Thursday, October 29 2015
Queensland is tipped to replace New South Wales as the most optimistic state regarding the residential property market and lead the country for price and rental growth over the next two years, according to the NAB Residential Property Survey.
The NAB Residential Property Survey found market sentiment improved notably in Queensland and was less negative in SA/NT, softened in Victoria and NSW and fell to a new low in WA.
NAB Group chief economist Alan Oster said the NAB Residential Property Index fell -7 to +10 points in the September quarter - its second consecutive fall - with the index now below its long-term average (+14 points), however it’s not all negative as the overall picture masks some big differences across individual state markets.
“The survey also suggests that yield compression will continue as capital growth outpaces rental growth in all states,” he said.
“Foreign buyers were notably more active in Victoria, where they accounted for just over 1 in 4 of all new property sales and around 1 in 7 sales of established homes.
"In established property markets, foreign buyers accounted for around 11.3% of all apartment sales and 9.5% of house sales. These ratios were significantly higher in Victoria, where foreign buyers accounted for around 1 in 5 of all established apartment sales and just over 1 in 6 houses.
The report noted expectations for national house price growth over the next 1-2 years were scaled back to 1.5% and 1.8%.
"However, this also masked a notable improvement in Queensland, which is now predicted to be the leading state for capital growth in the next few years (2.6% & 3.4%). In contrast, expectations were cut back in NSW (2.2% & 1.8%) and Victoria (1.9% & 1.9%), and remain weak in SA/NT (-0.2% & 0.5%) and WA (-0.7% & 0.4%)," it read.
"In 2016, the slowdown in average national house price growth to 2.3% is largely driven by a moderation in both Sydney and Melbourne prices growth. NAB Economics expects house price growth to decelerate in Sydney to 1.2%, while price growth in Melbourne will ease to 3%. Brisbane is tipped to see the fastest house price growth (4.5%), and the Adelaide market is expected to improve (2.4%). Perth will remain weak, although price declines are forecast to ease."
Thursday, October 29 2015
(Source: Propery Observer)
Most Australian investors believe Brisbane is a more affordable alternative to Sydney and Melbourne, according to a new survey by Property Investment Professionals of Australia (PIPA).
Chair Ben Kingsley said investors were increasingly looking outside the two largest capital cities for assets.
“Investors are seeing Melbourne and Sydney performing very well and they’re looking for alternative markets that they think they can get in before the market starts to move,” Mr Kingsley told wire service AAP.
“Sydney’s market has started to slow and Melbourne is approaching the peak of the cycle.”
“Probably over the last six months there has been some speculation in the Sydney market, and the Melbourne market is enjoying a good Spring but I suspect that will slow down into 2016,” Mr Kingsley said.
Of the investors surveyed by PIPA, 58 per cent identified Brisbane as the capital city offering the best investment prospects, well ahead of the 17 per cent that chose Melbourne.
Just 11 per cent named Sydney, while six per cent chose Perth and five per cent selected Adelaide.
About 20 per cent of investors said they had put their investment plans on hold because of concerns about a property bubble.
Tighter lending conditions were the key worry for investors, as regulators sought to slow the growth of investor lending.
Price corrections, the removal of negative gearing, long periods of vacancy and oversupply of property are concerns.
Thursday, October 22 2015
Chinese buyers nearly doubled their investment in Queensland property to almost $1 billion in 2014-15, according to The Australian.
The newspaper said Queensland’s Foreign Ownership of Land Register revealed investors from China spent $872.5 million buying land and property while Hong Kong investors spent $112 million.
The total of $984.5 million is more than double the $463 million spent by Chinese investors in Queensland the previous year.
China has been the top source of foreign investment in Queensland real estate for the past three years.
The Australian reported that Chinese buyers own 3585 parcels of land covering 237,490 hectares, while British investors own 5904 properties covering 2.2 million hectares.
Singapore has overtaken the US as the second-biggest source of foreign investment in real estate in Queensland. Singaporean investors spent $421m last financial year — nearly three times more than the year before.
Analyst Michael Matusik told The Australian that Chinese buyers were buying more than half the new apartments being sold off the plan in Brisbane and the Gold Coast.
Thursday, October 15 2015
Friday, October 09 2015
As I have been indentifying for some time there have been significant over supply risks building in Brisbane inner city units. The latset HTW property clock (pictured) puts Brisbane units at the top of the market.
One major lender has already tightened it's guidelines for Brisbane inner city units in response to the increase risk levels. No doubt other lenders will follow.
Tuesday, October 06 2015
The perennial issue of land supply and the escalating costs facing new homebuyers is not going to be solved anytime soon but there is movement at the station in regards to addressing this key bugbear in urban development.
Contributing issues to the undersupply in housing stock include a general inadequate investment in infrastructure, slow planning and approvals processes, high taxes and charges in the provision of housing, and in the case of a city like Sydney, the lack of undeveloped land due to geographical factors.
The Housing Industry Association had previously reported in its HIA-CoreLogic RP Data Residential Land Report, during the March 2015 quarter, the residential land price in Australia increased by 4.1 per cent compared with the previous quarter. This represented an increase of 8.2 per cent compared to the same quarter of last year. During the March 2015 quarter, residential land transactions fell by 5.2 per cent compared with the previous quarter to be 17.6 per cent lower than the same period 12 months earlier. The March 2015 quarter represented the third consecutive decline in land transactions in Australia.
The low sales rates combined with the increase in prices suggests that low supply is the cause of this price growth instead of a slowdown in demand.
The HIA’s senior economist Shane Garrett examines the underlying trend: “Land is the big driver of price increases in some areas. If you look at the figures nearly all of the increases in dwelling prices are explained by increases in the price of land whereas building cost increases actually in some parts haven’t gone up by much in relation to general price levels, so land is a big driver.
“The data shows that the land supply situation has tightened in recent years and manifested itself in higher prices and fewer actual lot transactions in the biggest markets.”
Garrett reflects on New South Wales where Sydney has the biggest demands as far as housing is concerned — the population is increasing, interest rates are low and there is a lot of new home building going on with detached dwellings and units.
“On a national basis land is the single biggest input to new home building and it’s something that the HIA has campaigned on for quite some time,” he says.
Bret Fleming, director of planning and design with consulting firm Urbis, says that as Australia’s population reaches 40 million in 30-40 years time, there is a requirement to make sure that supply and demand don’t get too far apart. He also asks are we in fact building the right type of dwellings in the right locations?
“Developers need to provide a variety of dwelling types, buyers can then climb up the housing ladder – give people the opportunity to buy in and trade up in the same area as their needs change. We’re now seeing more two bedroom product available in developments.”
So what more can be done to increase land supply and tackle affordability?
Fleming says, “We’d like to see more political will around the issue of housing demand and greater accountability that would go right down to a local government level whereby councils are obliged to provide a certain amount of land to accommodate certain population growth, but ultimately it comes down to political will and change is a sensitive issue in terms of introducing apartments into the middle ring or taking out farmland on the periphery of the city, so some sensible debate around that is needed. I think the recent changes in the federal government will help that as well. They seem to be emphasising the importance of our cities more than they have, which is nice considering they house 90% of our population.”
The HIA’s Shane Garrett says, “What we would like to see improved is the infrastructure funding mechanisms, (the introduction of) some sort of user pays scheme where buyers would pay back the infrastructure charges to some sort of local government authority for delivering these services over a period of say five, 10 or 15 years.
“And we would like to see the taxation burden relieved – the residential building sector is the second most taxed industrial sector of the economy.
On the new appointment of Jamie Briggs as Minister for Sustainable Cities and the Built Environment by new Prime Minister Malcolm Turnbull both Fleming and Garrett were favourable in the creation of this ministerial portfolio.
Urbis’s Bret Fleming: “It’s very much a step in the right direction. The federal government are actually tuning their mind to this and hopefully we will start to see some policies which will flow through to the state level and we will start to get some consistency and certainly Malcolm Turnbull is making the right noises in regards to infrastructure investment. It’s not just around roads any more but around public transport as well.”
HIA’s Shane Garrett says, “We welcome a dedicated government minister. It will be interesting to see if it translates into much action on the ground but the fact it has happened in the first place is a step in the right direction and something that we would welcome and are hopeful it will deal with some of the supply bottlenecks.”
It will be intriguing to see the results of future Land Reports from CoreLogic RP Data to see if there is a greater equilibrium between supply and demand, but in the meantime, first homebuyers are continuing to look at alternative options and locations in purchasing their first property and it’s likely developers will continue to respond with a variety of dwelling types.