July 12, 2021

#109: Property value growth tapers, investor activity picks up, emerging rental crisis, property listings take a dive and more - Market upda

46 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's Ep#109, Dave, Cate and Pete take you through: 1. Property market acceleration is reducing, but still going strong June's growth rate of 1.9% is down 30 basis points from May 2021 2.2%, and 90 basis points from a recent peak in March 2021 2.9%. All capital cities except Canberra have posted weaker results than in May. Most notably Perth and Darwin are trailing, where they fell to 0.2% growth and 0.8% growth respectively. The trio discuss the reasons for reasons for deceleration, given that Perth was predicted to be on the top of the property ladder for 2021. 2. Upper quartile shows the largest deceleration Across the top 25% of dwelling values in the combined capital cities market, growth in dwelling values in the June quarter was 8.0%, down from 9.2% in the three months to May. While this 8.0% uplift was still the highest seen among the value tiers analysed, the growth rate also had the largest month-on-month deceleration. It's likely that we've hit the peak rate of growth and values will continue to decelerate. 3. Capitals vs regionals Combined capital cities are neck and neck with regionals since February 2021 this year. However, over the last year, capitals up 12.4% and regionals 17.7%. It's likely that we'll see some regions that will continue to flourish, particularly those that were on the rise pre-covid and that are within commuting distance to a capital city. 4. The emerging rental crisis All capital cities have seen an increase in house rents over the last year, with Darwin leading the pack with 23.6% growth. The story is similar for units, bar Melbourne and Sydney where the CBD apartment market has been most affected due to covid. The trio discuss the emerging rental crisis, where the most vulnerable will find it very difficult to get a roof over their head. A possible answer is increasing investor incentives, to get mum and dad investors into the market to share some of the housing load with the government. However, the government hasn't rolled out the welcome mat for investors and tax continues to be a hurdle, but possibly an area that could be re-evaluated. 5. Investor activity continues to increase ABS data shows that for 5 out of the last 6 months (Dec 2020 to May 2021) - investor activity has outstripped owner occupied activity for new lending. This could signal we're headed in the trajectory for more stock to be on the market for renters, which would increase rental affordability. 6. Profit making resales trending up CoreLogic data shows 9 out of every 10 properties are being re-sold for a profit, up from 89.1% in the previous quarter and the covid-induced low of 86.0% in the three months to June 2020. What can be seen is a large discrepancy between units and houses, with 16.8% of units selling for a loss vs 6.8% of houses selling for a loss in the March quarter. This is reflected in current growth rates as well, where all capital cities except Hobart showing houses increasing at a faster rate than units. The trio discuss how land to asset ratio will be a driving factor of this discrepancy. 7. Listings take a dive The number of new and total listings are looking pretty grim, with each capital city posting decreases except Darwin. Canberra and Melbourne have the biggest drop in new listings, with 10.1% and 21.7% respectively. These markets are more impacted by the colder months of winter, were stock on the market declines, due to the misconception that winter is not a good time to sell. The trio give an important tip to those...

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