September 27, 2021

#120: How supply and demand dictate market movements - Part #2 Locational drivers - Streetscapes, schools, transport, prestige, shops, CBD a

47 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode, Dave, Cate and Pete take you through: Weekly market updates 1. APRA concerned over high debt-to-income lending, but no intervention for now Outstanding housing credit hit $1.9 trillion in June, which is 4.7% higher than 12 months ago. Compared with how the property market has moved in the last year, it doesn't seem too high. However, the June quarter saw a rise of high debt-to-income lending which is now at 21.9%, up from 15% two years ago. At the same time, lending with high loan to value ratios fell and interest only loans are the least in number they've been in the last two years. This indicates that we may be borrowing more, but not leveraging as hard and APRA doesn't believe lending standards are deteriorating. 2. Latest ABS stats on capital city property prices The ABS has released figures for the June quarter for the Residential Property Price Index, showing price increases of 6.7% over the last quarter for the combined capitals. This is the fastest rate of growth in any quarter since 2003. Over the last 12 months, values rose by 16.8%. Interestingly, capital city figures did not match CoreLogic's analysis in all cases which highlights discrepancies between data houses and the challenges of relying on data from one source. 3. The dangers of data delay Each capital city is exhibiting enormous growth runs, despite the pandemic. In Melbourne and Canberra, our ability to trade has been so restricted, that the only purchasers left in the market are those who are willing to purchase sight unseen or do video walk throughs of a property. This is a perfect illustration of data lag, as this won't flow through in the numbers until later. Location based factors that impact supply and demand 1. Access to public transport and shops Access to public transport is a key driver for demand and is increasingly important in larger cities. Access to shops is another key driver, although retail trade analysis shows that the larger the shopping centre, the further people are willing to travel to reach there. What we see now is that the desire to be close to shopping centres has been replaced with a desire to access local shops and nice cafes. Being within walking distance to your transport hub or local shopping precinct is a major draw card. 2. Quality schools Proximity to quality schools, particularly prestigious public schools where the perception is that your child will get a private school education at public school prices, is a major driver for many parents when picking a location. This greatly increases demand for properties that are within the zone of a public school or properties within 30 minutes commute of private schools. The Property Buyer shares a tip to do a cost benefit analysis, as many parents will pay extra to get in the zone of a public school, but maybe you'd be better off paying the private school fees and saving on the elevated purchase costs? 3. How close is too close? Being nearby to great amenities and services can greatly impact the desirability of a location, but being too close can be problematic. Train lines, rubbish tips, industrial areas, petrol stations and shopping precincts are just a few of the things that you need to be mindful of being too close to. Think about the noise, the people and the smells. Is the property too close for comfort? 4. Proximity to the CBD, are we at the beginning of a new era? The CBD apartment market has been one of the worst hit during covid, but will we see a permanent exodus from the CBD? The trio discuss the...

...more