Federal budget 2021: property hits and misses
The Federal government rolled out its latest budget in May, a single-year plan centring on aged care, childcare, infrastructure, investment tax breaks and more help for home buyers as it tapers off the record spending from last year’s budget.
The budget will use superannuation incentives to help younger Australians enter the property market and older Australians vacate the family home.
While there have been some significant aids to the property industry and construction sector, experts have also noted some missed opportunities.
Queensland budget announcement
The state government plans to establish a $1-billion housing investment fund according to its 2021-22 budget.
The fund is expected to generate $160 million in four years which will be used to “drive new supply to support current and future housing needs”.
A further $265 million would be spent delivering satellite hospitals to Bribie Island, Caboolture, Brisbane South, Pine Rivers, Gold Coast, Ipswich and Redlands.
Brisbane Olympics to push property market’s limits
Brisbane house prices will hit the $1-million median well before the 2032 Olympics with suburbs near venues tipped to move up to $3.9 million.
Property projections from PRD Research indicate the median price would reach $1.7 million by 2033 and would be “immensely” boosted on the Gold and Sunshine coasts.
Meanwhile, prices on the Gold Coast and Sunshine Coast hit $792,000, up 18.2 per cent on last year, and $825,000 up 23.1 per cent, respectively.
What the experts are saying about the Gold Coast’s housing market
Chief of Research
“What we have seen and what’s very evident for Queensland is the Sunshine Coast and the Gold Coast are very up there, and this data is really telling of who is active in the market.
“But 25 per cent of suburbs with higher property price growth than salaries is quite a strong milestone for Queensland.
“I think in the years leading up to the Olympics we’ll probably see even greater demand for properties there.”
Surfers Paradise Managing Director
“I have never seen anything like it in my 40 years in the industry, and it’s results like these that underpin just how strong the Gold Coast market is.
“Interstate buyers have long recognised how undervalued the Gold Coast market is, given that we are now the sixth-largest city in the country.
“Now we are beginning to see locals cotton on to how valuable the Coast is, which they had underestimated in the past, and they are well aware of the strong demand from interstate markets who see the Gold Coast as excellent value.
“Given the trajectory of the Gold Coast market, buyers are realising that it’s in their best interest to allow market forces to determine the value of their property which often greatly surpasses their expectations.”
Gold Coast Director
“Consumer sentiment and ‘FOMO’ has well and truly returned to the Gold Coast property market and is playing a big role in the market.
‘Off the back of that, there is some real tightness in the supply for people who want to live in house and land packages.
“If people are anxious about the level of activity, development and growth on the Gold Coast that has existed over the last couple of years, the reality is we actually have to find a way to grow smarter and pick up the pace of delivering product if we are to meet those long-standing population targets.
Mosaic Property Group
“While prices for properties have increased, we believe the pace of growth will slow towards the back end of this year and we expect the market to experience only minimal increases in early 2022 followed by a slowdown and flattening of the market thereafter.
“This will likely be followed by a potential second leg up once the pandemic is well and truly behind us, unlikely before 2023.”
Gold Coast housing market forecasts
ANZ similarly predicts at the national level Australian house prices will rise by a strong 17 per cent through 2021, before slowing to 6 per cent growth in 2022.
CommBank forecasts dwelling prices will rise 8 per cent in 2021 and 6 per cent in 2022, with house prices to rise 16 per cent in that time and unit prices by 9 per cent.
Westpac has revised its property price forecasts, tipping values to rise 15 per cent in 2021 before slowing to grow by per cent% next year.
NAB has also upgraded its forecasts for dwelling prices—now expected to grow around 19 per cent in 2021 and per cent% in 2022.
Gold Coast auction clearance rates
|Week||Clearance rate||Total Auctions|
|Week ending 4 July 2021||65.5%||91|
|Week ending 11 July 2021||69.4%||63|
|Week ending 18 July 2021||60.6%||67|
|Week ending 25 July 2021||70.0%||60|
^Source: Corelogic Auction Clearance Rates – July
For every 100 houses that went to auction on the Gold Coast during recent weeks, only three failed to find a buyer.
Some of the Coast’s biggest real estate agents are now struggling to keep up with the interest, with some agents reporting that 60 per cent of properties set for auction are selling before they are actually listed.
Figures from Corelogic show that Arundel, Coombabah and Gilston recorded growth of 10 per cent in the last three months, significantly outpacing well-heeled suburbs like Burleigh Heads, Hope Island and Palm Beach.
The top growth suburb for the quarter was Currumbin Valley, where the median house price climbed 11.9 per cent to reach almost $1.5 million.
Nine suburbs in total reached double-digit price growth in the three months to the end of June, with Coombabah rounding out the list of the ten top performers with a rise of 9.9 per cent.
Other suburbs to perform well included Merrimac (9.5 per cent), Reedy Creek (9.4 per cent) and Labrador (8.8 per cent).
New research by REA Group revealed units returned the biggest gains for investors in the following Coast suburbs: Surfers Paradise; Southport; Biggera Waters; Coombabah; Carrara; Mudgeeraba; and Nerang.
Gold Coast residential rental vacancy rate
|City||July 2021 vacancy rate||Monthly % change|
^Source: SQM Research – reference period July
Rental stock on market
|City||July 2021 vacancies||Vacancy net change|
^Source: SQM Research – reference period July
Gold Coast rent prices
|Type||Rent||Monthly % change||Annual % change|
^Source: SQM Research – reference period July
While owner-occupiers are seeking downsizing alternatives in coastal areas, investors are returning to the Gold Coast in the wake of historically low rental vacancy rates.
Brisbane’s vacancy rate dropped from 2.1 per cent to 1.7 per cent from the previous quarter, comparatively the Gold Coast’s has loosened slightly from a static 0.6 per cent to 0.9 per cent.
Carrara posted the strongest annual growth in rental demand of 26.2 per cent, followed by Biggera Waters at 19.8 per cent.
Southport’s rental demand grew by a more modest 7.7 per cent, with the CBD suburb hard hit by Covid-19’s exodus of international students.
But the centrally located suburb still delivered a healthy investor cashflow of $596.18, with capital growth of 15.6 per cent.
REA economist Paul Ryan said unit investors achieving a rental yield above 5 per cent were “doing very well”.
“House prices have risen, and that is pushing down rental yields,” Ryan said.
“That doesn’t make houses a bad investment, they may just not be bringing in the same yields or cashflow.”
Ryan said growth in rental demand for units on the Gold Coast, often cheaper to rent [than houses], are low maintenance and well located, had been “outstanding”.
“And with Covid, we have seen a lot of people moving to a region, and then renting before buying,” Ryan said.
Queensland building approvals
|Dwelling||Approved||Monthly % change|
^Australian Bureau of Statistics – Most recent reference period June (suspension of trend series between May 2020 and July 2020 due to Covid-19)
A significant dip in housing approvals has added fuel to the already hot property market, despite a lockdown softening.
Australian Bureau of Statistics data shows the number of private-sector houses approved dropped 11.8 per cent in June, following the downward trajectory since the end of the Federal government’s HomeBuilder stimulus package.
Across both houses and units the number of dwellings approved fell 6.7 per cent, compared to a 7.6 per cent decrease in May.
Queensland and Western Australia experienced the biggest decline in both house and unit approvals.
In Western Australia overall dwellings approvals dropped by 30.5 per cent, followed by Queensland at 18.4 per cent and Tasmania at 14.9 per cent.
In the 2020-21 financial year total dwelling approvals nationally were 27.3 per cent higher than in 2019-20 financial year, driven by a 42.8 per cent surge in private sector house approvals.
Dwelling approvals increased more than 88 per cent in Western Australia over the financial year, while in Queensland it was up 36.7 per cent and Tasmania experienced a 33.9 per cent increase.
Queensland home loan lending indicators
|Region||First home buyer loan commitments||First home buyer ratio – dwellings||First home buyer ratio – housing|
^Source: Australian Bureau of Statistics – most recent reference period June
Owner-occupier home buyers propelled a surge in housing credit in June.
Housing credit lifted 0.7 per cent—the most in 11 years—to be up 5.3 per cent when compared to a year ago, the strongest annual pace in two years.
Owner-occupier housing credit jumped 0.9 per cent, the biggest gain in five years, to be up 7.2 per cent on a year ago—the strongest annual growth rate in two years.
Investor housing credit rose by 0.3 per cent to be 2.0 per cent higher on a year ago, which is the strongest annual rate in three years.
“Deteriorating affordability is likely to weigh on owner-occupier demand, and a tightening in macro–prudential policy settings will restrain the supply of credit,” Westpac chief economist Bill Evans said.
“We expect housing credit growth to exceed 7 per cent by the first half of 2022, triggering a likely policy intervention. The precise response will depend on the composition of lending over the next year.”
Most economists now expect the RBA to begin raising rates over 2023 and 2024 to a natural rate of about 1.25 per cent.
Queensland interstate migration
|Region||March (quarter) 2021 arrivals||March (quarter) 2021 departures||December (quarter) 2020 net|
^Source: Australian Bureau of Statistics – March quarter 2021
With a population of roughly 3.7 million, Queensland’s south-east is Australia’s fastest-growing zone.
The Gold Coast and south-east Queensland were direct beneficiaries of Victoria’s extended lockdown last year, with a dramatic population shift north.
Australian Bureau of Statistics data for June revealed Victoria’s population fell by 12,700 while the number of interstate migration to Queensland increased by 30,000, or 2 per cent.
Before the pandemic, Gold Coast city planners were working to a framework that the population would reach a million by 2041, delivering 6000 dwellings for approximately 15,000 new arrivals per annum.
Queensland’s population is now expected to surge by more than a quarter of a million people in the next four years, according to forecasts in the federal budget, as people continue to flood in from other states.
Additional forecasts suggest it will top 5 million by the middle of the next decade.
Article Source: www.theurbandeveloper.com