Uncertainty surrounding the national economy has done little to impact the rapidly growing confidence that another property boom is imminent, new data suggests.
Almost 18 months of declines in median house prices in Australia’s two largest markets – Sydney and Melbourne – ended in June after prices fell more than 10 per cent from their peaks.
But consecutive monthly increases in dwelling values since, coupled with exceptionally high auction clearance rates and a lift in home loan approvals paint a picture of a rebound in real estate fortunes.
Data house CoreLogic said the national home value index recorded its third month of growth in September, up 0.9 per cent across all capital cities.
Sydney is up a cumulative 3.3 per cent and Melbourne up 3.2 per cent in August and September.
With spring in full swing, a traditionally busy time in real estate, industry pundits say the storm clouds look to have cleared and a new period of growth is here.
AUSSIES MORE CONFIDENT
Consumer comparison website finder.com.au has been tracking property sentiment for the past six months and has found the proportion of Australians who think now is the time to buy has lifted since May.
“More and more Aussies are feeling confident about the property market, we’ve found,” money expert Bessie Hassan told news.com.au.
“When we ask whether now is a good time to buy, 59 per cent currently believe that it is, which is up from 54 per cent in May. And 52 per cent think property in their area will increase somewhat or significantly in the next 12 months.”
In Sydney, 53 per cent of those surveyed expected prices to rise in the next year, while 61 per cent in Melbourne also believed values would rise, she said.
This time last year, Saturday auctions in most capital cities were ghost towns where you’d be hard-pressed to find many bidders.
Clearance rates were flat and prices continued a downward trend, with the average time a property spent on the market also higher than it had been for several years.
Since then, Ramon Mitchell, director of Gault & Co Property Advisory, said competition had strengthened among buyers, with bigger offers made and sales completed faster.
“There’s been increased traffic through open house inspections and there seems to have been much higher conversion of these to registered bidders on auction days,” Mr Mitchell said.
“You can see how this has played out in consistent improvement in auction clearance rates – including sales prior to auction.
“There’s no doubt this is having an effect on value – they’re increasing across most of the markets we monitor – particularly in the capital cities.”
Despite high prices making it difficult for first-home buyers to crack the market, research by lenders’ mortgage insurance provider Genworth has found that Millennials remain determined to buy their own home.
It found 94 per cent of young people consider homeownership a high priority, with 66 per cent of those surveyed hopeful of buying in the next five years.
More than half are working to save a deposit and three-in-four think now is the right time to act.
Genworth’s research also found young Aussies were shifting their expectations in order to meet the market, focusing on different areas or property types.
MORE LISTINGS SHIFTING
The latest data on monthly home loan approvals from the Australian Bureau of Statistics shows an increase in both the total number of mortgages written in August as well as their value.
There were 32,740 home loans approved in August for owner-occupied homes, up 1.9 per cent on the previous month.
New lending commitments for investment dwellings also rose 5.7 per cent to $4.8 billion in August, with Queensland recording the strongest growth, up 10.4 per cent.
That indicates a renewed confidence among investors, who are historically the first to flee a shaky market and among the last to re-enter a reviving one.
“We’ve seen a bump in house prices in Sydney and Melbourne and the latest ABS figures show a 2.9 per cent increase in the total value of home loans settled in August,” Ms Hassan said.
“That indicates a resurgence in property.
“Auction clearance rates are pushing 70 per cent or more consistently showing strong demand.”
Home Value Index September 2019
WHAT’S DRIVING GROWTH
Renewed activity from buyers is far outpacing the number of available properties on the market, which is contributing strongly to price increases, Mr Mitchell said.
Stock levels in Sydney and Melbourne, particularly, were historically low, at levels not seen since 2007, he said.
“Many agents are reporting a decline in their listing pipeline by up to 35 per cent from same time last year, which is a substantial drop,” Mr Mitchell said.
“The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending,” RBA governor Philip Lowe said. “Other sources of uncertainty include the effects of the drought and the evolution of the housing construction cycle.”
The health of the property markets will continue to be a strong indicator of where the RBA will go next, according to CoreLogic head of research Tim Lawless.
“A rebound in housing values and a rise in buyer activity will hopefully begin to flow through to a gradual improvement in household wealth and spending,” Lawless said in a note issued to Business Insider Australia.
“While the improved housing market conditions are a positive for broader economic conditions, an increase in speculative activity from property investors or a slip in the quality of lending standards could be the trigger for a new round of macro-prudential policies aimed at maintaining prudent lending standards and keeping a lid on further accrual of housing related debt,” he said.
The move was widely anticipated by the market.
“No economists surveyed by Bloomberg [are] looking for a rate cut,” AMP Capital chief economist Shane Oliver tweeted prior to the announcement. “[Market probability] on a cut is just 6% for Nov and 26% for Dec which seems a bit too low.”
However, while most of his economic peers are expecting the central bank to cut again at its first meeting next year in February, Oliver is predicting it’ll have to go in December.
It comes as a recent spate of data suggests something is rotten in Australia, with the government’s tax cuts and the RBA’s cash rate cuts failing to put the fire back in the economy, according to BIS Oxford Economics senior economist Sean Langcake.
“The Federal Government’s increased low- and middle-income tax offsets have not provided the immediate boost to retailers that had been hoped for.
This is another sign that economic momentum is weaker than had been expected heading into [the] RBA board meeting,” he said in a note.
Langcake is referring to Monday’s retail growth which underwhelmed, with adjusted sales figures actually declining in the quarter.
It spells trouble for the RBA which has pinned its hopes of economic growth to reinvigorated spending and wage growth.
“Spending on discretionary items, such as household goods, remains quite weak reflecting tight budgets and cautious households. Households are dialling back on what they don’t necessarily need – at least not now – so that they can maintain their spending on necessities, such as food and clothing,” Indeed Asia-Pacific economist Callam Pickering said on Monday.
“Not since our last recession have we had a retail sector that has struggled so much to get product out the door.”
It is considered one of the most livable cities in the world – but is it the best for property?
In this article for Switzer, John McGrath explains why Melbourne is taking to top property spot.
Melbourne is mirroring Sydney this Spring, with strong clearance rates in the late 70% range and plenty of outstanding prices being recorded across the city as it rebounds from the downturn.
As discussed in our recently released McGrath Report 2020, Melbourne experienced a softer landing than Sydney during the downturn, with a -10.9% decline in dwelling values from its peak compared to -14.9% for Sydney.
At the market turn in June 2019, Melbourne’s median house price was $709,092 and the apartment median price was $527,748, according to CoreLogic.
Since then, home values have increased by 3.5%.
CoreLogic-Moody’s Analytics predicts a 7.3% increase in Melbourne house prices over CY20 and CY21, with best gains in the North East (18%) in areas such as Banyule, Kinglake and Whittlesea; and the Inner East (13.2%) in areas such as Boroondara, Manningham and Whitehorse.
Apartments will rebound just 0.7% overall for the city, however strong gains will be seen in some pockets, such as the Inner East (16.6%), North West (9.5%) in areas such as Keilor, the Macedon Ranges and Sunbury; and Inner Melbourne (8%) in areas such as Brunswick, Essendon and Port Phillip.
Melbourne has excellent fundamentals that will support property price growth over the medium to long term.
Victoria had the strongest population growth in Australia at 2.2% in CY18 due to high overseas migration, strong internal movement from within Victoria; and new residents moving from Sydney and Perth, according to the Australian Bureau of Statistics.
More affordable housing than Sydney but equally attractive job prospects are part of the appeal, with Victoria recording just 4.5% unemployment in January 2019 and the strongest jobs growth in the country, up 15.9% since November 2013, according to government figures.
Melbourne’s buzzing café and restaurant scene, cultural richness and lifestyle attributes have elevated it to one of the world’s most desirable cities.
It is the favoured destination among foreign buyers and will become Australia’s largest city by 2066 – overtaking Sydney as early as 2031.
Reflecting its sophistication as a global city is the high glamour of its new apartment developments, which are meeting a growing appetite for luxury sky home living among Melbourne’s wealthy.
Although there has been a substantial decline in foreign investors, who bought heavily into Melbourne’s high rise projects before the introduction of tough new taxes, opulent and unique projects with a strong brand are resonating with the local business elite.
These include Capitol Grand, the six-star retail and high rise residential project in South Yarra, where 75% of stock, priced from almost $1 million for a one bedroom apartment to $25 million for a penthouse, was sold prior to completion.
Developer, Larry Kestelman said 90% of sales were to local owner occupiers, with several amalgamating apartments to create larger residences.
Fellow developer, Tim Gurner sold 95% of stock in Saint Moritz on St Kilda’s beachfront within a month of its launch in April.
A double-storey penthouse was sold to a local businessman for a new city record of $30 million.
The seven-bedroom property includes four living rooms, two pools, panoramic water views, a 1,000-bottle wine cellar and a seven-car garage.
Melbourne now has more skyscrapers (taller than 150 metres) than Sydney, with Australia 108 in Southbank the country’s tallest new building and home to Melbourne’s previous record of $25 million set in 2015. It is due for completion in 2020.
In FY20, major infrastructure projects will continue to prepare Melbourne for massive future population growth, including the commencement of the $15.8 billion North East Link, which will cut travel times by up to 35 minutes to Melbourne’s rapidly growing northern suburbs.
The new road should boost buyer demand in areas such as Greensborough, Heidelberg and Ivanhoe, where great new value is available following median house price falls to $755,000, $1,022,500 and $1,301,000 respectively during the downturn.
The Victorian Government is also moving forward with its highly anticipated Fishermans Bend redevelopment, Australia’s largest urban renewal project, which will transform 250ha of inner-city land into housing and employment opportunities for 80,000 people by 2050.
Regional Victoria received $2.6 billion in the FY20 Budget for new infrastructure and services that are expected to generate an estimated 4,500 new jobs, according to the budget papers.
About $615 million will be spent on public transport, such as the purchase of new trains for the busiest regional lines.
A growing number of Melburnians relocating to satellite cities is straining services, with all trains from Geelong arriving at Southern Cross before 9am at 96-100% capacity.
Planning has also begun for the Western Rail Plan, which will separate regional and metropolitan services on the Geelong and Ballarat lines to enable a faster express commute.
Affordability and lifestyle are fuelling regional buyer demand, with Shepparton, Warrnambool, Ballarat and Bendigo ranked among Australia’s top 10 regional performers in FY19 with growth of 2.3-2.7% compared to Melbourne’s -9.2% decline.
CoreLogic-Moody’s Analytics predicts house price growth of 13% in Shepparton, 12.7% in Geelong and 9.7% in Ballarat in CY20 and CY21.
Five incredible buildings around the world that have been inspired by nature
Where are some of the most interesting buildings located?
An article on Domain.com.au takes at look at 5 buildings around the world, inspired by nature.
Architects, probably more so than any other creative professionals, engage with nature.
Their designs become part of the landscape, the buildings make demands on the environment and, in turn, are affected by it.
No wonder that nature is often a powerful influence in the creation of these designs – both in appearance and function.
The concept of incorporating natural principles into design is happening in many ways.
In the search for more sustainable and eco-friendly living, architects are referencing all things natural, and studies repeatedly show that being in touch with the natural world enhances our physical, mental and emotional wellbeing.
Bioarchitecture, very simply described as the design and construction of buildings that reflect structures found in nature, is taking architecture closer to nature than ever before.
Architects have been inspired by the massive and the miniature – water, glaciers, flowers, forests, animals, insects – sometimes all at once.
Hungerburgbahn, Innsbruck
The late Zaha Hadid took inspiration from nature’s large, sweeping gestures.
The organic, curvilinear shape of the Hungerburgbahn, a train station in Innsbruck, echoes the contours of a glacier in its graceful curves and the materiality of ice in the white double-curved glass.
The Hungerburgbahn in Innsbruck, designed by Zaha Hadid. Photo: Supplied
Bosco Verticale, Milan
Boeri Studio, the architecture firm that designed Bosco Verticale, or Vertical Forest, was inspired by nature as an agent of wellbeing and sustainability.
The two towers in the Porta Nuova district of Milan use living nature as an essential component of the architecture.
Each tower houses 900 trees, 5000 shrubs and 11,000 perennial plants that help mitigate smog, produce oxygen, moderate interior temperature and absorb carbon dioxide.
The biodiversity of the plants attracts new bird and insect species.
The building is self-sufficient with renewable energy drawn from solar panels, while filtered wastewater is used on the plants.
The Bosco Verticale towers in Milan use nature as an essential component of the architecture. Photo: Supplied
Highpark Seasons, Melbourne
At Highpark Seasons in Glen Iris, it was the developer’s ability to create unique glazing, along with the parkland border, that inspired the design.
The treed linear park of Gardiners Creek Reserve winds around the site and directly opposite is a reserve.
This prompted the developer, a leading manufacturer of glass, to create glazing that would pick up the reflections of trees and greenery on all four sides.
“As well as contributing to the attractive appearance of the building, this also has the effect of settling it into the surrounding environment,” says Andrew Leoncelli, managing director of Residential Projects CBRE.
Highpark Seasons features special glazing that reflects the surrounding greenery.
The building’s mirrored facade changes throughout the seasons – cool greenery in spring and summer, rich reds and golds in autumn, and a light brightness in winter when the surrounding leaf density is less. Most of the 100 apartments are oriented to the north.
“They cascade away towards the creek, creating wide terraces, and go from six floors to three,” adds Leoncelli.
Designed by Rothelowman, the apartments, with their premium appointments and elegant finishes, appeal to local downsizers with around 40 per cent already sold, says Leoncelli.
The cloud house, Melbourne
In Melbourne, McBride Charles Ryan’s cloud-shaped extension to an Edwardian home is “a playful addition where family and friends can eat and have fun surrounded by the curved form,” say the architects.
It is dramatic, beautifully crafted, and the cloudy curves have a practical – as well as whimsical – side.
“The shape conforms to setback regulations without appearing to be determined by them,” say the architects.
McBride Charles Ryan’s cloud house in Melbourne. Photo: Supplied
Gaudi’s buildings, Barcelona
Antoni Gaudi, the deeply spiritual Catalan architect born in 1852, said of the magnificent towering forests of columns, rich colours, free forms and organic shapes that make up his Barcelona cathedral, Sagrada Familia, that he “strives to compress all of earth and heaven into its structure”.
Gaudi’s famous Sagrada Familia cathedral in Barcelona. Photo: Supplied
His Barcelona apartment buildings, Casa Batlo and La Pedrera, built in the early days of the 20th century, ventured further into nature than anyone had seen at the time.
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