Listings Finally Start To Rise

The number of properties listed for sale is finally starting to lift, as Australia moves into the so-called Spring selling season. Every capital city has recorded
an increase in the number of new real estate listings in recent weeks.

While the lift in listings is good news for buyers, CoreLogic’s Tim Lawless says listings are still below five-year averages in every capital except Adelaide, Perth and Darwin.

The largest lift in new listings is in Melbourne, where the rolling four-week count since the first week of September increased by 48.5%. Lawless says the increase follows the easing of restrictions on property inspections in that city.

Nationally during the same period new listings are up 9.8%, although that is still 3.9% below the fiveyear average for this time of year.

Sydney’s new listings remain 3.9% below the fiveyear average for this time of the year, while Hobart and Brisbane listings remain 9.6% and 3.8% below the five-year averages.

Units Join Price Growth Trend

Units are proving popular with buyers, with new data revealing record high demand in many suburbs. CoreLogic figures show demand for units in suburbs with desirable lifestyles are on the rise.

More than half (560) of the 994 unit markets analysed by CoreLogic are experiencing record high prices, with average growth of 16% or $108,000 since March last year. Two thirds of those 560 growth markets are in capital cities.

CoreLogic Australia head of research Eliza Owen says while some apartment markets in the inner cities continue to struggle, she expects to see further value increases in other unit markets, particularly those in desirable lifestyle locations.

Owens says the strong growth in house prices in the past year appears to be slowing slightly with the unit market now experiencing uplift. But there are 434 unit markets which have values still below their prepandemic levels with the top ten biggest drops all occurring within Greater Melbourne.

Residential Rental Listings Drop

Renters are finding it even harder to secure new premises, with the number of properties available for rent at a near all-time low in August. The latest REA Group’s PropTrack Rental Listings Report reveals that new rental listings dropped by 3.9% in August, the lowest levels since December 2019 before the pandemic hit.

The fall was most substantial in regional Australia with listings down 4.7% in August while in capital cities listings dropped 1.3%. The report found regional NSW, WA and Tasmania experienced the biggest drops in listings.

REA Group director of economic research Cameron Kusher says the high number of owner occupiers buying property is contributing to the lack of rental properties.

New listings in August dropped by 30% in Canberra, 17% in Melbourne, 10% in Hobart, 3.7% in Brisbane, 2.2% in Perth, and 1.1% in Adelaide, while listings increased 6.7% in Sydney and 5.4% in Adelaide.

Vacancy rates are still high in inner-city suburbs in Sydney and Melbourne which have a large proportion of units.

House Prices Drive Rise In Wealth

Australians have become even wealthier in the past year, with new figures revealing the growth in property values has helped drive household wealth up by 5.8%.

The latest ABS figures on household wealth for the June Quarter 2021 shows that household wealth has now hit a record $13,433 billion, with wealth per capita up to $522,032.

Residential property contributed 4.5 percentage points to the quarterly growth in wealth, with superannuation adding 1.1 percentage points and shares 0.3 percentage points.

With Australians unable to travel, savings were also high with $341.8 billion now sitting in Australian banks, although household savings weakened in June on the back of further spending and fewer lockdown days.

ABS head of finance and wealth Katherine Keenan says growth in owner-occupier loan balances is the strongest it has been for five years and that the value of loans to owner occupiers hit new highs in the first six months of 2021.

New Home Sales Continue To Rise

New home sales have increased in the past month, despite the
completion of the Federal Government’s HomeBuilder scheme
and a nationwide shortage of timber.

The latest Housing Industry Association figures show new home
sales rose 5.8% in August to 4,917, up from 4,646 in July.

HIA economist Tom Devitt says the strength of recent new home
sale shows means that the current construction boom should
continue throughout the second half of 2022 and continue to
provide jobs in the industry.

He says home-owners armed with increased savings during
COVID lockdowns are now looking to use those funds to either
renovate or build.

South Australia new homes sales increased 64% in August, followed by Queensland (44%), and New South Wales (18)%. But levels dropped in Victoria by 11% and by 12% in Western Australia.

The outlook for the unit market was not as rosy with JLL’s quarterly review revealing completions will drop by as much as 40% next year

Govt Acts On Timber Shortage

The Federal Government has stepped in to try to alleviate the price pressure on builders from an Australia-wide shortage of timber. It has announced
$15 million to help supply enough timber to build 10,000 new homes.

The funds will be used to subsidise the transport of salvaged timber from plantations on fire ravaged Kangaroo Island to timber mills in South Australia and other states.

Master Builders Australia CEO Denita Wawn says the move will be a big relief for builders, tradies and customers, who have been hamstrung by the shortage. She says thousands of builders and tradies feared for their jobs as a result of the surge in timber prices and delays of up to three months.

“This move is a ‘no-brainer’ that will underpin the continued success of the HomeBuilder scheme that is fulfilling the dreams of first home-ownership for thousands of people and playing a major role in accelerating economic recovery as we begin to look to the future beyond Covid lockdowns,” she says.

Growth The Fastest In 18yrs

Australian house prices have hit a record quarterly increase as transaction levels continue to rise across Australia. The latest ABS figures suggest house prices increased 6.7% in the June Quarter, which was the fastest pace of quarterly growth in 18 years.

ABS head of price statistics Michelle Marquardt says persistently low levels of stock on the market and strong demand is driving prices up.

The total value of Australia’s 10.7 million residential dwellings increased by $596.4 billion to $8.9 trillion in the June Quarter – the largest quarterly rise since ABS began the series in 2003.

CoreLogic figures reveal house prices nationally increased 18.4% in the 12 months to August.

RBA assistant governor for economics Luci Ellis told the Federal Government Inquiry into housing affordability that a lack of supply was driving up prices. “You don’t increase affordability by giving people more money to spend on housing,” Ellis says. “All that does is bid up prices.”

Housing Inquiry Targets Stamp Duty

Multiple submissions have been made to a Federal Government inquiry into housing affordability calling for the scrapping of stamp duty.

While stamp duty is a state fee, submissions to the inquiry suggest national cabinet meetings could be used to co-ordinate reform. The Housing Industry Association, Urban Development Institute of Australia, University of Canberra, Domain and the Urban Taskforce all want stamp duty put on the agenda.

Stamp duty can add tens of thousands to the cost of buying a home. Only the ACT has committed to phase it out, while NSW is considering a switch to a smaller annual land tax.

The HIA labels stamp duty as inequitable and inefficient, while the UDIA says tax reform is achievable through a whole-of-federation endeavour. The Urban Taskforce is recommending the Federal Government take the lead in discussions with the states to abolish stamp duty and replace it with a broad-based tax.

Home Sales Highest Since 2004

The number of properties selling throughout Australia has hit its highest level in 17 years. CoreLogic data shows 598,000 houses and units sold
in the 12 months to August, a 42% annual increase and the highest number of sales since 2004.

Western Australia recorded the biggest jump, up 62% to 63,804 sales. The Northern Territory and Queensland were also strong performers with transactions up by 58% (to 3242 sales) and 54% (to 146,687 sales) respectively.

NSW transactions are up 38.9% to 191,090 sales, South Australia is up by 39% to 39,774 sales and Victoria is up 34% to 129,933 sales. Transactions in the ACT increased by 27% resulting in 11,085 sales and Tasmania’s transaction levels lifted 11% to 12,223 sales.

CoreLogic’s head of research Tim Lawless says: “Such a significant surge in housing demand may seem surprising at a time when overseas migration has stalled, however the substantial rise can be explained by a lift in domestic demand from previously low levels.”

Family Guarantees Help FHBs

Young people may be saving more but many still need family help to get into their first home.

Rising property prices might be good for those who already own a property, but for those trying to buy their first home, it means the deposit they require keeps rising.

According to Canstar Blue, those struggling to achieve the required deposit are using a family security guarantee. With a family member acting as guarantor, first home buyers have more borrowing power and can avoid paying lenders mortgage insurance.

Guarantees mean family members don’t have to fork out any money directly to the borrower and once the home’s equity reaches 20% the guarantor can apply to the lender to be released from the obligation.

Many parents are living in properties worth a lot more than they owe on it. They can use that equity to help their children enter the property market. But parents are warned that they should weigh up the risks and obligations carefully before committing.