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Property Market Update 2024

BMT team — Mon, 15 Jan 2024 23:34:44 +0000

2023 was a year filled with more than its fair share of challenges, but Australians are tough and the property market was resilient in the face of multiple interest rate hikes and hesitant investor sentiment. Residential home prices across Australia grew by 7% over the year to November 2023, with dwelling prices in the combined capital cities peaking in May, slowing again towards the end of 2023 and settling at 8.2% growth over the year. In contrast residential property values in regional areas showed slower growth, at a rate of 3.4% over the past year. Interest Rates As expected, interest rates continued to rise and many fixed-term mortgage rate loans came to an end, putting some Australians under mortgage stress. Despite these pressures, residential house prices continued to grow, due to the continued imbalance between housing availability and strong demand. This housing imbalance has also impacted the rental market with national rental increases averaging 8.1% over the past year. Despite these increases in rental values, rental yields have shown much smaller growth rates due to interest rate hikes impacting mortgage repayments. Loan Approvals First time loan approvals have increased by 11.8% over the past year, but investor lending was still strong, comprising of more than a third of total approved loans across Australia in 2023. Rising interest rates have done little to slow down the residential property market outlook in most parts of Australia, with monthly sales volumes trending higher than the five-year average despite rising house prices and tighter lending. This upward trend in residential property prices is forecast to continue well into 2024 due to the housing shortage. Investment in alternative property classes will continue to grow in the year ahead. The return of international students is expected to stimulate the demand for student housing and Build-to-rent investment opportunities. Recovery in tourism will also boost consumer demand and growth in the hotel and short-term accommodation market. In line with this predicted growth, we at BMT have seen 15% growth in tax depreciation schedule orders for hotels and motels, affirming the expansion of this sector. Commercial Property Commercial property investors will remain focused on attracting top tenants who are prepared to pay for prime location and amenities, reinforcing the ‘flight to quality’ trend. BMT Tax Depreciation Schedule orders in the industrial sector have grown by 8% while the embattled office sector has shown a 6% decline in the request for tax depreciation schedules in line with market trends. BMT News Overall, it was a challenging but positive year for BMT. We completed more than 40,000 depreciation schedules in 2023, earning our clients hundreds of millions in tax deductions. In 2024 we will have completed close to 1 million depreciation schedules across Australia; an accomplishment that solidifies our position as the number one choice in tax depreciation. In 2023 the Australian Institute of Quantity Surveyors released a white paper validating our approach to property depreciation, insisting that a site inspection by an expert quantity surveyor remains the most reliable way to maximise the depreciation deductions on an investment property. They have also encouraged our industry to move away from referral fees, a practice that BMT has always avoided. Video link We look forward to another great year of partnering with you at BMT. To maximise the tax depreciations on your investment property Request a quote.

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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.

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Property Market Update 2022

BMT team — Fri, 28 Jan 2022 02:16:37 +0000

The pandemic pushed Australians to their limits in 2021, but we remained staunch – as did the housing and property market. Read on for a recap of events in last year’s property market and watch the video to hear the thoughts of our CEO, Bradley Beer. Contents: National property market prices Rental yields Finance and interest rates National property market prices The property market in Australia finished the year with strength. At the end of December 2021, Australian dwelling values were 22.1% higher than in December 2020, coming off a cyclical high of 22.2% in the twelve months to November. Australia’s inflated property market is now valued at more than $9 trillion, a record high after surging home prices through the pandemic lifted the value of residential property by $1 trillion in the past six months alone. Rental yields With national property values recording an annual rise of 22.1% compared with a 9.4% rise in rents, rental yields have decreased as a natural consequence. Gross rental yields fell to a new record low across Australia, reaching 3.2% in December. The lowest yields, by some margin, remain in Sydney (2.4%) and Melbourne (2.7%), however, except for Perth and Darwin, every capital city is recording record low yields. Finance and interest rates Following its December meeting, the RBA kept the Official Cash Rate at the record-low of 0.1 per cent. Concerns about property affordability have risen to the highest-ever level in the latest ANZ/Property Council Survey, with respondents saying soaring prices and increasingly unequal access to home ownership make it the number one issue for governments to address. The powerful Reserve Bank-led Council of Financial Regulators has maintained its watching brief over the hottest property market in over three decades, saying it continues to “closely monitor” the impact of the higher interest rate buffers imposed in November. Hear more from our CEO, Bradley Beer.

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Property market update February 2020

BMT team — Sun, 09 Feb 2020 22:11:34 +0000

House values jumped in January but there are signs of a slowdown House values lifted in every capital city in January with the CoreLogic national home value index up by 0.9 per cent. However, there are signs of a slowdown. Contents: Property values Rental rates Listing numbers Finance and interest rates Construction and commercial property Property values The property market rebound continued into 2020 as January saw prices rise in every capital city and rest-of-state region, apart from regional South Australia. Sydney and Melbourne continue to be market leaders as values increased 1.1 per cent and 1.2 per cent respectively. Hobart values increased by 0.9 per cent, while Brisbane jumped by 0.5 per cent. Canberra (0.3 per cent), Adelaide (0.2 per cent), Darwin (0.1 per cent) and Perth (0.1 per cent) also increased. Perth continued to bounce back after a five-and-a-half-year slump with January also marking the first positive change over the quarter (0.4 per cent) since May 2018. Regional markets also showed strong results during the first month of the year. The strongest conditions were in regional Tasmania (1.3 per cent) and Western Australia (0.9 per cent). Despite strong national results, the rate of growth is showing signs of slowing. The national dwelling index declined from 1.7 per cent in November to 0.9 per cent in January. Seasonal effects, ongoing affordability issues, an increase in advertised stock and tough economic conditions are all impacting the property market recovery. Rental rates Rental rates increased by 0.5 per cent in January however most markets remain relatively weak. Hobart remains the tightest market in Australia, where rental rates have experienced an annual increase of 5.8 per cent. According to CoreLogic, ‘with housing values rising more rapidly than rental rates, gross rental yields are swiftly compressing’. Listing numbers February figures released by SQM Research revealed national residential property listings increased by 2.2 per cent in January, however, were down 10 per cent compared to the same time last year. Overall, advertised listing numbers continue to trend below average, though experts are expecting to see numbers lift later in the year. While an increase in listings would offer a wider range of choice for buyers, it could also mitigate property growth as it dampens the urgency to purchase housing. Finance and interest rates The Reserve Bank of Australia (RBA) left the official cash rate unchanged at its February meeting. The cash rate remains at 0.75 per cent. The Reserve Bank of Australia #RBA has announced its decision to leave the official cash rate for February on hold. It remains at a record low of 0.75% pic.twitter.com/Ngq4vzKqG6 — BMT Tax Depreciation (@BMT_Tax_Dep) February 4, 2020 RBA Governor Philip Lowe said in a statement that: ‘There are continuing signs of a pick-up in established housing markets. This is especially so in Sydney and Melbourne, but prices in some other markets have also increased. Mortgage loan commitments have also picked up, although demand for credit by investors remains subdued. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality. Credit conditions for small and medium-sized businesses remain tight.’ In other finance news, the Commonwealth Bank and National Australia Bank have been inundated with thousands of applications for the First Home Loan Deposit Scheme since it opened in January. The influx of applications is fuelling a FOMO attitude among buyers and lifting property prices as a result. Construction and commercial property Investment in alternative real estate assets like student accommodation and petrol stations rose to $8 billion in 2019, a 42 per cent jump year on year. With subdued business conditions, property groups are on the hunt for relative value in the property market. The same growth cannot be said for the development sector. According to CoreLogic’s Cordell Construction latest report, the number of new developments which have been announced but not yet commenced decreased by 33 per cent. Nationally, the number of new projects fell by around 5 per cent when compared to the previous twelve-month period. In terms of construction, there were 863 projects moving into the construction phase over December, a decline of 14 per cent. As mentioned in our Property Market Outlook 2020 article, figures from the Performance of Construction Index also showed that overall activity in apartment construction and new developments contracted for a 20th month in December, even as the pace of decline eased.

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Property market update November 2019

BMT team — Mon, 04 Nov 2019 03:55:32 +0000

Property values deliver largest month-on-month gain since 2015 A surge in property values in October has delivered the largest month-on-month gain since 2015, CoreLogic’s national index data shows. Property values National dwelling values jumped by 1.2 per cent throughout October, delivering the fourth consecutive month of increased values and the largest month-on-month gain since May 2015. Melbourne overtook Sydney to claim the title of the best performing capital city, recording a 2.3 per cent increase in dwelling values over the month. Melbourne’s October growth is the largest consecutive gain for the city since November 2009. A tighter market combined with strong population growth relative to other cities has assisted the solid rebound. Dwelling values are trending higher across most of the capital cities as lower mortgage rates and improved credit conditions continue to encourage buyers. Dwelling values increased in Sydney (1.7 per cent), Hobart (0.9 per cent), Brisbane (0.8 per cent), Canberra (0.6 per cent), Adelaide (0.4 per cent) and Darwin (0.3 per cent). The worst performing city was Perth, declining by 0.4 per cent over the month. While the downwards trend in Perth has continued, the market is showing an improvement in the rate of decline. Both Perth and Darwin have been weakening since mid-2014, with Darwin down a cumulative 31 per cent and Perth values 22 per cent lower. The median value now stands at $435,119 for Perth and $394,132 for Darwin. Outside the capital cities, Launceston was the top performer for change in dwelling values. Property values in the Tasmanian city increased by 4.7 per cent. The Mackay and Whitsunday region in Queensland wasn’t far behind, recording a 4.4 per cent rise over the month. Rental rates CoreLogic data revealed slowing rental markets throughout October. Over the three months to October, rental rates fell across five out of the eight capital cities. The sharpest declines were found in Darwin, where rental rates were 1 per cent lower for the quarter. Sydney’s rental market also suffered, recording a 0.7 per cent decline in rent prices and the lowest rental yields (3.2 per cent) of any capital city. Adelaide and Brisbane emerged as the top performers. Rental rates increased by 0.3 per cent and 0.2 per cent respectively over the quarter. The current rental conditions are a combination of multiple factors including a rise in rental stock, increased construction skewed toward rental accommodation and higher first home buyer activity. Auction clearance rates Auction clearance rates remained relatively unchanged, pushing 70 per cent and consistently showing strong demand. There were just under 2,000 capital city homes taken to auction in the week ending October 20, 75.6 per cent of which returned a successful result according to preliminary results. Finance and interest rates Lower mortgage rates and improved access to credit are having a positive affect on the national property market as the rebound continues to gather momentum. The Reserve Bank of Australia #RBA has decided to leave the cash rate unchanged at a record low of 0.75 percent. #interest #rates #recordlow pic.twitter.com/fxcjYompFv — BMT Tax Depreciation (@BMT_Tax_Dep) November 5, 2019 Despite a subdued rental market, property investors are seeing improved cash flow as a result of falling mortgage rates. Over the quarter, average rents fell by 0.5 per cent across the capital cities while the gross yields dropped to 3.99 per cent. The average fixed rate mortgage also declined to 3.6 per cent, roughly matching the rental returns. Commercial property Commercial property is likely to become a stronger investment over the next 18 months, according to a report by AMP Capital, with most asset classes set to offer solid returns. Similarly, Australian Bureau of Statistics data from August showed commercial building approvals soared by 54 per cent to their highest point in three years. Australian office sales also soared to $17.9 billion in the first three quarters of 2019, showing strong growth in the sector. On the contrary, commercial primary producers and agricultural businesses could be facing tax changes liken to ‘the removal of negative gearing’. The tax legislation denies owners of vacant land the ability to claim holdings costs such as interest, council rates, land taxes and insurance as tax deductions. Property developers, foreign owners, farmers and trusts are said to be among those hit the hardest by the NSW government crackdown.

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Property market update October 2019

BMT team — Tue, 08 Oct 2019 21:54:05 +0000

Australian property market recovery gathers momentum The Australian property market has continued its recovery throughout September, led by strong rebounds in Sydney and Melbourne. Property values Australia’s two largest cities led the September recovery, with Sydney and Melbourne dwelling values both increasing by 1.7 percent. The positive trend pushed the median property value to $805,424 and $634,913 respectively, however values still remain well below their peaks. CoreLogic cited low mortgage rates, improved credit access and economic factors to the current bounce-back of Sydney and Melbourne. CoreLogic head of research Tim Lawless said: “Population growth is higher, unemployment is lower and jobs growth is stronger, providing a solid platform for housing demand.” Along with this, the Sydney and Melbourne markets have seen stronger investor participation in recent months as market confidence continues to grow. Brisbane and Canberra were the only other capital cities to record a rise in dwelling values, lifting 0.1 per cent and 1 per cent. Values fell in Hobart (-0.4 per cent), Perth (-0.8 per cent) and Darwin (-0.2 per cent), while Adelaide prices remained unchanged.While Perth continued its market decline experts say the city is just at the right stage of the property cycle for growth, having achieved a balance between supply and affordability. Residential property listings Property listings remain low across the country, with existing listing numbers 10 per cent lower than a year ago across the combined capital cities and fresh listings 15 per cent lower. The reduced real estate stock is creating a sense of urgency among buyers, with the fear of missing out boosting buyer activity. Auction clearance rates The seasonal impact of spring showed in the national auction market, with CoreLogic results recording a lift in national residential property listings by almost 3 per cent in the first week of September. National auction clearance rates held around the mid-to-high 70 per cent range over the month, with the results remaining high on larger volumes. Prices also experienced a lift throughout the month. Buyers are paying above the expected sale price as sentiment continues to pick up, and purchasers compete for the few properties on the market. Vacancy and rental rates National rental rates were down 0.1 per cent over September, continuing their downward trend for the fourth consecutive month. Sydney (-1.0 per cent), Melbourne (-0.3 per cent), Perth (-0.4 per cent), Darwin (-0.2 per cent) and Canberra (-1.1 per cent) all recorded a decline in the three months to September. While gross rental yields are still trending slightly higher than 12 months ago, they’re trending lower across most areas. Finance and interest rates The Reserve Bank of Australia (RBA) has dropped the official cash rate below 1 per cent for the first time in history. The official rate is now at a record low of 0.75 per cent. In a statement issued after the call, the RBA said they made the decision in a bid to support employment growth and to provide greater confidence that inflation would be consistent with the medium-term target. A combination of drought, stagnant wage growth and trade conflict between China and the United States also contributed to the controversial interest rates decision. Commercial property New hotel development in Australia is predicted to slow as the country’s struggling apartment market contributes to a decrease in residential-led mixed use projects. Along with the slowdown in development, hotels in Australia have started offering free co-working spaces as a new phenomenon of space activation takes hold. Two hotels in Sydney’s Rushcutters Bay and the CBD have offered free desks to businesses to draw in more patrons through the lure of a busier ground floor lobby. While hotels continue to look for new ways to adapt to the market, Sydney and Melbourne’s office and industrial property sectors have offered strong returns for investors throughout September. Melbourne’s office market boom is expected to continue until 2024, with prime rents expected to rise another 30 per cent to 40 per cent.

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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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Hobart property market set to stabilise

BMT team — Thu, 05 Sep 2019 00:17:26 +0000

While national property prices were plummeting at their steepest decline since the global financial crisis earlier this year, Australia’s island state was defying the odds. Tasmania has experienced significant capital growth in recent years, with Prime Minister Scott Morrison dubbing it the ‘turnaround state’. Hobart in particular has gone from strength to strength, only recently starting to cool off after years of exponential growth. Low supply of dwellings, low median price, tight vacancy rate and an upswing in tourism have all contributed to the city’s property boom. In this article we will look at: Hobart property values Hobart property listings Hobart vacancy and rental rates Hobart property market trends Hobart property values Hobart dwelling values continued to rise over the last month, with the latest CoreLogic data showing a 0.5 per cent increase in values during August, the third successive month of capital gain for the city. Hobart also topped CoreLogic’s list of top ten performers, recording a 3.1 per cent annual increase. Canberra placed second with 1.2 per cent. Over the past five years Hobart’s dwelling values have skyrocketed by 35.9 per cent, more than 10 per cent higher than Melbourne and 15 per cent higher than Sydney. According to the Australian Bureau of Statistics (ABS), Hobart property prices have been rising at an average rate of 4.6 per cent a year — the fastest of all Australian capitals. Despite solid growth, the median price of property ($465,535) remains relatively affordable in comparison to other capital cities like Sydney ($790,072) and Melbourne ($626,703). While the city has experienced enormous growth, the latest CoreLogic figures indicate prices are beginning to stabilise and it’s likely the property market will lose its momentum over the next twelve months. Hobart property listings Hobart had 298 new listings in August, a 12.4 per cent decline in comparison to the same period last year. However, overall there were 1,060 properties listed for sale, a 6.9 per cent increase over the past twelve months. The median time on the market for houses was 39 days, while units recorded a median of 42 days. Hobart vacancy and rental rates Hobart has the hottest renal market in the country and has experienced a 5.5 per cent increase in rental conditions over the past twelve months. The asking rental price for Hobart is $443.50, 9 per cent higher than the same time last year and 29.8 per cent higher than three years ago. Along with this, the city’s residential vacancy rate is currently just 0.5 per cent. Hobart property market trends The number of tourists visiting Tasmania has continued to grow, with 1.32 million visitors travelling to the state over the twelve months to March 2019, according to Tourism Tasmania. With steady visitation growth, Hobart is seeing a trend of investors converting private rental properties into short-stay accommodation. A recent University of Tasmania report recorded a 288 per cent increase in entire properties being listed on short-stay accommodation websites in the city from July 2016 to 2018. Given the city’s tight vacancy rate and rental conditions, reducing existing rental stock could further acerbate Hobart’s household rental stress. In July, the Master Builders Association said regulatory and cultural change to embrace higher-density housing was vital to Tasmania’s future.

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Could this regional city be the next property hotspot?

Simon Pressley — Mon, 19 Aug 2019 06:54:28 +0000

A high proportion of property investors often overlook regional locations which offer great potential. Right now, one of the strongest property markets in Australia is the inland regional Victorian city of Mildura. Mildura’s 7.8 per cent increase in median house price over the last twelve months is superior to all Australian capital cities. Only Hobart, Canberra and Melbourne have produced a higher rate of capital growth over the last three years. You’ll get change from $300,000 for a good quality house in Mildura and the 6.1 per cent median rental yield, regardless of the size of your deposit, puts a standard investment property in cash flow positive territory. While several capital cities are currently feeling the pinch from housing over-supply, Mildura’s vacancy rate of 0.6 per cent is reflective of one of the tightest rental markets in the country. As for employment opportunities, the 6.9 per cent increase in job advertisements over the year ending May 2019 is higher than six out of eight capital cities. There’s no such thing as a ‘perfect’ property market however, as you’ll see throughout this Mildura Property Market Research Report, this location certainly ticks the right boxes. Mildura property market history Over the last twenty eight years, Mildura’s median house price has more than tripled from $78,000 in 1990 to $270,000 as at December 2018. The trend line in the below chart confirms how incredibly consistent the market has been for just shy of three decades, with the average annual growth over the period being 4.5 per cent. The largest property market downturn ever experienced in Mildura was in 2008 (the year of the GFC) when the median house price declined by just $10,000. Contrast this against the $225,000 decline in middle-ring Sydney over the last two years and one can only hope that property investors are now starting to re-evaluate Mildura’s potential. Over the most recent five years (ending March 2019), Mildura’s 25.6 per cent price growth is on par with Canberra and superior to Brisbane, Perth, Adelaide and Darwin. As for rents, according to CoreLogic, Mildura’s current median house rent is $320 per week. Rents have increased by 18.5 per cent over the last five years and 6.7 per cent over the twelve months ending March 2019. Mildura population Located on the Victorian side of the Murray River, Mildura is the largest settlement in the Sunraysia region. Mildura is an important service centre for dozens of smaller country towns within a 100-kilometre radius. During 2017-18 the inland city had a population growth rate of 0.8 per cent, equal to Adelaide and driven largely by overseas migration. The demand from overseas migration is led by skilled labour, particularly to support the region’s agriculture productivity. Mildura housing supply Based on Mildura’s average annual population growth over the last five years (477) and its average household size of 2.4 people, the base-level demand for extra housing in Mildura is 199 dwellings per year. According to Australian Bureau of Statistics data, an average of 293 new dwellings have been approved in Mildura over the last five years. On face value, the data suggests recent supply should have been sufficient for recent demand, but the reality says otherwise. Mildura’s dwelling stock increased by 428 between the Census periods – enough for an increased population of 1,027 people. However, ABS data shows the actual population growth across this period was 2,742 (1,715 more than supply accommodated for). For much of the last decade, roughly seventy residential dwellings were recorded as ‘vacant’, or a vacancy rate of just shy of 2 per cent. All considered, Mildura’s rental stock would benefit from an additional forty to fifty dwellings. Mildura property market outlook Mildura is a shining example of a regional location that continues to produce solid results. Advantages: Mildura is one of the most accessible property markets in Australia for owner-occupiers and investors Current housing under-supply places pressure on real estate prices Continuation of tight supply is likely to maintain pressure on prices Strong housing demand is driven by healthy local economic conditions and overseas migration to meet skills labour shortages Exciting outlook for the Australian agriculture sector presents a great opportunity for regional cities like Mildura Strong investor cash flow supported by high rental yields and prospect for further rent rises Disadvantages: Declining internal migration Property growth cycle is already underway, although this is no suggestion of the cycle being too advanced for new buyers to benefit from

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Property market update August 2019

BMT team — Mon, 12 Aug 2019 04:12:15 +0000

Australian property market set to stabilise The property market continued to show signs of life throughout July and is tipped to stabilise by the end of the year following lower mortgage rates, improved housing affordability and increased confidence post federal election. Property values Tides appear to be turning for the Australian property market, with dwelling values holding firm throughout July, according to the latest CoreLogic Hedonic Home Value Index. Five out of the eight capital cities recorded a slight increase in values over the month. Sydney, Melbourne and Brisbane all recorded a 0.2 per cent rise, marking the first month-on-month rise for Brisbane since November 2018 and signalling a positive trend overall. Sydney house values were 0.2 per cent lower over the quarter, but unit values increased by 0.02 per cent. The latest forecast from BIS Oxford Economics is predicting inner Sydney’s new apartment market to return to balance in 2020, putting the central city back into undersupply as population growth picks up and a lack of new supply starts to push rents and prices higher. Melbourne is following a similar trend, with house values down 0.3 per cent over the three months to July and unit values up 1.1 per cent. Hobart (0.3 per cent) and Darwin (0.4 per cent) dwelling values increased over the month, while Adelaide (-0.3 per cent), Canberra (-0.3 per cent) and Perth (-0.5 per cent) declined. Regional markets remain varied. The best performing regions throughout July were in Tasmania’s south east and north-west, with New South Wales’ Riverina region also showing solid gains. On the other end of the property spectrum, the weakest regional sectors were in the outback regions of Queensland, Western Australia and South Australia, where drought conditions continue to bite. Residential property listings New residential listings are a significant 22 per cent lower than they were a year ago, while total stock advertised for sale is 3.5 per cent lower. While listing numbers are partly seasonal, recent falls are indicative of weak vendor confidence and tough market conditions. According to CoreLogic, the recent improvement in housing market conditions should support a rise in vendor sentiment as we approach spring. Vacancy and rental rates National rents were down 0.1 per cent in July, led by negative trends in Sydney, Perth and Canberra. According to CoreLogic, Sydney remains the lowest yielding market, tracking at 3.43 per cent, down from a recent peak of 3.51 per cent two months ago. The strongest conditions were in Hobart where rental prices have experienced an annual increase of 5.5 per cent. On average, Australia recorded a 0.3 per cent increase in rents over the second quarter of 2019, which is softer growth than the 1 per cent recorded in the previous quarter. Capital city rents were 0.1 per cent higher over the quarter however remain down year-on-year. Further, gross rental yields for the last quarter decreased in Sydney and Canberra, while increasing everywhere else. Auction clearance rates Combined capital cities recorded a preliminary auction clearance rate of 68.3 per cent in the first week of August. Sydney has the highest clearance rate of all capital cities, with 74.8 per cent of auctions returning a successful result. Melbourne was close behind, returning a result of 73.3 per cent. Outside of Sydney and Melbourne, auction volumes increased across all cities excluding Hobart. The latest data mirror the positive results felt throughout July. Auction clearance rates held above 70 per cent for most of the month across Sydney and Melbourne, indicating a better fit between buyer and seller pricing expectations. At the same time, advertised housing stock was reduced. The low number of houses going to auction is creating heightened competition among buyers, many of whom are eager to buy following the RBA’s consecutive interest rate cuts. Finance and interest rates The Reserve Bank of Australia (RBA) has announced its decision to leave interest rates on hold at 1 per cent following back-to-back cuts in June and July. The pause from lowering interest rates will give the RBA time to assess the economic effects of the consecutive cuts however, a further reduction is widely anticipated. Citing a weak inflation outlook and a deteriorating global growth outlook, RBA Governor Philip Lowe said, “the increased uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy remain tilted to the downside.” Along with the RBA’s interest rate call, the Australian Prudential Regulation Authority removed the 7 per cent interest rate buffer for residential mortgage lending. The relaxed restrictions eliminate the need for a ‘stress test’ on home loan applications, which typically determines whether borrowers can afford to repay residential home loans with an interest rate of at least 7 per cent. Commercial property There is healthy buying appetite at commercial auctions across the country although buyers are cautious as conditions remain tight. Capital values surged 7.1 per cent nationally, led by Melbourne and Sydney, while commercial rental yields tightened across all capital city markets except Melbourne. Along the east coast, the overall vacancy rate for industrial property declined to 2.3 per cent during the second quarter of 2019, according to analysis by Urbis. In other commercial news, agricultural property is forecast to decline as drought conditions worsen. Increased property availability and decreasing farm operating profits are expected to further slow price growth in agricultural regions in the coming eighteen months.

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