Welcome to this week's edition of 2 Sense on The Australian Property Podcast, where we take a look at the week's most interesting news headlines and break down what this means for you.
Mortgage Broker Chris Bates and Buyer's Agent Pete Wargent are discussing: business insolvencies hitting a 15-year high, why office towers are taking a major hit & Australian population surge driving rental vacancies to a new low.
Story 1: Business Insolvencies Hitting a 15-year High
Firms are starting to fail as the cost of capital risesWhy is this happening? The business cycle has been unusual, stimulus could have papered over the cracksBig surge in small business failures, rising unemployment, and a fall in employment, particularly in the retail segmentWhat does it mean for property? Distressed sales are still low for now. The unemployment rate is still 3.7%
Story 2: Office towers to take a major hit (according to a recent Morgan Stanley report)
ABS value of dwelling stock rose $325bn in the June quarter to over $10 trillion, driven mainly by increases in the mean dwelling price in NSW (+$32k) and QLD (+$26k)
However, Morgan Stanley reports office tower valuations could fall another 10-15%Why is this happening? Working from home phenomenon has persisted, at least for 3 days per week What does it mean? This could be interesting news for REITs and super fundsWhat does it mean for property? Commercial office prices to fall
Story 3: Record low rental vacancies
Record high population growth, and record low rental vacancy rates.
International arrivals in January hit 1.7m, the highest since January 2020
Why is this happening? Temp visas are at a record high of 2.55m, including a record 650,000 international students, with population growth at 2.4%.What does it mean? Despite this, the rental market seems to be a bit steadier and less panicked What does it mean for property? Ongoing rental shortages and pressures to continue for the next 2-3 years?
Australian Property Podcast resources:
ABC - Insolvencies
REA Housing CrisisInternational StudentsPete's blogAustralian Property Podcast online - videos, notes & resources
Ask a questionChris' mortgage brokingAmy's new property courseAmy's 100-point checklist (PDF)Pete Wargent's property coachingJoin Owen's Rask Core membership for $0.99
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