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House Prices Up $17,000, But Falls Ahead

House Prices

House values increased by $17,000, or 2.4 per cent, nationally over the first quarter of 2022 despite declines in Sydney and Melbourne.

March data from Corelogic shows the national home value index increased by 0.7 per cent in March at a slightly higher rate of growth than the 0.6 per cent increase in February.

Brisbane, Adelaide, Perth and the ACT all experienced stronger growth in house values, while Sydney’s growth rate slowed from 9.3 per cent to 0.3 per cent during the first quarter.

Melbourne also recorded a fall, from 5.8 per cent in April 2021 to just 0.1 per cent.

House values in regional areas rose faster (5.1 per cent) than in capital cities (1.5 per cent).

Change in house values by location

MonthQuarterAnnualTotal returnMedian value
Sydney
-0.2%
0.3%
17.7%
20.2%
$1,116,889
Melbourne
-0.1%
0.1%
9.8%
12.7%
$805,232
Brisbane2.0%6.4%29.3%33.7%$749,293
Adelaide1.9%5.7%26.3%30.7%$602,717
Perth1.0%1.9%7.0%11.6%$542,338
Hobart0.3%2.7%22.3%27.3%$731,849
Darwin0.8%1.7%10.6%17.7%$494,635
Canberra1.0%3.1%21.6%26.3%$932,704
Combined capitals0.3%1.5%16.3%19.2%$818,307
Combined regional1.7%5.1%24.5%29.3%$577,987
National0.7%2.4%18.2%21.3%$738,975

 

 

^ Source: Corelogic

Corelogic research director Tim Lawless said that housing growth was losing momentum.

“Virtually every capital city and major rest-of-state region has moved through a peak in the trend rate of growth some time last year or earlier this year,” Lawless said.

“The sharpest slowdown has been in Sydney, where housing prices are the most unaffordable, advertised supply is trending higher and sales activity is down over the year.

“There are a few exceptions to the slowdown, with regional South Australia recording a new cyclical high over the March quarter and some momentum returning to the Perth market where the rate of growth is once again trending higher since WA re-opened its borders.”

Population, supply and demand

Lawless said the seachange and treechange phenomena may also explain declines in Australia’s largest capital cities as ABS data showed that the regional population rose by almost 71,000, while the combined capital cities population fell by 26,000, mostly due to a sharp drop in Melbourne.

The net annual house price growth rate fell below 20 per cent for the first time since August 2021, at 18.2 per cent.

Housing turnover in the first quarter was 14.3 per cent lower than the same period in 2021 but still 12.2 per cent above the previous five-year average.

The national level of advertised housing stock is 30 per cent below the previous five-year average for the first four weeks of March 2022 but there are differences when the figure is broken down by capital city.

Melbourne’s total advertised supply was 8 per cent above the previous five-year average for the end of March 2022 but Sydney’s was 7.5 per cent higher than 2021’s figure and 2.6 per cent lower than the five-year average.

Annual change in advertised housing stock by location

Annual change (%)
Sydney7.5
Melbourne5.5
Brisbane-24.5
Adelaide-19.8
Perth-10.0
Hobart-1.9
Darwin18.1
Canberra5.3
Combined capitals-4.0
Combined regionals-22.1
National-12.0

^ Source: Corelogic House Value Index

Lawless said new listings on the market and increased buyer demand were key.

“With higher inventory levels and less competition, buyers are gradually moving back into the driver’s seat,” Lawless said.

“That means more time to deliberate on their purchase decisions and negotiate on price.”

In Brisbane and Adelaide, advertised housing stock levels stayed more than 40 per cent below the previous five-year average levels and between 20 to 25 per cent down on last year.

Regional Australia’s total advertised housing stock levels were 22 per cent below last year’s level and 43 per cent below the previous five-year average leading to strong selling conditions and therefore higher prices.

Interest rates will ramp up pressure

Capital Economics economist Ben Udy predicted that the slowdown in house price growth will turn into a decline.

“We still expect price growth to slow sharply in 2022 and we think that slowdown will turn to outright declines in the eight capital cities before long,” Udy said.

“We think the RBA will begin hiking interest rates from June [and] that will increase mortgage rates and reduce affordability, which is starting to look stretched.”

CBA head of economics Gareth Aird said that while higher interest rates would affect house prices, there would be a lag.

“The cash rate is forecast to lift in June 2022 because the economy will be at full employment and annual wages growth will be on an accelerating path to the desired level of 3 per cent,” Aird said.

“Stronger wages growth will provide a partial offset to rising interest rates on the property market.

“There is a lagged impact on changes in the cash rate and the impact on home prices and the broader economy so we anticipate that home prices will correct lower over 2023 despite our call for the RBA to be on hold for most of next year.”

Aird also said that the downward trend was an automatic correction after high prices in 2021.

“Price gains in 2021 nationally were extraordinary—21 per cent higher over the year as measured by the eight capital city index,” Aird said.

“A correction lower in dwelling prices is a natural response to rising interest rates given it was record low interest rates that drove the phenomenal lift in prices in 2021.”

Home lending remains elevated

New home loans fell by 3.7 per cent month-on-month in February with a decline in owner-occupier housing lending by 4.7 per cent, according to ABS data.

New South Wales’ total decline of 8.6 per cent—with owner occupier lending down by 10.5 per cent and investor lending down by 5.5 per cent—was the key factor.

Total home lending fell in Victoria (-3.7 per cent), Queensland (-2.9 per cent), and South Australia (-6.7 per cent) with growth in Tasmania (2.6 per cent) and Western Australia (1.9 per cent) though both those states experienced a decline in January 2022.

Lending for new home buyers declined the most (-7.2 per cent), lending for new home builds grew (3.1 per cent), owner-occupier lending for existing housing fell (-6.2 per cent) and investor lending declined (-1.8 per cent) for the first time since October 2020.

Investor lending is up year-on-year by 55 per cent, with ANZ predicting that rising immigration will support it in the short term.

First home buyer lending continued to decline by 9.7 per cent month-on-month and 29 per cent year-on-year.

Business construction lending declined by 40.2 per cent in February, and is down 9.4 per cent on a year ago.

Westpac senior economist Matthew Hassan said this showed that January’s housing approvals figure was Omicron-related.

“Construction-related loans were relatively steady in the month, reconfirming that the post HomeBuilder scheme has run its course and that the steep drop in dwelling approvals in Jan was an omicron-related rogue,” Hassan said.

CBA’s head of economics Gareth Aird said the lending figures showed that there was a downward trend.

“The level of lending is still elevated,” Aird said.

“But the change in lending over the month fits in with a property market that is showing signs of cooling, particularly in Sydney and Melbourne.”

 

Article Source: www.theurbandeveloper.com

Brisbane

Brisbane’s Office Market Greenlit for Business

Brisbane’s Office Market

Brisbane’s office market continues to shake off the pandemic doldrums with two new commercial towers approved in the CBD and fringe suburbs.

Property owner PGIM and development partner Indema’s plan for a bold adaptive reuse of a 1970s commercial building at 444 Queen Street has won approval.

The bronze 22-storey tower opposite Customs House will be stripped back to its core structure and completely remodelled with a new podium, curtain wall facade and an additional two-storey sculptural canopy.

Indema director Michael Bruderlin said they would be targeting a net zero certification for the building upon completion in the first quarter of 2024.

Bruderlin said Hutchies had been engaged in an early contractor design and construct contract to help de-risk the project and better understand the technical requirements.

The Fender Katsalidis-designed tower follows in the footsteps of another of its commercial adaptive reuse projects in Brisbane, Ashe Morgan’s Midtown, now the headquarters for Rio Tinto.

Bruderlin said retaining and repurposing the existing building is 400 per cent more environmentally friendly. Retaining the existing concrete structure provides a 70 per cent saving in embodied carbon.

The project will rejuvenate a 48-year-old building at the end of life into an A-grade commercial office asset and increase the net leasable area 40 per cent.

Bruderlin said the project would have a quicker turnaround than a normal demolish and build project and it would use clever design initiatives to increase floor plates and create a better value proposition for the asset.

PGIM purchased 444 Queen Street for $54.4 million from the Public Trustee of Queensland and Abacus Property Group in October last year.

Cornerstone has also won approval for a commercial development in the city fringe suburb of Fortitude Valley.

The Bureau Proberts-designed tower will capture the heritage brick character of the Fortitude Valley centre “borrowing from the intent of these buildings but with a stridently different and contemporary expression”, planning documents said.

“This approach is a deliberate counterpoint to the strong and solid brick structures of the immediately adjacent 47 Warner Street and McWhirters buildings.

“Brickwork or masonry is not used as a material in deference to these neighbouring buildings allowing them to become more evident and make a clear statement about the era of their inception.”

The 28-storey commercial tower at 251 Wickham Street features a stepped slanting facade fronting Warner Street, with a four-storey lobby, and an inverted podium.

There will also be a rooftop terrace, 20m pool and open-plan gym in the commercial tower, with retail offerings at the base of the building.

Brisbane’s metropolitan office market vacancy was at 16.3 per cent at the end of March and there were few transactions across the quarter, according to Colliers research.

But yields remained steady, and well above other capital cities, while incentives remained stagnant at 40 per cent.

 

 

Article source: www.theurbandeveloper.com

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Brisbane

Developer Pitches for $130m Shop-Top Housing on Bayside

$130m Shop-Top Housing on Bayside

Brisbane’s bayside could be going up in the world with plans for $130-million highrise shop-top housing in the heart of the seaside suburb of Wynnum.

Brisbane-based developer Hambros has lodged plans for a 21-storey apartment tower on the vacant lot neighbouring the Wynnum Central Shopping Centre, after winning approval for an small extension to the retail centre late last year.

The development comprises a 6-storey retail and commercial podium, with a 275-apartment tower above, backing on to Wynnum Central Park.

Hambros has reportedly spent about $14 million on revamping the Wynnum Central Shopping Centre on Bay Terrace, as part of a $74-million plan to rejuvenate Wynnum, including cinemas.

According to planning documents lodged with the Brisbane City Council, the tower will be made up of 54 one-bedroom apartments, 148 two-bedroom apartments, and 67 three-bedroom apartments, with six penthouses, which will have private rooftop space and their own pools.

The building height is well in excess of the allowable five to eight storeys in the Wynnum Manly Neighbourhood Plan, but town planners Gateway Survey and Planning argued the plan was “outdated” and should be overhauled.

The six-storey podium would contain two levels of parking, a retail tenancy at ground level, a floor of retail, with two storeys of commercial space for office, healthcare and events space on levels 5 and 6.

Developer Pitches for Shop-Top Housing on Bayside Brisbane

▲ Shayher Group won approval for its redevelopment of Wynnum Plaza last year, which included 184 apartments across eight residential buildings.

In a statement to the council Hambros director Justin Ham said the Wynnum CBD had been left behind “with no development occurring in the last 20 years”.

“Our project is designed to put Wynnum CBD on the ‘open for business’ map,” Ham said.

“This landmark development, with a construction cost estimated at $130 million will have a huge financial and community positive impact on the Wynnum CBD and surrounding areas.

“It’s a once-in-a-lifestime opportunity to create a beautiful space overlooking the best bay in the world.”

Ham said the development would bring much-needed foot traffic to the heart of the Wynnum CBD and help bolster businesses and landowners he said were struggling to remain profitable.

Taiwanese developer Shayher Group won approval for a masterplanned retail precinct at Wynnum Plaza with plans for 184 apartments across eight residential buildings as well as boutique cinemas and increased retail space, reportedly worth more than $100 million.

Work on the Wynnum Plaza redevelopment was due to commence later this year with a completion date hedged for 2024.

 

 

Article source: www.theurbandeveloper.com

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Brisbane

More room in the Brisbane property price bubble but get ready for a reckoning, says bank

Brisbane property price bubble but get ready for a reckoning

Brisbane’s house prices would continue to outpace the nation this year but a significant slump was near, according to the ANZ.

The bank’s economics team has revised its outlook for house prices and now tips a fall of about 3 per cent nationally this year followed by an 8 per cent fall next year. It had previously tipped a rise of 8 per cent this year and a fall of 6 per cent next year.

In Brisbane, the monthly growth rate has slipped down to about 2.5 per cent and ANZ expects a yearly rate this year of about 6 per cent with a fall of about 9 per cent next year.

The higher end of the market in Brisbane was also continuing to outpace the middle and lower price bracket in growth rates.

The downturn was being caused by higher interest rates and affordability issues and ANZ said the “wealth effect” would come into play which would spread the housing downturn to other areas of the economy.

“Falling house prices will weigh on consumer spending through the wealth effect, but high savings will provide a solid buffer,” ANZ said.

It expects the RBA cash rate to get to 2.35 per cent by mid-2023 while the market is tipping a 3.25 per cent. A cash rate of 2.35 per cent meant a variable rate mortgage of 4.75 per cent and a 3.25 per cent rate would increase variable loans to 5.65 per cent.

It said some people may struggle but forced selling because of higher interest rates was a low risk.

Meanwhile, CoreLogic said the Coalition’s plan to allow first home buyers to access their superannuation accounts to help pay for a house had some merit but there were downsides, including the possibility that it would only stimulate demand for housing and increase the cost “eroding some of the benefit of dipping into their super”.
CoreLogic worked out that under the scheme the median amount that could be accessed would be about $10,000, the equivalent of state-based first home buyer grants.
“CoreLogic data shows the current median dwelling value in Australia is $748,635, meaning the scheme could help increase the size of a standard deposit by around 1 per cent,” the company said.
Article source: inqld.com.au
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