Materials shortages, extreme rainfall and flash flooding are all predicted to continue to affect home building and property prices in the next year.
Also impacting the industry is the unprecedented demand caused by the Federal Government’s HomeBuilder scheme stimulus, which is driving over 143,700 new builds this year.
Scott Brumfield of construction group Hansen Yuncken says pandemic-related international supply chain issues have left Australia with its worst material shortage in 40 years.
“Delays in sourcing materials, from international suppliers especially, is not a new issue for Australia, given its geographical location, but one exacerbated by Covid among other factors and we now have a crisis on our hands,” he says.
Brumfield says steel prices have increased 15% and lead times are taking up to 18 months. Even before Covid there were delays in sourcing tiles, vinyl, glass and aluminium.
Lenders are continuing to offer low interest rates and incentives to entice homeowners to refinance.
Almost 200 lenders are now offering home loans at interest rates of less than 2%, although Money warns borrowers to do their research, not fall for gimmicks and to fully investigate cashback offers and honeymoon rates.
It says mortgages need to have a “real” quarantined deposit/offset account that runs alongside the home loan and nets off the savings balance from the
Otherwise, borrowers can find their savings are subsumed into the mortgage and locked up and unavailable for redraw if needed.
Mozo analysed the 10 best mortgages for owneroccupiers in the market for Money. The cheapest was from Well Home Loans with an interest rate of 1.85%, followed by the Police Credit Union and Tic:Toc at 1.89%. The comparison rate, which includes fees, is slightly lower at Police Credit Union while the Tic:Toc offer has a $10 monthly charge for having an offset account.
Property prices and demand continue to be strong despite increased listing levels in some capital cities.
CoreLogic figures show the number of properties offered for auction across Australia hit 4,261 last week – the first time auction numbers have exceeded
4,000 making it the busiest week of auctions since it started keeping records in 2008.
The preliminary auction clearance rate has softened a little since October but still remains above 70%, with 71.4% of auction properties selling under the
hammer last week.
Canberra had the highest auction clearance rate of 88%, while Adelaide achieved 79% and Brisbane 75%.
In Sydney 1,577 properties went to auction, the highest number offered since November 2014, achieving a clearance rate of 71.4%, down 2% on the previous week.
In Melbourne 1,891 properties were offered for auction last week, recording a clearance rate of 69%, down from 73% the previous week.
Speculation that property prices may fall by more than 10% have been quickly refuted by economists.
Commonwealth Bank last week forecast price falls by 2023 as high as 12% in Sydney and Hobart, 10% in Melbourne and Canberra, 9% in Perth and 8% in Brisbane, Adelaide and Darwin.
Economist Dr Andrew Wilson of Bluestone Home Loans has dismissed the predictions which he says are based on the presumption of a sharp increase in interest rates. Wilson says while the market may soften in 2022 the predicted prices drops are “nonsensical”.
He says rising affordability barriers and lower demand will reduce the pace of price growth, but prices will still grow.
Wilson says since 1987, Australia’s capital city housing market has experienced only three years where home prices have fallen – 2008, 2011 and 2018. “The price declines were clearly modest, falling by just 4.0%, 4.1% and 5.1%,” he says. Wilson predicts once international borders reopen and migration recommences, that will put upward pressure on home prices.
Australian house prices show no sign of slowing down, with a further increase of 1.4% nationally in November, led by a 2.2% monthly rise in the Combined Regions.
Growth in median house prices in November was led by a 3.2% rise in Brisbane, followed by Adelaide (2.6%) and Regional NSW (2.5%). The regional markets in Queensland, Tasmania and South Australia all rose 2.2% or 2.3%.
In the latest quarter, house prices rose 4.7% nationally and units 3.2%, while in annual terms house prices are up 24.6% and unit prices 14.2%. The data shows no sign of the slowdown in price growth reported in some sections of the media.
Annual growth in house prices is being led by Regional Tasmania, Regional NSW and Sydney, which have all risen about 30% in the past 12 months. Other jurisdictions to record big increases include Brisbane (28%), Canberra (27%), Hobart (27%), Adelaide (24%), Regional Queensland (24%) and Regional Victoria (24%).
Auction clearance rates in Australia’s smaller capital cities still remain strong.
CoreLogic auction clearance rates show that 3,725 homes were taken to auction last week, the busiest week for auctions since March. The number of properties being offered under the hammer was up 5.3% on the previous week and more than double the same time last year.
The combined capital city preliminary clearance rate last week was 74.5%, down from 75.5% the previous week.
Across the smaller capital cities, auction clearance rates increased with record numbers of properties taken to auction in Canberra and Adelaide. Canberra had an auction clearance rate last week of 86% while Brisbane was 83%.
Adelaide recorded a preliminary clearance rate of 80%, while in Perth five of the twelve results recorded sold under the hammer. In Melbourne 1,644 homes were taken to auction with a preliminary clearance rate of 73%. There were 1,369 properties taken to auction in Sydney with a clearance rate of 75%.
Australia’s residential building boom looks set to continue into 2022, with new figures revealing 191,000 properties will be built next year.
Housing Industry Association senior economist Tim Reardon says 2022 will be one of the best years on record, although not at the same level of 2021 which experienced a huge surge as a result of the HomeBuilder stimulus.
“We will be doing 120,000 next year, so it’s still one of the better years on record,” Reardon says.
Victoria is expected to have the largest number built with a forecast of 37,879 new homes, followed by New South Wales with 25,052, Queensland with 24,660 and Western Australia with 20,223.
There are 9,027 houses expected to be built in South Australia in 2022, followed by Tasmania with 2,461 houses, the ACT with 1,283 and the Northern Territory with 610.
Reardon says the housing industry is still struggling with shortages of materials and availability of tradies.
Property prices have grown at twice the rate of wages in the past 20 years. CoreLogic figures show that wages have increased 82% in the past 20 years while Australian home values have risen, on average, by 193%.
In the past 12 months alone Australian dwelling values have increased by 22%. According to ABS figures the Australian wage price index rose by only 2.2% in the past 12 months.
Reserve Bank of Australia assistant governor Luci Ellis told a parliamentary committee that because of property price increases the most realistic way for many Australians to enter the housing market was now through their parents.
The Standing Committee on Tax and Revenue for an inquiry into housing affordability and supply, is currently examining property taxes, regulation and supply issues which are driving up prices.
The difference in growth rates is most extreme in Tasmania with property values up by almost 300% in the past 20 years compared with an 84% rise in its state wage price index.construction.”
One in four Australian homeowners are now living in a property worth more than $1 million.
The housing boom throughout Australia means the value of Australia’s housing stock has increased substantially, according to CoreLogic research.
Nationally about 5% of homes are now worth more than $2 million.
The research reveals property owners in greater Sydney are now more likely to live in a $1million home, with 52% of homes worth more than $1 million and about 16% of homes now worth $2 million or more.
More than a third of homeowners in greater Melbourne now have a property valued at more than $1million.
CoreLogic figures show that house prices have surged throughout Australia in the past year by over 20% in some capital cities and many regional markets.
Buyer’s agent Rich Harvey says the past two years have been the “perfect economic storm” for property owners with homes for sale down by 30% but a big rise in demand at the same time.