Where have you been? I hope you had a great time. September school holidays can be a bit of a business wasteland, but this year it seems that everyone was away.
A fair bit happened in the world of property over the last two weeks. So here is a quick update to help get your head in gear.
Not a “bubble” but home prices lifting from a low base in response to very favourable influences such as low interest rates; under supply of new housing starts & strong population growth.
The latest house price results from RPData – for the year to September – suggest a rather tame residential market.
- National growth 3.7%per cent
- Sydney 8.0%
- Perth 7.6%
- Melbourne 5.4%
- Canberra 3.7%
- Darwin 2.2%
- Brisbane 1.1%
- Adelaide -0.8%
- Hobart -2.9%
Remember that CPI – for 2012/13 – was 2.6 per cent.
Over the past decade, Sydney home prices have only barely grown in line with inflation (up 2.7 per cent per annum). The current lift in prices since mid-2013 merely reflects investors & home buyers finally embracing attractive conditions.
Again, for mine, what we are experiencing is the normal machinations of the property cycle.
Australia’s population grew by 397,400 last year to reach 23 million. A year ago the country’s residents increased by 367,000 people & during 2011 the yearly escalation was just 305,000 – the lowest rate of annual increase in a bloody long while.
[sam id=34 codes=’true’] Queensland’s population is growing by 93,000 people each year, similar to NSW. Western Australia is seeing an 83,000 annual increase; yet Victoria remains the star, lifting its population by 102,000 new homies over the last 12 months.
Queensland’s population growth is starting to stabilise – reflecting a plateau in the more labour intensive side of resource sector investment. This should result in less interstate migration to Queensland, WA and NT in coming years.
More bums on seats might not be everyone’s cup of tea – but it does increase housing demand, which in turn should lead to more residential construction. For many who read the Missive, that’s music to your ears.
Thankfully, new housing starts are starting to improve, albeit from a low base.
There were 163,000 new homes approved across Oz this year, which is 17,000 more than last year.
Most new starts are still detached houses (95,000) versus 67,000 attached dwellings. But apartment starts are up 20 per cent on last year, whilst detached housing construction rose just 6 per cent.
A similar trend can be found in Queensland, with 30,000 new homes underway this year, against 27,000 during 2012. Interestingly, new detached house starts are down 1,000 or 5 per cent in Queensland, whilst new apartment construction is up 50 per cent – 12,000 approvals in the 12 months to August 2013 versus 8,000 the year before.
In response to strong demand for established dwellings & rising population growth, new home sales are now starting to rise, up more than 20 per cent on a year ago – the strongest growth in four years.
This is great news which hopefully can be sustained.
In August, house sales increased by 10 per cent in Western Australia, 8 per cent in South Australia, 7 per cent in New South Wales, 4 per cent in Queensland & 2 per cent in Victoria.
The Westpac/Melbourne Institute index of consumer sentiment rose by about 5 per cent in September – a three-year high. This index is up 13 per cent over the year.
Amazingly, cash remains the wisest place to put new savings according to the survey. But this is falling. The next highest was real estate (28 per cent); followed by Pay Debt (14 per cent) & shares (9 per cent).
In support, the NAB business survey for August reported a lift in the confidence index to 27-month highs. A further improvement is expected now that the election is out of the road.
The improvement in both business & consumer confidence now needs to be validated. We need to start embracing the positives. In the past five elections, confidence has lifted around the time of the poll. But a few months later, other issues had taken over as confidence drivers.
It is important that the new Government builds on the momentum that is developing.
Anyway, we will know more tomorrow, when Westpac releases its October consumer sentiment report.
The last consumer sentiment survey period straddled the Election Day so the October survey is the first monthly survey since the 7th September. However the Roy Morgan weekly survey has continued to publish & it has been rising in recent weeks.
New 25 Property Tips Report
Whilst you were out funning, we stayed in (well, I did play quite a bit of golf actually) & did some work.
Go here to find out about our new 25 Tips report. It costs just $25 (plus GST) with $5 of each report going to Micah Projects, a charity that helps feed & house Brisbane’s homeless.
You might want to buy a licence to distribute this report to your clients or database. Your logo, contact details, short company promotion & hyperlink go on the report. We will do the fiddly work for you!
Plus, $100 of your licence purchase price will go to Micah Projects.
Go on, help Brisbane’s homeless today.
This Matusik Missive, like all of them, is commentary & not advice. Readers should seek their own professional advice on the subject being discussed.
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.