While clearly, each cycle is different, there are some similarities and having now invested for over five decades through eight property cycles, I can see patterns in the chaos that others see.
That’s why in today’s Property Insider chat, I’m going to ask Dr Andrew Wilson, chief economist of My Housing Market, to give us a primer on housing cycles.
I would also like his thoughts on the age-old conundrum of whether you should invest in properties or shares.
With the stock market being near record highs and a number of headwinds for the housing markets, there are commentators out there suggesting shares are a better investment.
But is this true?
Let’s find out….
Property prices have been climbing for over a year now, and while this has been good news for homeowners, it is heartbreaking for house hunters.
At the same time, there have been mixed messages in the media about what’s ahead.
Of course, there are always the Negative Nellies wanting to tell anyone who is prepared to listen to them the market is about to crash, but other more solid commentators are suggesting our property markets will keep growing at a slower pace.
Watch this week’s property insider chat with Dr Andrew Wilson, as he explains the nature of property cycles.
Dr Wilson outlines his Wilson curve (see below) and how, despite all opposite pessimistic property predictions, we don’t really have property bubbles in Australia or significant property crashes.
Of course, rather than trying to time the market, investors should adopt a long-term perspective for their property investment.
There is no "best" time or "worst" time to buy property because property investment is a process, not just an event.
Attempting to time the market could lead to missed opportunities, and waiting for the "perfect" moment to invest may result in a more competitive market and potentially higher prices.
Having said that, watch as Dr Andrew Wilson and I discuss how the lagging Melbourne property market is currently offering a significant window of opportunity as property values are significantly below replacement cost, meaning many established properties purchased today have huge intrinsic equity.
In the medium term, our property markets will be underpinned by 3 factors:
I see the current market offering a window of opportunity for property investors with a long-term focus.
You see…we are at the early stages of a new property cycle, something that doesn’t happen very often.
Not that I suggest you try and time the market- this is just too difficult, and in truth, you’ve missed the bottom which occurred in early 2023.
But if the market hands you an opportunity like this, why not take advantage of it?
Taking advantage of the upturn stage of a new property has created significant wealth for investors in the past.
Moving forward, demand is going to outstrip supply for some time to come as we experience record levels of immigration at a time when we’re not building anywhere as many properties as we require.
At the same time, the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
Of course, in due course, consumer sentiment will rebound when it becomes clear that inflation continues to fall and interest rates have peaked.
At that time pent-up demand will be released as greed (FOMO) overtakes fear (FOBE - Fear of buying early), as it always does as the property cycle moves on.
We are also going to be experiencing a prolonged period of strong rental growth - the rental crisis will only worsen further, with no end in sight.
Now I'm not suggesting taking advantage of tenants, what I'm suggesting is to recognise there is currently a problem (lack of rental accommodation) and provide a solution.
So rather than trying to hunt down a bargain, focus on buying an investment-grade property in an A-grade location because these types of properties are in short supply but are still selling for reasonably good prices… Plus they’ll hold their value far better in the long term.
While it might feel counterintuitive to buy at a time when there are so many mixed messages in the media, you can benefit from less competition, low consumer sentiment, minimal downside risk and minimal risk of oversupply.
In this week’s, Property Insider video, Dr Andrew Wilson compares the cumulative capital growth of properties to Australian shares based on the All Ordinaries Index.
Using a starting point of 2007, which was the peak of a mining boom and property boom, the chart below shows how poorly the Australian share market has performed compared to property markets.
Watch as Dr Wilson explains how this has played out and how the American share market has significantly performed the Australian share market.
Remember, if you have a superannuation fund, as most Australians do, it’s most likely heavily weighted in Australian shares.
We are at an interesting stage of the property cycle where both rental growth and capital growth are strong.
Usually, investors enjoy one or the other, but not both at the same time.
Watch this week’s Property Insiders chat as Dr. Wilson explains the returns investors have been achieving.
As you can see from the charts below, combining rental yield, and capital growth has yielded some amazing results over the last 12 months.
Weekend auction markets hosted another big day of auctions, but clearance rates were lower across the board as robust markets now test buyer depth.
Adelaide had the strongest auction clearance rate of 74.4%.
Auction clearance results for the other capitals were:- Melbourne - 65.2%; Brisbane -56.4%; Sydney - 71.3% and Canberra - 57.6%.
The national auction market reported a clearance rate of 65.0% at the weekend which was well below the 73.1% reported over the previous weekend – but marginally higher than the 63.4% recorded over the same weekend last year.
National auction numbers were predictably higher following the holiday impacted the previous weekend, with 2448 listings versus the previous weekend’s 1371, and still significantly above the 1815 listed over the same weekend last year.
Weekend auction markets have resumed at full pace this weekend, and with high listing numbers again likely next weekend prior to the Easter break, they are certain to continue to test markets.
A recent Westpac Home Ownership Report reveals a surge in home buying intentions – 44% of Australians plan to purchase within the next half-decade, marking a significant 9% increase since July last year.
This wave of buyers isn't just limited to first-home seekers; there’s a 6% uptick in investors and a notable increase in those looking to upgrade or invest in renovations.
Interestingly, new ABS data indicates a rise in Australians juggling multiple jobs – over 970,000 people are pushing their limits to save for a home.
This era of multi-job holders is marked by a wave of inventive side hustles.
Damien MacRae of Westpac observes a resolute focus among Aussies on their long-term housing goals.
He said:
“While some pause their plans, the underlying determination to enter the housing market is unflinching.
Buyers are increasingly willing to compromise and get creative to achieve home ownership.”
Among these compromises, location flexibility stands out.
Previously a significant hurdle, many are now open to relocating.
An impressive 75% are considering areas they hadn't previously, and 50% are exploring the 'rent-vesting' strategy.
Cutting back on daily luxuries, like food delivery, is another popular tactic.
In the shifting landscape of preferences, apartments are on the rise, increasing 7% in popularity over the past year.
Interestingly, house preference has dipped by 5 percentage points over three years.
Partnering up for property purchases is another growing trend, with a striking 16% rise in couples buying together.
Even the prospect of Lenders Mortgage Insurance isn't deterring buyers – nearly half are willing to pay if it fast-tracks their first home purchase.
Townhouses have seen a doubling in interest, and the preference for house and land packages has quadrupled.
This shift seems more a move towards affordability than a reaction to the pandemic.
Mr. MacRae adds, “The pandemic did drive buyers away from cities in search of space, but now location flexibility is key for many to enter the market.”
He emphasizes the need to address supply shortages, given this resurgence in buyer confidence.
ABS's latest figures show a steady increase in multiple jobholders, particularly among women and younger workers.
Most secondary jobs align with the primary industry, spanning agriculture, construction, education, health, and more.
Thesmallbusinessblog.net highlights the popularity of side hustles like Uber driving, dropshipping, and various freelance roles.
These gigs offer flexibility and an opportunity to supplement income, crucial for many aiming to break into the housing market.
In conclusion, Australians are resiliently navigating the complex real estate landscape.
Their adaptability, willingness to compromise, and innovative approaches to saving are testament to their determination to achieve the dream of home ownership.
]]>Although the timing of an RBA rate cut remains uncertain and dependent on inflation outcomes.
Nonetheless, the hold decision, alongside lower inflation and a growing expectation that interest rates will reduce later this year, should help to provide a further lift in confidence.
Historically we have seen a close relationship between consumer sentiment and the volume of home sales.
Following the 6.2% rise in the February consumer sentiment reading from Westpac and the Melbourne Institute, a further lift in confidence could be accompanied by a rise in home purchasing.
This could add to housing demand that has already remained quite resilient despite the higher interest rate environment and cost of living pressures.
The RBA has consistently highlighted the challenges involved with returning inflation to the target range of 2-3%.
Headline inflation has reduced at a faster-than-forecast pace, falling from a peak of 7.8% at the end of 2022 to 4.1% annually, while the latest quarterly inflation reading, at 0.6%, is the lowest since March 2020.
However, beneath the headline result, it is clear that services inflation remains stubbornly high, reflecting tight labour market conditions but also ongoing growth in services costs such as insurance & financial services (+8.1% annual) and housing costs including rents (+7.3% annual), new builds (+5.1% annual) and utilities (+8.4% annual).
The RBA expects services inflation to decline only gradually, making the timing for a rate cut highly uncertain and dependent on further progress in reducing inflation emanating from the services sector.
Despite the high-interest rate environment, housing values have remained broadly resilient, if not strong in some cities and regions.
Upwards pressure on housing values has been supported by an imbalance between supply and demand, a situation that looks entrenched as barriers to new housing supply remain high.
Nationally, we have seen a reacceleration in the pace of value growth through the first two months of the year, which could reflect renewed optimism amid a peak in the rate hiking cycle and progress towards the inflation target.
CoreLogic’s daily HVI is pointing towards further growth in housing values, with each of the five largest capitals recording a rise in dwelling values through the month-to-date.
In line with a pick-up in the pace of growth in housing values, we have also seen auction clearance rates bounce higher through the year-to-date, rising to above-average levels in most cities.
Ray White’s recent economic update reveals that median-priced houses increased 78% over the past 10 years while luxury property - houses valued in the top 5% - doubled in value over the same period.
Premium houses in inner Brisbane, inner west, inner east and inner north posted the fastest rate of growth nationwide compared to median-priced houses over the past decade.
House prices for the top 5% of homes in inner Brisbane, which includes New Farm, Paddington and Spring Hill, rose by 225% - 38% higher than the 188% growth recorded for average houses in these areas, the AFR reports.
In Brisbane’s inner west, luxury houses rose 231% - 36.1% higher than median-priced houses in the same area and 34% higher than in the inner east.
Meanwhile, in Sydney, luxury houses in Leichhardt, inner city and Pittwater areas increased 228% and 253% respectively - 30% higher than the average houses over the past decade.
Over in Sydney’s infamous eastern suburbs, the price gains were just as impressive.
Houses in the affluent suburbs of Vaucluse, Rose Bay, Darling Point and Point Piper increased 219% - this translates to an outperformance of as much as $3 million versus the median-priced house in these suburbs.
Further south, Melbourne’s affluent suburbs of Stonnington West and East, Bayside and Boroondara districts outperformed regular-priced houses by up to 25% or $1.8 million over the 10-year time period.
It’s not just houses that have seen stronger price growth over the past decade compared to the median property on the market, luxury apartments are also performing strongly.
Historically, many apartments in Australia were built for people that could not afford a house and traditionally they were used as a stepping stone to get into the housing market.
But now, Conisbee explained, there is growing demand for luxury apartments and the gap between the median and the most expensive has grown as quality has improved.
“[This shows] a switch in the way that wealthy people want to live,” she said.
The suburbs for outperforming luxury units are mostly located in Sydney’s eastern suburbs - Double Bay, Bellevue Hill, Bronte and Tamarama - which have all seen values triple over the past 10 years versus the 154% increase for the average unit in these suburbs.
Premium units in North Sydney and Mosman have also tripled versus the 165% increase for median-priced units in those suburbs.
Price growth in the luxury property market is largely down to three key factors: land value, renovation and a higher concentration of wealth in those households, the report explains.
Property in some of our most expensive suburbs, which tend to be located close to beaches, bays and rivers, experience strong price growth due to the land value of those areas.
Meanwhile, properties on land with more unique characteristics that are hard to replicate, such as a view or proximity to water, are likely to have increased at an even higher rate over the 10-year period.
The renovation trend, which surged during and immediately after the pandemic, is another driver of luxury house price growth.
“And while it is not possible to measure, it is likely a higher proportion of well-located luxury homes have been renovated than the rest of the market and almost certainly true that more has been spent on them,” Nerida Conisbee, chief economist at Ray White and author of the report, said.
Meanwhile, a recent report from Oxfam has found that the wealth of Australia’s richest people has increased at a rate of $1.5 million per hour since 2020 - and much of this wealth has been invested in luxury homes around Australia which has also contributed to increased prices in this segment of the market.
Conisbee also warned that while luxury homes have outperformed, they have also exhibited a lot more volatility in price growth.
“During the pandemic, they increased far more than more affordable properties. But they also saw a much greater decline in 2022.”
She added that, as a result, timing the purchase of a luxury home appears far more important than it does for buying one closer to the median.
The Federal Government Housing Accord seeks to build more homes within established suburbs in order to try to help our ongoing housing and rental crisis.
But it is likely that most of them won’t be built in our most expensive suburbs, Conisbee said.
“Owning a luxury house or apartment in our most expensive suburbs is set to continue to be a solid investment over the next decade, providing of course you can afford to buy one in the first place.”
In today’s informed market, there are very few bargains.
Properties that no one else wants today will probably be the type of property that no one else will want in 5 years’ time.
Price is what you pay, value is what you get; so buy the best property you can afford — the type of property you’d still be happy to own in 10 to 15 years’ time.
As you can see from the data above, both luxury houses and apartments have outperformed the averages over the last decade and both are set to continue gaining in value strongly going forwards.
I’ve always advocated investing in areas where more affluent people live and wages growth is higher than the state averages, however, the very top end of the market, the most luxurious of homes and apartments tend not to be great investments as this segment of the market is more volatile in price growth.
They tend to increase strongly during good economic times and full value decline during challenging economic times.
]]>Good ones that is.
Of course, not all habits are productive ones.
Some are bad for us, they stop us from succeeding, and they reinforce negative patterns that we’ve picked up from parents, friends or colleagues.
No one is perfect, but I’ve found that the most successful people find ways to replace their bad habits with good ones.
A successful career, after all, is really just a series of good habits put into action over and over again.
But in order to eliminate our vices and form productive habits, we need to identify our destructive ones.
Here is my checklist of some of the all-time bad habits.
I can’t tell you how often I come across this one.
A lot of people are quick to blame others when things go wrong and they fail to take responsibility for the role they may have played in the situation.
Of course, sometimes people have a run of bad luck or are treated badly, but that’s different from playing the victim all the time.
Think about your social circle, your friends, and your family.
I’m sure there is at least one person you can think of who always blames others for their bad fortune.
Tiring isn’t it?
The fact is: that there are no rich or successful victims.
Setbacks will happen.
To everyone.
It’s easy to look at other people’s successes and think they got an easy ride.
Most of the time, they didn’t.
They just didn’t let setbacks stop them.
Depending on how you were raised by your parents, you will either take setbacks in your stride or you will let them crush you.
If you fall into the latter camp, then it’s time to try and change this “Poor Habit.”
Catch yourself every time you feel defeated or when something is not going your way, and change your thinking.
Do not give up on the first hurdle.
A small number of people have the opposite problem of giving up too easily: they don’t know when to give up.
They pour endless amounts of time, money, and emotion into a project despite endless rejections and knock-backs.
Rather than try a different approach, they continue to butt up against a wall that is not going anywhere.
This kind of blind pursuit is not resilience, it’s what I would call stupidity.
As important as it is to chase your dreams, it’s equally important to know when to stop, take a breath, and try something else.
Thinking you know it all and that you have nothing left to learn, is foolish.
This kind of belief system cuts you off from growing, it short-circuits the imagination and it stops you from developing new ideas.
Aim to be one of those people who ask other people questions at barbecues.
Don’t get so stuck in your own head, and your own career, that you forget that other people are leading interesting lives and may very well have a role to play in yours, too.
Always be on the lookout to learn more. It’s good for business, but it’s also good for your soul.
Speaking of soul, it’s important unhealthy lifestyle habits are ditched.
That means no burning the candle at both ends.
You may be busy — busier than you have ever been — but you need to find an exercise regime that suits you and one that you’ll stick to.
Eat well, try and get lots of sleep, and maintain a decent level of fitness.
Looking after your body will help ensure you’re in good shape when life throws those inevitable curve balls at you.
If you’ve got any bad debts, or some credit cards that are no longer serving you well, then get rid of them.
The ability to look after your finances is one of the best predictors of success.
If you can manage your money, stick to a budget and save, it shows you have the kind of self-control and maturity that is needed to be successful in life and to see something through.
Many of us have one or more of these bad habits that we need to work on, but that doesn’t mean we should be complacent.
Bad habits hold us back.
They stop us from reaching our goals and they often keep us poor, tired, and unhappy.
Reason enough to ditch them for some good ones.
]]>The Australian Competition and Consumer Commission reports that Australians lost a record $3.1 billion to scams in 2022.
This is an 80 per cent increase in total losses recorded in 2021.
This staggering loss highlights not just the cunning of scammers but also their ability to adapt to changing technologies and exploit new vulnerabilities.
So, in today’s podcast with independent financial advisor Stuart Wemyss, I want to ask him how to spot the signs of a scam.
Our conversation today is an eye-opener, revealing common tactics scammers use to exploit the digital landscape and deceive individuals.
We touch on personal experiences and the various types of scams, such as phishing and false billing.
Whether you're an experienced investor or a beginner, this episode is packed with practical insights and data-driven predictions to help you make informed decisions.
Amidst sharing these insights, we underscore the significance of safeguarding personal and financial information and discuss how banks' robust security measures, though sometimes inconvenient, are critical in protecting us from these fraudulent activities.
Scammers have always been out there, but the risk of being scammed has changed and increased in certain ways thanks to new technologies and tools.
In my chat with Stuart today, we talked about both of our experiences with scams and the types of scams you might be likely to encounter.
It’s increasingly important to be proactive in protecting your finances from the threat of digital scams.
By staying informed and implementing strategic safety practices, listeners can defend their assets and continue building wealth.
Links and Resources:
Stuart Wemyss – Prosolution Private Clients
Stuart’s Book – Rules of the Lending Game & Investopoly
Get the team at Metropole to help build your personal Strategic Property Plan Click here and have a chat with us
Join us at Wealth Retreat 2024 – www.WealthRetreat.com.au
Some of our favorite quotes from the show:
“2 factor authorization is a nuisance but helped protect me.” – Michael Yardney
“ I find it interesting when I get phone calls from banks or financial institutions who ring me and then ask me to identify myself. Now I know why they're doing it, but I always love saying hang on, you contacted me.” – Michael Yardney
“I believe this wanting what you have attitude can be practiced whatever your current situation. So how do you do this? Well, I think the first thing you should do is practice noticing what's great about what you've got.” – Michael Yardney
PLEASE LEAVE US A REVIEW
Reviews are hugely important to me because they help new people discover this podcast. If you enjoyed listening to this episode, please leave a review on iTunes - it's your way of passing the message forward to others and saying thank you to me. Here's how
]]>The depth of buyer appetite was again shown by this week's strong auction clearance rates despite 2,723 properties being put to auction as demand from buyers keeping up with the increased number of properties put to auction.
Easing inflation and the prospect of an earlier-than-expected rate cut are buoying vendor hopes and buyer appetites for property.
However beneath these headline results, housing market performance remains diverse around the country.
Moving forward, demand is going to continue to outstrip supply for some time to come as we experience high levels of immigration at a time when we’re just not building anywhere as many properties as we require.
At the same time, the cost of construction of delivering new dwellings will keep increasing not only because of supply chain issues and the lack of sufficient skilled labour but also because builders and developers will only commence new projects if they are financially viable and currently new projects will need to come on line at considerably higher prices than the current market price,
It will be much the same for our rental market where the supply / demand equation is so far out of balance that we’ve experienced an unprecedented rental crisis with historically low vacancy rates and skyrocketing rents and this will continue into 2024.
On the auction front, with 2,723 capital city homes going under the hammer last weekend, it was the second busiest week of auctions so far this year.
The preliminary clearance rate held up well under higher supply, coming in at 74.0%, 1.2 percentage points higher than the previous week’s preliminary clearance rate (72.8% which was revised down to 68.0% on final numbers).
See Corelogic's full auction report below.
Overall, Australian capital dwelling prices increased by 0.6% over the last month and are now 10.2% higher than they were 12 months ago.
Clearly, the property cycle is moving on driven by an undersupply of good properties relative to steady demand from buyers.
Source: CoreLogic March 18th 2024
Of course, these are "overall" figures - there is not one Sydney or Melbourne or Brisbane property market.
And various segments of each market are performing differently.
The more expensive parts of our capital cities are likely to outperform this year as the local residence will, in general, have more equity in the properties they are selling, and they won't be as sensitive to high interest rates and the high cost of living as the outer and new suburbs.
To help keep you up-to-date with all that's happening in property, here is my updated weekly analysis of data and charts as of 18th March 2024 provided by CoreLogic, and realestate.com.au.
Property asking prices are a useful leading indicator for housing markets - giving a good indication of what's ahead.
Here is the latest data available for March 2024.
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,887.405 | -4.722 | -1.7% | 10.6% |
All Units | 793.750 | 0.850 | 0.0% | 5.1% |
Combined | 1,447.330 | -2.480 | -1.4% | 9.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,253.380 | 7.620 | 1.5% | 7.9% |
All Units | 605.689 | 1.311 | 1.2% | 2.0% |
Combined | 1,051.434 | 5.653 | 1.4% | 6.6% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,059.581 | 4.401 | 1.8% | 11.8% |
All Units | 580.478 | 0.822 | 0.5% | 15.7% |
Combined | 940.439 | 3.511 | 1.6% | 12.2% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 954.414 | -1.801 | 1.7% | 15.8% |
All Units | 497.004 | 6.496 | 3.0% | 16.8% |
Combined | 835.644 | 0.354 | 1.9% | 15.8% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 874.293 | 3.763 | 1.2% | 13.8% |
All Units | 443.387 | -3.087 | 1.3% | 16.0% |
Combined | 797.026 | 2.534 | 1.2% | 14.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,204.100 | 2.337 | 0.3% | 17.0% |
All Units | 598.427 | -0.052 | -0.7% | 0.7% |
Combined | 984.932 | 1.473 | 0.0% | 12.7% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 659.100 | 0.500 | -0.6% | -3.4% |
All Units | 378.168 | 0.165 | 0.7% | 0.9% |
Combined | 548.932 | 0.369 | -0.3% | -2.4% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 805.965 | 3.632 | 1.2% | 1.7% |
All Units | 505.110 | -1.474 | -0.9% | 2.0% |
Combined | 760.776 | 2.865 | 1.0% | 1.7% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 908.057 | -1.759 | 1.3% | 10.8% |
All Units | 534.897 | -1.282 | 0.5% | 5.9% |
Combined | 828.369 | -1.657 | 1.2% | 10.0% |
Source: SQM Research
Property type | Price ($) | Weekly Change | Monthly Change % | Annual % change |
---|---|---|---|---|
All Houses | 1,351.430 | -2.636 | 0.2% | 11.1% |
All Units | 669.278 | 0.083 | 0.8% | 5.7% |
Combined | 1,151.278 | -1.838 | 0.3% | 9.9% |
Source: SQM Research
The value of property asking prices as a leading indicator for housing markets is quite significant.
In fact it's more valuable than median prices which can be quite misleading.
Let's delve into why this is the case and how it impacts the real estate market.
However, it's important to note that while asking prices are a valuable indicator, they should not be used in isolation.
Other factors like actual sales prices, time on the market, auction clearance rates, and economic conditions also play crucial roles in understanding the property market dynamics.
READ MORE: The latest median property prices in Australia’s major cities
Preliminary clearance rate holds up under higher supply
With 2,723 capital city homes going under the hammer last week, it was the second busiest week of auctions so far this year.
The preliminary clearance rate held up well under higher supply, coming in at 74.0%, 1.2 percentage points higher than the previous week’s preliminary clearance rate (72.8% which was revised down to 68.0% on final numbers).
Sydney was the only capital city to record a lower preliminary clearance rate, with 74.8% of auctions returning a successful result so far, down from 76.2% over the previous week (revised down to 71.1% on final numbers) and the lowest preliminary clearance rate so far this year.
Although the trend in clearance rates has been softening across Sydney, the success rate remains above the decade average of 72.2% on the preliminary rate and 68.1% on the final rate.
Melbourne’s preliminary clearance rate recorded a solid bounce back, rising to 72.4% after the previous week’s long weekend saw the preliminary clearance rate drop to 66.2% (revising down to 61.9% on final numbers).
Last week’s early result was the second highest so far this year, after the second week of February (73.1%).
With 1,387 auctions held, this was also the second-highest number of auctions held so far this year.
The preliminary clearance rate was up across the smaller capitals as well, led by Adelaide with a stunning 92.6% preliminary clearance rate.
Brisbane’s clearance rate came in at 71.9%, while Canberra’s preliminary clearance rate came in at 69.9%.
There were 181 auctions held across Brisbane last week, 159 in Adelaide, 110 in Canberra and 19 in Perth.
Four of the eight auctions reported in Perth so far were successful, while we are yet to receive the results of the three auctions in Tasmania.
City | Clearance Rate | Total Auctions | CoreLogic auction results | Cleared Auctions | Uncleared Auctions |
---|---|---|---|---|---|
Sydney | 74.8% | 864 | 652 | 488 | 164 |
Melbourne | 72.4% | 1,387 | 1,067 | 772 | 295 |
Brisbane | 71.9% | 181 | 114 | 82 | 32 |
Adelaide | 92.6% | 159 | 81 | 75 | 6 |
Perth | n/a | 19 | 8 | 4 | 4 |
Tasmania | n/a | 3 | 0 | 0 | 0 |
Canberra | 69.9% | 110 | 73 | 51 | 22 |
Weighted Average | 74.0% | 2,723 | 1,995 | 1,472 | 523 |
Source: CoreLogic
Our rental markets have been tightening further over the last few months, with vacancy rates for both houses and apartments extremely low across the country and asking rents rising rapidly.
Asking rents across the capital cities for houses had been rising in annual terms in the “double digits”, while for units, new asking rents are rising at faster rates, at over 20% in Sydney, Melbourne and Brisbane.
The recently released National Accounts showed that Australia’s population has grown by around 620,000 people in the past financial year.
That’s the highest number in history and a hundred thousand more than what the May federal budget projected.
This record 2.8% expansion in the 15 plus age group of our population is placing a great strain on our rental markets.
The number of overseas students and also people on graduate visas in Australia has increased by just over three hundred thousand in the last financial year.
In particular rents have been rebounding across inner-city rental markets (popular with international students) after slumping during the pandemic when international borders were closed.
While the pace of rental growth is likely to slow down, with current vacancy rates rents will continue to increase as there is a minimal new supply of properties set to enter the market in the medium-term future.
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $1,054.16 | 4.84 | 1.3% | 11.9% |
All Units | $703.58 | 2.42 | 1.5% | 10.3% |
Combined | $846.03 | 3.40 | 1.4% | 11.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $741.14 | 0.86 | 0.5% | 15.1% |
All Units | $552.70 | 2.30 | 2.3% | 10.3% |
Combined | $630.36 | 1.71 | 1.5% | 12.6% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $713.73 | -3.73 | -0.7% | 6.9% |
All Units | $571.40 | 2.60 | 0.7% | 10.9% |
Combined | $649.68 | -0.88 | -0.1% | 8.5% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $778.11 | -1.11 | -0.2% | 17.4% |
All Units | $580.10 | 5.90 | 1.7% | 16.9% |
Combined | $695.35 | 1.82 | 0.4% | 17.3% |
Source: SQM Research
Property Type | Rent $) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $638.38 | -0.38 | -0.1% | 12.9% |
All Units | $457.72 | -3.72 | 1.4% | 12.7% |
Combined | $576.18 | -1.53 | 0.3% | 13.0% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $751.84 | -0.84 | 0.1% | -1.6% |
All Units | $575.89 | 1.11 | 1.0% | 2.1% |
Combined | $656.44 | 0.22 | 0.5% | 0.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $719.33 | 0.67 | -1.6% | 0.7% |
All Units | $492.08 | -0.08 | -2.6% | 9.4% |
Combined | $583.97 | 0.23 | -2.1% | 5.0% |
Source: SQM Research
Property Type | Rent 9$) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $543.75 | 0.25 | 0.3% | -1.3% |
All Units | $463.96 | 1.04 | -0.9% | -3.5% |
Combined | $511.69 | 0.57 | -0.1% | -2.1% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $688.00 | 0.00 | 0.0% | 8.3% |
All Units | $532 | -4.00 | 0.4% | 8.6% |
Combined | $615.48 | -1.86 | 0.2% | 8.5% |
Source: SQM Research
Property Type | Rent ($) | Weekly change | Monthly change | 12 Months change |
---|---|---|---|---|
All Houses | $834 | 2.00 | 0.8% | 12.1% |
All Units | $622 | 3.00 | 1.6% | 10.5% |
Combined | $721.10 | 2.53 | 1.2% | 11.4% |
Source: SQM Research
As the following chart shows, houses are still being snapped up quickly by eager buyers.
At a national level, properties are taking slightly longer to sell than they were during the property boom of 2020 and 2021.
However, the number of days to sell a property is still relatively low (a sign of the tight supply situation for good properties), and vendor discounting is still at very low levels.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
Recent Ray White data reveals that time on the market (how long it takes to sell a property) is still significantly higher in most cities across the country compared to two years ago when the market hit its last peak in pricing following the end of the pandemic.
Nationwide, properties are on the market for sale for an average of 30 days, which is far higher than the 22 days recorded in the previous market peak in January 2022.
The data shows that Perth holds the record as the state where properties sell the quickest - at just 11 days.
Brisbane, Sydney and Melbourne follow next, with 22 days, 29 days and 29 days, respectively.
Meanwhile, Hobart has gone from the quickest selling state during the previous market peak to now being one of the slowest selling markets - at 36 days.
The key trend however is affordability, Ray White’s data reveals.
Both Perth and Adelaide have the lowest capital city medians and at a suburb level, low-cost housing is generally selling the quickest.
In fact, of the top 100 quickest-selling suburbs in Australia, 84 are located in Perth, the data reveals.
Properties in Seville Grove, in the city’s southeast, and the outer southern suburb of Cooloongup are among the fastest-selling, with the average time on the market standing at just five days.
Both suburbs have medians under $500,000.
Almost all of the quickest selling suburbs had a median under $750,000 (86 of the 100).
The most expensive of the top 100 quickest selling was the Perth suburb of Mount Claremont which has a median price of $1.78 million.
At a capital city level, it is also apparent that anything that is below the city median is selling a lot quicker.
For example, Sydney’s St Clair and Werrington Downs are listed as the state’s fastest-selling suburbs at 11 days each, and both have a median property price far below the city’s $1,128,155 median.
The same is true of the fastest-selling suburbs in Brisbane.
Properties in Leichhardt and Raceview are the quickest to sell, at 9 and 11 days respectively.
The median property price in these suburbs sits at $450,000 and $530,000 respectively, which is far below Brisbane’s $805,593 city median.
Meanwhile, the exception is Melbourne where properties in Skye and Kilsyth, which have a hold time of just 14 days, have median property prices close to, or just above, below the city’s $778,941 median.
As always, these tightly-held suburbs aren’t necessarily the suburbs I would recommend investing in.
That’s because when it comes to property investment, it's most important to look for an investment-grade property in the ‘right area’ rather than chasing ‘top hotspots’ or growth areas.
But even before looking for the right location, make sure you have a Strategic Property Plan to steer you through the upcoming challenging times our property markets will encounter.
You see…property investing is a process, not an event.
Things have to be done in the right order – and selecting the location and the right property in that location comes right at the end of the process.
The fact is, the property you will eventually buy will be the result of a sequence of questions you will need to ask and answer and a series of decisions you’ll need to make before you even start looking at locations.
Long before we talk about a property or the right location with our clients at Metropole, we look at factors including their age, their timeframes, and the desired end results in other words, what do they really want the properties to do – are they looking for cash flow, capital growth, or a combination of both.
And that’s because what makes a great investment property for me, is not likely to be the same as what would suit your investment needs.
]]>So it’s no wonder that housing affordability (or unaffordability) is such a popular topic at the moment.
There's no denying it has become a lot harder to make the first step, mainly due to the hurdle of saving up a big enough deposit to meet the bank’s requirements.
Especially when it comes to questioning how our younger generations will ever be able to make their first step on the property ladder at a time when the crippling cost of living and rising interest rates push home ownership out of reach for many.
But parents have been helping their children buy properties for generations and many will be happy to do the same to help their children in future.
The Bank of Mum and Dad provided nearly $3 billion worth of funding to adult children in 2023, the AFR reports, making it one of the nation’s largest residential property lenders.
Such support has increased fivefold in the past five years to assist about 60% of first-home buyers.
But while it’s great news that there are several ways that parents can help their kids onto the property ladder, the bad news is many generous parents are unknowingly creating a minefield of problems for both their own futures and that of their families.
Here are 7 steps to help your kids onto the property ladder without detonating a legal, tax or financial minefield that could sabotage your (or their) future.
Generally, there are two ways a parent can help their kid buy property - a guarantor loan or a cash gift.
One of the most common ways that parents help their children is by agreeing to a guarantee loan.
A guarantor loan is a loan product that offers up some of their equity to their child or children to assist with the deposit.
For example, perhaps your daughter could only save $30,000 but needs $60,000 to qualify for a home loan.
If you're thinking about guaranteeing a loan, make sure you understand the risks.
Take the same care as if you were taking out a loan for yourself.
For example, if you apply for a loan in the future, you'll have to tell your lender if you're a guarantor on any other loans.
They might decide not to lend to you, even if the loan that you guaranteed is being repaid.
It's important to recognise, however, that while you may not have ownership rights over the property, you may be wholly responsible for the entire loan if your daughter or son defaults.
In fact, lawyers say a growing number of court cases involving bitter family disputes about what was agreed and who is responsible for outstanding debts underlines the need for any loan or gift to be carefully documented.
With loans, the minimum a parent should do is register it against the title of the child’s property to make others aware of their interest.
Alternatively, you could lodge a caveat on your child’s property to protect your “equitable mortgage”.
And always have a written loan agreement, even if asking your child to do this might feel a bit awkward at the time because it is so much safer for you to have evidence of a loan agreement.
If you're considering this option, you should access expert advice before proceeding.
As a parent, we all want our children to have good lives and to be successful if that's what they desire to do.
But does that mindset extend to giving them a financial gift to buy a property?
In my opinion, it really is a personal decision and will depend on factors such as your child's capability to manage a home loan.
If your son or daughter has been spending every cent that they've earned for years, which is why they haven't saved a property deposit, is it really a good idea to just give them a handout?
Will they have the necessary financial discipline and know-how to not default on their mortgage repayments?
Perhaps a better idea could be to suggest a financial gift that matches their savings.
So, if they knuckle down and save $25,000, then you will tip in an equal amount to bump it up to $50,000.
That way, your child will learn how to save and you will be more confident that they're not taking on more than they can financially handle.
But parents need to be very clear about whether they’re providing their children with a gift or a loan.
If the money is a gift, this should be made clear in writing to avoid confusion down the track.
If the money is a loan, as mentioned you should write up a loan agreement detailing the size of the loan, the term and how it will be repaid.
So, before you decide on a strategy to help your children buy property, you must ensure you have accessed expert advice from a qualified wealth strategist.
That way, it reduces the chance of any ugly fallouts which could totally undo your original good intentions.
Parental contributions vary according to state and territory property prices, with an average of about $92,000 in NSW and $34,000 in Western Australia, according to Jarden Australia, an investment bank and wealth manager.
The national average is about $70,000, and nearly 5% receive more than $200,000, its analysis shows.
Larger assistance is generally provided in NSW and Victoria where property prices are the highest – typically about 10% of median dwelling values.
Parental assistance in Western Australia, where property prices are the lowest, equates to about 6% of dwelling values.
Making sure a loan is fair for lenders, borrowers and all family members – particularly siblings – can make or break a transaction, lower the risk of damaging disputes and maintain harmony, specialists told the AFR.
This includes ensuring parents can afford to subsidise their child’s purchase and that other siblings are comfortable with the amount of a gift or loan (plus repayment terms), which might mean amendments to parents’ wills to ensure equal treatment.
Parents first need to assess the impact of a loan on their own finances by calculating the amount of money they will need in retirement and whether it will affect their access to other credit.
Here’s an example of how the type of help parents give affects their own finances.
Source: AFR
Craig Hollett, a director of Solomon Hollett Lawyers told the AFR of cases where some children are increasingly helping themselves to their parents’ wealth, creating potential problems with siblings.
For example, children are using enduring powers of attorney, authorising them to make legal and financial decisions when parents no longer can, to claim they have the authority to cash in their inheritance early.
Alternatively, they pressure elderly parents to forgive debt.
“This can become sinister when one child gets more than others,” says Hollett. “Wills should make provision to ensure that all children are treated fairly.”
For this reason, it’s vital that all you write the agreement down, including terms of what has been agreed and what should happen should circumstances change.
This should include everything that has been discussed, with details of who has agreed on what and an idea of the timeframe.
Remember, verbal agreements are as legally enforceable as written ones, but you will have problems when you need to prove they exist.
Australians on part-age pensions, or other Centrelink benefits, need to ensure these are not jeopardised.
Remember that the government includes gifts over $10,000 a year or $30,000 over five years as assessable assets so retirees should look carefully at the assets test used to calculate the rate of age pension.
Source: AFR
There are no tax implications for either the giver or receiver for cash gifts but capital gains tax needs to be considered when gifting other types of assets… such as property.
So that means a property inherited by, or given to, children from their parents or other family members may come with an attached capital gains liability.
Generally, CGT does not apply when you inherit property but it may apply when you later dispose of or sell it.
That’s because, in the case of an inherited or deceased estate, the transfer of ownership to you (i.e the inheritance transaction) isn’t considered a CGT event.
And if the transfer isn’t considered a CGT event, there is no capital gains tax liability.
However, if you decide to sell the property, CGT on the inherited property may apply.
There are ways for a receiver to reduce their capital gains liability on the sale of the property, but to avoid creating more problems down the track the process needs to be thoroughly researched and planned.
About 1 in 3 parents guarantees a loan, which could expose them to extreme financial risk if the child defaults, including the possibility of losing their own home.
That’s because, as I mentioned above, the parents agree to take responsibility for mortgage repayments if the child is unable to make them.
And this can extend right into their retirement.
So parents should specify whether the loan guarantee is partial or full - even a partial guarantee of the first 25% of a loan reduces exposure and limits risk.
Loans are expected to be repaid at a specified interest rate, with terms and conditions setting out the lenders’ rights on default.
Therefore, parents offering a loan should set out a loan agreement specifying things like the interest rate, term and the lender’s rights in the case of default.
This helps to lower the risk of expensive legal fees and damaging credit scores, which affects the future capacity to borrow.
A loan is preferable to a gift where the child is in a relationship and there are fears a partner could walk away with family money.
Parents gifting money have different risks to look out for - a gift is seen as something where there is no expectation of repayment.
This still needs to be documented, including how much was gifted, to whom and for what purpose, including a statement saying it doesn’t need to be repaid to avoid confusion down the track.
Several lenders provide incentives for family members to assist in buying property, according to Canstar.
These help buyers avoid LMI with a lower deposit, increase their buying budget and access lower interest rates but those considering a deal need to compare terms and conditions which differ for each lender.
]]>A big part of that is because more of us have been able to work from home than ever before.
The proportion of Australians in paid work climbed above 64% in May last year and has stayed there since.
At the same time, unemployment has hovered around a half-century low of 4%.
In April last year, female unemployment fell to what is almost certainly an all-time low of 3.3%.
It’s working from home – actually, working from anywhere – that has been the game-changer, as the most enduring change to the way we work to have come out of the pandemic.
Before the pandemic, in 2019, the share of the workforce who usually work at least partly from home was 25%.
Three years on in 2022, it was 36%.
These numbers from the latest Household, Income and Labour Dynamics in Australia (HILDA) Survey show there’s also been a shift in who’s working from home.
Before the pandemic, a greater share of men than women worked from home.
Now it’s a greater share of women.
Among both women and men, the biggest jump has been among parents with young children.
The proportion of mothers with children under five working at least partly from home has leapt from 31% to 43%.
The working-from-home rate for fathers with children under five has jumped from 29% to 39%.
Before the pandemic, managers and professionals were the workers most likely to work from home.
They still are, with up to 60% dialling in from the home office for at least part of their work week.
But it’s clerical and administrative workers – occupations that are about three-quarters female – who had the biggest jump in working from home.
Their pre-pandemic rate of 18% has soared to 42%.
In terms of industries, finance and insurance led the pack before the pandemic and still do, with rates doubling to 85%.
Working from home is now also the norm in information media and telecommunications (74%) and public administration and safety (72%).
In the traditionally male industry of construction, women’s working-from-home rates have soared from 34% to 45%.
It’s well above the men’s rate of 24%, which is largely unchanged.
While this reflects the different types of jobs that men and women do in construction, it also suggests working from home is a way to boost women’s involvement, even in this industry.
The benefit of working from home for the economy has been fewer obstacles getting in the way of matching job seekers to employers.
Distance and location are no longer the deal-breakers they were.
Better job-matching means less unemployment, and the heightened prospect of finding a good job match encourages jobseekers who in earlier times might have given up.
In finance and insurance – the industry with the biggest and fastest-growing rate of working from home – the proportion of jobs that were vacant fell from 2.5% before the pandemic to just 1.7% by the end of 2023.
Making workers return to the office for jobs that can be effectively done from home would unravel the economic benefits that have been achieved.
Fewer people, especially women and parents with young children, would put themselves forward for work.
The pool of skills that employers are looking for would shrink.
And job-matching in the labour market becomes less efficient.
The result would be more Australians unemployed, and more Australians dropping out of the paid workforce, than if we had continued to embrace working from home.
Working from home still comes with challenges.
Workers who are less visible in the office are more likely to be overlooked.
But it has a wider economic benefit we have a chance to hold on to.
The extraordinary transformation of our labour market means it shouldn’t be seen as a “favour” to workers but as a favour to us all.
Guest author is Leonora Risse, Associate Professor in Economics, University of Canberra
This article is republished from The Conversation under a Creative Commons license. Read the original article here.
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