October 14, 2023

2 sense: Builders losing money, desperate Aussies turn to tiny dwellings as shortage bites

40 minutes

Welcome to the latest edition of 2 Sense on the Australian Property Podcast, where we break down the biggest news headlines of the week and tell you what this really means for you.

Mortgage Broker Chris Bates and Buyer's Agent Pete Wargent discuss the housing shortage forcing people to turn to granny flats, property investors driving a mortgage rebound, and why 1/3 of builders are losing money.

Story 1: Desperate Aussies turn to granny flats

CoreLogic economist Eliza Owen notes the following reasons why the rental market is still so high: (1) a shortfall of rental listings at a time when people are once again migrating to Australia in big numbers, (2) a growing desire among people post-pandemic to live in bigger homes with fewer people and (3) shortfall in investors building new properties for renters as interest rates have risen.

Not such good news for renters in the short term as there's going to be some pain as we continue to see strong flows of net overseas migration.

What's next?

Story 2: Property investors drive mortgage rebound

According to the Australian Bureau of Statistics (ABS), overall mortgage commitments rose by 2.2% in August, with owner-occupier commitments rising by 2.6% and investor mortgage commitments rising by 1.6%. The rebound in overall mortgage growth is being driven by investors, with the value of investor commitments almost back at the 2015 peak.

While a higher than usual share of investors are selling, there are also more investors purchasing

The situation facing property investors should also improve over the coming year given the rental market is experiencing record tightness, population growth is booming, prices are rising, and reduced construction levels.

What's next?

Story 3: A third of large builders are losing money

Despite talk of greedy developers, many are going bust, and a third of larger developers are burning negative cashflow according to the FSR released by the Reserve Bank of Australia.

Materials cost inflation slowed to 0.2% in the September quarter (Coredell), but wages are still under pressure due to skills shortages across the construction sector because of thin margins, leverage, rising interest rates, and soaring costs.

It is expected to have more insolvencies, undersupply, unit rents to rise, and units to outperform for the next year or two in the capital cities.

Australian Property Podcast resources:

Story 1

Story 2

Story 3

Australian Property Podcast online - videos, notes & resources

Ask a question

Chris' mortgage broking

Amy's new property course

Amy's 100-point checklist (PDF)

Pete Wargent's property coaching

Join Owen's Rask Core membership for $0.99

INFORMATION WARNING!

This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser.

Full individual disclosures for each guest are available via the show notes page. Owen and The Rask Group Pty Ltd do NOT receive anything for mentioning Super funds, products, shares, bank accounts, etc.

Access The Rask Group's Financial Services Guide (FSG): https://www.rask.com.au/fsg

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By Rask

October 14, 2023

2 sense: Builders losing money, desperate Aussies turn to tiny dwellings as shortage bites

40 minutes

Welcome to the latest edition of 2 Sense on the Australian Property Podcast, where we break down the biggest news headlines of the week and tell you what this really means for you.

Story 1: Desperate Aussies turn to granny flats

Not such good news for renters in the short term as there's going to be some pain as we continue to see strong flows of net overseas migration.

What's next?

Story 2: Property investors drive mortgage rebound

While a higher than usual share of investors are selling, there are also more investors purchasing

What's next?

Story 3: A third of large builders are losing money

Despite talk of greedy developers, many are going bust, and a third of larger developers are burning negative cashflow according to the FSR released by the Reserve Bank of Australia.

It is expected to have more insolvencies, undersupply, unit rents to rise, and units to outperform for the next year or two in the capital cities.

Australian Property Podcast resources:

Story 1

Story 2

Story 3

Australian Property Podcast online - videos, notes & resources

Ask a question

Chris' mortgage broking

Amy's new property course

Amy's 100-point checklist (PDF)

Pete Wargent's property coaching

Join Owen's Rask Core membership for $0.99