2023 Property Market Year in Review

BMT team — Mon, 20 Nov 2023 22:47:43 +0000

Despite ongoing interest rate hikes, high inflation and a subsequent ease in consumer spending, the residential property market has shown resilience with a 7.0% growth rate in the year to November 2023. As at the end of November, residential real estate constituted $10.3 trillion of Australia’s wealth, with superannuation at $3.5 trillion, Australian listed stocks at $2.8 trillion, and commercial real estate at $1.3 trillion following closely behind. RESIDENTIAL AND COMMERCIAL PROPERTY VALUES There has been renewed growth in the capital cities property market this year. Brisbane properties have shown growth at an impressive 10.7% over the past year and dwelling values are currently at a record high. Perth has taken a definitive lead at a growth rate of 13.5%, followed by Adelaide which has shown a slowdown from a significant 13.4% in November 2022 in comparison with a growth rate of 7.6% in November 2023. In Sydney, dwelling values increased by 10.2% over the past year, but are still below the record highs of January 2022 and Melbourne showed a respectable 3.0% growth over the past year. Canberra, Darwin and Hobart have struggled to get above the line this year with values falling by -0.3% in Canberra, -1.5% in Darwin and -3.0% in Hobart respectively. The rise in the value of regional property has also slowed across the country showing a more moderate growth rate of 3.4% as of November 2023 compared to the 10.1% growth rate seen at the same time last year, suggesting a potential downtrend in the tree change and a return to city life for many. PROPERTY SALES Most residential homes across Australia take approximately 32 days to sell, with 10.2% more properties on the market across Australia, than the same time a year ago. Perth has once again broken the trend, selling within less than 12 days, highlighting the lack of availability and rise in demand in the already heavily burdened property market in Western Australia. RENTAL PROPERTY MARKET As always, rental rates in the capital cities have shown significant growth at 9.7%, followed by a much more muted growth rate of 4.1% in regional areas. Rental rates across Australia as a whole have averaged 8.1%. According to CoreLogic, there has been a slight compression in gross rent yields nationally to 3.69%, which is down from 3.70% the previous month. LOAN APPROVALS AND CREDIT Covid era fixed rates expired this year, forcing many Australians into mortgage stress, spending well above the recommended 30% of their income on mortgage payments. In 2020 the average three – year fixed rate investor loan was at 2.2%. For some, this has now increased to a comparable variable rate loan of up to 7.21% with the Big Four banks, averaging 6.0% for owner occupiers and 6.49% for investors. Lending standards tightened for all residential and commercial real estate loan categories, but secured, tenanted investors are still positively favored by banks with investor finance comprising 35.6% of new mortgage lending through October. This share of investment lending was highest across NSW at 40.4% and is trending higher than the historic average at the national level. Most owner-occupier loans granted this year were first time buyers, comprising 28.9% of new owner occupier finance, which is well above the decade average of 24.2%. indicating a positive uptake of government schemes for this market segment. In terms of the number of dwellings approved for construction, both detached home – and unit approvals trended well below the historic 10-year average, with units trending even lower than detached homes. INTEREST RATES The 25-basis point Melbourne Cup Day rate hike has taken no one by surprise, leaving 1 in 4 lenders now with loans greater than their incomes according to the Reserve Bank of Australia. The number of Australians defaulting on their home loans, now surpasses the mortgage stress peaks of the Global Financial Crisis, however, returns on interest bearing investments, such as term deposits, have been favorable. Many mortgage customers have also found a way forward by refinancing their loans at more competitive rates. BMT NEWS As quantity surveyors, we have been steadfast in our approach to depreciation, believing that a physical onsite inspection will ensure an accurate and reliable depreciation schedule that will earn the owner the highest possible tax deductions. In 2023 our stance was validated by the Australian Institute of Quantity Surveyors, whose principal mission it is to establish and uphold professional standards at all times, maintain uniformity in procedures, support industry education, and foster public faith in cost certainty and the quantity surveying profession overall. Since opening its doors in 1997, BMT Tax Depreciation has completed more than 900 000 tax depreciation schedules to date, averaging first full financial year deductions of almost $9 000,00 in all residential properties and more than $15 000,00 in new properties, once again cementing our position as market leaders in tax depreciation. To maximise property tax depreciation deductions on your property, Request a Quote from us. 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.

The post 2023 Property Market Year in Review appeared first on .

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.

The post 2023 property market update appeared first on .

» 2023 property market outlook

2023 Property Market Year in Review

2023 property market update