While many of us spent recent time indulging in Easter eggs, camping or hiking in the bush, some serious stuff happened regarding the housing market.
Here is your post-Easter property market update.
The number of residential building approvals rose 3% in February, with alterations & additions lending reaching an all-time high.
New housing approvals are now averaging 13,000 per month (based on the last three months), which if this trend continues, will see an annualised level of 160,000 starts over the next 12 months. More on this topic next week.
The low interest environment, coupled with buoyant share markets & improving consumer confidence, & is supporting retail activity.
Retail trade rose by 2.5% during the first two months of 2013, making it the strongest start to a calendar year since 2001.
The strength in retail activity was broad-based with sales rising in 19 out of the 20 categories. But a word of caution – whilst the lift in spending is great news (with annualised spending growth rising from 3% to close to 5%), deep discounting partly contributed to the pick-up in retail activity.
The cash rate remained on hold at 3% & for the fourth straight month. Again, we discuss this topic more next week, but for mine, interest rates are now on hold for the next six months or so. Where they go next will depend largely on the domestic front for new housing starts.
It seems that the RBA are watching the housing market. In their April statement they noted that “dwelling investment is slowly increasing, with rising dwelling prices & high rental yields”.
Also, variable mortgage rates are around 6.45% and below the long-term normal rate of 7.2%.
It seems to me that the RBA thinks the housing market is in recovery & that interest rates are historically cheap – or to paraphrase, “sooner rather than later lock in your interest rates.”
Australia’s population growth rose by 102,000 over the last three months to be 382,000 higher than 12 months ago.
Natural increase made up for 40% of the increase, net overseas migration 60% or 228,000.
Annual population growth is likely to be in the 350,000 to 400,000 pa range over the next couple of years.
New dwelling construction is currently averaging 142,000 per annum – again, more on this next week – which is well below the current population growth of 382,000 & underlying housing demand of about 170,000 per annum.
Queensland’s annual population growth is now over 91,000 per annum; almost double that of just two and a bit years ago. Victoria’s population is still growing strongly, at 95,000 per annum. New South Wales is growing by 86,000 pa; Western Australia by 82,000 each year & South Australia by 16,400 pa.
The new financial wealth of Australian households rose by $63 billion last quarter or by 4% to $1,635 billion – a record high.
Per capita, this equates to $71,430 – which is up 22% on this time last year & stands at 5-year highs. Over the past decade, per capita wealth is up 88%.
Australian households hold $759 billion in cash & deposits, which represents 23% of all household assets. Home buyers are also well ahead in their repayment schedules.
The best news comes last. According to RPData-Rismark, capital city home prices rose 1.3% in March to stand at 2.4% higher than a year ago.
The median capital city house price is now $485,000 & the median apartment price is $420,000.
Dwelling prices rose in seven out of the eight capital cities in March. They remained unchanged in Adelaide. Dwelling prices are now higher in seven capitals than they were 12 months ago. Hobart is the exception.
Total returns on capital city houses & apartments are up 7% on a year ago.
Hmmm, maybe we should have Easter more often.
Good news, like a good holiday, seems to sleep till noon.
Michael is the director of independent property advisory Matusik Property Insights and writes the Matusik Missive which is free, however, reprinting, republication or distribution of any portion of this material, or inclusion on any website, is strictly prohibited without the written permission of Matusik Property Insights and may incur a charge.