more than 1 per cent, with cumulative growth over the cycle (June 2012 to date) reaching 64 per cent in Sydney and 44 per cent in Melbourne. Hobart remains the most affordable capital city with median values sitting at $306,000. Rental rates The latest CoreLogic report on rental rates, released in August, showed that rents across the combined capital cities fell by 0.3 per cent during July. Rental rates decreased in all cities except Melbourne and Hobart, which have experienced a 0.8 per cent and 3.9 per cent increase over the past quarter respectively. Sydney is still the most expensive city to live in, with a median average weekly rent of $595, compared to a combined capital city median rent of $483, which came in at its lowest level since December 2015. Hobart is the cheapest capital for tenants to live in, with a median average weekly rent of $359. Rental vacancies Figures from SQM Research released at the end of August revealed that the number of national residential vacancies rose during the month of July. A vacancy rate of 2.5 per cent was recorded with 79,300 properties vacant. Of the capital cities, Perth recorded the highest vacancy rate during July of 5.2 per cent. The report showed 10,738 vacancies in total and an increase of 1.4 per cent for the year-to-year vacancy rate. The city also recorded the highest monthly increase in rental vacancies of 0.2 per cent during the month of July. Building approvals The latest data on building approvals from the Australian Bureau of Statistics indicates that there has been a surge in apartment approvals of 23 per cent during the month of July. There were 11,393 apartment approvals during the month, a result which was 16 per cent higher than the number approved during the same month one year ago. Despite this increase, house approvals declined by 0.5 per cent during the month, with approvals almost 3 per cent lower over the year. Finance and interest rates As predicted by most Economists leading up to yesterday’s board meeting, the Reserve Bank of Australia (RBA) decided to keep rates on hold at 1.5 per cent. The recent changes made by the RBA during August and May have encouraged many first-home owners and particularly property investors to take advantage of low interest rates and enter the property market. Recent data released by the nation’s big four banks also highlighted that those with existing home loan debts have been able to reduce their home loan debts, with the nation’s largest lender, The Commonwealth Bank, confirming that three out of every four customers are thirty three mortgage repayments ahead on average Auction clearance rates Property sales for spring were off to a strong start, as the preliminary capital city clearance rates recorded a year to date high of 78.4 per cent according to CoreLogic. A total of 1,858 homes went to auction for the weekend ending the 4th of September 2016, however was a decrease compared to the 2,153 auctions recorded during the previous weekend and the 2,297 auctions recorded one year ago. Of the capital cities, Sydney achieved the strongest preliminary clearance rate of 83.9 per cent.

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