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Property market update: Brisbane, July 2019

Property market update Brisbane, July 2019

Amid the decline experienced by the property markets of Sydney and Melbourne, Brisbane has remained resilient, ultimately becoming increasingly popular among investors. How can they maximise wealth-creation opportunities in the Sunshine State?

Following the conclusion of the federal election, the property market has regained stability as a result of the securing of negative gearing and capital gains tax, the Reserve Bank slashing interest rates to its lowest ever levels and the Australian Prudential Regulation Authority (APRA) removing the serviceability buffer for borrowers.

With consumer confidence rising, experts believe that the worst is over for the Australian property market and, by 2020, property prices are likely to show considerable growth.

Through the turbulence in some major capital city markets, Brisbane managed to power through, remaining slow and steady in terms of property price growth, according to experts.

Patrick Leo’s managing director James Nihill: “(Brisbane’s) affordable housing market allowed the city to bypass the impact of the restrictive lending criteria that other major capital cities felt.”

CoreLogic’s data showed that the capital city’s property market saw dwelling prices rising by 0.3 of a percentage point for the year to November and by 0.1 of a percentage point over the past three months.

Over the next three years, Brisbane could be looking at up to 20 per cent growth as a result of high levels of interstate migration, steady population growth and major infrastructure projects, including the new Queen’s Wharf and the construction of Brisbane’s second airport runway, BIS Oxford Economics predicted.

 

“The July home value index results provide further confirmation that the housing market has reacted positively to the recent stimulus of lower mortgage rates and improved credit availability; however, the response to date has been relatively mild,” CoreLogic’s head of research Tim Lawless highlighted.

However, the property expert doesn’t foresee a fast recovery for the overall property market. As a result, Brisbane may continue its slow and steady ascent, with significant growth far off in the future.

According to Mr Lawless: “Housing credit policies remain much tougher than they were prior to the [banking] royal commission as lenders continue to move away from the Household Expenditure Measure and examine borrower spending behaviours and expenses more closely.”

“The ongoing tightness in housing credit is expected to keep a rapid rebound in housing values at bay, despite the lowest mortgage rates since the 1950s.”

Property values

Over the past year, property markets have collectively shown signs of recovery, with five of the major capital cities showing price jumps, according to CoreLogic.

The home value index showed the dwelling prices rose in Melbourne, Sydney, Brisbane, Darwin and Hobart. Combined, the rise is modest at 0.1 per cent, but nonetheless represents a turnaround to the consecutive months of falls.

Meanwhile, in the past month, Darwin recorded the sharpest monthly increase, with values rising 0.4 per cent. This was followed by Hobart, where values increased 0.3 per cent, then Sydney, Melbourne and Brisbane, each recording monthly spikes of 0.2 per cent.

On the other hand, dwelling values decrease in Perth, Adelaide and Canberra by 0.5 per cent, 0.3 per cent and 0.2 per cent, respectively.

Over the quarter, Brisbane, in particular, continued to fall with a 1.4 per cent drop in median house prices and a 3.1 per cent drop for unit prices.

According to Domain’s latest House Price Report, tighter lending conditions and the apartment construction boom have weighed down on property prices for the city, but strong population growth has meant the correction in unit prices was not as severe as predicted.

The share of Brisbane suburbs with a median house value under $500,000 declined by 12.1 per cent—that is, from 52.4 per cent in 2014 to 40.3 per cent in 2019, based on data from CoreLogic.

Additionally, 12.5 per cent of Brisbane suburbs have a current median unit value in excess of $500,000—up from 8 per cent of suburbs five years prior.

Supply and demand

CoreLogic data showed that, over the second weekend of July, 854 homes were taken to auction across all capital cities over the weekend, returning a preliminary clearance rate figure of 69 per cent.

The weekend result comes after the previous weekend recorded “the highest final clearance rate since April last year” when 953 homes were taken to auction with a final clearance rate sitting at 64 per cent.

However, a state-by-state breakdown showed a mixed result across the country’s capital cities.

Brisbane, in particular, found buyers for only 30 per cent of the 70 houses and 7 units sold at auctions over the said weekend.

Based on the data, the city’s auction clearance rate was recorded as lower than the same weekend in 2018, when 70 properties returned a 37.9 per cent clearance rate.

During that time, the median house price in the Queensland capital sits at $720,000.

Further softening the demand for housing in Brisbane is the losses to internal migration, according to a new analysis from Propertyology.

Based on data from the Australian Bureau of Statistics (ABS), only 10 per cent of all internal migrants to Queensland settled in Brisbane.

Propertyology managing director Simon Pressley suggested that the Brisbane labour market “will need to improve for it to be a major beneficiary of Sydney and Melbourne’s housing affordability squeeze”.

While Mr Pressley believes that examining where Australians are choosing to move and settle is a good indicator for where growth is to be expected, he argued that population growth is not the sole factor that drives growth into property markets.

“Far too much emphasis is placed on the role population mass and population growth plays on property price fluctuations,” he said.

“Even if an individual town or city had zero population growth, there will still be between 3 to 5 per cent of dwelling stock that will change hands within a typical year. Depending on the volume of dwellings listed for sale in that year, property prices may still grow.”

In contrast with capital cities, ‘tier-2 and tier-3 cities’ saw significant boosts to internal migration, including the Gold Coast, the Sunshine Coast, Geelong, Maitland and Port Macquarie—all of which also saw increased median house prices to match the growing demand.

The Sunshine Coast saw a median house price increase of 4.3 per cent in the year ending June 2018, while Geelong saw an increase of 11.9 per cent.

According to Mr Pressley, housing affordability and desirable lifestyle opportunities were key factors in the demand and growth of these areas.

Strategy

Investors who are keen to take advantage of the housing affordability in Brisbane are encouraged to look into buying units or high-rise apartments in and around the CBD as the Brisbane unit market sits at a ‘point of equilibrium’, according to the director of Right Property Group, Steve Waters.

Simply, areas at a point of equilibrium have enough supply and enough demand, he said.

“We’re starting to see rents increase there – that’s a sure sign of where the demand is, and the supply for that matter.”.

“This has come off the back of being heavily oversupplied,” Mr Waters highlighted.

Apart from studying the level of current supply, the property expert also strongly advised investors to look into ‘what’s in the pipeline’ in order to get an understanding of the growth potential of the property market.

He said: “It’s not just a matter of what’s constructed now but what’s in the pipeline in terms of DAs or just beginning construction and what have you.”

“Investors who can identify those good areas with the right fundamentals and perhaps take advantage of a market now where not everybody is in should be able to set themselves up for the future.”

“But once again, buying in the correct area is paramount.”

 

 

Source: www.smartpropertyinvestment.com.au

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Opinion

‘Listing of the year’: why this beachfront apartment complex is set to smash record

Grant Whisker beachfront apartment complex

Prospective buyers from as far as Brazil, Britain and the US are eyeing an “incredibly unusual” beachfront opportunity on the Sunshine Coast.

Touted as the “listing of the year”, 58 Parkyn Parade offers the rarest of opportunities that could set yet another record for a region firmly in the property spotlight.

It’s an entire block of apartments under single ownership on the highly sought-after Mooloolaba Spit.

The brown brick complex on the beachside of Parkyn Parade is being sold in its entirety, with the 620sqm north-facing block and all three self-contained units.

The property will go under the hammer this weekend.

It last changed hands in 1984 for $60,000 when it was just a beach shack, and the new owners built the apartments a couple of years later.

Currently used as a holiday home for extended family, the complex could be renovated for investment, redeveloped into a beachside mansion, or become strata-titled apartments.

All three apartments in the 1986-built building boast large bedrooms, ensuites and open-plan living and dining.

Sliding doors open to balconies, which offer views of the pool, courtyard and beach reserve.

Grant Whisker, from Define Property Agents, said the nine-bed, six-bath property was an “incredibly unusual” market offering and was expected to break sales records within Mooloolaba and possibly even the Coast.

Mr Whisker said the listing was attracting global interest and he had fielded calls from Brazil, Britain and the United States.

He said three-bedroom, two bathroom strata-titled apartments in the area were selling for between $2 million and $3.5 million.

“This is a very iconic piece of real estate, and I’m coming from a place where I have sold 25 apartments on the Spit in the past five years,” said Mr Whisker.

“To get a whole building is such a rarity and this is the only time a building like this has been sold on the Spit.”

Mr Whisker said the property offered extensive opportunities for the new buyer.

“If you took the building away, what you’ve got is a 620sqm allotment on the edge of one of the best beach accesses in the country.

“We’ve had extensive international enquiries. Interstate enquiry, and the enquiry locally has been very strong, which shows a strong appreciation and true appreciation from local investors and developers.”

The current owners, a Brisbane-based family, purchased the Mooloolaba parcel of land on a whim in the 80s.

“They built the building… after having been coerced to the auction. It was 1984 and the agent who was focused on selling the old beach shack that stood there previously was a friend of my sellers,” Mr Whisker said.

“He said ‘Can you come to the Coast on Saturday? I’ve got an auction on and no registered bidders’.

“My client bought that old beach shack and then had to ring his wife and tell her.”

beachfront apartment complex at Sunshine Coast

beachfront apartment complex from Define Property Agents at Sunshine Coast

 

Article source: www.sunshinecoastnews.com.au

 

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Opinion

How 5 prime markets are performing mid-2022

How 5 prime markets are performing mid-2022

As the half-year mark for 2022 approaches, looking at how things have changed since the start of the year can provide some valuable insight into expectations leading into 2023.

PRD’s has issued its Affordability and Livability Property Guides for the first half of 2022, looking at the performance of property in the hotspots of Brisbane, Sydney, Melbourne, Hobart and the Gold Coast.

What the reports show is that the major markets of Sydney and Melbourne no longer bear the dubious titles of roughest and toughest.

“The country’s two largest cities are becoming opportune markets for buyers and in particular first home buyers,” according to PRD.

Median property price growth has been shown to be slower in Sydney during this period than over the previous six months and swung into decline in Melbourne.

But Melbourne has enormous potential to change, given that office life is returning and the city is starting to see its labour force recover following the protracted lockdowns of the past two years.

Both cities, however, report a “lower average vendor premium compared to the past 12 months and a growing most affordable price bracket (relevant to each capital city) that is available to buyers,” the group noted.

Brisbane has proven to be the usurper of Sydney and Melbourne in regards to median property price growth, recording a continuously higher level of growth since the start of the year compared to the network’s previous report on the Queensland capital.

“An undersupply is evident in Brisbane Metro, particularly for houses. The Olympics 2032 announcement brought a certain buzz into Brisbane’s property market, and with border openings this trend is expected to continue,” PRD noted.

Meanwhile, Hobart has eclipsed Sydney, Brisbane, and Melbourne for the title of hottest seller’s market. Hobart buyers now need to offer the highest average vendor premium when compared to other capital cities to secure their dream property, whether that’s a house or a unit.

PRD remarked that this has been a consistent pattern for Hobart over the past 12 months, bucking the national trend that has seen a declining pattern in average vendor premium, or a swing towards average vendor discount, in other capitals.

And on the Gold Coast it’s a tale of two markets, with the houses showing slowed growth compared to the previous period, while units race ahead. Affordability appears to be a growing issue in the beachside hotspot, with the premium market getting most of the turnaround, while lower-cost houses have shrunk by half in six months alone.

 

 

Article source: www.smartpropertyinvestment.com.au

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Local Issues

Federal election results revealed: What it means for investors

Federal election results revealed What it means for investors

Australia has voted. Looking forward, here are the policies property purchasers, home owners, and investors can expect from the next government.

The results of the 2022 federal election are in, with Scott Morrison conceding the vote on Saturday night (21 May) and the Anthony Albanese-led Labor party declaring victory shortly after.

Mr Albanese will be Australia’s next Prime Minister, even though it’s yet uncertain whether he’ll be governing a minority or majority government.

In his victory speech, the man who will be Australia’s 31st Prime Minister said he wanted to “bring Australians together”.

Addressing the economy, he said that “together we can work in common interests with business and unions to drive productivity, lift wages and profits”.

“I want an economy that works for people, not the other way around,” he stated.

With housing affordability for both renters and buyers one of the hot button issues of the election, Mr Albanese made a number of promises along the campaign trail that will impact the property market when put into practice.

While a large crossbench could play a role in determining the extent to which the government is able to employ its election initiatives, here are the policies a Labor government has promised to enact:

Help to Buy

Anthony Albanese pledged that a Labor government would cut the cost of a mortgage by up to $380,000 for some eligible Australians under its Help to Buy scheme.

The program involves the Labor government providing eligible home buyers with an equity contribution of up to 40 per cent of the purchase price of a new home and up to 30 per cent of the purchase price for an existing home.

Buyers will be able to purchase a property that they intend to live in with a deposit of as little as 2 per cent. Participating lenders finance the remainder of the purchase.

During the period of the loan, the home buyer is able to buy an additional stake in the property when they have the means to do so. Before that point, they will not have to pay rent for the portion of the home owned by the government. The government would recover its equity and its share of the capital gain when the house is sold.

National Housing Supply and Affordability Council 

Following calls from housing advocates across the country, Mr Albanese pledged to establish a National Housing Supply and Affordability Council to address the two interrelated issues.

The council will reportedly be composed of experts from the finance, economics, urban development, residential construction, urban planning and social housing sectors.

The council will work closely with states and territories on setting targets for land supply, in consultation with states and territories, and play a key role in developing Labor’s National Housing and Homelessness Plan.

Regional First Home Guarantee

Under an expansion of the First Home Guarantee, the Labor party has promised to help 10,000 regional Australian families a year buy their first home.

The scheme aims to triple the number of places that Australians living in regional areas received last year under the current FHG scheme.

Places will be reserved for Australians who have lived in the region in which they apply from for more than 12 months. It will see approved applicants purchase a home with as little as a 5 per cent deposit, without needing to pay lenders’ mortgage insurance (LMI).

Price cap reviews

Continuing on from the Labor party’s planned expansion of the First Home Guarantee, the party also promised to conduct six-monthly reviews of the scheme’s price caps in both the capitals and regional areas that determine the maximum price an eligible applicant can pay for their new home.

Negative gearing

Labor backed down from its earlier proposed changes to negative gearing in July 2021, promising to “maintain existing regimes for negative gearing and capital gains tax” during the party’s tenure in power following the 2022 election.

 

 

 

Article source: www.smartpropertyinvestment.com.au

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