March 14, 2022

#144: Market Update February 22 - Has the market reached a turning point, are yields in Melbourne and Sydney about to rise, why rents and va

46 minutes

Got a question for the trio? - https://zfrmz.com/uLtjhyBskV96PY6eJfaI https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market updates 1. Declining rate of growth for housing values is proving to be the long-term trend While housing values are generally rising, the pace of growth in the national index has trended downwards since April 2021. This is not to say that housing values are going backwards, they are still increasing but have lost steam. Housing values increased 0.6% nationally over the month of February, although the effects on each state have varied greatly. Brisbane continues to perform strongly with 1.8% growth over the month and 29.7% over the year, which could well be a record for the city. However the floods in Brisbane are likely to dampen the property market, at least for the short term. 2. Is the property market at an inflection point? With recent events in Ukraine, speculation over rising interest rates, combined with inflation pressures and yields increasing for the first time, we may very well be at a turning point in the property market. ...Or are we? Media and speculation count for only so much and we have navigated global challenges before and fared better than predicted. 3. Regions continue to perform strongly Total return for combined regions is at a whopping 30.5%! 'Combined regions' is a very vague term and there will be some regions that perform more strongly than others, with annual growth and yields topping this figure. According to CoreLogic, Regional SA is actually the best performing regional market over the last 3 months, which is probably very closely tied to the fact that proportionally it has the lowest number of total listings of any regional area or capital city in the country. The trio ponder why investment in Adelaide's regions lag behind the nation's eastern states, among other data findings. Stay tuned for next week when Pete to shares his research and insights in his market update, where he will try to determine why regional towns in SA such as Victor Harbor are so much cheaper than regional towns in Victoria, such as Portsea. 4. Rents and vacancy rates will be the story of the year Cate shares her insights on the rental market in Ballarat, (as one example of a vibrant and changing regional city), and why rents have tightened again in this market. With the opening up of international boarders, vacancy rates are expected to be put under more pressure for capital city and university towns that will see an influx of international students. Vacancy rates are under 1% in every capital city except Melbourne, Sydney and Brisbane, although these cities have seen a significant reduction in vacancies over the last month. 5. Rental yields on the rise? Average rental yield in Melbourne and Sydney is as low as it's ever been. But this is likely to be the bottom of the curve. Melbourne unit growth has now recovered and Melbourne is largely on par with other capital cities in terms of annual change in rents. Increases of 20% in yields with the arrival of a new tenant is not uncommon, where previously landlords would be lucky to see a $10 per week increase in rent. As yields come down in Brisbane and Adelaide due to the stellar capital growth, this may bring investors back to Melbourne and Sydney. But are the Victorian landlord reforms with heightened landlord obligations turning investors away? And Victoria isn't the only state to roll out rental reforms. We are watching this space... 6. How listings impact housing value growth The clear picture from the data that we're studying is tha...

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